.R. No.

184109 February 1, 2012

CELERINO E. MERCADO, Petitioner,

vs.
BELEN* ESPINOCILLA** AND FERDINAND ESPINOCILLA, Respondents.

DECISION

VILLARAMA, JR., J.:

The Case

Petitioner Celerino E. Mercado appeals the Decision1 dated April 28, 2008 and Resolution2 dated
July 22, 2008 of the Court of Appeals (CA) in CA-G.R. CV No. 87480. The CA dismissed petitioners
complaint3 for recovery of possession, quieting of title, partial declaration of nullity of deeds and
documents, and damages, on the ground of prescription.

The Antecedent Facts

Doroteo Espinocilla owned a parcel of land, Lot No. 552, with an area of 570 sq. m., located at
Magsaysay Avenue, Zone 5, Bulan, Sorsogon. After he died, his five children, Salvacion, Aspren,
Isabel, Macario, and Dionisia divided Lot No. 552 equally among themselves. Later, Dionisia died
without issue ahead of her four siblings, and Macario took possession of Dionisias share. In an
affidavit of transfer of real property4 dated November 1, 1948, Macario claimed that Dionisia had
donated her share to him in May 1945.

Thereafter, on August 9, 1977, Macario and his daughters Betty Gullaba and Saida Gabelo sold 5 225
sq. m. to his son Roger Espinocilla, husband of respondent Belen Espinocilla and father of
respondent Ferdinand Espinocilla. On March 8, 1985, Roger Espinocilla sold 6 114 sq. m. to Caridad
Atienza. Per actual survey of Lot No. 552, respondent Belen Espinocilla occupies 109 sq. m.,
Caridad Atienza occupies 120 sq. m., Caroline Yu occupies 209 sq. m., and petitioner, Salvacion's
son, occupies 132 sq. m.7

The Case For Petitioner

Petitioner sued the respondents to recover two portions: an area of 28.5 8 sq. m. which he bought
from Aspren and another 28.5 sq. m. which allegedly belonged to him but was occupied by
Macarios house.9 His claim has since been modified to an alleged encroachment of only 39 sq. m.
that he claims must be returned to him. He avers that he is entitled to own and possess 171 sq. m.
of Lot No. 552, having inherited 142.5 sq. m. from his mother Salvacion and bought 28.5 sq. m. from
his aunt Aspren. According to him, his mothers inheritance is 142.5 sq. m., that is, 114 sq. m. from
Doroteo plus 28.5 sq. m. from Dionisia. Since the area he occupies is only 132 sq. m., 10 he claims
that respondents encroach on his share by 39 sq. m. 11

The Case For Respondents

Respondents agree that Doroteos five children each inherited 114 sq. m. of Lot No. 552. However,
Macarios share increased when he received Dionisias share. Macarios increased share was then
sold to his son Roger, respondents husband and father. Respondents claim that they rightfully
possess the land they occupy by virtue of acquisitive prescription and that there is no basis for
petitioners claim of encroachment.12

The Trial Courts Decision

On May 15, 2006, the Regional Trial Court (RTC) ruled in favor of petitioner and held that he is
entitled to 171 sq. m. The RTC found that petitioner inherited 142.5 sq. m. from his mother Salvacion
and bought 28.5 sq. m. from his aunt Aspren. The RTC computed that Salvacion, Aspren, Isabel and
Macario each inherited 142.5 sq. m. of Lot No. 552. Each inherited 114 sq. m. from Doroteo and
28.5 sq. m. from Dionisia. The RTC further ruled that Macario was not entitled to 228 sq. m. Thus,
respondents must return 39 sq. m. to petitioner who occupies only 132 sq. m. 13

There being no public document to prove Dionisias donation, the RTC also held that Macarios 1948
affidavit is void and is an invalid repudiation of the shares of his sisters Salvacion, Aspren, and
Isabel in Dionisias share. Accordingly, Macario cannot acquire said shares by prescription. The RTC
further held that the oral partition of Lot No. 552 by Doroteos heirs did not include Dionisias share
and that partition should have been the main action. Thus, the RTC ordered partition and deferred
the transfer of possession of the 39 sq. m. pending partition. 14 The dispositive portion of the RTC
decision reads:

WHEREFORE, in view of the foregoing premises, the court issues the following ORDER, thus -

a) Partially declaring the nullity of the Deed of Absolute Sale of Property dated August 9,
1977 x x x executed by Macario Espinocilla, Betty E. Gullaba and Saida E. Gabelo in favor of
Roger Espinocilla, insofar as it affects the portion or the share belonging to Salvacion
Espinocilla, mother of [petitioner,] relative to the property left by Dionisia Espinocilla,
including [Tax Declaration] No. 13667 and other documents of the same nature and
character which emanated from the said sale;

b) To leave as is the Deeds of Absolute Sale of May 11, 1983 and March 8, 1985, it having
been determined that they did not involve the portion belonging to [petitioner] x x x.

c) To effect an effective and real partition among the heirs for purposes of determining the
exact location of the share (114 sq. m.) of the late Dionisia Espinocilla together with the 28.5
sq. m. belonging to [petitioners] mother Salvacion, as well as, the exact location of the 39
sq. m. portion belonging to the [petitioner] being encroached by the [respondents], with the
assistance of the Commissioner (Engr. Fundano) appointed by this court.

d) To hold in abeyance the transfer of possession of the 39 sq. m. portion to the [petitioner]
pending the completion of the real partition above-mentioned. 15

The CA Decision

On appeal, the CA reversed the RTC decision and dismissed petitioners complaint on the ground
that extraordinary acquisitive prescription has already set in in favor of respondents. The CA found
that Doroteos four remaining children made an oral partition of Lot No. 552 after Dionisias death in
1945 and occupied specific portions. The oral partition terminated the co-ownership of Lot No. 552 in
1945. Said partition also included Dionisias share because the lot was divided into four parts only.
And since petitioners complaint was filed only on July 13, 2000, the CA concluded that prescription
has set in.16 The CA disposed the appeal as follows:

WHEREFORE, the appeal is GRANTED. The assailed May 15, 2006 Decision of the Regional Trial
Court (RTC) of Bulan, Sorsogon is hereby REVERSED and SET ASIDE. The Complaint of the
[petitioner] is hereby DISMISSED. No costs.17

The Instant Petition

The core issue to be resolved is whether petitioners action to recover the subject portion is barred
by prescription.

Petitioner confirms oral partition of Lot No. 552 by Doroteo's heirs, but claims that his share
increased from 114 sq. m. to 171 sq. m. and that respondents encroached on his share by 39 sq. m.
Since an oral partition is valid, the corresponding survey ordered by the RTC to identify the 39 sq. m.
that must be returned to him could be made.18 Petitioner also alleges that Macario committed fraud in
acquiring his share; hence, any evidence adduced by him to justify such acquisition is inadmissible.
Petitioner concludes that if a person obtains legal title to property by fraud or concealment, courts of
equity will impress upon the title a so-called constructive trust in favor of the defrauded party.19

The Courts Ruling

We affirm the CA ruling dismissing petitioners complaint on the ground of prescription. 1wphi1

Prescription, as a mode of acquiring ownership and other real rights over immovable property, is
concerned with lapse of time in the manner and under conditions laid down by law, namely, that the
possession should be in the concept of an owner, public, peaceful, uninterrupted, and adverse.
Acquisitive prescription of real rights may be ordinary or extraordinary. Ordinary acquisitive
prescription requires possession in good faith and with just title for 10 years. In extraordinary
prescription, ownership and other real rights over immovable property are acquired through
uninterrupted adverse possession for 30 years without need of title or of good faith. 20

Here, petitioner himself admits the adverse nature of respondents possession with his assertion that
Macarios fraudulent acquisition of Dionisias share created a constructive trust. In a constructive
trust, there is neither a promise nor any fiduciary relation to speak of and the so-called trustee
(Macario) neither accepts any trust nor intends holding the property for the beneficiary (Salvacion,
Aspren, Isabel). The relation of trustee and cestui que trust does not in fact exist, and the holding of
a constructive trust is for the trustee himself, and therefore, at all times adverse. 21 Prescription may
supervene even if the trustee does not repudiate the relationship. 22

Then, too, respondents uninterrupted adverse possession for 55 years of 109 sq. m. of Lot No. 552
was established. Macario occupied Dionisias share in 1945 although his claim that Dionisia donated
it to him in 1945 was only made in a 1948 affidavit. We also agree with the CA that Macarios
possession of Dionisias share was public and adverse since his other co-owners, his three other
sisters, also occupied portions of Lot No. 552. Indeed, the 1977 sale made by Macario and his two
daughters in favor of his son Roger confirms the adverse nature of Macarios possession because
said sale of 225 sq. m.23 was an act of ownership over Macarios original share and Dionisias share.
In 1985, Roger also exercised an act of ownership when he sold 114 sq. m. to Caridad Atienza. It
was only in the year 2000, upon receipt of the summons to answer petitioners complaint, that
respondents peaceful possession of the remaining portion (109 sq. m.) was interrupted. By then,
however, extraordinary acquisitive prescription has already set in in favor of respondents. That the
RTC found Macarios 1948 affidavit void is of no moment. Extraordinary prescription is unconcerned
with Macarios title or good faith. Accordingly, the RTC erred in ruling that Macario cannot acquire by
prescription the shares of Salvacion, Aspren, and Isabel, in Dionisias 114-sq. m. share from Lot No.
552.

Moreover, the CA correctly dismissed petitioners complaint as an action for reconveyance based on
an implied or constructive trust prescribes in 10 years from the time the right of action accrues. 24 This
is the other kind of prescription under the Civil Code, called extinctive prescription, where rights and
actions are lost by the lapse of time.25 Petitioners action for recovery of possession having been filed
55 years after Macario occupied Dionisias share, it is also barred by extinctive prescription. The CA
while condemning Macarios fraudulent act of depriving his three sisters of their shares in Dionisias
share, equally emphasized the fact that Macarios sisters wasted their opportunity to question his
acts.

WHEREFORE, we DENY the petition for review on certiorari for lack of merit and AFFIRM the
assailed Decision dated April 28, 2008 and Resolution dated July 22, 2008 of the Court of Appeals in
CA-G.R. CV No. 87480.

No pronouncement as to costs.

G.R. No. L-3489 September 7, 1907

VICENTE NAVALES, plaintiff-appellee,

vs.
EULOGIA RIAS, ET AL., defendants-appellants.

Pantaleon E. del Rosario for appellants.

F. Sevilla y Macam for appellee.

TORRES, J.:

On the 18th of November, 1904, Vicente Navales filed a complaint with the Court of First Instance of
Cebu against Eulogia Rias and Maximo Requiroso, claiming that the latter should be sentenced to
pay him the sum of 1,200 pesos, Philippine currency, as damages, together with costs and such
other expenses as the court might consider just and equitable. To this end he alleged that the said
defendants, without due cause, ordered the pulling down and destruction of his house erected in
Daanbuangan, town of Naga, Island of Cebu, which was 6 meters in height with an area of 8.70
square meters, built of wood with a nipa roof, and worth 1,000 pesos, which amount he expended in
its construction. He further alleged that the destruction took place in the month of April, 1904, and
that, notwithstanding his efforts, he had not obtained any reimbursement from the defendants, and
that by reason of their refusal he had been prejudiced to the extent of 200 pesos, Philippine
currency.

The defendant, in answer to the foregoing complaint, denied all and each one of the allegations
therein contained, and asked that judgment be entered dismissing the complaint with costs against
the plaintiff.
After considering the proofs submitted by both parties and the proceedings upon the trial, the judge,
on the 17th of January, 1906, rendered judgment declaring that the decision entered by the justice of
the peace of Naga, and the order given by virtue thereof were illegal, as well as the action of the
deputy sheriff Luciano Bacayo, that the defendant were thereby liable for the damages caused to the
plaintiff, which amounted to 500 pesos, and that the defendants were sentenced to pay the said sum
to the plaintiff, with costs. The defendant upon being informed of this decision, asked that it be set
aside, and also moved for a new trial on the ground that the decision was not in accordance with the
weight of the evidence. The motion was denied, to which exception was taken, and at the request of
the interested party, the corresponding bill of exceptions was limited.

The aim of this litigation, therefore, is to obtain payment through a judicial decision, of the damages
said to have been caused by the execution of a judgment rendered by the justice of the peace, in an
action for ejectment.

It is undeniable that, in order to remove from the land of Eulogia Rias, situated within the jurisdiction
of the town of Naga, the house which Vicente Navales had constructed thereon, by virtue of the
decision of the justice in the action instituted by the said Eulogia Rias against the owner of the house
, Vicente Navales, the deputy sheriff who carried the judgment into execution was obliged to destroy
the said house and removed it from the land, according to the usual procedure in the action for
ejectment.

In the order of execution issued to the deputy sheriff, the directive portion of the judgment of the
justice of the peace was inserted, and it contained the essential statement that the said judgment, by
reason of its not having been appealed from, had become final, and from the contents of the same
may be inferred that there had been an action for ejectment between the above-named parties, and
that there was no reason why it should not be enforced when it had already become final and
acquired the nature of res adjudicata.

Section 72 of the Code of Civil Procedure reads:

Execution. If no appeal from a judgment of a justice of the peace shall be perfected as

herein provided, the justice of the peace shall, at the request of the successful party, issue
execution for the enforcement of the judgment, and the expiration of the time limited by law
for the perfection of an appeal.

Assuming that the order for execution of final judgment was issued in accordance with the law, and
in view of the fact that it has not been alleged nor proven that the sheriff when complying with the
same had committed trespass or exceeded his functions, it must be presumed according to section
334 (14) of the said Code of Procedure, that the official duty was regularly performed. Therefore, it is
not possible to impute liability to the plaintiff who obtained the judgment and the execution thereof,
when the same was not disputed nor alleged to be null or illegal, and much less to compel the
payment of damages to the person who was defeated in the action and sentenced to be ejected
from the land which he improperly occupied with his house.

No proof has been submitted that a contract had been entered into between the plaintiff and the
defendants, or that the latter had committed illegal acts or omissions or incurred in any kind of fault
or negligence, from any of which an obligation might have arisen on the part of the defendants to
indemnify the plaintiff. For this reason, the claim for indemnity, on account of acts performed by the
sheriff while enforcing a judgment, can not under any consideration be sustained. (Art. 1089, Civil
Code.)

The illegality of the judgment of the justice of the peace, that of the writ of execution thereunder, or of
the acts performed by the sheriff for the enforcement of the judgment, has not been shown.
Therefore, for the reasons hereinbefore set forth, the judgment appealed from is hereby reversed,
and the complaint for damages filed by Vicente Navales against Eulogia Rias and Maximo
Requiroso is dismissed without special ruling as to costs. So ordered.

G.R. No. L-46179 January 31, 1978

CANDIDA VIRATA, TOMAS VIRATA, MANOLITO VIRATA, EDERLINDA VIRATA, NAPOLEON

VIRATA, ARACELY VIRATA, ZENAIDA VIRATA, LUZMINDA VIRATA, PACITA VIRATA, and
EVANGELINA VIRATA, petitioners,
vs.
VICTORIO OCHOA, MAXIMO BORILLA and THE COURT OF FIRST INSTANCE OF CAVITE, 7th
JUDICIAL DISTRICT, BRANCH V, stationed at BACOOR, CAVITE, respondents.

Remulla, Estrella & Associates for petitioners

Exequil C. Masangkay for respondents.

FERNANDEZ, J.:

This is an appeal by certiorari, from the order of the Court of First Instance of Cavite, Branch V, in
Civil Case No. B-134 granting the motion of the defendants to dismiss the complaint on the ground
that there is another action pending between the same parties for the same cause. 1

The record shows that on September 24, 1975 one Arsenio Virata died as a result of having been
bumped while walking along Taft Avenue, Pasay City by a passenger jeepney driven by Maximo
Borilla and registered in the name Of Victoria Ochoa; that Borilla is the employer of Ochoa; that for
the death of Arsenio Virata, a action for homicide through reckless imprudence was instituted on
September 25, 1975 against Maximo Borilla in the Court of First Instance of Rizal at Pasay City,
docketed as C Case No. 3162-P of said court; that at the hearing of the said criminal case on
December 12, 1975, Atty. Julio Francisco, the private prosecutor, made a reservation to file a
separate civil action for damages against the driver on his criminal liability; that on February 19,
1976 Atty. Julio Francisco filed a motion in said c case to withdraw the reservation to file a separate
civil action; that thereafter, the private prosecutor actively participated in the trial and presented
evidence on the damages; that on June 29, 1976 the heirs of Arsenio Virata again reserved their
right to institute a separate civil action; that on July 19, 1977 the heirs of Arsenio Virata, petitioners
herein, commenced Civil No. B-134 in the Court of First Instance of Cavite at Bacoor, Branch V, for
damages based on quasi-delict against the driver Maximo Borilla and the registered owner of the
jeepney, Victorio Ochoa; that on August 13, 1976 the defendants, private respondents filed a motion
to dismiss on the ground that there is another action, Criminal Case No. 3162-P, pending between
the same parties for the same cause; that on September 8, 1976 the Court of First Instance of Rizal
at Pasay City a decision in Criminal Case No. 3612-P acquitting the accused Maximo Borilla on the
ground that he caused an injury by name accident; and that on January 31, 1977, the Court of First
Instance of Cavite at Bacoor granted the motion to Civil Case No. B-134 for damages. 2

The principal issue is weather or not the of the Arsenio Virata, can prosecute an action for the
damages based on quasi-delict against Maximo Borilla and Victoria Ochoa, driver and owner,
respectively on the passenger jeepney that bumped Arsenio Virata.

It is settled that in negligence cases the aggrieved parties may choose between an action under the
Revised Penal Code or of quasi-delict under Article 2176 of the Civil Code of the Philippines. What is
prohibited by Article 2177 of the Civil Code of the Philippines is to recover twice for the same
negligent act.

The Supreme Court has held that:

According to the Code Commission: 'The foregoing provision (Article 2177) though at
first sight startling, is not so novel or extraordinary when we consider the exact
nature of criminal and civil negligence. The former is a violation of the criminal law,
while the latter is a 'culpa aquiliana' or quasi-delict, of ancient origin, having always
had its own foundation and individuality, separate from criminal negligence. Such
distinction between criminal negligence and 'culpa extra-contractual' or quasi-delito
has been sustained by decision of the Supreme Court of Spain and maintained as
clear, sound and perfectly tenable by Maura, an outstanding Spanish jurist.
Therefore, under the proposed Article 2177, acquittal from an accusation of criminal
negligence, whether on reasonable doubt or not, shall not be a bar to a subsequent
civil action, not for civil liability arising from criminal negligence, but for damages due
to a quasi-delict or 'culpa aquiliana'. But said article forestalls a double recovery.
(Report of the Code Commission, p. 162.)

Although, again, this Article 2177 does seem to literally refer to only acts of
negligence, the same argument of Justice Bocobo about construction that upholds
'the spirit that given life' rather than that which is literal that killeth the intent of the
lawmaker should be observed in applying the same. And considering that the
preliminary chapter on human relations of the new Civil Code definitely establishes
the separability and independence of liability in a civil action for acts criminal in
character (under Articles 29 to 32) from the civil responsibility arising from crime fixed
by Article 100 of the Penal Code, and, in a sense, the Rules of Court, under Sections
2 and 3(c), Rule 111, contemplate also the same separability, it is 'more congruent'
with the spirit of law, equity and justice, and more in harmony with modern progress',
to borrow the felicitous language in Rakes vs. Atlantic Gulf and Pacific Co., 7 Phil. to
359, to hod as We do hold, that Article 2176, where it refers to 'fault covers not only
acts 'not punishable by law' but also criminal in character, whether intentional and
voluntary or consequently, a separate civil action lies against the in a criminal act,
whether or not he is criminally prosecuted and found guilty and acquitted, provided
that the offended party is not allowed, if he is actually charged also criminally, to
recover damages on both scores, and would be entitled in such eventuality only to
the bigger award of the, two assuming the awards made in the two cases vary. In
other words the extinction of civil liability refereed to in Par. (c) of Section 13, Rule
111, refers exclusively to civil liability founded on Article 100 of the Revised Penal
Code, whereas the civil liability for the same act considered as a quasi-delict only
 and not as a crime is not extinguished even by a declaration in the criminal case that
the criminal act charged has not happened or has not been committed by the
accused. Brief stated, We hold, in reitration of Garcia, that culpa aquilina includes
voluntary and negligent acts which may be punishable by law. 3

The petitioners are not seeking to recover twice for the same negligent act. Before Criminal Case
No. 3162-P was decided, they manifested in said criminal case that they were filing a separate civil
action for damages against the owner and driver of the passenger jeepney based on quasi-
delict. The acquittal of the driver, Maximo Borilla, of the crime charged in Criminal Case No. 3162-P
is not a bar to the prosecution of Civil Case No. B-134 for damages based on quasi-delict The
source of the obligation sought to be enforced in Civil Case No. B-134 is quasi-delict, not an act or
omission punishable by law. Under Article 1157 of the Civil Code of the Philippines, quasi-delict and
an act or omission punishable by law are two different sources of obligation.

Moreover, for the petitioners to prevail in the action for damages, Civil Case No. B-134, they have
only to establish their cause of action by preponderance of the evidence.

WHEREFORE, the order of dismissal appealed from is hereby set aside and Civil Case No. B-134 is
reinstated and remanded to the lower court for further proceedings, with costs against the private
respondents.

G.R. No. 140847 September 23, 2005

HOSPICIO DE SAN JOSE DE BARILI, CEBU CITY, Petitioners,

vs.
DEPARTMENT OF AGRARIAN REFORM, Respondent.

DECISION

Tinga, J.:

At the core of this case is an obscure old special law. The issue is whether a provision in the law
prohibiting the sale of the properties donated to the charitable organization that was incorporated by
the same law bars the implementation of agrarian reform laws as regards said properties.

Petitioner Hospicio de San Jose de Barili ("Hospicio") is a charitable organization created as a body
corporate in 1925 by Act No. 3239. The law was enacted in order to formally accept the offer made
by Pedro Cui and Benigna Cui to establish a home for the care and support, free of charge, of
indigent invalids and incapacitated and helpless persons.1 The Hospicio was to be maintained with
the revenues of the personal and real properties to be endowed by the Cuis and other donors. 2

Section 4 of Act No. 3239 provides that "[t]he personal and real property donated to the [Hospicio] by
its founders or by other persons shall not be sold under any consideration." 3

On 10 October 1987, the Department of Agrarian Reform Regional Office (DARRO) Region VII
issued an order ordaining that two parcels of land owned by the Hospicio be placed under Operation
Land Transfer in favor of twenty-two (22) tillers thereof as beneficiaries. Presidential Decree (P.D.)
No. 27, a land reform law, was cited as legal basis for the order. The Hospicio filed a motion for the
reconsideration of the order with the Department of Agrarian Reform (DAR) Secretary, citing the
aforementioned Section 4 of Act No. 3239. It argued that Act No. 3239 is a special law, which could
not have been repealed by P.D. No. 27, a general law, or by the latters general repealing clause.

The DAR Secretary rejected the motion for reconsideration in an Order dated 30 March 1997.
Therein, the DAR Secretary held that P.D. No. 27 was a special law, as it applied only to particular
individuals in the State, specifically the tenants of rice and corn lands. Moreover, P.D. No. 27, which
covered all rice and corn lands, provides no exemptions based on the manner of acquisition of the
land by the landowner.4

The Order of the DAR Secretary was assailed in a Petition for Certiorari filed with the Court of
Appeals. In a Decision5 dated 9 July 1999, the Court of Appeals Special Eleventh Division affirmed
the DAR Secretarys issuance. It sustained the position of the Office of the Solicitor General (OSG)
position that Section 4 of Act No. 3239 was expressly repealed not only by P.D. No. 27, but also by
Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988, both
laws being explicit in mandating the distribution of agricultural lands to qualified beneficiaries. The
Court of Appeals further noted that the subject lands did not fall among the exemptions provided
under Section 10 of Rep. Act No. 6657. Finally, the appellate court brought into play the aims of land
reform, affirming as it did "the need to distribute and create an economic equilibrium among the
inhabitants of this land, most especially those with less privilege in life, our peasant farmer." 6

Unsatisfied with the Court of Appeals Decision, the Hospicio lodged the present Petition for Review.
The Hospicio alleges that P.D. No. 27, the CARL, and Executive Order No. 407 7 all violate Section
10, Article III of the Constitution, which provides that "no law impairing the obligation of contracts
shall be passed." More sedately, the Hospicio also argues that Act No. 3239 was not repealed either
by P.D. No. 27 or Rep. Act No. 6657 and that the forced disposition of the Hospicios landholdings
would incapacitate the discharge of its charitable functions, which equally promote social justice and
the upliftment of the lives of the less fortunate.

On the other hand, the OSG, representing respondent DAR, bluntly replies that Act No. 3239 was
repealed by P.D. No. 27 and Rep. Act No. 6657, which do not exempt lands owned by eleemosynary
or charitable institutions from the coverage of those agrarian reform laws.

A brief recapitulation of the relevant laws is in order.

P.D. No. 27, "Decreeing the Emancipation of Tenants from the Bondage of the Soil, Transferring to
Them Ownership of the Land they Till, and Providing the Instrument and Mechanism Therefor," has
once been touted as perhaps "a radical solution in its pristine sense, one that goes at the root [of the
problem of land tenancy]."8 Its constitutionality was upheld in De Chavez v. Zobel.9 The law generally
"ordains the emancipation of tenants and confers on them ownership of the lands they till." 10 The
following provisions of P.D. No. 27 have concretized this policy:

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the

powers vested in me by the Constitution as Commander-in-Chief of all the Armed Forces of the
Philippines, and pursuant to Proclamation No. 1081, dated September 21, 1972, and General Order
No. 1 dated September 22, 1972, as amended do hereby decree and order the emancipation of all
tenant farmers as of this day, October 21, 1972;

This shall apply to tenant farmers of private agricultural lands[11] primarily devoted to rice and corn
under a system of sharecrop or lease-tenancy, whether classified as landed estate or not;
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;

In all cases, the landowner may retain an area of not more than seven (7) hectares if such
landowner is cultivating such area or will now cultivate it;

The CARL was not yet in effect when the DARRO and the DAR issued their respective orders. Said
law vests P.D. No. 27 with suppletory effect insofar as the earlier law does not run inconsistent with
the later law.12 Under Section 4 of the CARL, placed under coverage are all public and private
agricultural lands regardless of tenurial arrangement and commodity produced, subject to the
exempted lands listed in Section 10 thereof.

We agree with the Court of Appeals that neither P.D. No. 27 nor the CARL exempts the lands of the
Hospicio or other charitable institutions from the coverage of agrarian reform. Ultimately, the result
arrived at in the assailed issuances should be affirmed. Nonetheless, both the DAR Secretary and
the appellate court failed to appreciate what to this Court is indeed the decisive legal dimension of
the case.

Section 4 of Act No. 3239 prohibits the sale "under any consideration" of the lands donated to the
Hospicio. But the land transfers mandated under P.D. No. 27 cannot be considered a conventional
sale under our civil laws.

Generally, sale arises out of a contractual obligation. Thus, it must meet the first essential requisite
of every contract that is the presence of consent.13 Consent implies an act of volition in entering into
the agreement.14The absence or vitiation of consent renders the sale either void or voidable.

In this case, the deprivation of the Hospicios property did not arise as a consequence of the
Hospicios consent to the transfer. There was no meeting of minds between the Hospicio, on one
hand, and the DAR or the tenants, on the other, on the properties and the cause which are to
constitute the contract15 that is to serve ultimately as the basis for the transfer of ownership of the
subject lands.16 Instead, the obligation to transfer arises by compulsion of law, particularly P.D. No.
27.17

Agrarian reform is justified under the States inherent power of eminent domain that enables it to
forcibly acquire private lands intended for public use upon payment of just compensation to the
owner.18 It has even been characterized as beyond the traditional exercise of eminent domain, but a
revolutionary kind of expropriation. As expounded in the landmark case of Association of Small
Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, thus:

. . . . However, we do not deal here with the traditional exercise of the power of eminent
domain. This is not an ordinary expropriation where only a specific property of relatively
limited area is sought to be taken by the State from its owner for a specific and perhaps local
purpose. What we deal with here is a revolutionary kind of expropriation.

The expropriation before us affects all private agricultural lands whenever found and of
whatever kind as long as they are in excess of the maximum retention limits allowed their
owners. This kind of expropriation is intended for the benefit not only of a particular community or of
a small segment of the population but of the entire Filipino nation, from all levels of our society, from
the impoverished farmer to the land-glutted owner. Its purpose does not cover only the whole
territory of this country but goes beyond in time to the foreseeable future, which it hopes to secure
and edify with the vision and the sacrifice of the present generation of Filipinos. Generations yet to
come are as involved in this program as we are today, although hopefully only as beneficiaries of a
richer and more fulfilling life we will guarantee to them tomorrow through our thoughtfulness today.
And, finally, let it not be forgotten that it is no less than the Constitution itself that has ordained this
revolution in the farms, calling for "a just distribution" among the farmers of lands that have
heretofore been the prison of their dreams but can now become the key at least to their
deliverance.19

This characterization is warranted whether the expropriation is operative under the CARL or P.D. No.
27, as both laws are keyed into the same governmental objective. Moreover, under both laws, the
landowner is entitled to just compensation for the properties taken.

The twin process of expropriation of lands under agrarian reform and the payment of just
compensation is akin to a forced sale, which has been aptly described in common law jurisdictions
as "sale made under the process of the court, and in the mode prescribed by law," and "which is not
the voluntary act of the owner, such as to satisfy a debt, whether of a mortgage, judgment, tax lien,
etc."20 The term has not been precisely defined in this jurisdiction, but reference to the phrase itself is
made in Articles 223, 232, 237 and 243 of the Civil Code, which uniformly exempt the family home
"from execution, forced sale, or attachment."21 Yet a forced sale is clearly different from the sales
described under Book V of the Civil Code which are conventional sales, as it does not arise from the
consensual agreement of the vendor and vendee, but by compulsion of law. Still, since law is
recognized as one of the sources of obligation, there can be no dispute on the efficacy of a forced
sale, so long as it is authorized by law.

The crucial question now arises, whether the sale prohibited under Section 4 of Act No. 3239
includes even a forced sale. Of course an overly literal reading of the provision would justify such
inclusion, but appropriately a more sophisticated approach to statutory construction is warranted.

No sance is required to discern the intent of Section 4. It ensures that the properties received by
the Hospicio are not alienated for profit by the officers or administrators, in contravention of the
charitable purpose for which the Hospicio was created. To an extent, it makes possible the perpetual
operation of the Hospicio, which was empowered by law to operate for an indefinite period, by
assuring the existence of the property on which the Hospicio could operate. We also do not doubt
that whatever fruits of the forcibly retained property would also serve a source of funding for the
operations of the Hospicio.

The salutariness of these objectives is beyond doubt. The interests they seek to protect are present
whether the prohibition encompasses only conventional sales, or even forced sales. Yet to insist that
Section 4 likewise prohibits sales or dispositions by operation of law would necessarily imply that the
Hospicio is also beyond the reach of any form of judicial execution. The charitable nature of the
Hospicio does not shield it from susceptibility to civil liability, and an absolute prohibition on sales,
whether forced or conventional, deprives whatever judgment creditors of the Hospicio from any
effective means of enforcing relief.

Was it the intent of the framers of Act No. 3239 to exempt the Hospicio from all judicial processes,
even those arising from civil transactions? We do not think so. The contemporaneous construction of
Section 4 indicates that the prohibition intended by the crafters of the law pertained only to
conventional sales, and not forced sales. The law was promulgated in 1925, or when the Spanish
Civil Code of 1889 was in effect. The provisions in the Civil Code referring to "forced sales" were not
derived from the Spanish Civil Code. On the other hand, the consensual nature of the contract of
sale, and of

contracts in general, is recognized under the Spanish Civil Code. Under Article 1261 of the Spanish
Civil Code, there is no contract unless the consent of the contracting parties exists. 22

Evidently, the word "sale," as contemplated by the framers of the law in 1925, pertains to its concept
in civil law, with the requisite of consent being present. It cannot refer to sales or dispositions that
arise by operation of law, such as through judicial execution, or, as in this case, expropriation.

Thus, we can hardly characterize the acquisition of the subject properties from the Hospicio for the
benefit of the tenants as a sale, within the contemplation of Section 4 of Act No. 3239. The transfer
arises from compulsion of law, and not the desire of any parties. Even if the Hospicio had voluntarily
offered to surrender its properties to agrarian reform, the resulting transaction would not be
considered as a conventional sale, since the obligation is created not out of the mandate of the
parties, but the will of the law.

The DARRO Order did note that Section 4 of Act No. 3239 is not applicable in this case, since the
transfer is compulsory on the part of the landowner, unlike in
ordinary sale.23 Regrettably, the DAR Secretary and the Court of Appeals failed to apply that sound
principle, preferring to rely instead on the conclusion that Section 4 was repealed by P.D. No. 27 and
the CARL.

Nonetheless, even assuming for the nonce that Section 4 contemplates even forced sales such as
those through expropriation, we would agree with the DAR Secretary and the Court of Appeals that
Section 4 is deemed repealed by P.D. No. 27 and the CARL.

The scope of lands subjected to agrarian reform under these two laws is overwhelming. P.D. No. 27
applies to all private agricultural lands primarily devoted to rice and corn with tenant farmers under a
system of sharecrop or lease-tenancy,24 while the CARL is even broader in scope, generally covering
all public and private agricultural lands regardless of tenurial arrangement and commodity produced.
Under Section 10 of the CARL, the only exempted lands are:

Lands actually, directly and exclusively used and found to be necessary for parks, wildlife, forest
reserves, reforestation, fish sanctuaries and breeding grounds, watersheds, and mangroves,
national defense, school sites and campuses including experimental farm stations operated by
public or private schools for educational purposes, seeds and seedlings research and pilot
production centers, church sites and convents appurtenant thereto, mosque sites and Islamic
centers appurtenant thereto, communal burial grounds and cemeteries, penal colonies and penal
farms actually worked by the inmates, government and private research and quarantine centers and
all lands with eighteen percent (18%) slope and over, except those already developed . . . .

Arguing against "too literal an interpretation" of Section 10, the Hospicio claims that "a serious
reading" of the provision is revelatory of the spirit and intent of the exemptions. It argues that there
are three categories of exemption as: "(1) those needed by the nation, such as parks, wildlife and
forest reserves, fishponds and for national defense, etc.; (2) those for educational purposes such as
school sites; and (3) for religious and charitable purposes like church sites, etc." 25 The Hospicio then
claims it falls under the third category of "religious and charitable purposes." 26

To begin with, the terms "charitable purposes" and "charitable organizations" do not appear in
Section 10 of the CARL. For its part, Hospicio unduly assumes that charity is integrally wedded to
religiosity, despite the fact that there are charitable institutions that are avowedly secular in
orientation. We disagree that there is a clear intent or spirit to include properties held by charitable
institutions, even those directly utilized for charitable purposes, in the list of exempted properties
under the CARL. Section 10 does not include properties which are generally used for charitable
purposes, such as orphanages, from the exemption. Not even all properties owned by religious
institutions are exempt, save for those places of worship and the convents/Islamic centers
appurtenant thereto. Even assuming that the Hospicio were actually owned and operated by the
Catholic Church, it still would not be exempted from the CARL.

It is axiomatic that where a general rule is established by a statute with exceptions, the Court will not
curtail nor add to the latter by implication, and it is a rule that an express exception excludes all
others.27 We cannot simply impute into a statute an exception which the Congress did not
incorporate. Moreover, general welfare legislation such as land reform laws is to be construed in
favor of the promotion of social justice to ensure the well-being and economic security of the
people.28 Since a broad construction of the provision listing the properties exempted under the CARL
would tend to denigrate the aims of agrarian reform, a strict application of these exceptions is in
order.

The crafters of P.D. No. 27 and the CARL were presumably aware of the radical scale of the
intended legislation, and the massive effects on property relations nationwide. Considering the
magnitude of the changes ordained in these laws, it would be foolhardy to require or expect the
legislature to denominate each and every law that would be consequently or logically amended or
repealed by the new laws. Hence, the viability of general repealing clauses, which are existent in
both P.D. No. 2729 and the CARL,30 as a means of repealing all previous enactments inconsistent with
revolutionary new laws. The presence of such general repealing clause in a later statute clearly
indicates the legislative intent to repeal all prior inconsistent laws on the subject matter, whether the
prior law is a general law or a special law, or as in this case, a special private law. Without such
clause, a later general law will ordinarily not repeal a prior special law on the same subject. But with
such clause contained in the subsequent general law, the prior special law will be deemed repealed,
as the clause is a clear legislative intent to bring about that result.31

Should we construe Section 4 of Act No. 3239 as barring forced sales through expropriation of the
properties of the Hospicio, such prohibition would irreconcilably countermand both P.D. No. 27 and
the CARL and their mandate to subject the properties to agrarian reform. The general repealing
clauses of the two later laws would then sufficiently repeal Section 4 of Act No. 3239, to the extent
that it may prohibit expropriation of agricultural lands for agrarian reform.

Still, in light of our earlier determinative pronouncement that Section 4 of Act No. 3239 does not
contemplate forced sales as part of the prohibition therein, there ultimately is no need to make an
abject declaration that Section 4 has indeed been repealed. Indeed, the Court considers the
prohibition on Section 4 as still effectual, but only insofar as it relates to conventional sales under the
Civil Code.
The other arguments raised by the Hospicio are similarly bereft of merit. It wants us to hold that P.D.
No. 27 and the CARL, both enacted to implement the urgently needed policy of agrarian reform,
violate the non-impairment of contracts clause under the Bill of Rights. Yet the broad sweep of this
argument ignores the nuances adopted by this Court in interpreting Section 10 of Article III. We have
held that the States exercise of police powers may prevail over obligations imposed by private
contracts.32 Especially in point is Kabiling v. NHA,33 wherein a law authorizing the expropriation of
properties in favor of qualified squatter families was challenged on the basis of the non-impairment
clause. The Court held:

The stated objective of the decree, namely, to resolve the land tenure problem in the Agno-Leveriza
area to allow the implementation of the comprehensive development plans for this depressed
community, provides the justification for the exercise of the police power of the State. The police
power of the State has been described as "the most essential, insistent and illimitable of powers." It
is a power inherent in the State, plenary, "suitably vague and far from precisely defined, rooted in the
conception that man in organizing the state and imposing upon the government limitations to
safeguard constitutional rights did not intend thereby to enable individual citizens or group of citizens
to obstruct unreasonably the enactment of such salutary measure to ensure communal peace,
safety, good order and welfare.

The objection raised by petitioners that P.D. No. 1808 impairs the obligations of contract is without
merit. The constitutional guaranty of non-impairment of obligations of contract is limited by and
subject to the exercise of the police power of the State in the interest of public health, safety, morals
and general welfare.34

More pertinently, what the Hospicio alleges would be impaired is not actually a contract, but a
legislative act, Act No. 3239. The Hospicio admits just as much in its petition, "[Act No. 3239] is not
merely an ordinary contract but a contract enacted into law . . . Act No. 3239 is thus a contract within
the purview of the impairment clause of the Constitution."35

The inanity of this argument is palpable. The non-impairment clause reads: "No law impairing the
obligation of contracts shall be passed." If, as the Hospicio argues, the constitutional provision
applies as well to the impairment of obligations created by law, then Section 10, Article III operates to
bar the legislature from amending or repealing its own enactments. This is of course not the case, as
the provision was intended to shield the impairment of obligations created by private agreements,
and not by legislative fiat. Certainly, Congress can at any time expressly amend or repeal any and all
sections of Act No. 3239 without fear of violating the non-impairment clause of the Constitution. In
fine, Section 1036 of Act 3239 provides that the privileges granted by the Act to the Hospicio are
subject to the conditions on the grant of franchises as provided in the Jones Law. Section 28 of the
Jones Law in turn provides in part, thus:

No franchise or right shall be granted to any individual, firm, or corporation except under the
conditions that it shall be subject to amendment, alteration, or repeal by the Congress of the
United States, and that lands or right of use and occupation of lands thus granted shall revert to the
government by which they were respectively granted upon the termination of the franchises and
rights under which they were granted or upon their revocation or repeal. (Emphasis supplied.)

Finally, the Hospicio alludes to its functions as a charitable institution, which equally promote social
justice and the upliftment of lives of the less fortunate. It notes that these purposes are no less noble
than giving land to the landless, whom they, with perhaps a touch of contempt, suggest are "perfectly
healthy to care for themselves."37

The rationale for holding that the properties of the Hospicio are covered by P.D. No. 27 and Rep. Act
No. 6657 is so well-grounded in law that it obviates any resort to the sordid game of choosing which
of the two competing aspirations is nobler. The body which would have unquestionable discretion in
assigning hierarchical values on the modalities by which social justice may be implemented is the
legislature. Land reform affords the opportunity for the landless to break away from the vicious cycle
of having to perpetually rely on the kindness of others. By refusing to exempt properties owned by
charitable institutions or maintained for charitable purposes from agrarian reform, the legislature has
indicated a policy choice which the Court is bound to implement.

WHEREFORE, the Petition is DENIED. No pronouncement as to costs.

SO ORDERED.

G.R. No. L-30511 February 14, 1980

MANUEL M. SERRANO, petitioner,

vs.
CENTRAL BANK OF THE PHILIPPINES; OVERSEAS BANK OF MANILA; EMERITO M. RAMOS,
SUSANA B. RAMOS, EMERITO B. RAMOS, JR., JOSEFA RAMOS DELA RAMA, HORACIO
DELA RAMA, ANTONIO B. RAMOS, FILOMENA RAMOS LEDESMA, RODOLFO LEDESMA,
VICTORIA RAMOS TANJUATCO, and TEOFILO TANJUATCO, respondents.

Rene Diokno for petitioner.

F.E. Evangelista & Glecerio T. Orsolino for respondent Central Bank of the Philippines.

Feliciano C. Tumale, Pacifico T. Torres and Antonio B. Periquet for respondent Overseas Bank of
Manila.

Josefina G. Salonga for all other respondents.

CONCEPCION, JR., J.:

Petition for mandamus and prohibition, with preliminary injunction, that seeks the establishment of
joint and solidary liability to the amount of Three Hundred Fifty Thousand Pesos, with interest,
against respondent Central Bank of the Philippines and Overseas Bank of Manila and its
stockholders, on the alleged failure of the Overseas Bank of Manila to return the time deposits made
by petitioner and assigned to him, on the ground that respondent Central Bank failed in its duty to
exercise strict supervision over respondent Overseas Bank of Manila to protect depositors and the
general public. 1 Petitioner also prays that both respondent banks be ordered to execute the proper and
necessary documents to constitute all properties fisted in Annex "7" of the Answer of respondent Central
Bank of the Philippines in G.R. No. L-29352, entitled "Emerita M. Ramos, et al vs. Central Bank of the
Philippines," into a trust fund in favor of petitioner and all other depositors of respondent Overseas Bank
of Manila. It is also prayed that the respondents be prohibited permanently from honoring, implementing,
or doing any act predicated upon the validity or efficacy of the deeds of mortgage, assignment. and/or
conveyance or transfer of whatever nature of the properties listed in Annex "7" of the Answer of
respondent Central Bank in G.R. No. 29352. 2

A sought for ex-parte preliminary injunction against both respondent banks was not given by this
Court.

Undisputed pertinent facts are:

On October 13, 1966 and December 12, 1966, petitioner made a time deposit, for one year with 6%
interest, of One Hundred Fifty Thousand Pesos (P150,000.00) with the respondent Overseas Bank
of Manila. 3 Concepcion Maneja also made a time deposit, for one year with 6-% interest, on March 6,
1967, of Two Hundred Thousand Pesos (P200,000.00) with the same respondent Overseas Bank of
Manila. 4

On August 31, 1968, Concepcion Maneja, married to Felixberto M. Serrano, assigned and conveyed
to petitioner Manuel M. Serrano, her time deposit of P200,000.00 with respondent Overseas Bank of
Manila. 5

Notwithstanding series of demands for encashment of the aforementioned time deposits from the
respondent Overseas Bank of Manila, dating from December 6, 1967 up to March 4, 1968, not a
single one of the time deposit certificates was honored by respondent Overseas Bank of Manila. 6

Respondent Central Bank admits that it is charged with the duty of administering the banking system
of the Republic and it exercises supervision over all doing business in the Philippines, but denies the
petitioner's allegation that the Central Bank has the duty to exercise a most rigid and stringent
supervision of banks, implying that respondent Central Bank has to watch every move or activity of
all banks, including respondent Overseas Bank of Manila. Respondent Central Bank claims that as
of March 12, 1965, the Overseas Bank of Manila, while operating, was only on a limited degree of
banking operations since the Monetary Board decided in its Resolution No. 322, dated March 12,
1965, to prohibit the Overseas Bank of Manila from making new loans and investments in view of its
chronic reserve deficiencies against its deposit liabilities. This limited operation of respondent
Overseas Bank of Manila continued up to 1968. 7

Respondent Central Bank also denied that it is guarantor of the permanent solvency of any banking
institution as claimed by petitioner. It claims that neither the law nor sound banking supervision
requires respondent Central Bank to advertise or represent to the public any remedial measures it
may impose upon chronic delinquent banks as such action may inevitably result to panic or bank
"runs". In the years 1966-1967, there were no findings to declare the respondent Overseas Bank of
Manila as insolvent. 8

Respondent Central Bank likewise denied that a constructive trust was created in favor of petitioner
and his predecessor in interest Concepcion Maneja when their time deposits were made in 1966 and
1967 with the respondent Overseas Bank of Manila as during that time the latter was not an
insolvent bank and its operation as a banking institution was being salvaged by the respondent
Central Bank. 9

Respondent Central Bank avers no knowledge of petitioner's claim that the properties given by
respondent Overseas Bank of Manila as additional collaterals to respondent Central Bank of the
Philippines for the former's overdrafts and emergency loans were acquired through the use of
depositors' money, including that of the petitioner and Concepcion Maneja. 10

In G.R. No. L-29362, entitled "Emerita M. Ramos, et al. vs. Central Bank of the Philippines," a case
was filed by the petitioner Ramos, wherein respondent Overseas Bank of Manila sought to prevent
respondent Central Bank from closing, declaring the former insolvent, and liquidating its assets.
Petitioner Manuel Serrano in this case, filed on September 6, 1968, a motion to intervene in G.R.
No. L-29352, on the ground that Serrano had a real and legal interest as depositor of the Overseas
Bank of Manila in the matter in litigation in that case. Respondent Central Bank in G.R. No. L-29352
opposed petitioner Manuel Serrano's motion to intervene in that case, on the ground that his claim
as depositor of the Overseas Bank of Manila should properly be ventilated in the Court of First
Instance, and if this Court were to allow Serrano to intervene as depositor in G.R. No. L-29352,
thousands of other depositors would follow and thus cause an avalanche of cases in this Court. In
the resolution dated October 4, 1968, this Court denied Serrano's, motion to intervene. The contents
of said motion to intervene are substantially the same as those of the present petition. 11

This Court rendered decision in G.R. No. L-29352 on October 4, 1971, which became final and
executory on March 3, 1972, favorable to the respondent Overseas Bank of Manila, with the
dispositive portion to wit:

WHEREFORE, the writs prayed for in the petition are hereby granted and
respondent Central Bank's resolution Nos. 1263, 1290 and 1333 (that prohibit the
Overseas Bank of Manila to participate in clearing, direct the suspension of its
operation, and ordering the liquidation of said bank) are hereby annulled and set
aside; and said respondent Central Bank of the Philippines is directed to comply with
its obligations under the Voting Trust Agreement, and to desist from taking action in
violation therefor. Costs against respondent Central Bank of the Philippines. 12

Because of the above decision, petitioner in this case filed a motion for judgment in this case,
praying for a decision on the merits, adjudging respondent Central Bank jointly and severally liable
with respondent Overseas Bank of Manila to the petitioner for the P350,000 time deposit made with
the latter bank, with all interests due therein; and declaring all assets assigned or mortgaged by the
respondents Overseas Bank of Manila and the Ramos groups in favor of the Central Bank as trust
funds for the benefit of petitioner and other depositors. 13

By the very nature of the claims and causes of action against respondents, they in reality are
recovery of time deposits plus interest from respondent Overseas Bank of Manila, and recovery of
damages against respondent Central Bank for its alleged failure to strictly supervise the acts of the
other respondent Bank and protect the interests of its depositors by virtue of the constructive trust
created when respondent Central Bank required the other respondent to increase its collaterals for
its overdrafts said emergency loans, said collaterals allegedly acquired through the use of depositors
money. These claims shoud be ventilated in the Court of First Instance of proper jurisdiction as We
already pointed out when this Court denied petitioner's motion to intervene in G.R. No. L-29352.
Claims of these nature are not proper in actions for mandamus and prohibition as there is no shown
clear abuse of discretion by the Central Bank in its exercise of supervision over the other respondent
Overseas Bank of Manila, and if there was, petitioner here is not the proper party to raise that
question, but rather the Overseas Bank of Manila, as it did in G.R. No. L-29352. Neither is there
anything to prohibit in this case, since the questioned acts of the respondent Central Bank (the acts
of dissolving and liquidating the Overseas Bank of Manila), which petitioner here intends to use as
his basis for claims of damages against respondent Central Bank, had been accomplished a long
time ago.

Furthermore, both parties overlooked one fundamental principle in the nature of bank deposits when
the petitioner claimed that there should be created a constructive trust in his favor when the
respondent Overseas Bank of Manila increased its collaterals in favor of respondent Central Bank
for the former's overdrafts and emergency loans, since these collaterals were acquired by the use of
depositors' money.

Bank deposits are in the nature of irregular deposits. They are really loans because they earn
interest. All kinds of bank deposits, whether fixed, savings, or current are to be treated as loans and
are to be covered by the law on loans. 14 Current and savings deposit are loans to a bank because it
can use the same. The petitioner here in making time deposits that earn interests with respondent
Overseas Bank of Manila was in reality a creditor of the respondent Bank and not a depositor. The
respondent Bank was in turn a debtor of petitioner. Failure of he respondent Bank to honor the time
deposit is failure to pay s obligation as a debtor and not a breach of trust arising from depositary's failure
to return the subject matter of the deposit

WHEREFORE, the petition is dismissed for lack of merit, with costs against petitioner.

SO ORDERED.