Apparently, the property remained undivided as
evidenced by Tax Declaration No. 02679[4] issued to
[G.R. No. 140417. May 28, 2004]
AZNAR BROTHERS REALTY COMPANY,
petitioner, vs. HEIRS OF ANICETO
AUGUSTO & PETRONA CALIPAN,
namely: TEODORICA ANDALES
GERONIMO AUGUSTO (deceased)
represented by: NICOMEDES AUGUSTO
JOVENCIO AUGUSTO TELESPORO
AUGUSTO LOLITA IGOT ROSARIO
NEMBRILLO ALFREDO AUGUSTO
URBANO AUGUSTO FELIPE AUGUSTO
TOMAS AUGUSTO ZACARIAS
AUGUSTO (deceased) represented by:
FELIPE AUGUSTO EUGENIO
AUGUSTO MANALO AUGUSTO FELIS
AUGUSTO CERAPINO AUGUSTO
CLARITA AYING MAURA AUGUSTO
CONCHITA AUGUSTO ARSENIA
OMPAD (deceased) represented by:
SARAH AMIT ANDRES OMPAD
ALBERTO OMPAD LILY DAGATAN all
represented by ALFREDO AUGUSTO,
respondents.
DECISION
CORONA, J.:
This is a petition to review the decision [1] of the
Court of Appeals in CA-GR CV No. 51279 reversing
the decision[2] of Branch 27 of the Regional Trial
Court (RTC) of Lapu-Lapu City. The CA ruled that
the claim of herein respondent Heirs of Aniceto
Augusto (Heirs) had not yet prescribed. The
dispositive portion[3] read:
WHEREFORE, the appealed Order is hereby
REVERSED and SET ASIDE. The complaint is
reinstated to the docket of Branch 27 of the Regional
Trial Court of Lapu-Lapu City to which the records
of the case is (sic) ORDERED REMANDED for
appropriate action in line with the disposition of this
case.
SO ORDERED.
The facts of the case follow.
The subject matter of this controversy is Lot No.
4397, Opon Cadastre, covered by Decree No. 531070
and situated in Dapdap, Mactan, Lapu-Lapu City,
Cebu. It was owned by Aniceto Augusto who was
married to Petrona Calipan. When Aniceto died on
December 3, 1934, he left behind five children:
Geronimo, Zacarias, Teoderica, Arsenia and Irenea.
Petrona Calipan in 1945.
Sometime in 1962, Tax Declaration No. 02679 in
the name of Calipan was cancelled pursuant to an
“Extrajudicial Partition”[5] executed before Notary
Public Vicente Fanilag. In lieu thereof, tax
declaration certificates covering Lot No. 4397 were
issued to the following: Filomeno Augusto, Ciriaco
Icoy, Felipe Aying, Zacarias Augusto, Abdon
Augusto, Teoderica Augusto, Pedro Tampus and
Anacleto Augusto.
On February 13, 1962, these persons sold the
property to petitioner Aznar Brothers Realty
Company (Aznar Realty) through a Deed of Sale of
Unregistered Land which was registered on the same
date with the Register of Deeds of Lapu-Lapu City.
On September 6, 1962, Carlos Augusto, claiming
to be an heir of “his father Aniceto” (when in fact he
was the son of Zacarias and as such was in reality a
grandson of Aniceto), filed a Petition for the
Reconstitution of Title. He alleged that the original
copy and duplicate owner’s copy of the title of the
property sold to respondent Aznar were lost during
the war.
On February 28, 1963, an “Affidavit of
Declaration of Heirs of Aniceto Augusto” was
executed wherein Zacarias, Teoderica, Arsenia and
Irenea (Geronimo having died in December 1961)
declared that, at the time of their father’s death, he
had five legitimate children and that he left behind 15
parcels of land covered by various tax declarations.
The affidavit was signed by Zacarias and
thumbmarked by Teoderica, Arsenia and Irenea, with
Carlos Augusto and Filomeno Augusto as witnesses.
On April 15, 1963, TCT No. 0070 covering the
property was issued to petitioner Aznar Realty, which
then secured Tax Declaration No. 01937.
On July 28, 1992, respondent Heirs filed Civil
Case No. 2666-L against petitioner Aznar Realty, and
Carlos and Filomeno Augusto in the RTC of Lapu-
Lapu City, Branch 27, for (1) recovery of Lot No.
4397; (2) the declaration of the Deed of Sale dated
February 13, 1962 as null and void; (3) the
recognition of the Heirs; (4) the cancellation of the
TCT issued to petitioner Aznar Realty and (5) the
issuance of a restraining order and/or writ of
preliminary injunction.
Only petitioner Aznar Realty filed an answer
interposing the defense of lack of cause of action and
prescription. It asked for a preliminary hearing on the
affirmative defenses as if a motion to dismiss had
been filed. This was granted by the trial court.
 After the hearing on the affirmative defenses, the
trial court ruled that the claim of respondent Heirs
was already barred by prescription:
On the basis of the foregoing facts and circumstances
established by evidence, this Court believes that the
action of the plaintiffs is undisputably barred by
prescription. Principally, plaintiffs’ action is for
recovery of a parcel of land. This type of action
prescribes after ten (10) years from the date of
registration or from discovery of the fraud. As held
in the case of Cañete vs. Benedicto, 158 SCRA 575,
“an action for recovery of title or possession of real
property or an interest therein can only be brought
within 10 years after the cause of action accrues
which is deemed to have taken place from the
registration of the document with the Register of
Deeds for registration constitutes a constructive
notice to the whole world” (Gerona vs. de Guzman,
11 SCRA 153). In the case of Gicano vs. Gegato,
157 SCRA 140, the Supreme Court ruled that “action
to recover property which was filed only 23 years
from the issuance of the title to the property on the
supposedly fraudulent sale, has been extinguished by
prescription.” Moreover, in Casipit vs. Court of
Appeals, 204 SCRA 648, the Supreme Court held that
“the prescriptive period for the reconveyance of
fraudulently registered real property is ten (10) years
reckoned from the date of issuance of the certificate
of title.”
The Deed of Sale of Unregistered Land dated
February 13, 1962 was registered on the same date at
the Register of Deeds of Lapu-Lapu City as
appearing at the back page thereof. Since that time
up to the filing of this case on July 28, 1992, thirty
(30) years had elapsed. And since the issuance of
Transfer Certificate of Title No. 0070 in the name of
Aznar Brothers Realty Co. on April 15, 1963 up to
the institution of this action, twenty-nine (29) years
had elapsed. The Court therefore believes there is no
more way by which plaintiffs’ action can rise from its
extinct state.
xxx xxx xxx
WHEREFORE, finding merit in defendants’
affirmative defense of prescription, this case is, as it
is hereby ordered DISMISSED. [6]
Respondents appealed the dismissal order to the
Court of Appeals which overturned the decision and
remanded the case to the court a quo. Citing the case
of Castillo vs. Heirs of Madrigal, [7] the Court of
Appeals found that the claim had not yet prescribed
since the action of respondents was for the
declaration of nullity of the Deed of Sale on the
ground of absence of consent. Such action was
imprescriptible. As held by the appellate court:
In Castillo v. Heirs of Madrigal [198 SCRA 556], the
Supreme Court held that an action for the declaration
of the inexistence of a deed of sale is imprescriptible
because of the absence of the vendors’ consent
following Article 1410 of the Civil Code which
provides:
The action or defense for the declaration of the
inexistence of a contract does not prescribe.
as was an action for reconveyance based on a void
document where the property has not yet passed to an
innocent purchaser for value, it citing Armamento v.
Guerrero, 96 SCRA 178; Baranda, et al. v. Baranda,
et al., 150 SCRA 59, 1987. In sustaining the
dismissal of the complaint in the case, the High Court
declared that although the action for annulment of the
document and the transfer of title was
imprescriptible, the complaint was dismissable for
failure to state a cause of action, the property having
been sold by the therein defendant vendee to its co-
defendant subsequent vendee who was not alleged in
the complaint to be a purchaser in bad faith.
The present case is for annulment of the deed of sale
and the transfer certificate of title issued as a result
thereof, and for reconveyance. The complaint alleges
that the heirs-owners of the questioned lot never sold
it to Aznar Realty which conspired with its co-
defendants in the fraudulent transfer thereof.
The court a quo thus erred in dismissing the
complaint at bar on the ground of prescription.[8]
Thus, this petition for review on the following
assignments of error:[9]
I
THE COURT OF APPEALS ERRED IN
REVERSING THE ORDER DATED OCTOBER 18,
1993 OF THE REGIONAL TRIAL COURT OF
CEBU, BRANCH 27, LAPU-LAPU CITY
II
THE COURT OF APPEALS ERRED IN HOLDING
THAT THE ACTION OF THE RESPONDENTS
(PLAINTIFFS IN CIVIL CASE NO. 2666-L) IS
IMPRESCRIPTIBLE; and
III
THE COURT OF APPEALS ERRED IN FAILING
TO CONSIDER THAT THE ACTION OF
RESPONDENTS (PLAINTIFFS IN CIVIL CASE
NO. 2666-L) IS BARRED BY PRESCRIPTION
AND LACHES.
The petition is without merit. The respondents’
claim is imprescriptible and not barred by laches.
Respondents anchored their action for
reconveyance in the trial court on the nullity of the
Deed of Sale between petitioner Aznar and the
supposed owners of the property. Respondents
impugned the validity of the document because the
sellers were not the true owners of the land and, even
if one of the real owners (Teoderica Augusto
Andales) thumbmarked the document, she was
unaware that she was selling the land. Paragraphs 5, 9
and 10 of respondents’ complaint[10] filed with the
trial court read:
5. That some on September 6, 1962, Aznar
Brothers Realty Co. through its lawyer, Atty. Ramon
Igana and Carlos Augusto, one of the defendants,
connived and confederated with one another in filing
a petition for reconstitution of title of the land of the
deceased spouses Aniceto Augusto and Petrona
Calipan (Talipan) on September 6, 1962 with the
Court of First Instance of Cebu, 4th Judicial District.
In such petition Carlos Augusto claimed that he is
one of the owners of Lot No. 4397 Opon Cadastre,
having inherited the same from his father, the
deceased Aniceto Augusto (see paragraph 2 of the
Petition for Reconstitution of Title as stated in the
verified xerox copy of the original petition, marked
as Annex “B”) when in fact and in truth he is the son
of Zacarias Augusto, the son of Aniceto Augusto, true
owner of lot no. 4397;
xxx xxx xxx
9. That Teoderica Augusto Andales, the only
survivor of the five legal and legitimate children of
deceased Aniceto Augusto and Petrona Calipan
(Talipan), and Ciriaco Icoy, whose names were used
as vendors by the above defendants, denied that they
sold to Aznar Brothers Realty Co. particularly the
land described on the Tax Declaration Nos. 19281,
19280, 1986 and 19285 as alleged in the Deed of Sale
of Unregistered Land (affidavits are hereto attached,
marked as Annexes “G” and “H”), duly notarized by
Atty. Maximo S. Ylaya with Doc. No. 395; Page No.
19; Book No. V; Series of 1962. the original copy of
which cannot be found (attached is a certification
from the records management of Archives office,
marked as Annex “I”);
10. That on February 28, 1963, an affidavit of
Declaration of Hrs. of Aniceto Augusto was allegedly
executed and witnessed by Carlos Augusto and
Felomino Augusto declaring that deceased Aniceto
Augusto at the time of his death (incidentally Aniceto
Augusto died in 1933) left properties consisting of
fifteen (15) parcels of land distributed to the different
persons who are strangers to the family of Sps.
Aniceto Augusto and Petrona Calipan (Talipan) and
therefore have no rights over the property of the
deceased Aniceto Augusto and Petrona Calipan
(Talipan) – the Tax Declarations were obviously
procured with the appearance that said parcel of lands
are distributed accordingly; that said affidavit of
Declaration of Hrs. of Aniceto Augusto was
formulated after the Deed of Sale was executed
(attached is an affidavit of Declaration of Hrs. of
Aniceto Augusto, marked as Annex “J”).
Respondents sought the declaration of nullity
(inexistence) of the Deed of Sale because of the
absence of their consent as the true and lawful
owners of the land. They argued that the sale to
petitioner Aznar was void since the purported
“owners” who signed the Deed of Sale as vendors
were not even heirs of Aniceto Augusto and Petrona
Calipan. They pointed out that the 1945 Tax
Declaration in the name of Petrona Calipan indicated
that the property was undivided as of the time
Aniceto Augusto died in 1932. The land area
appearing in said declaration was 5.7 hectares and
this fact belied the February 28, 1963 affidavit of
Zacarias et al. that, at the time of Aniceto’s death, he
left behind 15 parcels of land to persons who were
not even his compulsory heirs. The “owners” who
sold the land to petitioner Aznar Realty could not
have been the true owners of the land since there was
no showing how they acquired the land in the first
place. Thus, the trial court should not have dismissed
the complaint without looking into the validity of the
sale of land to petitioner Aznar Realty.
In Heirs of Romana Injug-Tiro vs. Casals,[11] a
case very similar to this, we said that:
A cursory reading of the complaint, however, reveals
that the action filed by petitioners was for partition,
recovery of ownership and possession, declaration of
nullity of a deed of sale of unregistered land and
extrajudicial settlement and confirmation of sale.
Petitioners’ causes of action are premised on their
claim that: (a) the Deed of Sale of Unregistered Land
is void and of no effect since their respective shares
in the inheritance were included in the sale without
their knowledge and consent, and one of the vendor-
signatories therein, Eufemio Ingjug (Eufemio Tiro,
husband of Romana Ingjug), was not even a direct
and compulsory heir of the decedent; and (b) the
Extrajudicial Settlement and Confirmation of Sale is
simulated and therefore null and void ab initio, as it
was purportedly executed in 1967 by, among others,
Eufemio Tiro who was not an heir, and by Francisco
Ingjug who died in 1963. Also the prayer in the same
complaint expressly asks that all those transactions be
declared null and void. In other words, it is the
nullity of the deeds of sale and the extrajudicial
settlement and confirmation of the sale which is the
basic hypothesis upon which the instant civil action
rests. Thus, it appears that we are dealing here not
with simple voidable contracts tainted with fraud, but
with contracts that are altogether null and void ab
initio. (emphasis ours)
Neither is respondents’ claim barred by laches. In
the same case of Injug-Tiro,[12] we ruled that:
In actions for reconveyance of property predicated on
the fact that the conveyance complained of was null
and void ab initio, a claim of prescription of action
would be unavailing. The action or defense for the
declaration of the inexistence of a contract does not
prescribe. Neither could laches be invoked in the case
at bar. Laches is a doctrine in equity and our courts
are basically courts of law and not courts of equity.
Equity, which has been aptly described as “justice
outside legality,” should be applied only in the
absence of, and never against, statutory law.
Aequetas nunguam contravenit legis. The positive
mandate of Art. 1410 of the New Civil Code
conferring imprescriptibility to actions for declaration
of the inexistence of a contract should pre-empt and
prevail over all abstract arguments based only on
equity. Certainly, laches cannot be set up to resist the
enforcement of an imprescriptible legal right, and
petitioners can validly vindicate their inheritance
despite the lapse of time.
Consequently, respondent Heirs could not have
been guilty of laches. It was only in 1991 when they
were evicted that they discovered their land had been
sold to Aznar Realty. From the testimony of
respondent Heirs, it was apparent that all matters
relating to the land had been entrusted to Carlos
Auguston by the Heirs, most of whom were
unschooled farmers who did not know how to read
and write. They never expected him to dupe them of
their inheritance. They had no reason to suspect that
he had sold the land since they remained in
possession thereof until they were ejected in 1991 by
petitioner Aznar Realty.
Respondents were evicted from their land in
November 1991 and they filed their complaint with
the trial court on July 28, 1992. Only eight months
had passed from the time they were ejected to the
time they asserted their rights over their property.
They certainly could not be deemed to have slept on
their rights.
Petitioner makes much of the fact that
respondents brought suit only after the property had
already been developed into an upscale subdivision.
Petitioner would have this Court believe that
respondents were merely “out to make an easy profit
at [its] expense.” This is the exact opposite of the
Court’s impression of respondent Heirs. On the
contrary, if the Court were to fault respondents, it
would be for being too trusting of their kin Carlos
Augusto and certainly not for being opportunistic.
Thus, the Court of Appeals did not err in setting
aside the decision of the trial court and ordering that
the case be remanded for trial. Respondents ask this
Court to rule on the merits of the case and not to send
it back to the trial court. Respondents herein are
destitute farmers who do not have the resources to
vindicate their rights to their inheritance in a long,
protracted trial. The Court commiserates with them
but it has no choice but to remand the case to the
court a quo to enable both parties to ventilate their
claims in a full-blown trial.
To facilitate the resolution of the case, however,
the trial court should take note of the facts duly
established during the hearing on the issue of
prescription, as affirmed by the Court of Appeals and
this Court.
WHEREFORE, the petition is hereby DENIED.
The decision of the Court of Appeals in CA-G.R. CV
No. 52179 is AFFIRMED.
SO ORDERED.
[G.R. No. 146890. June 8, 2004]
LILIAN CAPITLE, SOFRONIO CORREJADO,
ARTEMIO CORREJADO, VICENTE
CORREJADO, CECILIA CORREJADO,
GLORIA VDA. DE BEDUNA, ROGELIA
CORREJADO, MANUEL CORREJADO,
RODOLFO CORREJADO, TERESITA C.
AMARANTE, JUANITA CORREJADO
AND JULIETA C. PEREGRINO,
petitioners, vs. JULIETA VDA. DE
GABAN, JULIA CORREJADO AND
HERMINIGILDO CORREJADO,
respondents.
DECISION
CARPIO-MORALES, J.:
Fabian Correjado (Fabian) inherited from his
father Santos Correjado two parcels of land subject of
the case at bar, Lot No. 1782-B of the Pontevedra
Cadastre and Lot No. 952 of the Hinigaran Cadastre
containing 26,728 sq. m. and 55,591 sq. m.,
respectively.
Fabian died intestate in 1919. He was survived
by four children, namely: Julian, Zacarias, Francisco
and Manuel, all surnamed Correjado.
After Fabian’s death in 1919, his son Julian
occupied and cultivated the two subject parcels of
land (the property) until his death in 1950. He was
survived by three children, namely, herein
respondents Julieta vda. de Gaban (Julieta), Julia
Correjado (Julia) and Hermegildo Correjado.
 Julian’s brother Francisco died in 1960. He was
survived by herein petitioners Manuel Correjado,
Teresita C. Amarante, Juanita Correjado, Rodolfo
Correjado, and Jileta Peregrino.
Julian’s brother Zacarias died in 1984. He was
survived by the other petitioners herein, Aurora P.
vda. de Correjado, Lilia Capitle, Artemio Correjado,
Cecilia Correjado, Rogelia Correjado (Rogelia),
Sofronio Correjado, Vicente Correjado and Gloria
vda. de Beduna.
On November 26, 1986, petitioners filed a
complaint[1] for partition of the property and damages
before the Regional Trial Court (RTC) of La Carlota
City against respondents, alleging that Fabian
contracted two marriages, the first with Brigida
Salenda who was the mother of Julian, and the
subsequent one with Maria Catahay (Maria) who was
the mother of Zacarias, Manuel and Francisco; that
the property remained undivided even after the death
of Julian in 1950, his children-herein respondents
having arrogated unto themselves the use and
enjoyment of the property, to the exclusion of
petitioners; and that respondents refused to deliver
petitioners’ share in the property despite demands
therefor and for partition.
To the Complaint respondents countered in their
Answer[2] that in the proceedings in the intestate
estate of their great grandfather Santos Correjado,
petitioners were not adjudicated any share in the
property, for Maria, the mother of petitioners’
respective fathers Francisco and Zacarias, was just a
mistress of Fabian, hence, Francisco and Zacarias (as
well as Manuel) were illegitimate who were not
entitled to inherit under the old Civil Code (Spanish
Civil Code of 1889).
By Decision of December 29, 1992,[3] Branch 63
of the La Carlota City RTC dismissed the complaint
upon the grounds of prescription and laches.
On appeal to the Court of Appeals wherein
petitioners raised as sole error of the trial court its
dismissal of the complaint “without basis in fact and
in law,” the appellate court, by Decision of August
29, 2000,[4] dismissed the appeal and affirmed the
decision of the trial court.
In affirming the decision of the trial court,
appellant passed upon the issue of legitimacy of the
brothers Francisco and Zacarias (as well as of their
brother Manuel) in order to determine whether they
co-owned the property with Julian, illegitimate
children not being entitled to inherit under the
Spanish Civil Code of 1889[5] which was in force
when the brothers’ father Fabian died in 1919.
The appellate court found that respondents failed
to discharge the onus of proving that Francisco and
Zacarias were illegitimate. But it too found that
petitioners also failed to prove that Zacarias and
Francisco were legitimate.
Upon the disputable presumption, however, that
a man and a woman deporting themselves as husband
and wife have entered into a lawful contract of
marriage,[6] the appellate court presumed that Fabian
and Maria were lawfully married, hence, their
children Zacarias and Francisco (as well as Manuel)-
predecessors-in-interest of petitioners were legitimate
children and, therefore, they co-owned with Julian
the property.
Its finding of co-ownership of the property by
the predecessors-in-interest of the parties
notwithstanding, the appellate court held that, as did
the trial court, prescription and laches had set in,
ratiocinating as follows:
It is a hornbook doctrine that the possession of a co-
owner is like that of a trustee and shall not be
regarded as adverse to the other co-owners but in fact
as beneficial to all of them so much so that each co-
owner may demand at anytime the partition of the
common property and that this implies that an action
to demand partition is imprescriptible or cannot be
barred by laches (Salvador vs. Court of Appeals, 243
SCRA 23; De Castro vs. Echarri, 20 Phil. 23).
While the right of action to demand partition does not
prescribe, acquisitive prescription may set in where
one of the co-owners openly and adversely occupies
the property without recognizing the co-ownership
(Cordova vs. Cordova, 102 Phil. 1182; Heirs of
Segunda Manungding vs. Court of Appeals, 276
SCRA 601), The statute of limitations operates, as in
other cases, from the moment such adverse title is
asserted by the possessor of the property (Ramos vs.
Ramos, 45 Phil. 362; Bargayo vs. Camumot, 40 Phil.
857).
The elements constituting adverse possession by a
co-owner against another co-owner or cestui que
trust are: (1) that he has performed unequivocal acts
of repudiation amounting to an ouster of the cestui
que trust or other co-owners; (ii) that such positive
acts of repudiation have been made known to the
cestui que trust or the other co-owners; and (iii) that
the evidence thereon must be clear and convincing
(Salvador vs. Court of Appeals, supra).
Granting that appellants, as well as their
predecessors-in-interest, were initially co-owners of
the disputed property, nevertheless, acquisitive
prescription in favor of appellees had already set in.
Appellees had performed unequivocal acts of
repudiation. This is shown by the unrebutted
testimony of [herein respondent] Julia who declared
that her brother Atilano (deceased) introduced
improvements on the disputed property and the fact
that appellees and their father Julian paid the realty
taxes thereon as exclusive owners thereof. Moreover,
applicants admitted in paragraph 12 of the Complaint
that after Julian’sdeath (in 1950), appellees arrogated
unto themselves the use and enjoyment of the
disputed property, to the exclusion of appellants.
This admission is bolstered by [herein petitioner]
Rogelia’s testimony, as follows:
Q By the way you said that you are going
to recover this 1/6 share from Julieta
vda. de Gaban. Why, is she in
possession of this land?
A Yes, sir.
Q She is presently in possession of the
said lot?
A Yes, sir.
Q Can you tell us since when did she
possess that land?
A 1980.
Q Previous to that, can you tell us if she
was in possession of the said land?
A Yes, sir. She has been in possession of
the said lot before 1980.
Q Was there a period of years that you
have been in possession of the said
land?
[A No, sir. We have never been in
possession of the said land.]
xxx
Q Were you able to gather benefits from
that land?
A We never benefited.
Q Since when have you not benefited from
that land?
A Since 1919.
xxx
Q By the way, can you tell us since when
you have been deprived of that land,
from what year?
A From 1919 to 1990.” (TSN, January 9,
1990, pp. 51-55). (Underscoring
[7]
supplied)
Petitioners filed a motion for reconsideration [8] of
the appellate court’s decision upon the ground that
“THIS CASE HAS BEEN OVERTAKEN BY
EVENTS, PARTICULARLY ART. 19 OF THE
[NEW] CIVIL CODE” which reads:
ART. 19. Every person, must be in the exercise of his
rights and in the performance of his duties, act with
justice, give everyone his due, and observe honesty
and good faith,
citing some cases in support thereof.
Finding the invocation of Art. 19 misplaced, the
appellate court, by Resolution of February 7, 2001,[9]
denied the Motion for Reconsideration, hence, the
present petition[10] proffering the following
ISSUES FOR RESOLUTION
I
WHETHER OR NOT RELIANCE ON ART. 19 OF
THE CIVIL CODE ISMISPLACED.
II
WHETHER IN RESOLVING CASES, THE ISSUE
OF MORALITY OF THE ACT DOES NOT COME
INTO PLAY.
III
WHETHER OR NOT LACHES IS APPLICABLE IN
THE CASE AT BAR.[11]
Petitioners contend that “[t]here is such a thing
as morality that comes into play,” as after all, the
appellate court found the parties to be first cousins
and, therefore, following Art. 19 of the Civil Code,
petitioners should get their share in the property.
Petitioners further contend that “laches is not
strictly applied when it comes to close relations,”
citing Gallardo v. IAC, 155 SCRA 248.
The petition fails.
Article 19 of the Civil Code in Chapter 2 on
Human Relations is a statement of principle that
supplements but does not supplant a specific
provision of law.
With respect to rights to the inheritance of a
person who died before the effectivity on August 30,
1950 of the Civil Code like Fabian who died in 1919:
Art. 2263, New Civil Code
ART. 2263. Rights to the inheritance of a person who
died, with or without a will, before the effectivity of
this Code, shall be governed by the Civil Code of
1889, by other previous laws, and by the Rules of
Court. x x x
ART. 807, Spanish Civil Code of 1889
ART 807. The following are forced heirs:
1. Legitimate children and descendants, with respect
to their legitimate parents and ascendants;
2. In default of the foregoing, legitimate parents and
ascendants, with respect to their legitimate children
and descendants;
The widower or widow, natural children legally
acknowledged, and the father or the mother of the
latter, in the manner and to the extent established by
Articles 834, 835, 836, 837, 840, 841, 842, and 846.
ART. 939, Spanish Civil Code of 1889,
ART. 939. In the absence of legitimate descendants
and ascendants, the natural children legally
acknowledged and those legitimated by royal
concession shall succeed to the entire estate of the
deceased.
With respect to prescription:
Art. 1134, New Civil Code
ART. 1134. Ownership and other real rights over
immovable property are acquired by ordinary
prescription through possession of ten years.
Art. 1137, New Civil Code
ART. 1137. Ownership and other real rights over
immovables also prescribe through uninterrupted
adverse possession thereof for thirty years, without
need of title or of good faith.
Assuming arguendo that petitioners’ respective
fathers Francisco and Zacarias were legitimate and,
therefore, were co-owners of the property: From the
moment co-owner Julian occupied in 1919 and
claimed to be the absolute and exclusive owner of the
property and denied his brothers any share therein up
to the time of his death in 1950, the question involved
is no longer one of partition but of ownership in
which case imprescriptibility of the action for
partition can no longer be invoked. The adverse
possession by Julian and his successors-in-interest-
herein respondents as exclusive owner of the property
having entailed a period of about 67 years at the time
of the filing of the case at bar in 1986, ownership by
prescription had vested in them.[12]
As for estoppel by laches which is a creation of
equity,[13] since laches cannot interfere with the
running of the period of prescription, absent any
conduct of the parties operating as estoppel,[14] in
light of the prescription of petitioners’ action,
discussion thereof is dispensed with. Suffice it to
state that while laches may not be strictly applied
between near relatives, under the facts and
circumstances of the case, especially the
uncontroverted claim of respondents that their father
Julian, and the documented claim of respondent
Julieta, had paid realty taxes on the property as
exclusive owner, as well as the admission of
petitioner Rogelia that, as quoted above, she and her
co-petitioners “never benefited” or were “deprived”
of any benefits from the property since 1919 up to the
time of the filing of the case in 1986 before the RTC
or for a period of 67 years, despite demands therefor,
even an extremely liberal application of laches would
bar the filing of the case.
WHEREFORE, the petition is hereby
DISMISSED and the decision of the Court of
Appeals is AFFIRMED.
SO ORDERED.
[G.R. No. 156973. June 4, 2004]
SPOUSES TOMAS OCCEÑA and SILVINA
OCCEÑA, petitioners, vs. LYDIA
MORALES OBSIANA ESPONILLA,
ELSA MORALES OBSIANA SALAZAR
and DARFROSA OBSIANA SALAZAR
ESPONILLA, respondents.
DECISION
PUNO, J.:
The case at bar involves a portion of the 1,198-
square meter residential lot (lot no. 265) situated in
Sibalom, Antique, originally owned by spouses
Nicolas and Irene Tordesillas under OCT No. 1130.
The Tordesillas spouses had three (3) children,
namely: Harod, Angela and Rosario, the latter having
been survived by her two (2) children, Arnold and
Lilia de la Flor.
After the death of the Tordesillas spouses, the lot
was inherited by their children Harod and Angela,
and grandchildren Arnold and Lilia. In 1951, the heirs
executed a Deed of Pacto de Retro Sale[1] in favor of
Alberta Morales covering the southwestern
portion of the lot with an area of 748 square
meters.
Three (3) years later, in 1954, Arnold and Lilia
executed a Deed of Definite Sale of Shares, Rights,
Interests and Participations[2] over the same 748
sq. m. lot in favor of AlbertaMorales. The
notarized deed also attested that the lot sold by
vendors Arnold and Lilia to Alberta were their share
in the estate of their deceased parents.
Alberta possessed the lot as owner,
constructed a house on it and appointed a
caretaker to oversee her property. Thereafter, in
July 1956, vendor Arnold de la Flor borrowed the
OCT from Alberta covering the lot. He executed an
Affidavit[3] acknowledging receipt of the OCT in trust
and undertook to return said title free from changes,
modifications or cancellations.
In 1966, Arnold and Angela, nephew and
daughter respectively of the Tordesillas spouses,
without the knowledge of Alberta, executed a Deed
of Extrajudicial Settlement[4] declaring the two of
them as the only co-owners of the undivided 1,198
sq. m. lot no. 265, without acknowledging their
previous sale of 748 sq. m. thereof to Alberta. A
number of times, thereafter, Alberta and her nieces
asked Arnold for the OCT of the land but Arnold just
kept on promising to return it.
In 1983, Arnold executed an Affidavit of
Settlement of the Estate[5] of Angela who died in
1978 without issue, declaring himself as the sole heir
of Angela and thus consolidating the title of the entire
lot in his name.
In 1985, vendee Alberta Morales died. Her
nieces-heirs, Lydia, Elsa and Dafrosa, succeeded in
the ownership of the lot. Months later, as the heirs
were about to leave for theUnited States, they asked
Arnold to deliver to them the title to the land so they
can register it in their name. Arnold repeatedly
promised to do so but failed to deliver the title to
them.
On December 4, 1986, after Alberta’s heirs left
for the States, Arnold used the OCT he borrowed
from the deceased vendee Alberta Morales,
subdivided the entire lot no. 265 into three sublots,
and registered them all under his name, viz: lot no.
265-A (with TCT No. 16895), lot no. 265-B (with
TCT No. 16896) and lot no. 265-C (with TCT No.
16897). He then paid the real estate taxes on the
property.
On August 13, 1990, Arnold sold lot nos. 265-B
& C to spouses Tomas and Sylvina Occeña, which
included the 748 sq. m. portion previously sold to
Alberta Morales. A Deed of Absolute Sale[6] over
said lots was executed to the Occeña spouses and
titles were transferred to their names.
In 1993, after the death of Arnold, the three (3)
nieces-heirs of Alberta Morales learned about the
second sale of their lot to the Occeña spouses when
they were notified by caretaker Abas that they were
being ejected from the land. In 1994, the heirs filed a
case[7] for annulment of sale and cancellation of titles,
with damages, against the second vendees Occeña
spouses. In their complaint, they alleged that the
Occeñas purchased the land in bad faith as they were
aware that the lots sold to them had already been sold
to Alberta Morales in 1954. They averred that before
the sale, when Tomas Occeña conducted an ocular
inspection of the lots, Morito Abas, the caretaker
appointed by Alberta Morales to oversee her property,
warned them not to push through with the sale as the
land was no longer owned by vendor Arnold as the
latter had previously sold the lot to Alberta Morales
who had a house constructed thereon.
For their part, the Occeña spouses claimed that
the OCT in the name of the original owners of the
lots, the Tordesillas spouses, was cancelled after it
was subdivided between Angela and Arnold in 1969;
that new TCTs had been issued in the latter’s names;
that they were unaware that the subject lots were
already previously sold to Morales as they denied that
Tomas had a talk with caretaker Abas on the matter;
that as of December 4, 1987, the TCTs covering the
lots were in the name of Arnold and his wife, without
any adverse claim annotated thereon; that vendor
Arnold represented to them that the occupants they
saw on the land were squatters and that he merely
tolerated their presence; that they did not
personally investigate the alleged squatters on the
land and merely relied on the representation of
vendor Arnold; that sometime in 1966-1967, Arnold
and his co-heir Angela caused the survey of the
original lot and subdivided it into 3 lots, without
opposition from Morales or her heirs. Thus, three (3)
TCTs were issued in 1969 to Arnold and Angela and,
two of the lots were then sold to the Occeña spouses,
again without objection from Alberta Morales.
The Occeña spouses alleged that they were
buyers in good faith as the titles to the subject lots
were free from liens or encumbrances when they
purchased them. They claimed that in 1989, Arnold
offered to sell the subject lots to them. On August
13, 1990, after they verified with the Antique
Registry of Deeds that Arnold’s TCTs were clean and
unencumbered, Arnoldsigned the instrument of sale
over the subject lots in favor of the Occeñas for
P100,000.00 and new titles were issued in their
names.
The Occeñas likewise set up the defenses of
laches and prescription. They argue that Alberta and
plaintiffs-heirs were barred from prosecuting their
action as they failed to assert their right for forty (40)
years. Firstly, they point out that vendor Arnold and
Angela subdivided the entire lot in 1966 and declared
themselves as the only co-owners thereof in the deed
of extrajudicial settlement. Alberta Morales failed to
oppose the inclusion of her 748 sq. m. lot in the deed.
Thus, the title to the entire lot no. 256 was transferred
to the names of Arnold and Angela. Secondly,
preparatory to the division of the lots, vendor Arnold
had the land surveyed but Alberta again failed to
oppose the same. Finally, Alberta and her heirs who
are claiming adverse rights over the land based on the
1951 Deed of Pacto de Retro Sale and the 1954 Deed
of Definite Sale of Shares failed for 40 years to
annotate their adverse claims on the new titles issued
to Arnold and Angela, enabling the latter to possess a
clean title and transfer them to the Occeña spouses.
After trial, the lower court rendered a decision
declaring the Occeña spouses as buyers in good faith
and ruled that the action of the heirs was time-barred.
On appeal by Alberta’s heirs, the Court of
Appeals reversed the decision of the trial court. It
found that the Occeñas purchased the land in bad
faith and that the action filed by Alberta’s heirs was
not barred by prescription or laches. The dispositive
portion reads:
WHEREFORE, the instant appeal is hereby
GRANTED. Accordingly, the assailed decision is
hereby REVERSED and SET ASIDE and a new one
is rendered declaring the Deed of Absolute Sale dated
August 13, 1990 executed between Arnold de la Flor
in favor of defendants-appellees null and void and
ordering the cancellation of Transfer Certificate of
Title Nos. 16896, 16897, T-18241 and T-18242.
SO ORDERED. [8]
Hence this appeal where petitioner-spouses
Occeña raise the following issues:
I
WHETHER OR NOT A VERBAL
INFORMATION COULD BE MADE TO
PREVAIL OVER A CLEAN CERTIFICATE OF
TITLE OF A REGISTERED LAND WHICH IS
FREE OF ANY LIEN OR ENCUMBRANCE
ANNOTATED ON ITS CERTIFICATE OF
TITLE OR ANY ADVERSE CLAIM
RECORDED WITH THE REGISTER OF
DEEDS.
II
WHETHER OR NOT A BUYER OF A
REGISTERED LAND IS OBLIGATED TO
MAKE INQUIRIES OF ANY POSSIBLE
DEFECT OR ADVERSE CLAIM AFFECTING
ITS OWNERSHIP WHICH DOES NOT APPEAR
ON THE CERTIFICATE OF TITLE.
III
WHETHER OR NOT THE PERIOD OF MORE
THAN FORTY (40) YEARS WITHOUT
POSITIVE ACTION TAKEN BY
RESPONDENTS, AS WELL AS BY ALBERTA
MORALES, TO PROTECT THEIR INTEREST
CAN BE CONSIDERED LACHES AND THUS
THEIR PRESENT ACTION HAS PRESCRIBED.
On the first two issues, petitioner-spouses claim
that they were purchasers of the land in good faith as
the law does not obligate them to go beyond a clean
certificate of title to determine the condition of the
property. They argue that a person dealing with
registered land is only charged with notice of the
burden on the property annotated on the title. When
there is nothing on the title to indicate any cloud or
vice in the ownership of the property or any
encumbrance thereon, the purchaser is not required to
explore further than the title in quest of any hidden
defect or inchoate right that may subsequently defeat
his right thereto. They claim they had every right to
purchase the land despite the verbal warning made by
caretaker Abas as the information was mere hearsay
and cannot prevail over the title of the land which
was free from any encumbrance.
Their arguments do not persuade.
The petition at bar presents a case of double sale
of an immovable property. Article 1544 of the New
Civil Code provides that in case an immovable
property is sold to different vendees, the ownership
shall belong: (1) to the person acquiring it who in
good faith first recorded it in the Registry of
Property; (2) should there be no inscription, the
ownership shall pertain to the person who in good
faith was first in possession; and, (3) in the absence
thereof, to the person who presents the oldest title,
provided there is good faith.
In all cases, good faith is essential. It is the basic
premise of the preferential rights granted to the one
claiming ownership over an immovable.[9] What is
material is whether the second buyer first registers
the second sale in good faith, i.e., without knowledge
of any defect in the title of the property sold. [10] The
defense of indefeasibility of a Torrens title does not
extend to a transferee who takes the certificate of title
in bad faith, with notice of a flaw.[11]
The governing principle of prius tempore, potior
jure (first in time, stronger in right) enunciated under
Art. 1544 has been clarified, thus:
x x x Knowledge by the first buyer of the second sale
cannot defeat the first buyer’s rights except when the
second buyer first registers in good faith the second
sale (Olivares vs. Gonzales, 159 SCRA 33).
Conversely, knowledge gained by the second buyer
of the first sale defeats his rights even if he is first
to register, since such knowledge taints his
registration with bad faith (see also Astorga vs.
Court of Appeals, G.R. No. 58530, 26 December
1984). In Cruz vs. Cabaña (G.R. No. 56232, 22 June
1984, 129 SCRA 656), it was held that it is essential,
to merit the protection of Art. 1544, second
paragraph, that the second realty buyer must act
in good faith in registering his deed of sale (citing
Carbonell vs. Court of Appeals, 69 SCRA 99 and
Crisostomo vs. CA, G.R. No. 95843, 02 September
1992).[12]
In the case at bar, we find that petitioner-spouses
failed to prove good faith in their purchase and
registration of the land. A purchaser in good faith
and for value is one who buys property without
notice that some other person has a right to or interest
in such property and pays its fair price before he has
notice of the adverse claims and interest of another
person in the same property. So it is that the “honesty
of intention” which constitutes good faith implies a
freedom from knowledge of circumstances which
ought to put a person on inquiry. At the trial,
Tomas Occeña admitted that he found houses built on
the land during its ocular inspection prior to his
purchase. He relied on the representation of vendor
Arnold that these houses were owned by squatters
and that he was merely tolerating their presence on
the land. Tomas should have verified from the
occupants of the land the nature and authority of their
possession instead of merely relying on the
representation of the vendor that they were squatters,
having seen for himself that the land was occupied by
persons other than the vendor who was not in
possession of the land at that time. The settled rule is
that a buyer of real property in the possession of
persons other than the seller must be wary and
should investigate the rights of those in possession.
Without such inquiry, the buyer can hardly be
regarded as a buyer in good faith and cannot have
any right over the property.[13] A purchaser cannot
simply close his eyes to facts which should put a
reasonable man on his guard and then claim that he
acted in good faith under the belief that there was no
defect in the title of his vendor.[14] His mere refusal to
believe that such defect exists or his willful closing of
his eyes to the possibility of the existence of a defect
in his vendor’s title will not make him an innocent
purchaser for value if it later develops that the title
was in fact defective, and it appears that he would
have notice of the defect had he acted with that
measure of precaution which may reasonably be
required of a prudent man in a similar situation.
Indeed, the general rule is that one who deals
with property registered under the Torrens system
need not go beyond the same, but only has to rely on
the title. He is charged with notice only of such
burdens and claims as are annotated on the title.
However, this principle does not apply when the
party has actual knowledge of facts and
circumstances that would impel a reasonably cautious
man to make such inquiry or when the purchaser has
knowledge of a defect or the lack of title in his
vendor or of sufficient facts to induce a reasonably
prudent man to inquire into the status of the title of
the property in litigation. One who falls within the
exception can neither be denominated an innocent
purchaser for value nor a purchaser in good faith.[15]
The evidence of the private respondents show
that when Tomas Occeña conducted an ocular
inspection of the land prior to the second sale, Abas,
the caretaker of the house which Alberta Morales
built on the land, personally informed Tomas that the
lot had been previously sold by the same vendor
Arnold to Alberta Morales. With this information,
the Occeñas were obliged to look beyond the title of
their vendor and make further inquiries from the
occupants of the land as to their authority and right to
possess it. However, despite this information about a
prior sale, the Occeñas proceeded with the purchase
in haste. They did not inquire from Abas how they
could get in touch with the heirs or representatives of
Alberta to verify the ownership of the land. Neither
do the records reveal that they exerted effort to
examine the documents pertaining to the first sale.
Having discovered that the land they intended to buy
was occupied by a person other than the vendor not in
actual possession thereof, it was incumbent upon the
petitioners to verify the extent of the occupant’s
possessory rights.[16] The Occeñas did nothing and
chose to ignore and disbelieve Abas’ statement.
On the third issue, we hold that the action to
annul title filed by respondents-heirs is not barred by
laches and prescription. Firstly, laches is a creation
of equity and its application is controlled by equitable
considerations. Laches cannot be used to defeat
justice or perpetuate fraud and injustice. Neither
should its application be used to prevent the rightful
owners of a property from recovering what has been
fraudulently registered in the name of another.[17]
Secondly, prescription does not apply when the
person seeking annulment of title or reconveyance is
in possession of the lot because the action partakes of
a suit to quiet title which is imprescriptible.[18] In this
case, Morales had actual possession of the land when
she had a house built thereon and had appointed a
caretaker to oversee her property. Her undisturbed
possession of the land for a period of fifty (50) long
years gave her and her heirs a continuing right to seek
the aid of a court of equity to determine the nature of
the claim of ownership of petitioner-spouses. [19] As
held by this Court in Faja vs. Court of Appeals:[20]
x x x There is settled jurisprudence that one who is
in actual possession of a piece of land claiming to
be owner thereof may wait until his possession is
disturbed or his title attacked before taking steps
to vindicate his right, the reason for the rule being,
that his undisturbed possession gives him a
continuing right to seek the aid of a court of
equity to ascertain and determine the nature of
the adverse claim and its effect on his own title,
which right can be claimed only by one who is in
possession. x x x The right to quiet title to the
property, seek its reconveyance and annul any
certificate of title covering it accrued only from
the time the one in possession was made aware of
a claim adverse to his own, and it is only then that
the statutory period of prescription commences to
run against such possessor.
In the case at bar, Morales’ caretaker became
aware of the second sale to petitioner-spouses only in
1991 when he received from the latter a notice to
vacate the land. Respondents-heirs did not sleep on
their rights for in 1994, they filed their action to
annul petitioners’ title over the land. It likewise bears
to stress that when vendor Arnold reacquired title to
the subject property by means of fraud and
concealment after he has sold it to Alberta Morales, a
constructive trust was created in favor of Morales and
her heirs. As the defrauded parties who were in
actual possession of the property, an action of the
respondents-heirs to enforce the trust and recover the
property cannot prescribe. They may vindicate their
right over the property regardless of the lapse of time.
[21]
Hence, the rule that registration of the property
has the effect of constructive notice to the whole
world cannot be availed of by petitioners and the
defense of prescription cannot be successfully raised
against respondents.
In sum, the general rule is that registration under
the Torrens system is the operative act which gives
validity to the transfer of title on the land. However,
it does not create or vest title especially where a party
has actual knowledge of the claimant’s actual, open
and notorious possession of the property at the time
of his registration.[22] A buyer in bad faith has no
right over the land. As petitioner-spouses failed to
register the subject land in good faith, ownership of
the land pertains to respondent-heirs who first
possessed it in good faith.
IN VIEW WHEREOF, the petition is
DISMISSED. No costs.
SO ORDERED.
[G.R. No. 128254. January 16, 2004]
HEIRS OF POMPOSA SALUDARES represented
by ISABEL DATOR, petitioners, vs.
COURT OF APPEALS, JOSE DATOR and
CARMEN CALIMUTAN,respondents.
DECISION
CORONA, J.:
Assailed in the instant petition for review on
certiorari is the July 31, 1996 decision [1] of the Court
of Appeals reversing the August 27, 1992 decision [2]
of the Regional Trial Court of Lucena City, Branch
56, which in turn dismissed private respondents’
petition for reconveyance on the ground of
prescription of action.
At the core of the present controversy is a parcel
of land, known as Lot 5793, measuring 8,916 square
meters, located at Mahabang Parang, Lucban,
Quezon. The land formed part of the conjugal
properties of spouses Juan Dator and Pomposa
Saludares, known as the Tanza estate.
Pomposa died on May 1, 1923, leaving herein
petitioners, Enrica, Petra, Restituto, Amado, Delfina,
Beata, Vicenta and Isabel, all surnamed Dator, as her
compulsory heirs (hereinafter referred to as Heirs).
On February 28, 1940, the Heirs and their father
Juan executed a deed of extra-judicial partition of the
share of Pomposa in the Tanza estate. The settlement
conferred the eastern half of the Tanza estate to Juan
and the western half to the Heirs.
Before the aforementioned partition, Juan was in
possession of the entire Tanza estate. After the
partition, the Heirs took possession of their share and
had the same tenanted by a certain Miguel Dahilig,
husband of Petra, one of the Heirs, who in turn
managed the land in behalf of the other siblings.
Juan, the father, remained in possession of his half of
the land until his death on April 6, 1940.
On December 13, 1976, Isabel Dator applied for
a free patent over the entire Tanza estate, including
Lot 5793, in behalf of the Heirs. On May 26, 1977,
after all the requirements were complied with, the
Register of Deeds of Quezon awarded Free Patent
No. 4A-2-8976 and issued Original Certificate of
Title (OCT) No. 0-23617 in the names of the Heirs.
Sometime in 1988, the Heirs were informed by
their tenant that private respondents cut some 50
coconut trees located within the subject lot. Thus, the
Heirs sent a letter,[3] dated July 26, 1988, to private
respondents demanding an explanation for their
intrusion into their property and unauthorized felling
of trees.
On August 25, 1988, private respondents
retaliated by filing an action for reconveyance against
petitioners, docketed as civil case no. 88-121, in the
Regional Trial Court of Lucena City. Private
respondents alleged in their complaint that: (a) they that the title of the defendants has been secured thru
were the owners in fee simple and possessors of Lot fraud which in the case at bar is wanting and which
No. 5793; (b) they bought the land from the would necessarily invalidate it, the presumption is it
successors-in-interest of Petra Dator, one of the heirs; has been issued regularly in the absence of actual
(c) they were in possession of the subject land from fraud.
1966 to the present and (d) petitioner Isabel Dator There being no positive evidence presented which
obtained free patent OCT P-23617 over Lot 5793 in would establish actual fraud in the issuance of Free
favor of the Heirs by means of fraud and Patent Title No. P-23617 in the defendants’ name,
misrepresentation. Thus, private respondents prayed their title deserves recognition.
for the cancellation of OCT P-23617 and the issuance In like manner, in an action for reconveyance after
of a new title in their names. the lapse of one year from the date of the registration,
actual fraud in securing the title must be proved (J.N.
In their answer, the Heirs denied having sold any
Tuazon Co., Inc. versus Macalindog, G.R. No. L-
portion of the Tanza estate to anyone. They alleged
15398, December 29, 1962, 6 SCRA 938).
that: (a) they and their predecessors-in-interest had
The plaintiffs’ claim for reconveyance therefore
been and were still in actual, continuous, adverse and
cannot prosper.
public possession of the subject land in the concept of
WHEREFORE, judgment is hereby rendered in favor
an owner since time immemorial and (b) title to Lot
of the defendants and against the plaintiffs ordering
5793 was issued in their favor after faithful
the dismissal of the case with costs against plaintiffs
compliance with all the requirements necessary for
and declaring defendants, heirs of Pomposa
the issuance of a free patent.
Saludares, as the rightful owners of the land.
After trial, the lower court rendered a decision The claim of defendants in the matter of attorney’s
dismissing the action primarily on the ground of fees and litigation expenses not having been proven
prescription of action: by concrete evidence, the Court opts not to award the
same.
More telling is plaintiff Jose Dator’s admission that SO ORDERED.[4]
the adjacent lot which is 5794 is his and he was a
cadastral claimant, in fact, filed (sic) an application On appeal, the appellate court reversed the trial
for free patent. By and large, if Jose Dator was court decision:
personally claiming rights on the property now
It is true that the Torrens title issued upon a free
denominated as Lot 5793, the Court is intrigued and
patent may not be cancelled after the lapse of ten
cannot see its way clear why Jose Dator did not file
years from the date of its registration because the
any protest in the application of the heirs of Pomposa
statute of limitations bars such cancellation. But this
Saludares, neither had Jose Dator filed any petition
doctrine has long been qualified thusly:
for review within the time frame, instead it took them
If the registered owner, be he the patentee or his
eleven (11) long years to question the validity.
successor-in-interest to whom the Free patent was
The doctrine of “stale demands” or laches is even
transferred or conveyed, knew that the parcel of land
applicable in the case at bar. “Laches means the
described in the patent and in the Torrens belonged to
failure or neglect for an unreasonable length of time,
another who together with his predecessors-in-
to do that which by exercising diligence could or
interest were never in possession thereof, then the
should have been done earlier.” (Marcelino versus
statute barring an action to cancel a Torrens title
Court of Appeals, G.R. No. 94422, June 26, 1992)
issued upon a free patent does not apply and the true
xxx xxx xxx
owner may bring an action to have the ownership or
The issues with respect to ownership have already
title to the land judicially settled and the Court in the
been amply discussed which brings us to the issue as
exercise of its equity jurisdiction, without ordering
to whether or not the action has prescribed and
the cancellation of the Torrens title issued upon the
whether the original certificate of title in the name of
patent, may direct the defendant, the registered
the heirs of Pomposa Saludares is already
owner, to reconvey the parcel of land to the plaintiff
indefeasible.
who has been found to be the true owner thereof.
The action for reconveyance at bar was filed on
(Vital vs. Anore, et al., 90 Phil. 855, Underscoring
August 28, 1988 or more than eleven (11) years from
ours.)
the issuance of the title, a fact plaintiffs cannot deny.
In this case, there is clear evidence to show that
They cannot claim ignorance that the defendants-
appellee Isabel had full knowledge that Lot 5793 had
heirs of Pomposa Saludares are applying for a free
been sold to her brother-in-law Miguel Dahilig and
patent of Lot No. 5793 because notices were sent.
her sister Petra, that Lot 5793 no longer belonged to
xxx xxx xxx
her and to the heirs she claimed to represent. She
In the absence of competent and positive evidence
was signatory to the deed of sale dated April 16, 1940
in favor of appellant. (Exh. I) With this knowledge,
there is reason to conclude that appellant Isabel
misrepresented herself and the rest of the heirs as
owners entitled to the free patent.
WHEREFORE, all the above considered, judgment is
hereby rendered:
1. Reversing the August 27, 1992 decision of the
court below;
2. Ordering the Register of Deeds of Quezon
Province to cancel OCT No. P-23617 in the name of
the Heirs of Pomposa Saludares and to issue another
for the same property in the name of plaintiffs Jose
Dator and Carmen Calimutan;
3. Ordering appellees to pay appellants ten
thousand (P10,000.00) pesos for attorney’s fees, and
to pay the costs.
SO ORDERED.[5]
Aggrieved by the appellate court ruling, the
Heirs filed the instant petition, assigning the
following errors:
The Court of Appeals erred in tracing the history of
the transactions involving the property way back to
the year 1923 and render judgment based on its
findings, considering that petitioners are the
registered owners of the property under a torrens
certificate of title which is conclusive,
incontrovertible and indefeasible.
The Court of Appeals erred when it did not consider
that the complaint filed by the private respondents for
reconveyance and cancellation of title before the trial
court eleven (11) years after a torrens title over the
property was issued in the name of the petitioners
(had) prescribed.[6]
Notwithstanding the indefeasibility of the
Torrens title, the registered owner may still be
compelled to reconvey the registered property to its
true owner. The rationale for the rule is that
reconveyance does not set aside or re-subject to
review the findings of fact of the Bureau of Lands. In
an action for reconveyance, the decree of registration
is respected as incontrovertible. What is sought
instead is the transfer of the property or its title which
has been wrongfully or erroneously registered in
another person’s name, to its rightful or legal owner,
or to the one with a better right.[7]
Nevertheless, the right to seek reconveyance of
registered property is not absolute because it is
subject to extinctive prescription. In Caro vs. Court
of Appeals,[8] the prescriptive period of an action for
reconveyance was explained:
Under the present Civil Code, we find that just as an
implied or constructive trust is an offspring of the law
(Art. 1456, Civil Code), so is the corresponding
obligation to reconvey the property and the title
thereto in favor of the true owner. In this context,
and vis-à-vis prescription, Article 1144 of the Civil
Code is applicable.
Article 1144. The following actions must be brought
within ten years from the time the right of action
accrues:
(1) Upon a written contract;
(2) Upon an obligation
created by law;
(3) Upon a judgment.
xxx xxx xxx
An action for reconveyance has its basis in Section
53, paragraph 3 of Presidential Decree No. 1529,
which provides:
In all cases of registration procured by fraud, the
owner may pursue all his legal and equitable
remedies against the parties to such fraud without
prejudice, however, to the rights of any innocent
holder of the decree of registration on the original
petition or application, x x x.
This provision should be read in conjunction with
Article 1456 of the Civil Code, which provides:
Article 1456. If property is acquired through mistake
or fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit
of the person from whom the property comes.
The law thereby creates the obligation of the trustee
to reconvey the property and the title thereto in favor
of the true owner. Correlating Section 53, paragraph
3 of Presidential Decree No. 1529 and Article 1456 of
the Civil Code with Article 1144(2) of the Civil
Code, supra, the prescriptive period for the
reconveyance of fraudulently registered real property
is ten (10) years reckoned from the date of the
issuance of the certificate of title.
There is but one instance when prescription
cannot be invoked in an action for reconveyance, that
is, when the plaintiff is in possession of the land to be
reconveyed.[9]
In a series of cases,[10] this Court permitted the
filing of an action for reconveyance despite the lapse
of ten years and declared that said action, when based
on fraud, is imprescriptible as long as the land has not
passed to an innocent purchaser for value. But in all
those cases including Vital vs. Anore[11] on which the
appellate court based its assailed decision, the
common factual backdrop was that the registered
owners were never in possession of the disputed
property. Instead, it was the persons with the better
right or the legal owners of the land who had always
been in possession of the same. Thus, the Court
allowed the action for reconveyance to prosper in
those cases despite the lapse of more than ten years
from the issuance of title to the land. The exception
was based on the theory that registration proceedings
could not be used as a shield for fraud or for
enriching a person at the expense of another.[12]
In the case at bar, however, it is the rule rather
than the exception which should apply.
This Court does not normally review the factual
findings of the Court of Appeals in a petition for
review under Rule 45 of the Rules of Court. But
when the findings of fact of the appellate court differ
from those of the trial court, the Court in the exercise
of its power of review may inquire into the facts of a
case.
The trial court declared the Heirs as having been
in actual, open and continuous possession of the
disputed lot. On the other hand, the appellate court
ruled that it was private respondents.
Private respondents presented documents
purportedly showing a series of transactions which
led to the alleged transfer of ownership of Lot 5793
from the Heirs to them, namely: (1) aKasulatan Ng
Pagbibilihang Lampasan, dated April 16, 1940,
wherein the disputed lot was allegedly sold by the
Heirs to their sibling Petra Dator and her husband
Miguel Dahilig; (2) an extra-judicial partition
showing that, upon the death of Miguel, his heirs
Petra, Angel, Anatalia, Catalina, Felimon and Jacinto,
inherited Lot 5793 and (3) two deeds of sale dated
December 30, 1978 and March 15,1970 wherein
Felimon and Jacinto, and later Catalina, sold their
undivided shares in Lot 5793 to private respondents.
Other than the presentation of these documents,
however, private respondents failed to prove that they
were in actual, open and continuous possession of
Lot 5793.
On the other hand, Isabel Dator, who testified for
the Heirs, vehemently denied having signed the
Kasulatan Ng Pagbibilihang Lampasan and pointed
out the absence of the signatures of her other siblings
Vicenta, Barcelisa and Adoracion.
The Heirs likewise presented proof of payment
of realty taxes from 1956 to 1974 in the names of
their deceased parents, and from 1975 to 1988 in their
names.
More importantly, the Heirs convincingly
established their open and continuous occupation of
the entire Tanza estate, including Lot 5793, through
their tenant Miguel Dahilig. After Miguel’s death, he
was succeeded by Marcelo Saludares who testified
during the trial that: (a) the farm was under the
administration of Beata and Isabel Dator who took
over its management after Petra Dator died; (b) he
had been consistently tending the land since 1947; (c)
he was the one who planted the various crops and
trees thereon, except for some 100 coconut trees
which he explained were planted by other people in
response to the Green Revolution project of then
President Marcos.
Saludares identified each and every landmark
and boundary of the subject lot. He also enumerated
all the trees planted on the subject lot and, when
asked about the fruits of the land, he told the court
that he shared the harvest with the surviving Heirs.
In stark contrast, private respondents’ witness,
farm worker Perpetuo Daya could not identify the
boundaries of the disputed property, its adjoining
owners or recall the dates he worked and tilled the
subject lot.
Specially noteworthy was the fact that the
recorded cadastral claimant of Lot 5793, Angel
Dahilig, testified that he executed a waiver in favor of
the Heirs because they were the true owners of the
subject parcel of land.[13]
Furthermore, we note private respondent Jose
Dator’s declaration that he was the cadastral claimant
of and free patent applicant for Lot 5794 which was
adjacent to Lot 5793. This being the case, we find
private respondents’ inaction difficult to understand,
considering that they were among those who received
notices of petitioners’ free patent application dated
January 2, 1979 from the Bureau of Lands.[14]
If private respondents indeed owned Lot 5793,
they should have filed an application for free patent
for it just as they did for Lot 5794, or at least opposed
the Heirs’ application for free patent over Lot 5793,
to protect their interests. As a matter of fact, they
were aware that the Heirs’ tenant, Marcelo Saludares,
repeatedly harvested the fruits of Lot 5793.
But even assuming that private respondents
indeed validly acquired Lot 5793 in 1966 as they
claimed, they nevertheless slept on their right to
secure title thereto. Their unexplained inaction for
more than 11 years rendered their demand for
reconveyance stale. Vigilantibus sed non
dormientibus jura subverniunt. The law aids the
vigilant, not those who sleep on their rights. This
legal precept finds perfect application in the case at
bar.
Accordingly, we find that the Court of Appeals
committed reversible error in disregarding the ten-
year prescriptive period for the reconveyance of
registered real property and in giving due course to
said action despite the lapse of more than 11 years
from the issuance of title thereto, which was clearly
barred by prescription.
WHEREFORE, the petition is hereby granted.
The decision of the Court of Appeals, dated July 31,
1996, is REVERSED and SET ASIDE and the
decision of the Regional Trial Court, dated August
27, 1992, is REINSTATED.
SO ORDERED.
TEOFISTO OÑO, PRECY O.
NAMBATAC, VICTORIA O.
MANUGAS and POLOR O.
CONSOLACION,
Petitioners,
- versus -
VICENTE N. LIM,
Respondent.
x--------------------------------------------------------------- Office of Cebu.
--------------------------x
DECISION
BERSAMIN, J.:
The subject of controversy is Lot No. 943 of
the Balamban Cadastre in Cebu City, covered by
Original Certificate of Title (OCT) No. RO-9969-(O-
20449), over which the contending parties in this
action for quieting of title, initiated by respondent
Vicente N. Lim (Lim) in the Regional Trial Court
(RTC) in Cebu City, assert exclusive ownership, to
the exclusion of the other. In its decision dated July
30, 1996,[1] the RTC favored Lim, and ordered the
cancellation of OCT No. RO-9969-(O-20449) and the
issuance of a new certificate of title in the name of
Luisa Narvios-Lim (Luisa), Lim’s deceased mother
and predecessor-in-interest.
On appeal (CA-GR CV No. 57823), the Court
of Appeals (CA) affirmed the RTC on January 28,
2002.[2] It later denied the petitioners’ motion for
reconsideration through the resolution dated June 17,
[3]
2002.
Hence, this appeal via petition for review on
certiorari.
Antecedents
On October 23, 1992, Lim filed in the RTC in
Cebu City a petition for the reconstitution of the
owner’s duplicate copy of OCT No. RO-9969-(O-
20449), alleging that said OCT had been lost during
World War II by his mother, Luisa;[4] that Lot No. 943
G.R. No. 154270
of the Balamban Cadastre in Cebu City covered by
Present:
said OCT had been sold in 1937 to Luisa by Spouses
PUNO, C.J., Diego Oño and Estefania Apas (Spouses Oño), the
CARPIO MORALES,
lot’s registered owners; and that although the deed
LEONARDO-DE CASTRO,
evidencing the sale had been lost without being
BERSAMIN, and
VILLARAMA, registered,
JR., Antonio Oño (Antonio), the only
legitimate heir of Spouses Oño, had executed on
PromulgatedApril 23, 1961 in favor of Luisa a notarized
March 9, 2010
document denominated as confirmation of sale,[5]
which was duly filed in the Provincial Assessor’s
Zosimo Oño and petitioner Teofisto Oño
(Oños) opposed Lim’s petition, contending that they
had the certificate of title in their possession as the
successors-in-interest of Spouses Oño.
On account of the Oños’ opposition, and upon
order of the RTC, Lim converted the petition for
reconstitution into a complaint for quieting of title,[6]
averring additionally that he and his predecessor-in-
interest had been in actual possession of the property
since 1937, cultivating and developing it, enjoying its
fruits, and paying the taxes corresponding to it. He
prayed, inter alia, that the Oños be ordered to
surrender the reconstituted owner’s duplicate copy of
OCT No. RO-9969-(O-20449), and that said OCT be
cancelled and a new certificate of title be issued in
the name of Luisa in lieu of said OCT.
In their answer,[7] the Oños claimed that their
predecessors-in-interest, Spouses Oño, never sold
Lot No. 943 to Luisa; and that the confirmation of
sale purportedly executed by Antonio was fabricated,
his signature thereon not being authentic.
RTC Ruling
On July 30, 1996, after trial, the RTC rendered
its decision,[8] viz:

WHEREFORE, premises
considered, judgment is hereby
rendered quieting plaintiff's title to Lot
No. 943 of the Balamban (Cebu)
Cadastre, and directing the Register of
Deeds of Cebu —
(1) To register the aforestated
April 23, 1961 Confirmation of Sale
of Lot No. 943 of the Balamban, Cebu
Cadastre by Antonio Oño in favor of
Luisa Narvios-Lim;
(2) To cancel the original
certificate of title covering the said Lot
No. 943 of the Balamban, Cebu
Cadastre; and,
(3) To issue in the name of
Luisa Narvios-Lim, a new duplicate
certificate of title No. RO-9969 (O-
20449) of the Register of Deeds of
Cebu, which shall contain a
memorandum of the fact that it is
issued in place of the lost duplicate
certificate of title, and shall in all
respects be entitled to like faith and
credit as the original certificate, and
shall be regarded as such for all
purposes of this decree, pursuant to
the last paragraph of Section 109,
Presidential Decree No. 1529.
Without special pronouncement
as to costs.
SO ORDERED.[9]
The RTC found that the Lims had been in
peaceful possession of the land since 1937; that their
possession had never been disturbed by the Oños,
except on two occasions in 1993 when the Oños
seized the harvested copra from the Lims’ caretaker;
that the Lims had since declared the lot in their name
for taxation purposes, and had paid the taxes
corresponding to the lot; that the signature of Antonio
on the confirmation of sale was genuine, thereby
giving more weight to the testimony of the notary
public who had notarized the document and
affirmatively testified that Antonio and Luisa had
both appeared before him to acknowledge the
instrument as true than to the testimony of the expert
witness who attested that Antonio’s signature was a
forgery.
CA Ruling
On appeal, the Oños maintained that the
confirmation of sale was spurious; that the property,
being a titled one, could not be acquired by the Lims
through prescription; that their (the Oños) action to
claim the property could not be barred by laches; and
that the action instituted by the Lims constituted a
collateral attack against their registered title.
The CA affirmed the RTC, however, and found
that Spouses Oño had sold Lot No. 943 to Luisa; and
that such sale had been confirmed by their son
Antonio. The CA ruled that the action for quieting of
title was not a collateral, but a direct attack on the
title; and that the Lims’ undisturbed possession had
given them a continuing right to seek the aid of the
courts to determine the nature of the adverse claim of
a third party and its effect on their own title.
Nonetheless, the CA corrected the RTC, by
ordering that the Office of the Register of Deeds of
Cebu City issue a new duplicate certificate of title in
the name of Luisa, considering that the owner’s
duplicate was still intact in the possession of the
Oños.
The decree of the CA decision was as follows:
WHEREFORE, the appeal is
DISMISSED for lack of merit.
However, the dispositive portion of
the decision appealed from is
CORRECTED as follows:
(1) Within five (5) days from
finality of the decision,
defendants-appellants are
directed to present the
owner's duplicate copy of
OCT No. RO-9969 (O-
20449) to the Register of
Deeds who shall thereupon
register the “Confirmation of
 Sale” of Lot No. 943,
Balamban Cadastre, Cebu,
executed on April 23, 1961
by Antonio Oño in favor of
Luisa Narvios-Lim, and issue
a new transfer certificate of
title to and in the name of the
latter upon cancellation of
the outstanding original and
owner's duplicate certificate
of title.
(2) In the event defendants-
appellants neglect or refuse
to present the owner's copy
of the title to the Register of
Deeds as herein directed, the
said title, by force of this
decision, shall be deemed
annulled, and the Register of
Deeds shall make a The petition has no merit.
memorandum of such fact in
the record and in the new
transfer certificate of title to
be issued to Luisa Narvios-
Lim.
(3) Defendants-appellants shall
pay the costs.
SO ORDERED.[10]
The CA denied the Oños’ motion for
reconsideration[11] on June 17, 2002.[12]
Hence, this appeal.
Issues
The petitioners raise the following issues:
1. Whether or not the validity of the
OCT could be collaterally attacked
through an ordinary civil action to
quiet title;
2. Whether or not the ownership
over registered land could be lost
by prescription, laches, or adverse
possession;
3. Whether or not there was a deed
of sale executed by Spouses Oño
in favor of Luisa and whether or
not said deed was lost during
World War II;
4. Whether or not the confirmation
of sale executed by Antonio in
favor of Luisa existed; and
5. Whether or not the signature
purportedly of Antonio in that
confirmation of sale was genuine.
Ruling of the Court
A.
Action for cancellation of title
is not an attack on the title
The petitioners contend that this action for
quieting of title should be disallowed because it
constituted a collateral attack on OCT No. RO-9969-
(O-20449), citing Section 48 of Presidential Decree
No. 1529, viz:
Section 48. Certificate not
subject to collateral attack.– A
certificate of title shall not be subject
to collateral attack. It cannot be
altered, modified, or cancelled except
in a direct proceeding in accordance
with law.
The petitioners’ contention is not well taken.
An action or proceeding is deemed an attack
on a title when its objective is to nullify the title,
thereby challenging the judgment pursuant to which
the title was decreed.[13]The attack is direct when the
objective is to annul or set aside such judgment, or
enjoin its enforcement. On the other hand, the attack
is indirect or collateral when, in an action to obtain a
different relief, an attack on the judgment is
nevertheless made as an incident thereof.[14]
Quieting of title is a common law remedy for
the removal of any cloud, doubt, or uncertainty
affecting title to real property.[15] Whenever there is a
cloud on title to real property or any interest in real
property by reason of any instrument, record, claim,
encumbrance, or proceeding that is apparently valid
or effective, but is, in truth and in fact, invalid,
ineffective, voidable, or unenforceable, and may be
prejudicial to said title, an action may be brought to
remove such cloud or to quiet the title. [16] In such
action, the competent court is tasked to determine the
respective rights of the complainant and the other
claimants, not only to place things in their proper
places, and to make the claimant, who has no rights
to said immovable, respect and not disturb the one so
entitled, but also for the benefit of both, so that
whoever has the right will see every cloud of doubt
over the property dissipated, and he can thereafter
fearlessly introduce the improvements he may desire,
as well as use, and even abuse the property as he
deems fit.[17]
Lim’s complaint pertinently alleged:
18. If indeed, the genuine
original of the Owner's Duplicate of
the Reconstituted Original Certificate
of Title No. RO-9699 (O-20449) for
Lot 943, Balamban Cadastre xxx is in
Defendant's (Oño’s) possession, then
VNL submits the following
PROPOSITIONS:
xxx
18.2. Therefore, the Original of
Owner’s Duplicate Certificate (which
Respondents [Defendants Oños] claim
in their Opposition is in their
possession) must be surrendered to
VNL upon order of this Court, after
the Court shall have determined VNL's
mother's acquisition of the attributes of
ownership over said Lot 943, in this
action, in accordance with Section
107, P.D. 1529, Property Registration
Decree xxx
xxx
[t]hat OCT 20449 be cancelled and
new title for Lot 943 be issued directly
in favor of LUISA NARVIOS, to
complete her title to said Lot;[18]
The averments readily show that the action
was neither a direct nor a collateral attack on OCT
No. RO-9969-(O-20449), for Lim was asserting only
that the existing title registered in the name of the
petitioners’ predecessors had become inoperative due
to the conveyance in favor of Lim’s mother, and
resultantly should be cancelled. Lim did not thereby
assail the validity of OCT No. RO-9969-(O-20449),
or challenge the judgment by which the title of the
lot involved had been decreed. In other words, the
action sought the removal of a cloud from Lim’s
title, and the confirmation of Lim’s ownership over
the disputed property as the successor-in-interest of
Luisa.
B.
Prescription was not relevant
The petitioners assert that the lot, being titled in
the name of their predecessors-in-interest, could not
be acquired by prescription or adverse possession.
The assertion is unwarranted.
Prescription, in general, is a mode of
acquiring or losing ownership and other real rights
through the lapse of time in the manner and under
the conditions laid down by law.[19] However,
prescription was not relevant to the determination of
the dispute herein, considering that Lim did not base
his right of ownership on an adverse possession over
a certain period. He insisted herein, instead, that title
to the land had been voluntarily transferred by the
registered owners themselves to Luisa, his
predecessor-in-interest.
Lim showed that his mother had derived a just
title to the property by virtue of sale; that from the
time Luisa had acquired the property in 1937, she
had taken over its possession in the concept of an
owner, and had performed her obligation by paying
real property taxes on the property, as evidenced by
tax declarations issued in her name;[20]and that in
view of the delivery of the property, coupled with
Luisa’s actual occupation of it, all that remained to
be done was the issuance of a new transfer certificate
of title in her name.
C.
Forgery, being a question of fact,
could not be dealt with now
The petitioners submit that Lim’s evidence did
not preponderantly show that the ownership of the
lot had been transferred to Luisa; and that both the
trial and the appellate courts disregarded their
showing that Antonio’s signature on the
confirmation of sale was a forgery.
Clearly, the petitioners hereby seek a review of
the evaluation and appreciation of the evidence
presented by the parties.
The Court cannot anymore review the
evaluation and appreciation of the evidence, because
the Court is not a trier of facts. [21] Although this rule
admits of certain exceptions, viz: (1) when the
conclusion is a finding grounded entirely on
speculation, surmises, or conjecture; (2) when the
inference made is manifestly mistaken; (3) where
there is a grave abuse of discretion; (4) when the
judgment is based on a misapprehension of facts; (5)
when the findings of fact are conflicting; (6) when
the Court of Appeals, in making its findings, went
beyond the issues of the case, and the findings are
contrary to the admissions of both appellant and
appellee; (7) when the findings of the Court of
Appeals are contrary to those of the trial court; (8)
when the findings of fact are conclusions without
specific evidence on which they are based; (9) when
the facts set forth in the petition as well in the
petitioners’ main and reply briefs are not disputed by
the respondents; and, (10) when the findings of fact
of the Court of Appeals are premised on the supposed
absence of evidence and are contradicted by the
evidence on record,[22] it does not appear now that any
of the exceptions is present herein. We thus apply the
rule without hesitation, and reject the appeal for that
reason.
It is emphasized, too, that the CA upheld the
conclusion arrived at by the RTC that the signature of
Antonio had not been simulated or forged. The CA
ruled that the testimony of the notary public who had
notarized the confirmation of sale to the effect that
Antonio and Luisa had appeared before him prevailed
over that of the petitioners’ expert witness. The
concurrence of their conclusion on the genuineness of
Antonio’s signature now binds the Court.[23]
In civil cases, the party having the burden of
proof must establish his case by a preponderance of
evidence. Preponderance of evidence is the weight,
credit, and value of the aggregate evidence on either
side, and is usually considered to be synonymous
with the term greater weight of the evidence or
greater weight of the credible
evidence.Preponderance of evidence is a phrase that
means, in the last analysis, probability of the truth.[24]
It is evidence that is more convincing to the court as
worthy of belief than that which is offered in
opposition thereto.
Lim successfully discharged his burden of
proof as the plaintiff. He established by preponderant
evidence that he had a superior right and title to the
property. In contrast, the petitioners did not present
any proof of their better title other than their copy of
the reconstituted certificate of title. Such proof was
not enough, because the registration of a piece of land
under the Torrens system did not create or vest title,
such registration not being a mode of acquiring
ownership. The petitioners need to be reminded that a
certificate of title is merely an evidence of ownership
or title over the particular property described therein.
Its issuance in favor of a particular person does not
foreclose the possibility that the real property may be
co-owned with persons not named in the certificate, Corporation.
or that it may be held in trust for another person by
the registered owner.[25] The Facts

WHEREFORE, the petition for review on

certiorari is denied, and the decision dated January On 5 November 1968,[3] Pacita V. Aure,
28, 2002 is affirmed. Nicomedes Aure Bundac, and Zeny Abundo (Aure
Group), owners of a 2,064 square meter parcel of
The petitioners are ordered to pay the costs of land in Tagaytay City[4](Property), leased the Property
suit. to ESSO Standard Eastern, Inc., (ESSO Eastern), a
foreign corporation doing business in the country
SO ORDERED. through its subsidiary ESSO Standard Philippines,
Inc. (ESSO Philippines). The lease period is 90
ROMEO D. MARIANO, G.R. No. years[5] and the rent is payable monthly for the first 10
169438 years, and annually for the remaining period. [6] The
Petitioner, lease contract (Contract) contained an assignment
Present:
veto clause barring the parties from assigning the
CARPIO, lease without prior consent of the other.[7] Excluded
J., Chairperson, from the prohibition were certain corporations to
BRION,
whom ESSO Eastern may unilaterally assign its
PERALTA,
* leasehold right.[8]
- versus - DEL
CASTILLO, and On 23 December 1977, ESSO Eastern sold
PEREZ, ESSO Philippines to the Philippine National Oil
JJ.
Corporation (PNOC).[9] Apparently, the Aure Group
was not informed of the sale. ESSO Philippines,
whose corporate name was successively changed to
PETRON CORPORATION,
Promulgated: Petrophil Corporation then to Petron Corporation
Respondent. January (Petron), took possession of the Property.
21, 2010
x
----------------------------------------------------------------
----------------------- x On 18 November 1993, petitioner Romeo D.
Mariano (petitioner) bought the Property from the
DECISION Aure Group and obtained title to the Property issued
in his name bearing an annotation of ESSO Eastern’s
lease.[10]
CARPIO, J.:

On 17 December 1998, petitioner sent to

The Case
For review[1] is the Decision[2] of the Court of
Appeals upholding the lease contract between
petitioner Romeo D. Mariano and respondent Petron
Petron a notice to vacate the Property. Petitioner
informed Petron that Presidential Decree No. 471
(PD 471),[11] dated 24 May 1974, reduced the
Contract’s duration from 90 to 25 years, ending on 13
November 1993.[12] Despite receiving the notice to
vacate on 21 December 1998, Petron remained on the
Property.
On 18 March 1999, petitioner sued Petron in
the Regional Trial Court of Tagaytay City, Branch 18,
(trial court) to rescind the Contract and recover
possession of the Property. Aside from invoking PD
471, petitioner alternatively theorized that the
Contract was terminated on 23 December 1977 when
ESSO Eastern sold ESSO Philippines to PNOC, thus
assigning to PNOC its lease on the Property, without
seeking the Aure Group’s prior consent.
In its Answer, Petron countered that the
Contract was not breached because PNOC merely
acquired ESSO Eastern’s shares in ESSO Philippines,
a separate corporate entity. Alternatively, Petron
argued that petitioner’s suit, filed on 18 March 1999,
was barred by prescription under Article 1389 and
Article 1146(1) of the Civil Code as petitioner should
have sought rescission within four years from
PNOC’s purchase of ESSO Philippines on 23
December 1977[13] or before 23 December 1981.[14]
To dispense with the presentation of evidence,
the parties submitted a Joint Motion for Judgment
(Joint Motion) containing the following stipulation:
5. On December 23, 1977, the
Philippine National Oil Co. (PNOC), a
corporation wholly owned by the
Philippine Government, acquired
ownership of ESSO Standard
Philippines, Inc., including its
leasehold right over the land in
question, through the acquisition of
its shares of stocks.[15] (Emphasis
supplied)
The Ruling of the Trial Court
In its Decision dated 30 May 2000, the trial
court ruled for petitioner, rescinded the Contract,
ordered Petron to vacate the Property, and cancelled
the annotation on petitioner’s title of Petron’s lease.[16]
The trial court ruled that ESSO Eastern’s sale to
PNOC of its interest in ESSO Philippines included
the assignment to PNOC of ESSO Eastern’s lease
over the Property, which, for lack of the Aure
Group’s consent, breached the Contract, resulting in
its termination. However, because the Aure Group
(and later petitioner) tolerated ESSO Philippines’
continued use of the Property by receiving rental
payments, the law on implied new lease governs the
relationship of the Aure Group (and later petitioner)
and Petron, creating for them an implied new lease
terminating on 21 December 1998 upon Petron’s
receipt of petitioner’s notice to vacate.[17]
Petron appealed to the Court of Appeals,
distancing itself from its admission in the Joint
Motion that in buying ESSO Philippines from ESSO
Eastern, PNOC also acquired ESSO Eastern’s
leasehold right over the Property. Petron again
invoked its separate corporate personality to
distinguish itself from PNOC.
The Ruling of the Court of Appeals
In its Decision dated 29 October 2004, the
Court of Appeals found merit in Petron’s appeal, set
aside the trial court’s ruling, declared the Contract
subsisting until 13 November 2058[18] and ordered
petitioner to pay Petron P300,000 as attorney’s fees.
The Court of Appeals found no reason to pierce
ESSO Philippines’ corporate veil, treating PNOC’s
buy-out of ESSO Philippines as mere change in
ESSO Philippines’ stockholding. Hence, the Court of
Appeals rejected the trial court’s conclusion that
PNOC acquired the leasehold right over the Property.
Alternatively, the Court of Appeals found petitioner’s
suit barred by the four-year prescriptive period under
Article 1389 and Article 1146 (1) of the Civil Code,
reckoned from PNOC’s buy-out of ESSO Philippines
on 23 December 1977 (for Article 1389) or the
execution of the Contract on 13 November 1968[19]
(for Article 1146 [1]).[20]
Petitioner sought reconsideration but the Court
of Appeals denied his motion in its Resolution of 26
August 2005.
Hence, this petition.
The Issue
The question is whether the Contract subsists
between petitioner and Petron.
The Ruling of the Court
We hold in the affirmative and thus sustain the
ruling of the Court of Appeals.
ESSO Eastern Assigned to PNOC its
Leasehold Right over the Property, Breaching the
Contract
PNOC’s buy-out of ESSO Philippines was total
and unconditional, leaving no residual rights to ESSO
Eastern. Logically, this change of ownership carried
with it the transfer to PNOC of any proprietary
interest ESSO Eastern may hold through ESSO
Philippines, including ESSO Eastern’s lease over the
Property. This is the import of Petron’s admission in
the Joint Motion that by PNOC’s buy-out of ESSO
Philippines “[PNOC], x x x acquired ownership of
ESSO Standard Philippines, Inc., including its
leasehold right over the land in question, through
the acquisition of its shares of stocks.” As the Aure
Group gave no prior consent to the transaction
between ESSO Eastern and PNOC, ESSO Eastern
violated the Contract’s assignment veto clause.
Petron’s objection to this conclusion, sustained
by the Court of Appeals, is rooted on its reliance on
its separate corporate personality and on the unstated
assumption that ESSO Philippines (not ESSO
Eastern) initially held the leasehold right over the
Property. Petron is wrong on both counts.
Courts are loathe to pierce the fictive veil of
corporate personality, cognizant of the core doctrine
in corporation law vesting on corporations legal
personality distinct from their shareholders
(individual or corporate) thus facilitating the conduct
of corporate business. However, fiction gives way to
reality when the corporate personality is foisted to
justify wrong, protect fraud, or defend crime,
thwarting the ends of justice.[21] The fiction even
holds lesser sway for subsidiary corporations whose
shares are wholly if not almost wholly owned by its
parent company. The structural and systems overlap
inherent in parent and subsidiary relations often
render the subsidiary as mere local branch, agency or
adjunct of the foreign parent corporation.[22]
Here, the facts compel the conclusion that
ESSO Philippines was a mere branch of ESSO
Eastern in the execution and breach of the Contract.
First, by ESSO Eastern’s admission in the Contract, it
is “a foreign corporation organized under the laws of
the State of Delaware, U.S.A., duly licensed to
transact business in the Philippines, and doing
business therein under the business name and
style of ‘Esso Standard Philippines’ x x x”. In
effect, ESSO Eastern was ESSO Philippines for all of
ESSO Eastern’s Philippine business.
Second, the Contract was executed by ESSO
Eastern, not ESSO Philippines, as lessee, with the
Aure Group as lessor. ESSO Eastern leased the
Property for the use of ESSO Philippines, acting as
ESSO Eastern’s Philippine branch. Consistent with
such status, ESSO Philippines took possession of the
Property after the execution of the Contract. Thus, for
purposes of the Contract, ESSO Philippines was a
mere alter ego of ESSO Eastern.
The Lessor’s Continued Acceptance of Lease
Payments
Despite Breach of Contract Amounted to Waiver
The breach of contract notwithstanding, we
hold that the Contract subsists. Contrary to the trial
court’s conclusion that ESSO Eastern’s violation of
the assignment veto clause extinguished the Contract,
replaced by a new implied lease with a monthly term,
[23]
we hold that the breach merely gave rise to a cause
of action for the Aure Group to seek the lessee’s
ejectment as provided under Article 1673, paragraph SPOUSES ANTONIO L. CABALLERO and Promu
LEONARDA CABALLERO,
3 of the Civil Code.[24] Although the records do not Respondents. March
show that the Aure Group was formally notified of
ESSO Philippines’ sale to PNOC, the successive x-------------------------------------------------------------------
-----------------x
changes in the lessee’s name (from ESSO Philippines
to Petrophil Corporation then to Petron) suffice to
DECISION
alert the Aure Group of a likely change in the
personality of the lessee, which, for lack of the Aure
NACHURA, J.:
Group’s prior consent, was in obvious breach of the
Contract. Thus, the continued receipt of lease
This is a petition for review on certiorari of
payments by the Aure Group (and later by petitioner)
the decision[1] of the Court of Appeals (CA) dated
despite the contractual breach amounted to a waiver
September 26, 2000 and its resolution denying the
of their option to eject the lessee.
motion for reconsideration thereof.
Petitioner’s Suit Barred by Prescription

Petitioner’s waiver of Petron’s contractual

breach was compounded by his long inaction to seek
judicial redress. Petitioner filed his complaint nearly The facts are as follows:
22 years after PNOC acquired the leasehold rights to
the Property and almost six years after petitioner In a judgment rendered on February 1, 1985 in
bought the Property from the Aure Group. The more Cadastral Case No. N-6 (LRC Rec. No. N-611),
than two decades lapse puts this case well within theJudge Juan Y. Reyes of the Regional Trial Court
territory of the 10 year prescriptive bar to suits based
(RTC) of Cebu City, Branch 14, adjudicated in favor
upon a written contract under Article 1144 (1) of theof Spouses Antonio L. Caballero and Leonarda B.
Civil Code.[25] Caballero several parcels of land situated in Guba,
Cebu City, one of which was Cadastral Lot No.
11909, the subject of this controversy.[2] On May 21,
WHEREFORE, we DENY the petition. The 1987, Antonio Caballero moved for the issuance of
Decision dated 29 October 2004 and the Resolution the final decree of registration for their lots.[3]
dated 26 August 2005 of the Court of Appeals are Consequently, on May 25, 1987, the same court,
AFFIRMED. through then Presiding Judge Renato C. Dacudao,
ordered the National Land Titles and Deeds
SO ORDERED. Registration Administration to issue the decree of
registration and the corresponding titles of the lots in
favor of the Caballeros.[4]
CARMEN DEL PRADO, G.R. No. 148225
Petitioner,
Present: On June 11, 1990, respondents sold to
petitioner, Carmen del Prado, Lot No. 11909 on the
CORONA,
basis of the tax declaration covering the property. The
- versus - pertinent portion of the deed of sale reads as follows:
NACHURA,
DEL CASTILLO,
ABAD, That we, Spouses
MENDOZA, ANTONIO L. CABALLERO
and LEONARDA B.
CABALLERO, Filipinos, both City
of legal age and residents of Assessor
Talamban, Cebu City, ’s
Philippines, for and in Office,
consideration of the sum of Cebu
FORTY THOUSAND PESOS City.”
(P40,000.00), Philippine
Currency, paid by CARMEN of which parcel of land we are
DEL PRADO, Filipino, of the absolute and lawful
legal age, single and a resident owners.
of Sikatuna St., Cebu City,
Philippines, the receipt of
which is full is hereby Original Certificate of Title (OCT) No. 1305,
acknowledged, do by these
presents SELL, CEDE, covering Lot No. 11909, was issued only on
TRANSFER, ASSIGN & November 15, 1990, and entered in the “Registration
CONVEY unto the said Book” of the City of Cebu on December 19, 1990.[5]
CARMEN DEL PRADO, her
Therein, the technical description of Lot No. 11909
heirs, assigns and/or
successors-in-interest, one (1) states that said lot measures about 14,457 square
unregistered parcel of land, meters, more or less.[6]
situated at Guba, Cebu City,
Philippines, and more
particularly described and On March 20, 1991, petitioner filed in the
bounded, as follows: same cadastral proceedings a “Petition for
Registration of Document Under Presidential Decree
“
A parcel (P.D.) 1529”[7] in order that a certificate of title be
of land issued in her name, covering the whole Lot No.
known 11909. In the petition, petitioner alleged that the tenor
as Cad.
of the instrument of sale indicated that the sale was
Lot No.
11909, for a lump sum or cuerpo cierto, in which case, the
bounded vendor was bound to deliver all that was included
as
within said boundaries even when it exceeded the
follows:
area specified in the contract. Respondents opposed,
North : on the main ground that only 4,000 sq m of Lot No.
Lot 11903 11909 was sold to petitioner. They claimed that the
East
: Lot 11908 sale was not for a cuerpo cierto. They moved for the
West outright dismissal of the petition on grounds of
: Lot 11910 prescription and lack of jurisdiction.
South
: Lot 11858 &
11912 After trial on the merits, the court found that
petitioner had established a clear and positive right to
containi
Lot No. 11909. The intended sale between the parties
ng an area of 4,000
square meters, was for a lump sum, since there was no evidence
more or presented that the property was sold for a price per
less, unit. It was apparent that the subject matter of the
covered
by Tax sale was the parcel of land, known as Cadastral Lot
Dec. No. No. 11909, and not only a portion thereof.[8]
00787 of
the Cebu
 Thus, on August 2, 1993, the court a quo IN VIEW OF ALL
THE FOREGOING, the
rendered its decision with the following dispositive appealed decision is
portion: REVERSED and SET ASIDE
and a new one entered
WHEREFORE, dismissing the petition for lack
premises considered, the of jurisdiction. No
petition is hereby granted and pronouncement as to costs.[10]
judgment is hereby rendered in
favor of herein petitioner. The
Register of Deeds of the City Aggrieved, petitioner filed the instant petition,
of Cebu is hereby ordered and raising the following issues:
directed to effect the
registration in his office of the
Deed of Absolute Sale between I.
Spouses Antonio Caballero and WHETHER OR
Leonarda Caballero and NOT THE
Petitioner, Carmen del Prado COURT OF
dated June 11, 1990 covering APPEALS
Lot No. 11909 after payment COMMITTED
of all fees prescribed by law. GRAVE ERROR
Additionally, the Register of IN MAKING
Deeds of the City of Cebu is FINDINGS OF
hereby ordered to cancel FACT
Original Certificate No. 1305 CONTRARY TO
in the name of Antonio THAT OF THE
Caballero and Leonarda TRIAL
Caballero and the Transfer COURT[;]
Certificate of Title be issued in II. WHETHER
the name of Petitioner Carmen OR NOT THE
del Prado covering the entire COURT OF
parcel of land known as APPEALS
Cadastral Lot No. 11909.[9] COMMITTED
GRAVE ERROR
IN FAILING TO
An appeal was duly filed. On September 26, RULE THAT
THE SALE OF
2000, the CA promulgated the assailed decision,
THE LOT IS
reversing and setting aside the decision of the RTC. FOR A LUMP
SUM OR
The CA no longer touched on the character of CUERPO
CIERTO[;]
the sale, because it found that petitioner availed
III. WHETHER
herself of an improper remedy. The “petition for OR NOT THE
registration of document” is not one of the remedies COURT A QUO
provided under P.D. No. 1529, after the original HAS
JURISDICTION
registration has been effected. Thus, the CA ruled that
OVER THE
the lower court committed an error when it assumed PETITION FOR
jurisdiction over the petition, which prayed for a REGISTRATIO
remedy not sanctioned under the Property N OF THE
DEED OF
Registration Decree. Accordingly, the CA disposed, ABSOLUTE
as follows: SALE DATED
11 JUNE 1990
EXECUTED
 BETWEEN and boundaries are stated (e.g., P1
HEREIN million for 1,000 square meters, etc.).
PETITIONER In Rudolf Lietz, Inc. v. Court of
AND Appeals (478 SCRA 451), the Court
RESPONDENT discussed the distinction:
S[.][11]
“…In a unit price
contract, the statement
The core issue in this case is whether or not of area of immovable is
not conclusive and the
the sale of the land was for a lump sum or not. price may be reduced
or increased depending
Petitioner asserts that the plain language of on the area actually
delivered. If the
the Deed of Sale shows that it is a sale of a real estate
vendor delivers less
for a lump sum, governed under Article 1542 of the than the area agreed
Civil Code.[12] In the contract, it was stated that the upon, the vendee may
oblige the vendor to
land contains an area of 4,000 sq m more or less,
deliver all that may be
bounded on the North by Lot No. 11903, on the East stated in the contract or
by Lot No. 11908, on the South by Lot Nos. 11858 & demand for the
11912, and on the West by Lot No. 11910. When the proportionate reduction
of the purchase price if
OCT was issued, the area of Lot No. 11909 was delivery is not possible.
declared to be 14,475 sq m, with an excess of 10,475 If the vendor delivers
sq m. In accordance with Article 1542, respondents more than the area
stated in the contract,
are, therefore, duty-bound to deliver the whole area the vendee has the
within the boundaries stated, without any option to accept only
corresponding increase in the price.Thus, petitioner the amount agreed
upon or to accept the
concludes that she is entitled to have the certificate of
whole area, provided he
title, covering the whole Lot No. 11909, which was pays for the additional
originally issued in the names of respondents, area at the contract rate.
transferred to her name.
xxxx

We do not agree. In the case

where the area of an
immovable is stated in
In Esguerra v. Trinidad,[13] the Court had the contract based on
occasion to discuss the matter of sales involving real an estimate, the actual
estates. The Court’s pronouncement is quite area delivered may not
measure up exactly
instructive:
with the area stated in
the contract. According
In sales involving real estate, to Article 1542 of the
the parties may choose between two Civil Code, in the sale
types of pricing agreement: a unit of real estate, made for
price contract wherein the purchase a lump sum and not at
price is determined by way of the rate of a certain
reference to a stated rate per unit area sum for a unit of
(e.g., P1,000 per square meter), or a measure or number,
lump sum contract which states a full there shall be no
purchase price for an immovable the increase or decrease of
area of which may be declared based the price, although
on the estimate or where both the area there be a greater or
less areas or number thereof that
than that stated in the distinguishes the
contract. . . . determinate object.[14]

xxxx
The Court, however, clarified that the rule laid
Where both the
area and the down in Article 1542 is not hard and fast and admits
boundaries of the of an exception. It held:
immovable are
declared, the area A caveat is in order,
covered within the however. The use of “more or
boundaries of the less” or similar words in
immovable prevails designating quantity covers
over the stated area. In only a reasonable excess or
cases of conflict deficiency. A vendee of land
between areas and sold in gross or with the
boundaries, it is the description “more or less” with
latter which should reference to its area does not
prevail. What really thereby ipso facto take all risk
defines a piece of of quantity in the land..
ground is not the area,
calculated with more Numerical data are not
or less certainty, of course the sole gauge of
mentioned in its unreasonableness of the excess
description, but the or deficiency in area. Courts
boundaries therein laid must consider a host of other
down, as enclosing the factors. In one case (see Roble
land and indicating its v. Arbasa, 414 Phil. 343
limits. In a contract of [2001]), the Court found
sale of land in a mass, substantial discrepancy in area
it is well established due to contemporaneous
that the specific circumstances. Citing change
boundaries stated in the in the physical nature of the
contract must control property, it was therein
over any statement with established that the excess area
respect to the area at the southern portion was a
contained within its product of reclamation, which
boundaries. It is not of explained why the land’s
vital consequence that a technical description in the
deed or contract of sale deed of sale indicated the
of land should disclose seashore as its southern
the area with boundary, hence, the inclusion
mathematical accuracy. of the reclaimed area was
It is sufficient if its declared unreasonable.[15]
extent is objectively
indicated with
sufficient precision to
In the instant case, the deed of sale is not one
enable one to identify
it. An error as to the of a unit price contract. The parties agreed on the
superficial area is purchase price of P40,000.00 for a predetermined
immaterial. Thus, the area of 4,000 sq m, more or less, bounded on the
obligation of the
vendor is to deliver North by Lot No. 11903, on the East by Lot No.
everything within the 11908, on the South by Lot Nos. 11858 & 11912, and
boundaries, inasmuch on the West by Lot No. 11910. In a contract of sale of
as it is the entirety
land in a mass, the specific boundaries stated in the
contract must control over any other statement, with
respect to the area contained within its boundaries.[16]
Black’s Law Dictionary[17] defines the phrase
“more or less” to mean:
About; substantially; or
approximately; implying that
both parties assume the risk of
any ordinary discrepancy. The
words are intended to cover
slight or unimportant
inaccuracies in quantity,
Carter v. Finch, 186 Ark. 954,
57 S.W.2d 408; and are
ordinarily to be interpreted as
taking care of unsubstantial
differences or differences of
small importance compared to
the whole number of items
transferred.
Clearly, the discrepancy of 10,475 sq m
cannot be considered a slight difference in quantity.
The difference in the area is obviously sizeable and
too substantial to be overlooked. It is not a reasonable
excess or deficiency that should be deemed included
in the deed of sale.
We take exception to the avowed rule that this
Court is not a trier of facts. After an assiduous
scrutiny of the records, we lend credence to
respondents’ claim that they intended to sell only
4,000 sq m of the whole Lot No. 11909, contrary to
the findings of the lower court. The records reveal
that when the parties made an ocular inspection,
petitioner specifically pointed to that portion of the
lot, which she preferred to purchase, since there were
mango trees planted and a deep well thereon. After
the sale, respondents delivered and segregated the
area of 4,000 sq m in favor of petitioner by fencing
off the area of 10,475 sq m belonging to them.[18]
Contracts are the law between the contracting
parties. Sale, by its very nature, is a consensual
contract, because it is perfected by mere consent. The
essential elements of a contract of sale are the
following: (a) consent or meeting of the minds, that
is, consent to transfer ownership in exchange for the
price; (b) determinate subject matter; and (c) price
certain in money or its equivalent. All these elements
are present in the instant case.[19]
More importantly, we find no reversible error
in the decision of the CA. Petitioner’s recourse, by
filing the petition for registration in the same
cadastral case, was improper. It is a fundamental
principle in land registration that a certificate of title
serves as evidence of an indefeasible and
incontrovertible title to the property in favor of the
person whose name appears therein. Such
indefeasibility commences after one year from the
date of entry of the decree of registration. [20]
Inasmuch as the petition for registration of document
did not interrupt the running of the period to file the
appropriate petition for review and considering that
the prescribed one-year period had long since
expired, the decree of registration, as well as the
certificate of title issued in favor of respondents, had
become incontrovertible.[21]
WHEREFORE, the petition is DENIED.
SO ORDERED.
ANTHONY ORDUÑA, DENNIS G.R. No.
ORDUÑA, and ANTONITA ORDUÑA,
Petitioners, Present:
CORONA
- versus - VELASC
LEONAR
DEL CAS
EDUARDO J. FUENTEBELLA, PEREZ, J
MARCOS S. CID, BENJAMIN F. CID,
BERNARD G. BANTA, and ARMANDO Promulga
GABRIEL, JR.,
Respondents. June 29, 2
x---------------------------------------------------------------
--------------------------x
 DECISION
VELASCO, JR., J.:
In this Petition for Review[1] under Rule 45 of
the Rules of Court, Anthony Orduña, Dennis Orduña
and Antonita Orduña assail and seek to set aside the
Decision[2] of the Court of Appeals (CA) dated
December 4, 2006 in CA-G.R. CV No. 79680, as
reiterated in its Resolution of March 6, 2007, which
affirmed the May 26, 2003 Decision[3] of the
Regional Trial Court (RTC), Branch 3 in Baguio City,
in Civil Case No. 4984-R, a suit for annulment of title
and reconveyance commenced by herein petitioners
against herein respondents.
Central to the case is a residential lot with an
area of 74 square meters located at Fairview
Subdivision, Baguio City, originally registered in the
name of Armando Gabriel, Sr. (Gabriel Sr.) under
Transfer Certificate of Title (TCT) No. 67181 of the
Registry of Deeds of Baguio City.[4]
As gathered from the petition, with its
enclosures, and the comments thereon of four of the
five respondents,[5] the Court gathers the following
relevant facts:
Sometime in 1996 or thereabouts, Gabriel Sr.
sold the subject lot to petitioner Antonita Orduña
(Antonita), but no formal deed was executed to
document the sale. The contract price was apparently
payable in installments as Antonita remitted from
time to time and Gabriel Sr. accepted partial
payments. One of the Orduñas would later testify that
Gabriel Sr. agreed to execute a final deed of sale
upon full payment of the purchase price.[6]
As early as 1979, however, Antonita and her
sons, Dennis and Anthony Orduña, were already
occupying the subject lot on the basis of some
arrangement undisclosed in the records and even
constructed their house thereon. They also paid real
property taxes for the house and declared it for tax
purposes, as evidenced by Tax Declaration No. (TD)
96-04012-111087[7] in which they place the assessed
value of the structure at PhP 20,090.
After the death of Gabriel Sr., his son and
namesake, respondent Gabriel Jr., secured TCT No.
T-71499[8] over the subject lot and continued
accepting payments from the petitioners. On
December 12, 1996, Gabriel Jr. wrote Antonita
authorizing her to fence off the said lot and to
construct a road in the adjacent lot.[9] On December
13, 1996, Gabriel Jr. acknowledged receipt of a PhP
40,000 payment from petitioners.[10] Through a
letter[11] dated May 1, 1997, Gabriel Jr. acknowledged
that petitioner had so far made an aggregate payment
of PhP 65,000, leaving an outstanding balance of PhP
60,000. A receipt Gabriel Jr. issued dated November
24, 1997 reflected a PhP 10,000 payment.
Despite all those payments made for the
subject lot, Gabriel Jr. would later sell it to Bernard
Banta (Bernard) obviously without the knowledge of
petitioners, as later developments would show.
As narrated by the RTC, the lot conveyance
from Gabriel Jr. to Bernard was effected against the
following backdrop: Badly in need of money, Gabriel
Jr. borrowed from Bernard the amount of PhP 50,000,
payable in two weeks at a fixed interest rate, with the
further condition that the subject lot would answer for
the loan in case of default. Gabriel Jr. failed to pay
the loan and this led to the execution of a Deed of
Sale[12] dated June 30, 1999 and the issuance later of
TCT No. T-72782[13] for subject lot in the name of
Bernard upon cancellation of TCT No. 71499 in the
name of Gabriel, Jr. As the RTC decision indicated,
the reluctant Bernard agreed to acquire the lot, since
he had by then ready buyers in respondents Marcos
Cid and Benjamin F. Cid (Marcos and Benjamin or
the Cids).
Subsequently, Bernard sold to the Cids the
subject lot for PhP 80,000. Armed with a Deed of
Absolute Sale of a Registered Land [14] dated January
19, 2000, the Cids were able to cancel TCT No. T-
72782 and secure TCT No. 72783 [15] covering the
subject lot. Just like in the immediately preceding
transaction, the deed of sale between Bernard and the
Cids had respondent Eduardo J. Fuentebella
(Eduardo) as one of the instrumental witnesses.
Marcos and Benjamin, in turn, ceded the
subject lot to Eduardo through a Deed of Absolute
Sale[16] dated May 11, 2000. Thus, the consequent
cancellation of TCT No. T-72782 and issuance on
May 16, 2000 of TCT No. T-3276 [17] over subject lot
in the name of Eduardo.
As successive buyers of the subject lot,
Bernard, then Marcos and Benjamin, and finally
Eduardo, checked, so each claimed, the title of their
respective predecessors-in-interest with the Baguio
Registry and discovered said title to be free and
unencumbered at the time each purchased the
property. Furthermore, respondent Eduardo, before
buying the property, was said to have inspected the
same and found it unoccupied by the Orduñas.[18]
Sometime in May 2000, or shortly after his
purchase of the subject lot, Eduardo, through his
lawyer, sent a letter addressed to the residence of
Gabriel Jr. demanding that all persons residing on or
physically occupying the subject lot vacate the
premises or face the prospect of being ejected.[19]
Learning of Eduardo’s threat, petitioners went
to the residence of Gabriel Jr. at No. 34 Dominican
Hill, Baguio City. There, they met Gabriel Jr.’s
estranged wife, Teresita, who informed them about
her having filed an affidavit-complaint against her
husband and the Cids for falsification of public
documents on March 30, 2000. According to Teresita,
her signature on the June 30, 1999 Gabriel Jr.–
Bernard deed of sale was a forgery. Teresita further
informed the petitioners of her intent to honor the
aforementioned 1996 verbal agreement between
Gabriel Sr. and Antonita and the partial payments
they gave her father-in-law and her husband for the
subject lot.
On July 3, 2001, petitioners, joined by
Teresita, filed a Complaint[20] for Annulment of Title,
Reconveyance with Damages against the respondents
before the RTC, docketed as Civil Case No. 4984-R,
specifically praying that TCT No. T-3276 dated May
16, 2000 in the name of Eduardo be annulled.
Corollary to this prayer, petitioners pleaded that
Gabriel Jr.’s title to the lot be reinstated and that
petitioners be declared as entitled to acquire
ownership of the same upon payment of the
remaining balance of the purchase price therefor
agreed upon by Gabriel Sr. and Antonita.
While impleaded and served with summons,
Gabriel Jr. opted not to submit an answer.
Ruling of the RTC
By Decision dated May 26, 2003, the RTC
ruled for the respondents, as defendants a quo, and
against the petitioners, as plaintiffs therein, the
dispositive portion of which reads:
WHEREFORE, the instant
complaint is hereby DISMISSED for
lack of merit. The four (4) plaintiffs
are hereby ordered by this Court to
pay each defendant (except Armando
Gabriel, Jr., Benjamin F. Cid, and
Eduardo J. Fuentebella who did not
testify on these damages), Moral
Damages of Twenty Thousand
(P20,000.00) Pesos, so that each
defendant shall receive Moral
Damages of Eighty Thousand
(P80,000.00) Pesos each. Plaintiffs
shall also pay all defendants (except
Armando Gabriel, Jr., Benjamin F.
Cid, and Eduardo J. Fuentebella who
did not testify on these damages),
Exemplary Damages of Ten Thousand
(P10,000.00) Pesos each so that each
defendant shall receive Forty
Thousand (P40,000.00) Pesos as
Exemplary Damages. Also, plaintiffs
are ordered to pay each defendant
 (except Armando Gabriel, Jr., hereby DISMISSED and the 26 May
Benjamin F. Cid, and Eduardo J. 2003 Decision of the Regional Trial
Fuentebella who did not testify on Court, Branch 3 of Baguio City in
these damages), Fifty Thousand Civil Case No. 4989-R is hereby
(P50,000.00) Pesos as Attorney’s Fees, AFFIRMED.
jointly and solidarily.
SO ORDERED.[25]
Cost of suit against the
[21]
plaintiffs. Hence, the instant petition on the submission
that the appellate court committed reversible error of
On the main, the RTC predicated its dismissal law:
action on the basis of the following grounds and/or
1. xxx WHEN IT
premises: HELD THAT THE SALE OF
THE SUBJECT LOT BY
ARMANDO GABRIEL, SR.
AND RESPONDENT
1. Eduardo was a purchaser in good faith and,
ARMANDO GABRIEL, JR.
hence, may avail himself of the provision of Article TO THE PETITIONERS IS
1544[22] of the Civil Code, which provides that in case UNENFORCEABLE.
of double sale, the party in good faith who is able to
2. xxx IN NOT
register the property has better right over the FINDING THAT THE SALE
property; OF THE SUBJECT LOT BY
RESPONDENT ARMANDO
GABRIEL, JR. TO
2. Under Arts. 1356[23] and 1358[24] of the RESPONDENT BERNARD
Code, conveyance of real property must be in the BANTA AND ITS
proper form, else it is unenforceable; SUBSEQUENT SALE BY
THE LATTER TO HIS CO-
RESPONDENTS ARE NULL
3. The verbal sale had no adequate AND VOID.
consideration; and
3. xxx IN NOT
FINDING THAT THE
4. Petitioners’ right of action to assail RESPONDENTS ARE
Eduardo’s title prescribes in one year from date of the BUYERS IN BAD FAITH
issuance of such title and the one-year period has
4. xxx IN FINDING
already lapsed. THAT THE SALE OF THE
SUBJECT LOT BETWEEN
From the above decision, only petitioners GABRIEL, SR. AND
RESPONDENT GABRIEL,
appealed to the CA, their appeal docketed as CA- JR. AND THE PETITIONERS
G.R. CV No. 79680. HAS NO ADEQUATE
CONSIDERATION.
The CA Ruling
5. xxx IN RULING
THAT THE INSTANT
On December 4, 2006, the appellate court ACTION HAD ALREADY
PRESCRIBED.
rendered the assailed Decision affirming the RTC
decision. The fallo reads: 6. xxx IN FINDING
WHEREFORE, premises THAT THE PLAINTIFFS-
considered, the instant appeal is APPELLANTS ARE LIABLE
 FOR MORAL AND
EXEMPLARY DAMAGES
AND ATTORNEY’S FEES.[26]
The Court’s Ruling
The core issues tendered in this appeal may be
reduced to four and formulated as follows, to wit:
first, whether or not the sale of the subject lot by
Gabriel Sr. to Antonita is unenforceable under the
Statute of Frauds; second, whether or not such sale
has adequate consideration; third, whether the instant
action has already prescribed; and, fourth, whether or
not respondents are purchasers in good faith.
The petition is meritorious.
Statute of Frauds Inapplicable
to Partially Executed Contracts
It is undisputed that Gabriel Sr., during his
lifetime, sold the subject property to Antonita, the
purchase price payable on installment basis. Gabriel
Sr. appeared to have been a recipient of some partial
payments. After his death, his son duly recognized
the sale by accepting payments and issuing what may
be considered as receipts therefor. Gabriel Jr., in a
gesture virtually acknowledging the petitioners’
dominion of the property, authorized them to
construct a fence around it. And no less than his
wife, Teresita, testified as to the fact of sale and of
payments received.
Pursuant to such sale, Antonita and her two
sons established their residence on the lot, occupying
the house they earlier constructed thereon. They later
declared the property for tax purposes, as evidenced
by the issuance of TD 96-04012-111087 in their or
Antonita’s name, and paid the real estates due
thereon, obviously as sign that they are occupying
the lot in the concept of owners.
Given the foregoing perspective, Eduardo’s
assertion in his Answer that “persons appeared in the
property”[27] only after “he initiated ejectment
proceedings”[28] is clearly baseless. If indeed
petitioners entered and took possession of the
property after he (Eduardo) instituted the ejectment
suit, how could they explain the fact that he sent a
demand letter to vacate sometime in May 2000?
With the foregoing factual antecedents, the
question to be resolved is whether or not the Statute
of Frauds bars the enforcement of the verbal sale
contract between Gabriel Sr. and Antonita.
The CA, just as the RTC, ruled that the
contract is unenforceable for non-compliance with
the Statute of Frauds.
We disagree for several reasons. Foremost of
these is that the Statute of Frauds expressed in Article
1403, par. (2),[29] of the Civil Code applies only to
executory contracts, i.e., those where no performance
has yet been made. Stated a bit differently, the legal
consequence of non-compliance with the Statute does
not come into play where the contract in question is
completed, executed, or partially consummated.[30]
The Statute of Frauds, in context, provides
that a contract for the sale of real property or of an
interest therein shall be unenforceable unless the sale
or some note or memorandum thereof is in writing
and subscribed by the party or his agent. However,
where the verbal contract of sale has been partially
executed through the partial payments made by
one party duly received by the vendor, as in the
present case, the contract is taken out of the scope of
the Statute.
The purpose of the Statute is to prevent fraud
and perjury in the enforcement of obligations
depending for their evidence on the unassisted
memory of witnesses, by requiring certain
enumerated contracts and transactions to be
evidenced by a writing signed by the party to be
charged.[31] The Statute requires certain contracts to
be evidenced by some note or memorandum in order
to be enforceable. The term “Statute of Frauds” is
descriptive of statutes that require certain classes of
contracts to be in writing. The Statute does not
deprive the parties of the right to contract with
respect to the matters therein involved, but merely
regulates the formalities of the contract necessary to
render it enforceable.[32]
Since contracts are generally obligatory in
whatever form they may have been entered into,
provided all the essential requisites for their validity
are present,[33] the Statute simply provides the method
by which the contracts enumerated in Art. 1403 (2)
may be proved but does not declare them invalid
because they are not reduced to writing. In fine, the
form required under the Statute is for convenience or
evidentiary purposes only.
There can be no serious argument about the
partial execution of the sale in question. The records
show that petitioners had, on separate occasions,
given Gabriel Sr. and Gabriel Jr. sums of money as
partial payments of the purchase price. These
payments were duly receipted by Gabriel Jr. To
recall, in his letter of May 1, 1997, Gabriel, Jr.
acknowledged having received the aggregate
payment of PhP 65,000 from petitioners with the
balance of PhP 60,000 still remaining unpaid. But on
top of the partial payments thus made, possession of
the subject of the sale had been transferred to
Antonita as buyer. Owing thus to its partial execution,
the subject sale is no longer within the purview of the
Statute of Frauds.
Lest it be overlooked, a contract that infringes
the Statute of Frauds is ratified by the acceptance of
benefits under the contract.[34] Evidently, Gabriel, Jr.,
as his father earlier, had benefited from the partial
payments made by the petitioners. Thus, neither
Gabriel Jr. nor the other respondents—successive
purchasers of subject lots—could plausibly set up the
Statute of Frauds to thwart petitioners’ efforts
towards establishing their lawful right over the
subject lot and removing any cloud in their title. As it
were, petitioners need only to pay the outstanding
balance of the purchase price and that would
complete the execution of the oral sale.
There was Adequate Consideration
Without directly saying so, the trial court held
that the petitioners cannot sue upon the oral sale since
in its own words: “x x x for more than a decade,
[petitioners] have not paid in full Armando Gabriel,
Sr. or his estate, so that the sale transaction between
Armando Gabriel Sr. and [petitioners] [has] no
adequate consideration.”
The trial court’s posture, with which the CA
effectively concurred, is patently flawed. For starters,
they equated incomplete payment of the purchase
price with inadequacy of price or what passes as
lesion, when both are different civil law concepts
with differing legal consequences, the first being a
ground to rescind an otherwise valid and enforceable
contract. Perceived inadequacy of price, on the other
hand, is not a sufficient ground for setting aside a sale
freely entered into, save perhaps when the
inadequacy is shocking to the conscience.[35]
The Court to be sure takes stock of the fact
that the contracting parties to the 1995 or 1996 sale
agreed to a purchase price of PhP 125,000 payable
on installments. But the original lot owner, Gabriel
Sr., died before full payment can be effected.
Nevertheless, petitioners continued remitting
payments to Gabriel, Jr., who sold the subject lot to
Bernard on June 30, 1999. Gabriel, Jr., as may be
noted, parted with the property only for PhP 50,000.
On the other hand, Bernard sold it for PhP 80,000 to
Marcos and Benjamin. From the foregoing price
figures, what is abundantly clear is that what Antonita
agreed to pay Gabriel, Sr., albeit in installment, was
very much more than what his son, for the same lot,
received from his buyer and the latter’s buyer later.
The Court, therefore, cannot see its way clear as to
how the RTC arrived at its simplistic conclusion
about the transaction between Gabriel Sr. and
Antonita being without “adequate consideration.”
The Issues of Prescription and the Bona
Fides of the Respondents as Purchasers
Considering the interrelation of these two
issues, we will discuss them jointly.
There can be no quibbling about the
fraudulent nature of the conveyance of the subject lot
effected by Gabriel Jr. in favor of Bernard. It is
understandable that after his father’s death, Gabriel
Jr. inherited subject lot and for which he was issued
TCT No. No. T-71499. Since the Gabriel Sr. –
Antonita sales transaction called for payment of the
contract price in installments, it is also
understandable why the title to the property remained
with the Gabriels. And after the demise of his father,
Gabriel Jr. received payments from the Orduñas and
even authorized them to enclose the subject lot with a
fence. In sum, Gabriel Jr. knew fully well about the
sale and is bound by the contract as predecessor-in-
interest of Gabriel Sr. over the property thus sold.
Yet, the other respondents (purchasers of
subject lot) still maintain that they are innocent
purchasers for value whose rights are protected by
law and besides which prescription has set in against
petitioners’ action for annulment of title and
reconveyance.
The RTC and necessarily the CA found the
purchaser-respondents’ thesis on prescription correct
stating in this regard that Eduardo’s TCT No. T-3276
was issued on May 16, 2000 while petitioners filed
their complaint for annulment only on July 3, 2001.
To the courts below, the one-year prescriptive period
to assail the issuance of a certificate of title had
already elapsed.
We are not persuaded.
The basic complaint, as couched, ultimately
seeks the reconveyance of a fraudulently registered
piece of residential land. Having possession of the
subject lot, petitioners’ right to the reconveyance
thereof, and the annulment of the covering title, has
not prescribed or is not time-barred. This is so for an
action for annulment of title or reconveyance based
on fraud is imprescriptible where the suitor is in
possession of the property subject of the acts, [36] the
action partaking as it does of a suit for quieting of
title which is imprescriptible.[37] Such is the case in
this instance. Petitioners have possession of subject
lots as owners having purchased the same from
Gabriel, Sr. subject only to the full payment of the
agreed price.
The prescriptive period for the reconveyance
of fraudulently registered real property is 10 years,
reckoned from the date of the issuance of the
certificate of title, if the plaintiff is not in possession,
but imprescriptible if he is in possession of the
property.[38] Thus, one who is in actual possession of
a piece of land claiming to be the owner thereof may
wait until his possession is disturbed or his title is
attacked before taking steps to vindicate his right.[39]
As it is, petitioners’ action for reconveyance is
imprescriptible.
This brings us to the question of whether or
not the respondent-purchasers, i.e., Bernard, Marcos
and Benjamin, and Eduardo, have the status of
innocent purchasers for value, as was the thrust of the
trial court’s disquisition and disposition.
We are unable to agree with the RTC.
It is the common defense of the respondent-
purchasers that they each checked the title of the
subject lot when it was his turn to acquire the same
and found it clean, meaning without annotation of
any encumbrance or adverse third party interest. And
it is upon this postulate that each claims to be an
innocent purchaser for value, or one who buys the
property of another without notice that some other
person has a right to or interest in it, and who pays
therefor a full and fair price at the time of the
purchase or before receiving such notice.[40]
The general rule is that one dealing with a
parcel of land registered under the Torrens System
may safely rely on the correctness of the certificate of
title issued therefor and is not obliged to go beyond
the certificate.[41] Where, in other words, the
certificate of title is in the name of the seller, the
innocent purchaser for value has the right to rely on
what appears on the certificate, as he is charged with
notice only of burdens or claims on the res as noted
in the certificate. Another formulation of the rule is
that (a) in the absence of anything to arouse suspicion
or (b) except where the party has actual knowledge of
facts and circumstances that would impel a
reasonably cautious man to make such inquiry or (c)
when the purchaser has knowledge of a defect of title
in his vendor or of sufficient facts to induce a
reasonably prudent man to inquire into the status of
the title of the property,[42] said purchaser is without
obligation to look beyond the certificate and
investigate the title of the seller.
Eduardo and, for that matter, Bernard and
Marcos and Benjamin, can hardly claim to be
innocent purchasers for value or purchasers in good
faith. For each knew or was at least expected to know
that somebody else other than Gabriel, Jr. has a right
or interest over the lot. This is borne by the fact that
the initial seller, Gabriel Jr., was not in possession of
subject property. With respect to Marcos and
Benjamin, they knew as buyers that Bernard, the
seller, was not also in possession of the same
property. The same goes with Eduardo, as buyer, with
respect to Marcos and Benjamin.
Basic is the rule that a buyer of a piece of land
which is in the actual possession of persons other
than the seller must be wary and should investigate
the rights of those in possession. Otherwise, without
such inquiry, the buyer can hardly be regarded as a
buyer in good faith. When a man proposes to buy or
deal with realty, his duty is to read the public
manuscript, i.e., to look and see who is there upon it
and what his rights are. A want of caution and
diligence which an honest man of ordinary prudence
is accustomed to exercise in making purchases is, in
contemplation of law, a want of good faith. The buyer
who has failed to know or discover that the land sold
to him is in adverse possession of another is a buyer
in bad faith.[43]
Where the land sold is in the possession of a
person other than the vendor, the purchaser must go
beyond the certificates of title and make inquiries
concerning the rights of the actual possessor.[44] And
where, as in the instant case, Gabriel Jr. and the
subsequent vendors were not in possession of the
property, the prospective vendees are obliged to
investigate the rights of the one in possession.
Evidently, Bernard, Marcos and Benjamin, and
Eduardo did not investigate the rights over the subject
lot of the petitioners who, during the period material
to this case, were in actual possession thereof.
Bernard, et al. are, thus, not purchasers in good faith
and, as such, cannot be accorded the protection
extended by the law to such purchasers.[45] Moreover,
not being purchasers in good faith, their having
registered the sale, will not, as against the petitioners,
carry the day for any of them under Art. 1544 of the
Civil Code prescribing rules on preference in case of
double sales of immovable property. Occeña v.
Esponilla[46] laid down the following rules in the
application of Art. 1544: (1) knowledge by the first
buyer of the second sale cannot defeat the first
buyer’s rights except when the second buyer first
register in good faith the second sale; and (2)
knowledge gained by the second buyer of the first
sale defeats his rights even if he is first to register,
since such knowledge taints his registration with bad
faith.
Upon the facts obtaining in this case, the act
of registration by any of the three respondent-
purchasers was not coupled with good faith. At the
minimum, each was aware or is at least presumed to
be aware of facts which should put him upon such
inquiry and investigation as might be necessary to
acquaint him with the defects in the title of his
vendor.
The award by the lower courts of damages
and attorney’s fees to some of the herein respondents
was predicated on the filing by the original plaintiffs
of what the RTC characterized as an unwarranted
suit. The basis of the award, needless to stress, no
longer obtains and, hence, the same is set aside.
WHEREFORE, the petition is hereby
GRANTED. The appealed December 4, 2006
Decision and the March 6, 2007 Resolution of the
Court of Appeals in CA-G.R. CV No. 79680
affirming the May 26, 2003 Decision of the Regional
Trial Court, Branch 3 in Baguio City are hereby
REVERSED and SET ASIDE. Accordingly,
petitioner Antonita Orduña is hereby recognized to
have the right of ownership over subject lot covered
by TCT No. T-3276 of the Baguio Registry registered
in the name of Eduardo J. Fuentebella. The Register
of Deeds of Baguio City is hereby ORDERED to
cancel said TCT No. T-3276 and to issue a new one
in the name of Armando Gabriel, Jr. with the proper
annotation of the conditional sale of the lot covered
by said title in favor of Antonita Orduña subject to
the payment of the PhP 50,000 outstanding balance.
Upon full payment of the purchase price by Antonita
Orduña, Armando Gabriel, Jr. is ORDERED to
execute a Deed of Absolute Sale for the transfer of
title of subject lot to the name of Antonita Orduña,
within three (3) days from receipt of said payment.
No pronouncement as to costs.
SO ORDERED.
HEIRS OF JUANITA PADILLA,
G.R. No. 176858
represented by CLAUDIO PADILLA,
Petitioners,
Present:
CARPIO, J., C
- versus - VELASCO, JR
PERALTA,
BERSAMIN,**
ABAD, JJ.
DOMINADOR MAGDUA,
Respondent. Promulgated:
September 15,
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
---------------x
D E C I S I O N
CARPIO, J.:
The Case
Before the Court is a petition for review on
certiorari[1] assailing the Orders dated 8 September
2006[2] and 13 February 2007[3] of the Regional Trial
Court (RTC) of Tacloban City, Branch 34, in Civil
Case No. 2001-10-161.
The Facts
Juanita Padilla (Juanita), the mother of
petitioners, owned a piece of land located in San
Roque, Tanauan, Leyte. After Juanita’s death on
23 March 1989, petitioners, as legal heirs of Juanita,
sought to have the land partitioned. Petitioners sent
word to their eldest brother Ricardo Bahia (Ricardo)
regarding their plans for the partition of the land. In a
letter dated 5 June 1998 written by Ricardo addressed
to them, petitioners were surprised to find out that
Ricardo had declared the land for himself,
prejudicing their rights as co-heirs. It was then
discovered that Juanita had allegedly executed a
notarized Affidavit of Transfer of Real Property[4]
(Affidavit) in favor of Ricardo on 4 June 1966
making him the sole owner of the land. The records
do not show that the land was registered under the
Torrens system.
On 26 October 2001, petitioners filed an action
with the RTC of Tacloban City, Branch 34, for
recovery of ownership, possession, partition and
damages. Petitioners sought to declare void the sale
of the land by Ricardo’s daughters, Josephine Bahia
and Virginia Bahia-Abas, to respondent Dominador
Magdua (Dominador). The sale was made during the
lifetime of Ricardo.
Petitioners alleged that Ricardo, through
misrepresentation, had the land transferred in his
name without the consent and knowledge of his co-
heirs. Petitioners also stated that prior to 1966,
Ricardo had a house constructed on the land.
However, when Ricardo and his wife Zosima
separated, Ricardo left for Inasuyan, Kawayan,
Biliran and the house was leased to third parties.
Petitioners further alleged that the signature of
Juanita in the Affidavit is highly questionable because
on 15 May 1978 Juanita executed a written
instrument stating that she would be leaving behind
to her children the land which she had inherited from
her parents.
Dominador filed a motion to dismiss on the
ground of lack of jurisdiction since the assessed value
of the land was within the jurisdiction of the
Municipal Trial Court of Tanauan, Leyte.
In an Order dated 20 February 2006,[5] the RTC
dismissed the case for lack of jurisdiction. The RTC
explained that the assessed value of the land in the
amount ofP590.00 was less than the amount
cognizable by the RTC to acquire jurisdiction over
the case.[6]
Petitioners filed a motion for reconsideration.
Petitioners argued that the action was not merely for
recovery of ownership and possession, partition and
damages but also for annulment of deed of sale.
Since actions to annul contracts are actions beyond
pecuniary estimation, the case was well within the
jurisdiction of the RTC.
Dominador filed another motion to dismiss on
the ground of prescription.
In an Order dated 8 September 2006, the RTC
reconsidered its previous stand and took cognizance
of the case. Nonetheless, the RTC denied the motion
for reconsideration and dismissed the case on the
ground of prescription pursuant to Section 1, Rule 9
of the Rules of Court. The RTC ruled that the case
was filed only in 2001 or more than 30 years since
the Affidavit was executed in 1966. The RTC
explained that while the right of an heir to his
inheritance is imprescriptible, yet when one of the co-
heirs appropriates the property as his own to the
exclusion of all other heirs, then prescription can set
in. The RTC added that since prescription had set in
to question the transfer of the land under the
Affidavit, it would seem logical that no action could
also be taken against the deed of sale executed by
Ricardo’s daughters in favor of Dominador. The
dispositive portion of the order states:
WHEREFORE, premises
considered, the order of the Court is
reconsidered in so far as the
pronouncement of the Court that it has
no jurisdiction over the nature of the
action. The dismissal of the action,
however, is maintained not by reason
of lack of jurisdiction but by reason of
prescription.
SO ORDERED.[7]
Petitioners filed another motion for
reconsideration which the RTC denied in an Order
dated 13 February 2007 since petitioners raised no
new issue.
Hence, this petition.
The Issue
 The main issue is whether the present action
is already barred by prescription.
The Court’s Ruling
Petitioners submit that the RTC erred in
dismissing the complaint on the ground of
prescription. Petitioners insist that the Affidavit
executed in 1966 does not conform with the
requirement of sufficient repudiation of co-ownership
by Ricardo against his co-heirs in accordance with
Article 494 of the Civil Code. Petitioners assert that
the Affidavit became part of public records only
because it was kept by the Provincial Assessor’s
office for real property tax declaration purposes.
However, such cannot be contemplated by law as a
record or registration affecting real properties.
Petitioners insist that the Affidavit is not an act of
appropriation sufficient to be deemed as constructive
notice to an adverse claim of ownership absent a
clear showing that petitioners, as co-heirs, were
notified or had knowledge of the Affidavit issued by
their mother in Ricardo’s favor.
Respondent Dominador, on the other hand,
maintains that Juanita, during her lifetime, never
renounced her signature on the Affidavit or
interposed objections to Ricardo’s possession of the
land, which was open, absolute and in the concept of
an owner. Dominador contends that the alleged
written instrument dated 15 May 1978 executed by
Juanita years before she died was only made known
lately and conveys the possibility of being fabricated.
Dominador adds that the alleged ‘highly questionable
signature’ of Juanita on the Affidavit was only made
an issue after 35 years from the date of the transfer in
1966 until the filing of the case in 2001. As a buyer
in good faith, Dominador invokes the defense of
acquisitive prescription against petitioners.
At the outset, only questions of law may be
raised in a petition for review on certiorari under
Rule 45 of the Rules of Court. The factual findings
of the lower courts are final and conclusive and may
not be reviewed on appeal except under any of the
following circumstances: (1) the conclusion is
grounded on speculations, surmises or conjectures;
(2) the inference is manifestly mistaken, absurd or
impossible; (3) there is grave abuse of discretion; (4)
the judgment is based on a misapprehension of facts;
(5) the findings of fact are conflicting; (6) there is no
citation of specific evidence on which the factual
findings are based; (7) the finding of absence of facts
is contradicted by the presence of evidence on record;
(8) the findings of the Court of Appeals are contrary
to those of the trial court; (9) the Court of Appeals
manifestly overlooked certain relevant and
undisputed facts that, if properly considered, would
justify a different conclusion; (10) the findings of the
Court of Appeals are beyond the issues of the case;
and (11) such findings are contrary to the admissions
of both parties.[8]
We find that the conclusion of the RTC in
dismissing the case on the ground of prescription
based solely on the Affidavit executed by Juanita in
favor of Ricardo, the alleged seller of the property
from whom Dominador asserts his ownership, is
speculative. Thus, a review of the case is necessary.
Here, the RTC granted the motion to dismiss
filed by Dominador based on Section 1, Rule 9 of the
Rules of Court which states:
Section 1. Defenses and
objections not pleaded. – Defenses
and objections not pleaded either in a
motion to dismiss or in the answer are
deemed waived. However, when it
appears from the pleadings or the
evidence on record that the court has
no jurisdiction over the subject matter,
that there is another action pending
between the same parties for the same
cause, or that the action is barred by
a prior judgment or by statute of
limitations, the court shall dismiss the
 case. (Emphasis supplied)
The RTC explained that prescription had
already set in since the Affidavit was executed on 31
May 1966 and petitioners filed the present case only
on 26 October 2001, a lapse of more than 30 years.
No action could be taken against the deed of sale
made in favor of Dominador without assailing the
Affidavit, and the action to question the Affidavit had
already prescribed.
After a perusal of the records, we find
that the RTC incorrectly relied on the Affidavit alone
in order to dismiss the case without considering
petitioners’ evidence. The facts show that the land
was sold to Dominador by Ricardo’s daughters,
namely Josephine Bahia and Virginia Bahia-Abas,
during the lifetime of Ricardo. However, the alleged
deed of sale was not presented as evidence and
neither was it shown that Ricardo’s daughters had
any authority from Ricardo to dispose of the land.
No cogent evidence was ever presented that Ricardo
gave his consent to, acquiesced in, or ratified the sale
made by his daughters to Dominador. In its 8
September 2006 Order, the RTC hastily concluded
that Ricardo’s daughters had legal personality to sell
the property:
On the allegation of the
plaintiffs (petitioners) that Josephine
Bahia and Virginia Bahia-Abas had no
legal personality or right to [sell] the
subject property is of no moment in
this case. It should be Ricardo Bahia
who has a cause of action against [his]
daughters and not the herein plaintiffs.
After all, Ricardo Bahia might have
already consented to or ratified the
alleged deed of sale.[9]
Also, aside from the Affidavit,
Dominador did not present any proof to show that
Ricardo’s possession of the land had been open,
continuous and exclusive for more than 30 years in
order to establish extraordinary acquisitive
prescription.[10] Dominador merely assumed that
Ricardo had been in possession of the land for 30
years based on the Affidavit submitted to the RTC.
The petitioners, on the other hand, in their pleading
filed with the RTC for recovery of ownership,
possession, partition and damages, alleged that
Ricardo left the land after he separated from his wife
sometime after 1966 and moved to another place.
The records do not mention, however, whether
Ricardo had any intention to go back to the land or
whether Ricardo’s family ever lived there.
Further, Dominador failed to show that
Ricardo had the land declared in his name for
taxation purposes from 1966 after the Affidavit was
executed until 2001 when the case was filed.
Although a tax declaration does not prove ownership,
it is evidence of claim to possession of the land.
Moreover, Ricardo and petitioners are co-heirs
or co-owners of the land. Co-heirs or co-owners
cannot acquire by acquisitive prescription the share
of the other co-heirs or co-owners absent a clear
repudiation of the co-ownership, as expressed in
Article 494 of the Civil Code which states:
Art. 494. x x x No
prescription shall run in favor of a co-
owner or co-heir against his co-
owners or co-heirs as long as he
expressly or impliedly recognizes the
co-ownership.
Since possession of co-owners is like that
of a trustee, in order that a co-owner’s possession
may be deemed adverse to the cestui que trust or
other co-owners, the following requisites must
concur: (1) that he has performed unequivocal acts of
repudiation amounting to an ouster of the cestui que
trust or other co-owners, (2) that such positive acts of
repudiation have been made known to the cestui que
trust or other co-owners, and (3) that the evidence
thereon must be clear and convincing.[11]
In the present case, all three requisites
have been met. After Juanita’s death in 1989,
petitioners sought for the partition of their mother’s
land. The heirs, including Ricardo, were notified Dominador bought the land at his own risk, being
about the plan. Ricardo, through a letter dated 5 aware as buyer that no title had been issued over the
June 1998, notified petitioners, as his co-heirs, that land. As a consequence, Dominador is not afforded
he adjudicated the land solely for himself. protection unless he can manifestly prove his legal
Accordingly, Ricardo’s interest in the land had now entitlement to his claim.
become adverse to the claim of his co-heirs after
repudiating their claim of entitlement to the land. In With regard to the issue of the
Generosa v. Prangan-Valera,[12] we held that in order jurisdiction of the RTC, we hold that the RTC did not
that title may prescribe in favor of one of the co- err in taking cognizance of the case.
owners, it must be clearly shown that he had Under Section 1 of Republic Act No.
repudiated the claims of the others, and that they 7691 (RA 7691),[14] amending Batas Pambansa Blg.
were apprised of his claim of adverse and exclusive 129, the RTC shall exercise exclusive jurisdiction on
ownership, before the prescriptive period begins to the following actions:
run.
Section 1. Section 19 of Batas
Pambansa Blg. 129, otherwise known
However, in the present case, the as the “Judiciary Reorganization Act
prescriptive period began to run only from 5 June of 1980”, is hereby amended to read
as follows:
1998, the date petitioners received notice of
Ricardo’s repudiation of their claims to the land. “Sec. 19. Jurisdiction in civil
Since petitioners filed an action for recovery of cases. – Regional Trial Courts
shall exercise exclusive original
ownership and possession, partition and damages
jurisdiction.
with the RTC on 26 October 2001, only a mere three
years had lapsed. This three-year period falls short of “(1) In all civil actions
the 10-year or 30-year acquisitive prescription period in which the subject of the
litigation is incapable of
required by law in order to be entitled to claim legal pecuniary estimation;
ownership over the land. Thus, Dominador cannot
invoke acquisitive prescription. “(2) In all civil
actions which involve the title
to, or possession of, real
Further, Dominador’s argument that property, or any interest
prescription began to commence in 1966, after the therein, where the assessed
value of the property involved
Affidavit was executed, is erroneous. Dominador
exceeds Twenty Thousand
merely relied on the Affidavit submitted to the RTC Pesos (P20,000.00) or, for
that Ricardo had been in possession of the land for civil actions in Metro Manila,
more than 30 years. Dominador did not submit any where such value exceeds
Fifty Thousand Pesos
other corroborative evidence to establish Ricardo’s (P50,000.00) except actions
alleged possession since 1966. In Heirs of for forcible entry into and
Maningding v. Court of Appeals, [13]
we held that the unlawful detainer of lands or
buildings, original jurisdiction
evidence relative to the possession, as a fact, upon over which is conferred upon
which the alleged prescription is based, must be clear, the Metropolitan Trial Courts,
complete and conclusive in order to establish the Municipal Trial Courts, and
Municipal Circuit Trial
prescription. Here, Dominador failed to present any
Courts; x x x
other competent evidence to prove the alleged
extraordinary acquisitive prescription of Ricardo over
the land. Since the property is an unregistered land, On the other hand, Section 3 of RA 7691
expanded the jurisdiction of the Metropolitan Trial
Courts, Municipal Trial Courts and Municipal Circuit
Trial Courts over all civil actions which involve title
to or possession of real property, or any interest,
outside Metro Manila where the assessed value does
not exceed Twenty thousand pesos (P20,000.00).
The provision states:
Section 3. Section 33
of the same law is hereby amended to
read as follows:
“Sec. 33. Jurisdiction
of Metropolitan Trial Courts,
Municipal Trial Courts and
Municipal Circuit Trial Courts
in Civil Cases. - Metropolitan
Trial Courts, Municipal Trial
Courts, and Municipal Trial
Circuit Trial Courts shall
exercise:
xxx
“(3) Exclusive original
jurisdiction in all civil actions
which involve title to, or
possession of, real property, or
any interest therein where the
assessed value of the property
or interest therein does not
exceed Twenty thousand pesos
(P20,000.00) or, in civil
actions in Metro Manila, where
such assessed value does not
exceed Fifty thousand pesos
(P50,000.00) exclusive of
interest, damages of whatever
kind, attorney’s fees, litigation
expenses and costs: Provided,
That in cases of land not
declared for taxation purposes,
the value of such property shall
be determined by the assessed
value of the adjacent lots.”
In the present case, the records show that the
assessed value of the land was P590.00 according to
the Declaration of Property as of 23 March 2000 filed
with the RTC. Based on the value alone, being way
below P20,000.00, the MTC has jurisdiction over the
case. However, petitioners argued that the action was
not merely for recovery of ownership and possession,
partition and damages but also for annulment of deed
of sale. Since annulment of contracts are actions
incapable of pecuniary estimation, the RTC has
jurisdiction over the case.[15]
Petitioners are correct. In Singson v. Isabela
Sawmill,[16] we held that:
In determining whether an
action is one the subject matter of
which is not capable of pecuniary
estimation this Court has adopted the
criterion of first ascertaining the
nature of the principal action or
remedy sought. If it is primarily for
the recovery of a sum of money, the
claim is considered capable of
pecuniary estimation, and whether
jurisdiction is in the municipal courts
or in the courts of first instance would
depend on the amount of the claim.
However, where the basic issue is
something other than the right to
recover a sum of money, where the
money claim is purely incidental to, or
a consequence of, the principal relief
sought, this Court has considered such
actions as cases where the subject of
the litigation may not be estimated in
terms of money, and are cognizable by
courts of first instance (now Regional
Trial Courts).
When petitioners filed the action with the RTC
they sought to recover ownership and possession of
the land by questioning (1) the due execution and
authenticity of the Affidavit executed by Juanita in
favor of Ricardo which caused Ricardo to be the sole
owner of the land to the exclusion of petitioners who
also claim to be legal heirs and entitled to the land,
and (2) the validity of the deed of sale executed
between Ricardo’s daughters and Dominador. Since
the principal action sought here is something other
than the recovery of a sum of money, the action is
incapable of pecuniary estimation and thus
cognizable by the RTC. Well-entrenched is the rule
that jurisdiction over the subject matter of a case is
conferred by law and is determined by the allegations
in the complaint and the character of the relief
sought, irrespective of whether the party is entitled to
all or some of the claims asserted.[17]
In sum, we find that the Affidavit, as the
principal evidence relied upon by the RTC to dismiss
the case on the ground of prescription, insufficiently
established Dominador’s rightful claim of ownership
to the land. Thus, we direct the RTC to try the case
on the merits to determine who among the parties are
legally entitled to the land.
WHEREFORE, we GRANT the petition. We
REVERSE AND SET ASIDE the Orders dated 8
September 2006 and 13 February 2007 of the
Regional Trial Court of Tacloban City, Branch 34 in
Civil Case No. 2001-10-161.
SO ORDERED.
This case is about the prescriptive period of
an action for rescission of a contract of sale where the
buyer is evicted from the thing sold by a subsequent
judicial order in favor of a third party.
The Facts and the Case
The facts are not disputed. When the late
Emilio Dalope died, he left a 589-square meter
untitled lot[1] in Sta. Barbara, Pangasinan, to his wife,
Felisa Dalope (Felisa) and their nine children, one of
whom was Rosa Dalope-Funcion.[2] To enable Rosa
and her husband Antonio Funcion (the Funcions) get
a loan from respondent Development Bank of the
Philippines (DBP), Felisa sold the whole lot to the
Funcions. With the deed of sale in their favor and the
tax declaration transferred in their names, the
Funcions mortgaged the lot with the DBP.

On February 12, 1979, after the Funcions

HEIRS OF SOFIA QUIRONG, G.R. No. failed to pay their loan, the DBP foreclosed the
173441
mortgage on the lot and consolidated ownership in its
Represented by ROMEO P.
QUIRONG, name on June 17, 1981.[3]
Petitioners, Present:
Four years later or on September 20, 1983 the
Carpio, DBP conditionally sold the lot to Sofia Quirong [4] for
J., Chairperson,
the price of P78,000.00. In their contract of sale,
- versus -
Leonardo-De Castro, Sofia Quirong waived any warranty against eviction.
The contract provided that the DBP did not guarantee
Brion, possession of the property and that it would not be
liable for any lien or encumbrance on the same.
Peralta,*
Quirong gave a down payment of P14,000.00.
and

Abad, Two months after that sale or on November

JJ. 28, 1983 Felisa and her eight children (collectively,
DEVELOPMENT BANK OF the Dalopes)[5] filed an action for partition and
THE PHILIPPINES,
declaration of nullity of documents with damages
Promulgated:
Respondent. against the DBP and the Funcions before the
December Regional Trial Court (RTC) of Dagupan City, Branch
3, 2009 42, in Civil Case D-7159.
x
---------------------------------------------------------------- On December 27, 1984, notwithstanding the
------------------------ x
suit, the DBP executed a deed of absolute sale of the
DECISION subject lot in Sofia Quirong’s favor. The deed of sale
carried substantially the same waiver of warranty
ABAD, J.: against eviction and of any adverse lien or
encumbrance.

On May 11, 1985, Sofia Quirong having since
died, her heirs (petitioner Quirong heirs) filed an
answer in intervention[6] in Civil Case D-7159 in
which they asked the RTC to award the lot to them
and, should it instead be given to the Dalopes, to
allow the Quirong heirs to recover the lot’s value
from the DBP. But, because the heirs failed to file a
formal offer of evidence, the trial court did not rule
on the merits of their claim to the lot and,
alternatively, to relief from the DBP.[7]
On December 16, 1992 the RTC rendered a
decision, declaring the DBP’s sale to Sofia Quirong
valid only with respect to the shares of Felisa and
Rosa Funcion in the property. It declared Felisa’s
sale to the Funcions, the latter’s mortgage to the DBP,
and the latter’s sale to Sofia Quirong void insofar as
they prejudiced the shares of the eight other children
of Emilio and Felisa who were each entitled to a tenth
share in the subject lot.
The DBP received a copy of the decision on
January 13, 1993 and, therefore, it had until January
28, 1993 within which to file a motion for its
reconsideration or a notice of appeal from it. But the
DBP failed to appeal supposedly because of
excusable negligence and the withdrawal of its
previous counsel of record.[8]
When the RTC judgment became final and the
court issued a writ of execution, the DBP resisted the
writ by motion to quash, claiming that the decision
could not be enforced because it failed to state by
metes and bounds the particular portions of the lot
that would be assigned to the different parties in the
case. The RTC denied the DBP’s motion, prompting
the latter to seek recourse by special civil action of
certiorari directly with this Court in G.R. 116575,
Development Bank of the Philippines v. Fontanilla.
On September 7, 1994 the Court issued a resolution,
denying the petition for failure of the DBP to pay the
prescribed fees. This resolution became final and
executory on January 17, 1995.[9]
On June 10, 1998 the Quirong heirs filed the
present action[10] against the DBP before the RTC of
Dagupan City, Branch 44, in Civil Case CV-98-
02399-D for rescission of the contract of sale
between Sofia Quirong, their predecessor, and the
DBP and praying for the reimbursement of the price
of P78,000.00 that she paid the bank plus damages.
The heirs alleged that they were entitled to the
rescission of the sale because the decision in Civil
Case D-7159 stripped them of nearly the whole of the
lot that Sofia Quirong, their predecessor, bought from
the DBP. The DBP filed a motion to dismiss the
action on ground of prescription and res judicata but
the RTC denied their motion.
On June 14, 2004, after hearing the case, the
RTC rendered a decision,[11] rescinding the sale
between Sofia Quirong and the DBP and ordering the
latter to return to the Quirong heirs the P78,000.00
Sofia Quirong paid the bank.[12] On appeal by the
DBP, the Court of Appeals (CA) reversed the RTC
decision and dismissed the heirs’ action on the
ground of prescription. The CA concluded that,
reckoned from the finality of the December 16, 1992
decision in Civil Case D-7159, the complaint filed on
June 10, 1998 was already barred by the four-year
prescriptive period under Article 1389 of the Civil
Code.[13] The Quirong heirs filed a motion for
reconsideration of the decision but the appellate court
denied it,[14] thus, this petition.
The Issues Presented
The issues presented in this case are:
1. Whether or not the
Quirong heirs’ action for rescission of
respondent DBP’s sale of the subject
property to Sofia Quirong was already
barred by prescription; and
2. In the negative, whether
or not the heirs of Quirong were
entitled to the rescission of the DBP’s
sale of the subject lot to the late Sofia
Quirong as a consequence of her heirs
having been evicted from it.
The Court’s Rulings
The CA held that the Quirong heirs’ action for
rescission of the sale between DBP and their
predecessor, Sofia Quirong, is barred by prescription
reckoned from the date of finality of the December
16, 1992 RTC decision in Civil Case D-7159 and
applying the prescriptive period of four years set by
Article 1389 of the Civil Code.
Unfortunately, the CA did not state in its
decision the date when the RTC decision in Civil
Case D-7159 became final and executory, which
decision resulted in the Quirong heirs’ loss of 80% of
the lot that the DBP sold to Sofia Quirong. Petitioner
heirs claim that the prescriptive period should be
reckoned from January 17, 1995, the date this Court’s
resolution in G.R. 116575 became final and
executory.[15]
But the incident before this Court in G.R.
116575 did not deal with the merit of the RTC
decision in Civil Case D-7159. That decision became
final and executory on January 28, 1993 when the
DBP failed to appeal from it within the time set for
such appeal. The incident before this Court in G.R.
116575 involved the issuance of the writ of execution
in that case. The DBP contested such issuance
supposedly because the dispositive portion of the
decision failed to specify details that were needed for
its implementation. Since this incident did not affect
the finality of the decision in Civil Case D-7159, the
prescriptive period remained to be reckoned from
January 28, 1993, the date of such finality.
The next question that needs to be resolved is
the applicable period of prescription. The DBP
claims that it should be four years as provided under
Article 1389 of the Civil Code.[16] Article 1389
provides that “the action to claim rescission must be
commenced within four years.” The Quirong heirs,
on the other hand, claim that it should be 10 years as
provided under Article 1144 which states that actions
“upon a written contract” must be brought “within 10
years from the date the right of action accrues.”
Now, was the action of the Quirong heirs “for
rescission” or “upon a written contract”? There is no
question that their action was for rescission, since
their complaint in Civil Case CV-98-02399-D asked
for the rescission of the contract of sale between
Sofia Quirong, their predecessor, and the DBP and
the reimbursement of the price ofP78,000.00 that
Sofia Quirong paid the bank plus damages. The
prescriptive period for rescission is four years.
But it is not that simple. The remedy of
“rescission” is not confined to the rescissible
contracts enumerated under Article 1381.[17] Article
1191 of the Civil Code gives the injured party in
reciprocal obligations, such as what contracts are
about, the option to choose between fulfillment and
“rescission.” Arturo M. Tolentino, a well-known
authority in civil law, is quick to note, however, that
the equivalent of Article 1191 in the old code actually
uses the term “resolution” rather than the present
“rescission.”[18] The calibrated meanings of these
terms are distinct.
“Rescission” is a subsidiary action based on
injury to the plaintiff’s economic interests as
described in Articles 1380 and 1381. “Resolution,”
the action referred to in Article 1191, on the other
hand, is based on the defendant’s breach of faith, a
violation of the reciprocity between the parties. As
an action based on the binding force of a written
contract, therefore, rescission (resolution) under
Article 1191 prescribes in 10 years. Ten years is the
period of prescription of actions based on a written
contract under Article 1144.
The distinction makes sense. Article 1191
gives the injured party an option to choose between,
first, fulfillment of the contract and, second, its
rescission. An action to enforce a written contract
(fulfillment) is definitely an “action upon a written
contract,” which prescribes in 10 years (Article
1144). It will not be logical to make the remedy of
fulfillment prescribe in 10 years while the alternative
remedy of rescission (or resolution) is made to
prescribe after only four years as provided in Article
1389 when the injury from which the two kinds of
actions derive is the same.
Here, the Quirong heirs alleged in their
complaint that they were entitled to the rescission of
the contract of sale of the lot between the DBP and
Sofia Quirong because the decision in Civil Case D-
7159 deprived her heirs of nearly the whole of that
lot. But what was the status of that contract at the
time of the filing of the action for rescission?
Apparently, that contract of sale had already been
fully performed when Sofia Quirong paid the full
price for the lot and when, in exchange, the DBP
executed the deed of absolute sale in her favor. There
was a turnover of control of the property from DBP
to Sofia Quirong since she assumed under their
contract, “the ejectment of squatters and/or
occupants” on the lot, at her own expense.[19]
Actually, the cause of action of the Quirong
heirs stems from their having been ousted by final
judgment from the ownership of the lot that the DBP
sold to Sofia Quirong, their predecessor, in violation
of the warranty against eviction that comes with
every sale of property or thing. Article 1548 of the
Civil Code provides:
Article 1548. Eviction shall
take place whenever by a final
judgment based on a right prior to
the sale or an act imputable to the
vendor, the vendee is deprived of the
whole or of a part of thing
purchased.
xxxx
With the loss of 80% of the subject lot to the
Dalopes by reason of the judgment of the RTC in
Civil Case D-7159, the Quirong heirs had the right to
file an action for rescission against the DBP pursuant
to the provision of Article 1556 of the Civil Code
which provides:
Article 1556. Should the
vendee lose, by reason of the
eviction, a part of the thing sold of
such importance, in relation to the
whole, that he would not have
bought it without said part, he may
demand the rescission of the
contract; but with the obligation to
return the thing without other
encumbrances than those which it
had when he acquired it. x x x
And that action for rescission, which is based
on a subsequent economic loss suffered by the buyer,
was precisely the action that the Quirong heirs took
against the DBP. Consequently, it prescribed as
Article 1389 provides in four years from the time the
action accrued. Since it accrued on January 28, 1993
when the decision in Civil Case D-7159 became final
and executory and ousted the heirs from a substantial
portion of the lot, the latter had only until January 28,
1997 within which to file their action for rescission.
Given that they filed their action on June 10, 1998,
they did so beyond the four-year period.
With the conclusion that the Court has
reached respecting the first issue presented in this
case, it would serve no useful purpose for it to further
consider the issue of whether or not the heirs of
Quirong would have been entitled to the rescission of
the DBP’s sale of the subject lot to Sofia Quirong as a
consequence of her heirs having been evicted from it.
As the Court has ruled above, their action was barred
by prescription. The CA acted correctly in reversing
the RTC decision and dismissing their action.
Parenthetically, the Quirong heirs were
allowed by the RTC to intervene in the original action
for annulment of sale in Civil Case D-7159 that the
Dalopes filed against the DBP and the Funcions. Not
only did the heirs intervene in defense of the sale,
they likewise filed a cross claim against the DBP.
And they were apparently heard on their defense and
cross claim but the RTC did not adjudicate their
claim for the reason that they failed to make a formal
offer of their documentary exhibits. Yet, they did not
appeal from this omission or from the judgment of
the RTC, annulling the DBP’s sale of the subject lot
to Sofia Quirong. This point is of course entirely
academic but it shows that the Quirong heirs have
themselves to blame for the loss of whatever right
they may have in the case.
WHEREFORE, the Court DENIES the
petition and AFFIRMS the November 30, 2005
decision of the Court of Appeals in CA-G.R. CV
83897.
SO ORDERED.
JAIME D. ANG, G.R. No. 1778
 Petitioner, To secure the release of the vehicle, Ang paid
Present:
BA Finance the amount of P62,038.47[6] on March
QUISUMBING,23, 1993. Soledad refused to reimburse the said
- versus - CARPIO MORALES,
amount, despite repeated demands, drawing Ang to
TINGA,
charge him for Estafa with abuse of confidence
VELASCO, JR., and
BRION, JJ before the Office of the City Prosecutor, Cebu City.
COURT OF APPEALS AND BRUNO By Resolution[7] of July 15, 1993, the City
SOLEDAD, Prosecutor’s Office dismissed the complaint for
Respondents. Promulgated:
insufficiency of evidence, drawing Ang to file on
September November
29, 2008 9, 1993 the first[8] of three successive
x------------------------------------ complaints for damages against Soledad before the
- - - - - - - - - - - - - -x
RTC of Cebu City where it was docketed as Civil
Case No. Ceb-14883.

DECISION
CARPIO MORALES, J.:
Under a “car-swapping” scheme, respondent
Bruno Soledad (Soledad) sold his Mitsubishi GSR
sedan 1982 model to petitioner Jaime Ang (Ang) by
Deed of Absolute Sale[1] dated July 28, 1992. For his
part, Ang conveyed to Soledad his Mitsubishi Lancer
model 1988, also by Deed of Absolute Sale [2] of even
date. As Ang’s car was of a later model, Soledad paid
him an additional P55,000.00.
Ang, a buyer and seller of used vehicles, later
offered the Mitsubishi GSR for sale through Far
Eastern Motors, a second-hand auto display center.
The vehicle was eventually sold to a certain Paul
Bugash (Bugash) for P225,000.00, by Deed of
Absolute Sale[3] dated August 14, 1992. Before the
deed could be registered in Bugash’s name, however,
the vehicle was seized by virtue of a writ of
replevin[4] dated January 26, 1993 issued by the Cebu
City Regional Trial Court (RTC), Branch 21 in Civil
Case No. CEB-13503, “BA Finance Corporation vs.
Ronaldo and Patricia Panes,” on account of the
alleged failure of Ronaldo Panes, the owner of the
vehicle prior to Soledad, to pay the mortgage debt [5]
constituted thereon.
Branch 19 of the Cebu City RTC, by Order[9]
dated May 4, 1995, dismissed Civil Case No. Ceb-
14883 for failure to submit the controversy to
barangay conciliation.
Ang thereafter secured a certification to file
action and again filed a complaint for damages, [10]
docketed as Ceb-17871, with the RTC of Cebu City,
Branch 14 which dismissed it, by Order[11] dated
March 27, 1996, on the ground that the amount
involved is not within its jurisdiction.
Ang thereupon filed on July 15, 1996 with the
Municipal Trial Court in Cities (MTCC) a complaint,
[12]
docketed as R-36630, the subject of the instant
petition.
After trial, the MTCC dismissed the complaint
on the ground of prescription, vìz:
It appearing that the
Deed of Sale to plaintiff o[f]
subject vehicle was dated and
executed on 28 July 1992, the
complaint before the Barangay
terminated 21 September 1995
per Certification to File Action
attached to the Complaint, and
this case eventually was filed
with this Court on 15 July
1996, this action has already
been barred since more than
 six (6) months elapsed from
the delivery of the subject
vehicle to the plaintiff buyer
to the filing of this action,
pursuant to the aforequoted
Article 1571.”[13] (Emphasis
and underscoring supplied)
His motion for reconsideration having been
denied, Ang appealed to the RTC, Branch 7 of which
affirmed the dismissal of the complaint, albeit it
rendered judgment in favor of Ang “for the sake of
justice and equity, and in consonance with the
salutary principle of non-enrichment at another’s
expense.” The RTC ratiocinated:
xxxx
[I]t was error for the
Court to rely on Art. 1571 of
the Civil Code to declare the
action as having prescribed,
since the action is not one for
the enforcement of the
warranty against hidden
defects. Moreover, Villostas
vs. Court of Appeals declared
that the six-month prescriptive
period for a redhibitory action
applies only to implied
warranties. There is here
anexpress warranty. If at all,
what applies is Art. 1144 of
the Civil Code, the general
law on prescription, which
states, inter alia, that actions
‘upon a written contract’
prescribes in ten (10) years
[Engineering & Machinery
Corporation vs. Court of
Appeals, G.R. No. 52267,
January 24, 1996].
More appropriate to the
discussion would be
defendant’s warranty against
eviction, which he explicitly
made in the Deed of Absolute
Sale: I hereby covenant my
absolute ownership to (sic) the
above-described property and
the same is free from all liens
and encumbrances and I will
defend the same from all
claims or any claim
whatsoever…”
Still the Court finds
that plaintiff cannot recover
under this warranty. There
is no showing of compliance
with the requisites.
xxxx
Nonetheless, for the
sake of justice and equity,
and in consonance with the
salutary principle of non-
enrichment at another’s
expense, defendant should
reimburse plaintiff the
P62,038.47 which on March
23, 1993 he paid BA Finance
Corporation to release the
mortgage on the car.
(Emphasis and underscoring
supplied)[14]
The RTC thus disposed as
follows:
Wherefore, judgment is
rendered directing defendant to
pay plaintiff P62,038.47, the
amount the latter paid BA
Finance Corporation to release
the mortgage on the vehicle,
with interest at the legal rate
computed from March 23,
1993. Except for this, the
judgment in the decision of the
trial court, dated October 8,
2001 dismissing the claims of
plaintiff is affirmed.”
(Underscoring supplied)[15]
Soledad’s Motion for Reconsideration was
denied by Order[16] of December 12, 2002, hence, he
elevated the case to the Court of Appeals, Cebu City.
The appellate court, by the challenged
[17]
Decision of August 30, 2006, noting the sole issue
to be resolved whether the RTC erred in directing
Soledad to pay Ang the amount the latter paid to BA
Finance plus legal interest, held that, following
Goodyear Phil., Inc. v. Anthony Sy,[18] Ang “cannot
anymore seek refuge under the Civil Code provisions
granting award of damages for breach of warranty
against eviction for the simple fact that three years
and ten months have lapsed from the execution of the
deed of sale in his favor prior to the filing of the
instant complaint.” It further held:
It bears to stress
that the deed of
absolute sale was
executed on July 28,
1992, and the instant
complaint dated May
15, 1996 was received
by the MTCC on July
15, 1996.
While it is true
that someone unjustly
enriched himself at the
expense of herein
respondent, we agree
with petitioner
(Soledad) that it is not
he.
The appellate court accordingly reversed the
RTC decision and denied the petition.
By Resolution[19] of April 25, 2007, the
appellate court denied Ang’s motion for
reconsideration, it further noting that when Ang
settled the mortgage debt to BA Finance, he did so
voluntarily in order to resell the vehicle, hence,
Soledad did not benefit from it as he was unaware of
the mortgage constituted on the vehicle by the
previous owner.
The appellate court went on to hold that
Soledad “has nothing to do with the transaction
anymore; his obligation ended when he delivered the
subject vehicle to the respondent upon the perfection
of the contract of sale.” And it reiterated its ruling
that the action, being one arising from breach of
warranty, had prescribed, it having been filed beyond
the 6-month prescriptive period.
The appellate court brushed aside Ang’s
contention that Soledad was the proximate cause of
the loss due to the latter’s failure to thoroughly
examine and verify the registration and ownership of
the previous owner of the vehicle, given that Ang is
engaged in the business of buying and selling second-
hand vehicles and is therefore expected to be cautious
in protecting his rights under the circumstances.
Hence, the present recourse – petition for
review on certiorari, Ang maintaining that his cause
of action had not yet prescribed when he filed the
complaint and he should not be blamed for paying the
mortgage debt.
To Ang, the ruling in Goodyear v. Sy is not
applicable to this case, there being an express
warranty in the herein subject Deed of Absolute Sale
and, therefore, the action based thereon prescribes in
ten (10) years following Engineering & Machinery
Corp. v. CA[20] which held that where there is an
express warranty in the contract, the prescriptive
period is the one specified in the contract or, in the
absence thereof, the general rule on rescission of
contract.
Ang likewise maintains that he should not be
blamed for paying BA Finance and should thus be
entitled to reimbursement and damages for, following
Carrascoso, Jr. v. Court of Appeals,[21] in case of
breach of an express warranty, the seller is liable for
damages provided that certain requisites are met
which he insists are present in the case at bar.
The resolution of the sole issue of whether the
complaint had prescribed hinges on a determination
of what kind of warranty is provided in the Deed of
Absolute Sale subject of the present case.
A warranty is a statement or representation
made by the seller of goods, contemporaneously and
as part of the contract of sale, having reference to the
character, quality or title of the goods, and by which
he promises or undertakes to insure that certain facts
are or shall be as he then represents them.[22]
Warranties by the seller may be express or
implied. Art. 1546 of the Civil Code defines express
warranty as follows:
Machinery Corp. states that “the prescriptive period
for instituting actions based on a breach of express
warranty is that specified in the contract, and in the
absence of such period, the general rule on rescission
of contract, which is four years (Article 1389, Civil
Code).”

“Art. 1546. Any

affirmation of fact or
any promise by the
seller relating to the
thing is an express As for actions based on breach of implied
warranty if the
warranty, the prescriptive period is, under Art. 1571
natural tendency of
such affirmation or (warranty against hidden defects of or encumbrances
promise is to induce upon the thing sold) and Art. 1548 (warranty against
the buyer to purchase eviction), six months from the date of delivery of the
the same, and if the
buyer purchases the thing sold.
thing relying thereon.
No affirmation of the
value of the thing, nor The following provision of the Deed of
any statement Absolute Sale reflecting the kind of warranty made
purporting to be a by Soledad reads:
statement of the seller’s
opinion only, shall be
construed as a xxxx
warranty, unless the I hereby
seller made such covenant my absolute
affirmation or ownership to (sic) the
statement as an expert above-described
and it was relied upon property and the
by the buyer.” same is free from all
(Emphasis and liens and
underscoring supplied) encumbrances and I
will defend the same
from all claims or any
On the other hand, an implied warranty is that claim whatsoever; will
which the law derives by application or inference save the vendee from
any suit by the
from the nature of the transaction or the relative
government of the
situation or circumstances of the parties, irrespective Republic of the
of any intention of the seller to create it.[23] Among Philippines.
the implied warranty provisions of the Civil Code
are: as to the seller’s title (Art. 1548), against hidden x x x x
defects and encumbrances (Art. 1561), as to fitness or (Emphasis supplied)
merchantability (Art. 1562), and against eviction
(Art. 1548). In declaring that he owned and had clean title
to the vehicle at the time the Deed of Absolute Sale
The earlier cited ruling in Engineering & was forged, Soledad gave an implied warranty of
title. In pledging that he “will defend the same from a right prior to the
sale made by the
all claims or any claim whatsoever [and] will save the vendor; and
vendee from any suit by the government of the
Republic of the Philippines,” Soledad gave a (4) The vendor
has been summoned
warranty against eviction.
and made co-
defendant in the suit
Given Ang’s business of buying and selling for eviction at the
used vehicles, he could not have merely relied on instance of the vendee.
Soledad’s affirmation that the car was free from liens
In the absence
and encumbrances. He was expected to have of these requisites, a
thoroughly verified the car’s registration and related breach of the warranty
documents. against eviction under
Article 1547 cannot be
[24]
declared.”
Since what Soledad, as seller, gave was an (Emphasis supplied),
implied warranty, the prescriptive period to file a
breach thereof is six months after the delivery of the
have not been met. For one, there is no judgment
vehicle, following Art. 1571. But even if the date of
which deprived Ang of the vehicle. For another,
filing of the action is reckoned from the date
there was no suit for eviction in which Soledad as
petitioner instituted his first complaint for damages
seller was impleaded as co-defendant at the instance
on November 9, 1993, and not on July 15, 1996 when
of the vendee.
he filed the complaint subject of the present petition,
the action just the same had prescribed, it having
been filed 16 months after July 28, 1992, the date of Finally, even under the principle of solutio
delivery of the vehicle. indebiti which the RTC applied, Ang cannot recover
from Soledad the amount he paid BA Finance. For,
On the merits of his complaint for damages, even if
as the appellate court observed, Ang settled the
Ang invokes breach of warranty against eviction as
mortgage debt on his own volition under the
inferred from the second part of the earlier-quoted
supposition that he would resell the car. It turned out
provision of the Deed of Absolute Sale, the following
essential requisites for such breach, vìz:

“A breach of
this warranty requires
the concurrence of the
following
circumstances:

(1) The
purchaser has been
deprived of the whole
or part of the thing
sold;

(2) This
eviction is by a final
judgment;

(3) The basis

thereof is by virtue of
that he did pay BA Finance in order to avoid
returning the payment made by the ultimate buyer
Bugash. It need not be stressed that Soledad did not
benefit from Ang’s paying BA Finance, he not being
the one who mortgaged the vehicle, hence, did not
benefit from the proceeds thereof.

WHEREFORE, the petition is, in light of the

foregoing disquisition, DENIED.

SO ORDERED.