USUFRUCT
years. Thereafter, she worked at the
MERCEDES MORALIDAD,
Petitioner,
- versus -
SPS. DIOSDADO PERNES and ARLENE
PERNES,
Respondents.
G.R. No. 152809
Present:
PUNO, J., Chairperson,
SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
GARCIA, JJ.
Promulgated:
August 3, 2006
x ----------------------------------------------------
-----------------------------x
DECISION
GARCIA, J.:
Under consideration is this petition for
review on certiorari under Rule 45 of the
Rules of Court to nullify and set aside the
following issuances of the Court of
Appeals (CA) in CA-G.R. SP No. 61610, to
wit:
1. Decision dated September
27, 2001,[1] affirming an earlier decision
of the Regional Trial Court (RTC) of
Davao City which reversed that of the
Municipal Trial Court in Cities (MTCC),
Davao City, Branch 1, in an action for
unlawful detainer thereat commenced
by the petitioner against the herein
respondents; and
2. Resolution dated February
28, 2002,[2] denying petitioners motion
for reconsideration.
At the heart of this controversy is a
parcel of land located in Davao City and
registered in the name of petitioner
Mercedes Moralidad under Transfer
Certificate of Title (TCT) No. T-123125 of
the Registry of Deeds of Davao City.
In her younger days, petitioner taught in
Davao City, Quezon City and Manila.
While teaching in Manila, she had the
good fortune of furthering her studies at
the University of Pennsylvania, U.S.A.
While schooling, she was offered to
teach at the Philadelphia Catholic
Archdiocese, which she did for seven (7)
to look for his own;
Mental Health Department of said
University for the next seventeen (17)
years.
During those years, she would come
home to the Philippines to spend her
two-month summer vacation in her
hometown in Davao City. Being single,
she would usually stay in Mandug, Davao
City, in the house of her niece,
respondent Arlene Pernes, a daughter of
her younger sister, Rosario.
Back in the U.S.A. sometime in 1986, she
received news from Arlene that Mandug
at the outskirts of Davao City was
infested by NPA rebels and many women
and children were victims of crossfire
between government troops and the
insurgents. Shocked and saddened about
this development, she immediately sent
money to Araceli, Arlenes older sister,
with instructions to look for a lot in
Davao City where Arlene and her family
could transfer and settle down. This was
why she bought the parcel of land
covered by TCT No. T-123125.
Petitioner acquired the lot property
initially for the purpose of letting Arlene
move from Mandug to Davao City proper
but later she wanted the property to be
also available to any of her kins wishing
to live and settle in Davao City.
Petitioner made known this intention in
a document she executed on July 21,
1986.[3] The document reads:
I, MERCEDES VIA MORALIDAD, of legal
age, single, having been born on the
29th day of January, 1923, now actually
residing at 8021 Lindbergh Boulevard,
Philadelphia, Pennsylvania, U.S.A.,
wishes to convey my honest intention
regarding my properties situated at Palm
Village Subdivision, Bajada, Davao City,
9501, and hereby declare:
1. That it is my desire that Mr. and Mrs.
Diosdado M. Pernes may build their
house therein and stay as long as they
like;
2. That anybody of my kins who wishes
to stay on the aforementioned real
property should maintain an atmosphere
of cooperation, live in harmony and
must avoid bickering with one another;
3. That anyone of my kins may enjoy
the privilege to stay therein and may
avail the use thereof. Provided, however,
that the same is not inimical to the
purpose thereof;
4. That anyone of my kins who cannot
conform with the wishes of the
undersigned may exercise the freedom
5. That any proceeds or income
derived from the aforementioned
properties shall be allotted to my
nearest kins who have less in life in
greater percentage and lesser
percentage to those who are better of in
standing.
xxx xxx xxx
Following her retirement in 1993,
petitioner came back to the Philippines
to stay with the respondents on the
house they build on the subject
property. In the course of time, their
relations turned sour because members
of the Pernes family were impervious to
her suggestions and attempts to change
certain practices concerning matters of
health and sanitation within their
compound. For instance, Arlenes eldest
son, Myco Pernes, then a fourth year
veterinary medicine student, would
answer petitioner back with clenched fist
and at one time hurled profanities when
she corrected him. Later, Arlene herself
followed suit. Petitioner brought the
matter to the local barangay lupon
where she lodged a complaint for
slander, harassment, threat and
defamation against the Pernes Family.
Deciding for petitioner, the lupon
apparently ordered the Pernes family to
vacate petitioners property but not after
they are reimbursed for the value of the
house they built thereon. Unfortunately,
the parties could not agree on the
amount, thus prolonging the impasse
between them.
Other ugly incidents interspersed with
violent confrontations meanwhile
transpired, with the petitioner narrating
that, at one occasion in July 1998, she
sustained cuts and wounds when Arlene
pulled her hair, hit her on the face, neck
and back, while her husband Diosdado
held her, twisting her arms in the
process.
Relations having deteriorated from
worse to worst, petitioner, on July 29,
1998, lodged a formal complaint before
the Regional Office of the Ombudsman
for Mindanao, charging the respondent
spouses, who were both government
employees, with conduct unbecoming of
public servants. This administrative case,
however, did not prosper.
Then, on August 3, 1998, petitioner filed
with the MTCC of Davao City an unlawful
detainer suit against the respondent
spouses. Petitioner alleged that she is
the registered owner of the land on
which the respondents built their house;
that through her counsel, she sent the
respondent spouses a letter demanding
them to vacate the premises and to pay
rentals therefor, which the respondents
refused to heed.
In their defense, the respondents alleged
having entered the property in question,
building their house thereon and
maintaining the same as their residence
with petitioners full knowledge and
express consent. To prove their point,
they invited attention to her written
declaration of July 21, 1986, supra,
wherein she expressly signified her
desire for the spouses to build their
house on her property and stay thereat
for as long as they like.
The MTCC, resolving the ejectment suit
in petitioners favor, declared that the
respondent spouses, although builders in
good faith vis--vis the house they built
on her property, cannot invoke their
bona fides as a valid excuse for not
complying with the demand to vacate.
To the MTCC, respondents continued
possession of the premises turned
unlawful upon their receipt of the
demand to vacate, such possession
being merely at petitioners tolerance,
and sans any rental. Accordingly, in its
decision dated November 17, 1999,[4]
the MTCC rendered judgment for the
petitioner, as plaintiff therein, to wit:
WHEREFORE, judgment is hereby
rendered in favor of herein plaintiff and
against the defendants, as follows:
a) Directing the defendants,
their agents and other persons acting on
their behalf to vacate the premises and
to yield peaceful possession thereof to
plaintiff;
b) Ordering defendants to pay
P2,000.00 a month from the filing of this
complaint until they vacate premises;
c) Sentencing defendants to
pay the sum of P120,000.00[5] as
attorneys fees and to pay the cost of
suit.
Defendants counterclaim are hereby
dismissed except with respect to the
claim for reimbursement of necessary
and useful expenses which should be
litigated in an ordinary civil actions. (sic)
Dissatisfied, the respondent spouses
appealed to the RTC of Davao City.
In the meantime, petitioner filed a
Motion for Execution Pending Appeal.
The motion was initially granted by the
RTC in its Order of February 29, 2000,
but the Order was later withdrawn and
vacated by its subsequent Order dated
May 9, 2000[6] on the ground that
immediate execution of the appealed
decision was not the prudent course of
action to take, considering that the
house the respondents constructed on
the subject property might even be more
valuable than the land site.
Eventually, in a decision[7] dated
September 30, 2000, the RTC reversed
that of the MTCC, holding that
respondents possession of the property
in question was not, as ruled by the
latter court, by mere tolerance of the
petitioner but rather by her express
consent. It further ruled that Article
1678 of the Civil Code on reimbursement
of improvements introduced is
inapplicable since said provision
contemplates of a lessor-lessee
arrangement, which was not the factual
milieu obtaining in the case. Instead, the
RTC ruled that what governed the
parties relationship are Articles 448 and
546 of the Civil Code, explaining thus:
Since the defendants-appellees
[respondents] are admittedly possessors
of the property by permission from
plaintiff [petitioner], and builders in
good faith, they have the right to retain
possession of the property subject of this
case until they have been reimbursed
the cost of the improvements they have
introduced on the property.
Indeed, this is a substantive right given
to the defendants by law, and this right
is superior to the procedural right to [sic]
plaintiff to immediately ask for their
removal by a writ of execution by virtue
of a decision which as we have shown is
erroneous, and therefore invalid. (Words
in brackets supplied),
and accordingly dismissed petitioners
appeal, as follows:
WHEREFORE, in view of the foregoing,
the Decision appealed from is REVERSED
and declared invalid. Consequently, the
motion for execution pending appeal is
likewise denied.
Counter-claims of moral and exemplary
damages claimed by defendants are
likewise dismissed. However, attorneys
fees in the amount of fifteen thousand
pesos is hereby awarded in favor of
defendants-appellants, and against
plaintiffs.
SO ORDERED.[8]
Therefrom, petitioner went to the CA in
CA-G.R. SP No. 61610.
On September 27, 2001, the CA, while
conceding the applicability of Articles
448 and 546 of the Civil Code to the
case, ruled that it is still premature to
apply the same considering that the
issue of whether respondents right to
possess a portion of petitioners land had
already expired or was already
terminated was not yet resolved. To the
CA, the unlawful detainer suit
presupposes the cessation of
respondents right to possess. The CA
further ruled that what governs the
rights of the parties is the law on
usufruct but petitioner failed to establish
that respondents right to possess had
already ceased. On this premise, the CA
concluded that the ejectment suit
instituted by the petitioner was
premature. The appellate court thus
affirmed the appealed RTC decision,
disposing:
WHEREFORE, premises considered, the
instant petition for review is hereby
denied for lack of merit. Accordingly, the
petitioners complaint for Unlawful
Detainer is DISMISSED.
SO ORDERED.
With the CAs denial of her motion for
reconsideration in its Resolution of
February 28, 2002, petitioner is now
before this Court raising the following
issues:
I. WHETHER OR NOT THE
COURT OF APPEALS ERRED IN
DISMISSING THE UNLAWFUL DETAINER
CASE FOR BEING PREMATURE WHICH
DECISION IS NOT IN ACCORDANCE WITH
LAW AND JURISPRUDENCE.
II. WHETHER OR NOT THE
COURT OF APPEALS ERRED IN APPLYING
ARTICLES 448 AND 546 AND THE
PROVISIONS OF THE CODE ON
USUFRUCT INSTEAD OF ARTICLE 1678 OF
THE CIVIL CODE.
The Court rules for the petitioner.
The Court is inclined to agree with the
CA that what was constituted between
the parties herein is one of usufruct over
a piece of land, with the petitioner being
the owner of the property upon whom
the naked title thereto remained and the
respondents being two (2) among other
unnamed usufructuaries who were
simply referred to as petitioners kin. The
Court, however, cannot go along with
the CAs holding that the action for
unlawful detainer must be dismissed on
ground of prematurity.
Usufruct is defined under Article 562 of
the Civil Code in the following wise:
ART. 562. Usufruct gives a right to enjoy
the property of another with the
obligation of preserving its form and
substance, unless the title constituting it
or the law otherwise provides.

Usufruct, in essence, is nothing else but
simply allowing one to enjoy anothers
property.[9] It is also defined as the right
to enjoy the property of another
temporarily, including both the jus
utendi and the jus fruendi,[10] with the
owner retaining the jus disponendi or
the power to alienate the same.[11]
It is undisputed that petitioner, in a
document dated July 21, 1986, supra,
made known her intention to give
respondents and her other kins the right
to use and to enjoy the fruits of her
property. There can also be no quibbling
about the respondents being given the
right to build their own house on the
property and to stay thereat as long as
they like. Paragraph #5 of the same
document earmarks proceeds or income
derived from the aforementioned
properties for the petitioners nearest
kins who have less in life in greater
percentage and lesser percentage to
those who are better of (sic) in standing.
The established facts undoubtedly gave
respondents not only the right to use the
property but also granted them, among
the petitioners other kins, the right to
enjoy the fruits thereof. We have no
quarrel, therefore, with the CAs ruling
that usufruct was constituted between
petitioner and respondents. It is thus
pointless to discuss why there was no
lease contract between the parties.
However, determinative of the outcome
of the ejectment case is the resolution of
the next issue, i.e., whether the existing
usufruct may be deemed to have been
extinguished or terminated. If the
question is resolved in the affirmative,
then the respondents right to
possession, proceeding as it did from
their right of usufruct, likewise ceased. In
that case, petitioners action for
ejectment in the unlawful detainer case
could proceed and should prosper.
The CA disposed of this issue in this wise:
xxx Section 1, Rule 70 of the 1997 Rules
of Civil Procedure, as amended, provides
xxx
xxx xxx xxx
From the foregoing provision, it becomes
apparent that for an action for unlawful
detainer to prosper, the plaintiff
[petitioner] needs to prove that
defendants [respondents] right to
possess already expired and terminated.
Now, has respondents right to possess
the subject portion of petitioners
property expired or terminated? Let us
therefore examine respondents basis for
occupying the same.
It is undisputed that petitioner expressly
authorized respondents o occupy
portion of her property on which their
house may be built. Thus it is my desire
that Mr. and Mrs. Diosdado M. Pernes
may build their house therein and stay
as long as they like. From this statement,
it seems that petitioner had given the
respondents the usufructuary rights over
the portion that may be occupied by the
house that the latter would build, the
duration of which being dependent on
how long respondents would like to
occupy the property. While petitioner
had already demanded from the
respondents the surrender of the
premises, this Court is of the opinion
that the usufructuary rights of
respondents had not been terminated by
the said demand considering the clear
statement of petitioner that she is
allowing respondents to occupy portion
of her land as long as the latter want to.
Considering that respondents still want
to occupy the premises, petitioner
clearly cannot eject respondents.[12]
We disagree with the CAs conclusion of
law on the matter. The term or period of
the usufruct originally specified provides
only one of the bases for the right of a
usufructuary to hold and retain
possession of the thing given in usufruct.
There are other modes or instances
whereby the usufruct shall be
considered terminated or extinguished.
For sure, the Civil Code enumerates such
other modes of extinguishment:
ART. 603. Usufruct is extinguished:
(1) By the death of the
usufructuary, unless a contrary intention
clearly appears;
(2) By expiration of the period
for which it was constituted, or by the
fulfillment of any resolutory condition
provided in the title creating the
usufruct;
(3) By merger of the usufruct and
ownership in the same person;
(4) By renunciation of the
usufructuary;
(5) By the total loss of the thing
in usufruct;
(6) By the termination of the
right of the person constituting the
usufruct;
(7) By prescription. (Emphasis
supplied.)
The document executed by the
petitioner dated July 21, 1986
constitutes the title creating, and sets
forth the conditions of, the usufruct.
Paragraph #3 thereof states [T]hat
anyone of my kins may enjoy the
privilege to stay therein and may avail
the use thereof. Provided, however, that
the same is not inimical to the purpose
thereof (Emphasis supplied). What may
be inimical to the purpose constituting
the usufruct may be gleaned from the
preceding paragraph wherein petitioner
made it abundantly clear that anybody
of my kins who wishes to stay on the
aforementioned property should
maintain an atmosphere of cooperation,
live in harmony and must avoid bickering
with one another. That the maintenance
of a peaceful and harmonious relations
between and among kin constitutes an
indispensable condition for the
continuance of the usufruct is clearly
deduced from the succeeding Paragraph
#4 where petitioner stated [T]hat
anyone of my kins who cannot conform
with the wishes of the undersigned may
exercise the freedom to look for his own.
In fine, the occurrence of any of the
following: the loss of the atmosphere of
cooperation, the bickering or the
cessation of harmonious relationship
between/among kin constitutes a
resolutory condition which, by express
wish of the petitioner, extinguishes the
usufruct.
From the pleadings submitted by the
parties, it is indubitable that there were
indeed facts and circumstances whereby
the subject usufruct may be deemed
terminated or extinguished by the
occurrence of the resolutory conditions
provided for in the title creating the
usufruct, namely, the document
adverted to which the petitioner
executed on July 21, 1986.
As aptly pointed out by the petitioner in
her Memorandum, respondents own
evidence before the MTCC indicated that
the relations between the parties have
deteriorated to almost an irretrievable
level.[13] There is no doubt then that
what impelled petitioner to file
complaints before the local barangay
lupon, the Office of the Ombudsman for
Mindanao, and this instant complaint for
unlawful detainer before the MTCC is
that she could not live peacefully and
harmoniously with the Pernes family and
vice versa.
Thus, the Court rules that the continuing
animosity between the petitioner and
the Pernes family and the violence and
humiliation she was made to endure,
despite her advanced age and frail
condition, are enough factual bases to
consider the usufruct as having been
terminated.
To reiterate, the relationship between
the petitioner and respondents
respecting the property in question is
one of owner and usufructuary.
Accordingly, respondents claim for
reimbursement of the improvements
they introduced on the property during
the effectivity of the usufruct should be
governed by applicable statutory
provisions and principles on usufruct. In
this regard, we cite with approval what
Justice Edgardo Paras wrote on the
matter:
If the builder is a usufructuary, his rights
will be governed by Arts. 579 and 580. In
case like this, the terms of the contract
and the pertinent provisions of law
should govern (3 Manresa 215-216; se
also Montinola vs. Bantug, 71 Phil.
449).[14] (Emphasis ours.)
WHEREFORE, the petition is GRANTED.
The assailed Decision and Resolution of
the CA are REVERSED and SET ASIDE.
Accordingly, the decision of the MTCC is
REINSTATED with MODIFICATION that all
of respondents counterclaims are
dismissed, including their claims for
reimbursement of useful and necessary
expenses.
No pronouncement as to costs.
SO ORDERED.

By express provision of law,

respondents, as usufructuary, do not
have the right to reimbursement for the
improvements they may have
introduced on the property. We quote
Articles 579 and 580 of the Civil Code:

Art. 579. The usufructuary may make on

the property held in usufruct such useful
improvements or expenses for mere
pleasure as he may deem proper,
provided he does not alter its form or
substance; but he shall have no right to
be indemnified therefor. He may,
however, remove such improvements,
should it be possible to do so without
damage to the property. (Emphasis
supplied.)

Art. 580. The usufructuary may set off

the improvements he may have made on
the property against any damage to the
same.

Given the foregoing perspective,

respondents will have to be ordered to
vacate the premises without any right of
reimbursement. If the rule on
reimbursement or indemnity were
otherwise, then the usufructuary might,
as an author pointed out, improve the
owner out of his property.[15] The
respondents may, however, remove or
destroy the improvements they may
have introduced thereon without
damaging the petitioners property.

Out of the generosity of her heart, the

petitioner has allowed the respondent
spouses to use and enjoy the fruits of
her property for quite a long period of
time. They opted, however, to repay a
noble gesture with unkindness. At the
end of the day, therefore, they really
cannot begrudge their aunt for putting
an end to their right of usufruct. The
disposition herein arrived is not only
legal and called for by the law and facts
of the case. It is also right.
EASEMENT
BOGO-MEDELLIN MILLING CO., INC.,
petitioner, vs. COURT OF APPEALS AND
HEIRS OF MAGDALENO VALDEZ SR.,
respondents.
DECISION
CORONA, J.:
This is an appeal by certiorari under Rule
45 of the Rules of Court seeking to annul
and set aside the decision[1] dated
November 17, 1995 of the Court of
Appeals, Tenth Division, which reversed
the decision[2] dated November 27,
1991 of the Regional Trial Court of Cebu
City, Branch IX, which ruled in favor of
herein petitioner, Bogo-Medellin Milling
Company, Inc. and dismissed herein
private respondents' complaint for
payment of compensation and/or
recovery of possession of real property
and damages with application for
restraining order or preliminary
injunction; and its resolution dated
March 2, 1996 denying petitioner's
motion for reconsideration.
The antecedent facts follow.
Magdaleno Valdez, Sr., father of herein
private respondents Sergio Valdez,
Angelina Valdez-Novabos, Teresita
Argawanon-Mangubat and Daylinda
Argawanon-Melendres (hereafter the
heirs), purchased from Feliciana
Santillan, on December 9, 1935, a parcel
of unregistered land covered by Tax
Declaration No. 3935 with an area of one
hectare, 34 ares and 16 centares, located
in Barrio Dayhagon, Medellin, Cebu.[3]
He took possession of the property and
declared it for tax purposes in his
name.[4]
Prior to the sale, however, the entire
length of the land from north to south
was already traversed in the middle by
railroad tracks owned by petitioner
Bogo-Medellin Milling Co., Inc.
(hereafter Bomedco). The tracks were
used for hauling sugar cane from the
fields to petitioners sugar mill.
When Magdaleno Valdez, Sr. passed
away in 1948, herein private
respondents inherited the land.
However, unknown to them, Bomedco
was able to have the disputed middle lot
which was occupied by the railroad
tracks placed in its name in the Cadastral
Survey of Medellin, Cebu in 1965. The
entire subject land was divided into
three, namely, Cadastral Lot Nos. 953,
954 and 955. Lot Nos. 953 and 955
remained in the name of private
respondents. However, Lot No. 954, the
narrow lot where the railroad tracks lay,
was claimed by Bomedco as its own and
was declared for tax purposes in its
name. [5]
It was not until 1989 when private
respondents discovered the
aforementioned claim of Bomedco on
inquiry with the Bureau of Lands.
Through their lawyer, they immediately
demanded the legal basis for Bomedco's
claim over Cadastral Lot No. 954 but
their letter of inquiry addressed to
petitioner went unheeded, as was their
subsequent demand for payment of
compensation for the use of the land.[6]
On June 8, 1989, respondent heirs filed a
Complaint for Payment of Compensation
and/or Recovery of Possession of Real
Property and Damages with Application
for Restraining Order/Preliminary
Injunction against Bomedco before the
Regional Trial Court of Cebu.[7]
Respondent heirs alleged that, before
she sold the land to Valdez, Sr. in 1935,
Santillan granted Bomedco, in 1929, a
railroad right of way for a period of 30
years. When Valdez, Sr. acquired the
land, he respected the grant. The right of
way expired sometime in 1959 but
respondent heirs allowed Bomedco to
continue using the land because one of
them was then an employee of the
company.[8]
In support of the complaint, they
presented an ancient document ― an
original copy of the deed of sale written
in Spanish and dated December 9,
1935[9] ― to evidence the sale of the
land to Magdaleno Valdez, Sr.; several
original real estate tax receipts[10]
including Real Property Tax Receipt No.
3935[11] dated 1922 in the name of
Graciano de los Reyes, husband of
Feliciana Santillan, and Real Property Tax
Receipt No. 09491[12] dated 1963 in the
name of Magdaleno Valdez, Sr.
Magdaleno Valdez, Jr. also testified for
the plaintiffs during the trial.
On the other hand, Bomedcos principal
defense was that it was the owner and
possessor of Cadastral Lot No. 954,
having allegedly bought the same from
Feliciana Santillan in 1929, prior to the
sale of the property by the latter to
Magdaleno Valdez, Sr. in 1935. It also
contended that plaintiffs claim was
already barred by prescription and
laches because of Bomedcos open and
continuous possession of the property
for more than 50 years.
Bomedco submitted in evidence a Deed
of Sale[13] dated March 18, 1929; seven
real estate tax receipts[14] for the
property covering the period from 1930
to 1985; a 1929 Survey Plan of private
land for Bogo-Medellin Milling
Company;[15] a Survey Notification
Card;[16] Lot Data Computation for Lot
No. 954;[17] a Cadastral Map for
Medellin Cadastre[18] as well as the
testimonies of Vicente Basmayor,
Geodetic Engineer and property
custodian for Bomedco, and Rafaela A.
Belleza, Geodetic Engineer and Chief of
the Land Management Services of the
DENR, Region VIII.
In its decision dated November 27, 1991,
the trial court[19] rejected Bomedco's
defense of ownership on the basis of a
prior sale, citing that its evidence a xerox
copy of the Deed of Sale dated March
18, 1929 was inadmissible and had no
probative value. Not only was it not
signed by the parties but defendant
Bomedco also failed to present the
original copy without valid reason
pursuant to Section 4, Rule 130 of the
Rules of Court.[20]
Nonetheless, the trial court held that
Bomedco had been in possession of
Cadastral Lot No. 954 in good faith for
more than 10 years, thus, it had already
acquired ownership of the property
through acquisitive prescription under
Article 620 of the Civil Code. It explained:
Under Article 620 of the Civil Code,
CONTINUOUS and APPARENT easements
can be acquired by prescription after ten
(10) years. The apparent characteristic of
the questioned property being used by
defendant as an easement is no longer
at issue, because plaintiffs themselves
had acknowledged that the existence of
the railway tracks of defendant Bomedco
was already known by the late
Magdaleno Valdez, herein plaintiffs
predecessor-in-interest, before the late
Magdaleno Valdez purchased in 1935
from the late Feliciana Santillan the land
described in the Complaint where
defendants railway tracks is traversing
[sic] (TSN of February 5, 1991, pp. 7-8).
As to the continuity of defendants use of
the strip of land as easement is [sic] also
manifest from the continuous and
uninterrupted occupation of the
questioned property from 1929 up to
the date of the filing of the instant
Complaint. In view of the defendants
UNINTERRUPTED possession of the strip
of land for more than fifity (50) years,
the Supreme Courts ruling in the case of
Ronquillo, et al. v. Roco, et al. (103 Phil
84) is not applicable. This is because in
said case the easement in question was a
strip of dirt road whose possession by
the dominant estate occurs only
everytime said dirt road was being used
by the dominant estate. Such fact would
necessarily show that the easements
possession by the dominant estate was
never continuous. In the instant case
however, there is clear continuity of
defendants possession of the strip of
land it had been using as railway tracks.
Because the railway tracks which
defendant had constructed on the
questioned strip of land had been
CONTINUOUSLY occupying said
easement. Thus, defendant Bomedcos
apparent and continuous possession of
said strip of land in good faith for more
than ten (10) years had made defendant
owner of said strip of land traversed by
its railway tracks. Because the railway
tracks which defendant had constructed
on the questioned strip of land had been
continuously occupying said easement
[sic]. Thus, defendant Bomedcos
apparent and continuous possession of
said strip of land in good faith for more
than ten (10) years had made defendant
owner of said strip of land traversed by
its railway tracks.
Respondent heirs elevated the case to
the Court of Appeals which found that
Bomedco did not acquire ownership
over the lot. It consequently reversed
the trial court. In its decision dated
November 17, 1995, the appellate court
held that Bomedco only acquired an
easement of right of way by unopposed
and continuous use of the land, but not
ownership, under Article 620 of the Civil
Code.
The appellate court further ruled that
Bomedcos claim of a prior sale to it by
Feliciana Santillan was untrue. Its
possession being in bad faith, the
applicable prescriptive period in order to
acquire ownership over the land was 30
years under Article 1137 of the Civil
Code. Adverse possession of the
property started only in 1965 when
Bomedco registered its claim in the
cadastral survey of Medellin. Since only
24 years from 1965 had elapsed when
the heirs filed a complaint against
Bomedco in 1989, Bomedcos possession
of the land had not yet ripened into
ownership.
And since there was no showing that
respondent heirs or their predecessor-in-
interest was ever paid compensation for
the use of the land, the appellate court
awarded compensation to them, to be
computed from the time of discovery of
the adverse acts of Bomedco.
Its motion for reconsideration having
been denied by the appellate court in its
resolution dated March 22, 1996,
Bomedco now interposes before us this
present appeal by certiorari under Rule
45, assigning the following errors:
I petitioner really owned the land,
THE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR WHEN IT REVERSED
AND SET ASIDE THE TRIAL COURTS
DECISION DISMISSING PRIVATE
RESPONDENTS COMPLAINT.
II
THE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR WHEN IT ORDERED
THE PETITIONER TO PAY THE PRIVATE
RESPONDENT THE REASONABLE VALUE
OF LOT 954 AND THE AMOUNT OF TEN
THOUSAND (P10,000.00) PESOS AS
REASONABLE ATTORNEYS FEES.
Petitioner Bomedco reiterates its claim
of ownership of the land through
extraordinary acquisitive prescription
under Article 1137 of the Civil Code and
laches to defeat the claim for
compensation or recovery of possession
by respondent heirs. It also submits a
third ground originally tendered by the
trial court ― acquisition of the easement
of right of way by prescription under
Article 620 of the Civil Code.
Extraordinary Acquisitive Prescription
Under Art. 1137 of the Civil Code
Petitioners claim of ownership through
extraordinary acquisitive prescription
under Article 1137 of the Civil Code
cannot be sustained.
There is no dispute that the
controversial strip of land has been in
the continuous possession of petitioner
since 1929. But possession, to constitute
the foundation of a prescriptive right,
must be possession under a claim of
title, that is, it must be adverse.[21]
Unless coupled with the element of
hostility towards the true owner,
possession, however long, will not
confer title by prescription.[22]
After a careful review of the records, we
are inclined to believe the version of
respondent heirs that an easement of
right of way was actually granted to
petitioner for which reason the latter
was able to occupy Cadastral Lot No.
954. We cannot disregard the fact that,
for the years 1930, 1937, 1949, 1962 and
1963, petitioner unequivocally declared
the property to be a central railroad
right of way or sugar central railroad
right of way in its real estate tax receipts
when it could have declared it to be
industrial land as it did for the years
1975 and 1985.[23] Instead of indicating
ownership of the lot, these receipts
showed that all petitioner had was
possession by virtue of the right of way
granted to it. Were it not so and
petitioner would not have consistently
used the phrases central railroad right of
way and sugar central railroad right of
way in its tax declarations until 1963.
Certainly an owner would have found no
need for these phrases. A person cannot
have an easement on his own land, since
all the uses of an easement are fully
comprehended in his general right of
ownership.[24]
While it is true that, together with a
persons actual and adverse possession
of the land, tax declarations constitute
strong evidence of ownership of the land
occupied by him,[25] this legal precept
does not apply in cases where the
property is declared to be a mere
easement of right of way.
An easement or servitude is a real right,
constituted on the corporeal immovable
property of another, by virtue of which
the owner has to refrain from doing, or
must allow someone to do, something
on his property, for the benefit of
another thing or person. It exists only
when the servient and dominant estates
belong to two different owners. It gives
the holder of the easement an
incorporeal interest on the land but
grants no title thereto. Therefore, an
acknowledgment of the easement is an
admission that the property belongs to
another.[26]
Having held the property by virtue of an
easement, petitioner cannot now assert
that its occupancy since 1929 was in the
concept of an owner. Neither can it
declare that the 30-year period of
extraordinary acquisitive prescription
started from that year.
Petitioner, however, maintains that even
if a servitude was merely imposed on the
property in its favor, its possession
immediately became adverse to the
owner in the late 1950s when the grant
was alleged by respondent heirs to have
expired. It stresses that, counting from
the late 1950s (1959 as found by the trial
court), the 30-year extraordinary
acquisitive prescription had already set
in by the time respondent heirs made a
claim against it in their letters dated
March 1 and April 6, 1989.
We do not think so. The mere expiration
of the period of easement in 1959 did
not convert petitioners possession into
an adverse one. Mere material
possession of land is not adverse
possession as against the owner and is
insufficient to vest title, unless such
possession is accompanied by the intent
to possess as an owner.[27] There
should be a hostile use of such a nature
and exercised under such circumstances
as to manifest and give notice that the
possession is under a claim of right.
In the absence of an express grant by the
owner, or conduct by petitioner sugar
mill from which an adverse claim can be
implied, its possession of the lot can only
be presumed to have continued in the
same character as when it was acquired
(that is, it possessed the land only by
virtue of the original grant of the
easement of right of way),[28] or was by
mere license or tolerance of the owners
(respondent heirs).[29] It is a
fundamental principle of law in this
jurisdiction that acts of possessory
character executed by virtue of license
or tolerance of the owner, no matter
how long, do not start the running of the
period of prescription.[30]
After the grant of easement expired in
1959, petitioner never performed any
act incompatible with the ownership of
respondent heirs over Cadastral Lot No.
954. On the contrary, until 1963,
petitioner continued to declare the sugar
central railroad right of way in its realty
tax receipts, thereby doubtlessly
conceding the ownership of respondent
heirs. Respondents themselves were
emphatic that they simply tolerated
petitioners continued use of Cadastral
Lot No. 954 so as not to jeopardize the
employment of one of their co-heirs in
the sugar mill of petitioner.[31]
The only time petitioner assumed a legal
position adverse to respondents was
when it filed a claim over the property in
1965 during the cadastral survey of
Medellin. Since then (1965) and until the
filing of the complaint for the recovery of
the subject land before the RTC of Cebu
in 1989, only 24 years had lapsed. Since
the required 30-year extraordinary
prescriptive period had not yet been
complied with in 1989, petitioner never
acquired ownership of the subject land.
Laches
Neither can petitioner find refuge in the
principle of laches. It is not just the lapse
of time or delay that constitutes laches.
The essence of laches is the failure or
neglect, for an unreasonable and
unexplained length of time, to do that
which, through due diligence, could or
should have been done earlier, thus
giving rise to a presumption that the
party entitled to assert it had either
abandoned or declined to assert it.[32]
Its essential elements are: (a) conduct on
the part of the defendant, or of one
under whom he claims, giving rise to the
situation complained of; (b) delay in
asserting complainants rights after he
had knowledge of defendants acts and
after he has had the opportunity to sue;
(c) lack of knowledge or notice by
defendant that the complainant will
assert the right on which he bases his
suit; and (d) injury or prejudice to the
defendant in the event the relief is
accorded to the complainant.[33]
The second element (which in turn has
three aspects) is lacking in the case at
bar. These aspects are: (a) knowledge of
defendant's action, (b) opportunity to
sue defendant after obtaining such
knowledge and (c) delay in the filing of
such suit.[34]
Records show that respondent heirs only
learned about petitioners claim on their
property when they discovered the
inscription for the cadastral survey in the
records of the Bureau of Lands in 1989.
Respondents lost no time in demanding
an explanation for said claim in their
letters to the petitioner dated March 1,
1989 and April 6, 1989. When petitioner
ignored them, they instituted their
complaint before the Regional Trial
Court of Cebu City on June 8, 1989.
Petitioners reliance on Caro vs. Court of
Appeals [35] and Vda. de Alberto vs.
Court of Appeals [36] is misplaced.
There, laches was applied to bar
petitioners from questioning the
ownership of the disputed properties
precisely because they had knowledge of
the adverse claims on their properties
yet tarried for an extraordinary period of
time before taking steps to protect their
rights.
Further, there is no absolute rule on
what constitutes laches. It is a rule of
equity and applied not to penalize
neglect or sleeping on ones rights but
rather to avoid recognizing a right when
to do so would result in a clearly unfair
situation. The question of laches is
addressed to the sound discretion of the
court and each case must be decided
according to its particular
circumstances.[37] It is the better rule
that courts, under the principle of
equity, should not be guided or bound
strictly by the statute of limitations or
the doctrine of laches if wrong or
injustice will result.
It is clear that petitioner never acquired
ownership over Cadastral Lot No. 954
whether by extraordinary acquisitive
prescription or by laches.
Acquisition of Easement of Right of Way
By
Prescription Under Art. 620 of the Civil
Code
Petitioner contends that, even if it failed
to acquire ownership of the subject land,
it nevertheless became legally entitled to
the easement of right of way over said
land by virtue of prescription under
Article 620 of the Civil Code:
Continuous and apparent easements are
acquired either by virtue of a title or by
prescription of ten years.
The trial court and the Court of Appeals
both upheld this view for the reason that
the railroad right of way was, according
to them, continuous and apparent in
nature. The more or less permanent
railroad tracks were visually apparent
and they continuously occupied the
subject strip of land from 1959 (the year
the easement granted by Feliciana
Santillan to petitioner expired). Thus,
with the lapse of the 10-year prescriptive
period in 1969, petitioner supposedly
acquired the easement of right of way
over the subject land.
Following the logic of the courts a quo, if
a road for the use of vehicles or the
passage of persons is permanently
cemented or asphalted, then the right of
way over it becomes continuous in
nature. The reasoning is erroneous.
Under civil law and its jurisprudence,
easements are either continuous or
discontinuous according to the manner
they are exercised, not according to the
presence of apparent signs or physical
indications of the existence of such
easements. Thus, an easement is
continuous if its use is, or may be,
incessant without the intervention of
any act of man, like the easement of
drainage;[38] and it is discontinuous if it
is used at intervals and depends on the
act of man, like the easement of right of
way.[39]
The easement of right of way is
considered discontinuous because it is
exercised only if a person passes or sets
foot on somebody elses land. Like a road
for the passage of vehicles or persons,
an easement of right of way of railroad
tracks is discontinuous because the right
is exercised only if and when a train
operated by a person passes over
another's property. In other words, the
very exercise of the servitude depends
upon the act or intervention of man
which is the very essence of
discontinuous easements.
The presence of more or less permanent
railroad tracks does not in any way
convert the nature of an easement of
right of way to one that is continuous. It
is not the presence of apparent signs or
physical indications showing the
existence of an easement, but rather the
manner of exercise thereof, that
categorizes such easement into
continuous or discontinuous. The
presence of physical or visual signs only
classifies an easement into apparent or
non-apparent. Thus, a road (which
reveals a right of way) and a window
(which evidences a right to light and
view) are apparent easements, while an
easement of not building beyond a
certain height is non-apparent.[40]
In Cuba, it has been held that the
existence of a permanent railway does
not make the right of way a continuous
one; it is only apparent. Therefore, it
cannot be acquired by prescription.[41]
In Louisiana, it has also been held that a
right of passage over another's land
cannot be claimed by prescription
because this easement is discontinuous
and can be established only by title.[42]
In this case, the presence of railroad
tracks for the passage of petitioners
trains denotes the existence of an
apparent but discontinuous easement of
right of way. And under Article 622 of
the Civil Code, discontinuous easements,
whether apparent or not, may be
acquired only by title. Unfortunately,
petitioner Bomedco never acquired any
title over the use of the railroad right of
way whether by law, donation,
testamentary succession or contract. Its
use of the right of way, however long,
never resulted in its acquisition of the
easement because, under Article 622,
the discontinuous easement of a railroad
right of way can only be acquired by title
and not by prescription.
To be sure, beginning 1959 when the
original 30-year grant of right of way
given to petitioner Bomedco expired, its
occupation and use of Cadastral Lot No.
954 came to be by mere tolerance of the
respondent heirs. Thus, upon demand by
said heirs in 1989 for the return of the
subject land and the removal of the
railroad tracks, or, in the alternative,
payment of compensation for the use
thereof, petitioner Bomedco which had
no title to the land should have returned
the possession thereof or should have
begun paying compensation for its use.
But when is a party deemed to acquire
title over the use of such land (that is,
title over the easement of right of way)?
In at least two cases, we held that if: (a)
it had subsequently entered into a
contractual right of way with the heirs
for the continued use of the land under
the principles of voluntary easements or
(b) it had filed a case against the heirs
for conferment on it of a legal easement
of right of way under Article 629 of the
Civil Code, then title over the use of the
land is deemed to exist. The conferment
of a legal easement of right of way under
Article 629 is subject to proof of the
following:
(1) it is surrounded by other immovables
and has no adequate outlet to a public
highway;
(2) payment of proper indemnity;
(3) the isolation is not the result of its
own acts; and
(4) the right of way claimed is at the
point least prejudicial to the servient
estate, and, insofar as consistent with
this rule, the distance from the dominant
estate to the highway is the shortest.[43]
None of the above options to acquire
title over the railroad right of way was
ever pursued by petitioner despite the
fact that simple resourcefulness
demanded such initiative, considering
the importance of the railway tracks to
its business. No doubt, it is unlawfully
occupying and using the subject strip of
land as a railroad right of way without
valid title yet it refuses to vacate it even
after demand of the heirs. Furthermore,
it tenaciously insists on ownership
thereof despite a clear showing to the
contrary.
We thus uphold the grant by the Court
of Appeals of attorneys fees in the
amount of P10,000 considering the
evident bad faith of petitioner in refusing
respondents just and lawful claims,
compelling the latter to litigate.[44]
WHEREFORE, the petition is DENIED. The
appealed decision dated November 17,
1995 and resolution dated March 2,
1996 of the Court of Appeals are
AFFIRMED with MODIFICATION.
Petitioner Bogo-Medellin Milling
Company, Inc. is hereby ordered to
vacate the subject strip of land
denominated as Cadastral Lot No. 954,
remove its railway tracks thereon and
return its possession to the private
respondents, the heirs of Magdaleno
Valdez, Sr. It is also hereby ordered to
pay private respondents attorney's fees
in the amount of P10,000.
SO ORDERED.
G.R. No. L-37409 May 23, 1988
NICOLAS VALISNO, plaintiff-appellant,
vs.
FELIPE ADRIANO, defendant-appellee.
Honorio Valisno Garcia I for plaintiff-
appelant.
Felipe K Medina for defendant-appellee.
GRIÑO-AQUINO, J.:
This case was certified to this Court by
the Court of Appeals in a resolution
dated August 10, 1973, the sole issue
being a question of law and beyond its
jurisdiction. to decide.
Admitted by the parties in their pleading
and established during the trial on the
merits are the following material facts:
On June 20, 1960, 'the plaintiff-appellant
file against the defendant-appellee an
action for damages docketed as Civil
Case No. 3472 in the Court of First
Instance of Nueva Ecija. The complaint
alleged that the plaintiff is the absolute
owner and actual possessor of a
557,949-square-meter parcel of land in
La Fuente, Santa Rosa, Nueva Ecija, and
more particularly described in his
Transfer Certificate of Title No. NT-
16281. The plaintiff-appellant Valisno
bought the land from the defendant-
appellees sister, Honorata Adriano
Francisco, on June 6,1959. (Deed of
Absolute Sale, Exh. "A".) The land which
is planted with watermelon, peanuts,
corn, tobacco, and other vegetables
adjoins that of the appellee Felipe
Adriano on the bank of the Pampanga
River. Both parcels of land had been
inherited by Honorata Adriano Francisco
and her brother, Felipe Adriano, from
their father, Eladio Adriano. At the time
of the sale of the land to Valisno, the
land was irrigated by water from the
Pampanga River through a canal about
seventy (70) meters long, traversing the
appellee's land.
On December 16, 1959, the appellee
levelled a portion of the irrigation canal
so that the appellant was deprived of the
irrigation water and prevented from
cultivating his 57-hectare land.
The appellant filed in the Bureau of
Public Works and Communications a
complaint for deprivation of water
rights. A decision was rendered on
March 22, 1960 ordering Adriano to
reconstruct the irrigation canal,
"otherwise judicial action shall be taken
against him under the provisions of
Section 47 of Act 2152 (the Irrigation
Act), as amended." Instead of restoring
the irrigation canal, the appellee asked
for a reinvestigation of the case by the
Bureau of Public Works and
Communications. A reinvestigation was
granted.
In the meantime, plaintiff Valisno rebuilt
the irrigation canal at his own expense
because his need for water to irrigate his
watermelon fields was urgent.
On June 20, 1960, he filed a complaint
for damages in the Court of First
Instance (now Regional Trial Court) of
Nueva Ecija (Civil Case No. 3472)
claiming that he suffered damages
amounting to P8,000 when he failed to
plant his fields that year (1960) for lack
of irrigation water, P800 to reconstruct
the canal on defendant Adriano's land,
and P1,500 for attorney's fees and the
costs of suit.
On October 25, 1961, the Secretary of
Public Works and Communications
reversed the Bureau's decision by issuing
a final resolution dismissing Valisno's
complaint. The Secretary held that Eladio
Adriano's water rights which had been
granted in 1923 ceased to be enjoyed by
him in 1936 or 1937, when his irrigation
canal collapsed. His non-use of the water
right since then for a period of more
than five years extinguished the grant by
operation of law, hence the water rights
did not form part of his hereditary estate
which his heirs partitioned among
themselves. Valisno, as vendee of the
land which Honorata received from her
father's estate did not acquire any water
rights with the land purchased.
In his answer to the damage suit (Civil
Case No. 3472), the defendant Felipe
Adriano admitted that he levelled the
irrigation canal on his land, but he
averred: that neither his late father nor
his sister Honorata possessed water
rights for the land which she sold to the
appellant; that he (the appellee) applied
for water rights for his land in 1956 and
obtained the same in 1958; and that he
had a perfect right to level his land for
his own use because he merely allowed
his sister to use his water rights when
she still owned the adjacent land. He set
up a counterclaim for P3,000 as damages
incurred by him in levelling the land on
which the appellant dug an irrigation
canal, P2,000 as actual damages, P3,000
as attorney's fees, and expenses of
litigation.
In a decision dated April 21, 1966, the
trial court held that the plaintiff had no
right to pass through the defendant's
land to draw water from the Pampanga
River. It pointed out that under Section 4
of the Irrigation Law, controversies
between persons claiming a right to
water from a stream are within the
jurisdiction of the Secretary of Public
Works and his decision on the matter is
final, unless an appeal is taken to the
proper court within thirty days. The
court may not pass upon the validity of
the decision of the Public Works
Secretary collaterally. Furthermore,
there was nothing in the plaintiff 's
evidence to show that the resolution
was not valid. It dismissed the complaint
and counterclaim.
The plaintiff's motion for reconsideration
of the decision was denied by the trial
court. The plaintiff appealed to the Court
of Appeals which certified the case to Us
upon the legal question of whether the
provisions of the Irrigation Act (Act No.
2152) or those of the Civil Code should
apply to this case.
The plaintiff-appellant argues that while
the trial court correctly held that the
Secretary of Public Works may legally
decide who between the parties is
entitled to apply for water rights under
the Irrigation Act, it erred in ruling that
the Secretary has authority to hear and
decide the plaintiff 's claim for damages
for the defendant's violation of his
(plaintiff's) right to continue to enjoy the
easement of aqueduct or water through
the defendant's land under Articles 642,
643, and 646 of the Civil Code, which
provide:
Article 642. Any person who may wish to
use upon his own estate any water of
which he can dispose shall have the right
to make it flow through the intervening
estates, with the obligation to indemnify
their owners, as well as the owners of
the lower estates upon which the waters
may filter or descend.
Article 643. One desiring to make use of
the right granted inthe preceding article
is obliged:
(1) To prove that he can dispose
of the water and that it is sufficient for
the use for which it is intended;
(2) To show that the proposed
right of way is the most convenient and
the least onerous to third persons;
(3) To indemnify the owner of the
servient estate in the manner
determined by the laws and regulations.
Article 646. For legal purposes, the
easement of aqueduct shall be
considered as continuous and apparent,
even though the flow of the water may
not be continuous, or its use depends
upon the needs of the dominant estate,
or upon a schedule of alternate days or
hours.

The existence of the irrigation canal on
defendant's land for the passage of
water from the Pampanga River to
Honorata's land prior to and at the time
of the sale of Honorata's land to the
plaintiff was equivalent to a title for the
vendee of the land to continue using it
as provided in Article 624 of the Civil
Code:
Article 624. The existence of an apparent
sign of easement between two estates,
established or maintained by the owner
of both shall be considered, should
either of them be alienated, as a title in
order that he easement may continue
actively and passively, unless at the time,
theownership of the two estates is
divided, the contrary should be provided
in the title of conveyance of either of
them, or the sign aforesaid should be
removed before the execution of the
deed.
This provision shall also apply in case of
the division of a thing owned in common
on by two or more persons (Civil Code)
This provision was lifted from Article 122
of the Spanish Law of Waters which
provided:
Article 122. Whenever a tract of irrigated
land which previously received its waters
from a single point is divided through
inheritance, sale or by virtue of some
other title, between two or more
owners, the owners of the higher estates
are under obligation to give free passage
to the water as an easement of conduit
for the irrigation of the lower estates,
and without right to any compensation
therefore unless otherwise stipulated in
the deed of conveyance. (Art. 122,
Spanish Law of Waters of August 3,
1866.)
No enlightened concept of ownership
can shut out the Idea of restrictions
thereon, such as easements. Absolute
and unlimited dominion is unthinkable,
inasmuch as the proper enjoyment of
property requires mutual service and
forbearance among adjoining estates
(Amor vs. Florentino, 74 Phil. 403).
As indicated in the decision dated March
22, 1960 of the Bureau of Works "the
principal issue involved in this case falls
under the subject of servitude of waters
which are governed by Article 648 of the
new Civil Code and the suppletory laws
mentioned in the cases of Lunod vs.
Meneses 11 Phil. 128) and Osmena vs.
Camara (C.A. 380 62773) which are the
irrigation law and the Spanish Law of
Waters of August 3, 1866, specifically
Article 122 thereof.
The deed of sale in favor of Valisno
included the "conveyance and transfer
of the water rights and improvements"
appurtenant to Honorata Adriano's
property. By the terms of the Deed of
Absolute Sale, the vendor Honorata
Adriano Francisco sold, ceded, conveyed
and transferred to Dr. Nicolas Valisno all
"rights, title, interest and participations
over the parcel of land above- described,
together with one Berkely Model 6 YRF
Centrifugal Pump G" suction, 6"
discharge 500-1500 GPM, with Serial No.
5415812 and one (1) set of suction pipe
and discharge of pipe with elbow,
nipples, flanges and footvalves," and the
water rights and such other
improvements appertaining to the
property subject of this sale. According
to the appellant, the water right was the
primary consideration for his purchase of
Honorata's property, for without it the
property would be unproductive.
Water rights, such as the right to use a
drainage ditch for irrigation purposes,
which are appurtenant to a parcel of
land, pass with the conveyance of the
land, although not specifically
mentioned in the conveyance. The
purchaser's easement of necessity in a
water ditch running across the grantor's
land cannot be defeated even if the
water is supplied by a third person
(Watson vs. French, 112 Me 371 19 C.J.
868-897). The fact that an easement by
grant may also have qualified as an
easement of necessity does detract from
its permanency as property right, which
survives the determination of the
necessity (Benedicto vs. CA, 25 SCRA
145).<äre||anº•1àw>
As an easement of waters in favor of the
appellant has been established, he is
entitled to enjoy it free from
obstruction, disturbance or wrongful
interference (19 CJ 984), such as the
appellee's act of levelling the irrigation
canal to deprive him of the use of water
from the Pampanga River.
WHEREFORE, the appealed decision is
set aside, and a new one is entered
ordering the appellee to grant the
appellant continued and unimpeded use
of the irrigation ditch traversing his land
in order to obtain water from the
Pampanga River to irrigate appellant's
land. Let the records of this case be
remanded to the court a quo for the
reception of evidence on the appellant's
claim for damages.
SO ORDERED.
G.R. No. 170846 February 6, 2007
NATIONAL POWER CORPORATION,
Petitioner,
vs.
AURELLANO S. TIANGCO, LOURDES S.
TIANGCO and NESTOR S. TIANGCO,
Respondents.
DECISION
GARCIA, J.:
In this petition for review on certiorari
under Rule 45 of the Rules of Court,
petitioner National Power Corporation
(NPC) seeks the annulment and setting
aside of the Decision1 dated March 14,
2005 of the Court of Appeals (CA) in CA-
G.R. CV No. 53576, as reiterated in its
Resolution2 of December 2, 2005 which
denied the petitioner’s motion for
reconsideration. The assailed decision
modified that of the Regional Trial Court
(RTC) of Tanay, Rizal, Branch 80, by
increasing the amount of just
compensation due the respondents in an
expropriation case filed against them by
the petitioner.
The facts:
Herein respondents Aurellano, Lourdes
and Nestor, all surnamed Tiangco, are
the owners of a parcel of land with an
area of 152,187 square meters at
Barangay Sampaloc, Tanay, Rizal and
registered in their names under TCT No.
M-17865 of the Registry of Deeds of
Rizal.
On the other hand, petitioner NPC is a
government-owned and controlled
corporation created for the purpose of
undertaking the development and
generation of power from whatever
source. NPC’s charter (Republic Act No.
6395) authorizes the corporation to
acquire private property and exercise
the right of eminent
domain.1awphi1.net
NPC requires 19,423 square meters of
the respondents’ aforementioned
property, across which its 500Kv
Kalayaan-San Jose Transmission Line
Project will traverse. NPC’s Segregation
Plan3 for the purpose shows that the
desired right-of-way will cut through the
respondents’ land, in such a manner that
33,392 square meters thereof will be left
separated from 99,372 square meters of
the property. Within the portion sought
to be expropriated stand fruit-bearing
tress, such as mango, avocado, jackfruit,
casuy, santol, calamansi, sintones and
coconut trees.
On November 20, 1990, after repeated
unsuccessful negotiations with the
respondents, NPC filed with the RTC of
Tanay, Rizal a complaint for
expropriation4 against them. In time, the
respondents filed their answer.
On March 14, 1991, the trial court issued
a Condemnation Order, granting NPC the
right to take possession of the area
sought to be expropriated. In the same
Order, the court directed the parties to
nominate their respective
commissioners, with a third member to
be nominated and appointed by the
court itself, to determine the proper
amount of just compensation to be paid
to the respondents. As constituted in the
manner thus indicated, the board of
commissioners was composed of the
following: for NPC, Atty. Restituto Mallo
of its Legal Department; for the
respondents, Mr. Basilio Afuang, a
geodetic engineer and a real estate
broker by profession; and for the court,
Clerk of Court V Ms. Amelia de Guzman
Carbonell.
On April 5, 1991, the trial court issued an
order directing NPC to pay and deposit
with the Rizal Provincial Treasurer the
amount of ₱81,204.00, representing the
temporary provisional value of the area
subject of the expropriation prior to the
taking of possession thereof. On April 22,
1991, with NPC having complied with the
deposit requirement, a writ of
possession was issued in its favor.
Thereafter, an ocular inspection of the
premises was conducted and hearings
before the board of commissioners were
held, during which the Municipal
Assessor of Tanay, Rizal was presented.
He submitted a record of the Schedule of
Values for taxation purposes and a
certification to the effect that the unit
value of the respondents’ property is
₱21,000.00 per hectare.
On August 7, 1993, commissioner Basilio
Afuang for the respondents filed his
report. He pegged the price of the area
sought to be expropriated at ₱30.00 per
square meter or ₱582,690.005 in the
aggregate; and for the improvements
thereon, Afuang placed a valuation of
₱2,093,950.00. The figures are in
contrast with the respondents’ own
valuation of ₱600,600.00, for the area,
and ₱4,935,500.00, for the
improvements.
On September 14, 1993, NPC filed an
amended complaint to acquire only
19,423 square meters of the
respondents’ property. The original area
of 20,220 square meters initially sought
to be expropriated under the original
complaint turned out to be in excess of
the area required.
For its part, NPC made it clear that it is
interested only in acquiring an easement
of right-of-way over the respondents’
property and that ownership of the area
over which the right-of-way will be
established shall remain with the
respondents. For this reason, NPC claims
that it should pay, in addition to the
agreed or adjudged value of the
improvements on the area, only an
easement fee in an amount equivalent
to ten per cent (10%) of the market
value of the property as declared by the
respondents or by the Municipal
Assessor, whichever is lower, as
provided for under Section 3-A of
Republic Act No. 6395, as amended by
Presidential Decree 938.6
The court-appointed commissioner, Ms.
Amelia de Guzman Carbonell, found that
the risk and dangerous nature of the
transmission line project essentially
deprive the respondents of the use of
the area. Nonetheless, she
recommended that the determination of
just compensation should be relegated
to "expert appraisers."7
From the evidence before it, the trial
court made a determination that the
market value of the property is ₱2.09
per square meter, or ₱40,594.07 for the
entire 19,423 square meters needed by
NPC, and not the ₱30.00 per square
meter claimed by the respondents.
Neither did the trial court consider NPC’s
reliance on Section 3-A of Republic Act
No. 6395, as amended by Presidential
Decree 938, the court placing more
weight on the respondents’ argument
that expropriation would result in the
substantial impairment of the use of the
area needed, even though what is
sought is a mere aerial right-of-way. The
court found as reasonable the amount of
₱324,750.00 offered by NPC for the
improvements, as the same is based on
the official current schedule of values as
determined by the Municipal Assessor of
Tanay, Rizal.
Hence, in its decision8 of February 19,
1996, the trial court rendered judgment
as follows:
WHEREFORE, in view of the foregoing,
judgment is hereby rendered:
1. Expropriating in favor of [NPC] a
parcel of land covering a total area of
19,423 sq.m. covered by TCT No. M-
17860 owned by the [respondents];
2. Ordering the amount of P40,594.07 as
just compensation for the 19,423 square
meters of land affected by the
expropriations; and the amount of
P324,750.00 as reasonable
compensation for the improvements on
the land expropriated with legal interest
from the time of possession by the
plaintiff. No pronouncement as to costs.
SO ORDERED. (Words in brackets
supplied.)
The respondents moved for
reconsideration, presenting for the first
time a document entitled "Bureau of
Internal Revenue Circular of Appraisal,"
which shows that for the year 1985,
lands in Barangay Sampaloc were valued
at ₱30.00 per square meter; for the year
1992, at ₱80.00 per square meter; and
for year 1994, at ₱100.00 per square
meter. Respondents maintain that the
price of ₱30.00 per square meter for the
needed area of 19,423 square meters is
the reasonable amount and should be
the basis for fixing the amount of just
compensation due them. The trial court
denied the motion, stating that the BIR
circular in question was belatedly filed
and therefore NPC could not have
opposed its presentation.
From the aforesaid decision of the trial
court, both NPC and the respondents
went on appeal to the CA whereat the
separate appeals were consolidated and
docketed as CA-G.R. CV No. 53576. The
appellate court found merit in the
respondents’ appeal, and disregarded
the ₱2.09 per square meter valuation of
the trial court, which was based on a
1984 tax declaration. Instead, the CA
placed reliance upon a 1993 tax
declaration, "being only two years
removed from the time of taking."9 The
appellate court determined the time of
taking to be in 1991. Thus, the greater
value of ₱913,122.00 as declared in Tax
Declaration No. 011-2667 dated July 23,
1993 should be the basis for determining
just compensation. With regard to the
value of improvements, the appellate
court found NPC’s valuation more
favorable, being based on the current
(1991) schedule of values for trees in the
provinces of Rizal and Laguna. Hence, in
its decision10 of March 14, 2005, the CA
rendered judgment, to wit:
WHEREFORE, the instant Appeal is
GRANTED. The decision of the Regional
Trial Court of Tanay, Rizal, Branch 80
dated February 19, 1996 is hereby
MODIFIED and the compensation
awarded for the 19,423 square meters of
land affected is increased to
₱116,538.00, and the reasonable
compensation for the improvements
thereon is likewise increased to
P325,025.00, with legal interest from the
time of possession by the plaintiff-
appellee NAPOCOR. No pronouncement
as to costs.
SO ORDERED.
NPC moved for reconsideration, but its
motion was denied by the appellate
court in its resolution11 of December 2,
2005.
Hence, NPC’s instant petition for review,
submitting for our resolution only the
following issues with respect to the
amount of just compensation that must
be paid the respondents for the
expropriated portion (19,423 square
meters) of their property:
1. Is it to be based on the 1984 or the
1993 valuation?
2. Should NPC pay for the value of the
land being taken, or should it be limited
to what is provided for under P.D. 938,
that is, ten per cent (10%) of its market
value as declared by the owner or the
assessor (whichever is lower),
considering that the purpose for which
the property is being taken is merely for
the establishment of a safe and free
passage for its overhead transmission
lines?
There is no issue as to the
improvements. Since the ₱325,025.00
valuation therefor is the very price set by
the NPC commissioner, to which the
corporation did not object but otherwise
adopts, the Court fixes the amount of
₱325,025.00 as just compensation for
the improvements.
We now come to the more weighty
question of what amount is just by way
of compensation for the 19,423 square-
meter portion of the respondents’
property.
In eminent domain cases, the time of
taking is the filing of the complaint, if
there was no actual taking prior thereto.
Hence, in this case, the value of the
property at the time of the filing of the
complaint on November 20, 1990 should
be considered in determining the just
compensation due the respondents. So it
is that in National Power Corporation v.
Court of Appeals, et al.,12 we ruled:
Normally, the time of the taking
coincides with the filing of the complaint
for expropriation. Hence, many rulings of
this Court have equated just
compensation with the value of the
property as of the time of filing of the
complaint consistent with the above
provision of the Rules. So too, where the
institution of the action precedes entry
into the property, the just compensation
is to be ascertained as of the time of the
filing of the complaint.
The trial court fixed the value of the
property at its 1984 value, while the CA,
at its 1993 worth. Neither of the two
determinations is correct. For purposes
of just compensation, the respondents
should be paid the value of the property
as of the time of the filing of the
complaint which is deemed to be the
time of taking the property.
It was certainly unfair for the trial court
to have considered a property value
several years behind its worth at the
time the complaint in this case was filed
on November 20, 1990. The landowners
are necessarily shortchanged,
considering that, as a rule, land values
enjoy steady upward movement. It was
likewise erroneous for the appellate
court to have fixed the value of the
property on the basis of a 1993
assessment. NPC would be paying too
much. Petitioner corporation is correct
in arguing that the respondents should
not profit from an assessment made
years after the taking.
The expropriation proceedings in this
case having been initiated by NPC on
November 20, 1990, property values on
such month and year should lay the basis
for the proper determination of just
compensation. In Association of Small
Landowners in the Philippines, Inc. v.
Secretary of Agrarian Reform,13 the
Court ruled that the equivalent to be
rendered for the property to be taken
shall be substantial, full, ample and, as
must apply to this case, real. This must
be taken to mean, among others, that
the value as of the time of taking should
be the price to be paid the property
owner.
Just compensation is defined as the full
and fair equivalent of the property taken
from its owner by the expropriator. In
this case, this simply means the
property’s fair market value at the time
of the filing of the complaint, or "that
sum of money which a person desirous
but not compelled to buy, and an owner
willing but not compelled to sell, would
agree on as a price to be given and
received therefor."14 The measure is not
the taker’s gain, but the owner’s loss.
In the determination of such value, the
court is not limited to the assessed value
of the property or to the schedule of
market values determined by the
provincial or city appraisal committee;
these values consist but one factor in the
judicial valuation of the property.15 The
nature and character of the land at the
time of its taking is the principal criterion
for determining how much just
compensation should be given to the
landowner16 All the facts as to the
condition of the property and its
surroundings, as well as its
improvements and capabilities, should
be considered.17
Neither of the two determinations made
by the courts below is therefore correct.
A new one must be arrived at, taking
into consideration the foregoing
pronouncements.
Now, to the second issue raised by
petitioner NPC.
In several cases, the Court struck down
NPC’s consistent reliance on Section 3-A
of Republic Act No. 6395, as amended by
Presidential Decree 938.18 True, an
easement of a right-of-way transmits no
rights except the easement itself, and
the respondents would retain full
ownership of the property taken.
Nonetheless, the acquisition of such
easement is not gratis. The limitations
on the use of the property taken for an
indefinite period would deprive its
owner of the normal use thereof. For
this reason, the latter is entitled to
payment of a just compensation, which
must be neither more nor less than the
monetary equivalent of the land
taken.19
While the power of eminent domain
results in the taking or appropriation of
title to, and possession of, the
expropriated property, no cogent reason
appears why said power may not be
availed of to impose only a burden upon
the owner of the condemned property,
without loss of title and possession.20
However, if the easement is intended to
perpetually or indefinitely deprive the
owner of his proprietary rights through
the imposition of conditions that affect
the ordinary use, free enjoyment and
disposal of the property or through
restrictions and limitations that are
inconsistent with the exercise of the
attributes of ownership, or when the
introduction of structures or objects
which, by their nature, create or increase
the probability of injury, death upon or
destruction of life and property found on
the land is necessary, then the owner
should be compensated for the
monetary equivalent of the land, in
accordance with our ruling in NPC v.
Manubay Agro-Industrial:
As correctly observed by the CA,
considering the nature and the effect of
the installation power lines, the
limitations on the use of the land for an
indefinite period would deprive
respondent of normal use of the
property. For this reason, the latter is
entitled to payment of a just
compensation, which must be neither
more nor less than the monetary
equivalent of the land.21
The evidence suggests that NPC’s
transmission line project that traverses
the respondents’ property is perpetual,
or at least indefinite, in nature.
Moreover, not to be discounted is the
fact that the high-tension current to be
conveyed through said transmission lines
evidently poses a danger to life and limb;
injury, death or destruction to life and
property within the vicinity. As the Court
held in NPC v. Chiong,22 it is not
improper to assume that NPC will erect
structures for its transmission lines
within the property. What is sought to
be expropriated in this case is, at its
longest extent, 326.34 meters, and
through it may be built several
structures, not simply one. Finally, if NPC
were to have its way, respondents will
continue to pay the realty taxes due on
the affected portion of their property, an
imposition that, among others, merits
the rejection of NPC’s thesis of payment
of a mere percentage of the property’s
actual value.
WHEREFORE, the instant petition is
GRANTED in part in that the decision of
the Court of Appeals dated March 14,
2005 vis a vis the award of ₱116,538.00,
as and by way of just compensation for
the 19,423 square meters of the
respondents’ property, is SET ASIDE, and
the case is ordered REMANDED to the
court of origin for the proper
determination of the amount of just
compensation for the portion thus
taken, based on our pronouncements
hereon. The same decision, however, is
AFFIRMED, insofar as it pertains to the
award of ₱325,025.00 for the
improvements, with legal interest from
the time of actual possession by the
petitioner.
No pronouncement as to costs.
SO ORDERED.
JOHN KAM BIAK Y. CHAN, JR., the said digging, the same shall be
P e t i t i o n e r, This MEMORANDUM OF AGREEMENT, divided among the parties as follows:
executed this 28th day of February,
- versus - 1995, by and between: FIRST PARTY - 35%
SECOND PARTY - 65%
IGLESIA NI CRISTO, INC., JOHN Y. CHAN, of legal age, single, and a
R e s p o n d e n t. resident of Aringay, La Union, now and 7. In case government or military
hereinafter called the FIRST PARTY; interference or outside intervention is
G.R. No. 160283 imminent, the FIRST PARTY hereby
GEN. ELY E. YORO, Jr., of legal age, reserves the option to stop the digging
Present: married, and a resident of Damortis, Sto. at any stage thereof.
Tomas, La Union, hereinafter referred to
PUNO, as the SECOND PARTY: IN WITNESS WHEREOF, We have
Chairman, hereunto set our hands on the day and
AUSTRIA-MARTINEZ, WITNESSETH that: year first above-written at Aringay, La
CALLEJO, SR., WHEREAS, the FIRST PARTY is the owner Union.[4]
TINGA, and of a parcel of land located at Sta. Rita,
CHICO-NAZARIO, JJ. Aringay, La Union.

WHEREAS, the FIRST PARTY, desires to Diggings thereafter commenced. After

Promulgated:
October 14, 2005
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - -x
DECISION
CHICO-NAZARIO, J.:
Before Us is a petition for review on
certiorari[1] assailing the Decision[2] of
the Court of Appeals in CA-G.R. CV No.
65976, dated 25 September 2003. Said
Decision denied the petitioners appeal
from the decision of the Regional Trial
Court (RTC), La Union, Branch 31, in Civil
Case No. A-1646.
THE FACTS
The antecedents of the instant case are
quite simple.
The Aringay Shell Gasoline Station is
owned by the petitioner. It is located in
Sta. Rita East, Aringay, La Union, and
bounded on the south by a chapel of the
respondent.
The gasoline station supposedly needed
additional sewerage and septic tanks for
its washrooms. In view of this, the
services of Dioscoro Ely Yoro (Yoro), a
retired general of the Armed Forces of
the Philippines, was procured by
petitioner, as the former was allegedly a
construction contractor in the locality.
Petitioner and Yoro executed a
Memorandum of Agreement[3] (MOA)
on 28 February 1995 which is
reproduced hereunder:
MEMORANDUM OF AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
dig a septic tank for its perusal in the
property bordering Iglesia ni Cristo.
WHEREAS, the SECOND PARTY is willing
to contract the intended digging of
septic tank for the first party.
WHEREAS, the FIRST PARTY and SECOND
PARTY has (sic) agreed verbally as to the
compensation of the said digging of
septic tank.
WHEREFORE, for and in consideration of
the terms and covenants hereinbelow
set forth, the FIRST PARTY hereby
AGREES and ALLOWS the SECOND PARTY
to undertake the digging of the parcel of
land for the exclusive purpose of having
a septic tank.
TERMS AND COVENANTS
1. The SECOND PARTY shall contract the
said digging;
2. The FIRST PARTY shall have complete
control over the number of personnel
who will be entering the property for
said contract;
3. The digging shall be allowed for a
period of three (3) weeks only,
commencing on March 28, 1995, unless
extended by agreement of the parties;
4. Any damage within or outside the
property of the FIRST PARTY incurred
during the digging shall be borne by the
SECOND PARTY;
5. In the event that valuable objects are
found on the property, the same shall be
divided among the parties as follows:
FIRST PARTY - 60%
SECOND PARTY - 40%
6. In the event that valuable objects are
found outside the property line during
some time, petitioner was informed by
the members of the respondent that the
digging traversed and penetrated a
portion of the land belonging to the
latter. The foundation of the chapel was
affected as a tunnel was dug directly
under it to the damage and prejudice of
the respondent.
On 18 April 1995, a Complaint[5] against
petitioner and a certain Teofilo Oller,
petitioners engineer, was filed by the
respondent before the RTC, La Union,
Branch 31, docketed therein as Civil Case
No. A-1646. Petitioner and Oller filed an
Answer with Third-Party Complaint[6]
impleading Yoro as third-party
defendant.
Yoro filed an Answer to the Third-Party
Complaint[7] dated 13 July 1995. An
Amended and Supplemental
Complaint[8] dated 30 August 1995 was
later filed by the respondent already
naming Yoro as a party-defendant, to
which the petitioner and Oller filed an
Answer.[9] Yoro filed his own
Answer.[10]
After four years of hearing the case, the
trial court promulgated its Decision[11]
holding that the diggings were not
intended for the construction of
sewerage and septic tanks but were
made to construct tunnels to find hidden
treasure.[12] The trial court adjudged
the petitioner and Yoro solidarily liable
to the respondent on a 35%-65% basis
(the petitioner liable for the 35%), and
absolving Oller from any liability, viz:
WHEREFORE, this Court renders
judgment in favor of plaintiff IGLESIA NI
CRISTO and against defendants JOHN
KAMBIAK CHAN and DIOSCORO ELY
YORO, JR. who are respectively solidarily
liable to PLAINTIFF on a 35%-65% basis,
with JOHN CHAN taking the 35% tab,
Ordering the two (2) aforesaid
DEFENDANTS to pay PLAINTIFF the
following amounts:
1. SIX HUNDRED THIRTY-THREE
THOUSAND FIVE HUNDRED NINETY-FIVE
PESOS AND FIFTY CENTAVOS
(P633,595.50); representing ACTUAL
DAMAGES;
2. FIVE HUNDRED THOUSAND PESOS
(P500,000.00) representing MORAL
DAMAGES;
3. TEN MILLION PESOS (P10,000,000.00)
as EXEMPLARY DAMAGES;
4. FIFTY THOUSAND PESOS (P50,000.00)
as plaintiffs attorneys fees; and
5. TWENTY THOUSAND PESOS
(P20,000.00) as litigation expenses.
Defendant TEOFILO OLLER is absolved of
any civil liability.
Any counterclaim filed against PLAINTIFF
IGLESIA NI CRISTO is dismissed.[13]
Petitioner filed a Notice of Appeal[14]
dated 18 August 1999. Yoro filed his own
Notice of Appeal[15] dated 20 August
1999.
In a Resolution[16] dated 19 November
1999, the trial court disallowed Yoros
appeal for failure to pay the appellate
court docket and other lawful fees
within the reglementary period for
taking an appeal.[17] In view of Yoros
failure to appropriately file an appeal, an
order was issued for the issuance of a
Writ of Execution as against him only,
the dispositive portion of which reads:
WHEREFORE, premises considered, this
Court GRANTS the motion of plaintiff
Iglesia ni Cristo for the issuance of a Writ
of Execution as against Dioscoro Ely
Yoro, Jr. only.[18]
The petitioners appeal to the Court of
Appeals, on the other hand, was given
due course.[19] On 25 September 2003,
the Court of Appeals rendered its
Decision denying the appeal. It affirmed
the trial court but with modifications.
The decretal portion of the decision
states:
WHEREFORE, the appeal is hereby
DENIED. The assailed decision in Civil
Case No. A-1646 is hereby AFFIRMED
with MODIFICATIONS as follows:
(a) The award of moral damages in the
amount of P500,000.00 is hereby
deleted.
(b) The award of exemplary damages is
hereby reduced to P50,000.00.
(c) The award of attorneys fees and
litigation expenses is hereby reduced to
P30,000.00.[20]
Undeterred, petitioner instituted the
instant case before this Court. On 15
December 2004, the instant petition was
given due course.[21]
ASSIGNMENT OF ERRORS
Petitioner assigns as errors the
following:
I contract, according to the respondent,
THE COURT OF APPEALS ERRED IN
AFFIRMING THE DECISION OF THE
REGIONAL TRIAL COURT (BRANCH 31,
AGOO, LA UNION) PARTICULARLY IN
SAYING THAT THE BASIS OF THE
SOLIDARY OBLIGATION OF PETITIONER
AND YORO VIS--VIS PLAINTIFF IS BASED
NOT ON THE MOA BUT ON TORT
II
THE COURT OF APPEALS ERRED IN NOT
GIVING EFFECT TO THE MOA WHICH
SHOULD EXONERATE THE PETITIONER
FROM ALL LIABILITIES TO THE PRIVATE
RESPONDENT
III
THE COURT OF APPEALS ERRED IN NOT
APPRECIATING THE THIRD-PARTY
COMPLAINT AS CROSS-CLAIM OF THE
PETITIONER AGAINST YORO.[22]
ISSUE
Drawn from the above assignment of
errors, the solitary issue that needs to be
resolved is:
WHETHER OR NOT THE MEMORANDUM
OF AGREEMENT ENTERED INTO BY THE
PETITIONER AND YORO HAS THE EFFECT
OF MAKING THE LATTER SOLELY
RESPONSIBLE FOR DAMAGES TO THE
RESPONDENT.
THE RULINGS OF THE COURT
Petitioner avers that no liability should
attach to him by laying the blame solely
on Yoro. He argues that the MOA
executed between him and Yoro is the
law between them and must be given
weight by the courts. Since nothing in
the MOA goes against the law, morals,
good customs and public policy, it must
govern to absolve him from any
liability.[23] Petitioner relies heavily in
Paragraph 4 of the MOA, which is again
reproduced hereunder:
4. Any damage within or outside the
property of the FIRST PARTY incurred
during the digging shall be borne by the
SECOND PARTY.
In answer to this, the respondent asserts
that the MOA should not absolve
petitioner from any liability. This written
clearly shows that the intention of the
parties therein was to search for hidden
treasure. The alleged digging for a septic
tank was just a cover-up of their real
intention.[24] The aim of the petitioner
and Yoro to intrude and surreptitiously
hunt for hidden treasure in the
respondents premises should make both
parties liable.[25]
At this juncture, it is vital to underscore
the findings of the trial court and the
Court of Appeals as to what was the real
intention of the petitioner and Yoro in
undertaking the excavations. The
findings of the trial court and the Court
of Appeals on this point are in complete
unison. Petitioner and Yoro were in
quest for hidden treasure[26] and,
undoubtedly, they were partners in this
endeavor.
The Court of Appeals, in its Decision,
held in part:
The basis of their solidarity is not the
Memorandum of Agreement but the fact
that they have become joint tortfeasors.
There is solidary liability only when the
obligation expressly so states, or when
the law or the nature of the obligation
requires solidarity.[27]
We find no compelling reason to disturb
this particular conclusion reached by the
Court of Appeals. The issue, therefore,
must be ruled in the negative.
Article 2176 of the New Civil Code
provides:
ART. 2176. Whoever by act or omission
causes damage to another, there being
fault or negligence, is obliged to pay for
the damage done. Such fault or
negligence, if there is no pre-existing
contractual relation between the parties,
is called a quasi-delict and is governed by
the provisions of this Chapter.
Based on this provision of law, the
requisites of quasi-delict are the
following:
(a) there must be an act or omission;
(b) such act or omission causes damage
to another;
(c) such act or commission is caused by
fault or negligence; and
(d) there is no pre-existing contractual
relation between the parties.
All the requisites are attendant in the
instant case. The tortious act was the
excavation which caused damage to the
respondent because it was done
surreptitiously within its premises and it
may have affected the foundation of the
chapel. The excavation on respondents
premises was caused by fault. Finally,
there was no pre-existing contractual
relation between the petitioner and Yoro
on the one hand, and the respondent on
the other.
For the damage caused to respondent,
petitioner and Yoro are jointly liable as
they are joint tortfeasors. Verily, the
responsibility of two or more persons
who are liable for a quasi-delict is
solidary.[28]
The heavy reliance of petitioner in
paragraph 4 of the MOA cited earlier
cannot steer him clear of any liability.
As a general rule, joint tortfeasors are all
the persons who command, instigate,
promote, encourage, advise,
countenance, cooperate in, aid or abet
the commission of a tort, or who
approve of it after it is done, if done for
their benefit.[29]
Indubitably, petitioner and Yoro
cooperated in committing the tort. They
even had provisions in their MOA as to
how they would divide the treasure if
any is found within or outside petitioners
property line. Thus, the MOA, instead of
exculpating petitioner from liability, is
the very noose that insures that he be so
declared as liable.
Besides, petitioner cannot claim that he
did not know that the excavation
traversed the respondents property. In
fact, he had two (2) of his employees AFFIRMED with MODIFICATION as to the
actually observe the diggings, his award of exemplary damages, which is
security guard and his engineer Teofilo hereby increased to P100,000.00. Costs
Oller.[30] against petitioner.
Coming now to the matter on damages, SO ORDERED.
the respondent questions the drastic
reduction of the exemplary damages
awarded to it. It may be recalled that the
trial court awarded exemplary damages
in the amount of P10,000,000.00 but
same was reduced by the Court of
Appeals to P50,000.00.
Exemplary or corrective damages are
imposed by way of example or
correction for the public good.[31] In
quasi-delicts, exemplary damages may
be granted if the defendant acted with
gross negligence.[32] By gross
negligence is meant such entire want of
care as to raise a presumption that the
person in fault is conscious of the
probable consequences of carelessness,
and is indifferent, or worse, to the
danger of injury to person or property of
others.[33]
Surreptitiously digging under the
respondents chapel which may weaken
the foundation thereof, thereby
endangering the lives and limbs of the
people in worship, unquestionably
amounts to gross negligence. Not to
mention the damage that may be caused
to the structure itself. The respondent
may indeed be awarded exemplary
damages.
For such tortious act done with gross
negligence, the Court feels that the
amount awarded by the Court of
Appeals is inadequate. The exemplary
damages must correspondingly be
increased to P100,000.00.
The modification made by this Court to
the judgment of the Court of Appeals
must operate as against Yoro, for as
fittingly held by the court a quo:
While it is settled that a party who did
not appeal from the decision cannot
seek any relief other than what is
provided in the judgment appealed
from, nevertheless, when the rights and
liability of the defendants are so
interwoven and dependent as to be
inseparable, in which case, the
modification of the appealed judgment
in favor of appellant operates as a
modification to Gen. Yoro who did not
appeal. In this case, the liabilities of Gen.
Yoro and appellant being solidary, the
above exception applies.[34]
WHEREFORE, the Decision of the Court
of Appeals dated 25 September 2003 is
 LEO WINSTON G.R. No. 149023
BRIN LEE,
Petitioner,
Present:
PUNO, C.J., Chairp
erson,
SANDOVAL-
-versus- GUTIERREZ,
CORONA,
AZCUNA, and
GARCIA, JJ.
SPOUSES
AMADEO and Promulgated:
ADELAIDA CARR
EON, September 27,
Respondents. 2007
x-----------------------------------------------------
------------------------------------x
DECISION
SANDOVAL-GUTIERREZ, J.:
Challenged in the instant Petition for
Review on Certiorari[1] are the
Decision[2] of the Court of Appeals
dated March 12, 2001 and its Resolution
dated June 21, 2001 in CA-G.R. CV No.
60511.
Spouses Amadeo and Adelaida Carreon,
respondents, are the owners of a house
and Lots Nos. 8-B and 8-C located
in Cebu City
covered by Transfer Certificates of Title
(TCT) Nos. 61049 and 56745,
respectively, of the Registry of Deeds,
same city.
On the other hand, Anita Linda
Rodriguez is the owner of Lot No. 6213-
A-2 covered by TCT No. 93402. It is
situated within the vicinity of
respondent spouses lots.
As there is no existing way from their
property to the nearest road,
respondents filed with the Regional Trial
Court (RTC), Branch 22, Cebu City a
complaint for easement of right of way
against Rodriguez, docketed as Civil Case
No. CEB-7426. During the pre-trial, the
RTC found that there is another servient
estate, owned by Mr. and Ms. Anselmo
Jardin which could be used by
respondents as a right of
way. Respondents then filed a Motion
for Leave to Admit Amended Complaint
to include spouses Jardin as co-
defendants, the latter being owners of
Lots Nos. 6213-A-3, 6213-A-4 and 8-A
located on the eastern side of
respondents property. On June 9, 1989,
the RTC issued an Order admitting the
Amended Complaint.
However, the lots of spouses Jardin were
sold pendente lite to Leo Winston Brin
Lee, petitioner. As a result, respondents
filed a Motion for Leave to Admit Second
Amended Complaint
impleading petitioner as additional
defendant. On September 10, 1993, the
RTC granted the motion.
After trial, the RTC rendered Judgment in
favor of respondents and
against petitioner, the dispositive
portion of which reads:
FOR ALL THE FOREGOING, judgment is
hereby rendered for the plaintiffs as
follows:
1. Ordering defendant Mr. Leo Winston
Brin Lee to grant plaintiffs a right of way
on the northern portion of his properties
as indicated in Exh.9-Lee measuring one-
meter wide and thirteen meters long;
2. Ordering Mr. Leo Winston Brin Lee to
demolish the fence/structure to the
extent obstructing the right of way
hereinabove constituted;
3. Ordering plaintiffs to solidarily pay
defendant Lee the amount of THREE
THOUSAND PESOS (P3,000.00) per sq. m.
or a total of THIRTY NINE THOUSAND
PESOS (P39,000.00) as payment of
indemnity, on or before the complete
establishment thereof;
4. Further ordering plaintiffs to solidarily
pay defendant Lee the amount of
TWENTY FIVE THOUSAND PESOS
(P25,000.00) as the value of the
wall/fence to be demolished likewise on
or before the complete establishment of
the easement; and
5. All counterclaims are hereby
dismissed for lack of merit.
NO PRONOUNCEMENT AS TO COSTS.
SO ORDERED.
On appeal by petitioner, the Court of
Appeals, in its assailed Decision, affirmed
the RTC Judgment, thus:
WHEREFORE, premises considered, the
present appeal is hereby DISMISSED, for
lack of merit. The appealed Decision
dated June 24, 1997 of
the Regional Trial Court of Cebu City,
Branch 22 in Civil Case No. CEB-7426 is
hereby AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
Petitioner filed a motion for
reconsideration but it was denied by the
appellate court in its Resolution of June
21, 2001.
Hence, the present petition.
Petitioner contends that respondents
have an existing right of way; and that
had the trial court considered certain
testimonial evidence and respondents
admissions, its conclusion and that of
the Court of Appeals would have been
different.
Respondents, on the other hand, pray
that the petition be denied for lack of
merit.
The issue for our resolution is whether
the Court of Appeals erred in ruling that
respondents are entitled to an easement
of right of way on petitioners
property. This issue is both factual and
legal in nature.
The conferment of a legal easement of
right of way is governed by Articles 649
and 650 of the Civil Code reproduced as
follows:
ART. 649. The owner, or any person who
by virtue of a real right may cultivate or
use any immovable, which is surrounded
by other immovables pertaining to other
persons and without adequate outlet to
a public highway, is entitled to demand a
right of way through the neighboring
estates, after payment of the proper
indemnity.
Should this easement be established in
such a manner that its use may be
continuous for all the needs of the
dominant estate, establishing a
permanent passage, the indemnity shall
consist of the value of the land occupied
and the amount of the damage caused
to the servient estate.
In case the right of way is limited to the
necessary passage for the cultivation of
the estate surrounded by others and for
the gathering of its crops through the
servient estate without a permanent
way, the indemnity shall consist in the
payment of the damage caused by such
encumbrance.
This easement is not compulsory if the
isolation of the immovable is due to the
proprietors own acts.
ART. 650. The easement of right of way
shall be established at the point least
prejudicial to the servient estate, and,
insofar as consistent with this rule,
where the distance from the dominant
estate to a public highway may be the
shortest.
To be entitled to an easement of right of
way, the following requisites should be
met:
1. the dominant estate is surrounded by
other immovables and has no adequate
outlet to a public highway (Art. 649, par.
1);
2. there is payment of proper indemnity
(Art. 649, par. 1);
3. the isolation is not due to the acts of
the proprietor of the dominant estate
(Art. 649, last par.); and
4. the right of way claimed is at the point
least prejudicial to the servient estate;
and insofar as consistent with this rule,
where the distance from the dominant
estate to a public highway may be the
shortest (Art. 650).[3]
All the above requisites are present
here.
As regards the first requisite, the parties
agreed that respondents property is
surrounded by the estates of other
persons, including that of petitioner. The
only dispute is whether respondents
have an adequate outlet to the nearest
road. The Court of Appeals held:
least prejudicial and shortest distance to
the servient estate, the
Court of Appeals held: We find the same
to be present in the case at
bar. Moreover, it should be emphasized
that what respondent spouses asked for
was merely a one (1) meter wide
pathway. The trial court found that this
easement will only affect a small portion
of petitioners lot which has a total area
of 249 square meters.[5] Only his fence
will be affected, the damage of which
respondent spouses are willing to pay.
Verily, we find no cogent reason to
disturb the Decision of the Court of
Appeals affirming the Judgment of the
trial court.
WHEREFORE, we DENY the petition. The
challenged Decision and Resolution of
the Court of Appeals in CA-G.R. CV No.
60511 are AFFIRMED. Costs against
petitioner.
SO ORDERED.

x x x What defendant-appellant insists is

that plaintiffs-appellees can use another
outlet leading to the nearest road by
traversing several small lots and
thereafter use the northern portion of
his property which he is willing to be the
subject of a right of way. The trial court
found that plaintiffs-appellees managed
to reach the nearest road through any
passage available, passing through
several lots as they were unobstructed
by any structure of fence. However, as
correctly ruled by the court a quo, this is
not the adequate outlet referred to by
law. Plaintiffs-appellees have every right
in accordance with law to formally
demand for an adequate outlet sufficient
for their needs. Moreover, the
alternative route referred to by
defendant-appellant appears to be
merely a proposed outlet, not yet in
existence. x x x

The second requisite is that payment of

indemnity has been complied
with. Respondents have consistently
maintained that they are willing to pay
the area affected at a reasonable price
that may be fixed by the Court.[4]

Anent the third requisite, records show

that the isolation of respondents
property is not due to their
fault. Actually, it is surrounded by
estates of other persons, leaving
respondents no adequate ingress or
egress to a public highway.

Going now to the fourth requisite that

the right of way claimed is at the point
SPOUSES VICTOR VALDEZ AND JOCELYN
VALDEZ, represented by their Attorney-
In-Fact, VIRGILIO VALDEZ,
Petitioners,
- versus -
SPOUSES FRANCISCO TABISULA AND
CARIDAD TABISULA,
Respondents.
G.R. No. 175510
Present:
QUISUMBING, J., Chairperson,
CARPIO MORALES,
TINGA,
VELASCO, JR., and
BRION, JJ.
Promulgated:
July 28, 2008
x------------------------------
--------------------x
DECISION
CARPIO MORALES, J.:
Petitioner-spouses Victor and Jocelyn
Valdez purchased via a January 11, 1993
Deed of Absolute Sale[1] (the deed) from
respondent-spouses Francisco Tabisula
and Caridad Tabisula a 200 square meter
(sq.m.) portion (the subject property) of
a 380 sq. m. parcel of land located in San
Fernando, La Union, which 380 sq.m.
parcel of land is more particularly
described in the deed as follows:
A parcel of land classified as residential
lot, bounded on the North by Lot No.
25569, on the East, by Lot No. 247, 251,
on the South, by a Creek and on the
West, by Lot No. 223-A, declared under
Tax Decl. No. 52820, with an area of 380
square meters, more or less, and
assessed at P 17100.00 for the current
year. It is not registered under Act 496
nor under the Spanish Mortgage Law.
(Emphasis and underscoring supplied)
The pertinent portions of the deed read:
xxxx
That for and in consideration of the sum
of SEVENTY THOUSAND (P70,000.00)
PESOS, Philippine Currencyp [sic] paid to
us at our entire satisfaction by spouses
VICTOR and JOECELYN [sic] VALDEZ, both
of legal age, Filipinos and residents of
148 P. Burgos St., San Fernando, La
Union, receipt of which is hereby
acknowledged, do hereby SELL, CONVEY
and TRANSFER by way of absolute sale
unto the said spouses Victor and
Joecelyn Valdez, their heirs and assigns,
the TWO HUNDRED (200) SQUARE
METERS, EASTERN PORTION of the
parcel of land above-described, free
from all liens and encumbrances.
xxxx
That now and hereinafter, said VENDEE-
SPOUSES VICTOR and JOECELYN [sic]
VALDEZ shall be the absolute owners of
the said 200 sq. meters, eastern portion
and that we shall warrant and forever
defend their ownership of the same
against the claims of all persons
whomsoever; they shall be provided a 2
1/2 meters [sic] wide road right-of-way
on the western side of their lot but
which is not included in this sale.
x x x.x (Emphasis and underscoring
supplied)
Respondents subsequently built a
concrete wall on the western side of the
subject property.[2] Believing that that
side is the intended road right of way
mentioned in the deed, petitioners,
through their representative, reported
the matter to the barangay for
mediation and conciliation. Respondents
failed to attend the conferences
scheduled by the barangay, however,
drawing petitioners to file in April 1999
or more than six years after the
execution of the deed a Complaint for
Specific Performance with Damages[3]
against respondents before the Regional
Trial Court (RTC) of San Fernando City, La
Union.
In their complaint, petitioners alleged
that they purchased the subject property
on the strength of respondents
assurance of providing them a road right
of way. They thus prayed that
respondents be ordered to provide the
subject property with a 2-meter wide
easement and to remove the concrete
wall blocking the same.[4]
Respondents, in their Answer with
Compulsory Counterclaim (for damages
and attorneys fees),[5] averred that the
2 -meter easement should be taken from
the western portion of the subject
property and not from theirs;[6] and
petitioners and their family are also the
owners of two properties adjoining the
subject property, which adjoining
properties have access to two public
roads or highways the bigger one which
adjoins P. Burgos St. on the north, and
the smaller one which abuts an existing
barangay road on the north.[7]
Respondents further averred that they
could not have agreed to providing
petitioners an easement on the western
side of their lot as there exists a two-
storey concrete house on their lot where
the supposed easement is to be located,
which was erected long before the
subject property was sold to
petitioners.[8] In support of this claim,
respondents submitted a February 20,
2003 letter from the City Engineers
Office.[9]
Branch 26 of the RTC of San Fernando
dismissed petitioners complaint and
granted respondents Counterclaim by
Decision[10] of March 18, 2005, the
dispositive portion of which reads:
WHEREFORE, and in view of all the
foregoing, judgment is hereby rendered
finding the defendants as against the
plaintiffs and hereby orders the
Complaint dismissed for being
unmeritorious and plaintiffs are hereby
ordered to pay the defendants, the
following:
1) P100,000.00 as moral damages;
2) P50,000.00 as exemplary damages;
3) P50,000.00 as attorneys fees;
4) P30,000.00 as expenses of litigation;
and
5) To pay the costs.
SO ORDERED.[11] (Underscoring
supplied)
On appeal by petitioners, the Court of
Appeals, by Decision of May 29,
2006,[12] affirmed that of the trial court,
it holding that the deed only conveyed
ownership of the subject property to
petitioners, and that the reference
therein to an easement in favor of
petitioners is not a definite grant-basis of
a voluntary easement of right of
way.[13]
The appellate court went on to hold that
petitioners are neither entitled to a legal
or compulsory easement of right of way
as they failed to present circumstances
justifying their entitlement to it under
Article 649 of the Civil Code.[14]
Petitioners motion for
reconsideration[15] having been denied
by the Court of Appeals by Resolution of
November 15, 2006, they filed the
present petition for review on certiorari
faulting the trial [sic] court
I. . . . IN RULING THAT THE RIGHT OF
WAY IS NOT PART OF THE ABSOLUTE
DEED OF SALE DATED JANUARY 11,
1993;
II. . . . IN RULING THAT THE PROVISION
OF THE ABSOLUTE DEED OF SALE
GRANTING A RIGHT OF WAY IS VAGUE
AND OBSCURE;
III. . . . IN AWARDING MORAL AND
EXEMPLARY DAMAGES TO THE
RESPONDENTS.[16] (Underscoring
supplied)
An easement or servitude is a real right
constituted on anothers property,
corporeal and immovable, by virtue of
which the owner of the same has to
abstain from doing or to allow somebody
else to do something on his property for
the benefit of another thing or
person.[17] The statutory basis of this
right is Article 613 of the Civil Code
which reads:
Art. 613. An easement or servitude is an
encumbrance imposed upon an
immovable for the benefit of another
immovable belonging to a different
owner.
The immovable in favor of which the
easement is established is called the
dominant estate; that which is subject
thereto, the servient estate.
There are two kinds of easements
according to source by law or by the will
of the owners. So Article 619 of the Civil
Code provides:
Art. 619. Easements are established
either by law or by the will of the
owners. The former are called legal and
the latter voluntary easements.
From the allegations in petitioners
complaint, it is clear that what they seek
to enforce is an alleged grant in the deed
by respondents of an easement reading:
they shall be provided a 2 meters wide
road right-of-way on the western side of
their lot but which is not included in this
sale.
Article 1358 of the Civil Code provides
that any transaction involving the sale or
disposition of real property must be in
writing.[18] The stipulation harped upon
by petitioners that they shall be
provided a 2 meters wide road right-of-
way on the western side of their lot but
which is not included in this sale is not a
disposition of real property. The proviso
that the intended grant of right of way is
not included in this sale could only mean
that the parties would have to enter into
a separate and distinct agreement for
the purpose.[19] The use of the word
shall, which is imperative or mandatory
in its ordinary signification, should be
construed as merely permissive where,
as in the case at bar, no public benefit or
private right requires it to be given an
imperative meaning.[20]
Besides, a document stipulating a
voluntary easement must be recorded in
the Registry of Property in order not to
prejudice third parties. So Articles 708
and 709 of the Civil Code call for, viz:
Art. 708. The Registry of Property has for
its object the inscription or annotation of
acts and contracts relating to the
ownership and other rights over
immovable property.
Art. 709. The titles of ownership, or of
other rights over immovable property,
which are not duly inscribed or
annotated in the Registry of Property
shall not prejudice third persons.
Petitioners are neither entitled to a legal
or compulsory easement of right of way.
For to be entitled to such kind of
easement, the preconditions under
Articles 649 and 650 of the Civil Code
must be established, viz:
Art. 649. The owner, or any person who
by virtue of a real right may cultivate or
use any immovable, which is surrounded
by other immovables pertaining to other
persons, and without adequate outlet to
a public highway, is entitled to demand a
right of way through the neighboring
estates, after payment of the proper
indemnity.
xxxx
This easement is not compulsory if the
isolation of the immovable is due to the
proprietors own acts. (Underscoring
supplied)
Art. 650. The easement of right of way
shall be established at the point least
prejudicial to the servient estate, and,
insofar as consistent with this rule,
where the distance from the dominant
estate to a public highway may be the
shortest. (Underscoring supplied)
Thus, to be conferred a legal easement
of right of way under Article 649, the
following requisites must be complied
with: (1) the property is surrounded by
other immovables and has no adequate
outlet to a public highway; (2) proper
indemnity must be paid; (3) the isolation
is not the result of the owner of the
dominant estates own acts; (4) the right
of way claimed is at the point least
prejudicial to the servient estate; and (5)
to the extent consistent with the
foregoing rule, the distance from the
dominant estate to a public highway
may be the shortest.[21] The onus of
proving the existence of these
prerequisites lies on the owner of the
dominant estate,[22] herein petitioners.
As found, however, by the trial court,
which is supported by the Sketch[23]
(Exhibit B; Exhibit 1) of the location of
the lots of the parties and those
adjoining them, a common evidence of
the parties, petitioners and their family
are also the owners of two properties
adjoining the subject property which
have access to two public roads or
highways.[24]
Since petitioners then have more than
adequate passage to two public roads,
they have no right to demand the grant
by respondents of an easement on the
western side of [respondents] lot.
It may not be amiss to note at this
juncture that at the time the deed was
executed in 1993, the barangay road-
Exhibit 1-G, by which petitioners could
access Burgos Street-Exhibit 1-F, was not
yet in existence; and that the Interior
Street-Exhibit 1-H, which petitioners via
this case seek access to with a right of
way, was still a creek,[25] as reflected in
the earlier-quoted particular description
of respondents parcel of land from
which the subject property originally
formed part.
Respecting the grant of damages in favor
of respondents by the trial court which
was affirmed by the appellate court, the
Court finds the same baseless.
To merit an award of moral damages,
there must be proof of moral suffering,
mental anguish, fright and the like. It is
not enough that one suffers sleepless
nights, mental anguish, serious anxiety
as a result of the actuation of the other
party.[26] Invariably, such actuation
must be shown by clear and convincing
evidence[27] to have been willfully done
in bad faith or with ill-motive.
In respondents case, they predicated
their Counterclaim for damages on
general allegations of sickness,
humiliation and embarrassment, without
establishing bad faith, fraud or ill-motive
on petitioners part.[28]
More importantly, respondents are
precluded from filing any counterclaim in
light of Article 199 of Rule XXVI of the
Rules and Regulations Implementing the
Local Government Code of 1991 reading:
xxxx
ARTICLE 199. Penalty for Refusal or
Failure of Any Party or Witness to
Appear before the Lupon or Pangkat.
Refusal or willful failure of any party or
witness to appear before the lupon or
pangkat in compliance with summons
issued pursuant to this Rule may be
punished by the city or municipal court
as for indirect contempt of court upon
application filed therewith by the lupon
chairman, the pangkat chairman, or by
any of the contending parties. Such
refusal or willful failure to appear shall
be reflected in the records of the lupon
secretary or in the minutes of the
pangkat secretary and shall bar the
complainant who fails to appear, from
seeking judicial recourse for the same
course of action, and the respondent
who refuses to appear, from filing any
counterclaim arising out of, or
necessarily connected with the
complaint.

x x x x (Emphasis and underscoring

supplied)

While respondent Caridad Tabisula

claimed that she always appeared, when
summoned, before the barangay
lupon,[29] the following Certificate to
File Action[30] belies the claim.

xxxx

This is to certify that respondents failed

to appear for (2) Mediation Proceeding
before our Punong Barangay thus the
corresponding complaint may now be
filed in court.

Issued this 24th day of November 1998

at the Multi Purpose Hall, Barangay 1
City of San Fernando (LU).

x x x x (Underscoring supplied)

The award for moral damages being thus

baseless, that for exemplary damages
must too be baseless.

As for the award of attorney's fees and

expenses of litigation, respondents have
not shown their entitlement thereto in
accordance with Article 2208 of the Civil
Code.

WHEREFORE, the May 29, 2006 Decision

and November 15, 2006 Resolution of
the Court of Appeals are MODIFIED in
that the grant of the Counterclaim of
respondents, Spouses Francisco Tabisula
and Caridad Tabisula, is reversed and set
aside. In all other respects, the
challenged decision is AFFIRMED.

Costs against petitioners.

SO ORDERED.