G.R. No. 184746. August 15, 2012.* mere preponderance of evidence not being adequate.
onderance of evidence not being adequate. Fraud is a question of fact which
SPOUSES CRISPIN GALANG and CARlDAD GALANG,
petitioners, vs. SPOUSES CONRADO S. REYES AND FE DE KASTRO REYES
(As substituted by their legal heir: Hermenigildo K. Reyes), respondents.
Civil Law; Land Registration; “Declaration of Nullity of Free Patents” and “Reversion,”
Distinguished.―An ordinary civil action for declaration of nullity of free patents and
certificates of title is not the same as an action for reversion. The difference between
them lies in the allegations as to the character of ownership of the realty whose title is
sought to be nullified. In an action for reversion, the pertinent allegations in the
complaint would admit State ownership of the disputed land. Hence in Gabila v.
Barriga where the plaintiff in his complaint admits that he has no right to demand the
cancellation or amendment of the defendant’s title because even if the title were
cancelled or amended the ownership of the land embraced therein or of the portion
affected by the amendment would revert to the public domain, we ruled that the action
was for reversion and that the only person or entity entitled to relief would be the
Director of Lands. On the other hand, a cause of action for declaration of nullity of
free patent and certificate of title would require allegations of the plaintiff’s
ownership of the contested lot prior to the issuance of such free patent and certificate
of title as well as the defendant’s fraud or mistake; as the case may be, in successfully
obtaining these documents of title over the parcel of land claimed by plaintiff. In
such a case, the nullity arises strictly not from the fraud or deceit but from the fact that
the land is beyond the jurisdiction of the Bureau of Lands to bestow and whatever
patent or certificate of title obtained therefor is consequently void ab initio. The real
party in interest is not the State but the plaintiff who alleges a pre-existing right of
ownership over the parcel of land in question even before the grant of title to the
defendant.
_______________
* THIRD DIVISION.
524
524 SUPREME COURT REPORTS ANNOTATED
Galang vs. Reyes
Same; Ownership; If indeed a property was the former bed of a creek that changed its
course and passed through the property of the claimant, then, pursuant to Article 461 of the
Civil Code, the ownership of the old bed left to dry by the change of course was automatically
acquired by the claimant.―If indeed a property was the former bed of a creek that
changed its course and passed through the property of the claimant, then, pursuant to
Article 461, the ownership of the old bed left to dry by the change of course
was automatically acquired by the claimant. Before such a conclusion can be reached,
the fact of natural abandonment of the old course must be shown, that is, it must be
proven that the creek indeed changed its course without artificial or man-made
intervention. Thus, the claimant, in this case the Reyeses, must prove three key
elements by clear and convincing evidence. These are: (1) the old course of the creek,
(2) the new course of the creek, and (3) the change of course of the creek from the old
location to the new location by natural occurrence.
Same; Homestead Patents; Fraud; Misrepresentation; Fraud and misrepresentation, as
grounds for cancellation of patent and annulment of title, should never be presumed.―Fraud
and misrepresentation, as grounds for cancellation of patent and annulment of title,
should never be presumed, but must be proved by clear and convincing evidence, with
must be proved.
PETITION for review on certiorari of the decision and resolution of the Court
of Appeals.
The facts are stated in the opinion of the Court.
D.L. Wagas Law Office for petitioners.
Gene B. Macalaguing for respondents.
MENDOZA, J.:
This petition for review on certiorari under Rule 45 seeks to reverse and set
aside the April 9, 2008 Decision1 of the
_______________
1 Rollo, pp. 19-27. Special Fourteenth Division, penned by Associate Justice Marlene
Gonzales-Sison, with Associate Justice Lu-
525
VOL. 678, AUGUST 15, 2012 525
Galang vs. Reyes
Court of Appeals (CA) and its October 6, 2008 Resolution,2in CA-G.R. CV. No.
85660.
The Facts
On September 4, 1997, spouses Conrado S. Reyes and Fe de Kastro
Reyes (the Reyeses) filed a case for the annulment of Original Certificate of Title
(OCT) No. P-928 against spouses Crispin and Caridad Galang (the
Galangs)with the Regional Trial Court, Antipolo, Rizal (RTC), docketed as
Civil Case No. 97-4560.
In their Complaint,3 the Reyeses alleged that they owned two properties:
(1) a subdivision project known as Ponderosa Heights Subdivision (Ponderosa),
and (2) an adjoining property covered by Transfer Certificate of Title (TCT)
No. 185252, with an area of 1,201 sq.m.;4 that the properties were separated by
the Marigman Creek, which dried up sometime in 1980 when it changed its
course and passed through Ponderosa; that the Galangs, by employing
manipulation and fraud, were able to obtain a certificate of title over the dried
up creek bed from the Department of Environment and Natural Resources
(DENR), through its Provincial Office (PENRO); that, specifically, the property
was denominated as Lot 5735, Cad 29 Ext., Case-1, with an area of 1,573 sq.m.
covered by OCT No. P-928; that they discovered the existence of the certificate
of title sometime in March 1997 when their caretaker, Federico Enteroso
(Enteroso), informed them that the subject property had been fraudulently
titled in the names of the Galangs; that in 1984, prior to such discovery,
Enteroso applied for the titling of the property, as he had been occupying it
since 1968 and had built his house on it;
_______________
 cenito N. Tagle (Acting Chairman, Special Fourteenth Division) and Associate Justice Monina
Arevalo Zenarosa, concurring.
2 Id., at pp. 28-30.
3 Id., at pp. 40-44.
4 Id., at p. 41.
526
526 SUPREME COURT REPORTS ANNOTATED
Galang vs. Reyes
that, later, Enteroso requested them to continue the application because of
financial constraints on his part;5that they continued the application, but later
learned that the application papers were lost in the Assessor’s Office;6and that
as the owners of the land where the new course of water passed, they are
entitled to the ownership of the property to compensate them for the loss of
the land being occupied by the new creek.
The Galangs in their Answer7 denied that the land subject of the complaint
was part of a creek and countered that OCT No. P-928 was issued to them after
they had complied with the free patent requirements of the DENR, through
the PENRO; that they and their predecessor-in-interest had been in possession,
occupation, cultivation, and ownership of the land for quite some time; that
the property described under TCT No. 185252 belonged to Apolonio Galang,
their predecessor-in-interest, under OCT No. 3991; that the property was
transferred in the names of the Reyeses through falsified document; 8 that
assuming ex gratia argumenti that the creek had indeed changed its course and
passed through Ponderosa, the Reyeses had already claimed for themselves
the portion of the dried creek which adjoined and co-existed with their
property; that Enteroso was able to occupy a portion of their land by means of
force, coercion, machinations, and stealth in 1981; that such unlawful entry
was then the subject of an Accion Publiciana before the RTC of Antipolo City
(Branch 72); and that at the time of the filing of the Complaint, the matter was
still subject of an appeal before the CA, under CA-G.R. CV No. 53509.
_______________
5 Id., at pp. 41-42.
6 Id., at p. 43.
7 Id., at pp. 48-53.
8 Id., at p. 56.
527
VOL. 678, AUGUST 15, 2012 527
Galang vs. Reyes
The RTC Decision
In its Decision,9 dated July 16, 2004, the RTC dismissed the complaint for
lack of cause of action and for being an erroneous remedy. The RTC stated that
a title issued upon a patent may be annulled only on grounds of actual and
intrinsic fraud, which much consist of an intentional omission of fact required
by law to be stated in the application or willful statement of a claim against
the truth. In the case before the trial court, the Reyeses presented no evidence
of fraud despite their allegations that the Galangs were not in possession of
the property and that it was part of a dried creek. There being no evidence,
these contentions remained allegations and could not defeat the title of the
Galangs. The RTC wrote:
A title issued upon patent may be annulled only on ground of actual fraud.
Such fraud must consist [of] an intentional omission of fact required by law to be
stated in the application or willful statement of a claim against the truth. It must show
some specific facts intended to deceive and deprive another of his right. The fraud must
be actual and intrinsic, not merely constructive or intrinsic; the evidence thereof must
be clear, convincing and more than merely preponderant, because the proceedings
which are being assailed as having been fraudulent are judicial proceedings, which by
law, are presumed to have been fair and regular. (Libudan v. Palma Gil, 45 SCRA 17)
However, aside from allegations that defendant Galang is not in possession of the
property and that the property was part of a dried creek, no other sufficient evidence
of fraud was presented by the plaintiffs. They have, thus, remained allegations, which
cannot defeat the defendants title.10
The RTC added that the land, having been acquired through a homestead
patent, was presumably public land.
_______________
9 Id., at pp. 55-61.
10 Id., at p. 69.
528
528 SUPREME COURT REPORTS ANNOTATED
Galang vs. Reyes
Therefore, only the State can institute an action for the annulment of the title
covering it.
It further opined that because the Reyeses claimed to have acquired the
property by right of accretion, they should have filed an action for
reconveyance, explaining “[t]hat the remedy of persons whose property had
been wrongly or erroneously registered in another’s name is not to set aside
the decree/title, but an action for reconveyance, or if the property has passed
into the hands of an innocent purchaser for value, an action for damages.” 11
The Court of Appeals Decision
In its Decision, dated April 9, 2008, the CA reversed and set aside the RTC
decision and ordered the cancellation of OCT No. P-928 and the reconveyance
of the land to the Reyeses.
The CA found that the Reyeses had proven by preponderance of evidence
that the subject land was a portion of the creek bed that was abandoned
through the natural change in the course of the water, which had now
traversed a portion of Ponderosa. As owners of the land occupied by the new
course of the creek, the Reyeses had become the owners of the abandoned
creek bed ipso facto. Inasmuch as the subject land had become private, a free
patent issued over it was null and void and produced no legal effect
whatsoever. A posteriori, the free patent covering the subject land, a private
land, and the certificate of title issued pursuant thereto, are null and void.12The
Galangs moved for a reconsideration,13 but their motion was denied in a
Resolution dated October 6, 2008.
Hence, this petition.
_______________
11 Id., at pp. 60-61.
12 Id., at p. 24.
13 Id., at pp. 32-38.
529
VOL. 678, AUGUST 15, 2012 529
Galang vs. Reyes
Issues
The Galangs present, as warranting a review of the questioned CA
decision, the following grounds:
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN NOT
RESOLVING THAT THE OFFICE OF THE SOLICITOR GENERAL, NOT THE
PRIVATE RESPONDENTS, HAS THE SOLE AUTHORITY TO FILE [CASES FOR]
ANNULMENT OF TITLE INVOLVING PUBLIC LAND.
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN HOLDING THAT
PRIVATE RESPONDENTS HAVE [A] CAUSE OF ACTION AGAINST
PETITIONERS EVEN WITHOUT EXHAUSTION OF ADMINISTRATIVE
REMED[IES].
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DEVIATING
FROM THE FINDINGS OF FACT OF THE TRIAL COURT AND INTERPRETING
ARTICLE 420 IN RELATION TO ARTICLE 461 OF THE CIVIL CODE OF THE
PHILIPPINES BY SUBSTITUTING ITS OWN OPINION BASED ON
ASSUMPTION OF FACTS. 14
A reading of the records discloses that these can be synthesized into two
principal issues, to wit: (1) whether the Reyeses can file the present action for
annulment of a free patent title and reconveyance; and (2) if they can, whether
they were able to prove their cause of action against the Galangs.
The Court’s Ruling
Regarding the first issue, the Galangs state that the property was formerly
a public land, titled in their names by vir-
_______________
14 Id., at p. 11.
530
530 SUPREME COURT REPORTS ANNOTATED
Galang vs. Reyes
tue of Free Patent No. 045802-96-2847 issued by the DENR. Thus, they posit
that the Reyeses do not have the personality and authority to institute any
action for annulment of title because such authority is vested in the Republic
of the Philippines, through the Office of the Solicitor General.15
In this regard, the Galangs are mistaken. The action filed by the Reyeses
seeks the transfer to their names of the title registered in the names of the
Galangs. In their Complaint, they alleged that: first, they are the owners of the
land, being the owners of the properties through which the Marigman creek
passed when it changed its course; and second, the Galangs illegally
dispossessed them by having the same property registered in their names. It
was not an action for reversion which requires that the State be the one to
initiate the action in order for it to prosper. The distinction between the two
actions was elucidated in the case of Heirs of Kionisala v. Heirs of Dacut,16 where
it was written:
An ordinary civil action for declaration of nullity of free patents and certificates
of title is not the same as an action for reversion. The difference between them lies in
the allegations as to the character of ownership of the realty whose title is sought to be
nullified. In an action for reversion, the pertinent allegations in the complaint would
admit State ownership of the disputed land. Hence in Gabila v. Barrigawhere the
plaintiff in his complaint admits that he has no right to demand the cancellation or
amendment of the defendant’s title because even if the title were cancelled or amended
the ownership of the land embraced therein or of the portion affected by the
amendment would revert to the public domain, we ruled that the action was for
reversion and that the only person or entity entitled to relief would be the Director of
Lands.
On the other hand, a cause of action for declaration of nullity of free patent and
certificate of title would require allegations of the plaintiff’s ownership of the
contested lot prior to the issuance of such free patent and certificate of
_______________
15 Id., at p. 12.
16 428 Phil. 249; 378 SCRA 206 (2002).
531
VOL. 678, AUGUST 15, 2012 531
Galang vs. Reyes
title as well as the defendant’s fraud or mistake; as the case may be, in successfully
obtaining these documents of title over the parcel of land claimed by plaintiff. In
such a case, the nullity arises strictly not from the fraud or deceit but from the fact that
the land is beyond the jurisdiction of the Bureau of Lands to bestow and whatever
patent or certificate of title obtained therefor is consequently void ab initio. The real
party in interest is not the State but the plaintiff who alleges a pre-existing right of
ownership over the parcel of land in question even before the grant of title to the
defendant. In Heirs of Marciano Nagano v. Court of Appeals we ruled―
x x x x from the allegations in the complaint x x x private respondents claim
ownership of the 2,250 square meter portion for having possessed it in the
concept of an owner, openly, peacefully, publicly, continuously and adversely
since 1920. This claim is an assertion that the lot is private land x x x x
Consequently, merely on the basis of the allegations in the complaint, the lot in
question is apparently beyond the jurisdiction of the Director of the Bureau of
Lands and could not be the subject of a Free Patent. Hence, the dismissal of
 private respondents’ complaint was premature and trial on the merits should
have been conducted to thresh out evidentiary matters. It would have been
entirely different if the action were clearly for reversion, in which case, it would
have to be instituted by the Solicitor General pursuant to Section 101 of C.A.
No. 141 x x x x
It is obvious that private respondents allege in their complaint all the facts
necessary to seek the nullification of the free patents as well as the certificates of title
covering Lot 1015 and Lot 1017. Clearly, they are the real parties in interest in light of
their allegations that they have always been the owners and possessors of the two (2)
parcels of land even prior to the issuance of the documents of title in petitioners’ favor,
hence the latter could only have committed fraud in securing them―
x x x x That plaintiffs are absolute and exclusive owners and in actual
possession and cultivation of two parcels of agricultural lands herein
particularly described as follows [technical description of Lot 1017 and Lot
1015] x x x x 3. That plaintiffs became absolute and exclusive owners of the
abovesaid parcels of land by virtue of inheritance from their late father,
532
532 SUPREME COURT REPORTS ANNOTATED
Galang vs. Reyes
Honorio Dacut, who in turn acquired the same from a certain Blasito Yacapin
and from then on was in possession thereof exclusively, adversely and in the
concept of owner for more than thirty (30) years x x x x 4. That recently, plaintiff
discovered that defendants, without the knowledge and consent of the former,
fraudulently applied for patent the said parcels of land and as a result thereof
certificates of titles had been issued to them as evidenced by certificate of title
No. P-19819 in the name of the Hrs. of Ambrocio Kionisala, and No. P-20229 in
the name of Isabel Kionisala x x x x 5. That the patents issued to defendants are
null and void, the same having been issued fraudulently, defendants not
having been and/or in actual possession of the litigated properties and the
statement they may have made in their application are false and without basis
in fact, and, the Department of Environment and Natural Resources not having
any jurisdiction on the properties the same not being anymore public but
already private property x x x x
It is not essential for private respondents to specifically state in the complaint the
actual date when they became owners and possessors of Lot 1015 and Lot 1017. The
allegations to the effect that they were so preceding the issuance of the free patents and
the certificates of title, i.e., “the Department of Environment and Natural Resources not
having any jurisdiction on the properties the same not being anymore public but
already private property,” are unquestionably adequate as a matter of pleading to oust
the State of jurisdiction to grant the lots in question to petitioners. If at all, the oversight
in not alleging the actual date when private respondents’ ownership thereof accrued
reflects a mere deficiency in details which does not amount to a failure to state a cause
of action. The remedy for such deficiency would not be a motion to dismiss but a
motion for bill of particulars so as to enable the filing of appropriate responsive
pleadings.
With respect to the purported cause of action for reconveyance, it is settled that in
this kind of action the free patent and the certificate of title are respected as
incontrovertible. What is sought instead is the transfer of the property, in this case
the title thereof, which has been wrongfully or erroneously registered in the
defendant’s name. All that must be alleged in the complaint are two (2) facts which
admitting them to be true would entitle the plaintiff to recover title to the disputed
533
VOL. 678, AUGUST 15, 2012 533
Galang vs. Reyes
land, namely, (1) that the plaintiff was the owner of the land and, (2) that the
defendant had illegally dispossessed him of the same.
We rule that private respondents have sufficiently pleaded (in addition to the cause
of action for declaration of free patents and certificates of title) an action for
reconveyance, more specifically, one which is based on implied trust. An implied trust
arises where the defendant (or in this case petitioners) allegedly acquires the disputed
property through mistake or fraud so that he (or they) would be bound to hold and
reconvey the property for the benefit of the person who is truly entitled to it. In the
complaint, private respondents clearly assert that they have long been the absolute and
exclusive owners and in actual possession and cultivation of Lot 1015 and Lot 1017 and
that they were fraudulently deprived of ownership thereof when petitioners obtained
free patents and certificates of title in their names. These allegations certainly measure
up to the requisite statement of facts to constitute an action for
reconveyance. [Emphases supplied]
17
In this case, the complaint instituted by the Reyeses before the RTC was for
the annulment of the title issued to the Galangs, and not for reversion. Thus,
the real party in interest here is not the State but the Reyeses who claim a right
of ownership over the property in question even before the issuance of a title
in favor of the Galangs. Although the Reyeses have the right to file an action
for reconveyance, they have failed to prove their case. Thus, on the second
issue, the Court agrees with the RTC that the Reyeses failed to adduce
substantial evidence to establish their allegation that the Galangs had
fraudulently registered the subject property in their names.
The CA reversed the RTC decision giving the reason that the property was
the former bed of Marigman Creek, which changed its course and passed
through their Ponderosa prop-
_______________
17 Id., at pp. 260-263, cited in Banguilan v. Court of Appeals, G.R. No. 165815, April 27, 2007, 522
SCRA 644, 653-655.
534
534 SUPREME COURT REPORTS ANNOTATED
Galang vs. Reyes
erty, thus, ownership of the subject property was automatically vested in
them.
The law in this regard is covered by Article 461 of the Civil Code, which
provides:
Art. 461. River beds which are abandoned through the natural change in the
course of the waters ipso facto belong to the owners whose lands are occupied by the
new course in proportion to the area lost. However, the owners of the lands adjoining
the old bed shall have the right to acquire the same by paying the value thereof, which
value shall not exceed the value of the area occupied by the new bed.
If indeed a property was the former bed of a creek that changed its course
and passed through the property of the claimant, then, pursuant to Article 461,
the ownership of the old bed left to dry by the change of course
was automatically acquired by the claimant.18 Before such a conclusion can be
reached, the fact of natural abandonment of the old course must be shown, that
is, it must be proven that the creek indeed changed its course without artificial
or man-made intervention. Thus, the claimant, in this case the Reyeses, must
prove three key elements by clear and convincing evidence. These are: (1)
the old course of the creek, (2) the new course of the creek, and (3) the change
of course of the creek from the old location to the new location
by natural occurrence.
In this regard, the Reyeses failed to adduce indubitable evidence to prove
the old course, its natural abandonmentand the new course. In the face of a
Torrens title issued by the government, which is presumed to have been
regularly issued, the evidence of the Reyeses was clearly wanting.
Uncorroborated testimonial evidence will not suffice to convince the Court to
order the reconveyance of the property to them. This
_______________
18 Tolentino, II Commentaries and Jurisprudence on the Civil Code of the Philippines 137
(1992 ed., reprinted 2005), citing Fitzimmons v. Cassity, (La. App.) 172 So. 824.
535
VOL. 678, AUGUST 15, 2012 535
Galang vs. Reyes
failure did not escape the observation of the Office of the Solicitor General.
Thus, it commented:
In the case at bar, it is not clear whether or not the Marigman Creek dried-up
naturally back in 1980. Neither did private respondents submit any findings or report
from the Bureau of Lands or the DENR Regional Executive Director, who has the
jurisdiction over the subject lot, regarding the nature of change in the course of the
creek’s waters. Worse, what is even uncertain in the present case is the exact
location of the subject matter of dispute. This is evident from the decision of the
Regional Trial Court which failed to specify which portion of the land is actually being
disputed by the contending parties.
xxx
Since the propriety of the remedy taken by private respondents in the trial court
and their legal personality to file the aforesaid action depends on whether or not the
litigated property in the present case still forms part of the public domain, or had
already been converted into a private land, the identification of the actual portion of
the land subject of the controversy becomes necessary and indispensable in deciding
the issues herein involved.
xxx
Notably, private respondents failed to submit during trial any convincing proof of
a similar declaration by the government that a portion of the Marigman Creek had
already dried-up and that the same is already considered alienable and disposable
agricultural land which they could acquire through acquisitive prescription.
Indeed, a thorough investigation is very imperative in the light of the conflicting
factual issues as to the character and actual location of the property in dispute. These
factual issues could properly be resolved by the DENR and the Land Management
Bureau, which have the authority to do so and have the duty to carry out the provisions
of the Public Land Act, after both parties have been fully given the chance to present
all their evidence. [Emphases supplied]
19
_______________
19 Rollo, pp. 109-112.
536
536 SUPREME COURT REPORTS ANNOTATED
Galang vs. Reyes
Moreover, during cross-examination, Conrado S. Reyes admitted that the
plan surveyed for Fe de Castro Reyes and Jose de Castro, marked before the
RTC as Exhibit “A-2,” was prepared by a geodetic engineer without
conducting an actual survey on the ground:
COUNSEL FOR DEFENDANTS:
I am showing to you Exhibit “A-2” which is a plan surveyed for Fe de Kastro Reyes and Jose de
Kastro. This plan was prepared by the geodetic engineer without conducting actual survey on
the ground, is it not?
A: I cannot agree to that question.
Q: But based on the certification of the geodetic engineer, who prepared this it appears that this plan
was plotted only based on the certification on this plan marked as Exhibit “A-2”, is it not?
A: Yes, sir.
Q: So, based on this certification that the geodetic engineer conducted the survey of this plan based
on the technical description without conducting actual survey on the ground?
A: Yes, sir. 20
At some point, Mr. Reyes admitted that he was not sure that the property
even existed:
COUNSEL FOR DEFENDANTS:
The subject matter of this document Exhibit I is that, that property which at present is titled in the
name of Fe de Castro Reyes married to Conrado Reyes, et al. is that correct?
A: Yes.
Q: The subject matter of this case now is the adjoining lot of this TCT 185252, is that correct?
A: I do not know.
_______________
20 TSN, Civil Case No. 97-4560, May 7, 1999, p. 6.
537
VOL. 678, AUGUST 15, 2012 537
Galang vs. Reyes
Q: You mean you do not know the lot subject matter of this case?
A: I do not know whether it really exists.
Q: Just answer the question, you do not know?
A: Yes. 21
The conflicting claims here are (1) the title of the Galangs issued by the
DENR, through the PENRO, and (2) the claim of the Reyeses, based on
unsubstantiated testimony, that the land in question is the former bed of a
dried up creek. As between these two claims, this Court is inclined to decide
in favor of the Galangs who hold a valid and subsisting title to the property
which, in the absence of evidence to the contrary, the Court presumes to have
been issued by the PENRO in the regular performance of its official duty.
The bottom line here is that, fraud and misrepresentation, as grounds for
cancellation of patent and annulment of title, should never be presumed, but
must be proved by clear and convincing evidence, with mere preponderance
of evidence not being adequate. Fraud is a question of fact which must be
proved.22
In this case, the allegations of fraud were never proven. There was no
evidence at all specifically showing actual fraud or misrepresentation. Thus,
the Court cannot sustain the findings of the CA.
WHEREFORE, the petition is GRANTED. The April 9, 2008 Decision and
the October 6, 2008 Resolution of the Court of Appeals, in CA-G.R. CV. No.
85660, are hereby REVERSED and SET ASIDE. Civil Case No. 97-4560 of the
Regional Trial Court of Antipolo City, Branch 73, is hereby ordered
DISMISSED for lack of merit.
_______________
21 TSN, Civil Case No. 97-4560, May 21, 1999, p. 9.
22 Datu Kiram Sampaco v. Hadji Serad Mingca Lantud, GR. No. 163551, July 18, 2011, 654 SCRA
36, 49-50.
538
538 SUPREME COURT REPORTS ANNOTATED
Galang vs. Reyes
SO ORDERED.
Velasco, Jr. (Chairperson), Peralta, Abad and Reyes,**JJ., concur.
Petition granted, judgment and resolution reversed and set aside.
 G.R. No. 149418. July 27, 2006. * **
SPOUSES PELAGIO GULLA and PERLITA GULLA, petitioners, vs. HEIRS
OF ALEJANDRO LABRADOR, represented by ALEX LABRADOR,
respondents.
Public Lands; Regalian Doctrine; Article 440 of the New Civil Code does not apply in
this case considering that Lot A is a foreshore land adjacent to the sea which is alternately
covered and left dry by the ordinary flow of the tides; Such property belongs to the public domain
and is not available for private ownership until formally declared by the government to be no
longer needed for public use.—The trial court, the RTC and the CA were one in ruling that
the 562-square-meter property, Lot A, is part of the public domain, hence, beyond the
commerce of men and not capable of registration. In fact, the land is within the salvage
zone fronting the China Sea as well as the property covered by OCT No. P-13350 in the
name of respon-
_______________
*Transferred to the Present First Division on June 6, 2006.
FIRST DIVISION.
**
736
736 SUPREME COURT REPORTS ANNOTATED
Gulla vs. Heirs of Alejandro Labrador
dents. The provision relied upon is Article 440 of the New Civil Code, which
states that “[t]he ownership of property gives the right by accession to everything
which is produced thereby, or which is incorporated or attached thereto, either
naturally or artificially.” The provision, however, does not apply in this case,
considering that Lot A is a foreshore land adjacent to the sea which is alternately
covered and left dry by the ordinary flow of the tides. Such property belongs to the
public domain and is not available for private ownership until formally declared by
the government to be no longer needed for public use. Respondents thus have no
possessory right over the property unless upon application, the government, through
the then Bureau of Lands, had granted them a permit.
Parties; Respondents have no cause of action to cause petitioners’ eviction from the
subject property; The real party-in-interest to file a complaint against petitioner’s eviction
therefrom is the Republic of the Philippines, through the Office of the Solicitor General.—There
is no question that no such permit was issued or granted in favor of respondents. This
being the case, respondents have no cause of action to cause petitioners’ eviction from
the subject property. The real party-in-interest to file a complaint against petitioners
for recovery of possession of the subject property and cause petitioner’s eviction
therefrom is the Republic of the Philippines, through the Office of the Solicitor General.
Consequently, petitioners cannot be required to pay any rentals to respondents for
their possession of the property.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Jethro F. Villanueva and Luperio F. Villanueva for respondents.
CALLEJO, SR., J.:
Before the Court is a Petition for Review on Certiorari of the Decision of the 1
Court of Appeals (CA) in CA-G.R. SP No.
_______________
Penned by Associate Justice Mercedes Gozo-Dadole (retired), with Associate Justices Ma.
1
Alicia Austria-Martinez (now an Associ
737
VOL. 496, JULY 27, 2006 737
Gulla vs. Heirs of Alejandro Labrador
52176. The CA decision affirmed that of the Regional Trial Court (RTC),
Branch 69 of Iba, Zambales in Civil Case No. 1523-I, which in turn affirmed
2
the ruling of the Municipal Trial Court (MTC) of San Felipe, Zambales in Civil
Case No. 381. 3
Angel Labrador, Leonardo Labrador, Fe Labrador Gamboa, Alex Labrador
and Roger Labrador filed a complaint against the spouses Pelagio and Perlita
Gulla in the RTC of Iba, Zambales for “Cancellation of Tax Declaration and
Recovery of Possession with Damages” (accion publiciana). The complaint
involved a 22,590-square-meter lot covered by Original Certificate of Title
(OCT) No. P-13350, and the 562-square-meter lot abutting the titled property.
The case was thereafter forwarded to the MTC of San Felipe, Zambales
pursuant to Republic Act No. 7691. 4
The titled property is located in San Felipe, Zambales and identified as Lot
No. 520, Cad. 686-D. According to the Labradors, the property was declared
for taxation purposes under their names (Tax Declaration No. 010-0469A) and
the corresponding taxes were paid thereon. In 1996, the spouses Gulla
occupied a portion of the property fronting the China Sea, as well as the 562-
square-meter lot within the salvage area. The spouses Gulla then constructed
a house in the occupied property and fenced its perimeter. The Labradors
pointed out that whatever alleged claims the spouses Gulla had on the
property was acquired through a Deed of Waiver of Rights dated July 23, 1996
executed in their favor by another “squatter” Alfonso Bactad. To verify the
exact location of the portion occupied by the spouses Gulla, a verification
survey of the land was conducted on August 17, 1990 in the presence of
Pelagio Gulla. Geodetic Engineer Crisostomo A. Magarro
_______________
ate Justice of the Supreme Court) and Hilarion L. Aquino (retired), concurring; Rollo, pp. 82-
95.
2Penned by Rodolfo V. Toledano; Id., at pp.77-80.
3Penned by Judge Lavezares C. Leomo; Id., at pp. 58-76.
4Rollo, p. 61.
738
738 SUPREME COURT REPORTS ANNOTATED
Gulla vs. Heirs of Alejandro Labrador
prepared a sketch indicating portions occupied by the spouses Gulla, as well
as the following report:
1. a.Lot A in Green color containing an area of 562 square meters is the claim of
Pelagio Gulla, Sr. which is outside the titled property of the Hrs. of
Alejandro Labrador and is within the Salvage Zone;
2. b.Lot B in Violet containing an area of 820 square meters is the claim of Pelagio
Gulla, Sr. and within the titled property of the Hrs. of Alejandro Labrador
and obviously within the Salvage Zone;
3. c.Lot C in Red color containing an area of 1,506 square meters is the claim of
Pelagio Gulla, Sr. [and] is also within the titled property of the Hrs. of
Alejandro Labrador, represented by Alex Labrador and covered by O.C.T.
No. P-13350.
The Total area claimed by Pelagio Gulla, Sr. is 2,888 square meters (more or
less). (Italics supplied)
5 xxxx
For their part, the spouses Gulla claimed that they had been in possession of
the 2,888-square-meter property, Lot A in the sketch of Engr. Magarro, since
1984 and declared the property for taxation purposes under their names in Tax
Declaration (T.D.) No. 010-0549. On October 8, 1994, they filed an application
for miscellaneous sales patent which was certified as alienable and disposable
land by the barangay captain, former Mayor Edilberto A. Abille, and
Community Environment and Natural Resources Officer Jaime Centeno. The
property was likewise declared for taxation purposes in their names under
T.D. No. 010-0550-R in 1994.
On November 3, 1998, the MTC rendered judgment in favor of the
Labradors, ordering the spouses Gulla to vacate that portion of the property
covered by OCT No. P-13350 (Lots B and C in the sketch of Engr. Magarro),
and the 562-square-meter lot within the salvage zone (Lot A). The fallo of the
decision reads:
_______________
5Id., at pp. 102-103.
739
VOL. 496, JULY 27, 2006 739
Gulla vs. Heirs of Alejandro Labrador
“WHEREFORE, by preponderance of evidences, it is hereby ordered upon the
defendants to VACATE the portion including the 565 salvage zone actually occupied
by them immediately and to pay P1,000.00 as monthly rental from July 1996, until they
vacate the premises and P10,000.00 as actual damages and attorney’s fee of P20,000.00.
SO ORDERED.” 6 acquired by the Labradors through accession under Article 440 of the New
According to the MTC, the Labradors were able to establish ownership over
the subject property, as evidenced by the title under their name (OCT No. P-
13350). For their part, the defendant-spouses failed to overcome the evidence
of the plaintiffs, and not being the riparian owners of Lot A which is within
the salvage zone, they have no right to possess the same. 7
On appeal, the RTC rendered judgment on March 23, 1999 affirming the
appealed decision. It ratiocinated that, as correctly observed by the court a quo,
Lot A is beyond the perimeter of the property covered by OCT No. P-13350
and is within the salvage zone that abutted the property of plaintiffs. Applying
Article 440 of the New Civil Code, the RTC declared that the Labradors had
the right to possess the land, it being inseparably attached to the titled
property as an accessory. It further held that “economic convenience is better
attained in a state of single ownership than in co-ownership,” and that
“natural justice demands that the owner of the principal or more important
thing should also own the accessory.” 8
This prompted the spouses Gulla to file a petition for review before the CA
where they alleged the following:
2. THE LOWER COURT ERRED IN RELYING ON THE SURVEY WHICH WAS
UNILATERALLY CONDUCTED BY THE RESPONDENTS.
_______________
6Id., at pp. 75-76.
7Id., at pp. 58-76.
8Id., at p. 80.
740
740 SUPREME COURT REPORTS ANNOTATED
Gulla vs. Heirs of Alejandro Labrador
1. 3.THE LOWER COURT ERRED IN HOLDING THAT THE LAND
OCCUPIED BY PETITIONERS IS WITHIN THE LOT COVERED BY
ORIGINAL CERTIFICATE OF TITLE NO. P-13350.
2. 4.THE LOWER COURT ERRED IN EJECTING THE PETITIONERS
EVEN FROM THE ALLEGED SALVAGE ZONE.
3. 5.THE LOWER COURT ERRED IN AWARDING MONTHLY
RENTAL, ACTUAL DAMAGES AND ATTORNEY’S FEES. 9
The spouses Gulla insisted that the trial court erred in relying on the survey
report of Engr. Magarro. In contrast, their evidence showed that Lot A, with
an area of 562 square meters, is alienable and disposable, and is covered by a
1936 tax declaration under the name of Alfonso Bactad. Since the property is
located within the salvage zone, it is res nullius, hence, could not have been
Civil Code. They also insisted that the trial court had no jurisdiction to declare
them entitled to the possession of Lot A since the Republic of the Philippines
was not a party to the case. The spouses Gulla concluded that they cannot be
held liable for monthly rentals, actual damages and attorney’s fees, since the
claimed title over the subject property is fraudulent.
On December 11, 2000, the CA rendered judgment affirming the assailed
decision. Applying Article 440 of the New Civil Code, the appellate court
declared that although Lot A is outside the titled property of the Labradors,
by analogy, as the owners of the adjoining property, the latter have the
“priority to use it.” Stated differently, the Labradors, although not the owners
of the property within the salvage zone, have the right to use it more than the
spouses Gulla.
This prompted the aggrieved spouses to file a motion for reconsideration,
which the appellate court denied, hence, the present petition.
_______________
9Id., at p. 49.
741
VOL. 496, JULY 27, 2006 741
Gulla vs. Heirs of Alejandro Labrador
The sole issue in this case is whether or not petitioners are entitled to the
possession of Lot A which is located at the foreshore of San Felipe, Zambales
as indicated in the report of Engr. Magarro.
10
Petitioners point out that Lot A is not covered by any certificate of title. The
free patent issued to respondents, as well as the tax declaration covering the
property, refers only to “Lot 520,” a totally different lot from what they are
occupying, or Lot A. Moreover, the lower courts erred in ruling that the
salvage zone is incorporated in the title of respondents, since the zone is res
nullius and cannot be the subject of the commerce of man, part of the public
domain and intended for public use; so long as this is so, it cannot be
appropriated by any person except through express authorization granted in
due form by a competent authority. Petitioners insist that the adjudication of
11
the salvage zone is best determined at an appropriate forum. Petitioners
further allege that respondents are claiming possession over Lot A by virtue
of a fraudulently acquired patent, the validity of which is still the subject of a
pending civil case between Alfonso Bactad and herein respondents.
Petitioners reiterate that they occupied the subject land openly,
notoriously, and in the concept of owners for many years since 1986.
Respondents’ contention, that they occupied the land clandestinely, is negated
by the very location/nature of the property, i.e., that it is situated in the coastal
area which is very much exposed. Considering the size of the alleged property
of respondents, about 2.2 hectares, it is impossible to “secretly” occupy the
said area. It is thus more credible to state that respondents were not actually
working on or were never in possession of the contested property. According
to respondents, the lower courts should have taken judicial notice of the
alarming number of “smart individuals” who,
_______________
Id., at p. 15.
10
Navarro v. Intermediate Appellate Court, 335 Phil. 537, 555; 268 SCRA 74, 91 (1997).
11
742
742 SUPREME COURT REPORTS ANNOTATED
Gulla vs. Heirs of Alejandro Labrador
after having obtained title by means of connections, would suddenly file cases
in courts knowing that rulings will be issued in their favor on the basis of
alleged titles. 12
The petition is meritorious.
In ruling for respondents, the CA ratiocinated, thus:
“The ownership of property gives the right by accession to everything which is
produced thereby, or which is incorporated or attached thereto, either naturally or
artificially (Article 440, Civil Code). Accession is the right of an owner of a thing to the
products of said thing as well as to whatever is inseparably attached thereto as an
accessory (Sanchez Roman, Vol. II, p. 89).
In the case at bar, it is undisputed that the area of 562 square meters is outside the
titled property of the respondents and is within the salvage zone adjacent to
respondents’ property. However, while it is true that the salvage zone cannot be the
subject of commerce, the adjoining owner thereof, the respondents in this case, has the
priority to use it. Otherwise stated, herein respondents [do] not own the salvage zone
but as an adjacent owner, he has the right to use it more than the petitioners applying
the basic rule as stated above.
Moreover, the law provides the different modes of acquiring ownership, namely:
(a) occupation; (b) intellectual creation; (c) law; (d) donation; (e) succession; (f)
tradition, as a consequence of certain contracts; and (g) prescription. It will be noted
that accession is not one of those listed therein. It is therefore safe to conclude that
accession is not a mode of acquiring ownership. The reason is simple: accession
presupposes a previously existing ownership by the owner over the principal. This is
not necessarily so in the other modes of acquiring ownership. Therefore,
fundamentally and in the last analysis, accession is a right implicitly included in
ownership, without which it will have no basis or existence. (p. 179, Paras, Vol. II,
Thirteenth Edition (1994), Civil Code). In general, the right to accession is automatic
(ipso jure), requiring no prior act on the part of the owner of the principal (Villanueva v.
Claustro, 23 Phil. 54).
In the light of the foregoing, the lower court therefore is correct in ejecting the
petitioners even if the portion occupied by them is in the salvage zone.” 13
_______________
Rollo, pp. 16-17.
12
743
VOL. 496, JULY 27, 2006 743
Gulla vs. Heirs of Alejandro Labrador
The trial court, the RTC and the CA were one in ruling that the 562-square-
meter property, Lot A, is part of the public domain, hence, beyond the
commerce of men and not capable of registration. In fact, the land is within the Petition partially granted, judgment affirmed with modification.
salvage zone fronting the China Sea as well as the property covered by OCT
No. P-13350 in the name of respondents. The provision relied upon is Article
440 of the New Civil Code, which states that “[t]he ownership of property
gives the right by accession to everything which is produced thereby, or which
is incorporated or attached thereto, either naturally or artificially.” The
provision, however, does not apply in this case, considering that Lot A is a
foreshore land adjacent to the sea which is alternately covered and left dry by
the ordinary flow of the tides. Such property belongs to the public domain and
is not available for private ownership until formally declared by the
government to be no longer needed for public use. Respondents thus have no
14

possessory right over the property unless upon application, the government,
through the then Bureau of Lands, had granted them a permit. 15

There is no question that no such permit was issued or granted in favor of

respondents. This being the case, respondents have no cause of action to cause
petitioners’ eviction from the subject property. The real party-in-interest to file
a complaint against petitioners for recovery of possession of the subject
property and cause petitioner’s eviction therefrom is the Republic of the
Philippines, through the Office of the Solicitor General. Consequently,
petitioners cannot be required to pay any rentals to respondents for their
possession of the property.
IN LIGHT OF ALL THE FOREGOING, the petition is partially GRANTED.
The Decision of the Court of Appeals CA-
_______________

Id., at pp. 93-94.

13

Republic v. Vda. de Castillo, No. L-69002, June 30, 1988, 163 SCRA 286.
14

De Buyser v. Director of Lands, 206 Phil. 13, 17; 121 SCRA 13, 18 (1983).
15

744
744 SUPREME COURT REPORTS ANNOTATED
Gulla vs. Heirs of Alejandro Labrador
G.R. SP No. 52176 is AFFIRMED WITH THE MODIFICATION that the
complaint of respondents is DISMISSED insofar as Lot A with an area of 562
square meters is concerned. The Municipal Trial Court of San Felipe,
Zambales, is ORDERED to dismiss the complaint of the plaintiffs in Civil Case
No. 381 insofar as Lot A with an area of 562 square meters is concerned
without prejudice to the right of the Republic of the Philippines to take such
appropriate action for the recovery of said lot from petitioners.
Let a copy of this decision be served on the Office of the Solicitor General
for appropriate action.
SO ORDERED.
Panganiban (C.J., Chairperson), Ynares-Santiagoand Chico-Nazario, JJ.,
concur.
Austria-Martinez, J., No part.
 G.R. No. 133879. November 21, 2001.*
EQUATORIAL REALTY DEVELOPMENT, INC., petitioner, vs. MAYFAIR
THEATER, INC., respondent.
Ownership; Leases; Rent is a civil fruit that belongs to the owner of the property
producing it by the right of accession.—To better understand the peculiarity of the instant
case, let us begin with some basic parameters. Rent is a civil fruit that belongs to the
owner of the property producing it by right of accession. Consequently and ordinarily,
the rentals that fell due from the time of the perfection of the sale to petitioner until its
rescission by final judgment should belong to the owner of the property during that
period.
Same; Sales; Ownership of the thing sold is a real right, which the buyer acquires only
upon delivery of the thing to him “in any of the ways specified in articles 1497 to 1501, or in
any other manner signifying an agreement that the possession is transferred from the vendor to
the vendee;” While the execution of a public instrument of sale is recognized by law as equivalent
to the delivery of the thing sold, such constructive or symbolic delivery, being merely
presumptive, is deemed negated by the failure of the vendee to take actual possession of the land
sold.—Ownership of the thing sold is a real right, which the buyer acquires only upon
delivery of the thing to him “in any of the ways specified in articles 1497 to 1501, or in
any other manner signifying an agreement that the possession is transferred from the
vendor to the vendee.” This right is transferred, not merely by contract, but also by
tradition or delivery. Non nudis pactis sed traditione dominia rerum transferantur. And
there is said to be delivery if and when the thing sold “is placed in the control and
possession of the vendee.” Thus, it has been held that while the execution of a public
instrument of sale is recognized by law as equivalent to the delivery of the thing
sold, such constructive or symbolic delivery, being merely presumptive, is deemed negated by
the failure of the vendee to take actual possession of the land sold.
Same; Same; Words and Phrases; “Delivery”, Explained; In the Law on Sales, delivery
may be either actual or constructive, but both forms of delivery contemplate “the absolute giving
up of the control and custody of the property on the part of the vendor, and the assumption of
the same by the vendee.”—Delivery has been described as a composite act, a thing in
_______________
EN BANC.
*
57
VOL. 370, NOVEMBER 21, 2001 57
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
which both parties must join and the minds of both parties concur. It is an act by
which one party parts with the title to and the possession of the property, and the other
acquires the right to and the possession of the same. In its natural sense, deliverymeans
something in addition to the delivery of property or title; it means transfer of
possession. In the Law on Sales, delivery may be either actual or constructive, but both
forms of delivery contemplate “the absolute giving up of the control and custody of the
property on the part of the vendor, and the assumption of the same by the vendee.”
Same; Same; The execution of a contract of sale as a form of constructive delivery is a
legal fiction—it holds true only when there is no impediment that may prevent the passing of
the property from the hands of the vendor into those of the vendee, and when there is such
impediment, “fiction yields to reality—the delivery has not been effected.”—Let us now apply
the foregoing discussion to the present issue. From the peculiar facts of this case, it is
clear that petitioner never took actual control and possession of the property sold, in view
of respondent’s timely objection to the sale and the continued actual possession of the
property. The objection took the form of a court action impugning the sale which, as
we know, was rescinded by a judgment rendered by this Court in the mother case. It
has been held that the execution of a contract of sale as a form of constructive delivery
is a legal fiction. It holds true only when there is no impediment that may prevent the
passing of the property from the hands of the vendor into those of the vendee. When
there is such impediment, “fiction yields to reality—the delivery has not been effected.”
Same; Same; Rescission; Since rescission creates the obligation to return the things which
were the object of the contract, together with their fruits, and the price with its interests, not
only the land and building sold, but also the rental payments paid, if any, has to be returned to
the buyer.—However, the point may be raised that under Article 1164 of the Civil Code,
Equatorial as buyer acquired a right to the fruits of the thing sold from the time the
obligation to deliver the property to petitioner arose. That time arose upon the
perfection of the Contract of Sale on July 30, 1978, from which moment the laws provide
that the parties to a sale may reciprocally demand performance. Does this mean that
despite the judgment rescinding the sale, the right to the fruits belonged to, and
remained enforceable by, Equatorial? Article 1385 of the Civil Code answers this
question in the negative, because “[rescission creates the obligation to return the things
which were the object of the contract, together with their fruits, and the price with its
interest; x x x.” Not only the land and build-
58
58 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
ing sold, but also the rental payments paid, if any, had to be returned by the buyer.
Same; Same; Same; Bad Faith; Even assuming that there was valid delivery, the guilty
party is not entitled to any benefits from a “rescinded” Deed of Absolute Sale where it was
guilty of bad faith.—Furthermore, assuming for the sake of argument that there was
valid delivery, petitioner is not entitled to any benefits from the “rescinded” Deed of
Absolute Sale because of its bad faith. This being the law of the mother case decided in
1996, it may no longer be changed because it has long become final and executory.
Judgments; Res Judicata; Bar by Prior Judgment; A final judgment on the merits
rendered by a court of competent jurisdiction is conclusive as to the rights of the parties and
their privies and constitutes an absolute bar to subsequent actions involving the same claim,
demand, or cause of action.—Under the doctrine of res judicata or bar by prior judgment,
a matter that has been adjudicated by a court of competent jurisdiction must be deemed
to have been finally and conclusively settled if it arises in any subsequent litigation
between the same parties and for the same cause. Thus, “[a] final judgment on the
merits rendered by a court of competent jurisdiction is conclusive as to the rights of the
parties and their privies and constitutes an absolute bar to subsequent actions
involving the same claim, demand, or cause of action.” Res judicata is based on the
ground that “the party to be affected, or some other with whom he is in privity, has
litigated the same matter in a former action in a court of competent jurisdiction, and
should not be permitted to litigate it again.”
MELO, J., Concurring Opinion:
 Judgments; Ownership; Leases; It can be seen from the previous ruling in 1996, in G.R.
No. 106063, that the issue of rentals and interests was fully discussed and passed upon—
Equatorial profited from the use of the building for all the years when it had no right or, as stated
in the decision, had an inferior right over the property.—It can be seen from the above ruling
that the issue of rentals and interests was fully discussed and passed upon in 1996.
Equatorial profited from the use of the building for all the years when it had no right
or, as stated in our decision, had an inferior right over the property. Mayfair, which
had the superior right, continued to pay rent but it was the rate fixed in the lease
contract with Carmelo. We see no reason for us to now deviate from the reasoning
given in our main decision. The decision has been final and executory for five (5) years
and petitioner has failed to present any valid and reasonable ground
59
VOL. 370, NOVEMBER 21, 2001 59
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
to reconsider, modify or reverse it. Let that which has been fairly adjudicated
remain final.
Contracts; Rescission; As far the injured third party is concerned, the fraudulent
contract, once rescinded, is non-existent or void from its inception.—Mayfair starts its
arguments with a discussion of Article 1381 of the Civil Code that contracts entered
into in fraud of creditors are rescissible. There is merit in Mayfair’s contention that the
legal effects are not restricted to the contracting parties only. On the contrary, the
rescission is for the benefit of a third party, a stranger to the contract. Mayfair correctly
states that as far as the injured third party is concerned, the fraudulent contract, once
rescinded, is non-existent or void from its inception. Hence, from Mayfair’s standpoint,
the deed of absolute sale which should not have been executed in the first place by
reason of Mayfair’s superior right to purchase the property and which deed was
cancelled for that reason by this Court, is legally non-existent. There must be a
restoration of things to the condition prior to the celebration of the contract
(Respondent relies on Almeda vs. J.M. & Company, 43072-R, December 16, 1975, as cited
in the Philippine Law Dictionary; IV Arturo M. Tolentino, Civil Code of the
Philippines, 570, 1990 Ed., citing Manresa; IV Edgardo L. Paras, Civil Code of the
Philippines, 717-718, 1994 Ed.).
VITUG, J., Dissenting Opinion:
Contracts; Rescission; Classifications of Defective Contracts; In terms of their
efficaciousness, rescissible contracts are regarded as being the closest to perfectly executed
contracts.—Civil Law, in its usual sophistication, classifies defective contracts (unlike
the seemingly generic treatment in Common Law), into, first, the rescissible contracts,
which are the least infirm; followed by, second, the voidable contracts; then, third, the
unenforceable contracts; and, finally, fourth, the worst of all or the void contracts. In
terms of their efficaciousness, rescissible contracts are regarded, among the four, as
being the closest to perfectly executed contracts. A rescissible contract contains all the
requisites of a valid contract and are considered legally binding, but by reason of injury
or damage to either of the contracting parties or to third persons, such as creditors, it is
susceptible to rescission at the instance of the party who may be prejudiced thereby. A
rescissible contract is valid, binding and effective until it is rescinded. The proper way
by which it can be assailed is by an action for rescission based on any of the causes
expressly specified by law.
Same; Same; When the Court held in the previous case, G.R. No. 106063, the contract to
be “deemed rescinded,” the Court did not mean a “declaration of nullity” of the questioned
contract—the agreement, being
60
60 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
efficacious until rescinded, validly transferred ownership over the property to Equatorial
from the time the deed of sale was executed in a public instrument on 30 July 1978 up to the
time that the decision in G.R. No. 106063 became final on 17 March 1997.—Thus, when the
Court held the contract to be “deemed rescinded” in G.R. No. 106063, the Court did not
mean a “declaration of nullity” of the questioned contract. The agreement between
petitioner and Carmelo, being efficacious until rescinded, validly transferred
ownership over the property to petitioner from the time the deed of sale was executed
in a public instrument on 30 July 1978 up to the time that the decision in G.R. No. 106063
became final on 17 March 1997. It was only from the latter date that the contract had
ceased to be efficacious. The fact that the subject property was in the hands of a lessee,
or for that matter of any possessor with a juridical title derived from an owner, would
not preclude a conferment of ownership upon the purchaser nor be an impediment
from the transfer of ownership from the seller to the buyer. Petitioner, being the owner
of the property (and none other) until the judicial rescission of the sale in its favor, was
entitled to all incidents of ownership inclusive of, among its other elements, the right
to the fruits of the property. Rentals or rental value over that disputed property from
30 July 1978 up to 17 March 1997 should then properly pertain to petitioner. In this
respect, the much abused terms of “good faith” or “bad faith” play no role; ownership,
unlike other concepts, is never described as being either in good faith or in bad faith.
SANDOVAL-GUTIERREZ, J., Dissenting Opinion:
Sales; Ownership; Firmly incorporated in our Law on Sales is the principle that
ownership is transferred to the vendee by means of delivery, actual or constructive.—Firmly
incorporated in our Law on Sales is the principle that ownership is transferred to the
vendee by means of delivery, actual or constructive. There is actual delivery when the
thing sold is placed in the control and possession of the vendee. Upon the other hand,
there is constructive delivery when the delivery of the thing sold is represented by
other signs or acts indicative thereof. Article 1498 of the Civil Code is in point. It
provides that “When the sale is made through a public instrument, the execution thereof shall
be equivalent to the delivery of the thing which is the object of the contract, if from the deed the
contrary does not appear or cannot clearly be inferred.” Contrary to the majority opinion,
the facts and circumstances of the instant case clearly indicate that there was indeed
actual and constructive delivery of the disputed property from Carmelo to Equatorial.
61
VOL. 370, NOVEMBER 21, 2001 61
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
Same; Same; Possession; Leases; Receiving rentals is an exercise of actual possession.—
That actual possession of the property was turned over by Carmelo to Equatorial is
clear from the fact that the latter received rents from Mayfair. Significantly, receiving
rentals is an exercise of actual possession. Possession, as defined in the Civil Code, is
the holding of a thing or the enjoyment of a right. It may either be by material
occupation or by merely subjecting the thing or right to the action of our will.
Possession may therefore be exercised through one’s self or through another. It is not
necessary that the person in possession should himself be the occupant of the property,
the occupancy can be held by another in the name of the one who claims possession. In
the case at bench, Equatorial exercised possession over the disputed property through
Mayfair. When Mayfair paid its monthly rentals to Equatorial, the said lessee
recognized the superior right of Equatorial to the possession of the property. And even
if Mayfair did not recognize Equatorial’s superior right over the disputed property, the
fact remains that Equatorial was then enjoying the fruits of its possession.
Same; Same; Same; Degrees of Possession.—At this juncture, it will be of aid to lay
down the degrees of possession. The firstdegree is the mere holding, or possession
without title whatsoever, and in violation of the right of the owner. Here, both the
possessor and the public know that the possession is wrongful. An example of this is
the possession of a thief or a usurper of land. The second is possession with juridical
title, but not that of ownership. This is possession peaceably acquired, such that of a
tenant, depositary, or pledge. The third is possession with a just title, or a title sufficient
to transfer ownership, but not from the true owner. An example is the possession of a
vendee of a piece of land from one who pretends to be the owner but is in fact not the
owner thereof. And the fourth is possession with a just title from the true owner. This
is possession that springs from ownership. Undoubtedly, Mayfair’s possession is by
virtue of juridical title under the contract of lease, while that of Equatorial is by virtue
of its right of ownership under the contract of sale.
Same; Same; It does not always follow that, because a transaction is prohibited or illegal,
title, as between the parties to the transaction, does not pass from the seller, donor, or transferor
to the vendee, donee, or transferee.—In G.R. No. 106063, Mayfair’s main concern in its
action for specific performance was the recognition of its right of first refusal. Hence,
the most that Mayfair could secure from the institution of its suit was to be allowed to
exercise its right to buy the property upon rescission of the contract of sale. Not until
Mayfair actually exercised what it was allowed to do by this Court in G.R. No. 106063,
specifically to buy the disputed
62
62 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
property for P11,300,000.00, would it have any right of ownership. How then, at
that early stage, could Mayfair’s action be an impediment in the consummation of the
contract between Carmelo and Equatorial? Pertinently, it does not always follow that,
because a transaction is prohibited or illegal, title, as between the parties to the
transaction, does not pass from the seller, donor, or transferor to the vendee, donee or
transferee.
Same; Rescission; Bad Faith; Where bad faith was the very reason why the contract was
declared rescissible, to utilize bad faith again, this time, to deprive Equatorial of its entitlement
to the rent corresponding to the period during which the contract was supposed to validly exist,
would not only be unjust, it would also disturb the very nature of a rescissible contract.—
Neither should the presence of bad faith prevent the award of rent to Equatorial. While
Equatorial committed bad faith in entering into the contract with Carmelo, it has been
equitably punished when this Court rendered the contract rescissible. That such bad
faith was the very reason why the contract was declared rescissible is evident from the
Decision itself. To utilize it again, this time, to deprive Equatorial of its entitlement to
the rent corresponding to the period during which the contract was supposed to validly
exist, would not only be unjust, it would also disturb the very nature of a rescissible
contract.
PETITION for review on certiorari of a decision of the Regional Trial Court
of Manila, Br. 8.
The facts are stated in the opinion of the Court.
Estelito P. Mendoza for petitioner.
De Borja, Medialdea, Bello, Guevarra & Gerodias Law Offices for Private
respondent.
PANGANIBAN, J.:
General propositions do not decide specific cases. Rather, laws are interpreted
in the context of the peculiar factual situation of each proceeding. Each case
has its own flesh and blood and cannot be ruled upon on the basis of isolated
clinical classroom principles.
While we agree with the general proposition that a contract of sale is valid
until rescinded, it is equally true that ownership of the thing sold is not
acquired by mere agreement, but by tradition or delivery. The peculiar facts
of the present controversy as found by this Court in an earlier relevant
Decision show that delivery was
63
VOL. 370, NOVEMBER 21, 2001 63
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
not actually effected; in fact, it was prevented by a legally effective
impediment. Not having been the owner, petitioner cannot be entitled to the
civil fruits of ownership like rentals of the thing sold. Furthermore, petitioner’s
bad faith, as again demonstrated by the specific factual milieu of said Decision,
bars the grant of such benefits. Otherwise, bad faith would be rewarded
instead of punished.
The Case
Filed before this Court is a Petition for Review under Rule 45 of the Rules of
1
Court, challenging the March 11, 1998 Order of the Regional Trial Court of
2
Manila (RTC), Branch 8, in Civil Case No. 97-85141. The dispositive portion of
the assailed Order reads as follows:
“WHEREFORE, the motion to dismiss filed by defendant Mayfair is hereby
GRANTED, and the complaint filed by plaintiff Equatorial is hereby DISMISSED.” 3
Also questioned is the May 29, 1998 RTC Order denying peti-tioner’s Motion
4 As a result of the sale of the subject properties to Equatorial, Mayfair filed
for Reconsideration.
The Facts
The main factual antecedents of the present Petition are matters of record,
because it arose out of an earlier case decided by this Court on November 21,
1996, entitled Equatorial Realty Development, Inc. v. Mayfair Theater,
Inc. (henceforth referred to as the “mother case”), docketed as GR No. 106063.
5 docketed as Civil Case No. 118019.
_______________
1Originally assigned to the Second Division, this case was transferred to the Third Division
and later on referred to the Court en banc.
2Rollo, pp. 261-270; penned by Judge Felixberto T. Olalia, Jr.
3RTC Decision, p. 10; rollo, p. 270.
4Rollo, pp. 310-311.
5264 SCRA 483, November 21, 1996, per Hermosisima, J.; concurred in by Justices Padilla
(with Separate Opinion), Regalado, Davide, Bellosillo, Melo, Puno, Kapunan, Mendoza, Francisco,
and Panganiban (with Separate Concurring Opinion). Justice Vitug wrote a Dissenting Opinion,
joined by Justice Torres, while Justice Romero filed a Concurring and Dissenting Opinion. Chief
Justice Narvasa took no part.
64
64 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
Carmelo & Bauermann, Inc. (“Carmelo”) used to own a parcel of land,
together with two 2-storey buildings constructed thereon, located at Claro M.
Recto Avenue, Manila, and covered by TCT No. 18529 issued in its name by
the Register of Deeds of Manila.
On June 1, 1967, Carmelo entered into a Contract of Lease with Mayfair
Theater, Inc. (“Mayfair”) for a period of 20 years. The lease covered a portion
of the second floor and mezzanine of a two-storey building with about 1,610
square meters of floor area, which respondent used as a movie house known
as Maxim Theater.
Two years later, on March 31, 1969, Mayfair entered into a second Contract
of Lease with Carmelo for the lease of another portion of the latter’s
property—namely, a part of the second floor of the two-storey building, with
a floor area of about 1,064 square meters; and two store spaces on the ground
floor and the mezzanine, with a combined floor area of about 300 square
meters. In that space, Mayfair put up another movie house known as Miramar
Theater. The Contract of Lease was likewise for a period of 20 years.
Both leases contained a provision granting Mayfair a right of first refusal
to purchase the subject properties. However, on July 30, 1978—within the 20-
year-lease term—the subject properties were sold by Carmelo to Equatorial
Realty Development, Inc. (“Equatorial”) for the total sum of P11,300,000,
without their first being offered to Mayfair.
a Complaint before the Regional Trial Court of Manila (Branch 7) for (a) the
annulment of the Deed of Absolute Sale between Carmelo and Equatorial, (b)
specific performance, and (c) damages. After trial on the merits, the lower
court rendered a Decision in favor of Carmelo and Equatorial. This case,
entitled “Mayfair Theater, Inc. v. Carmelo and Bauermann, Inc., et al.,” was
On appeal (docketed as CA-GR CV No. 32918), the Court of Appeals (CA)
completely reversed and set aside the judgment of the lower court.
The controversy reached this Court via GR No. 106063. In this mother case,
it denied the Petition for Review in this wise:
65
VOL. 370, NOVEMBER 21, 2001 65
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
“WHEREFORE, the petition for review of the decision of the Court of Appeals, dated
June 23, 1992, in CA-G.R. CV No. 32918, is HEREBY DENIED. The Deed of Absolute
Sale between petitioners Equatorial Realty Development, Inc. and Carmelo &
Bauermann, Inc. is hereby deemed rescinded; Carmelo & Bauermann is ordered to
return to petitioner Equatorial Realty Development the purchase price. The latter is
directed to execute the deeds and documents necessary to return ownership to Carmelo
& Bauermann of the disputed lots. Carmelo & Bauermann is ordered to allow Mayfair
Theater, Inc. to buy the aforesaid lots for P11,300,000.00.”
6
The foregoing Decision of this Court became final and executory on March 17,
1997. On April 25, 1997, Mayfair filed a Motion for Execution, which the trial
court granted.
However, Carmelo could no longer be located. Thus, following the order
of execution of the trial court, Mayfair deposited with the clerk of court a
quo its payment to Carmelo in the sum of P11,300,000 less P847,000 as
withholding tax. The lower court issued a Deed of Reconveyance in favor of
Carmelo and a Deed of Sale in favor of Mayfair. On the basis of these
documents, the Registry of Deeds of Manila cancelled Equatorial’s titles and
issued new Certificates of Title in the name of Mayfair.
7
Ruling on Equatorial’s Petition for Certiorari and Prohibition contesting
the foregoing manner of execution, the CA in its Resolution of November 20,
1998, explained that Mayfair had no right to deduct the P847,000 as
withholding tax. Since Carmelo could no longer be located, the appellate court
ordered Mayfair to deposit the said sum with the Office of the Clerk of Court,
Manila, to complete the full amount of P11,300,000 to be turned over to
Equatorial.
Equatorial questioned the legality of the above CA ruling before this Court
in GR No. 136221 entitled “Equatorial Realty Development, Inc. v. Mayfair
Theater, Inc.” In a Decision promulgated on May 12, 2000, this Court directed
8
the trial court to follow strictly
_______________
Ibid., p. 512.
6
TCT Nos. 235120, 235121, 235122, and 235123.
7
332 SCRA 139, May 12, 2000; penned by Justice Bernardo T. Pardo (First Division) with the
8
concurrence of Chief Justice Hilario G. Davide,
66
66 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
the Decision in GR No. 106063, the mother case. It explained its ruling in these
words:
“We agree that Carmelo and Bauermann is obliged to return the entire amount of
eleven million three hundred thousand pesos (P11,300,000.00) to Equatorial. On the
other hand, Mayfair may not deduct from the purchase price the amount of eight
hundred forty-seven thousand pesos (P847,000.00) as withholding tax. The duty to
withhold taxes due, if any, is imposed on the seller, Carmelo and Bauermann, Inc.”
Meanwhile, on September 18, 1997—barely five months after Mayfair had
submitted its Motion for Execution before the RTC of Manila, Branch 7—
Equatorial filed with the Regional Trial Court of Manila, Branch 8, an action
for the collection of a sum of money against Mayfair, claiming payment of
rentals or reasonable compensation for the defendant’s use of the subject
premises after its lease contracts had expired. This action was the progenitor
of the present case.
In its Complaint, Equatorial alleged among other things that the Lease
Contract covering the premises occupied by Maxim Theater expired on May
31, 1987, while the Lease Contract covering the premises occupied by Miramar
Theater lapsed on March 31, 1989. Representing itself as the owner of the
10
subject premises by reason of the Contract of Sale on July 30, 1978, it claimed
rentals arising from Mayfair’s occupation thereof.
Ruling of the RTC Manila, Branch 8
As earlier stated, the trial court dismissed the Complaint via the herein
assailed Order and denied the Motion for Reconsideration filed by Equatorial.
The lower court debunked the claim of petitioner for unpaid back rentals,
holding that the rescission of the Deed of Absolute
_______________
Jr. and Justices Santiago M. Kapunan and Consuelo Ynares-Santiago. Justice Reynato S. Puno
took no part.
Ibid., p. 149.
9
Complaint, pp. 3-4; rollo, pp. 47-48.
10
Rollo, pp. 261-270 and 301-311.
11
67
VOL. 370, NOVEMBER 21, 2001
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
Sale in the mother case did not confer on Equatorial any vested or residual
proprietary rights, even in expectancy.
In granting the Motion to Dismiss, the court a quo held that the critical issue
was whether Equatorial was the owner of the subject property and could thus
enjoy the fruits or rentals therefrom. It declared the rescinded Deed of
Absolute Sale as “void at its inception as though it did not happen.”
The trial court ratiocinated as follows:
“The meaning of rescind in the aforequoted decision is to set aside. In the case
of Ocampo v. Court of Appeals, G.R. No. 97442, June 30, 1994, the Supreme Court held
that, ‘to rescind is to declare a contract void in its inception and to put an end as though
it never were. It is not merely to terminate it and release parties from further obligations
to each other but to abrogate it from the beginning and restore parties to relative
positions which they would have occupied had no contract ever been made.’
“Relative to the foregoing definition, the Deed of Absolute Sale between Equatorial
and Carmelo dated July 31, 1978 is void at its inception as though it did not happen.
“The argument of Equatorial that this complaint for backrentals as ‘reasonable
9
compensation for use of the subject property after expiration of the lease
contracts presumes that the Deed of Absolute Sale dated July 30, 1978 from whence the
fountain of Equatorial’s alleged property rights flows is still valid and existing.
xxx xxx xxx
“The subject Deed of Absolute Sale having been rescinded by the Supreme Court,
Equatorial is not the owner and does not have any right to demand backrentals from
the subject property, x x x.” 12
The trial court added: “The Supreme Court in the Equatorial case, G.R. No.
106063, has categorically stated that the Deed of Absolute Sale dated July 31,
1978 has been rescinded subjecting the present complaint to res judicata.” 13
Hence, the present recourse. 14
_______________
12Rollo, pp. 265-266.
13RTC Order dated May 11, 1998, p. 9; rollo, p. 269.
11
14The case was deemed submitted for decision on June 13, 2000, upon receipt by the Court of
the letter of Virginia A. Bautista, officer-in-
68
68 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
Issues
Petitioner submits, for the consideration of this Court, the following issues: 15
“A.
The basis of the dismissal of the Complaint by the Regional Trial Court not only
67 disregards basic concepts and principles in the law on contracts and in civil law,
especially those on rescission and its corresponding legal effects, but also ignores the
dispositive portion of the Decision of the Supreme Court in G.R. No. 106063entitled
‘Equatorial Realty Development, Inc. & Carmelo & Bauermann, Inc. vs. Mayfair
Theater, Inc.’
“B.
The Regional Trial Court erred in holding that the Deed of Absolute Sale in favor
of petitioner by Carmelo & Bauermann, Inc., dated July 31, 1978, over the premises
used and occupied by respondent, having been ‘deemed rescinded’ by the Supreme
Court in G.R. No. 106063, is ‘void at its inception as though it did not happen.’
“C.
The Regional Trial Court likewise erred in holding that the aforesaid Deed of
Absolute Sale, dated July 31, 1978, having been ‘deemed rescinded’ by the Supreme
Court in G.R. No. 106063, petitioner ‘is not the owner and does not have any right to
demand backrentals from the subject property,’ and that the rescission of the Deed of
Absolute Sale by the Supreme Court does not confer to petitioner ‘any vested right nor
any residual proprietary rights even in expectancy.’
“D.
The issue upon which the Regional Trial Court dismissed the civil case, as stated
in its Order of March 11, 1998, was not raised by respondent in its Motion to Dismiss.
_______________
charge of RTC Manila, Branch 8, transmitting the complete records of Civil Case No. 97-85141,
the progenitor of the present case. After the final deliberations on this case on November 13, 2001,
the writing of this Decision was assigned to herein ponente.
15Petition pp. 11-12, 24; rollo, pp. 24-25, 37; original in upper case.
69
VOL. 370, NOVEMBER 21, 2001 69
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
“E.
The sole ground upon which the Regional Trial Court dismissed Civil Case No. 97-
85141 is not one of the grounds of a Motion to Dismiss under Sec. 1 of Rule 16 of the
1997 Rules of Civil Procedure.”
Basically, the issues can be summarized into two: (1) the substantive issue of
whether Equatorial is entitled to back rentals; and (2) the procedural issue of
whether the court a quo’s dismissal of Civil Case No. 97-85141 was based on
one of the grounds raised by respondent in its Motion to Dismiss and covered
by Rule 16 of
the Rules of Court.
This Court’s Ruling
The Petition is not meritorious.
First Issue:
Ownership of Subject Properties
We hold that under the peculiar facts and circumstances of the case at bar, as found
by this Court en banc in its Decision promulgated in 1996 in the mother case,
no right of ownership was transferred from Carmelo to Equatorial in view of
a patent failure to deliver the property to the buyer.
Rental—a Civil Fruit of Ownership
To better understand the peculiarity of the instant case, let us begin with some
basic parameters. Rent is a civil fruit that belongs to the owner of the property
16
producing it by right of acces-
17
_______________
Art. 442, Civil Code, provides in its third paragraph that “[c]ivil fruits are the rents of
16
buildings, the price of leases of lands and other property and the amount or perpetual or life
annuities or other similar incomes.”
Art. 441, par (3), provides: “To the owner belong x x x (3) [t]he civil fruits.”
17
70
70 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
sion. Consequently and ordinarily, the rentals that fell due from the time of
18
the perfection of the sale to petitioner until its rescission by final judgment
should belong to the owner of the property during that period.
By a contract of sale, “one of the contracting parties obligates himself to
transfer ownership of and to deliver a determinate thing and the other to pay
therefor a price certain in money or its equivalent.” 19
Ownership of the thing sold is a real right, which the buyer acquires only
20
upon delivery of the thing to him “in any of the ways specified in articles 1497 to
1501, or in any other manner signifying an agreement that the possession is
transferred from the vendor to the vendee.” This right is transferred, not
21
merely by contract, but also by tradition or delivery. Non nudis pactis sed
22
traditione dominia rerum transferantur. And there is said to be delivery if and
when the thing sold “is placed in the control and possession of the
vendee.” Thus, it has been held that while the execution of a public
23
instrument of sale is recognized by law as equivalent to the delivery of the
thing sold, such constructive or symbolic delivery, being merely presumptive, is
24
deemed negated by the failure of the vendee to take actual possession of the land sold. 25
Delivery has been described as a composite act, a thing in which both
parties must join and the minds of both parties concur. It is an act by which
one party parts with the title to and the possession of the property, and the
other acquires the right to and the posses-
_______________
18Art. 440 reads: “The ownership of the property gives the right by accession to everything
produced thereby, or which is incorporated or attached thereto, either naturally or artificially.”
19Art. 1458, Civil Code.
20See Arts. 712 and 1164, Civil Code.
21Art. 1496, Civil Code.
22Tolentino, Civil Code, 1992 ed., Vol. II, pp. 451-452; Roman v. Grimlt, 6 Phil. 96, April 11,
1906; Ocejo, Perez & Co. v. International Bank, 37 Phil. 631, February 14, 1918.
23Art. 1497, Civil Code.
24Art. 1498, Civil Code.
25Pasagui v. Villablanca, 68 SCRA 18, November 10, 1975; Tolentino, op. cit., Vol. V, p. 54.
71
VOL. 370, NOVEMBER 21, 2001
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
sion of the same. In its natural sense, delivery means something in addition to
the delivery of property or title; it means transfer of possession. In the Law on 26
Sales, delivery may be either actual or constructive, but both forms of delivery
contemplate “the absolute giving up of the control and custody of the property
on the part of the vendor, and the assumption of the same by the vendee.”
Possession Never Acquired by Petitioner
Let us now apply the foregoing discussion to the present issue. From the
peculiar facts of this case, it is clear that petitioner never took actual
control and possession of the property sold, in view of respondent’s timely
objection to the sale and the continued actual possession of the property. The
objection took the form of a court action impugning the sale which, as we
know, was rescinded by a judgment rendered by this Court in the mother case.
It has been held that the execution of a contract of sale as a form of constructive
delivery is a legal fiction. It holds true only when there is no impediment that
may prevent the passing of the property from the hands of the vendor into
those of the vendee. When there is such impediment, “fiction yields to
28
reality—the delivery has not been effected.” 29
Hence, respondent’s opposition to the transfer of the property by way of
sale to Equatorial was a legally sufficient impediment that effectively
prevented the passing of the property into the latter’s hands.
This was the same impediment contemplated in Vda. de Sarmiento
v.Lesaca, in which the Court held as follows:
30
“The question that now arises is: Is there any stipulation in the sale in question from
which we can infer that the vendor did not intend to
_______________
26 CJS, Vol. 26A, p. 165.
27 Words and Phrases, Vol. IIA, p. 522.
28 Vda. de Sarmiento v. Lesaca, 108 Phil. 900, 903, June 30, 1960.
29 Addison v. Felix, 38 Phil. 404, August 3, 1918; as cited in Vda. de Sarmiento v. Lesaca, supra, at p. 904.
30 Supra, per Bautista-Angelo, J.
72
72 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
deliver outright the possession of the lands to the vendee? We find none. On the
contrary, it can be clearly seen therein that the vendor intended to place the vendee in
actual possession of the lands immediately as can be inferred from the stipulation that
the vendee ‘takes actual possession thereof x x x with full rights to dispose, enjoy and
make use thereof in such manner and form as would be most advantageous to herself.’
The possession referred to in the contract evidently refers to actual possession and not
merely symbolical inferable from the mere execution of the document.
“Has the vendor complied with this express commitment? she did not. As provided
71 in Article 1462, the thing sold shall be deemed delivered when the vendee is placed in
the control and possession thereof, which situation does not here obtain because from
the execution of the sale up to the present the vendee was never able to take possession
of the lands due to the insistent refusal of Martin Deloso to surrender them claiming
ownership thereof. And although it is postulated in the same article that the execution
of a public document is equivalent to delivery, this legal fiction only holds true when
there is no impediment that may prevent the passing of the property from the hands
27
of the vendor into those of the vendee. x x x.” 31
The execution of a public instrument gives rise, therefore, only to a prima facie
presumption of delivery. Such presumption is destroyed when the instrument
itself expresses or implies that delivery was not intended; or when by other
means it is shown that such delivery was not effected, because a third person was
actually in possession of the thing. In the latter case, the sale cannot be considered
consummated.
However, the point may be raised that under Article 1164 of the Civil Code,
Equatorial as buyer acquired a right to the fruits of the thing sold from the
time the obligation to deliver the property to petitioner arose. That time arose
32
upon the perfection of the Contract of Sale on July 30, 1978, from which
moment the laws provide that the parties to a sale may reciprocally demand
performance.
33
_______________
Ibid., p. 903.
31
Art. 1164 reads: “The creditor has a right to the fruits of the thing from the time the
32
obligation to deliver it arises. However, he shall acquire no real right over it until the same has
been delivered to him.”
See Art. 1475, Civil Code.
33
73
VOL. 370, NOVEMBER 21, 2001 73
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
Does this mean that despite the judgment rescinding the sale, the right to the
fruits belonged to, and remained enforceable by, Equatorial?
34
 Article 1385 of the Civil Code answers this question in the negative,
because “[rescission creates the obligation to return the things which were the
object of the contract, together with their fruits, and the price with its interest;
x x x.” Not only the land and building sold, but also the rental payments paid, if any,
had to be returned by the buyer.
Another point. The Decision in the mother case stated that “Equatorial x x
x has received rents” from Mayfair “during all the years that this controversy
has been litigated.” The Separate Opinion of Justice Teodoro Padilla in the
mother case also said that Equatorial was “deriving rental income” from the
disputed property. Even herein ponente’s Separate Concurring Opinion in the
mother case recognized these rentals. The question now is: Do all these
statements concede actual delivery?
The answer is “No.” The fact that Mayfair paid rentals to Equatorial during
the litigation should not be interpreted to mean either actual delivery or ipso
facto recognition of Equatorial’s title.
The CA Records of the mother case show that Equatorial—as alleged
35
buyer of the disputed properties and as alleged successorin-interest of
Carmelo’s rights as lessor—submitted two ejectment suits against Mayfair.
Filed in the Metropolitan Trial Court of Manila, the firstwas docketed as Civil
Case No. 121570 on July 9, 1987; and the second, as Civil Case No. 131944 on
May 28, 1990. Mayfair eventually won them both. However, to be able to
maintain physical possession of the premises while awaiting the outcome of
the mother case, it had no choice but to pay the rentals.
The rental payments made by Mayfair should not be construed as a
recognition of Equatorial as the new owner. They were made
_______________
Rentals that accrued from the execution of the Deed of Sale from July 30, 1978 until
34
November 21, 1996. Equatorial Realty Development, Inc. v. Mayfair Theater, Inc., supra.
CA Records in the mother case, pp. 460 and 516. These ejectment suits are also referred to in
35
the Petition and Comment in the present case.
74
74 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
merely to avoid imminent eviction. It is in this context that one should
understand the aforequoted factual statements in the ponencia in the mother
case, as well as the Separate Opinion of Mr. Justice Padilla and the Separate
Concurring Opinion of the herein ponente.
At bottom, it may be conceded that, theoretically, a rescissible contract is
valid until rescinded. However, this general principle is not decisive to the
issue of whether Equatorial ever acquired the right to collect rentals. What is
decisive is the civil law rule that ownership is acquired, not by mere
agreement, but by tradition or delivery. Under the factual environment of this
controversy as found by this Court in the mother case, Equatorial was never
put in actual and effective control or possession of the property because of
Mayfair’s timely objection.
As pointed out by Justice Holmes, general propositions do not decide
specific cases. Rather, “laws are interpreted in the context of the peculiar
factual situation of each case. Each case has its own flesh and blood and cannot
be decided on the basis of isolated clinical classroom principles.” 36
In short, the sale to Equatorial may have been valid from inception, but it
was judicially rescinded before it could be consummated. Petitioner never
acquired ownership, not because the sale was void, as erroneously claimed by
the trial court, but because the sale was not consummated by a legally
effective delivery of the property sold.
Benefits Precluded by Petitioner’s Bad Faith
Furthermore, assuming for the sake of argument that there was valid delivery,
petitioner is not entitled to any benefits from the “rescinded” Deed of Absolute
Sale because of its bad faith. This being the law of the mother case decided in
1996, it may no longer be changed because it has long become final and
executory. Peti-
_______________
Philippines Today v. NLRC, 267 SCRA 202, January 30, 1997, per Panganiban, J.
36
75
VOL. 370, NOVEMBER 21, 2001 75
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
tioner’s bad faith is set forth in the following pertinent portions of the mother
case:
“First and foremost is that the petitioners acted in bad faith to render Paragraph 8
‘inutile.’
xxx xxx xxx
“Since Equatorial is a buyer in bad faith, this finding renders the sale to it of the
property in question rescissible. We agree with respondent Appellate Court that the
records bear out the fact that Equatorial was aware of the lease contracts because its
lawyers had, prior to the sale, studied the said contracts. As such, Equatorial cannot
tenably claim to be a purchaser in good faith, and, therefore, rescission lies.
xxx xxx xxx
“As also earlier emphasized, the contract of sale between Equatorial and Carmelo
is characterized by bad faith, since it was knowingly entered into in violation of the
rights of and to the prejudice of Mayfair. In fact, as correctly observed by the Court of
Appeals, Equatorial admitted that its lawyers had studied the contract of lease prior to
the sale. Equatorial’s knowledge of the stipulations therein should have cautioned it to
look further into the agreement to determine if it involved stipulations that would
prejudice its own interests.
xxx xxx xxx
 “On the part of Equatorial, it cannot be a buyer in good faithbecause it bought the
property with notice and full knowledge that Mayfair had a right to or interest in the
property superior to its own. Carmelo and Equatorial took unconscientious advantage
of Mayfair.” (Italics supplied)
37
Thus, petitioner was and still is entitled solely to the return of the purchase
price it paid to Carmelo; no more, no less. This Court has firmly ruled in the
mother case that neither of them is entitled to any consideration of equity, as
both “took unconscientious advantage of Mayfair.” 38
In the mother case, this Court categorically denied the payment of interest, a fruit
of ownership. By the same token, rentals, another fruit of ownership, cannot be granted
without mocking this Court’s en banc Decision, which has long become final.
_______________
Ibid., pp. 506-512.
37
Id., p. 511.
38
76
76 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
Petitioner’s claim of reasonable compensation for respondent’s use and
occupation of the subject property from the time the lease expired cannot be
countenanced. If it suffered any loss, petitioner must bear it in silence, since it
had wrought that loss upon itself. Otherwise, bad faith would be rewarded instead
of punished.
We uphold the trial court’s disposition, not for the reason it gave, but for
(a) the patent failure to deliver the property and (b) petitioner’s bad faith, as
above discussed.
Second Issue: Ground in Motion to Dismiss
Procedurally, petitioner claims that the trial court deviated from the accepted
and usual course of judicial proceedings when it dismissed Civil Case No. 97-
85141 on a ground not raised in respondent’s Motion to Dismiss. Worse, it
allegedly based its dismissal on a ground not provided for in a motion to
dismiss as enunciated in the Rules of Court.
We are not convinced. A review of respondent’s Motion to Dismiss Civil
Case No. 97-85141 shows that there were two grounds invoked, as follows:
“(A)
Plaintiff is guilty of forum-shopping.
“(B)
Plaintiff’s cause of action, if any, is barred by prior judgment.” 39
The court a quo ruled, inter alia, that the cause of action of petitioner (plaintiff
in the case below) had been barred by a prior judgment of this Court in GR
No. 106063, the mother case.
Although it erred in its interpretation of the said Decision when it argued
that the rescinded Deed of Absolute Sale was “void,” we hold, nonetheless,
that petitioner’s cause of action is indeed barred by a prior judgment of this
Court. As already discussed, our Deci-
_______________
Respondent’s Motion to Dismiss, p. 1; rollo, p. 67; original in upper case.
39
77
VOL. 370, NOVEMBER 21, 2001 77
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
sion in GR No. 106063 shows that petitioner is not entitled to back rentals,
because it never became the owner of the disputed properties due to a failure
of delivery. And even assuming arguendo that there was a valid delivery,
petitioner’s bad faith negates its entitlement to the civil fruits of ownership,
like interest and rentals.
Under the doctrine of res judicata or bar by prior judgment, a matter that
has been adjudicated by a court of competent jurisdiction must be deemed to
have been finally and conclusively settled if it arises in any subsequent
litigation between the same parties and for the same cause. Thus, “[a] final40
judgment on the merits rendered by a court of competent jurisdiction is
conclusive as to the rights of the parties and their privies and constitutes an
absolute bar to subsequent actions involving the same claim, demand, or cause
of action.” Res judicata is based on the ground that “the party to be affected,
41
or some other with whom he is in privity, has litigated the same matter in a
former action in a court of competent jurisdiction, and should not be permitted
to litigate it again.”
42
It frees the parties from undergoing all over again the rigors of unnecessary
suits and repetitive trials. At the same time, it prevents the clogging of court
dockets. Equally important, it stabilizes rights and promotes the rule of law.
We find no need to repeat the foregoing disquisitions on the first issue to
show satisfaction of the elements of res judicata. Suffice it to say that, clearly,
our ruling in the mother case bars petitioner from claiming back rentals from
respondent. Although the court a quo erred when it declared “void from
inception” the Deed of Absolute Sale between Carmelo and petitioner, our
foregoing discussion supports the grant of the Motion to Dismiss on the
ground that our prior judgment in GR No. 106063 has already resolved the
issue of back rentals.
_______________
 Development Bank of the Philippines v. CA, GR No. 110203, May 9, 2001, 357 SCRA 626,
40
citing Gosnell v. Webb, 66 CA2d 518, 521, 152 P2d 463 (1944); Poochigan v. Layne, 120 CA2d 757, 261
P2d 738 (1953).
Ibid., per Panganiban, J., citing Republic v. Court of Appeals, 324 SCRA 560, February 3, 2000.
41
Id., citing Watkins v. Watkins, 117 CA2d 610, 256 P2d 339 (1953).
42
78
78 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
On the basis of the evidence presented during the hearing of Mayfair’s Motion
to Dismiss, the trial court found that the issue of ownership of the subject
property has been decided by this Court in favor of Mayfair. We quote the
RTC:
“The Supreme Court in the Equatorial case, G.R. No. 106063 has categorically stated
that the Deed of Absolute Sale dated July 31, 1978 has been rescinded subjecting the
present complaint to res judicata.” (Emphasis in the original)
43
Hence, the trial court decided the Motion to Dismiss on the basis of res
judicata, even if it erred in interpreting the meaning of “rescinded” as
equivalent to “void.” In short, it ruled on the ground raised; namely, bar by
prior judgment. By granting the Motion, it disposed correctly, even if its legal
reason for nullifying the sale was wrong. The correct reasons are given in this
Decision.
WHEREFORE, the Petition is hereby DENIED. Costs against petitioner.
SO ORDERED.
Davide, Jr. (C.J.), Quisumbing, Pardo, Buena, Ynares-
Santiago and Carpio, JJ., concur.
Bellosillo, J., I join the dissent of J. Gutierrez.
Melo, J., Please see concurring opinion.
Puno, J., I concur and also join the concurring opinion of J. Melo.
Vitug, J., Please see dissenting opinion.
Kapunan, J., I join the dissenting opinions of Justices Vitug and Sandoval-
Gutierrez.
Mendoza, J., I concur in this and Melo, J.’s concurring opinion.
De Leon, Jr., J., I join the dissenting opinion of Justice J.C. Vitug.
_______________
RTC Order dated March 11, 1978, p. 9; rollo, p. 269.
43
79
VOL. 370, NOVEMBER 21, 2001 79
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
Sandoval-Gutierrez, J., Please see my Dissenting Opinion.
CONCURRING OPINION
MELO, J.:
While I express my conformity to the ponencia of our distinguished colleague,
Mr. Justice Artemio V. Panganiban, I would just like to make the following
observations:
1. 1.The issue in this case was squarely resolved in our 1996 En Banc decision in
the main case. What petitioner is asking us to do now is to reverse or modify
a judgment which is accurate in every respect, conformable to law and
jurisprudence, and faithful to principles of fairness and justice.
2. 2.Petitioner’s submissions are deceiving. It is trying to collect unjustified and
unbelievably increased rentals by provoking a purely academic discussion,
as far as respondent is concerned, of a non-applicable provision of the Civil
Code on contracts.
3. 3.To grant the petition is to reward bad faith, for petitioner has deprived
respondent of the latter’s property rights for twenty-three (23) years and has
forced it to defend its interests in case after case during that lengthy period.
Petitioner now tries to inflict further injury in the fantastic and groundless
amount of P115,947,867.00. To remand this case to the lower court in order
to determine the back rentals allegedly due to petitioner Equatorial Realty
Development Corporation, Inc. is to encourage continuation of crafty tactics
and to allow the further dissipation of scarce judicial time and resources.
The instant petition arose from a complaint for back rentals, increased rentals
and interests filed by petitioner Equatorial Realty Development, Inc.
(Equatorial) against respondent Mayfair Theater, Inc. (Mayfair). It has to be
adjudicated in the context of three earlier petitions decided by this Court.
A dispute between the two parties over the ownership of a commercial lot
and building along Claro M. Recto Avenue in Manila has led to 23 years of
protracted litigation, including the filing of 4
80
80 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
petitions with the Court, namely, G.R. No. L-106063, decided on November
21, 1996 (264 SCRA 483); G.R. No. 103311 decided on March 4, 1992; G.R. No.
136221, decided on May 12, 2000; and the present petition, G.R. No. 133879.
The case at bar is a classic illustration of how a dubious interpretation of
the dispositive portion of the 1996 decision for petitioner could lead to 5 more
years of bitter litigation after the initial 18 years of legal proceedings over the
first case.
Lease contracts over the subject property were executed on June 1, 1967
and March 31, 1969 by original owner Carmelo and Bauermann, Inc.
(Carmelo) in favor of herein respondent Mayfair. The leases expired on May
31, 1987 and March 31, 1989, respectively. The lease contracts embodied
provisions giving Mayfair a right-of-first-refusal should Carmelo sell the
property.
 In an act characterized as bad faith by this Court, the property, in violation
of the right-of-first-refusal, was sold by Carmelo to herein petitioner
Equatorial, on July 31, 1978 for P11,300,000.00. On September 13, 1978, Mayfair
filed the first case for annulment of the contract of sale, specific performance
of the right-of-first-refusal provision, and damages. The Regional Trial Court
(RTC) of Manila decided the case in favor of Equatorial on February 7, 1991.
Counterclaims for compensation arising from the use of the premises were
awarded to Equatorial by the 1991 RTC decision.
On June 23, 1992, the Court of Appeals reversed the RTC decision, thus
leading to the first petition, G.R. No. 106063, filed against Mayfair by both
Equatorial and Carmelo.
On November 21, 1996, this Court En Banc rendered its decision (264 SCRA
483 [1996]), disposing:
WHEREFORE, the petition for review of the decision of the Court of Appeals dated
June 23, 1992, in CA-G.R. CV No. 32918, is HEREBY DENIED. The Deed of Absolute
Sale between petitioners Equatorial Realty Development, Inc. and Carmelo &
Bauermann, Inc. is hereby rescinded; petitioner Carmelo & Bauermann is ordered to
return to petitioner Equatorial Realty Development the purchase price. The latter is
directed to execute the deeds and documents necessary to return ownership to Carmelo
& Bauermann of the disputed lots. Carmelo and Bauermann is or-
81
VOL. 370, NOVEMBER 21, 2001
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
dered to allow Mayfair Theater, Inc. to buy the aforesaid lots for P11,300,000.00.
In the Court of Appeals decision (CA-G.R. CV No. 32918, June 23, 1992) in the
main case, raised to this Court, Mayfair was ordered to directly pay
P11,300,000.00 to Equatorial whereupon Equatorial would execute the deeds
and documents necessary for the transfer of ownership to Mayfair and the
registration of the property in its name. The execution of documents and the
transfer of the property were directly between Equatorial and Mayfair. Our
decision in 1996 (G.R. No. 106063) affirmed the appellate decision. However,
while the 1978 deed of sale questioned by Mayfair was rescinded, we ordered
Carmelo to first return to Equatorial the purchase price of the property,
whereupon Equatorial would return ownership to Carmelo, after which
Mayfair would buy the lot for P11,300,000.00 from Carmelo.
When the case was remanded to the RTC for execution of the decision, it
was ascertained that Carmelo and Bauermann, Inc. was no longer in existence.
The Sheriff could not enforce the portions of the judgment calling for acts to
be performed by Carmelo. Mayfair, therefore, deposited the amount of
P11,300,000.00 with the RTC for payment to Equatorial, hoping that the latter
would faithfully comply with this Court’s decision. In this regard, it may be
mentioned that buyer Mayfair also paid P847,000.00 in taxes which the
vendors should have paid. The RTC ordered the execution of deeds of transfer,
the cancellation of Equatorial’s titles to the property, and the issuance of new
titles in favor of Mayfair. Accordingly, the property was registered in the name
of Mayfair and titles issued in its favor.
Equatorial, however, saw an opening for further litigation. It questioned
the method employed by the RTC to execute the Court’s judgment, arguing
that the directives involving Carmelo’s participation were ignored by the trial
court. The litigation over the alleged incorrectness of the execution eventually
led to the second petition earlier mentioned—G.R. No. 136221.
It may be mentioned at this point that on July 9, 1987, while the right-of-
first-refusal and cancellation case was pending, Equatorial filed an action for
ejectment against Mayfair. Because the issue of
82
82 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
ownership was still pending in the case for rescission of deed of sale including
the enforcement of the right-of-first-refusal provision, the ejectment case was
dismissed. Appeals to the RTC and the Court of Appeals were denied.
On March 26, 1990, still another ejectment case was filed by Equatorial. In
decisions which reached all the way to this Court in G.R. No. 103311, the cases
for ejectment did not prosper. Mayfair won the cases on March 4, 1992.
The three cases decided by the Court in these litigations between
81 Equatorial and Mayfair, all of them in favor of Mayfair, are antecedents of the
present and fourth petition.Equatorial has been adjudged as having unlawfully
and in bad faith acquired property that should have belonged to Mayfair since
1978. Ownership and title have been unquestionably transferred to Mayfair.
Seemingly, Equatorial now seeks to profit from its bad faith. While the case
involving the allegedly incorrect execution of the 1996 decision on cancellation
of the deed of sale in G.R. No. 106063 was being litigated, Equatorial filed on
September 18, 1997 with the RTC of Manila two complaints for payment of
back and increased rentals arising from the use by Mayfair of the lot, building,
and other fixed improvements. From the time the property was sold by
Carmelo to Equatorial, lessee Mayfair had been paying to Equatorial the
rentals fixed in the 1967 and 1969 lease contracts with the original owner. This
was during the pendency of the complaint for annulment of the contract of
sale, specific performance of the right-of-first-refusal provision, and damages.
As found in our 1998 decision in G.R. No. 106063, the disputed property
should have actually belonged to Mayfair at the time. However, to avoid the
ejectment cases, which Equatorial nonetheless later filed, Mayfair was forced
to pay rentals to Equatorial. It paid the rentals based on the rates fixed by
Carmelo in the lease contracts.
Equatorial, claiming the 1967 and 1969 rentals to be inadequate, claimed
increased amounts as reasonable compensation. Because the amounts fixed by
the lease contract with Carmelo but paid to Equatorial were only at the rate of
P17,966.21 monthly while Equatorial wanted P210,000.00 every month plus
legal in-
83
VOL. 370, NOVEMBER 21, 2001 83
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
terests, the suit was for the payment of P115,947,867.68 as of June 19, 1997.
Citing the 1996 decision in G.R. No. 106063, Mayfair contended that it
owned the property under the decision. It stated that the sale by Carmelo to
Equatorial had been cancelled, and, as owner, Mayfair owed no increased
rentals to Equatorial based on said decision.
The present case on back rentals could not be conclusively decided because
the execution and finality of the issue of ownership were being contested for
5 years in the petition on the proper execution filed in G.R. No. 136221. This
petition had to wait for the resolution of G.R. No. 136221.
In its decision dated May 12, 2000, in G.R. No. 136221(First Division, per
Mr. Justice Pardo; Davide, C.J.,Kapunan, and Ynares-
Santiago, JJ., concurring), this Court reiterated the judgment in G.R. No.
106063. It emphasized that the 1996 decision awarding the property to Mayfair
was clear. It stated that the decision having attained finality, there was nothing
left for the parties to do but to adhere to the mandates of the decision.
In the dispositive portion, however, the Court ordered the trial court “to
carry out the execution following strictly the terms” of the 1996 decision.
However, as earlier stated, this could not be done because Carmelo had ceased
to exist. There was no longer any Carmelo which could return the
P11,300,000.00 consideration of the 1978 sale to Equatorial as ordered in the
dispositive portion of the 1996 decision. Equatorial could not and would not
also execute the deeds returning the property to Carmelo, as directed in the
decision. Neither could the defunct Carmelo sell the property to Mayfair at the
sale price in 1978 when the right of first refusal was violated.
Mayfair had to file a motion for partial reconsideration, emphasizing that
it was impossible for a corporation which has gone out of existence to obey the
specific orders of this Court. A resolution was, therefore, rendered on June 25,
2001 putting an end to the controversy over the proper implementation of the
1996 judgment.
This June 25, 2001 Resolution in G.R. No. 136221validated the issuance of
new titles in the name of the adjudicated owner, May-
84
84 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
fair. The Court ordered the direct release to Equatorial of the P11,300,000.00
deposited in court for the account of the defunct Carmelo.
In the follow-up Resolution of the First Division in G.R. No. 136221 dated
June 25, 2001, the Court, after describing the case as a promethean one
involving the execution of a decision which has been long final, and after
calling the efforts to stave off execution as a travesty of justice, instructed the
trial court:
1. 1.To execute the Court’s Decision strictly in accordance with the ruling in G.R.
No. 106063 by validating the acts of the sheriff of Manila and the titles in the
name of Mayfair Theater, Inc. issued by the Register of Deeds of Manila
consistent therewith;
2. 2.In case of failure of Carmelo and Bauermann to accept the amount of
P11,300,000.00 deposited by Mayfair Theater, Inc. with the Clerk of Court,
Regional Trial Court, Manila, to authorize the Clerk of Court to RELEASE
the amount of P11,300,000.00 deposited with the court for the account of
Carmelo and Bauermann, Inc. to petitioner;
3. 3.To devolve upon the trial court the determination of other issues that may
remain unresolved among the parties, relating to the execution of this
Court’s final decision in G.R. No. 106063.
In light of the Court’s judgments in G.R. No. 106063 and G.R. No. 136221, the
present petition in G.R. No. 133879for back rentals should now be finally
resolved, applying the rulings in those earlier decisions.
Indubitably, the 1978 deed of sale executed by Carmelo in favor of
Equatorial over the disputed property has been set aside by this Court.
Equatorial was declared a buyer in bad faith. The contract was characterized
as a fraudulent sale and the entirety of the indivisible property sold to
Equatorial was the property we ordered to be conveyed to Mayfair for the
same price paid by Equatorial to Carmelo.
It is also beyond question that the method of execution of the 1996 decision
by the RTC, the direct payment by Mayfair to Equatorial, bypassing and
detouring the defunct Carmelo corporation, has been validated by this Court.
There are no longer any procedural obstacles to the full implementation of the
decision.
85
VOL. 370, NOVEMBER 21, 2001 85
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
And finally, the property sold to Equatorial in violation of Mayfair’s right of
first refusal is now indisputably possessed by, and owned and titled in the
name of, respondent Mayfair.
Parenthetically, the issue on the payment of back and increased rentals,
plus interests, was actually settled in the 1996 decision in G.R. No. 106063. It
could not be enforced at the time only because of the controversy
unfortunately raised by Equatorial over the proper execution of the 1996
decision.
 It is now time to reiterate the 1996 decision on interests and settle the
dispute between Mayfair and Equatorial once and for all.
Thus, we reiterate that:
On the question of interest payments on the principal amount of P11,300.000.00, it must
be borne in mind that both Carmelo and Equatorial acted in bad faith. Carmelo
knowingly and deliberately broke a contract entered into with Mayfair. It sold the
property to Equatorial with purpose and intent to withhold any notice or knowledge
of the sale coming to the attention of Mayfair. All the circumstances point to a
calculated and contrived plan of non-compliance with the agreement of first refusal.
On the part of Equatorial, it cannot be a buyer in good faith because it bought the
property with notice and full knowledge that Mayfair had a right to or interest in the
property superior to its own. Carmelo and Equatorial took unconscientious advantage
of Mayfair.
Neither may Carmelo and Equatorial avail of consideration based on equity which
might warrant the grant of interests. The vendor received as payment from the vendee what
at the time, was a full and fair price for the property. It has used the P11,300,000.00 all these
years earning income or interest from the amount. Equatorial, on the other hand, has received
rents and otherwise profited from the use of the property turned over to it by Carmelo. In fact,
during all the years that this controversy was being litigated, Mayfair paid rentals regularly to
the buyer who had an inferior right to purchase the property. Mayfair is under no obligation
to pay any interests arising from this judgment to either Carmelo or Equatorial (264
SCRA 483, pp. 511-512).
Worthy quoting too is the concurring opinion in our 1996 decision of Mr.
Justice Teodoro R. Padilla as follows:
The equities of the case support the foregoing legal disposition. During the intervening
years between 1 August 1978 and this date, Equa-
86
86 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
torial (after acquiring the C.M. Recto property for the price of P11,300,000,00) had been leasing
the property and deriving rental income therefrom. In fact, one of the lessees in the property was
Mayfair. Carmelo had, in turn, been using the proceeds of the sale, investment-wise
and/or operation wise in its own business.
It may appear, at first blush, that Mayfair is unduly favored by the solution
submitted by this opinion, because the price of P11,300,000.00 which it has to pay
Carmelo in the exercise of its right of first refusal, has been subjected to the inroads of
inflation so that its purchasing power today is less than when the same amount was
paid by Equatorial to Carmelo. But then it cannot be overlooked that it was Carmelo’s
breach of Mayfair’s right of first refusal that prevented Mayfair from paying the price
of P11,300,000.00 to Carmelo at about the same time the amount was paid by Equatorial
to Carmelo. Moreover, it cannot be ignored that Mayfair had also incurred consequential
or “opportunity” losses by reason of its failure to acquire and use the property under its right
of first refusal. In fine, any loss in purchasing power of the price of P11,300,000.00 is for
Carmelo to incur or absorb on account of its bad faith in breaching Mayfair’s
contractual right of first refusal to the subject property, (ibid., pp. 511-512).
It can be seen from the above ruling that the issue of rentals and interests was
fully discussed and passed upon in 1996. Equatorial profited from the use of
the building for all the years when it had no right or, as stated in our decision,
had an inferior right over the property. Mayfair, which had the superior right,
continued to pay rent but it was the rate fixed in the lease contract with
Carmelo. We see no reason for us to now deviate from the reasoning given in
our main decision. The decision has been final and executory for five (5) years
and petitioner has failed to present any valid and reasonable ground to
reconsider, modify or reverse it. Let that which has been fairly adjudicated
remain final.
My second observation relates to the clever but, to my mind, deceptive
argument foisted by Equatorial on the Court.
Equatorial relies on the Civil Code provision on rescissible contracts to
bolster its claim. Its argument is that a rescissible contract remains valid and
binding upon the parties thereto until the same is rescinded in an appropriate
judicial proceeding.
Equatorial conveniently fails to state that the July 31, 1978 Deed of
Absolute Sale was between Equatorial and Carmelo only.
87
VOL. 370, NOVEMBER 21, 2001 87
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
Respondent Mayfair was not a party to the contract. The deed of sale was
surreptitiously entered into between Carmelo and Equatorial behind the back
and in violation of the rights of Mayfair. Why should the innocent and
wronged party now be made to bear the consequences of an unlawful contract
to which it was not privy? Insofar as Equatorial and Carmelo are concerned,
their 1978 contract may have validly transferred ownership from one to the
other. But not as far as Mayfair is concerned.
Mayfair starts its arguments with a discussion of Article 1381 of the Civil
Code that contracts entered into in fraud of creditors are rescissible. There is
merit in Mayfair’s contention that the legal effects are not restricted to the
contracting parties only. On the contrary, the rescission is for the benefit of a
third party, a stranger to the contract. Mayfair correctly states that as far as the
injured third party is concerned, the fraudulent contract, once rescinded, is
non-existent or void from its inception. Hence, from Mayfair’s standpoint, the
deed of absolute sale which should not have been executed in the first place
by reason of Mayfair’s superior right to purchase the property and which deed
was cancelled for that reason by this Court, is legally non-existent. There must
be a restoration of things to the condition prior to the celebration of the
contract (Respondent relies on Almeda vs. J.M. & Company, 43072-R, December
16, 1975, as cited in the Philippine Law Dictionary; IV Arturo M. Tolentino, Civil
Code of the Philippines, 570, 1990 Ed., citing Manresa; IV Edgardo L. Paras, Civil
Code of the Philippines, 717-718, 1994 Ed.).
It is hard not to agree with the explanations of Mayfair, to wit:
4.22. As a consequence of the rescission of the Deed of Absolute Sale, it was as if
Equatorial never bought and became the lessor of the subject properties. Thus, the
court a quo did not err in ruling that Equatorial is not the owner and does not have any
right to demand back rentals from [the] subject property.
4.23. Tolentino, supra, at 577-578 further explains that the effects of rescission in
an accion pauliana retroact to the date when the credit or right being enforced was
acquired.
“While it is necessary that the credit of the plaintiff in the accion pauliana must be prior to the
fraudulent alienation, the date of
88
88 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
the judgment enforcing it is immaterial. Even if the judgment be subsequent to the alienation, it is
merely declaratory, with retroactive effect to the date when the credit was constituted. x x x.” (emphasis
supplied)
4.24. The clear rationale behind this is to prevent conniving parties, such as
Equatorial and Carmelo, from benefiting in any manner from their unlawful act of
entering into a contract in fraud of innocent parties with superior rights like Mayfair.
Thus, to allow Equatorial to further collect rentals from Mayfair is to allow the former
to profit from its own act of bad faith. Ex dolo malo non oritur actio. (Respondent’s
Comment, pp. 338-339, Rollo).
This brings me to my third and final observation in this case. This Court
emphasized in the main case that the contract of sale between Equatorial and
Carmelo was characterized by bad faith. The Court described the sale as
“fraudulent” in its 1996 decision. It stated that the damages which Mayfair
suffered are in terms of actual injury and lost opportunities, emphasizing that
Mayfair should not be given an empty or vacuous victory. Moreover,
altogether too many suits have been filed in this case. Four separate petitions
have come before us, necessitating full length decisions in at least 3 of them.
The 1996 decision stressed that the Court has always been against multiplicity
of suits.
There was bad faith from the execution of the deed of sale because
Equatorial and Carmelo affirmatively operated with furtive design or with
some motive of self-interest or ill-will or for ulterior purposes (Air France vs.
Carrascoso, 18 SCRA 166 [1966]). There was breach of a known duty by the two
parties to the unlawful contract arising from motives of interests or ill-will
calculated to cause damage to another (Lopez vs. Pan American World
Airways, 123 Phil. 264 [1966]).
The presence of bad faith is clear from the records. Our resolution of this
issue in 1996 (G.R. 106063) is res judicata.
We stated:
First and foremost is that the petitioners (referring to Equatorial and Carmelo) acted in
bad faith to render Paragraph 8 “inutile”.
xxx
xxx
89
VOL. 370, NOVEMBER 21, 2001 89
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
xxx
Since Equatorial is a buyer in bad faith, this finding renders the sale to it of the
property in question rescissible. We agree with respondent Appellate Court that the
records bear out the fact that Equatorial was aware of the lease contracts because its
lawyers had, prior to the sale, studied the said contracts. As such Equatorial cannot
tenably claim to be a purchaser in good faith and, therefore, rescission lies.
xxx
xxx
xxx
As also earlier emphasized, the contract of sale between Equatorial and Carmelo is
characterized by bad faith, since it was knowingly entered into in violation of the rights
of and to the prejudice of Mayfair. In fact, as correctly observed by the Court of
Appeals, Equatorial admitted that its lawyers had studied the contract of lease prior to
the sale. Equatorial’s knowledge of the stipulations therein should have cautioned it to
look further into the agreement to determine if it involved stipulations that would
prejudice its own interests.
xxx
xxx
xxx
On the part of Equatorial, it cannot be a buyer in good faith because it bought the
property with notice and full knowledge that Mayfair had a right to or interest in the
property superior to its own. Carmelo and Equatorial took unconscientious advantage
of Mayfair (264 SCRA 506, 507-511).
We ruled that because of bad faith, neither may Carmelo and Equatorial avail
themselves of considerations based on equity which might warrant the grant
of interests and, in this case, unconscionably increased rentals.
Verily, if Mayfair were a natural person, it could very well have asked for
moral damages instead of facing a lengthy and expensive suit to pay rentals
many times higher than those stipulated in the contract of lease. Under the
Civil Code, Mayfair is the victim in a breach of contract where Carmelo and
Equatorial acted fraudulently and in bad faith.
Considering the judgments in our 3 earlier decisions, Mayfair is under no
obligation to pay any interests, whether based on law or
90
90 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
equity, to Carmelo or Equatorial. Mayfair is the wronged entity, the one which
has suffered injury since 1978 or for the 23 years it was deprived of the
property.
Equatorial has received rentals and other benefits from the use of the
property during these 23 years, rents and benefits which would have accrued
to Mayfair if its rights had not been violated.
 There is no obligation on the part of respondent Mayfair to pay any
increased, additional, back or future rentals or interests of any kind to
petitioner Equatorial under the circumstances of this case.
I, therefore, concur with the majority opinion in denying due course and
dismissing the petition.
DISSENTING OPINION
VITUG, J.:
Civil Law, in its usual sophistication, classifies defective contracts (unlike the
seemingly generic treatment in Common Law), into, first, the rescissible
contracts, which are the least infirm; followed by, second, the voidable
1 preferent right created by the contract. Rescissible contracts are not void ab
contracts; then, third, the unenforceable contracts; and, finally, fourth, the
2 3
worst of all or the void contracts. In terms of their efficaciousness, rescissible
4 inexistent contracts is inapplicable. Until set aside in an appropriate action
contracts are regarded, among the four, as being the closest to perfectly
executed contracts. A rescissible contract contains all the requisites of a valid
contract and are considered legally binding, but by reason of injury or damage
to either of the contracting parties or to third persons, such as creditors, it is
susceptible to rescission at the instance of the party who may be prejudiced
thereby. A rescissible contract is valid, binding and effective until it is
rescinded. The proper way by which it can be assailed is by an action for
rescission based on any of the causes expressly specified by law. 5
_______________
1Article 1381-1382, Civil Code of the Philippines.
2Article 1390.
3Article 1403.
4Article 1409.
5Borja vs. Addison, 44 Phil. 895.
91
VOL. 370, NOVEMBER 21, 2001 91
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
The remedy of rescission in the case of rescissible contracts under Article 1381
is not to be confused with the remedy of rescission, or more properly termed
“resolution,” of reciprocal obligations under Article 1191 of the Civil Code.
While both remedies presuppose the existence of a juridical relation that, once
rescinded, would require mutual restitution, it is basically, however, in this
aspect alone when the two concepts coincide.
Resolution under Article 1191 would totally release each of the obligors
from compliance with their respective covenants. It might be worthwhile to
note that in some cases, notably Ocampo vs. Court of Appeals, and Velarde vs.
6
Court of Appeals, where the Court referred to rescission as being likened to
7
contracts which are deemed “void at inception” the focal issue is the breach of
the obligation involved that would allow resolution pursuant to Article 1191
of the Civil Code. The obvious reason is that when parties are reciprocally
bound, the refusal or failure of one of them to comply with his part of the
bargain should allow the other party to resolve their juridical relationship
rather than to leave the matter in a state of continuing uncertainty. The result
of the resolution, when decreed, renders the reciprocal obligations inoperative
“at inception.”
Upon the other hand, the rescission of a rescissible contract under Article
1381, taken in conjunction with Article 1385, is a relief which the law grants
for the protection of a contracting party or a third person from injury and
damage that the contract may cause, or to protect some incompatible and
8
initio,and the principle, “quod nullum est nullum producit effectum” in void and
rescissible contracts are respected as being legally valid, binding and in force.
It would be wrong to say that rescissible contracts produce no legal effects
whatsoever and that no acquisition or loss of rights could meanwhile occur
and be attributed to the
_______________
6233 SCRA 551 (1994).
7G.R. No. 108346, 11 July 2001, 361 SCRA 56.
8Aquino vs. Tanedo, 39 Phil. 517.
92
92 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
terminated contract. The effects of the rescission, prospective in nature, can
come about only upon its proper declaration as such.
Thus, when the Court held the contract to be “deemed rescinded” in G.R.
9
No. 106063, the Court did not mean a “declaration of nullity” of the questioned
contract. The agreement between petitioner and Carmelo, being efficacious
until rescinded, validly transferred ownership over the property to petitioner
from the time the deed of sale was executed in a public instrument on 30 July
1978 up to the time that the decision in G.R. No. 106063 became final on 17
March 1997. It was only from the latter date that the contract had ceased to be
efficacious. The fact that the subject property was in the hands of a lessee, or
for that matter of any possessor with a juridical title derived from an owner,
would not preclude a conferment of ownership upon the purchaser nor be an
impediment from the transfer of ownership from the seller to the buyer.
Petitioner, being the owner of the property (and none other) until the judicial
rescission of the sale in its favor, was entitled to all incidents of ownership
inclusive of, among its other elements, the right to the fruits of the property.
Rentals or rental value over that disputed property from 30 July 1978 up to 17
March 1997 should then properly pertain to petitioner. In this respect, the
much abused terms of “good faith” or “bad faith” play no role; ownership,
unlike other concepts, is never described as being either in good faith or in bad
faith.
With all due respect, I am thus unable to join in this instance my colleagues
in the majority.
DISSENTING OPINION
SANDOVAL-GUTIERREZ, J.:
“Stare decisis et non quieta movere—follow past precedents and do not disturb
what has been settled. Adherence to this principle is imperative if this Court
is to maintain stability in jurisprudence.
I regret that I am unable to agree with the majority opinion.
_______________
9Equatorial Realty Dev., Inc. vs. Mayfair Theater, Inc., 264 SCRA 483(1996).
93
VOL. 370, NOVEMBER 21, 2001 93
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
The principal issue in this case is whether a rescissiblecontract is void and
ineffective from its inception. This issue is not a novel one. Neither is it difficult
to resolve as it involves the application of elementary principles in the law on
contracts, specifically on rescissible contracts, as distinguished from void or
inexistent contracts.
The facts are simple.
On June 1, 1967, respondent Mayfair Theater, Inc. (Mayfair) leased
portions of the ground, mezzanine and second floors of a two storey
commercial building located along C.M. Recto Avenue, Manila. The building
together with the land on which it was constructed was then owned by
Carmelo & Bauermann, Inc. (Carmelo). Respondent used these premises as
“Maxim Theater.” The lease was for a period of twenty (20) years.
On March 31, 1969, Mayfair leased from Carmelo another portion of the
second floor, as well as two (2) store spaces on the ground and mezzanine
floors of the same building. Respondent Mayfair used the premises as a movie
theater known as “Miramar Theater.”
Both leases contained the following identical provisions:
“That if the LESSOR should desire to sell the leased premises, the LESSEE shall be given
30-days exclusive option to purchase the same.
In the event, however, that the leased premises is sold to someone other than the
LESSEE, the LESSOR is bound and obligated, as it hereby binds and obligates itself, to
stipulate in the Deed of Sale thereof that the purchaser shall recognize this lease and be
bound by all the terms and conditions thereof.
On July 31, 1978, Carmelo entered into a Deed of Absolute Sale whereby it sold
the subject land and two-storey building to petitioner Equatorial Realty
Development, Inc. (Equatorial) for P11,300,000.00. Having acquired from
Carmelo ownership of the subject property, Equatorial received rents from
Mayfair for sometime.
Subsequently, Mayfair, claiming it had been denied its right to purchase
the leased property in accordance with the provisions of its lease contracts
with Carmelo, filed with the Regional Trial
94
94 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
Court, Branch 7, Manila, a suit for specific performance and annulment of sale
with prayer to enforce its “exclusive option to purchase” the property. The
dispute between Mayfair, on the one hand, and Carmelo and Equatorial on
the other, reached this Court in G.R. No. 106063, “Equatorial Realty
Development, Inc. & Carmelo & Bauermann, Inc. vs. Mayfair Theater, Inc.” On 1
November 21, 1996, this Court rendered a Decision, the dispositive portion of
which reads:
“WHEREFORE, the petition for review of the decision of the Court of Appeals, dated
June 23, 1992, in CA-G.R. CV No. 32918, is HEREBY DENIED. The Deed of Absolute
Sale between petitioners Equatorial Realty Development, Inc. and Carmelo &
Bauermann, Inc. is hereby deemed rescinded; Carmelo & Bauermann is ordered to
return to petitioner Equatorial Realty Development the purchase price. The latter is
directed to execute the deeds and documents necessary to return ownership to Carmelo
& Bauermann of the disputed lots. Carmelo & Bauermann is ordered to allow Mayfair
Theater, Inc. to buy the aforesaid lots for P11,300,000.00.
SO ORDERED.”
The Decision of this Court in G.R. No. 106063 became final and executory
on March 17, 1997.
On April 25, 1997, Mayfair filed with the trial court a motion for execution
which was granted.
However, Carmelo could no longer be located. Thus, Mayfair deposited
with the trial court its payment to Carmelo in the sum of P11,300,000.00 less
P847,000.00 as withholding tax.
The Clerk of Court of the Manila Regional Trial Court, as sheriff, executed
a deed of re-conveyance in favor of Carmelo and a deed of sale in favor of
Mayfair. On the basis of these documents, the Registry of Deeds of Manila
cancelled Equatorial’s titles and issued new Certificates of Title in the name of
2
Mayfair.
_______________
1 264 SCRA 483 (1996).
2 TCT Nos. 235120, 235121 and 235123.
 95 On March 11, 1998, the court a quo issued an order dismissing Civil Case No.
VOL. 370, NOVEMBER 21, 2001 95 97-85141 on the ground that since this Court, in G.R. No. 106063, rescinded the
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc. Deed of Absolute Sale between Carmelo and Equatorial, the contract is void
In G.R. No. 136221, “Equatorial Realty Development, Inc. vs. Mayfair Theater,
3
at its inception. Correspondingly, Equatorial is not the owner of the subject
6

Inc.,” this Court instructed the trial court to execute strictly this Court’s
Decision in G.R. No. 106063.
On September 18, 1997, or after the execution of this Court’s Decision
in G.R. No. 106063, Equatorial filed with the Regional Trial Court of Manila,
Branch 8, an action for collection of a sum of money against Mayfair, docketed
as Civil Case No. 97-85141. Equatorial prayed that the trial court render
judgment ordering Mayfair to pay:
1. (1)the sum of P11,548,941.76 plus legal interest, representing the total amount
of unpaid monthly rentals/reasonable compensation from June 1, 1987
(Maxim Theater) and March 31, 1989 (Miramar Theater) to July 31, 1997;
property and, therefore, does not have any right to demand from Mayfair
payment of rentals or reasonable compensation for its use and occupation of
the premises.
Equatorial filed a motion for reconsideration but was denied.
Hence, the present petition.
At this stage, I beg to disagree with the ruling of the majority that (1)
Equatorial did not acquire ownership of the disputed property from Carmelo
because of lack of delivery; and that (2) Equatorial is not entitled to the
payment of rentals because of its bad faith.
Firmly incorporated in our Law on Sales is the principle that ownership is
transferred to the vendee by means of delivery, actual or constructive. There 7

2. (2)the sums of P849,567.12 and P458,853.44 a month, plus legal interest, as is actual delivery when the thing sold is placed in the control and possession
rental/reasonable compensation for the use and occupation of the subject of the vendee. Upon the other hand, there is constructive delivery when the
8

property from August 1, 1997 to May 31, 1998 (Maxim Theater) and March delivery of the thing sold is represented by other signs or acts indicative
31, 1998 (Miramar Theater); thereof. Article 1498 of the Civil Code is in point. It provides that “When the
3. (3)the sum of P500,000.00 as and for attorney’s fees, plus other expenses of
sale is made through a public instrument, the execution thereof shall be equivalent to
litigation; and
the delivery of the thing which is the object of the contract, if from the deed the contrary
4. (4)the costs of the suit.
4

does not appear or cannot clearly be inferred.” 9

On October 14, 1997, before filing its answer, Mayfair filed a “Motion to
Dismiss” Civil Case No. 97-85141 on the following grounds:
“(A)
Contrary to the majority opinion, the facts and circumstances of the instant
case clearly indicate that there was indeed actual and constructive delivery of
the disputed property from Carmelo to Equatorial.
_______________

PLAINTIFF IS GUILTY OF FORUM SHOPPING. 6 Order, Rollo, pp. 261, 265.

7 Article 1477 of the Civil Code of the Philippines.
(B) 8 Vitug, Compendium of Civil Law and Jurisprudence, Revised Edition, 1993, p. 592; Article
1497, Civil Code of the Philippines, La Fuerza, Inc. v. Court of Appeals, 23 SCRA 1217 (1968).
PLAINTIFF’S CAUSE OF ACTION, IF ANY, IS BARRED BY PRIOR JUDGMENT.”
9 Tolentino, Civil Code of the Philippines, Vol. II, 1998, p. 461.
97
5
VOL. 370, NOVEMBER 21, 2001 97
_______________ Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
Let me substantiate my claim.
3332 SCRA 139 (2000) In this case, Equatorial questioned the regularity of the execution of First, I must take exception to the majority’s statement that this Court
this Court’s Decision in G.R. No. 106063. found in G.R. No. 106063 that, “no right of ownership was transferred from
10

Complaint, Rollo, p. 45.

Carmelo to Equatorial in view of a patent failure to deliver the property to the buyer.”
4
11
5Motion to Dismiss, Rollo, p. 67.
96 A perusal of the Decision dated November 21, 1996 would reveal
96 SUPREME COURT REPORTS ANNOTATED otherwise.
To say that this Court found no transfer of ownership between Equatorial
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
and Carmelo is very inaccurate. For one, this Court, in disposing of G.R. No.
106063, explicitly ordered Equatorial to “execute the deeds and documents
necessary to return ownership to Carmelo & Bauermann of the disputed lots.” I 12
suppose this Court would not have made such an order if it did not recognize
the transfer of ownership from Carmelo to Equatorial under the contract of
sale. For why would the Court order Equatorial to execute the deeds and
documents necessary to return ownership to Carmelo if, all along, it believed
that ownership remained with Carmelo?
Furthermore, this Court explicitly stated in the Decision that Equatorial
received rentals from Mayfair during the pendency of the case. Let me quote
the pertinent portion of the Decision, thus:
“x x x Equatorial, on the other hand, has received rents and otherwise profited from
the use of the property turned over to it by Carmelo. In fact, during all the years that
this controversy was being litigated, Mayfair paid rentals regularly to the
buyer (Equatorial) who had an inferior right to purchase the property. Mayfair is under
no obligation to pay any interests arising from this judgment to
either Carmelo or Equatorial.” 13
_______________
Equatorial Realty Development, Inc. v. Mayfair Theater, Inc., 264 SCRA 483 (1996). In this case,
10
this Court ruled that the contract of sale between Carmelo and Equatorial is rescissible. This Court
upheld Mayfair’s right of first refusal. It ordered Carmelo to return to Equatorial the purchase
price. Equatorial was directed to execute the documents necessary to return ownership of the
disputed property to Carmelo and the latter was ordered to allow Mayfair to buy the same.
Decision, p. 12.
11
Ibid., p. 512.
12
Ibid., p. 512.
13
98
98 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
Justice Teodoro R. Padilla, in his Separate Opinion, made the following similar
observations:
“The equities of the case support the foregoing legal disposition. During the
intervening years between 1 August 1978 and this date, Equatorial (after acquiring the
C.M. Recto property for the price of P11,300,000.00) had been leasing the property and
deriving rental income therefrom. In fact, one of the lessees in the property was Mayfair.
Carmelo had, in turn, been using the proceeds of the sale, investment-wise and/or
operation-wise in its own business.” 14
Obviously, this Court acknowledged the delivery of the property from
Carmelo to Equatorial. As aptly described by Justice Panganiban himself, the
sale between Carmelo and Equatorial had not only been “perfected” but also
“consummated.” 15
That actual possession of the property was turned over by Carmelo to
Equatorial is clear from the fact that the latter received rents from Mayfair.
Significantly, receiving rentals is an exercise of actual possession. Possession, as
defined in the Civil Code, is the holding of a thing or the enjoyment of a right. It may 16
either be by material occupation or by merely subjecting the thing or right to
the action of our will. Possession may therefore be exercised through one’s
17
self or through another. It is not necessary that the person in possession
18
should mself be the occupant of the property, the occupancy can be held by
another in the name of the one who claims possession. In the case at bench,
Equatorial exercised possession over the disputed property through Mayfair.
When Mayfair paid its monthly rentals to Equatorial, the said lessee
recognized the superior right of Equatorial to the possession of the
property. And even if Mayfair did not recognize Equatorial superior right over the
disputed property, the fact remains that Equatorial was then enjoying the fruits of its
possession.
_______________
Ibid., p. 514.
14
His Concurring Opinion in G.R. No. 106063, supra.
15
Article 523 of the Civil Code of the Philippines.
16
Tolentino, Civil Code of the Philippines, Volume II, p. 238; 4 Manresa 17.
17
Ibid., p. 239.
18
99
VOL. 370, NOVEMBER 21, 2001 99
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
At this juncture, it will be of aid to lay down the degrees of possession.
The first degree is the mere holding, or possession without title whatsoever,
and in violation of the right of the owner. Here, both the possessor and the
public know that the possession is wrongful. An example of this is the
possession of a thief or a usurper of land. The second is possession with juridical
title, but not that of ownership.This is possession peaceably acquired, such that
of a tenant, depositary, or pledge. The third is possession with a just title, or a
title sufficient to transfer ownership, but not from the true owner. An example
is the possession of a vendee of a piece of land from one who pretends to be
the owner but is in fact not the owner thereof. And the fourth is possession with
a just title from the true owner. This is possession that springs from
ownership. Undoubtedly, Mayfair’s possession is by virtue of juridical title
19
under the contract of lease, while that of Equatorial is by virtue of its right of
ownership under the contract of sale.
Second, granting arguendo that there was indeed no actual delivery, would
Mayfair’s alleged “timely objection to the sale and continued actual possession of the
property”constitute an “impediment” that may prevent the passing of the
property from Carmelo to Equatorial? 20
I believe the answer is no.
The fact that Mayfair has remained in “actual possession of the property,”
after the perfection of the contract of sale between Carmelo and Equatorial up
to the finality of this Court’s Decision in G.R. No. 106063 (and even up to the
present), could not prevent the consummation of such contract. As I have
previously intimated, Mayfair’s possession is not under a claim of ownership.
It cannot in any way clash with the ownership accruing to Equatorial by virtue
of the sale. The principle has always been that the one who possesses as a mere
holder acknowledges in another a superior right or right of ownership. A
tenant possesses the thing leased as a mere holder, so does the usufructuary
of the thing in usufruct; and the borrower of the thing loaned in commodatum.
_______________
Ibid., pp. 241-242.
19
Dissenting Opinion, p. 5.
20
100
100 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
None of these holders asserts a claim of ownership in himself over the thing.
Similarly, Mayfair does not claim ownership, but only possession as a lessee
with the prior right to purchase the property.
In G.R. No. 106063, Mayfair’s main concern in its action for specific
performance was the recognition of its right of first refusal. Hence, the most
that Mayfair could secure from the institution of its suit was to be allowed to
exercise its right to buy the property upon rescission of the contract of sale. Not
until Mayfair actually exercised what it was allowed to do by this Court in G.R. No.
106063, specifically to buy the disputed property for P11,300,000.00, would it have
any right of ownership. How then, at that early stage, could Mayfair’s action be
an impediment in the consummation of the contract between Carmelo and
Equatorial?
Pertinently, it does not always follow that, because a transaction is
prohibited or illegal, title, as between the parties to the transaction, does not
pass from the seller, donor, or transferor to the vendee, donee or transferee. 21
And third, conformably to the foregoing disquisition, I maintain that
Equatorial has the right to be paid whatever monthly rentals during the period
that the contract of sale was in existence minus the rents already paid. In Guzman
v. Court of Appeals, this Court decreed that upon the purchase of the leased
22
property and proper notice by the vendee, the lessee must pay the agreed
monthly rentals to the new owner since, by virtue of the sale, the vendee steps
into the shoes of the original lessor to whom the lessee bound himself to pay.
His belief that the subject property should have been sold to him does not
justify the unilateral withholding of rental payments due to the new owner of
the property. It must be stressed that under Article 1658 of the Civil Code,
23
there are only two instances wherein the lessee may suspend payment of rent,
_______________
O’Mara v. Detinger, 62 N.Y.S. 2d 825, 271 App. Div. 22; Rosasco Creameries, Inc. v. Cohen, 276
21
N.Y. 274, 278, 11 N.E. 2d 908, 909; Whitfield v. United States, 92 U.S. 165, 169, 170, 23 L. Ed. 705.
Guzman v. Court of Appeals, 177 SCRA 604 (1989).
22
Ibid.
23
101
VOL. 370, NOVEMBER 21, 2001 101
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
namely: in case the lessor fails to make the necessary repairs or to maintain the
lessee in peaceful and adequate enjoyment of the property leased. In this case, 24
the fact remains that Mayfair occupied the leased property. It derived benefit
from such occupation, thus, it should pay the corresponding rentals due. Nemo
cum alterius detrimento locupletari potest. No one shall enrich himself at the
expense of another. 25
Neither should the presence of bad faith prevent the award of rent to
Equatorial. While Equatorial committed bad faith in entering into the contract
with Carmelo, it has been equitably punished when this Court rendered the
contract rescissible. That such bad faith was the very reason why the contract
was declared rescissible is evident from the Decision itself. To utilize it again, 26
this time, to deprive Equatorial of its entitlement to the rent corresponding to
the period during which the contract was supposed to validly exist, would not
only be unjust, it would also disturb the very nature of a rescissible contract.
Let me elucidate on the matter.
Articles 1380 through 1389 of the Civil Code deal with rescissible contracts.
A rescissible contract is one that is validly entered into, but is subsequently
terminated or rescinded for causes provided for by law.
This is the clear implication of Article 1380 of the same Code which
provides:
“Art. 1380. Contracts validly agreed upon may be rescinded in the cases established by
law.”
Rescission has been defined as follows:
_______________
24Reyes v. Arca, 15 SCRA 442 (1965).
25Santos v. Court of Appeals, 221 SCRA 42 (1993).
26“Since Equatorial is a buyer in bad faith, this finding renders the sale to it of the property in question
rescissible. We agree with respondent Appellate Court that the records bear out the fact that
Equatorial was aware of the lease contracts because its lawyers had, prior to the sale, studied the
said contracts. As such, Equatorial cannot tenably claim to be a purchaser in good faith, and
therefore, rescission lies.”
102
102 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
“Rescission is a remedy granted by law to the contracting parties and even to third
persons, to secure the reparation of damages caused to them by a contract, even if this
should be valid, by means of the restoration of things to their condition at the moment
prior to the celebration of said contract. It is a relief for the protection of one of the
contracting parties and third persons from all injury and damage the contract may
cause, or to protect some incompatible and preferential right created by the contract. It
implies a contract which, even if initially valid, produces a lesion or pecuniary damage to
someone. It sets aside the act or contract for justifiable reasons of equity.” 27
Necessarily, therefore, a rescissible contract remains valid and binding upon the
parties thereto until the same is rescinded in an appropriate judicial proceeding.
On the other hand, a void contract, which is treated in Articles 1409
through 1422 of the Civil Code, is inexistent and produces no legal effect
whatsoever. The contracting parties are not bound thereby and such contract
is not subject to ratification.
In dismissing petitioner Equatorial’s complaint in Civil Case No. 97-85141,
the trial court was apparently of the impression that a rescissible contract has
the same effect as a void contract, thus:
“However, the words in the dispositive portion of the Supreme Court “is hereby
deemed rescinded” does not allow any other meaning. The said Deed of Absolute Sale
is void at its inception.
xxxx
The subject Deed of Absolute Sale having been rescinded by the Supreme
Court, Equatorial is not the owner and does not have any right to demand back rentals from
subject property. The law states that only an owner can enjoy the fruits of a certain
property or jus utendi which includes the right to receive from subject property what it
produces, x x x x”
The trial court erred. In G.R. No. 106063 (involving Mayfair’s suit for specific
performance), this Court clearly characterized the Deed of Absolute Sale
between Carmelo and petitioner Equatorial as a rescissible contract. We stated
therein that:
_______________
27IV Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines (1997),
pp. 570-571.
103
VOL. 370, NOVEMBER 21, 2001 103
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
“Since Equatorial is a buyer in bad faith, this finding renders the sale to it of the property in
question rescissible. We agree with respondent Appellate Court that the records bear out
the fact that Equatorial was aware of the lease contracts because its lawyers had, prior
to the sale, studied the said contracts. As such, Equatorial cannot tenably claim to be a
purchaser in good faith, and therefore, rescission lies.”
This Court did not declare the Deed of Absolute Sale between Carmelo and
Equatorial void but merely rescissible. Consequently, the contract was, at
inception, valid and naturally, it validly transferred ownership of the subject
property to Equatorial. It bears emphasis that Equatorial was
not automatically divested of its ownership. Rather, as clearly directed in the
dispositive portion of our Decision, Carmelo should return the purchase price
to Equatorial which, in turn, must execute such deeds and documents necessary to
enable Carmelo to reacquire its ownership of the property.
As mentioned earlier, Mayfair deposited with the Regional Trial Court,
Branch 7, Manila, the purchase price of P10,452,000.00 (P11,300,000.00 less
P847,000.00 as withholding tax). In turn, the Clerk of Court executed the deed
of sale of the subject property in favor of Mayfair.
In the meantime, Mayfair has continued to occupy and use the premises,
the reason why Equatorial filed against it Civil Case No. 97-85141 for sum of
money representing rentals and reasonable compensation.
At this point, I must reiterate that Equatorial purchased the subject
property from Carmelo and became its owner on July 31, 1978. While the
contract of sale was “deemed rescinded” by this Court in G.R. No. 106063,
nevertheless the sale had remained valid and binding between the contracting
parties until March 17, 1997 when the Decision in G.R. No. 106063 became
final. Consequently, being the owner, Equatorial has the right to demand from
Mayfair payment of rentals corresponding to the period from July 31, 1978 up to
March 17, 1997.
Records show that the rentals and reasonable compensation which
Equatorial demands from Mayfair are those which accrued from the year 1987
to 1998. As earlier stated, prior thereto, Mayfair had been paying the rents to
Equatorial.
104
104 SUPREME COURT REPORTS ANNOTATED
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
In line with this Court’s finding that Equatorial was the owner of the disputed
property from July 31, 1978 to March 17, 1997, it is, therefore, entitled to the
payment of rentals accruing to such period.
Consequently, whether or not Mayfair paid Equatorial the rentals specified
in the lease contracts from June 1, 1987 to March 17, 1997 is for the trial court to
resolve.
One last word. In effect, the majority have enunciated that:
1. 1.A lessor, in a contract of sale, cannot transfer ownership of his property,
occupied by the lessee, to the buyer because there can be no delivery of such
property to the latter; and
2. 2.Not only a possessor, but also an owner, can be in bad faith.
I cannot subscribe to such doctrines.
WHEREFORE, I vote to GRANT the petition.
Petition denied.
 G.R. No. 170923. January 20, 2009.*
SULO SA NAYON, INC. and/or PHILIPPINE VILLAGE HOTEL, INC. and
JOSE MARCEL E. PANLILIO, petitioners, vs. NAYONG PILIPINO
FOUNDATION, respondent.
Lease; Ejectment; Unlawful Detainer; The word “vacate” is not a talismanic word that
must be employed in all notices to vacate—the tenants must pay rentals which are fixed and
which became payable in the past, failing which they must move out.—Petitioners’ argument
that the demand letter is “inadequate” because it contained no demand to vacate the
leased premises does not persuade. We have ruled that: . . . . The word “vacate” is not
a talismanic word that must be employed in all notices. The alternatives in this case are
clear cut. The tenants must pay rentals which are fixed and which became payable in
the past, failing which they must move out. There can be no other interpretation of the
notice given to them. Hence, when the petitioners demanded that either he pays
P18,000 in five days or a case of ejectment would be filed against him, he was placed
on notice to move out if he does not pay. There was, in effect, a notice or demand to
vacate.
Same; Builders in Good Faith; Introduction of valuable improvements on the leased
premises does not give the lessee the right of retention and reimbursement which rightfully
belongs to a builder in good faith—the doctrine is that a lessee is neither a builder in good faith
nor in bad faith that would call for the application of Articles 448 and 546 of the Civil Code
since his rights are governed by Article 1678.—In the case at bar, petitioners have no
adverse claim or title to the land. In fact, as lessees, they recognize that the respondent
is the owner of the land. What petitioners insist is that because of the improvements,
which are of substantial value, that they have introduced on the leased premises with
the permission of respondent, they should be considered builders in good faith who
have the right to retain possession of the property until reimbursement by respondent.
We affirm the ruling of the CA that introduction of valuable improvements on the
leased premises does not give the petitioners the right of retention and reimbursement
which rightfully belongs to a builder in good faith. Otherwise, such a situation would
allow the lessee to easily “improve” the lessor out of its property. We reiterate the
doctrine that a lessee is neither a builder in good faith nor in bad faith that would call
for the application of Articles 448 and 546 of the Civil Code. His rights are governed by
Article 1678 of the Civil Code.
_______________
* FIRST DIVISION.
656
Same; Same; Contracts; Basic is the doctrine that laws are deemed incorporated in each
and every contract—existing laws always form part of any contract.—Petitioners argue that
to apply Article 1678 to their case would result to sheer injustice, as it would amount
to giving away the hotel and its other structures at virtually bargain prices. They allege
that the value of the hotel and its appurtenant facilities amounts to more than two
billion pesos, while the monetary claim of respondent against them only amounts to a
little more than twenty-six million pesos. Thus, they contend that it is the lease contract
that governs the relationship of the parties, and consequently, the parties may be
considered to have impliedly waived the application of Article 1678. We cannot sustain
this line of argument by petitioners. Basic is the doctrine that laws are deemed
incorporated in each and every contract. Existing laws always form part of any
contract. Further, the lease contract in the case at bar shows no special kind of
agreement between the parties as to how to proceed in cases of default or breach of the
contract.
PETITION for review on certiorari of the decision and resolution of the Court
of Appeals.
The facts are stated in the opinion of the Court.
Linderbergh S. Villamil for petitioners.
The Government Corporate Counsel for respondent.
PUNO, C.J.:
On appeal are the Court of Appeals’ (CA’s) October 4, 2005 Decision1 in
CA-G.R. SP No. 74631 and December 22, 2005 Resolution,2 reversing the
November 29, 2002 Decision3 of the Regional Trial Court (RTC) of Pasay City
in Civil Case No. 02-0133. The RTC modified the Decision4of the Metropolitan
Trial Court (MeTC) of Pasay City which ruled against petitioners and ordered
them to vacate the premises and pay their arrears. The RTC declared
petitioners as builders in good faith and upheld their right to indemnity.
The facts are as follows:
_______________
1 Rollo, pp. 43-53.
2 Id., at pp. 55-56.
3 Id., at pp. 144-159.
4 Id., at pp. 138-143.
657
Respondent Nayong Pilipino Foundation, a government-owned and
controlled corporation, is the owner of a parcel of land in Pasay City, known
as the Nayong Pilipino Complex. Petitioner Philippine Village Hotel, Inc.
(PVHI), formerly called Sulo sa Nayon, Inc., is a domestic corporation duly
organized and existing under Philippine laws. Petitioner Jose Marcel E.
Panlilio is its Senior Executive Vice President.
On June 1, 1975, respondent leased a portion of the Nayong Pilipino
Complex, consisting of 36,289 square meters, to petitioner Sulo sa Nayon, Inc.
for the construction and operation of a hotel building, to be known as the
Philippine Village Hotel. The lease was for an initial period of 21 years, or until
May 1996. It is renewable for a period of 25 years under the same terms and
conditions upon due notice in writing to respondent of the intention to renew
at least 6 months before its expiration. Thus, on March 7, 1995, petitioners sent
respondent a letter notifying the latter of their intention to renew the contract
for another 25 years. On July 4, 1995, the parties executed a Voluntary
Addendum to the Lease Agreement. The addendum was signed by petitioner
Jose Marcel E. Panlilio in his official capacity as Senior Executive Vice
President of the PVHI and by Chairman Alberto A. Lim of the Nayong Pilipino
Foundation. They agreed to the renewal of the contract for another 25 years,
or until 2021. Under the new agreement, petitioner PVHI was bound to pay
the monthly rental on a per square meter basis at the rate of P20.00 per square
meter, which shall be subject to an increase of 20% at the end of every 3-year
period. At the time of the renewal of the lease contract, the monthly rental
amounted to P725,780.00.
Beginning January 2001, petitioners defaulted in the payment of their
monthly rental. Respondent repeatedly demanded petitioners to pay the
arrears and vacate the premises. The last demand letter was sent on March 26,
2001.
On September 5, 2001, respondent filed a complaint for unlawful detainer
before the MeTC of Pasay City. The complaint was docketed as Civil Case No.
708-01. Respondent computed the arrears of petitioners in the amount of
twenty-six million one hundred eighty-three thousand two hundred twenty-
five pesos and fourteen centavos (P26,183,225.14), as of July 31, 2001.658
On February 26, 2002, the MeTC rendered its decision in favor of
respondent. It ruled, thus:
“. . . . The court is convinced by the evidence that indeed, defendants defaulted in
the payment of their rentals. It is basic that the lessee is obliged to pay the price of the
lease according to the terms stipulated (Art. 1657, Civil Code). Upon the failure of the
lessee to pay the stipulated rentals, the lessor may eject (sic)and treat the lease as
rescinded and sue to eject the lessee (C. Vda[.] De Pamintuan v. Tiglao, 53 Phil. 1). For
non-payment of rentals, the lessor may rescind the lease, recover the back rentals and
recover possession of the leased premises. . .
xxx
. . . . Improvements made by a lessee such as the defendants herein on leased
premises are not valid reasons for their retention thereof. The Supreme Court has
occasion to address a similar issue in which it ruled that: ‘The fact that petitioners allegedly
made repairs on the premises in question is not a reason for them to retain the possession of the
premises. There is no provision of law which grants the lessee a right of retention over the leased
premises on that ground. Article 448 of the Civil Code, in relation to Article 546, which provides
for full reimbursement of useful improvements and retention of the premises until
reimbursement is made, applies only to a possessor in good faith, i.e., one who builds on a land
in the belief that he is the owner thereof. This right of retention does not apply to a mere lessee,
like the petitioners, otherwise, it would always be in his power to ‘improve’ his landlord out of
the latter’s property (Jose L. Chua and Co Sio Eng vs. Court of Appeals and Ramon Ibarra, G.R.
No. 109840, January 21, 1999).’
Although the Contract of Lease stipulates that the building and all the
improvements in the leased premises belong to the defendants herein, such will not
defeat the right of the plaintiff to its property as the defendants failed to pay their
rentals in violation of the terms of the contract. At most, defendants can only invoke
[their] right under Article 1678 of the New Civil Code which grants them the right to
be reimbursed one-half of the value of the building upon the termination of the lease,
or, in the alternative, to remove the improvements if the lessor refuses to make
reimbursement.”
The dispositive portion of the decision reads as follows:
“WHEREFORE, premises considered, judgment is hereby rendered in favor
of Nayong Pilipino Foundation, and against the defendant Philippine Village
Hotel, Inc[.], and all persons claiming rights under it, ordering the latter
to:659 1. VACATE the subject premises and surrender possession thereof to
plaintiff;
2. PAY plaintiff its rental arrearages in the sum of TWENTY SIX
MILLION ONE HUNDRED EIGHTY THREE THOUSAND TWO HUNDRED
TWENTY FIVE PESOS AND 14/100 (P26,183,225.14) incurred as of July 31,
2001;
3. PAY plaintiff the sum of SEVEN HUNDRED TWENTY FIVE
THOUSAND SEVEN HUNDRED EIGHTY PESOS (P725,780.00) per month
starting from August 2001 and every month thereafter by way of reasonable
compensation for the use and occupation of the premises;
4. PAY plaintiff the sum of FIFTY THOUSAND PESOS (P50,000.00) by
way of attorney’s fees[; and]
5. PAY the costs of suit.
The complaint against defendant Jose Marcel E. Panlilio is hereby dismissed for
lack of cause of action. The said defendant’s counterclaim however is likewise
dismissed as the complaint does not appear to be frivolous or maliciously instituted.
SO ORDERED.” 5
Petitioners appealed to the RTC which modified the ruling of the MeTC. It
held that:
“. . . it is clear and undisputed that appellants-lessees were expressly required to
construct a first-class hotel with complete facilities. The appellants were also
unequivocally declared in the Lease Agreement as the owner of the improvements so
constructed. They were even explicitly allowed to use the improvements and building
as security or collateral on loans and credit accommodations that the Lessee may secure
for the purpose of financing the construction of the building and other improvements
(Section 2; pars. “A” to “B,” Lease Agreement). Moreover, a time frame was
setforth (sic) with respect to the duration of the lease initially for 21 years and
renewable for another 25 years in order to enable the appellants-lessees to recoup their
huge money investments relative to the construction and maintenance of the
improvements.
xxx
Considering therefore, the elements of permanency of the construction and substantial
value of the improvements as well as the undispute[d] own-
_______________
5 Id., at pp. 142-143.
660ership over the land improvements, these, immensely engender the application of
Art. 448 of the Civil Code. The only remaining and most crucial issue to be resolved is
whether or not the appellants as builders have acted in good faith in order for Art. 448
in relation to Art. 546 of the Civil Code may apply with respect to their rights over
improvements.
xxx
. . . it is undeniable that the improvement of the hotel building of appellants (sic)
PVHI was constructed with the written consent and knowledge of appellee. In fact, it
was precisely the primary purpose for which they entered into an agreement. Thus, it
could not be denied that appellants were builders in good faith.
Accordingly, and pursuant to Article 448 in relation to Art. 546 of the Civil Code,
plaintiff-appellee has the sole option or choice, either to appropriate the building, upon
payment of proper indemnity consonant to Art. 546 or compel the appellants to
purchase the land whereon the building was erected. Until such time that plaintiff-
appellee has elected an option or choice, it has no right of removal or
demolition against appellants unless after having selected a compulsory sale,
appellants fail to pay for the land (Ignacio vs. Hilario, 76 Phil. 605). This, however, is
without prejudice from the parties agreeing to adjust their rights in some other way as
they may mutually deem fit and proper.”
The dispositive portion of the decision of the RTC reads as follows:
“WHEREFORE, and in view of the foregoing, judgment is hereby rendered
modifying the decision of [the] MTC, Branch 45 of Pasay City rendered on February
26, 2002 as follows:
1. Ordering plaintiff-appellee to submit within thirty (30) days from
receipt of a copy of this decision a written manifestation of the option or choice
it selected, i.e., to appropriate the improvements upon payment of proper
indemnity or compulsory sale of the land whereon the hotel building of PVHI
and related improvements or facilities were erected;
2. Directing the plaintiff-appellee to desist and/or refrain from doing acts
in the furtherance or exercise of its rights and demolition against appellants
unless and after having selected the option of compulsory sale and appellants
failed to pay [and] purchase the land within a reasonable time or at such time
as this court will direct;661
3. Ordering defendants-appellants to pay plaintiff-appellee [their] arrears
in rent incurred as of July 31, 2001 in the amount of P26,183,225.14;
4. Ordering defendants-appellants to pay to plaintiff-appellee the unpaid
monthly rentals for the use and occupation of the premises pending this appeal
from July to November 2002 only at P725,780.00 per month;
5. The fourth and fifth directives in the dispositive portion of the trial
court’s decision including that the last paragraph thereof JME Panlilio’s
complaint is hereby affirmed;
6. The parties are directed to adjust their respective rights in the interest
of justice as they may deem fit and proper if necessary.
SO ORDERED.” 6
Respondent appealed to the CA which held that the RTC erroneously
applied the rules on accession, as found in Articles 448 and 546 of the Civil
Code when it held that petitioners were builders in good faith and, thus, have
the right to indemnity. The CA held:
“By and large, respondents are admittedly mere lessees of the subject premises and
as such, cannot validly claim that they are builders in good faith in order to solicit the
application of Articles 448 and 546 of the Civil Code in their favor. As it is, it is glaring
error on the part of the RTC to apply the aforesaid legal provisions on the supposition
that the improvements, which are of substantial value, had been introduced on the
leased premises with the permission of the petitioner. To grant the respondents the
right of retention and reimbursement as builders in good faith merely because of the
valuable and substantial improvements that they introduced to the leased premises
plainly contravenes the law and settled jurisprudential doctrines and would, as stated,
allow the lessee to easily “improve” the lessor out of its property.
. . . . Introduction of valuable improvements on the leased premises does not strip
the petitioner of its right to avail of recourses under the law and the lease contract itself
in case of breach thereof. Neither does it deprive the petitioner of its right under Article
1678 to exercise its option to acquire the improvements or to let the respondents remove
the same.”
_______________
6 Id., at pp. 158-159.
662 Petitioners’ Motion for Reconsideration was denied.
Hence, this appeal.7
Petitioners assign the following errors:
I
THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE REVERSIBLE
ERROR IN NOT HOLDING THAT PETITIONERS WERE BUILDERS IN GOOD
FAITH OVER THE SUBSTANTIAL AND VALUABLE IMPROVEMENTS WHICH
THEY HAD INTRODUCED ON THE SUBJECT PROPERTY, THUS COMPELLING
THE APPLICATION OF ARTICLE 448 OF THE CIVIL CODE IN RELATION TO
ARTICLE 546 OF THE SAME CODE, INSTEAD OF ARTICLE 1678 OF THE CIVIL
CODE.
II
THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS
REVERSIBLE ERROR WHEN IT DISREGARDED THE FACT THAT THE LEASE
CONTRACT GOVERNS THE RELATIONSHIP OF THE PARTIES AND
CONSEQUENTLY THE PARTIES MAY BE CONSIDERED TO HAVE IMPLIEDLY
WAIVED THE APPLICATION OF ARTICLE 1678 OF THE CIVIL CODE TO THE
INSTANT CASE.
III
ASSUMING ARGUENDO THAT THE PETITIONERS ARE NOT BUILDERS IN
GOOD FAITH, THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE
REVERSIBLE ERROR WHEN IT OVERLOOKED THE FACT THAT RESPONDENT
ALSO ACTED IN BAD FAITH WHEN IT DID NOT HONOR AND INSTEAD
BREACHED THE LEASE CONTRACT BETWEEN THE PARTIES, THUS BOTH
PARTIES ACTED AS IF THEY ARE IN GOOD FAITH.
IV
TO SANCTION THE APPLICATION OF ARTICLE 1678 OF THE CIVIL CODE
INSTEAD OF ARTICLE 448 OF THE CIVIL CODE IN RELATION TO ARTICLE 546
OF THE SAME CODE WOULD NOT ONLY WREAK HAVOC AND CAUSE
SUBSTANTIAL INJURY TO THE RIGHTS AND INTERESTS OF PETITIONER
PHILIPPINE VILLAGE HOTEL, INC. WHILE RESPONDENT NAYONG PILIPINO
FOUNDATION, IN COMPARISON THERETO, WOULD SUFFER ONLY SLIGHT OR
INCONSE-
_______________
 7 Id., at pp. 10-41.
663QUENTIAL INJURY OR LOSS, BUT ALSO WOULD CONSTITUTE UNJUST
ENRICHMENT ON THE PART OF RESPONDENT AT GREAT EXPENSE AND
GRAVE PREJUDICE OF PETITIONERS.
V oblige the one who built or planted to pay the price of the land, and the one who sowed,
THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE REVERSIBLE
ERROR IN NOT HOLDING THAT THE COURTS A QUO DID NOT ACQUIRE
JURISDICTION OVER THE UNLAWFUL DETAINER CASE FOR NON-
COMPLIANCE WITH JURISDICTIONAL REQUIREMENTS DUE TO THE ABSENCE
OF A NOTICE TO VACATE UPON PETITIONERS. 8
First, we settle the issue of jurisdiction. Petitioners argue that the MeTC did
not acquire jurisdiction to hear and decide the ejectment case because they
never received any demand from respondent to pay rentals and vacate the
premises, since such demand is a jurisdictional requisite. We reiterate the
ruling of the MeTC, RTC and CA. Contrary to the claim of petitioners,
documentary evidence proved that a demand letter dated March 26, 2001 was
sent by respondent through registered mail to petitioners, requesting them “to
pay the rental arrears or else it will be constrained to file the appropriate legal
action and possess the leased premises.”
Further, petitioners’ argument that the demand letter is “inadequate”
because it contained no demand to vacate the leased premises does not
persuade. We have ruled that:
“. . . . The word ‘vacate’ is not a talismanic word that must be employed in all
notices. The alternatives in this case are clear cut. The tenants must pay rentals which
are fixed and which became payable in the past, failing which they must move out.
There can be no other interpretation of the notice given to them. Hence, when the
petitioners demanded that either he pays P18,000 in five days or a case of ejectment
would be filed against him, he was placed on notice to move out if he does not pay.
There was, in effect, a notice or demand to vacate.” 9 who have the right to retain possession of the property until reimbursement
_______________
8 Id., at pp. 22-23.
9 MeTC Decision, citing Golden Gate Realty Corporation v. Intermediate Appellate Court, No. L-
74289, July 31, 1987, 152 SCRA 684.
664In the case at bar, the language of the demand letter is plain and simple:
respondent demanded payment of the rental arrears amounting to
P26,183,225.14 within ten days from receipt by petitioners, or respondent will
be constrained to file an appropriate legal action against petitioners to recover
the said amount. The demand letter further stated that respondent will possess
the leased premises in case of petitioners’ failure to pay the rental arrears
within ten days. Thus, it is clear that the demand letter is intended as a notice
to petitioners to pay the rental arrears, and a notice to vacate the premises in
case of failure of petitioners to perform their obligation to pay.
Second, we resolve the main issue of whether the rules on accession, as
found in Articles 448 and 546 of the Civil Code, apply to the instant case.
Article 448 and Article 546 provide:
“Art. 448. The owner of the land on which anything has been built, sown or
planted in good faith, shall have the right to appropriate as his own the works, sowing
or planting, after payment of the indemnity provided for in Articles 546 and 548, or to
the proper rent. However, the builder or planter cannot be obliged to buy the land if
its value is considerably more than that of the building or trees. In such case, he shall
pay reasonable rent, if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall agree upon the terms of the
lease and in case of disagreement, the court shall fix the terms thereof.
Art. 546. Necessary expenses shall be refunded to every possessor; but only the
possessor in good faith may retain the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same
right of retention, the person who has defeated him in the possession having the option
of refunding the amount of the expenses or of paying the increase in value which the
thing may have acquired by reason thereof.”
We uphold the ruling of the CA.
The late Senator Arturo M. Tolentino, a leading expert in Civil Law,
explains:665
“This article [Article 448] is manifestly intended to apply only to a case where one
builds, plants, or sows on land in which he believes himself to have a claim of title, and
10
not to lands where the only interest of the builder, planter or sower is that of a holder,
such as a tenant.”11
In the case at bar, petitioners have no adverse claim or title to the land. In
fact, as lessees, they recognize that the respondent is the owner of the land.
What petitioners insist is that because of the improvements, which are of
substantial value, that they have introduced on the leased premises with the
permission of respondent, they should be considered builders in good faith
by respondent.
We affirm the ruling of the CA that introduction of valuable improvements
on the leased premises does not give the petitioners the right of retention and
reimbursement which rightfully belongs to a builder in good faith. Otherwise,
such a situation would allow the lessee to easily “improve” the lessor out of
its property. We reiterate the doctrine that a lessee is neither a builder in good
faith nor in bad faith12 that would call for the application of Articles 448 and
546 of the Civil Code. His rights are governed by Article 1678 of the Civil Code,
which reads:
“Art. 1678. If the lessee makes, in good faith, useful improvements which are suitable
to the use for which the lease is intended, without altering the form or substance of the
property leased, the lessor upon the termination
_______________
 10 Tolentino, Arturo M., Commentaries and Jurisprudence on the Civil Code of the Philippines, vol. II, 2004, or any of its provisions, as well as all unpaid rents, fees, charges, taxes, assessment and
citing Floreza v. Evangelista, 96 SCRA 130 (1980); Applied to co-owner: Del Campo v. Abesia, No. L-49219, April
15, 1988, 160 SCRA 379.
others which the LESSOR may be entitled to.”
11 Alburo v. Villanueva, 7 Phil. 277 (1907); De Laureano v. Adil, No. L-43345, July 29, 1976, 72 SCRA Petitioners assert that respondent committed a breach of the lease contract
148; Floreza v. Evangelista, No. L-25462, February 21, 1980, 96 SCRA 130; Balucanag v. Francisco, No. L-33422, May when it filed the ejectment suit against them. However, we find nothing in the
30, 1983, 122 SCRA 498; Southwestern University v. Salvador, No. L-45013, May 28, 1979, 90 SCRA 318; Castillo v.
Court of Appeals, No. L-48290, September 29, 1983, 124 SCRA 808. above quoted provision that prohibits respondent to proceed the way it did in
12 Southwestern University v. Salvador, No. L-45013, May 28, 1979, 90 SCRA 318, Concurring Opinion of J. enforcing its rights as lessor. It can rightfully file for ejectment to evict
Melencio-Herrera, citing Alburo v. Villanueva, 7 Phil. 277 (1907).
petitioners, as it did before the court a quo.
666of the lease shall pay the lessee one-half of the value of the improvements at that
time. Should the lessor refuse to reimburse said amount, the lessee may remove the IN VIEW WHEREOF, petitioners’ appeal is DENIED. The October 4, 2005
improvements, even though the principal thing may suffer damage thereby. He shall Decision of the Court of Appeals in CA-G.R. SP No. 74631 and its December
not, however, cause any more impairment upon the property leased than is necessary. 22, 2005 Resolution are AFFIRMED. Costs against petitioners.
With regard to ornamental expenses, the lessee shall not be entitled to any SO ORDERED.
reimbursement, but he may remove the ornamental objects, provided no damage is Carpio, Corona, Azcuna and Leonardo-De Castro, JJ.,concur.
caused to the principal thing, and the lessor does not choose to retain them by paying Petition denied, judgment and resolution affirmed.
their value at the time the lease is extinguished.”
Under Article 1678, the lessor has the option of paying one-half of the value of
the improvements which the lessee made in good faith, which are suitable for
the use for which the lease is intended, and which have not altered the form
and substance of the land. On the other hand, the lessee may remove the
improvements should the lessor refuse to reimburse.
Petitioners argue that to apply Article 1678 to their case would result to
sheer injustice, as it would amount to giving away the hotel and its other
structures at virtually bargain prices. They allege that the value of the hotel
and its appurtenant facilities amounts to more than two billion pesos, while
the monetary claim of respondent against them only amounts to a little more
than twenty-six million pesos. Thus, they contend that it is the lease contract
that governs the relationship of the parties, and consequently, the parties may
be considered to have impliedly waived the application of Article 1678.
We cannot sustain this line of argument by petitioners. Basic is the doctrine
that laws are deemed incorporated in each and every contract. Existing laws
always form part of any contract. Further, the lease contract in the case at bar
shows no special kind of agreement between the parties as to how to proceed
in cases of default or breach of the contract. Petitioners maintain that the lease
contract contains a default provision which does not give respondent the right
to appropriate the improvements nor evict petitioners in cases of cancellation
or termination of the contract due to default or breach of its terms. They cite
paragraph 10 of the lease contract, which provides that:667
“10. DEFAULT.—. . . Default shall automatically take place upon the failure of
the LESSEE to pay or perform its obligation during the time fixed herein for such
obligations without necessity of demand, or, if no time is fixed, after 90 days from the
receipt of notice or demand from the LESSOR. . .
In case of cancellation or termination of this contract due to the default or breach
of its terms, the LESSEE will pay all reasonable attorney’s fees, costs and expenses of
litigation that may be incurred by the LESSOR in enforcing its rights under this contract
 G.R. No. 149295. September 23, 2003. *
PHILIPPINE NATIONAL BANK, petitioner, vs.GENEROSO DE JESUS,
represented by his Attorney-in-Fact, CHRISTIAN DE JESUS, respondent.
Possession; Builders in Good Faith; A builder in good faith can compel the landowner to
make a choice between appropriating the building by paying the proper indemnity or obliging
the builder to pay the price of the land; In order, however, that the builder can invoke the
accruing benefit and enjoy his corresponding right to demand that a choice be made by the
landowner, he should be able to prove good faith on his part.—A builder in good faith can,
under the foregoing provisions, compel the landowner to make a choice between
appropriating the building by paying the proper indemnity or obliging the builder to
pay the price of the land. The choice belongs to the owner of the land, a rule that accords
with the principle of accession, i.e., that the accessory follows the principal and not the
other way around. Even as the option lies with the landowner, the grant to him,
nevertheless, is preclusive. He must choose one. He cannot, for instance, compel the
owner of the building to instead remove it from the land. In order, however, that the
builder can invoke that accruing benefit and enjoy his corresponding right to demand
that a choice be made by the landowner, he should be able to prove good faith on his
part.
Same; Same; Words and Phrases; Good faith is an intangible and abstract with no
technical meaning or statutory definition, and it encompasses, among other things, an honest
belief, the absence of malice and the absence of design to defraud or to seek an unconscionable
advantage; Applied to possession, one is considered in good faith if he is not aware that there
exists in his title or mode of acquisition any flaw which invalidates it.—Good faith, here
understood, is an intangible and abstract quality with no technical meaning or
statutory definition, and it encompasses, among other things, an honest belief, the
absence of malice and the absence of design to defraud or to seek an unconscionable
advantage. An individual’s personal good faith is a concept of his own mind and,
therefore, may not conclusively be determined by his protestations alone. It implies
honesty of intention, and freedom from knowledge of circumstances which ought to
put the holder upon inquiry. The essence of good faith lies in an honest belief in the
validity of one’s right, ignorance of a superior claim, and absence of intention to
overreach another. Applied to possession, one is considered in good faith if he is not
aware that there exists in his title or mode of acquisition any flaw which invalidates it.
_______________
*FIRST DIVISION.
558
558 SUPREME COURT REPORTS ANNOTATED
Philippine National Bank vs. De Jesus
Same; Same; Ownership; Article 448, of the Civil Code refers to a piece of land whose
ownership is claimed by two or more parties, one of whom has built some works (or sown or
planted something) and, not to a case where the owner of the land is the builder, sower, or planter
who then later loses ownership of the land by sale or otherwise for “where the true owner himself
is the builder of works on his own land, the issue of good faith or bad faith is entirely
irrelevant”.—Equally significant is the fact that the building, constructed on the land by
Ignacio, has in actuality been part of the property transferred to petitioner. Article 448,
of the Civil Code refers to a piece of land whose ownership is claimed by two or more
parties, one of whom has built some works (or sown or planted something) and, not to
a case where the owner of the land is the builder, sower, or planter who then later loses
ownership of the land by sale or otherwise for, elsewise stated, “where the true owner
himself is the builder of works on his own land, the issue of good faith or bad faith is
entirely irrelevant.”
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
The Chief Legal Counsel for petitioner.
Rolando V. Zubiri for private respondent.
VITUG, J.:
Petitioner Philippine National Bank disputes the decision handed down by the
Court of Appeals promulgated on 23 March 2001 in CA-G.R. CV No. 56001,
entitled “Generoso De Jesus, represented by his Attorney-in-Fact, Christian De
Jesus, versus Philippine National Bank.” The assailed decision has affirmed
the judgment rendered by the Regional Trial Court, Branch 44, of Mamburao,
Occidental Mindoro, declaring respondent Generoso De Jesus as being the
true and lawful owner of the 124-square-meter portion of the land covered by
Transfer Certificate of Title (TCT) No. T-17197 and ordering petitioner bank to
vacate the premises, to deliver possession thereof to respondent, and to
remove the improvement thereon.
It would appear that on 10 June 1995, respondent filed a complaint against
petitioner before the Regional Trial Court of Occidental Mindoro for recovery
of ownership and possession, with damages, over the questioned property. In
his complaint, respondent stated that he had acquired a parcel of land situated
in Mam-
559
VOL. 411, SEPTEMBER 23, 2003 559
Philippine National Bank vs. De Jesus
burao, Occidental Mindoro, with an area of 1,144 square meters covered by
TCT No. T-17197, and that on 26 March 1993, he had caused a verification
survey of the property and discovered that the northern portion of the lot was
being encroached upon by a building of petitioner to the extent of 124 square
meters. Despite two letters of demand sent by respondent, petitioner failed
and refused to vacate the area.
Petitioner, in its answer, asserted that when it acquired the lot and the
building sometime in 1981 from then Mayor Bienvenido Ignacio, the
encroachment already was in existence and to remedy the situation, Mayor
Ignacio offered to sell the area in question (which then also belonged to
Ignacio) to petitioner at P100.00 per square meter which offer the latter claimed
to have accepted. The sale, however, did not materialize when, without the
knowledge and consent of petitioner, Mayor Ignacio later mortgaged the lot
to the Development Bank of the Philippines.
The trial court decided the case in favor of respondent declaring him to be
the rightful owner of the disputed 124-square-meter portion of the lot and
ordering petitioner to surrender possession of the property to respondent and
to cause, at its expense, the removal of any improvement thereon.
The Court of Appeals, on appeal, sustained the trial court but it ordered to
be deleted the award to respondent of attorney’s fees, as well as moral and
exemplary damages, and litigation expenses.
Petitioner went to this Court, via a petition for review, after the appellate
court had denied the bank’s motion for reconsideration, here now contending
that—
1. “1.THE COURT OF APPEALS GRAVELY ERRED IN LAW IN ADJUDGING
PNB A BUILDER IN BAD FAITH OVER THE ENCROACHED PROPERTY
IN QUESTION;
2. “2.THE COURT OF APPEALS GRAVELY ERRED IN LAW IN NOT
APPLYING IN FAVOR OF PNB THE PROVISION OF ARTICLE 448 OF
THE CIVIL CODE AND THE RULING IN TECNOGAS PHILIPPINES
MANUFACTURING CORP. VS. COURT OF APPEALS, G.R. No. 108894,
February 10, 1997, 268 SCRA 7.”
1
_______________
1Rollo, p. 12.
560
560 SUPREME COURT REPORTS ANNOTATED
Philippine National Bank vs. De Jesus
The Regional Trial Court and the Court of Appeals have both rejected the idea
that petitioner can be considered a builder in good faith. In the context that
such term is used in particular reference to Article 448, et seq., of the Civil Code,
a builder in good faith is one who, not being the owner of the land, builds on
that land believing himself to be its owner and unaware of any defect in his
title or mode of acquisition.
The various provisions of the Civil Code, pertinent to the subject, read:
“Article 448. The owner of the land on which anything has been built, sown, or planted
in good faith, shall have the right to appropriate as his own the works, sowing or
planting, after payment of the indemnity provided for in Articles 546 and 548, or to
oblige the one who built or planted to pay the price of the land, and the one who sowed,
the proper rent. However, the builder or planter cannot be obliged to buy the land if
its value is considerably more than that of the building or trees. In such a case, he shall
pay reasonable rent, if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall agree upon the terms of the
lease and in case of disagreement, the court shall fix the terms thereof.”
“Article 449. He who builds, plants, or sows in bad faith on the land of another,
loses what is built, planted or sown without right to indemnity.”
“Article 450. “The owner of the land on which anything has been built, planted or
sown in bad faith may demand the demolition of the work, or that the planting or
sowing be removed in order to replace things in their former condition at the expense
of the person who built, planted or sowed; or he may compel the builder or planter to
pay the price of the land, and the sower the proper rent.”
A builder in good faith can, under the foregoing provisions, compel the
landowner to make a choice between appropriating the building by paying
the proper indemnity or obliging the builder to pay the price of the land. The
choice belongs to the owner of the land, a rule that accords with the principle
of accession, i.e., that the accessory follows the principal and not the other way
around. Even as the option lies with the landowner, the grant to him,
2
nevertheless, is preclusive. He must choose one. He cannot, for instance,
compel the owner of the building to instead remove it from
_______________
2Depra vs. Dumlao, G.R. No. L-57348, 16 May 1985, 136 SCRA 475.
561
VOL. 411, SEPTEMBER 23, 2003 561
Philippine National Bank vs. De Jesus
the land. In order, however, that the builder can invoke that accruing benefit
3
and enjoy his corresponding right to demand that a choice be made by the
landowner, he should be able to prove good faith on his part.
Good faith, here understood, is an intangible and abstract quality with no
technical meaning or statutory definition, and it encompasses, among other
things, an honest belief, the absence of malice and the absence of design to
defraud or to seek an uncon-scionable advantage. An individual’s personal
good faith is a concept of his own mind and, therefore, may not conclusively
be determined by his protestations alone. It implies honesty of intention, and
freedom from knowledge of circumstances which ought to put the holder
upon inquiry. The essence of good faith lies in an honest belief in the validity
4
of one’s right, ignorance of a superior claim, and absence of intention to
overreach another. Applied to possession, one is considered in good faith if
5
he is not aware that there exists in his title or mode of acquisition any flaw
which invalidates it. 6
Given the findings of both the trial court and the appellate court, it should
be evident enough that petitioner would fall much too short from its claim of
good faith. Evidently, petitioner was quite aware, and indeed advised, prior
to its acquisition of the land and building from Ignacio that a part of the
building sold to it stood on the land not covered by the land conveyed to it.
 Equally significant is the fact that the building, constructed on the land by
Ignacio, has in actuality been part of the property transferred to petitioner.
Article 448, of the Civil Code refers to a piece of land whose ownership is
claimed by two or more parties, one of whom has built some works (or sown
or planted something) and, not to a case where the owner of the land is the
builder, sower, or planter who then later loses ownership of the land by sale
or otherwise for, elsewise stated, “where the true owner himself is

_______________

3Ignacio vs. Hilario, 76 Phil. 605; Sarmiento vs. Agana, G.R. No. L-57288, 30 April 1984, 129
SCRA 122; Tecnogas Philippines Manufacturing Corp. vs. Court of Appeals, G.R. No. 108894, 10
February 1997, 268 SCRA 7.
4Black’s Law Dictionary, Abridged Fifth Edition, p. 353.
5Bernardo vs. Bernardo, 96 Phil. 202; Negrete vs. CFI of Marinduque,G.R. No. L-31267, 24
November 1972, 48 SCRA 113.
6Article 526, Civil Code of the Philippines.
562
562 SUPREME COURT REPORTS ANNOTATED
Philippine National Bank vs. De Jesus
the builder of works on his own land, the issue of good faith or bad faith is
entirely irrelevant.” 7

In fine, petitioner is not in a valid position to invoke the provisions of

Article 448 of the Civil Code. The Court commiserates with petitioner in its
present predicament; upon the other hand, respondent, too, is entitled to his
rights under the law, particularly after having long been deprived of the
enjoyment of his property. Nevertheless, the Court expresses hope that the
parties will still be able to come up with an arrangement that can be mutually
suitable and acceptable to them.
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No.
56001 is AFFIRMED. No costs.
SO ORDERED.
Davide, Jr. (C.J., Chairman), Ynares-Santiago and Carpio, JJ., concur.
Azcuna, J., On sick leave.
Judgment affirmed.
 G.R. Nos. 154391-92. September 30, 2004. *
Spouses ISMAEL and TERESITA MACASAET, petitioners, vs. Spouses
VICENTE and ROSARIO MACASAET, respondents.
Ejectment; Unlawful Detainer; In actions for unlawful detainer, possession that was
originally lawful becomes unlawful upon the expiration or termination of the defendant’s right
to possess, arising from an express or implied contract.—In actions for unlawful detainer,
possession that was originally lawful becomes unlawful upon the expiration or
termination of the defendant’s right to possess, arising from an express or implied
contract. In other words, the plaintiff’s cause of action comes from the expiration or
termination of the defendant’s right to continue possession. The case resulting
therefrom must be filed within one year from the date of the last demand.
Same; Same; To show a cause of action in an unlawful detainer, an allegation that the
defendant is illegally withholding possession from the plaintiff is sufficient.—To show a cause
of action in an unlawful detainer, an allegation that the defendant is illegally
withholding possession from the plaintiff is sufficient. The complaint may lie even if it
does not employ the terminology of the law, provided the said pleading is couched in
a language adequately stating that the withholding of possession or the refusal to
vacate has become unlawful. It is equally settled that the jurisdiction of the court, as
well as the nature of the action, is determined from the averments of the complaint.
Same; Same; This court has consistently held that those who occupy the land of another
at the latter’s tolerance or permission, without any contract between them, are necessarily bound
by an implied promise that the occupants will vacate the property upon demand. A summary
action for ejectment is the proper remedy to enforce this implied obligation.—This Court has
consistently held that those who occupy the land of another at the latter’s tolerance or
permission, without any contract between them, are necessarily
_______________
*THIRD DIVISION.
626
626 SUPREME COURT REPORTS ANNOTATED
Macasaet vs. Macasaet
bound by an implied promise that the occupants will vacate the property upon
demand. A summary action for ejectment is the proper remedy to enforce this implied
obligation. The unlawful deprivation or withholding of possession is to be counted
from the date of the demand to vacate.
Same; Same; Unless inconsistent with Rule 70, the provisions of Rule 18 on pre-trial
applies to the preliminary conference. Under section 4 of this Rule, the nonappearance of a party
may be excused by the showing of a valid cause.—Unless inconsistent with Rule 70, the
provisions of Rule 18 on pretrial applies to the preliminary conference. Under Section
4 of this Rule, the nonappearance of a party may be excused by the showing of a valid
cause; or by the appearance of a representative, who has been fully authorized in
writing to enter into an amicable settlement, to submit to alternative modes of dispute
resolution, and to enter into stipulations or admissions of facts and of documents.
Same; Same; Respondents have the right to appropriate—as their own—the building and
other improvements on the subject lots, but only after (1) refunding the expenses of petitioners
or (2) paying the increase in value acquired by the properties by reason thereof. They have the
option to oblige petitioners to pay the price of the land, unless its value is considerably more
than that of the structures—in which case, the petitioners shall pay reasonable rent.—
Respondents have the right to appropriate—as their own—the building and other
improvements on the subject lots, but only after (1) refunding the expenses of
petitioners or (2) paying the increase in value acquired by the properties by reason
thereof. They have the option to oblige petitioners to pay the price of the land, unless
its value is considerably more than that of the structures—in which case, petitioners
shall pay reasonable rent.
PETITION for review on certiorari of the decision and resolution of the Court
of Appeals.
The facts are stated in the opinion of the Court.
Ismael H. Macasaet for petitioners.
De Jesus, Linatoc, Mendoza & Associates for respondents.
627
VOL. 439, SEPTEMBER 30, 2004 627
Macasaet vs. Macasaet
PANGANIBAN, J.:
The present case involves a dispute between parents and children. The
children were invited by the parents to occupy the latter’s two lots, out of
parental love and a desire to foster family solidarity. Unfortunately, an
unresolved conflict terminated this situation. Out of pique, the parents asked
them to vacate the premises. Thus, the children lost their right to remain on
the property. They have the right, however, to be indemnified for the useful
improvements that they constructed thereon in good faith and with the
consent of the parents. In short, Article 448 of the Civil Code applies.
The Case
Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing
1
the March 22, 2002 Decision and the June 26, 2002 Resolution of the Court of
2 3
Appeals (CA) in CA-G.R. SP Nos. 56205 & 56467. The challenged Decision
disposed as follows:
“WHEREFORE, the assailed Decision is AFFIRMED with the
following MODIFICATIONS:
1. ‘1.Vicente and Rosario should reimburse Ismael and Teresita one-half of the
value of the useful improvements introduced in the premises prior to
demand, which is equivalent to P475,000.00. In case the former refuse to
reimburse the said amount, the latter may remove the improvements, even
though the land may suffer damage thereby. They shall not, however, cause
any more impairment upon the property leased than is necessary.
2. ‘2.The award of attorney’s fees is DELETED.
_______________ Macasaet vs. Macasaet
1Rollo, pp. 35-76.
spondents to allot the land they owned as an advance grant of inheritance in
2Id., pp. 209-229. Ninth Division. Penned by Justice Mariano C. del Castillo, with the favor of their children. Thus, they contended that the lot covered by TCT No.
concurrence of Justices Ruben T. Reyes (Division chairman) and Renato C. Dacudao (member). T-103141 had been allotted to Ismael as advance inheritance. On the other
3Id., pp. 264-265. hand, the lot covered by TCT No. T-78521 was allegedly given to petitioners
628
as payment for construction materials used in the renovation of respondents’
628 SUPREME COURT REPORTS ANNOTATED house. 10

Macasaet vs. Macasaet The MTCC ruled in favor of respondents and ordered petitioners to vacate
11

the premises. It opined that Ismael and Teresita had occupied the lots, not by
1. ‘3.The records of these consolidated cases are REMANDEDto the Court of virtue of a verbal lease agreement, but by tolerance of Vicente and Rosario. As 12

origin for further proceedings to determine the option to be taken by Vicente their stay was by mere tolerance, petitioners were necessarily bound by an
and Rosario and to implement the same with dispatch.’ ” 4
implied promise to vacate the lots upon demand. The MTCC dismissed their
13

contention that one lot had been allotted as an advance inheritance, on the
The assailed Resolution denied petitioners’ Motion for Reconsideration. ground that successional rights were inchoate. Moreover, it disbelieved
The Facts petitioners’ allegation that the other parcel had been given as payment for
Petitioners Ismael and Teresita Macasaet and Respondents Vicente and
5 construction materials. 14

Rosario Macasaet are first-degree relatives. Ismael is the son of respondents, On appeal, the regional trial court (RTC) upheld the findings of the MTCC.
15

and Teresita is his wife. 6 However, the RTC allowed respondents to appropriate the building and other
On December 10, 1997, the parents filed with the Municipal Trial Court in improvements introduced by petitioners, after payment of the indemnity
Cities (MTCC) of Lipa City an ejectment suit against the provided for by Article 448 in relation to Articles 546 and 548 of the Civil
children. Respondents alleged that they were the owners of two (2) parcels of
7 Code. It added that respondents could oblige petitioners to purchase the land,
16

land covered by Transfer Certificate of Title (TCT) Nos. T-78521 and T-103141, unless its value was considerably more than the building. In the latter
situated at Banay-banay, Lipa City; that by way of a verbal lease agreement, situation, petitioners should
Ismael and Teresita occupied these lots in March 1992 and used them as their
residence and the situs of their construction business; and that despite _______________
repeated demands, petitioners failed to pay the agreed rental of P500 per
10Ibid.
week. 8
11Presided by Assisting Judge Norberto P. Mercado.
Ismael and Teresita denied the existence of any verbal lease agreement. 12Assailed Decision, pp. 5-6; Rollo, pp. 213-214. MTCC Decision dated August 27, 1998, pp. 3-
They claimed that respondents had invited them to construct their residence 4; Rollo, pp. 167-168.
and business on the subject lots in order that they could all live near one other, 13Ibid.
14Ibid.
employ Marivic (the sister of Ismael), and help in resolving the problems of 15Presided by Judge Jane Aurora C. Lantion.
the family. They added that it was the policy of re-
9 16RTC Decision dated July 15, 1999, pp. 4-5; Rollo, pp. 173-174.
630
_______________ 630 SUPREME COURT REPORTS ANNOTATED
4Assailed Decision, p. 20; Rollo, p. 228.
Macasaet vs. Macasaet
5Also referred to as “Rosita” in some parts of the records. pay rent if respondents would not choose to appropriate the building. 17

6Id., pp. 2 & 210. Upon denial of their individual Motions for Reconsideration, the parties
7Respondents’ Complaint; Rollo, pp. 85-88. filed with the CA separate Petitions for Review, which were later
8Assailed Decision, pp. 2-3; Rollo, pp. 210-211. Respondents’ Complaint, pp. 1-2; Rollo, pp.
85-86. consolidated. 18

9Id., pp. 3-4 & 211-212. Petitioners’ Answer with Compulsory Counterclaim, p. 4; Rollo, p. 94. Ruling of the Court of Appeals
629 The CA sustained the finding of the two lower courts that Ismael and Teresita
VOL. 439, SEPTEMBER 30, 2004 629 had been occupying the subject lots only by the tolerance of Vicente and
Rosario. Thus, possession of the subject lots by petitioners became illegal
19
upon their receipt of respondents’ letter to vacate it. 20
Citing Calubayan v. Pascual, the CA further ruled that petitioners’ status
21
was analogous to that of a lessee or a tenant whose term of lease had expired,
but whose occupancy continued by tolerance of the owner. Consequently, in
22
ascertaining the right of petitioners to be reimbursed for the improvements
they had introduced on respondents’ properties, the appellate court applied
23
the Civil Code’s provisions on lease. The CA modified the RTC Decision by
declaring that Article 448 of the Civil Code was inapplicable. The CA opined
that under Article 1678 of the same Code, Ismael and Teresita had the right to
be reimbursed for one half of the value of the improvements made. 24
_______________
17Ibid.
18Assailed Decision, p. 9; Rollo, p. 217.
19Id., pp. 10 & 218.
Id., pp. 11 & 219.
20
21128 Phil. 160; 21 SCRA 146, September 18, 1967.
22Ibid.
23Assailed Decision, p. 13; Rollo, p. 221.
24The CA computed the total value of the improvements at P950,000, which represented the
cost of constructing a one-storey structure (P700,000), the equipment necessary for the
construction business (P130,000), and the cost of filling materials (P120,000). See Assailed
Decision, p. 15; Rollo, p. 223.
631
VOL. 439, SEPTEMBER 30, 2004 631
Macasaet vs. Macasaet
Not satisfied with the CA’s ruling, petitioners brought this recourse to this
Court. 25
The Issues
Petitioners raise the following issues for our consideration:
1. “1.a) Whether or not Section 17[,] Rule 70 of the Rules of Court on Judgment
should apply in the rendition of the decision in this case;
b) Whether or not the Complaint should have been dismissed;
c) Whether or not damages including attorney’s fees should have been
awarded to herein petitioners;
2. “2.a) Whether or not the rule on appearance of parties during the Pretrial
should apply on appearance of parties during Preliminary Conference in an
unlawful detainer suit;
b) Whether or not the case of Philippine Pryce Assurance Corporation vs. Court
of Appeals (230 SCRA 164) is applicable to appearance of parties in an
unlawful detainer suit;
3. “3.Whether or not Article 1678 of the Civil Code should apply to the case on
the matters of improvements, or is it Article 447 of the Civil Code in relation
to the Article 453 and 454 thereof that should apply, if ever to apply the Civil
Code;
4. “4.Whether or not the [D]ecision of the Court of Appeals is supported by
evidence, appropriate laws, rules and jurisprudence; “5. Whether or not
Assisting Judge Norberto Mercado of the MTCC Lipa City should be held
accountable in rendering the MTCC [D]ecision;
5. “6.Whether or not Atty. Glenn Mendoza and Atty. Andrew Linatoc of the
same [l]aw office should be held accountable for pursuing the [e]jectment
case[.]” 26
_______________
25This case was deemed submitted for resolution on May 13, 2003, upon this Court’s receipt
of respondents’ Memorandum signed by Atty. Glenn P. Mendoza. Petitioners’ Memorandum,
signed by Atty. Ismael H. Macasaet, was filed on April 14, 2003.
26Petitioners’ Memorandum, p. 15; Rollo, p. 432.
632
SUPREME COURT REPORTS ANNOTATED 632
Macasaet vs. Macasaet
The Court’s Ruling
The Petition is partly meritorious.
First Issue:
Ejectment
Who is entitled to the physical or material possession of the premises? At the
outset, we stress that this is the main issue in ejectment proceedings. In the 27
present case, petitioners failed to justify their right to retain possession of the
subject lots, which respondents own. Since possession is one of the attributes
of ownership, respondents clearly are entitled to physical or material
28
possession.
Allegations of the Complaint
Petitioners allege that they cannot be ejected from the lots, because
respondents based their Complaint regarding the nonpayment of rentals on a
verbal lease agreement, which the latter failed to prove. Petitioners contend
29
that the lower courts erred in using another ground (tolerance of possession)
to eject them.
In actions for unlawful detainer, possession that was originally lawful
becomes unlawful upon the expiration or termination of the defendant’s right
to possess, arising from an express or implied contract. In other words, the
30
plaintiff’s
_______________
27Rivera v. Rivera, 405 SCRA 466, 471, July 8, 2003; Balanon-Anicete v. Balanon, 402 SCRA 514,
518, April 30, 2003; De Luna v. Court of Appeals, 212 SCRA 276, 278, August 6, 1992.
28Co v. Militar, G.R. No. 149912, January 29, 2004, 421 SCRA 455.
 Petitioners’ Memorandum, p. 16; Rollo, p. 433.
29
Varona v. Court of Appeals, G.R. No. 124148, May 20, 2004, 428 SCRA 577; Sarmiento v. Court
30
of Appeals, 320 Phil. 146, 153; 250 SCRA 108, 115, November 16, 1995; Sumulong v. Court of
Appeals, 232 SCRA 372, May 10, 1994.
633
633 VOL. 439, SEPTEMBER 30, 2004
Macasaet vs. Macasaet
cause of action comes from the expiration or termination of the defendant’s
right to continue possession. The case resulting therefrom must be filed
31
within one year from the date of the last demand.
To show a cause of action in an unlawful detainer, an allegation that the
defendant is illegally withholding possession from the plaintiff is sufficient.
The complaint may lie even if it does not employ the terminology of the law,
provided the said pleading is couched in a language adequately stating that
the withholding of possession or the refusal to vacate has become unlawful. It 32
is equally settled that the jurisdiction of the court, as well as the nature of the
action, is determined from the averments of the complaint. 33
In the present case, the Complaint alleged that despite demands,
petitioners “refused to pay the accrued rentals and [to] vacate the leased
premises.” It prayed that judgment be rendered “[o]rdering [petitioners] and
34
all those claiming rights under them to vacate the properties x x x and remove
the structures x x x constructed thereon.” Effectively then, respondents
35
averred that petitioners’ original lawful occupation of the subject lots had
become unlawful.
The MTCC found sufficient cause to eject petitioners. While it disbelieved
the existence of a verbal lease agreement, it nevertheless concluded that
petitioners’ occupation of the
_______________
31Sarmiento v. Court of Appeals, supra; Sumulong v. Court of Appeals, supra.
32Varona v. Court of Appeals, supra; Cañiza v. Court of Appeals, 335 Phil. 1107, 1115; 268 SCRA
640, 650, February 24, 1997; Sumulong v. Court of Appeals, supra, p. 386.
Lopez v. David, Jr., G.R. No. 152145, March 30, 2004, 426 SCRA 535; Arcal v. Court of
33
Appeals, 348 Phil. 813, 823; 285 SCRA 34, 41, January 26, 1998; Hilario v. Court of Appeals, 329 Phil.
202, 210; 260 SCRA 420, August 7, 1996; Sarmiento v. Court of Appeals, supra; Sumulong v. Court of
Appeals, supra, p. 385.
34Respondents’ Complaint, p. 2; Rollo, p. 86.
Id., pp. 3 & 87.
35
634
634 SUPREME COURT REPORTS ANNOTATED
Macasaet vs. Macasaet
subject lots was by mere tolerance of respondents. Basing its conclusion on the
fact that the parties were close relatives, the MTCC ruled thus:
“x x x [T]he parties herein are first degree relatives. Because of this relationship, this
Court takes judicial notice of the love, care, concern and protection imbued upon the
parents towards their [children], i.e., in the instant case, the love, care, concern and
protection of the [respondents] to the [petitioners]. With this in mind, this Court is
inclined to believe the position of the [petitioners] that there was no such verbal lease
agreement between the parties herein that took place in 1992. x x x.
“From the allegations of the [petitioners], this Court is convinced that their stay
and occupancy of the subject premises was by mere tolerance of the [respondents], and
not by virtue of a verbal lease agreement between them.” 36
Having found a cause of action for unlawful detainer, the MTCC (as well as
the RTC and the CA) did not err in ordering the ejectment of petitioners as
prayed for by respondents. There was no violation of Section 17 of Rule 70 of 37
the Rules of Court. As earlier explained, unlawful detainer was sufficiently
alleged in the Complaint and duly proven during the trial. Significantly, the
issue of whether there was enough
_______________
36MTCC Decision dated August 27, 1998, pp. 3-4; Rollo, pp. 167-168.
37“Section 17. Judgment.—If after the trial the court finds that the allegations of the complaint
are true, it shall render judgment in favor of the plaintiff for the restitution of the premises, the
sum justly due as arrears of rent or as reasonable compensation for the use and occupation of the
premises, attorney’s fees and costs. If it finds that said allegations are not true, it shall render
judgment for the defendant to recover his costs. If a counterclaim is established, the court shall
render judgment for the sum found in arrears from either party and award costs as justice
requires.”
635
VOL. 439, SEPTEMBER 30, 2004 635
Macasaet vs. Macasaet
ground to eject petitioners was raised during the preliminary conference. 38
Not Merely Tolerated Possession
Petitioners dispute the lower courts’ finding that they occupied the subject lots
on the basis of mere tolerance. They argue that their occupation was not under
such condition, since respondents had invited, offered and persuaded them to
use those properties. 39
This Court has consistently held that those who occupy the land of another
at the latter’s tolerance or permission, without any contract between them, are
necessarily bound by an implied promise that the occupants will vacate the
property upon demand. A summary action for ejectment is the proper
40
remedy to enforce this implied obligation. The unlawful deprivation or
41
withholding of possession is to be counted from the date of the demand to
vacate.
42
Toleration is defined as “the act or practice of permitting or enduring
something not wholly approved of.” Sarona v. 43
_______________
38 MTCC Order on the Preliminary Conference dated July 30, 1998; Rollo, p. 108.
 39Petitioners’ Memorandum, p. 22; Rollo, p. 439.
Rivera v. Rivera, 405 SCRA 466, 471, July 8, 2003; Pengson v. Ocampo, Jr., 412 Phil. 860, 866; 360
40
SCRA 420, 425, June 29, 2001; Arcal v. Court of Appeals, supra, p. 825; 43; Refugia v. Court of
Appeals, 327 Phil. 982, 1010; 258 SCRA 347, 370, July 5, 1996; Dakudao v. Consolacion, 207 Phil. 750,
756; 122 SCRA 877, 883, June 24, 1983.
41Ibid.
42Lopez v. David, supra; Arcal v. Court of Appeals, supra, p. 825; p. 43; Villaluz v. Court of
Appeals, 344 Phil. 77, 89; 278 SCRA 540, 550, September 5, 1997.
43Black’s Law Dictionary (8th ed., 1999), p. 1525.
636
636 SUPREME COURT REPORTS ANNOTATED
Macasaet vs. Macasaet
Villegas described what tolerated acts means, in this language:
44
“Professor Arturo M. Tolentino states that acts merely tolerated are ‘those which by
reason of neighborliness or familiarity, the owner of property allows his neighbor or
another person to do on the property; they are generally those particular services or
benefits which one’s property can give to another without material injury or prejudice
to the owner, who permits them out of friendship or courtesy.’ x x x. And, Tolentino
continues, even though ‘this is continued for a long time, no right will be acquired by
prescription.” x x x. Further expounding on the concept, Tolentino writes: ‘There is tacit
consent of the possessor to the acts which are merely tolerated. Thus, not every case of
knowledge and silence on the part of the possessor can be considered mere tolerance. By
virtue of tolerance that is considered as an authorization, permission or license, acts of
possession are realized or performed. The question reduces itself to the existence or
non-existence of the permission.” 45
We hold that the facts of the present case rule out the finding of possession by
mere tolerance. Petitioners were able to establish that respondents had invited
them to occupy the subject lots in order that they could all live near one other
and help in resolving family problems. By occupying those lots, petitioners
46
demonstrated their acceptance of the invitation. Hence, there was a meeting
of minds, and an agreement regarding possession of the lots impliedly arose
between the parties.
The occupancy of the subject lots by petitioners was not merely
“something not wholly approved of” by respondents. Neither did it arise from
what Tolentino refers to as “neighborliness or familiarity.” In point of fact,
their possession was upon the invitation of and with the complete approval of
respondents, who desired that their children would
_______________
44131 Phil. 365; 22 SCRA 1257, March 27, 1968.
45Id., pp. 372-373, per Sanchez, J.
46MTCC Decision, dated August 27, 1998, p. 3 (Rollo, p. 167); RTC Decision, dated July 15,
1999, p. 2 (Rollo, p. 171).
637
VOL. 439, SEPTEMBER 30, 2004 637
Macasaet vs. Macasaet
occupy the premises. It arose from familial love and a desire for family
solidarity, which are basic Filipino traits.
Right to Use the Lots Terminated
That Ismael and Teresita had a right to occupy the lots is therefore clear. The
issue is the duration of possession. In the absence of a stipulation on this point,
Article 1197 of the Civil Code allows the courts to fix the duration or the
period.
“Article 1197. If the obligation does not fix a period, but from its nature and the
circumstances it can be inferred that a period was intended, the courts may fix the
duration thereof.
“The courts shall also fix the duration of the period when it depends upon the will
of the debtor.
“In every case the courts shall determine such period as may under the
circumstances have been probably contemplated by the parties. Once fixed by the
courts, the period cannot be changed by them.”
Article 1197, however, applies to a situation in which the parties intended a
period. Such qualification cannot be inferred from the facts of the present case.
To repeat, when Vicente and Rosario invited their children to use the lots,
they did so out of parental love and a desire for solidarity expected from
Filipino parents. No period was intended by the parties. Their mere failure to
fix the duration of their agreement does not necessarily justify or authorize the
courts to do so. 47
Based on respondents’ reasons for gratuitously allowing petitioners to use
the lots, it can be safely concluded that the agreement subsisted as long as the
parents and the children mutually benefited from the arrangement.
Effectively, there
_______________
47Id., p. 198. The term “may” in Article 1197 connotes discretion on the part of the courts to
exercise this power.
638
638 SUPREME COURT REPORTS ANNOTATED
Macasaet vs. Macasaet
is a resolutory condition in such an agreement. Thus, when a change in the
48
condition existing between the parties occurs—like a change of ownership,
necessity, death of either party or unresolved conflict or animosity—the
agreement may be deemed terminated. Having been based on parental love,
the agreement would end upon the dissipation of the affection.
When persistent conflict and animosity overtook the love and solidarity
between the parents and the children, the purpose of the agreement
ceased. Thus, petitioners no longer had any cause for continued possession of
49
the lots. Their right to use the properties became untenable. It ceased upon
their receipt of the notice to vacate. And because they refused to heed the
demand, ejectment was the proper remedy against them. Their possession,
which was originally lawful, became unlawful when the reason therefor—love
and solidarity—ceased to exist between them.
No Right to Retain Possession
Petitioners have not given this Court adequate reasons to reverse the lower
courts’ dismissal of their contention that Lots T-78521 and T-103141,
respectively, were allegedly allotted to them as part of their inheritance and
given in consideration for past debts.
_______________
48In an obligation with a resolutory condition, the extinguishment of the right acquired
depends upon the occurrence of the event that constitutes the condition (Article 1181 of the Civil
Code).
49The records do not disclose the exact date when the conflict between petitioners and
respondents arose. It can be readily assumed to have transpired not later than June 6, 1996, the
date of petitioners’ demand letter, which became the subject of Civil Case No. 0594-96 (Demand
Letter; Rollo, p. 145). At any rate, an animosity between the parties was confirmed by respondents’
demand letter dated August 13, 1997, asking petitioners to vacate the subject lots (Rollo, p. 89),
and the subsequent filing of this case.
639
VOL. 439, SEPTEMBER 30, 2004 639
Macasaet vs. Macasaet
The right of petitioners to inherit from their parents is merely inchoate and is
vested only upon the latters’ demise. Indisputably, rights of succession are
transmitted only from the moment of death of the decedent. Assuming that
50
there was an “allotment” of inheritance, ownership nonetheless remained
with respondents. Moreover, an intention to confer title to certain persons in
the future is not inconsistent with the owners’ taking back possession in the
meantime for any reason deemed sufficient. Other than their self-serving
51
testimonies and their affidavits, petitioners offered no credible evidence to
support their outlandish claim of inheritance “allocation.”
We also agree with the lower courts that petitioners failed to prove the
allegation that, through a dation in payment, Lot T-78521 had been transferred
to the latter as payment for respondents’ debts. The evidence presented by
52
petitioners related only to the alleged indebtedness of the parents arising from
the latter’s purported purchases and advances. There was no sufficient proof
53
that respondents had entered into a contract of dation to settle the alleged debt.
Petitioners even stated that there was a disagreement in the accounting of the
purported debt, a fact that disproves a meeting of the minds with the parents.
54
_______________
50 Art. 777 of the Civil Code.
51 Cañiza v. Court of Appeals, supra, p. 1118.
52Petitioners’ Memorandum, pp. 43-44; Rollo, pp. 460-461. In a dation in payment, property is
alienated to the creditor in satisfaction of a debt. Such contract is governed by the law on sales.
Art. 1245 of the Civil Code.
53Ibid.
54In the Affidavits submitted with their Position Paper, petitioners alleged that the execution
of the Deed of Assignment did not occur, because their father had refused to agree to the
accounting of the materials supplied. Petitioners’ Memorandum, pp. 45-46; Rollo, pp. 462-463.
640
640 SUPREME COURT REPORTS ANNOTATED
Macasaet vs. Macasaet
Petitioners also admitted that a portion of the alleged debt is the subject matter
of a collection case against respondents (Civil Case No. 0594-96). Thus, the 55
former’s allegation that the indebtedness has been paid through a dation
cannot be given credence, inconsistent as it is with their action to recover the
same debt.
Despite their protestations, petitioners recognized the right of the parents
to recover the premises when they admitted in their Position Paper filed with
the MTCC that respondents had a title to the lots.
“The [respondents] want to get their property because the title is theirs, the [petitioners]
do not object but what is due the [petitioners] including the reparation for the tarnish
of their dignity and honor must be given the [petitioners] for the benefits of their
children before the premises will be turned over.” 56
As a rule, the right of ownership carries with it the right of possession.
Second Issue:
Appearance at the Preliminary Conference
Section 8 of Rule 70 of the Rules of Court requires the appearance of the
plaintiff and the defendant during the preliminary conference. On the basis of
this provision, petitioners claim that the MTCC should have dismissed the
case upon the failure of respondents to attend the conference. However,
petitioners do not dispute that an attorney-in-fact with a written authorization
from respondents appeared during the preliminary conference. The issue then 57
is whether the rules
_______________
55Petitioners’ Memorandum, p. 44; Rollo, p. 461. The recovery of P235,908, which forms a
significant part of respondents’ alleged P391,338 debt, is the subject matter of Civil Case No. 0594-
96.
56Petitioners’ Position Paper, p. 3; Rollo, p. 111.
57Petitioners’ Memorandum, p. 31; Rollo, p. 448. Petitioner challenges the applicability
of Philippine Pryce Assurance Corp. v.
641
VOL. 439, SEPTEMBER 30, 2004 641
Macasaet vs. Macasaet
on ejectment allow a representative to substitute for a party’s personal
appearance.
Unless inconsistent with Rule 70, the provisions of Rule 18 on pretrial
applies to the preliminary conference. Under Section 4 of this Rule, the
58
nonappearance of a party may be excused by the showing of a valid cause; or
by the appearance of a representative, who has been fully authorized in
writing to enter into an amicable settlement, to submit to alternative modes of
dispute resolution, and to enter into stipulations or admissions of facts and of
documents. 59
Section 4 of Rule 18 may supplement Section 8 of Rule 70. Thus, the spirit
behind the exception to personal appearance under the rules on pretrial is
applicable to the preliminary conference. If there are valid reasons or if a
representative has a “special authority,” a party’s appearance may be waived.
As petitioners are challenging only the applicability of the rules on pretrial to
the rule on preliminary conference, the written authorization from
respondents can indeed be readily considered as a “special authorization.”
_______________
Court of Appeals (230 SCRA 164, 170, February 21, 1994 per Nocon, J.), in which this Court
reiterated the rule that “where a party may not himself be present at the pre-trial, and another
person substitutes for him, or his lawyer undertakes to appear not only as an attorney but in
substitution of the client’s person, it is imperative for that representative or the lawyer to have
‘special authority’ to enter into agreements which otherwise only the client has the capacity to
make.”
58§8 of Rule 70 of the Rules of Court.
59This rule on substitution of a party through a “special authority” can be traced to
jurisprudential pronouncements. See Home Insurance Co. v. United States Lines Co., 129 Phil. 106,
109; 21 SCRA 863, November 15, 1967, in which this Court held that attorneys needed a “special
authority” to compromise litigation. See also Development Bank of the Phils. v. Court of Appeals, 169
SCRA 409, 413, January 26, 1989, in which we noted that a special authority is imperative to make
substantive agreements that, otherwise, only the client has capacity to make.
642
642 SUPREME COURT REPORTS ANNOTATED
Macasaet vs. Macasaet
Third Issue:
Rights of a Builder in Good Faith
As applied to the present case, accession refers to the right of the owner to
everything that is incorporated or attached to the property. Accession 60
industrial—building, planting and sowing on an immovable—is governed by
Articles 445 to 456 of the Civil Code.
Articles 447 and 1678 of the Civil Code Inapplicable
To buttress their claim of reimbursement for the improvements introduced on
the property, petitioners cite Article 447. They allege that the CA erred in
61
applying Article 1678, since they had no lease agreement with respondents.
We clarify. Article 447 is not applicable, because it relates to the rules that
apply when the owner of the property uses the materials of another. It does
not refer to the instance when a possessor builds on the property of another,
which is the factual milieu here.
In view of the unique factual setting of the instant case, the contention of
petitioners regarding the inapplicability of Article 1678 deserves attention. The
CA applied the provisions on lease, because it found their possession by mere
tolerance comparable with that of a lessee, per the pronouncement
in Calubayan v. Pascual, from which we quote:
62
“x x x. It has been held that a person who occupies the land of another at the latter’s
tolerance or permission, without any contract between them, is necessarily bound by
an implied promise that he will vacate upon demand, failing which a summary action for
ejectment is the proper remedy against them. The status of defendant is analogous to that
of a lessee or tenant whose term of lease has ex-
_______________
60 Jose C. Vitug, Civil Law Annotated (2003), Vol. II, p. 23.
61 Petitioners’ Memorandum, pp. 33-37; Rollo, pp. 450-454.
62 Supra.
643
VOL. 439, SEPTEMBER 30, 2004 643
Macasaet vs. Macasaet
pired but whose occupancy continued by tolerance of the owner. In such a case, the
unlawful deprivation or withholding of possession is to be counted from the date of
the demand to vacate.” (Emphasis in the original.)
63
As explained earlier, Ismael and Teresita’s possession of the two lots was not
by mere tolerance, a circumstance that negates the applicability of Calubayan.
Article 448 Applicable
On the other hand, when a person builds in good faith on the land of another,
the applicable provision is Article 448, which reads: 64
“Article 448. The owner of the land on which anything has been built, sown or planted
in good faith, shall have the right to appropriate as his own the works, sowing or
planting, after payment of the indemnity provided for in Articles 546 and 548, or to
oblige the one who built or planted to pay the price of the land, and the one who sowed,
the proper rent. However, the builder or planter cannot be obliged to buy the land if
its value is considerably more than that of the building or trees. In such case, he shall
pay reasonable rent, if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall agree upon the terms of the
lease and in case of disagreement, the court shall fix the terms thereof.”
This Court has ruled that this provision covers only cases in which the
builders, sowers or planters believe themselves to be owners of the land or, at
least, to have a claim of title thereto. It does not apply when the interest is
65
merely that of
_______________
 63Id., p. 163, per Angeles, J.
See Depra v. Dumlao, 136 SCRA 475, 481, May 16, 1985, in which this Court explained the
64
philosophy behind this provision.
65Pada-Kilario v. Court of Appeals, 379 Phil. 515, 530; 322 SCRA 481, January 19, 2000; Chua v.
Court of Appeals, 361 Phil. 308, 318; 301 SCRA 356, January 21, 1999; Balucanag v. Francisco, 207 Phil.
433, 438; 122 SCRA 498 [1983]; Floreza v. Evangelista, 96
644
644 SUPREME COURT REPORTS ANNOTATED
Macasaet vs. Macasaet
a holder, such as a mere tenant, agent or usufructuary. From these 66
pronouncements, good faith is identified by the belief that the land is owned;
or that—by some title—one has the right to build, plant, or sow thereon. 67
However, in some special cases, this Court has used Article 448 by
recognizing good faith beyond this limited definition. Thus, in Del Campo v.
Abesia, this provision was applied to one whose house—despite having been
68
built at the time he was still co-owner—overlapped with the land of
another. This article was also applied to cases wherein a builder had
69
constructed improvements with the consent of the owner. The Court ruled that
the law deemed the builder to be in good faith. In Sarmiento v. Agana, the
70 71
builders were found to be
_______________
SCRA 130, 136, February 21, 1980; Quemuel v. Olaes, 111 Phil. 797; 1 SCRA 1159, April 29,
1961; Alburo v. Villanueva, 7 Phil. 277, 280, January 2, 1907.
66 Chua v. Court of Appeals, supra; Balucanag v. Francisco, supra; Quemuel v. Olaes, supra; Alburo v.
Villanueva, supra. See also Edgardo L. Paras, Civil Code of the Philippines Annotated (14th ed., 1999),
Vol. 2, p. 212. In Pecson v. Court of Appeals (314 Phil. 313, 322; 244 SCRA 407[1995] per Davide, J.),
this Court also ruled that “Article 448 does not apply to a case where the owner of the land is the
builder, sower, or planter who then later loses ownership of the land by sale or donation.”
67 Arturo M. Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines (1992),
Vol. 2, p. 111.
68 160 SCRA 379, 383, April 15, 1988.
69 Id., pp. 382-383. Article 448 does not apply where a co-owner builds, plants, or sows on land
owned in common, since such co-owner does not do so on land that he or she does not own. See
also Arturo M. Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines(1992),
Vol. 2, p. 117.
70 De Guzman v. Fuente, 55 Phil. 501, 503, December 29, 1930; Aringo v. Arena, 14 Phil. 263, 268-
269; Javier v. Javier, 7 Phil. 261, 267, January 2, 1907. [Cited in Edgardo L. Paras, Civil Code of the
Philippines Annotated (14th ed., 1999), Vol. 2, p. 211]; See also Boyer-Roxas v. Court of Appeals, 211
SCRA 470, 488, July 15, 1992.
71 129 SCRA 122, April 30, 1984.
645
VOL. 439, SEPTEMBER 30, 2004 645
Macasaet vs. Macasaet
in good faith despite their reliance on the consent of another, whom they had
mistakenly believed to be the owner of the land. 72
Based on the aforecited special cases, Article 448 applies to the present
factual milieu. The established facts of this case show that respondents fully
consented to the improvements introduced by petitioners. In fact, because the
children occupied the lots upon their invitation, the parents certainly knew
and approved of the construction of the improvements introduced
thereon. Thus, petitioners may be deemed to have been in good faith when
73
they built the structures on those lots.
The instant case is factually similar to Javier v. Javier. In that case, this Court
74
deemed the son to be in good faith for building the improvement (the house)
with the knowledge and consent of his father, to whom belonged the land
upon which it was built. Thus, Article 448 was applied.75
Rule on Useful Expenses
The structures built by petitioners were “useful” improvements, because they
augmented the value or income of the bare lots. Thus, the indemnity to be
76
paid by respondents under Article 448 is provided for by Article 546, which
we quote:
_______________
72Id., p. 125.
73The RTC observed that petitioners had merely been invited by the parents (respondents) to
transfer to the premises. Considering that the parties were living near one other, it was readily
assumed that respondents had known of the structures built and had not opposed their
construction. RTC Decision dated July 15, 1999, p. 4; Rollo, p. 173.
74Supra, note 70.
75Then Art. 361 of the Civil Code.
76Cabangis v. Court of Appeals, 200 SCRA 414, 420, August 9, 1991.
646
646 SUPREME COURT REPORTS ANNOTATED
Macasaet vs. Macasaet
“Art. 546. Necessary expenses shall be refunded to every possessor; but only the
possessor in good faith may retain the thing until he has been reimbursed therefor.
“Useful expenses shall be refunded only to the possessor in good faith with the
same right of retention, the person who has defeated him in the possession having the
option of refunding the amount of the expenses or of paying the increase in value which
the thing may have acquired by reason thereof.”
Consequently, respondents have the right to appropriate—as their own—the
building and other improvements on the subject lots, but only after (1)
refunding the expenses of petitioners or (2) paying the increase in value
acquired by the properties by reason thereof. They have the option to oblige
petitioners to pay the price of the land, unless its value is considerably more
than that of the structures—in which case, petitioners shall pay reasonable
rent.
In accordance with Depra v. Dumlao, this case must be remanded to the
77
trial court to determine matters necessary for the proper application of Article
448 in relation to Article 546. Such matters include the option that respondents
would take and the amount of indemnity that they would pay, should they
decide to appropriate the improvements on the lots. We disagree with the
CA’s computation of useful expenses, which were based only on petitioners’
bare allegations in their Answer. 78
_______________
77 Supra. Also cited in National Housing Authority v. Grace Baptist Church, G.R. No. 156437,
March 1, 2004, 424 SCRA 147; and Technogas Philippines Manufacturing v. Court of Appeals, 335 Phil.
471, 485; 268 SCRA 5, February 10, 1997.
78 Assailed Decision, p. 15; Rollo, p. 223. This Court also notes that petitioners merely
submitted a list of expenses with their corresponding costs, without showing any proof
(e.g., actual receipts) that these costs had been incurred. Petitioner’s Position Paper, p. 15, rollo, p.
123; Itemized List of Materials, Rollo, p. 588.
647
VOL. 439, SEPTEMBER 30, 2004
Macasaet vs. Macasaet
Ruling on Improvement Justified
While, ordinarily, the jurisdiction of the MTCC on ejectment proceedings is
limited to the issue of physical or material possession of the property in
question, this Court finds it necessary to abbreviate the issue on the
improvements in relation to Article 448. First, the determination of the parties’
right to those improvements is intimately connected with the MTCC
proceedings in the light of the ejectment of petitioners. Second, there is no
dispute that while they constructed the improvements, respondents owned
the land. Third, both parties raised no objection when the RTC and the CA
ruled accordingly on this matter.
Equitable considerations compel us to settle this point immediately, pro hoc
vice, to avoid needless delay. Both parties have already been heard on this
issue; to dillydally or equivocate would not serve the cause of substantial
justice.
Other Issues Raised
Given the foregoing rulings, it is no longer necessary to address petitioners’
allegation that the MTCC judge and respondents’ lawyers should be
respectively held personally accountable for the Decision and for filing the
case. The insinuation of petitioners that the lawyers manipulated the issuance
79
of a false barangay certification is unavailing. Their contention that
80
respondents did not attend the barangay conciliation proceedings was based
solely on hearsay, which has little or no probative value. 81
_______________
79 Petitioners’ Memorandum, pp. 49-51; Rollo, pp. 466-468.
80 Id., pp. 51 & 468.
81This contention was based on information from an alleged barangay councilor of Banay-
banay that no conciliation had transpired on October 14, 1997, the scheduled date. Petitioner
Teresita Macasaet’s Affidavit; Rollo, p. 77. In a letter dated October 14, 1997, addressed to the
barangay captain, it appears that petitioners waived their presence at the conciliation proceedings.
Rollo, p. 103.
648
648 SUPREME COURT REPORTS ANNOTATED
Macasaet vs. Macasaet
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals
are AFFIRMED with the following MODIFICATIONS:
1. 1.The portion requiring Spouses Vicente and Rosario Macasaet to reimburse
one half of the value of the useful improvements, amounting to P475,000,
and the right of Spouses Ismael and Rosita Macasaet to remove those
improvements (if the former refuses to reimburse) is DELETED.
2. 2.The case is REMANDED to the court of origin for further proceedings to
647
determine the facts essential to the proper application of Articles 448 and 546
of the Civil Code, specifically to the following matters:
1. a.Spouses Vicente and Rosario Macasaet’s option to appropriate—as their
own—the improvements on the lots, after paying the indemnity, as
provided under Article 546 in relation to Article 448 of the Civil Code; or in
requiring Spouses Ismael and Rosita Macasaet to pay for the value of the
lots, unless it is considerably more than that of the improvements, in which
case petitioners shall pay reasonable rent based upon the terms provided
under the Civil Code
2. b.The value of the useful expenses incurred by Spouses Ismael and Rosita
Macasaet in the construction of the improvements on the lots
3. c.The increase in value acquired by the lots by reason of the useful
improvements
4. d.Spouses Vicente and Rosario Macasaet’s choice of type of indemnity to be
paid (whether b or c)
5. e.Whether the value of the lots is considerably more than that of the
improvements built thereon
No pronouncement as to costs.
SO ORDERED.
Sandoval-Gutierrez, Corona and Carpio-Morales, JJ., concur.
649
VOL. 439, SEPTEMBER 30, 2004 649
Abalos vs. Macatangay, Jr.
Judgment affirmed with modifications.
 G.R. No. 79688. February 1, 1996. * Federico T. Tabino, Jr. for C.T. Torres Enterprises, Inc.
PLEASANTVILLE DEVELOPMENT CORPORATION, petitioner, vs. COURT
OF APPEALS, WILSON KEE, C.T. TORRES ENTERPRISES, INC. and
ELDRED JARDINICO, respondents.
Civil Law; Property; Builder in Good Faith; Court agrees with the findings and
conclusions of the Court of Appeals that Kee was a builder in good faith.—Petitioner fails to
persuade this Court to abandon the findings and conclusions of the Court of Appeals
that Kee was a builder in good faith.
Same; Same; Same; Good faith consists in the belief of the builder that the land he is
building on is his and his ignorance of any defect or flaw in his title.—Good faith consists in
the belief of the builder that the land he is building on is his and his ignorance of any
defect or flaw in his title. And as good faith is presumed, petitioner has the burden of
proving bad faith on the part of Kee. At the time he built improvements on Lot 8, Kee
believed that said lot was what he bought from petitioner. He was not aware that the
lot delivered to him was not Lot 8. Thus, Kee’s good faith. Petitioner failed to prove
otherwise.
Same; Same; Same; Violation of the Contract of Sale on Installment may not be the basis
to negate the presumption that Kee was a builder in good faith.—Such violations have no
bearing whatsoever on whether Kee was a builder in good faith, that is, on his state of
mind at the time he built the improvements on Lot 9. These
_______________
*THIRD DIVISION.
11
VOL. 253, FEBRUARY 1, 1996 11
Pleasantville Development Corporation vs. Court of Appeals
alleged violations may give rise to petitioner’s cause of action against Kee under
the said contract (contractual breach), but may not be bases to negate the presumption
that Kee was a builder in good faith.
Same; Same; Waiver; Rights may be waived unless the waiver is contrary to law, public
order, public policy, morals or good customs or prejudicial to a third person with a right
recognized by law.—We do not agree with the interpretation of petitioner that Kee
contracted away his right to recover damages resulting from petitioner’s negligence.
Such waiver would be contrary to public policy and cannot be allowed. “Rights may
be waived, unless the waiver is contrary to law, public order, public policy, morals, or
good customs, or prejudicial to a third person with a right recognized by law.”
Same; Agency; Damages; Rule is that the principal is responsible for the acts of the agent,
done within the scope of his authority and should bear the damage caused to third persons.—
The rule is that the principal is responsible for the acts of the agent, done within the
scope of his authority, and should bear the damage caused to third persons. On the
other hand, the agent who exceeds his authority is personally liable for the damage.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Mirano, Mirano & Associates Law Offices for petitioner.
Abraham D. Caña for Wilson Kee.
PANGANIBAN, J.:
Is a lot buyer who constructs improvements on the wrong property
erroneously delivered by the owner’s agent, a builder in good faith? This is
the main issue resolved in this petition for review on certiorari to reverse the
Decision of the Court of
1
_______________
1Rollo, pp. 37-46.
12
12 SUPREME COURT REPORTS ANNOTATED
Pleasantville Development Corporation vs. Court of Appeals
Appeals in CA-G.R. SP No. 11040, promulgated on August 20, 1987.
2
By resolution dated November 13, 1995, the First Division of this Court
resolved to transfer this case (along with several others) to the Third Division.
After due deliberation and consultation, the Court assigned the writing of this
Decision to the undersigned ponente.
The Facts
The facts, as found by respondent Court, are as follows:
Edith Robillo purchased from petitioner a parcel of land designated as Lot
9, Phase II and located at Taculing Road, Pleasantville Subdivision, Bacolod
City. In 1975, respondent Eldred Jardinico bought the rights to the lot from
Robillo. At that time, Lot 9 was vacant.
Upon completing all payments, Jardinico secured from the Register of
Deeds of Bacolod City on December 19, 1978 Transfer Certificate of Title No.
106367 in his name. It was then that he discovered that improvements had
been introduced on Lot 9 by respondent Wilson Kee, who had taken
possession thereof.
It appears that on March 26, 1974, Kee bought on installment Lot 8 of the
same subdivision from C.T. Torres Enterprises, Inc. (CTTEI), the exclusive real
estate agent of petitioner. Under the Contract to Sell on Installment, Kee could
possess the lot even before the completion of all installment payments. On
January 20, 1975, Kee paid CTTEI the relocation fee of P50.00 and another
P50.00 on January 27, 1975, for the preparation of the lot plan. These amounts
were paid prior to Kee’s taking actual possession of Lot 8. After the
preparation of the lot plan and a copy thereof given to Kee, CTTEI through its
employee, Zenaida Octaviano, accompanied Kee’s wife, Donabelle Kee, to
inspect Lot 8. Unfortu-
_______________
Eleventh Division, composed of J. Alfredo L. Benipayo, ponente, and JJ. Lorna S. Lombos-
2
dela Fuente, chair, and Ricardo J. Francisco, member.
13
VOL. 253, FEBRUARY 1, 1996
Pleasantville Development Corporation vs. Court of Appeals
nately, the parcel of land pointed by Octaviano was Lot 9. Thereafter, Kee
proceeded to construct his residence, a store, an auto repair shop and other
improvements on the lot.
After discovering that Lot 9 was occupied by Kee, Jardinico confronted
him. The parties tried to reach an amicable settlement, but failed.
On January 30, 1981, Jardinico’s lawyer wrote Kee, demanding that the
latter remove all improvements and vacate Lot 9. When Kee refused to vacate
Lot 9, Jardinico filed with the Municipal Trial Court in Cities, Branch 3,
Bacolod City (MTCC), a complaint for ejectment with damages against Kee.
Kee, in turn, filed a third-party complaint against petitioner and CTTEI.
The MTCC held that the erroneous delivery of Lot 9 to Kee was attributable
to CTTEI. It further ruled that petitioner and CTTEI could not successfully
invoke as a defense the failure of Kee to give notice of his intention to begin
construction required under paragraph 22 of the Contract to Sell on
Installment and his having built a sari-sari store without the prior approval of
petitioner required under paragraph 26 of said contract, saying that the
purpose of these requirements was merely to regulate the type of
improvements to be constructed on the lot. 3 computed from January 30, 1981, the date of the de-
However, the MTCC found that petitioner had already rescinded its
contract with Kee over Lot 8 for the latter’s failure to pay the installments due,
and that Kee had not contested the rescission. The rescission was effected in
1979, before the complaint was instituted. The MTCC concluded that Kee no
longer had any right over the lot subject of the contract between him and
petitioner. Consequently, Kee must pay reasonable rentals for the use of Lot 9,
and, furthermore, he cannot claim reimbursement for the improvements he
introduced on said lot.
_______________
3Rollo, pp. 28-29.
14
14 SUPREME COURT REPORTS ANNOTATED
Pleasantville Development Corporation vs. Court of Appeals
The MTCC thus disposed:
“IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered as follows:
1. 1.Defendant Wilson Kee is ordered to vacate the premises of Lot 9, covered by
TCT No. 106367 and to remove all structures and improvements he
introduced thereon;
2. 2.Defendant Wilson Kee is ordered to pay to the plaintiff rentals at the rate of
P15.00 a day computed from the time this suit was filed on March 12, 1981
13 until he actually vacates the premises. This amount shall bear interests (sic)
at the rate of 12 per cent (sic) per annum.
3. 3.Third-Party Defendant C.T. Torres Enterprises, Inc. and Pleasantville
Subdivision are ordered to pay the plaintiff jointly and severally the sum of
P3,000.00 as attorney’s fees and P700.00 as cost and litigation expenses.”4
On appeal, the Regional Trial Court, Branch 48, Bacolod City (RTC) ruled that
petitioner and CTTEI were not at fault or were not negligent, there being no
preponderant evidence to show that they directly participated in the delivery
of Lot 9 to Kee. It found Kee a builder in bad faith. It further ruled that even
5
assuming arguendo that Kee was acting in good faith, he was, nonetheless,
guilty of unlawfully usurping the possessory right of Jardinico over Lot 9 from
the time he was served with notice to vacate said lot, and thus was liable for
rental.
The RTC thus disposed:
“WHEREFORE, the decision appealed from is affirmed with respect to the order
against the defendant to vacate the premises of Lot No. 9 covered by Transfer
Certificate of Title No. T-106367 of the land records of Bacolod City; the removal of all
structures and improvements introduced thereon at his expense and the payment to
plaintiff (sic) the sum of Fifteen (P15.00) Pesos a day as reasonable rental to be
_______________
4 Rollo, pp. 30-31.
5 Rollo, p. 34.
15
VOL. 253, FEBRUARY 1, 1996 15
Pleasantville Development Corporation vs. Court of Appeals
mand, and not from the date of the filing of the complaint, until he had vacated (sic)
the premises, with interest thereon at 12% per annum. This Court further renders
judgment against the defendant to pay the plaintiff the sum of Three Thousand
(P3,000.00) Pesos as attorney’s fees, plus costs of litigation.
“The third-party complaint against Third-Party Defendants Pleasantville
Development Corporation and C.T. Torres Enterprises, Inc. is dismissed. The order
against Third-Party Defendants to pay attorney’s fees to plaintiff and costs of litigation
is reversed.” 6
Following the denial of his motion for reconsideration on October 20, 1986,
Kee appealed directly to the Supreme Court, which referred the matter to the
Court of Appeals.
 The appellate court ruled that Kee was a builder in good faith, as he was
unaware of the “mix-up” when he began construction of the improvements on
Lot 8. It further ruled that the erroneous delivery was due to the negligence of
CTTEI, and that such wrong delivery was likewise imputable to its principal,
petitioner herein. The appellate court also ruled that the award of rentals was
without basis.
Thus, the Court of Appeals disposed:
“WHEREFORE, the petition is GRANTED, the appealed decision is REVERSED, and
judgment is rendered as follows:
1. 1.Wilson Kee is declared a builder in good faith with respect to the
improvements he introduced on Lot 9, and is entitled to the rights granted
him under Articles 448, 546 and 548 of the New Civil Code.
2. 2.Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville
Development Corporation are solidarily liable under the following
circumstances:
1. a.If Eldred Jardinico decides to appropriate the improvements and, thereafter,
remove these structures, the third-party defendants shall answer for all
demolition expenses and the value of the improvements thus destroyed or
rendered useless;
_______________
6Rollo, p. 35.
16
16 SUPREME COURT REPORTS ANNOTATED
Pleasantville Development Corporation vs. Court of Appeals
1. b.If Jardinico prefers that Kee buy the land, the third-party defendants shall
answer for the amount representing the value of Lot 9 that Kee should pay
to Jardinico.
1. 3.Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville
Development Corporation are ordered to pay in solidum the amount of
P3,000.00 to Jardinico as attorney’s fees, as well as litigation expenses.
2. 4.The award of rentals to Jardinico is dispensed with.
“Furthermore, the case is REMANDED to the court of origin for the determination of
the actual value of the improvements and the property (Lot 9), as well as for further
proceedings in conformity with Article 448 of the New Civil Code.” 7
Petitioner then filed the instant petition against Kee, Jardinico and CTTEI.
The Issues
The petition submitted the following grounds to justify a review of the
respondent Court’s Decision, as follows:
1. “1.The Court of Appeals has decided the case in a way probably not in accord
with law or the the (sic) applicable decisions of the Supreme Court on third-
party complaints, by ordering third-party defendants to pay the demolition
expenses and/or price of the land;
2. “2.The Court of Appeals has so far departed from the accepted course of
judicial proceedings, by granting to private respondent-Kee the rights of a
builder in good faith in excess of what the law provides, thus enriching
private respondent Kee at the expense of the petitioner;
3. “3.In the light of the subsequent events or circumstances which changed the
rights of the parties, it becomes imperative to set aside or at least modify the
judgment of the Court of Appeals to harmonize with justice and the facts;
4. “4.Private respondent-Kee in accordance with the findings of facts of the
lower court is clearly a builder in bad faith, having vio-
_______________
Rollo, pp. 45-46.
7
17
VOL. 253, FEBRUARY 1, 1996 17
Pleasantville Development Corporation vs. Court of Appeals
lated several provisions of the contract to sell on installments;
1. “5.The decision of the Court of Appeals, holding the principal, Pleasantville
Development Corporation (liable) for the acts made by the agent in excess
of its authority is clearly in violation of the provision of the law;
2. “6.The award of attorney’s fees is clearly without basis and is equivalent to
putting a premium in (sic) court litigation.”
From these grounds, the issues could be re-stated as follows:
1. (1)Was Kee a builder in good faith?
2. (2)What is the liability, if any, of petitioner and its agent, C.T. Torres
Enterprises, Inc.? and
3. (3)Is the award of attorney’s fees proper?
The First Issue: Good Faith
Petitioner contends that the Court of Appeals erred in reversing the RTC’s
ruling that Kee was a builder in bad faith.
 Petitioner fails to persuade this Court to abandon the findings and
conclusions of the Court of Appeals that Kee was a builder in good faith. We
agree with the following observation of the Court of Appeals:
“The roots of the controversy can be traced directly to the errors committed by CTTEI,
when it pointed the wrong property to Wilson Kee and his wife. It is highly improbable
that a purchaser of a lot would knowingly and willingly build his residence on a lot
owned by another, deliberately exposing himself and his family to the risk of being
ejected from the land and losing all improvements thereon, not to mention the social
humiliation that would follow.
“Under the circumstances, Kee had acted in the manner of a prudent man in
ascertaining the identity of his property. Lot 8 is covered by Transfer Certificate of Title
No. T-69561, while Lot 9 is identified in Transfer Certificate of Title No. T-106367.
Hence, under the Torrens system of land registration, Kee is presumed to have
knowledge of the metes and bounds of the property with which he is dealing. x x x
18
18 SUPREME COURT REPORTS ANNOTATED
Pleasantville Development Corporation vs. Court of Appeals
xxx xxx xxx
“But as Kee is a layman not versed in the technical description of his property, he
had to find a way to ascertain that what was described in TCT No. 69561 matched Lot
8. Thus, he went to the subdivision developer’s agent and applied and paid for the
relocation of the lot, as well as for the production of a lot plan by CTTEI’s geodetic
engineer. Upon Kee’s receipt of the map, his wife went to the subdivision site
accompanied by CTTEI’s employee, Octaviano, who authoritatively declared that the
land she was pointing to was indeed Lot 8. Having full faith and confidence in the
reputation of CTTEI, and because of the company’s positive identification of the
property, Kee saw no reason to suspect that there had been a misdelivery. The steps
Kee had taken to protect his interests were reasonable. There was no need for him to
have acted ex-abundantia cautela, such as being present during the geodetic engineer’s
relocation survey or hiring an independent geodetic engineer to countercheck for
errors, for the final delivery of subdivision lots to their owners is part of the regular
course of everyday business of CTTEI. Because of CTTEI’s blunder, what Kee had
hoped to forestall did in fact transpire. Kee’s efforts all went to naught.”
8
Good faith consists in the belief of the builder that the land he is building on
is his and his ignorance of any defect or flaw in his title. And as good faith is
9
presumed, petitioner has the burden of proving bad faith on the part of Kee.
At the time he built improvements on Lot 8, Kee believed that said lot was
what he bought from petitioner. He was not aware that the lot delivered to
him was not Lot 8. Thus, Kee’s good faith. Petitioner failed to prove otherwise.
To demonstrate Kee’s bad faith, petitioner points to Kee’s violation of
paragraphs 22 and 26 of the Contract of Sale on Installment.
We disagree. Such violations have no bearing whatsoever on whether Kee
was a builder in good faith, that is, on his
_______________
8Rollo, pp. 43-44.
Floreza vs. Evangelista, 96 SCRA 130 (February 21, 1980); cf. Art. 526, Civil Code of the
9
Philippines.
Art. 527, Civil Code of the Philippines.
10
19
VOL. 253, FEBRUARY 1, 1996 19
Pleasantville Development Corporation vs. Court of Appeals
state of mind at the time he built the improvements on Lot 9. These alleged
violations may give rise to petitioner’s cause of action against Kee under the
said contract (contractual breach), but may not be bases to negate the
presumption that Kee was a builder in good faith.
Petitioner also points out that, as found by the trial court, the Contract of
Sale on Installment covering Lot 8 between it and Kee was rescinded long
before the present action was instituted. This has no relevance on the liability
of petitioner, as such fact does not negate the negligence of its agent in pointing
out the wrong lot to Kee. Such circumstance is relevant only as it gives
Jardinico a cause of action for unlawful detainer against Kee.
Petitioner next contends that Kee cannot “claim that another lot was
erroneously pointed out to him” because the latter agreed to the following
provision in the Contract of Sale on Installment, to wit:
“13. The Vendee hereby declares that prior to the execution of his contract he/she has
personally examined or inspected the property made subject-matter hereof, as to its
location, contours, as well as the natural condition of the lots and from the date hereof
whatever consequential change therein made due to erosion, the said Vendee shall bear
the expenses of the necessary fillings, when the same is so desired by him/her.” 11
The subject matter of this provision of the contract is the change of the location,
contour and condition of the lot due to erosion. It merely provides that the
vendee, having examined the property prior to the execution of the contract,
agrees to shoulder the expenses resulting from such change.
We do not agree with the interpretation of petitioner that Kee contracted
away his right to recover damages resulting from petitioner’s negligence. Such
waiver would be contrary to public policy and cannot be allowed. “Rights may
be waived, unless the waiver is contrary to law, public order,
10
_______________
Rollo, p. 17.
11
20
20 SUPREME COURT REPORTS ANNOTATED
Pleasantville Development Corporation vs. Court of Appeals
public policy, morals, or good customs, or prejudicial to a third person with a
right recognized by law.” 12
The Second Issue: Petitioner’s Liability
Kee filed a third-party complaint against petitioner and CTTEI, which was
dismissed by the RTC after ruling that there was no evidence from which fault
or negligence on the part of petitioner and CTTEI can be inferred. The Court
of Appeals disagreed and found CTTEI negligent for the erroneous delivery
of the lot by Octaviano, its employee.
Petitioner does not dispute the fact that CTTEI was its agent. But it
contends that the erroneous delivery of Lot 9 to Kee was an act which was
clearly outside the scope of its authority, and consequently, CTTEI alone
should be liable. It asserts that “while [CTTEI] was authorized to sell the lot
belonging to the herein petitioner, it was never authorized to deliver the
wrong lot to Kee.” 13
Petitioner’s contention is without merit.
The rule is that the principal is responsible for the acts of the agent, done
within the scope of his authority, and should bear the damage caused to third
persons. On the other hand, the agent who exceeds his authority is personally
14
liable for the damage. 15
CTTEI was acting within its authority as the sole real estate representative
of petitioner when it made the delivery to Kee. In acting within its scope of
authority, it was, however, negligent. It is this negligence that is the basis of
petitioner’s liability, as principal of CTTEI, per Articles 1909 and 1910 of
_______________
Art. 6, Civil Code of the Philippines; see Cañete vs. San Antonio Agro-Industrial Development
12
Corp., 113 SCRA 723 (April 27, 1982).
13Rollo, p. 19.
14Lopez vs. Alvendia, 120 Phil. 1424 (December 24, 1964); cf. Art. 1910, Civil Code.
15BA Finance Corporation vs. Court of Appeals, 211 SCRA 112 (July 3, 1992); Art. 1897, Civil Code.
21
VOL. 253, FEBRUARY 1, 1996
Pleasantville Development Corporation vs. Court of Appeals
the Civil Code.
Pending resolution of the case before the Court of Appeals, Jardinico and
Kee on July 24, 1987 entered into a deed of sale, wherein the former sold Lot 9
to Kee. Jardinico and Kee did not inform the Court of Appeals of such deal.
The deed of sale contained the following provision:
1. “1.That Civil Case No. 3815 entitled “Jardinico vs. Kee” which is now pending
appeal with the Court of Appeals, regardless of the outcome of the decision
shall be mutually disregarded and shall not be pursued by the parties herein
and shall be considered dismissed and without effect whatsoever”;
Kee asserts though that the “terms and conditions in said deed of sale are
strictly for the parties thereto” and that “(t)here is no waiver made by either
of the parties in said deed of whatever favorable judgment or award the
honorable respondent Court of Appeals may make in their favor against
herein petitioner Pleasantville Development Corporation and/or private
respondent C.T. Torres Enterprises, Inc.” 17
Obviously, the deed of sale can have no effect on the liability of petitioner.
As we have earlier stated, petitioner’s liability is grounded on the negligence
of its agent. On the other hand, what the deed of sale regulates are the
reciprocal rights of Kee and Jardinico; it stressed that they had reached an
agreement independent of the outcome of the case.
Petitioner further assails the following holding of the Court of Appeals:
1. “2.Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville
Development Corporation are solidarily liable under the following
circumstances:
1. “a.If Eldred Jardinico decides to appropriate the improvements and,
thereafter, remove these structures, the
_______________
Rollo, p. 47.
16
Rollo, p. 61.
17
22
22 SUPREME COURT REPORTS ANNOTATED
Pleasantville Development Corporation vs. Court of Appeals
third-party defendants shall answer for all demolition expenses and the value of the
improvements thus destroyed or rendered useless;
21
1. “b.If Jardinico prefers that Kee buy the land, the third-party defendants shall
answer for the amount representing the value of Lot 9 that Kee should pay
to Jardinico.”18
Petitioner contends that if the above holding would be carried out, Kee would
be unjustly enriched at its expense. In other words, Kee would be able to own
the lot, as buyer, without having to pay anything on it, because the
aforequoted portion of respondent Court’s Decision would require petitioner
and CTTEI jointly and solidarily to “answer” or reimburse Kee therefor.
We agree with petitioner.
Petitioner’s liability lies in the negligence of its agent CTTEI. For such
16
negligence, the petitioner should be held liable for damages. Now, the extent
and/or amount of damages to be awarded is a factual issue which should be
determined after evidence is adduced. However, there is no showing that such
evidence was actually presented in the trial court; hence no damages could 2. (2)Petitioner Pleasantville Development Corporation and respondent C.T.
now be awarded. Torres Enterprises, Inc. are declared solidarily liable for damages due to
The rights of Kee and Jardinico vis-a-vis each other, as builder in good faith negligence;
and owner in good faith, respectively, are regulated by law (i.e., Arts. 448, 546
_______________
and 548 of the Civil Code). It was error for the Court of Appeals to make a
“slight modification” in the application of such law, on the ground of “equity.”
Universal Shipping Lines, Inc. vs. Intermediate Appellate Court, 188 SCRA 170 (July 31, 1990).
19

At any rate, as it stands now, Kee and Jardinico have amicably settled through Art. 2208, Civil Code of the Philippines.
20

their deed of sale their rights and obligations with regards to Lot 9. Thus, we
delete items 2 (a) and (b) of the dispositive portion of the Court of Appeals’
Decision [as reproduced above] holding petitioner and CTTEI solidarily liable.
_______________
Rollo, pp. 9-10.
18
24
24 SUPREME COURT REPORTS ANNOTATED
Pleasantville Development Corporation vs. Court of Appeals
however, since the amount and/or extent of such damages was not proven
during the trial, the same cannot now be quantified and awarded;

23 1. (3)Petitioner Pleasantville Development Corporation and respondent C.T.

23 VOL. 253, FEBRUARY 1, 1996
Pleasantville Development Corporation vs. Court of Appeals
The Third Issue: Attorney’s Fees
The MTCC awarded Jardinico attorney’s fees and costs in the amount of
P3,000.00 and P700.00, respectively, as prayed for in his complaint. The RTC
deleted the award, consistent with its ruling that petitioner was without fault
or negligence. The Court of Appeals, however, reinstated the award of
attorney’s fees after ruling that petitioner was liable for its agent’s negligence.
The award of attorney’s fees lies within the discretion of the court and
depends upon the circumstances of each case. We shall not interfere with the
19
Torres Enterprises, Inc. are ordered to pay in solidum the amount of
P3,000.00 to Jardinico as attorney’s fees, as well as litigation expenses; and
2. (4)The award of rentals to Jardinico is dispensed with.
SO ORDERED.
Narvasa (C.J., Chairman), Davide, Jr. and Melo, JJ., concur.
Francisco, J., No part. Member of the division in the Court of Appeals which
rendered the assailed decision.
Petition partially granted. Judgment modified.

discretion of the Court of Appeals. Jardinico was compelled to litigate for the
protection of his interests and for the recovery of damages sustained as a result
of the negligence of petitioner’s agent. 20

In sum, we rule that Kee is a builder in good faith. The disposition of the
Court of Appeals that Kee “is entitled to the rights granted him under Articles
448, 546 and 548 of the New Civil Code” is deleted, in view of the deed of sale
entered into by Kee and Jardinico, which deed now governs the rights of
Jardinico and Kee as to each other. There is also no further need, as ruled by
the appellate Court, to remand the case to the court of origin “for
determination of the actual value of the improvements and the property (Lot
9), as well as for further proceedings in conformity with Article 448 of the New
Civil Code.”
WHEREFORE, the petition is partially GRANTED. The Decision of the
Court of Appeals is hereby MODIFIED as follows:

1. (1)Wilson Kee is declared a builder in good faith;

 G.R. No. 95907. April 8, 1992. * CARLOS, et al.”, affirming the decision of the Regional Trial Court of Malolos,
JOSE REYNANTE, petitioner, vs. THE HONORABLE COURT OF APPEALS,
THE HON. VALENTIN CRUZ, as Presiding Judge, Regional Trial Court of
Bulacan, Branch VIII, and the HEIRS OF LEONCIO CARLOS and DOLORES
A. CARLOS; and HEIRS OF GORGONIO CARLOS and CONCEPCION
CARLOS, respondents.
Civil Law; Ownership; Property; Possession; A party who can prove prior possession can
recover such possession even against the owner himself.—A party who can
prove prior possession can recover such possession even against the owner himself.
Whatever may be the character of his prior possession, if he has in his favor priority in
time, he has the security that entitles him to remain on the property until he is lawfully
ejected by a person having a better right by accion publiciana or accion reinvindicatoria.
Same; Same; Same; Accretion.—Accretion benefits a riparian owner when the
following requisites are present: (1) that the deposit be gradual and imperceptible; (2)
that it resulted from the effects of the current of the water; and (c) that the land where
accretion takes place is adjacent to the bank of a river.
Same; Same; Same; Prescription; Failure to register the acquired alluvial deposit by
accretion for a period of fifty (50) years subjected said accretion to acquisition through
prescription by third persons.—Assuming private respondents had acquired the alluvial
deposit (the lot in question), by accretion, still their failure to register said accretion for
a period of fifty (50) years subjected said accretion to acquisition through prescription
by third persons. It is undisputed that petitioner has been in possession of the subject
lots for more than fifty (50) years and unless private respondents can show a better title
over the subject lots, petitioner’s possession over the property must be respected.
PETITION for review on certiorari of the decision and resolution of the Court
of Appeals. Dayrit, J.
The facts are stated in the opinion of the Court.
________________
SECOND DIVISION.
*
795
VOL. 207, APRIL 8, 1992 795
Reynante vs. Court of Appeals
Edgardo V. Cruz for petitioner.
Magtanggol C. Gunigundo for private respondents.
PARAS, J.:
This is a petition for review on certiorari which seeks the reversal of: a)
decision of the Court of Appeals dated February 28, 1990 in CA-G.R. No.
1
19171 entitled “JOSE REYNANTE versus HON. VALENTIN CRUZ, Judge,
RTC of Malolos, Bulacan, and HEIRS OF LEONCIO AND DOLORES
2
Bulacan, Branch 8, Third Judicial Region which reversed the decision of the 3
Municipal Trial Court of Meycauayan, Bulacan, Branch I, Third Judicial
Region in Civil Case No. 1526 entitled “HEIRS OF LEONCIO CARLOS &
DOLORES A. CARLOS and HEIRS OF GORGONIO A. CARLOS &
CONCEPCION CARLOS versus JOSE REYNANTE: and b) the resolution
denying the motion for reconsideration.
The facts as culled from the records of the case are as follows: More than
50 years ago, petitioner Jose Reynante was taken as tenant by the late Don
Cosme Carlos, owner and father-in-law of herein private respondents, over a
fishpond located at Barrio Liputan, Meycauayan, Bulacan with an area of
188.711 square meters, more or less and covered by Transfer Certificate of Title
No. 25618, Land Registry of Bulacan.
During the tenancy, petitioner Jose Reynante constructed a nipa hut where
he and his family lived and took care of the nipa palms (sasahan) he had
planted on lots 1 and 2 covering an area of 5,096 square meters and 6,011
square meters respectively. These lots are located between the fishpond
covered by TCT No. 25618 and the Liputan (formerly Meycauayan) River.
Petitioner harvested and sold said nipa palms without interference and
prohibition from anybody. Neither did the late Don Cosme Carlos question
his right to plant the nipa palms near the
_______________
1 Penned by Associate Justice Abelardo M. Dayrit and concurred in by Associate Justices Luis
A. Javellana and Felipe B. Kalalo.
2 Penned by Judge Valentin R. Cruz.
3 Penned by Judge Orlando C. Paguio.
796
796 SUPREME COURT REPORTS ANNOTATED
Reynante vs. Court of Appeals
fishpond or to harvest and appropriate them as his own.
After the death of Don Cosme Carlos, his heirs (private respondents’
predecessors-in-interest) entered into a written agreement denominated as
“SINUMPAANG SALAYSAY NG PAGSASAULI NG KARAPATAN” dated
November 29, 1984 with petitioner Jose Reynante whereby the latter for and
in consideration of the sum of P200,000.00 turned over the fishpond he was
tenanting to the heirs of Don Cosme Carlos and surrendered all his rights
therein as caretaker or “bantay-kasama at tagapamahala” (Rollo, p. 77).
Pursuant to the said written agreement, petitioner surrendered the
fishpond and the two huts located therein to private respondents. Private
respondents thereafter leased the said fishpond to one Carlos de la Cruz.
Petitioner continued to live in the nipa hut constructed by him on lots 1 and 2
and to take care of the nipa palms he had planted therein.
 On February 17, 1988, private respondents formally demanded that the
petitioner vacate said portion since according to them petitioner had already
been indemnified for the surrender of his rights as a tenant. Despite receipt
thereof, petitioner refused and failed to relinquish possession of lots 1 and 2.
Hence, on April 22, 1988, private respondents filed a complaint for forcible
entry with preliminary mandatory injunction against petitioner alleging that
the latter by means of strategy and stealth, took over the physical, actual and
material possession of lots 1 and 2 by residing in one of the kubos or huts
bordering the Liputan River and cutting off and/or disposing of the sasa or
nipa palms adjacent thereto.
On January 10, 1989, the trial court rendered its decision dismissing the
complaint and finding that petitioner had been in prior possession of lots 1
and 2.
Private respondents appealed to the Regional Trial Court and on August
8, 1989 it rendered its decision, the dispositive portion of which reads as
follows:
“WHEREFORE, this Court renders judgment in favor of the plaintiffs and against
defendant and hereby reverses the decision of the Court a quo. Accordingly, the
defendant is ordered to restore possession of that piece of land particularly described
and defined as Lots 1 & 2 of the land survey conducted by Geodetic Engineer Restituto
797
VOL. 207, APRIL 8, 1992 797
Reynante vs. Court of Appeals
Buan on March 2, 1983, together with the sasa or nipa palms planted thereon. No
pronouncement as to attorney’s fees. Each party shall bear their respective costs of the
suit.
SO ORDERED.” (Rollo, p. 55; Decision, p. 4).
From said decision, petitioner filed with the Court of Appeals a petition for
review (Rollo, p. 30; Annex “A”). On February 28, 1990, the Court of Appeals
rendered its decision, the dispositive portion of which reads as follows:
“WHEREFORE, the decision of the court a quo, being consistent with law and
jurisprudence, is hereby AFFIRMED in toto. The instant petition seeking to issue a
restraining order is hereby denied.
SO ORDERED.” (Rollo, p. 30; Decision, p. 3).
On November 5, 1990, the Court of Appeals denied the motion for
reconsideration filed by petitioner (Rollo, p. 35; Annex “B”).
Hence, this petition.
In its resolution dated May 6, 1991, the Second Division of this Court gave
due course to the petition and required both parties to file their respective
memoranda (Rollo, p. 93).
The main issues to be resolved in this case are: a) who between the
petitioner and private respondents has prior physical possession of lots 1 and
2; and b) whether or not the disputed lots belong to private respondents as a
result of accretion.
An action for forcible entry is merely a quieting process and actual title to
the property is never determined. A party who can prove prior possession can
recover such possession even against the owner himself. Whatever may be the
character of his prior possession, if he has in his favor priority in time, he has
the security that entitles him to remain on the property until he is lawfully
ejected by a person having a better right by accion publiciana or accion
reinvindicatoria (German Management & Services, Inc. v. Court of
Appeals, G.R. No. 76216, September 14, 1989, 177 SCRA 495, 498, 499). On the
other hand, if a plaintiff cannot prove prior physical possession, he has no
right of action for forcible entry and detainer even if he should be the owner
of the property (Lizo v. Carandang, 73 Phil. 469 [1942]).
Hence, the Court of Appeals could not legally restore private respondents’
possession over lots 1 and 2 simply because petitioner has clearly proven that
he had priorpossession over lots
798
798 SUPREME COURT REPORTS ANNOTATED
Reynante vs. Court of Appeals
1 and 2.
The evidence on record shows that petitioner was in possession of the
questioned lots for more than 50 years. It is undisputed that he was the
caretaker of the fishpond owned by the late Don Cosme Carlos for more than
50 years and that he constructed a nipa hut adjacent to the fishpond and
planted nipa palms therein. This fact is bolstered by the “SINUMPAANG
SALAYSAY” executed by Epifanio Lucero (Records, p. 66), Apolonio D. Morte
(Records, p. 101) and Carling Dumalay (Records, p. 103), all of whom are
disinterested parties with no motive to falsify that can be attributed to them,
except their desire to tell the truth.
Moreover, an ocular inspection was conducted by the trial court dated
December 2, 1988 which was attended by the parties and their respective
counsels and the court observed the following:
“The Court viewed the location and the distance of the constructed nipa hut and the
subject ‘sasahan’ which appears exists (sic) long ago, planted and stands (sic) adjacent
to the fishpond and the dikes which serves (sic) as passage way of water river of lot 1
and lot 2. During the course of the hearing, both counsel oberved a muniment of title
embedded on the ground which is located at the inner side of the ‘pilapil’ separating
the fishpond from the subject ‘sasa’ plant with a height of 20 to 25 feet from water level
and during the ocular inspection it was judicially observed that the controversial
premises is beyond the titled property of the plaintiffs but situated along the Liputan,
Meycauayan River it being a part of the public domain.” (Rollo, p. 51; Decision, p. 12).
On the other hand, private respondents based their claim of possession over
lots 1 and simply on the written agreement signed by petitioner whereby the
latter surrendered his rights over the fishpond.
Evidently, the trial court did not err when it ruled that:
“An examination of the document signed by the defendant (Exhibit ‘B’), shows that
what was surrendered to the plaintiffs was the fishpond and not the ‘sasahan’ or the
land on which he constructed his hut where he now lives. That is a completely different
agreement in which a tenant would return a farm or a fishpond to his landlord in return
for the amount that the landlord would pay to him as a
799
VOL. 207, APRIL 8, 1992 799
Reynante vs. Court of Appeals
disturbance compensation. There is nothing that indicates that the tenant was giving
other matters not mentioned in a document like Exhibit ‘B’. Moreover, when the
plaintiffs leased the fishpond to Mr. Carlos de la Cruz there was no mention that the
lease included the hut constructed by the defendant and the nipa palms planted by him
(Exhibit ‘1’), a circumstance that gives the impression that the nipa hut and the nipa
palms were not included in the lease to Mr. de la Cruz, which may not belong to the
plaintiffs.” (Rollo, p. 49; Decision, p. 9).
With regard to the second issue, it must be noted that the disputed lots
involved in this case are not included in Transfer Certificate of Title No. 25618
as per verification made by the Forest Management Bureau, Department of
Environment and Natural Resources. That tract of land situated at Barrio
Liputan, Meycauayan, Bulacan containing an area of 1.1107 hectares as
described in the plan prepared and surveyed by Geodetic Engineer Restituto
Buan for Jose Reynante falls within Alienable and Disposable Land (for
fishpond development) under Project No. 15 per B.F.L.C. Map No. 3122 dated
May 8, 1987 (Rollo, p. 31; Decision, p. 2).
The respondent Court of Appeals ruled that lots 1 and 2 were created by
alluvial formation and hence the property of private respondents pursuant to
Article 457 of the New Civil Code, to wit:
“Art. 457. To the owners of lands adjoining the banks of rivers belong the accretion
which they gradually receive from the effects of the current of the waters.”
Accretion benefits a riparian owner when the following requisites are present:
(1) that the deposit be gradual and imperceptible; (2) that it resulted from the
effects of the current of the water; and (c) that the land where accretion takes
place is adjacent to the bank of a river (Republic v. Court of Appeals, G.R. No.
L-61647, October 12, 1984, 132 SCRA 514, cited in Agustin v. Intermediate
Appellate Court, G.R. Nos. 66075-76, July 5, 1990, 187 SCRA 218).
Granting without conceding that lots 1 and 2 were created by alluvial
formation and while it is true that accretions which the banks of rivers may
gradually receive from the effect of the current become the property of the
owner of the banks, such
800
800 SUPREME COURT REPORTS ANNOTATED
Reynante vs. Court of Appeals
accretion to registered land does not preclude acquisition of the additional
area by another person through prescription.
This Court ruled in the case of Ignacio Grande, et al. v. Hon. Court of
Appeals, et al., G.R. No. L-17652, June 30, 1962, 115 Phil. 521 that:
“An accretion does not automatically become registered land just because the lot which
receives such accretion is covered by a Torrens Title. Ownership of a piece of land is
one thing; registration under the Torrens system of that ownership is another.
Ownership over the accretion received by the land adjoining a river is governed by the
Civil Code. Imprescriptibility of registered land is provided in the registration law.
Registration under the Land Registration and Cadastral Act does not vest or give title
to the land, but merely confirms and, thereafter, protects the title already possessed by
the owner, making it imprescriptible by occupation of third parties. But to obtain this
protection, the land must be placed under the operation of the registration laws,
wherein certain judicial procedures have been provided.”
Assuming private respondents had acquired the alluvial deposit (the lot in
question), by accretion, still their failure to register said accretion for a period
of fifty (50) years subjected said accretion to acquisition through prescription
by third persons.
It is undisputed that petitioner has been in possession of the subject lots
for more than fifty (50) years and unless private respondents can show a better
title over the subject lots, petitioner’s possession over the property must be
respected.
PREMISES CONSIDERED, the decision of the respondent Court of
Appeals dated February 28, 1990 is REVERSED and SET ASIDE and the
decision of the Municipal Trial Court of Meycauayan, Bulacan, Branch I, is
hereby REINSTATED.
SO ORDERED.
Melencio-Herrera (Chairman, Actg. C.J.), Padilla, Regalado and Nocon,
JJ., concur.
Decision reversed and set aside.
 G.R. Nos. 66075-76. July 5, 1990. * Certificate of Title No. 5472 was issued for land east of the Cagayan River
EULOGIO AGUSTIN, HEIRS OF BALDOMERO LANGCAY, ARTURO
BALISI & JUAN LANGCAY, petitioners, vs. INTERMEDIATE APPELLATE
COURT, MARIA MELAD, TIMOTEO MELAD, PABLO BINAYUG &
GERONIMA UBINA, respondents.
Civil Law; Property; Accretion; Evidence; Findings of the Court of Appeals that there
had been accretion to the lots of the private respondents is a finding of fact which is conclusive
on the Supreme Court.—The finding of the Court of Appeals that there had been
accretions to the lots of the private respondents who did not lose the ownership of such
accretions even after they were separated from the principal lots by the sudden change
of course of the river, is a finding of fact which is conclusive on this Court.
Same; Same; Same; Essential requisites before accretion benefits a riparian owner.—
Accretion benefits a riparian owner when the following requisites are present: (1) that
the deposit be gradual and imperceptible; (2) that it resulted from the effects of the
current of the water; and (3) that the land where accretion takes place is adjacent to the
bank of a river.
Same; Same; Same; Accretions belong to the riparian owners upon whose lands the
alluvial deposits were made, reason.—These accretions belong to riparian owners upon
whose lands the alluvial deposits were made (Roxas vs. Tuason, 9 Phil. 408; Director of
Lands vs. Rizal, 87 Phil. 806). The reason for this principle is because, if lands bordering
on streams are exposed to floods and other damage due to the destructive force of the
waters, and if by virtue of law they are subject to encumbrances and various kinds of
easements, it is only just that such risks or dangers as may prejudice the owners thereof
should in some way be compensated by the right of accretion.
PETITION to review the decision of the then Intermediate Appellate Court.
The facts are stated in the opinion of the Court.
Antonio N. Laggui for petitioners.
Pedro R. Perez, Jr. for private respondents.
_______________
*FIRST DIVISION.
219
VOL. 187, JULY 5, 1990 219
Agustin vs. Intermediate Appellate Court
GRIÑO-AQUINO, J.:
The Cagayan River separates the towns of Solana on the west and Tuguegarao
on the east in the province of Cagayan. According to the unrebutted testimony
of Romeo Rigor, Geodetic Engineer of the Bureau of Lands, in 1919 the lands
east of the river were covered by the Tuguegarao Cadastre. In 1925, Original
owned by defendant-petitioner Eulogio Agustin (Exh. 2-Agustin).
As the years went by, the Cagayan River moved gradually eastward,
depositing silt on the western bank. The shifting of the river and the siltation
continued until 1968.
In 1950, all lands west of the river were included in the Solana Cadastre.
Among these occupying lands covered by the Solana Cadastre were plaintiffs-
private respondents, namely, Pablo Binayug, who has been in possession of
Lots 3349, 7876, 7877, 7878, 7879, 7875, 7881, 7882, 7883, 7884, 7885, 7891 and
7892, and Maria Melad, who owns Lot 3351 (Exh. 3-Binayug; Exh. B-Melad).
Pablo Binayug began his possession in 1947. An area of eight (8) hectares was
planted to tobacco and corn while 12 hectares were overgrown
with talahib (Exh. C-1 Binayug.) Binayug’s Homestead Application No. W-
79055 over this land was approved in 1959 (Exh. B-Binayug). Binayug’s
possession was recognized in the decision in Civil Case No. 101 (Exh. F-
Binayug). On the other hand, as a result of Civil Case No. 343-T, Macario
Melad, the predecessor-in-interest of Maria Melad and Timoteo Melad, was
issued Original Certificate of Title No. P-5026 for Lot 3351 of Cad. 293 on June
1, 1956.
Through the years, the Cagayan River eroded lands of the Tuguerarao
Cadastre on its eastern bank among which was defendant-petitioner Eulogio
Agustin’s Lot 8457 (Exh. E-Melad), depositing the alluvium as accretion on the
land possessed by Pablo Binayug on the western bank.
However, in 1968, after a big flood, the Cagayan River changed its course,
returned to its 1919 bed, and, in the process, cut across the lands of Maria
Melad, Timoteo Melad, and the spouses Pablo Binayug and Geronima Ubina
whose lands were transferred on the eastern, or Tuguegarao, side of the river.
To cultivate those lots they had to cross the river.
220
220 SUPREME COURT REPORTS ANNOTATED
Agustin vs. Intermediate Appellate Court
In April, 1969, while the private respondents and their tenants were planting
corn on their lots located on the eastern side of the Cagayan River, the
petitioners, accompanied by the mayor and some policemen of Tuguegarao,
claimed the same lands as their own and drove away the private respondents
from the premises.
On April 21, 1970, private respondents Maria Melad and Timoteo Melad
filed a complaint (Civil Case No. 343-T) to recover Lot No. 3351 with an area
of 5 hectares and its 6.6-hectare accretion. On April 24, 1970, private
respondent Pablo Binayug filed a separate complaint (Civil Case No. 344-T) to
recover his lots and their accretions.
On June 16, 1975, the trial court rendered a decision, the dispositive portion
of which reads:
“WHEREFORE, premises considered, judgment is hereby made:
“In Civil Case No. 343-T, commanding Eulogio Agustin, Gregorio Tuliao, Jacinto
Buquel and Octavio Bancud, or anybody acting as their representative[s] or agents to
vacate Lot No. 3351 of Solana Cadastre together with its accretion consisting of portions
of Lots 9463, 9462 and 9461 of Tuguegarao Cadastre and for these defendants to restore
ownership in favor of Maria Melad and Timoteo Melad who are the only interested
heirs of Macario Melad.
“In Civil Case No. 344-T, commanding defendants Justo Adduru, Andres Pastor,
Teofilo Tagacay, Vicente Camilan, Nicanor Mora, Baldomero Cagurangan, Domingo
Quilang, Cesar Cabalza, Elias Macababbad, Titong Macababbad, Arturo Balisi, Jose
Allabun, Eulogio Agustin, Banong Aquino, Junior Cambri and Juan Langoay, or any
of their agents or representatives to vacate the Lots 3349, 7876, 7877, 7878, 7879, 7875,
7881, 7882, 7883, 7884, 7885, 7891 and 7892, together with its accretion and to restore
possession to plaintiffs Pablo Binayug and Geronimo Ubina. Without pronouncement
as to damages which were not properly proven and to costs.
“SO ORDERED. (As amended by the order dated August 15, 1975.)” (pp. 24-25,
Rollo.)
Only defendant-petitioner Eulogio Agustin appealed in Civil Case No. 343-T,
while in Civil Case No. 344-T, only defendants-petitioners Eulogio Agustin,
Baldomero Cagurangan (substituted by his heir), Arturo Balisi and Juan
Langcay appealed. But upon motion of plaintiffs-private respondents, the trial
court ordered the execution pending appeal of the judgment in
221
VOL. 187, JULY 5, 1990 221
Agustin vs. Intermediate Appellate Court
Civil Case No. 344-T against Cagurangan, Balisi and Langcay on the ground
that their appeal was dilatory as they had not presented evidence at the trial
(Order dated August 15, 1975).
On November 29, 1983, the Intermediate Appellate Court rendered a
decision affirming in toto the judgment of the trial court, with costs against the
defendants-appellants.
In their petition for review of that decision, the petitioners allege that the
Court of Appeals erred:
1. 1.in declaring that the land in question had become part of private
respondents’ estate as a result of accretion;
2. 2.in declaring that the accretion to private respondents’ estate which used to
pertain to petitioners’ estate cannot preclude the private respondents from
being the owners thereof; and
3. 3.in declaring that the ownership of private respondents over the accretion is
not affected by the sudden and abrupt change in the course of the Cagayan
River when it reverted to its old bed.
The petition is unmeritorious and must be denied.
The finding of the Court of Appeals that there had been accretions to the
lots of the private respondents who did not lose the ownership of such
accretions even after they were separated from the principal lots by the sudden
change of course of the river, is a finding of fact which is conclusive on this
Court. That finding is supported by Art. 457 of the New Civil Code which
provides:
“Art. 457. To the owners of lands adjoining the banks of rivers belong the accretion
which they gradually receive from the effects of the current of the waters. (366)”
Accretion benefits a riparian owner when the following requisites are present:
(1) that the deposit be gradual and imperceptible; (2) that it resulted from the
effects of the current of the water; and (3) that the land where accretion takes
place is adjacent to the bank of a river (Republic vs. CA, 132 SCRA 514).
All these requisites of accretion are present in this case for, as the trial court
found:
“x x x Cagayan River did move year by year from 1919 to 1968 or f or a period of 49
years. Within this period, the alluviun (sic) deposited
222
222 SUPREME COURT REPORTS ANNOTATED
Agustin vs. Intermediate Appellate Court
on the other side has become greater in area than the original lands of the plaintiffs in
both cases. Still the addition in every year is imperceptible in nature, one could not
discern it but can be measured after the lapse of a certain time. The testimonial evidence
in these cases that said Cagayan River moved eastward year by year is overwhelming
as against the denial of defendant Eulogio Agustin alone. Cesar Caronan, one time
mayor of Solana, Cagayan, said so. Arturo Taguian said so. Timoteo Melad said so.
Francisco Ubina said so. Geodetic Engineer Rigor impliedly said so when he testified
that when Solana Cadastre was executed in 1950 it overlapped portions of Tuguegarao
Cadastre executed in 1919. This could not have happened if that part of Tuguegarao
Cadastre was not eroded by the overflow of the Cagayan River. These testimonies
cannot be destroyed by the denials of Vicente Cauilan, Marcelo Agustin and Eulogio
Agustin alone. x x x.” (p. 27, Rollo.)
The appellate court confirmed that the accretion on the western bank of the
Cagayan River had been going on from 1919 up to 1968 or for a period of 49
years. It was gradual and imperceptible. Only when Lot No. 3351, with an
original area of 5 hectares described in the free patent that was issued to
Macario Melad in June 1956, was resurveyed in 1968 did it become known that
6.6 hectares had been added to it. Lot No. 3351, covered by a homestead patent
issued in June, 1950 to Pablo Binayug, grew from its original area of 18
hectares, by an additional 50 hectares through alluvium as the Cagayan River
gradually moved to the east. These accretions belong to riparian owners upon
whose lands the alluvial deposits were made (Roxas vs. Tuason, 9 Phil.
408; Director of Lands vs. Rizal, 87 Phil. 806). The reason for this principle is
because, if lands bordering on streams are exposed to floods and other damage
due to the destructive force of the waters, and if by virtue of law they are
subject to encumbrances and various kinds of easements, it is only just that
such risks or dangers as may prejudice the owners thereof should in some way
be compensated by the right of accretion (Cortes vs. City of Manila, 10 Phil.
567).
The private respondents’ ownership of the accretion to their lands was not
lost upon the sudden and abrupt change of the course of the Cagayan River in
1968 or 1969 when it reverted to its old 1919 bed, and separated or transferred
said accretions to the other side (or eastern bank) of the river. Articles 459 and
223
VOL. 187, JULY 5, 1990 223
Agustin vs. Intermediate Appellate Court
463 of the New Civil Code apply to this situation.
“Art. 459. Whenever the current of a river, creek or torrent segregates from an estate
on its bank a known portion of land and transfers it to another estate, the owner of the
land to which the segregated portion belonged retains the ownership of it, provided
that he removes the same within two years.”
“Art. 463. Whenever the current of a river divides itself into branches, leaving a
piece of land or part thereof isolated, the owner of the land retains his ownership. He
also retains it if a portion of land is separated from the estate by the current.(Emphasis
supplied).
In the case at bar, the sudden change of course of the Cagayan River as a result
of a strong typhoon in 1968 caused a portion of the lands of the private
respondents to be “separated from the estate by the current.” The private
respondents have retained the ownership of the portion that was transferred
by avulsion to the other side of the river.
WHEREFORE, the petition is denied for lack of merit. The decision of the
Intermediate Appellate Court, now Court of Appeals, is hereby affirmed.
Costs against the petitioners.
SO ORDERED.
Narvasa (Actg. C.J.), Cruz, Gancayco and Medialdea, JJ., concur.
Petition denied. Decision affirmed.
 G.R. No. 142595. October 15, 2003. *
RACHEL C. CELESTIAL, petitioner, vs. JESSE CACHOPERO, respondent.
Remedial Law; Certiorari; Appellate jurisdiction is separate and distinct from the
jurisdiction to issue the prerogative writ of certiorari; The RTCs have concurrent jurisdiction
with the Court of Appeals and the Supreme Court over original petitions for certiorari,
prohibition and mandamus under Section 21 of B.P. 129.—Concomitantly, appellate
jurisdiction is separate and distinct from the jurisdiction to issue the prerogative writ
of certiorari. An appellate jurisdiction refers to a process which is a continuation of the
original suit and not a commencement of a new action. In contrast, to invoke a
court’s jurisdiction to issue the writ of certiorari requires the commencement of a new and
original action therefor, independent of the proceedings which gave rise to the
questioned decision or order. As correctly held by the Court of Appeals, the RTCs have
concurrent jurisdiction with the Court of Appeals and the Supreme Court
over originalpetitions for certiorari, prohibition and mandamus under Section 21 of B.P.
129.
Same; Exhaustion of Administrative Remedies; Requirement of prior exhaustion of
administrative remedies not absolute; Instances when it may be dispensed with and judicial
action may be validly resorted to immediately.—This requirement of prior exhaustion of
administrative remedies is not absolute, there being instances when it may be
dispensed with and judicial action may be validly resorted to immediately, among
which are: 1) when the question raised is purely legal; 2) when the administrative body
is in estoppel; 3) when the act complained of is patently illegal; 4) when there is urgent
need for judicial intervention; 5) when the claim involved is small; 6) when irreparable
damage will be suffered; 7) when there is no other plain, speedy and adequate remedy;
8) when strong public interest is involved; and 9) in quo warranto proceedings.
Civil Law; Property; Public Lands; The adverse possession which may be the basis of a
grant of title in the confirmation of an imperfect title refers only to alienable or disposable
portions of the public domain.—Since property of public dominion is outside the
commerce of man and not susceptible to private appropriation and acquisitive
prescription, the adverse possession which may be the basis of a grant of title in the
confirmation of an imperfect title refers only to alienable or disposable portions of the
public domain. It is only after the Government has declared the land to be alienable
and disposable agricultural land that the year of entry, cultiva-
_______________
THIRD DIVISION.
*
470
470 SUPREME COURT REPORTS ANNOTATED
Celestial vs. Cachopero
tion and exclusive and adverse possession can be counted for purposes of an
imperfect title.
Same; Same; Same; A creek is property of the public domain which is not susceptible to
private appropriation and acquisitive prescription.—A creek, like the Salunayan Creek, is a
recess or arm extending from a river and participating in the ebb and flow of the sea.
As such, under Articles 420(l) and 502(l) of the Civil Code, the Salunayan Creek,
including its natural bed, is property of the public domain which is not susceptible to
private appropriation and acquisitive prescription. And, absent any declaration by the
government, that a portion of the creek has dried-up does not, by itself, alter its
inalienable character.
Same; Same; Same; The abandoned river bed is given to the owner(s) of the land(s) onto
which the river changed its course instead of the riparian owner(s).—Article 461 provides for
compensation for the loss of the land occupied by the new bed since it is believed more
equitable to compensate the actual losers than to add land to those who have lost
nothing. Thus, the abandoned river bed is given to the owner(s) of the land(s) onto
which the river changed its course instead of the riparian owner(s).
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Littie Sarah A. Agdeppa for petitioner.
Jesus Amparo for respondent.
CARPIO-MORALES, J.:
In the instant appeal by petition for review on certiorari, petitioner Rachel
1
Cachopero Celestial assails the February 15, 1999 Decision of the Court of
Appeals in CA-G.R. SP No. 45927, “Jesse C. Cachopero v. Regional Executive
Director of DENR, Region XII and Rachel C. Celestial,” which reversed and
set aside the Order of the Regional Trial Court (RTC) of Midsayap, Cotabato,
Branch 18 dismissing respondent’s petition for certiorari, prohibition and
mandamus, and mandated the Regional Executive Director of the Department
of Environment and Natural Resources (DENR), Region XII to process the
Miscellaneous Sales Application (MSA) of respondent Jesse Cachopero in
DENR Claim No. XII-050-90 to which petitioner filed a protest.
_______________
1Under Rule 45 of the Rules of Court.
471
VOL. 413, OCTOBER 15, 2003 471
Celestial vs. Cachopero
Respondent, brother of petitioner, filed an MSA (Plan No. (XII-6)-1669) with
the Bureau of Lands covering a 415 square meter parcel of land located at
Barrio 8, Midsayap, Cotabato and formerly part of the Salunayan Creek in
Katingawan, Midsayap.
In his MSA, respondent alleged that he had, since 1968, been occupying
the land whereon he built a residential house and introduced other
improvements.
Petitioner filed a protest against respondent’s MSA, claiming preferential
right over the land subject thereof since it is adjacent to, and is the only outlet
from, her residential house situated at Lot No. 2586-G-28 (LRC) Psd-105462,
Poblacion 8, Midsayap.
Following an ocular inspection, the Bureau of Lands, finding the land
subject of respondent’s MSA to be outside the commerce of man, dismissed
petitioner’s protest and denied respondent’s MSA, to wit:
In the ocular inspection, it was verified that the land in dispute with an area of 415 square
meters was formerly a part of the Salunayan Creek that became dry as a result of the
construction of an irrigation canal by the National Irrigation Administration. However, it
was certified by Project Engineer Reynaldo Abeto of the said office in his certification
dated May 19, 1982, that only a portion of the same containing an area of 59.40 square
meters more or less was taken as part of the National Irrigation Administration service
road. It was also ascertained that the P20,000.00 residential house wherein Jesse
Cachopero and his family are living is not within the 69-meters width of the national
highway. However, per the certification of the local office of the District Engineer for Public
Works and Highways, the government may need the area where the house stands for expansion
in the future. Moreover, it was also certified by the office of Municipal Mayor that the whole
area covered by the miscellaneous sales application of Jesse Cachopero is needed by the municipal
government for future public improvements.
From the foregoing facts, it is clear that the subject land is outside the commerce of man and
therefore, not susceptible of private acquisition under the provision of the Public Land
Act.However, in keeping with the policy of our compassionate society in tilting the
balance of social forces by favoring the disadvantaged in life, we may allow Jesse
Cachopero to temporarily occupy the land in dispute, after excluding therefrom the
portion needed for the existing right of way being claimed by Rachel Celestial to be
[the] only adequate outlet to the public highway until such time that the land is needed
by the government for expansion of the road.
“WHEREFORE, it is ordered that this case, be, as hereby it is, dismissed and this
case (sic), dropped from the records. The Miscellaneous
472
472 SUPREME COURT REPORTS ANNOTATED
Celestial vs. Cachopero
Sales Application (New) of Jesse Cachopero is hereby rejected and in lieu thereof, he
shall file a revocable permit application for the land in question after excluding from
the southern part of the land the area of five (5) meters for right of way purposes as
shown in the sketch drawn at the back of this order. The segregation survey of the area
shall be at the pro-rata expense of the parties.
SO ORDERED.” (Emphasis and italics supplied)
2
Petitioner thereafter instituted an action for ejectment against respondent and
his wife before the Municipal Trial Court of Midsayap, Cotabato, docketed as
Civil Case No. 711. A judgment based on a compromise was rendered in said
case under the following terms and conditions:
That Spouses Jesse Cachopero and Bema Cachopero, defendants in this case, are going to
vacate the premises in question and transfer the old house subject of this ejectment case
at the back of Lot No. 2586-G-28 (LRC) Psd-105462, located at 8, Midsayap, Cotabato,
within eight (8) months from today, but not later than April 30, 1990;
xxx
That plaintiff is willing to give a two (2)-meter wide exit alley on the eastern portion of said
lot as road-right-of-way up to the point of the NIA road on the west of Lot No. 2586-G-
28, (LRC) Psd-105462;
That defendants hereby promise to remove all their improvements introduced fronting the
residence of the plaintiffbefore August 31, 1989; and the plaintiff shall likewise remove all her
existing improvements on the same area;
x x x (Italics supplied)
3
Subsequently or on May 21, 1991, respondent filed another MSA with the
DENR Regional Office of Cotabato involving a portion of the same lot subject
of his first MSA, covering an area of 334 square meters, more or less (the subject
land), and docketed as DENR-XII-Claim No. 050-90. This time, the MSA was
supported by a certification dated January 9, 1989 issued by the Office of the
4
Mayor of Midsayap and an Indorsement dated January 16, 1989 by the District
5
Engineer of the Department of Public Works and
_______________
2Bureau of Lands Order dated September 24, 1985, Records at pp. 35-36.
3Rollo at pp. 47-48.
4Records at p. 30.
5Id., at p. 31.
473
VOL. 413, OCTOBER 15, 2003 473
Celestial vs. Cachopero
Highways stating that the subject land is suitable for residential purposes and
no longer needed by the municipal government.
Petitioner likewise filed a protest against her brother-respondent’s second
MSA, alleging a preferential right over the subject land, she being the adjacent
and riparian owner, and maintaining that it is her only access to the national
highway. She thus reiterated her demand for a five (5)-meter road right of way
through the land.
After another investigation of the subject land, DENR Regional Executive
Director Macorro Macumbal issued an Order dated February 17, 1994 stating
that it was suitable for residential purposes but that, in light of the conflicting
interest of the parties, it be sold at public auction. Respondent’s second MSA
was accordingly dismissed, viz.:
“In the ocular investigation of the premises, it was established that the said property is a
dried bed of Salunayan Creek resulting from the construction of the irrigation canal by the
National Irrigation Administration; that it is suitable for residential purpose x x x
xxx
It is evident that under the law, property of the public domain situated within the
first (1st) to fourth class municipalities are disposable by sales only. Since municipality
of Midsayap, Cotabato is classified as third (3rd) class municipality and the property in dispute,
Lot no. (MSA-XII-6)-1669, is situated in the poblacion of Midsayap, Cotabato, and considering
the conflicting interest of the herein parties, it is therefore equitable to dispose the same by sale
at a public auction pursuant to Section 67, C.A. No. 141, as amended, pertinent clause of
which provides:
x x x sale shall be made through oral bidding; and adjudication shall be made to the highest
bidder, x x x.
WHEREFORE, in view of all the foregoing, it is ordered as hereby is ordered that
the instant protest is dismissed and dropped from the records, and the Miscellaneous
Sales Application (New) of Jesse C. Cachopero is rejected and returned unrecorded.
Accordingly, the CENR Officer of CENRO XII-4B shall cause the segregation survey of
a portion of five (5) meters in width running parallel to line point C-1 of the approved
survey plan (MSA-XII-6)-1669, sketch is shown at the dorsal side hereof, as a permanent
easement and access road for the occupants of Lot No. 2386-G-28, (LRC) Psd-105462 to
the national highway. Thereafter, and pursuant to paragraph G.2.3 of Department
Administrative Order No. 38, Series of 1990, the CENRO XII 4B shall dispose the
remaining area of the lot in question through oral bidding.
474
474 SUPREME COURT REPORTS ANNOTATED
Celestial vs. Cachopero
SO ORDERED.” (Emphasis and italics supplied)
6 ordered the DENR to process the MSA of respondent.
Petitioner moved for the dismissal of the petition, alleging lack of
jurisdiction and non-exhaustion of administrative remedies.
_______________
6DENR Order dated February 17, 1994, Rollo at pp. 49-50.
7Id., at p. 52.
475
VOL. 413, OCTOBER 15, 2003 475
Celestial vs. Cachopero
By Order of March 26, 1997, the RTC denied respondent’s petition for
certiorari for lack of merit and non-exhaustion of administrative remedies, as
it did deny his motion for reconsideration.
The Court of Appeals, before which respondent assailed the RTC orders
by petition for certiorari, prohibition and mandamus, granted said petition,
and accordingly reversed and set aside the assailed orders of the RTC and
8

Respondent filed a Motion for Reconsideration of the above-said order of the Petitioner’s Motion for Reconsideration of the appellate court’s decision
9

DENR Regional Executive Director, but it was denied by Order of February having been denied by Resolution of March 2, 2000, she lodged the present 10

27, 1995 by the OIC Regional Executive Director of Region XII, Cotabato City
in this wise:
“A meticulous scrutiny of the records disclosed that Civil Case No. 711 for ejectment,
decided on the basis of compromise agreement of the parties dated August 10, 1989,
involved “transfer of the house from Lot No. MSA XII-6-1669 to the litigant’s parents’
petition, alleging that the Court of Appeals acted contrary to law and
jurisprudence 1) in holding that the RTC of Midsayap had jurisdiction over
respondent’s petition, the doctrine of exhaustion of administrative remedies
was not applicable to the instant case, and the contested land is public land;
and 2) in ordering the processing of respondent’s MSA pursuant to R.A. 730. 11

property situated at the back of protestant property, Lot No. 2586-G-28 (LRC), Psd-
Petitioner contends that the RTC of Midsayap had no jurisdiction over
105462.” Whereas the issue in DENR XII Claim No. 050-90 involved the disposition of
lot no. (MSA XII-6)-1669 a residential public land being exclusively vested with the
respondent’s petition for certiorari as (a) it “is in the nature of an
Director of Lands (Sec. 4, C.A. 141). appeal” falling within the jurisdiction of the Court of Appeals under Section
12

The two (2) meters wide exit alley provided in the compromise agreement was 9(3) of Batas Pambansa Blg. 129 (B.P. 129), as amended; and (b) respondent
13

established by the protestant from her private property (Lot No. 2586-G-28 (LRC), Psd- failed to exhaust administrative remedies when he failed to appeal the
105462) for the benefit of her brother, herein respondent, upon his transfer to their questioned Orders to the Secretary of Environment and Natural Resources. 14

parents property at the back of Lot No. 2586-G-28 (LRC), Psd-105462. Whereas the five
(5) meters wide easement imposed on Lot No. (MSA-XII-6)-1669, a public land, _______________
provided in the decision in DENR Claim No. 050-90 is in accordance with Article 670
of the New Civil Code x x x 8 Id., at p. 67.
xxx 9 CA Rollo, at pp. 74-121.
With all the above foregoing, we find no reversible error to reconsider our Order 10 Rollo, at pp. 68-69.
of February 17, 1994.
11 Id., at pp. 13-15.
12 Id., at p. 19.
WHEREFORE, the instant motion for reconsideration is DENIED.” 7
13 SEC. 9. Jurisdiction.—The Court of Appeals shall exercise:
Respondent thereupon filed on April 3, 1995 with the RTC of Midsayap, xxx
Cotabato a petition for certiorari, prohibition and mandamus with preliminary (3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders, or awards of
Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards, or commissions, except those
mandatory injunction and temporary restraining order assailing the Orders falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the
dated February 17, 1994 and February 27, 1995 of the DENR Regional provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth
paragraph of Section 17 of the Judiciary Act of 1948.
Executive Director and OIC Regional Executive Director of Region XII, xxx
Cotabato, attributing grave abuse of discretion in the issuance thereof. 14 Rollo at pp. 15-17.
 476
476 SUPREME COURT REPORTS ANNOTATED
Celestial vs. Cachopero
Petitioner’s petition fails.
Petitioner has apparently confused the separate and distinct remedies of
an appeal (i.e. through a petition for review of a decision of a quasi-judicial
agency under Rule 43 of the Rules of Court) and a special civil action for
certiorari (i.e. through a petition for review under Rule 65 of the Rules of
Court). In Silverio v. Court of Appeals, this Court, speaking through then Chief
15
Justice Claudio Teehankee, distinguished between these two modes of judicial
review as follows:
The provisions of the Rules of Court permit an aggrieved party, in the general types of
cases, to take a cause and apply for relief to the appellate courts by way of either of two
distinctly different and dissimilar modes—through the broad process of appeal or the limited
special civil action of certiorari. An appeal brings up for review errors of judgment committed
by a court with jurisdictionover the subject of the suit and the persons of the parties or any such
error committed by the court in the exercise of its jurisdiction amounting to nothing more than
an error of judgment. On the other hand, the writ of certiorari issues for the correction of errors
of jurisdiction only or grave abuse of discretion amounting to lack or excess of jurisdiction. The
writ of certiorari “cannot legally be used for any other purpose.” In terms of its
function, the writ of certiorari serves “to keep an inferior court within the bounds of its
jurisdiction or to prevent it from committing such a grave abuse of discretion
amounting to excess of jurisdiction” or to relieve parties from arbitrary acts of courts—
acts which courts have no power or authority in law to perform. (Italics, emphasis and
16
underscoring supplied)
Concomitantly, appellate jurisdiction is separate and distinct from the
jurisdiction to issue the prerogative writ of certiorari. An appellate
jurisdiction refers to a process which is a continuation of the original suit and
not a commencement of a new action. In contrast, to invoke a
court’s jurisdiction to issue the writ of certiorari requires the commencement of a
new and original action therefor, independent of the proceedings which gave
rise to the questioned decision or order. As correctly held by the Court of
17
Appeals, the
18
_______________
141 SCRA 525 (1986).
15
Id., at pp. 538-539 (citations omitted); see also Fortich v. Corona, 289 SCRA 624, 642 (1998)
16
and Fernando v. Vasquez, et al., 31 SCRA 288(1970).
Morales v. Court of Appeals, 283 SCRA 211, 222 (1997).
17
Rollo at p. 65.
18
477
VOL. 413, OCTOBER 15, 2003 477
Celestial vs. Cachopero
RTCs have concurrent jurisdiction with the Court of Appeals and the Supreme
Court over original petitions for certiorari, prohibition and mandamus under 19
Section 21 of B.P. 129.
20
A perusal of respondent’s Petition dated April 3, 1995 filed before the RTC
clearly shows that it alleged that the DENR Regional Executive Director and
OIC Regional Executive Director acted with “grave abuse of discretion and
without or in excess of jurisdiction amounting to lack of jurisdiction” when
they issued the questioned Orders dated February 17, 1994 and February 27,
1995. Evidently, respondent sought a judicial review of the questioned Orders
through a special civil action for certiorari which, as aforementioned, was
within the jurisdiction of the RTC of Midsayap, Cotabato. 21
_______________
Cebu Women’s Club v. De la Victoria, 327 SCRA 533, 539 (2000); Morales v. Court of Appeals,
19
supra at p. 222; Comendador v. De Villa, 200 SCRA 80, 96 (1991); People v. Cuaresma, 172 SCRA 415,
423 (1989); Dela Cruz v. Gabor, 30 SCRA 325 (1969).
SEC. 21. Original Jurisdiction in other cases.—Regional Trial Courts shall exercise original
20
jurisdiction:
1. (1)In the issuance of writs of certiorari, prohibition, mandamus, quo warranto, habeas
corpus and injunction which may be enforced in any part of their respective regions;
and
2. (2)In actions affecting ambassadors and other public ministers and consuls.
Significantly, respondent Cachopero filed his petition in 1995, before the 1997 Rules of Civil
21
Procedure took effect. Under Section 4, Rule 65 of the present Rules of Court, a petition assailing
acts or omissions of quasi-judicial agencies should now be filed with the Court of Appeals, viz:
SEC. 4. Where petition filed.—The petition may be filed not later than sixty (60) days from notice of the judgment,
order or resolution sought to be assailed in the Supreme Court or, if it relates to the acts or omissions of a lower
court or of a corporation, board, officer or person, in the Regional Trial Court exercising jurisdiction over the
territorial area as defined by the Supreme Court. It may also be filed in the Court of Appeals whether or not the
same is in aid of its appellate jurisdiction, or in the Sandiganbayan if it is in aid of its jurisdiction. If it involves
the acts or omissions of a quasijudicial agency, and unless otherwise provided by law or these Rules, the petition shall be
filed in and cognizable only by the Court of Appeals. (Italics supplied)
478
478 SUPREME COURT REPORTS ANNOTATED
Celestial vs. Cachopero
Additionally, this Court finds no reason to disturb the Court of Appeals’
conclusion that the instant case falls under the recognized exceptions to the
rule on exhaustion of administrative remedies, to wit:
The rule of exhaustion of administrative remedies is inapplicable if it should appear
that an irreparable injury or damage will be suffered by a party if he should await,
before taking court action, the final action of the administrative official concerned on
the matter as a result of a patently illegal order (Vivo vs. Cloribel, 18 SCRA 713; De Lara
vs. Cloribel, 14 SCRA 269); or where appeal would not prove to be speedy and adequate
remedy. 22
True, the doctrine of exhaustion of administrative remedies calls for resort first
to the appropriate administrative authorities in the resolution of a controversy
falling under their jurisdiction before the same may be elevated to the courts
of justice for review, and non-observance thereof is a ground for the dismissal
of the complaint, the rationale being:
23
The thrust of the rule on exhaustion of administrative remedies is that the courts must
allow the administrative agencies to carry out their functions and discharge their
responsibilities within the specialized areas of their respective competence. It is
presumed that an administrative agency, if afforded an opportunity to pass upon a
matter, will decide the same correctly, or correct any previous error committed in its
forum. Furthermore, reasons of law, comity and convenience prevent the courts from
entertaining cases proper for determination by administrative agencies. Hence,
premature resort to the courts necessarily becomes fatal to the cause of action of the
petitioner.24
However, this requirement of prior exhaustion of administrative remedies is
not absolute, there being instances when it may be dispensed with and judicial
action may be validly resorted to immediately, among which are: 1) when the
question raised is purely legal; 2) when the administrative body is
in estoppel; 3) when the act complained of is patently illegal; 4) when there is
urgent need for judicial intervention; 5) when the claim involved is small; 6)
_______________
Rollo at p. 66.
22
Castro v. Gloria, 363 SCRA 417, 422 (2001).
23
Gonzales v. Court of Appeals, 357 SCRA 599, 604 (2001) (citations
24
omitted).
479
VOL. 413, OCTOBER 15, 2003 479
Celestial vs. Cachopero
when irreparable damage will be suffered; 7) when there is no other plain,
speedy and adequate remedy; 8) when strong public interest is involved; and
9) in quo warrantoproceedings. 25
Hence, where the act complained of is patently illegal since the
administrative body acted without or in excess of jurisdiction or with such
grave abuse of discretion as to be tantamount to lack of jurisdiction, as was
alleged in respondent’s petition before the RTC, prior exhaustion of
administrative remedies is not required and resort to the courts through a
special civil action for certiorari under Rule 65 is permitted:
We hold that it was an error for the court a quo to rule that the petitioners should have
exhausted its remedy of appeal from the orders denying their application for
waiver/suspension to the Board of Trustees and thereafter to the Court of Appeals
pursuant to the Rules. Certiorari is an appropriate remedy to question the validity of the
challenged issuances of the HDMF which are alleged to have been issued with grave abuse of
discretion amounting to lack of jurisdiction.
Moreover, among the accepted exceptions to the rule on exhaustion of administrative
remedies are: (1) where the question in dispute is purely a legal one; and (2) where the
controverted act is patently illegal or was performed without jurisdiction or in excess of
jurisdiction. Moreover, while certiorari as a remedy may not be used as a substitute for
an appeal, especially for a lost appeal, this rule should not be strictly enforced if the
petition is genuinely meritorious. It has been said that where the rigid application of
the rules would frustrate substantial justice, or bar the vindication of a legitimate
grievance, the courts are justified in exempting a particular case from the operation of
the rules. (Emphasis supplied)
26
To justify the issuance of the writ of certiorari, however, it must be clearly
shown that there is a patent and grave abuse of discretion amounting to an
evasion of a positive duty or to a virtual refusal to perform a duty enjoined by
law, or to act at all in contemplation of law, as where the power is exercised in
an arbitrary and despotic manner by reason of passion or personal hostility. 27
_______________
Castro v. Gloria, supra at p. 422.
25
China Banking Corp. v. Members of the Board of Trustees, Home Development Mutual Fund, 307
26
SCRA 443, 449-450 (1999) (citations omitted).
J.L. Bernardo Construction v. Court of Appeals, 324 SCRA 24, 34 (2000) citing Lalican v.
27
Vergara, 276 SCRA 518 (1997); see also San Mi
480
480 SUPREME COURT REPORTS ANNOTATED
Celestial vs. Cachopero
The crux of the case at bar is, therefore, whether the DENR Regional Executive
Director and OIC Regional Director acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in issuing the questioned Orders
dated February 17, 1994 and February 27, 1995, respectively.
In resolving respondent’s second MSA and petitioner’s protest thereto, the
DENR Regional Executive Director, after considering the conflicting interest
of the parties, found it equitable to resolve the same by directing the sale of the
subject land at public auction pursuant to Section 67, C.A. No. 141, as
amended.
Section 67 of Commonwealth Act No. 141, otherwise known as
“The Public Land Act,” provides the procedure for the disposition oflands of the
public domain which are open to disposition or concession and intended to be used
for residential, commercial, industrialor other productive purposes other than
agricultural, to wit:
SEC. 67. The lease or sale shall be made through oral bidding; and adjudication shall be
made to the highest bidder. However, where an applicant has made improvements on
the land by virtue of a permit issued to him by competent authority, the sale or lease
shall be made by sealed bidding as prescribed in Section twenty-six of this Act, the
provisions of which shall be applied wherever applicable. If all or part of the lots
remain unleased or unsold, the Director of Lands shall from time to time announce in
the Official Gazette or in any other newspapers of general circulation, the lease or sale
of those lots, if necessary. (Italics supplied)
With the enactment of Republic Act No. 730 on June 18, 1952, however, an
28
exception to the foregoing procedure was created by authorizing disposition
of lands of the public domain by private sale, instead of bidding, provided that:
(1) the applicant has in his favor the conditions specified therein and (2) the
area applied for is not more than 1,000 square meters. The pertinent provision
29
of R.A. 730 thus provides:
_______________
guel Corporation v. Sandiganbayan, 340 SCRA 289, 310-311 (2000); Cuison v. Court of Appeals, 289
SCRA 159, 171 (1998).
AN ACT TO PERMIT THE SALE WITHOUT PUBLIC AUCTION OF PUBLIC LANDS OF
28
THE REPUBLIC OF THE PHILIPPINES FOR RESIDENTIAL PURPOSES TO QUALIFIED
APPLICANTS UNDER CERTAIN CONDITIONS.
Agura v. Serfino, Sr., 204 SCRA 569, 581-83 (1991).
29
481
VOL. 413, OCTOBER 15, 2003 481
Celestial vs. Cachopero
SEC. 1. Notwithstanding the provisions of Sections 61 and 67 of Commonwealth Act
No. 141, as amended by Republic Act No. 293, any Filipino citizen of legal age who is
not the owner of a home lot in the municipality or city in which he resides and who has
in good faith established his residence on a parcel of the public land of the Republic of
the Philippines which is not needed for the public service, shall be given preference to
purchase at a private sale of which reasonable notice shall be given to him not more than
one thousand square meters at a price to be fixed by the Director of Lands with the
approval of the Secretary of Agriculture and Natural Resources. It shall be an essential
condition of this sale that the occupant has constructed his house on the land and
actually resided therein. Ten percent of the purchase price shall be paid upon the
approval of the sale and the balance may be paid in full, or in ten equal annual
installments.
SEC. 2. Land acquired under the provisions of this Act shall not be subject to any
restrictions against encumbrance or alienation before and after the issuance of the
patents thereon. 30
SEC. 3. The provisions of the Public Land Act with respect to the sale of lands for
residential purposes which are not inconsistent herewith shall be applicable.
SEC. 4. This Act shall take effect upon its approval.
Approved, June 18, 1952. (Emphasis supplied)
Given the foregoing provisions of R.A. 730 which took effect on June 18, 1952,
and the DENR Regional Executive Director’s February 17, 1994 finding that
the subject land was “suitable for residential purposes,” it was incumbent
upon him to determine whether the provisions of R.A. 730 were applicable to
respondent’s MSA. As held by the Court of Appeals:
Finally, petitioner contends that the DENR Regional Executive Director and OIC
Regional Executive Director gravely erred in ordering the sale of the subject lot through
oral bidding applying Section 67, Commonwealth Act No. 141 and not Republic Act
730 authorizing the sale of public land without bidding.
We agree with the petitioner.
xxx
Apropos is the case of Reyes vs. Court of Appeals, 125 SCRA 785, ruling that:
_______________
As amended by Presidential Decree No. 2004, December 30, 1985.
30
482
482 SUPREME COURT REPORTS ANNOTATED
Celestial vs. Cachopero
“When public land lots of not more than 1,000 sq. ms. are used, or to be used as a residence x x x
they can be sold on private sales under the provisions of Republic Act No. 730.”
In Agura vs. Serfino, Sr., (204 SCRA 569), the Supreme Court held that:
“R.A. 730 authorizes a sale by private sale, as an exception to the general rule that it should be by
bidding, if the area applied for does not exceed 1,000 square meters, x x x.”
We see no reason why these ruling should not be applied in this case which involves 415
[should have been 334] square meters only. 31
The Regional Director, however, summarily chose to apply Section 67 of the
Public Land Act upon a finding that it was more “equitable” in light of the
“conflicting interest” of the parties. In his “Answer” to respondent’s petition
before the RTC, the Director justified his non-application of R.A. 730 in this
wise:
x x x Republic Act No. 730 is not applicable to the case at bar, the land being disputed,
Republic Act No. 730 requisite (sic) was not meet (sic) that for this law to apply to a
particular case, the land must be in the first place not a land in conflict. There being a
pending protest for final adjudication, the said conflict continues to exist thus an impediment
to the application of Republic Act 730. (Emphasis supplied)
32
which justification he reiterated in his Opposition to respondent’s Motion for
33
Reconsideration of the RTC decision.
The Director’s reliance on equity as basis for his action was misplaced,
however. It is well-settled that “equity follows the law.” Described as “justice
34
outside legality,” it is applied only in the absence of, and never against,
statutory law or legal pronouncements. Where pertinent positive rules are
35
present, they should pre-empt and prevail over all abstract arguments based
only on equity. 36
_______________
31 Rollo at pp. 65-66.
32 Records at p. 76.
33 Id., at p. 120.
34 I J.C. Vitug, Civil Law 12 (2003 Ed.) citing Severino v. Severino, 44 Phil. 343, 355 (1923); Labayan
v. Talisay Silay Milling Co., 52 Phil. 440(1928).
35 Smith, Bell & Co., Inc. v. Court of Appeals, 267 SCRA 530, 542 (1997); David-Chan v. Court of
Appeals, 268 SCRA 677, 687 (1997).
 Causapin v. Court of Appeals, 233 SCRA 615, 625 (1994), citing Zabat v. Court of Appeals, 142
36
SCRA 587 (1986).
483
VOL. 413, OCTOBER 15, 2003 483
Celestial vs. Cachopero
A reading of R.A. 730 (or of the Public Land Act for that matter) shows nothing
therein to support the Director’s contention that the pendency of a protest is a
bar to the application of R.A. 730 to an MSA. Indeed, that Section 1 of R.A. 730
gives a qualified applicant preference to purchase alienable public land suitable
for residential purposes implies that there may be more than one party
interested in purchasing it.
What is more, under Section 91 of the Public Land Act, it is the duty of the
Director of the Lands Management Bureau (formerly the Director of Lands) to
determine whether the material facts set forth in an MSA are true:
SEC. 91. The statements made in the application shall be considered as essential
conditions and parts of any concession, title, or permit issued on the basis of such
application, and any false statement therein or omission of facts altering, changing, or
modifying the consideration of the facts set forth in such statements, and any
subsequent modification, alteration, or change of the material facts set forth in the
application shall ipso facto produce the cancellation of the concession, title, or permit
granted. It shall be the duty of the Director of Lands, from time to time and whenever he may
deem it advisable, to make the necessary investigations for the purpose of ascertaining whether
the material facts set out in the application are true, or whether they continue to exist and are
maintained and preserved in good faith, and for the purposes of such investigation, the
Director of Lands is hereby empowered to issue subpoenas and subpoenas duces
tecum and, if necessary, to obtain compulsory process from the courts. In every
investigation made in accordance with this section, the existence of bad faith, fraud,
concealment, or fraudulent and illegal modification of essential facts shall be presumed
if the grantee or possessor of the land shall refuse or fail to obey a subpoena or subpoena
duces tecum lawfully issued by the Director of Lands or his authorized delegates or
agents, or shall refuse or fail to give direct and specific answers to pertinent questions,
and on the basis of such presumption, an order of cancellation may issue without
further proceedings. (Emphasis supplied)
Likewise, under Section 102 of the same Public Land Act, it is the duty of the
Director of the Lands Management Bureau to, after due hearing, verify
whether the grounds of a protest or objection to an MSA are well founded,
and, if so, to cancel the MSA:
SEC. 102. Any person, corporation, or association may file an objection under oath to
any application or concessi6n under this Act, grounded on any reason sufficient under
this Act for the denial or cancellation of the application or the denial of the patent or
grant. If, after the
484
484 SUPREME COURT REPORTS ANNOTATED
Celestial vs. Cachopero
applicant or grantee has been given suitable opportunity to be duly heard, the objection is found
to be well founded, the Director of Lands shall deny or cancel the application or deny patent or
grant, and the person objecting shall, if qualified, be granted a prior right of entry for a
term of sixty days from the date of the notice. (Emphasis supplied)
There was thus clearly a positive duty on the part of the DENR Director to
process respondent’s MSA, and to ascertain, particularly in light of petitioner’s
protest, whether respondent was qualified to purchase the subject land at
a private sale pursuant to R.A. 730. This, he did not do.
In fine, by abdicating his duty to process respondent’s MSA and
summarily ordering, without factual or legal basis, that the subject land be
disposed of via oral bidding pursuant to Section 67 of the Public Land Act, the
Director acted with patent grave abuse of discretion amounting to lack or
excess of jurisdiction. As the Court of Appeals held:
Considering that the assailed Orders of public respondent DENR Regional Executive
Director applying Section 67 of Commonwealth Act No. 141 and ordering the sale of
the subject lot by oral bidding are patently erroneous, the authority of the court to issue
writs of certiorari, prohibition and mandamus is warranted.
37
The Director’s commission of grave abuse of discretion does not, however,
mean that respondent automatically has the better right to the subject land. As
mandated by law, the Director must process respondent’s MSA, conduct an
investigation, and determine whether the material facts set forth therein are
true to bring it within the coverage of R.A. 730.
A thorough investigation is all the more imperative considering that
petitioner’s protest raises serious factual issues regarding respondent’s
qualification to purchase the subject land—in particular, whether he already
owns a home lot in Midsayap and whether he has, in good faith, constructed
his house on the subject land and actually resided therein. These factual issues
are properly within the authority of the DENR and the Land Management
Bureau, which are tasked with carrying out the provisions of the
_______________
Rollo at p. 66.
37
485
VOL. 413, OCTOBER 15, 2003 485
Celestial vs. Cachopero
Public Land Act and R.A. 730, to determine, after both parties have been given
38
an opportunity to fully present their evidence.
As for petitioner’s claim of ownership over the subject land, admittedly a
dried-up bed of the Salunayan Creek, based on (1) her alleged long term
adverse possession and that of her predecessorin-interest, Marcelina Basadre,
even prior to October 22, 1966, when she purchased the adjoining property
from the latter, and (2) the right of accession under Art. 370 of the Spanish
Civil Code of 1889 and/or Article 461 of the Civil Code, the same must fail.
 Since property of public dominion is outside the commerce of man and 39
not susceptible to private appropriation and acquisitive prescription, the
adverse possession which may be the basis of a grant of title in the
confirmation of an imperfect title refers only to alienable or disposable
portions of the public domain. It is only after the Government has declared
41
the land to be alienable and disposable agricultural land that the year of entry,
cultivation and exclusive and adverse possession can be counted for purposes
of an imperfect title. 42
A creek, like the Salunayan Creek, is a recess or arm extending from a river
and participating in the ebb and flow of the sea. As such, under Articles
43
420(1) and 502(1) of the Civil Code, the
44 45
_______________
38 Commonwealth Act No. 141, Secs. 3-4.
39 Municipality of Antipolo v. Zapanta, 133 SCRA 820, 820 (1984); Meneses v. Commonwealth, 69
Phil. 647, 650 (1940).
40 Civil Code, art. 1113; Maneclang v. Intermediate Appellate Court, 161 SCRA 469, 471
(1988); Meneses v. Commonwealth, supra.
41 Palomo v. Court of Appeals, 266 SCRA 392, 401 (1997); vide Villarico v. Court of Appeals, 309
SCRA 193, 198 (1999).
42 Republic v. Court of Appeals, 154 SCRA 476 (1987); Director of Land Management v. Court of
Appeals, 172 SCRA 455 (1989); see also Ignacio v. Director of Lands, 108 Phil. 335, 339 (1960).
43 Maneclang v. Intermediate Appellate Court, supra, citing Mercado v. Municipal President of
Macabebe, 59 Phil. 592 (1934).
44 ART. 420. The following things are property of public dominion: (1) Those intended for
public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks,
shores, roadsteads, and others of similar character; x x x (Italics supplied).
45 ART. 502. The following are of public dominion: (1) Rivers and their natural beds;
486
486 SUPREME COURT REPORTS ANNOTATED
Celestial vs. Cachopero
Salunayan Creek, including its natural bed, is property of the public domain
which is not susceptible to private appropriation and acquisitive
prescription. And, absent any declaration by the government, that a portion
46
of the creek has dried-up does not, by itself, alter its inalienable character.
This, in fact, was the very reason behind the denial of respondent’s first
MSA, the District Engineer having certified that the government may need the
subject land for future expansion, and the office of the Municipal Mayor
having certified that it was needed by the municipal government for future
public improvements. Consequently, it was only after the same offices
47
subsequently certified that the subject land was suitable for residential
48
purposes and no longer needed by the municipal government that it became
alienable and disposable. Confronted with similar factual circumstances, this
Court in Bracewell v. Court of Appeals held: 49
Clear from the above is the requirement that the applicant must prove that the land is
40 alienable public land. On this score, we agree with respondents that petitioner failed to
show that the parcels of land subject of his application are alienable or disposable. On the
contrary, it was conclusively shown by the government that the same were only classified as
alienable or disposable on March 27, 1972. Thus, even granting that petitioner and his
predecessors-in-interest had occupied the same since 1908, he still cannot claim title thereto by
virtue of such possession since the subject parcels of land were not yet alienable land at that time
nor capable of private appropriation. The adverse possession which may be the basis of a
grant of title or confirmation of an imperfect title refers only to alienable or disposable
portions of the public domain. (Emphasis supplied)
50
With respect to petitioner’s invocation of the principle of accession under
either Article 370 of the Spanish Civil Code of 1889 or Article 461 of the Civil
Code, the same does not apply to vest her with ownership over subject land.
_______________
xxx
Vide note 43, supra.
46
Vide note 2, supra.
47
Vide notes 4 and 5, supra.
48
323 SCRA 193 (2000).
49
Id., at p. 198.
50
487
VOL. 413, OCTOBER 15, 2003 487
Celestial vs. Cachopero
Under Article 370 of the Spanish Civil Code of 1889 which took effect in the
51
Philippines on December 7, 1889, the beds of rivers which remain abandoned
52
because the course of the water has naturally changed belong to the owners of
the riparian lands throughout their respective lengths. If the abandoned bed
divided estates belonging to different owners, the new dividing line shall run
at equal distance therefrom. 53
When the present Civil Code took effect on August 30, 1950, the foregoing
54
rule was abandoned in favor of the present Article 461, which provides:
ART. 461. River beds which are abandoned through the natural change in the course
of the waters ipso facto belong to the owners whose lands are occupied by the new course in
proportion to the area lost. However, the owners of the lands adjoining the old bed shall
have the right to acquire the same by paying the value thereof, which value shall not
exceed the value of the area occupied by the new bed. (Emphasis supplied)
Article 461 provides for compensation for the loss of the land occupied by the
new bed since it is believed more equitable to compensate the actual losers
than to add land to those who have lost nothing. Thus, the abandoned river
55
bed is given to the owner(s) of the land(s) onto which the river changed its
course instead of the riparian owner(s). 56
_______________
 51 ART. 370. Los cauces de los rios, que quedan abandonados por variar naturalmente el curso de las Communications and work pertaining thereto are commenced within two years from the change in the course
aguas, pertenecen a los dueños de los terranos ribereños en toda la longitude respective a cada uno. Si el of the river or stream.
cauce abandonado separaba heredades de distintos dueños, la nueva linea divisoria correra equidistante de Rollo at pp. 24-25.
57

unas y otras. Ramos v. Intermediate Appellate Court, 175 SCRA 70, 74 (1989).
58

52 Mijares v. Nery, 3 Phil. 195 (1904); Insular Government v. Aldecoa,19 Phil. 505 (1911); Barretto v. 489
Tuazon, 59 Phil. 845 (1934). VOL. 413, OCTOBER 15, 2003 489
53 See Agne v. Director of Lands, 181 SCRA 793, 805 (1990) and Pascual v. Sarmiento, et al., 37 Phil.
170, 177 (1917). Celestial vs. Cachopero
54 Lara v. Del Rosario, 94 Phil. 778, 783 (1954); Raymundo v. Peñas, 96 Phil. 311, 313 (1954); Hilario, the National Irrigation Administration. Thus, in Ronquillo v. Court of Appeals, this 59

Jr. v. City of Manila, 126 Phil. 128, 135; 19 SCRA 931 (1967).
55 Report of the Code Commission at p. 96.
56 This provision was further modified by Article 58 of Presidential Decree 1067, the Water
Code of the Philippines, which took effect on December 31, 1976), viz:
488
488 SUPREME COURT REPORTS ANNOTATED
Celestial vs. Cachopero
Petitioner claims that on October 22, 1966, when she purchased the property
adjoining the subject land from Marcelina Basadre, the said subject land was
already a dried-up river bed such that “almost one-half portion of the
residential house x x x was so already built and is still now situated at the said
Court held:
The law is clear and unambiguous. It leaves no room for interpretation. Article 370
applies only if there is a natural change in the course of the waters. The rules on alluvion do not
apply to man-made or artificial accretions nor to accretions to lands that adjoin canals or
esteros or artificial drainage systems. Considering our earlier finding that the dried-up
portion of Estero Calubcub was actually caused by the active intervention of man, it follows that
Article 370 does not apply to the case at bar and, hence, the Del Rosarios cannot be entitled
thereto supposedly as riparian owners.
The dried-up portion of Estero Calubcub should thus be considered as forming part
of the land of the public domain which cannot be subject to acquisition by private
ownership. x x x (Emphasis supplied)
60

Furthermore, both provisions pertain to situations where there has been

dried-up portion of the Salunayan Creek bed x x x.” She failed to allege, 57

a change in the course of a river, not where the river simply dries up. In the
however, when the subject portion of the Salunayan Creek dried up, a fact
instant Petition, it is not even alleged that the Salunayan Creek changed its
essential to determining whether the applicable law is Article 370 of the
course. In such a situation, commentators are of the opinion that the dry river
Spanish Civil Code of 1889 or Article 461 of the Civil Code.
bed remains property of public dominion.
Had the disputed portion of the Salunayan Creek dried up after the present
61

Finally, while this Court notes that petitioner offered to purchase the
Civil Code took effect, the subject land would clearly not belong to petitioner
subject land from the government, she did so through an informal letter dated
or her predecessor-in-interest since under the aforementioned provision of
62

August 9, 1989 instead of the prescribed form. By such move, she is deemed
Article 461, “river beds which are abandoned through the natural change in
63

to have acknowledged that the subject land is public land, for it would be
the course of the waters ipso facto belong to the owners of the land occupied by the
absurd for her to have applied for its purchase if she believed it was hers. She
new course,” and the owners of the adjoining lots have the right to acquire them
is thus estopped from claiming otherwise.
only after paying their value.
64

58

WHEREFORE, the petition is hereby DENIED for lack of merit.

And both Article 370 of the Old Code and Article 461 of the present Civil
Code are applicable only when “[r]iver beds are abandoned through _______________
the natural change in the course of the waters.” It is uncontroverted, however,
that, as found by both the Bureau of Lands and the DENR Regional Executive 59 195 SCRA 433 (1991).
Director, the subject land became dry as a result of the construction of an irrigation 60 Id., at p. 443 (citations omitted).
canal by 61 II A. Tolentino, Civil Code of the Philippines 137-138 (1992 ed); II Edgardo L. Paras, Civil Code
of the Philippines Annotated 275 (2002 [15th] ed.).
62 Rollo at p. 8.
_______________ 63 Annex “F” of the Petition, Rollo at p. 46.
64 Ronquillo v. Court of Appeals, supra at p. 443; Ramos v. Intermediate Appellate Court, supra at p.
ART. 58. When a river or stream suddenly changes its course to traverse private lands, the owner of the affected 74.
lands may not compel the government to restore the river to its former bed; nor can they restrain the government
490
from taking steps to revert the river or stream to its former course. The owners of the lands thus affected are not
entitled to compensation for any damage sustained thereby. However, the former owners of the new bed shall 490 SUPREME COURT REPORTS ANNOTATED
be the owners of the abandoned bed in proportion to the area lost by each.
The owners of the affected lands may undertake to return the river or stream to its old bed at their own People vs. Canoy
expense; Provided, That a permit therefor is secured from the Secretary of Public Works, Transportation and SO ORDERED.
 Puno (Chairman), Panganiban and Sandoval-Gutierrez, JJ., concur.
Corona, J., On leave.
Petition denied.
 G.R. No. 123586. August 12, 2004. *
SPOUSES BEDER MORANDARTE and MARINA FEBRERA,
petitioners, vs. COURT OF APPEALS, REPUBLIC OF THE PHILIPPINES, and
SPOUSES VIRGINIO B. LACAYA and NENITA LACAYA, respondents.
Land Registration; Land Titles; Public Lands; Rivers; Just as the old bed had been of
public dominion before the abandonment, the new riverbed shall likewise be of public
dominion.—Rivers and their natural beds are undoubtedly properties of public
dominion (Art. 502 par. 1, Civil Code of the Philippines). Whether navigable or not,
rivers belong to the public and cannot be acquired by prescription (Com vs. Meneses, 38
O.G. 2839, Paras, Civil Code, p. 328, Vol. II, 12th Edition). In fact, a stream located
within private land is still property of public dominion, even if the Torrens Title of the
land does not show the existence of said stream (Talion vs. Sec. of Public Works and
Highways, L-24281, May 16, 1967; Paras, supra). Correspondingly, Art. 462 of the same
Civil Code provides: Art. 462. Whenever a river, changing its course by natural causes,
opens a new bed through a private estate, this bed shall become of public dominion.
The rule is the same that even if the new bed is on private property. The bed becomes
property of public dominion. Just as the old bed had been of public dominion before
the abandonment, the new riverbed shall likewise be of public dominion (Hilario vs.
City of Manila, L-19570, April 27, 1967).
Same; Same; Same; Same; Appeals; Exceptions; Factual findings of the trial court, when
adopted and confirmed by the CA, are binding and conclusive upon the Supreme Court and
generally will not be reviewed on appeal.—Prefatorily, it must be stated that in petitions
for review on certiorari, only questions of law may be raised by the parties and passed
_______________
*SECOND DIVISION.
214
214 SUPREME COURT REPORTS ANNOTATED
Morandarte vs. Court of Appeals
upon by this Court. Factual findings of the trial court, when adopted and
confirmed by the CA, are binding and conclusive upon the Supreme Court and
generally will not be reviewed on appeal. Inquiry upon the veracity of the CA’s factual
findings and conclusion is not the function of the Supreme Court for the Court is not a
trier of facts. While this Court has recognized several exceptions to this rule, to wit: (1)
when the findings are grounded entirely on speculation, surmises, or conjectures; (2)
when the inference made is manifestly mistaken, absurd, or impossible; (3) when there
is grave abuse of discretion; (4) when the judgment is based on a misapprehension of
facts; (5) when the findings of facts are conflicting; (6) when in making its findings, the
CA went beyond the issues of the case, or its findings are contrary to the admissions of
both the appellant and the appellee; (7) when the findings are contrary to the trial court;
(8) when the findings are conclusions without citation of specific evidence on which
they are based; (9) when the facts set forth in the petition as well as in the petitioner’s
main and reply briefs are not disputed by the respondent; (10) when the findings of
fact are premised on the supposed absence of evidence and contradicted by the
evidence on record; and (11) when the CA manifestly overlooked certain relevant facts
not disputed by the parties, which, if properly considered, would justify a different
conclusion, none of these exceptions find application here.
Same; Same; Same; Same; Reversion; A complaint for reversion involves a serious
controversy, involving a question of fraud and misrepresentation committed against the
government and it seeks the return of the disputed portion of the public domain.—A complaint
for reversion involves a serious controversy, involving a question of fraud and
misrepresentation committed against the government and it seeks the return of the
disputed portion of the public domain. It seeks to cancel the original certificate of
registration, and nullify the original certificate of title, including the transfer certificate
of title of the successors-in-interest because the same were all procured through fraud
and misrepresentation.
Same; Same; Same; Same; Same; The State, as the party alleging that fraud and
misrepresentation attended the application for free patent, bears the burden of proof.—The
State, as the party alleging that fraud and misrepresentation attended the application
for free patent, bears the burden of proof. The circumstances evidencing fraud and
misrepresentation are as varied as the people who perpetrate it in each case. It assumes
different shapes and forms and may be committed in as many different ways.
Therefore, fraud and misrepresentation are never presumed but must be proved by
clear and convincing evidence; mere preponderance of evidence not even being
adequate.
Same; Same; Same; Same; Property of the public domain is incapable of registration and
its inclusion in a title nullifies that title.—It is well-
215
VOL. 436, AUGUST 12, 2004 215
Morandarte vs. Court of Appeals
recognized that if a person obtains a title under the Public Land Act which
includes, by oversight, lands which cannot be registered under the Torrens system, or
when the Director of Lands did not have jurisdiction over the same because it is a public
domain, the grantee does not, by virtue of the said certificate of title alone, become the
owner of the land or property illegally included. Otherwise stated, property of the
public domain is incapable of registration and its inclusion in a title nullifies that title.
PETITION for review on certiorari of the decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Gancayco, Balasbas and Santos Law Offices for petitioners.
Vic T. Lacaya, Sr. for private respondents.
AUSTRIA-MARTINEZ, J.:
Before us is a petition for review on certiorari under Rule 45 of the Rules of
Court which seeks the reversal of the Decision, dated August 23, 1995, of the
1
Court of Appeals (CA for brevity) in CA-G.R. CV No. 36258, affirming the
Decision, dated November 5, 1991, rendered by the Regional Trial Court
(Branch 7), Dipolog City, Zamboanga del Norte (RTC for brevity) in Civil Case
No. 3890, declaring Free Patent No. (IX-8) 785 and Original Certificate of Title
2 The Republic alleged that the BOL found that the subject land includes a
No. P-21972, in the name of petitioner Beder Morandarte (Morandarte for
brevity), and all its derivative titles, null and void ab initio.
The factual antecedents are as follows:
Morandarte filed an application for free patent, dated December 5, 1972,
before the Bureau of Lands, Dipolog City District Land Office (BOL for
brevity), covering a parcel of land located at Sta. Filomena, Dipolog City with
an area of 4.5499 hectares and described as a portion of Lot 1038 of Dipolog
Cadastre No. 85. 3
_______________
1 Penned by Justice Conrado M. Vasquez, Jr. and concurred in by Justices Emeterio C. Cui and
Angelina Sandoval-Gutierrez (now Justice of the Supreme Court).
Erroneously referred to as Free Patent No. (IX-5) 785 by the RTC in the dispositive portion of
2
its decision.
3No. XI-12903-A, Exhibit “A”, Original Records, p. 158.
216
216 SUPREME COURT REPORTS ANNOTATED
Morandarte vs. Court of Appeals
On July 27, 1976, the District Land Officer of the BOL approved the free
patent application of Morandarte and directed the issuance of a free patent in
his favor. Accordingly, Free Patent No. (IX-8) 785 for Lot No. 7, Csd-09-05-
4 in accordance and in compliance with the requirements of the law. They
00078-D was issued in the name of Morandarte. On September 20, 1976, the
Register of Deeds of Zamboanga del Norte issued the corresponding Original
Certificate of Title No. (P-21972) 5954. 5 As regards the Miputak River, they argued that the river changed its
Subsequently, Morandarte caused a subdivision survey of the lot, dividing
the same into Lot No. 6781-A, with an area of 13,939 square meters, and Lot
No. 6781-B, with an area of 32,819 square meters. As a result of the subdivision
survey, Transfer Certificates of Title Nos. T-1835 and T-1836 covering Lots
6781-A and 6781-B, respectively, were issued in favor of Morandarte on May
12, 1980 by the Registry of Deeds of Dipolog City. 6 directive that the existence of the river should not be indicated as the original
On May 22, 1981, Morandarte and his wife, Marina Febrera, executed a real
estate mortgage over Lot 6781-B, subject of TCT No. 1836, in favor of the
Development Bank of the Philippines, Dipolog City branch (DBP for brevity),
in consideration of a loan in the amount of P52,160.00. 7 not render the title void; only the portion of the property covered by the
More than ten years after the issuance of the OCT in Morandarte’s name,
or on March 19, 1987, respondent Republic of the Philippines (Republic for
brevity), represented by the Director of Lands, filed before the RTC a
Complaint for Annulment of Title and Reversion against the Morandarte
spouses, the Register of Deeds of Zamboanga del Norte, the Register of Deeds
of Dipolog City, and DBP, docketed as Civil Case No. 3890. 8
portion of the Miputak River which cannot be validly awarded as it is outside
the commerce of man and beyond the authority of the BOL to dispose of. It
claimed that the Morandarte spouses deliberately and intentionally concealed
such fact in the application to ensure approval thereof. Considering that the
Morandarte spouses are guilty of fraud and misrepresentation in
_______________
Id., p. 163.
4
Exhibit “B”, Id., p. 164.
5
Exhibits “C” and “D”, Id., pp. 166-167.
6
Exhibit “E”, Id., p. 168.
7
Id., p. 1.
8
217
VOL. 436, AUGUST 12, 2004 217
Morandarte vs. Court of Appeals
the procurement of their title, the Republic stressed that their title is void.
9
The Register of Deeds of Dipolog City filed a Motion to Dismiss, dated
April 7, 1987, praying for the dismissal of the complaint as against her since
the complaint failed to state a claim against her.10
In their Answer dated April 13, 1987, the Morandarte spouses denied the
allegations of the complaint and claimed that they were able to secure the title
alleged that the land is a portion of inherited property from Antonio L.
Morandarte whose ownership thereof is covered by Tax Declaration No. 2296.
course brought about by the fact that a portion of the Miputak River was
leased by the Bureau of Fisheries (BOF for brevity) to a certain Aguido Realiza
whose rights were subsequently transferred to Virgilio Lacaya. They alleged
that they indicated in their survey plan the actual location of the Miputak
River in relation to the property but the BOL returned the survey with the
survey did not show its existence, to which they complied with by submitting
a new survey plan which did not indicate the existence of the river.
In the alternative, they alleged that inclusion of the Miputak River should
Miputak River should be nullified but their title to the remaining portion
should be maintained. 11
For its part, DBP filed its Answer dated April 13, 1987 praying for the
dismissal of the complaint as against it since it had nothing to do with the
issuance of the title to the spouses. DBP interposed a cross-claim against the
12
spouses for the payment of their outstanding obligations. The Morandarte
13 _______________
spouses filed an Answer to the Crossclaim dated April 29, 1987. 14

Id., p. 51.
15

Id., p. 74.
16
_______________
Id., p. 78.
17

Id., p. 82.
18

Id., p. 4.
9
Id., p. 294.
19

Id., p. 10.
10
219
Id., p. 11.
11

Id., p. 15.
12
VOL. 436, AUGUST 12, 2004 219
Id., p. 18.
13
Morandarte vs. Court of Appeals
Id., p. 27.
14

218
218 SUPREME COURT REPORTS ANNOTATED
“WHEREFORE, judgment is hereby rendered:
Morandarte vs. Court of Appeals
No answer was filed by the Register of Deeds of Zamboanga del Norte.
On March 4, 1988, upon prior leave of court, herein respondent spouses
Virginio B. Lacaya and Nenita Lacaya filed their Complaint-In-Intervention
which alleged that they are holders of a fishpond lease agreement covering a
fishpond area of about 5.0335 hectares, 1.2681 hectares of which have been
included in the title issued to the Morandarte spouses. Considering that the
land of the Morandarte spouses encroaches on the area leased to them, the
Lacaya spouses submit that the former’s title thereto is void.15
In their Answer to the complaint-in-intervention, dated March 19, 1988, the
Morandarte spouses denied the allegations of the Lacaya spouses. They 16
maintained that the portion of the fishpond originally belonged to Antonio L.
Morandarte, their predecessor-in-interest, and the Lacaya spouses have never
been in possession thereof but are actually squatters therein.
On the other hand, the Republic, in its Answer to the complaint-in-
intervention, dated March 21, 1988, adopted the allegations of the complaint-
in-intervention to further support its claim that the title of the Morandarte
spouses is void. The Lacaya spouses filed their Reply and Answer on March
17
30, 1988, denying the arguments of the Morandarte spouses and reiterating the
allegations in their complaint-in-intervention.18
Following trial on the merits, on November 5, 1992, the RTC rendered a
Decision in favor of the Republic and the Lacaya spouses. The RTC declared
19
that while fraud in the procurement of the title was not established by the
State, Morandarte’s title is, nonetheless, void because it includes a portion of
the Miputak River which is outside the commerce of man and beyond the
authority of the BOL to dispose of. In addition, the RTC sustained the fishpond
rights of the Lacaya spouses over a portion included in Morandarte’s title
The dispositive portion of the decision of the trial court reads:
1. 1.Declaring null and void ab initio Free Patent No. (IX-5) (sic) 785 and Original
Certificate of Title No. P-21972 in the name of Beder Morandarte, as well as
all derivative titles issued thereafter;
2. 2.Ordering defendants spouses Beder Morandarte and Marina Febrera to
surrender their owner’s duplicate copies of Transfer Certificate of Title Nos.
T-1835 and T-1836, which were the derivative titles of Original Certificate of
Title No. P-21972;
3. 3.Directing the Register of Deeds of Zamboanga del Norte to cancel Original
Certificate of Title No. P-21972 in the name of Beder Morandarte, and the
Register of Deeds of Dipolog City to cancel Transfer Certificate of Title Nos.
T-1835 and T-1836 in the name of the same defendant;
4. 4.Ordering the reversion of the land in question to the state, free from liens
and encumbrances;
5. 5.Enjoining defendants spouses Beder Morandarte and Marina Febrera from
exercising any act of ownership or possession of the subject property;
6. 6.Dismissing the Cross-Claim of defendant Development Bank of the
Philippines against Cross Defendants Spouses Beder Morandarte and
Marina Febrera, for being premature, but ordering the latter cross
defendants to give a substitute security in favor of DBP as indicated in this
decision;
7. 7.Declaring valid and enforceable the Lease Agreement for a period of twenty
five years over the fishpond area of Intervenors;
8. 8.Denying Intervenors’ prayer for damages against defendants-spouses
Morandarte; and
9. 9.Dismissing, for lack of merit, the counterclaim and prayer for damages of
defendants spouses Morandarte against the Intervenors.
No costs against defendant-spouses Morandarte.
IT IS SO ORDERED.”
20

based on a Deed of Transfer of Fishpond Rights from Felipe B. Lacaya and a

Dissatisfied, the Morandarte spouses appealed to the CA. In a Decision
Fishpond Lease Agreement with the BOF.
21

dated August 23, 1995, the CA affirmed the decision of the RTC, ratiocinating,
22

as follows:
_______________
Id., pp. 313-315.
20
Court of Appeals (CA) Rollo, p. 23.
21
Id., p. 107.
22
220
220 SUPREME COURT REPORTS ANNOTATED
Morandarte vs. Court of Appeals
The present controversial Miputak River used to occupy the area adjacent to the
northern and western boundaries of Lot No. 6781 Cad-85 (Exh. “J”). As time passed, it
changed its course and occupies (sic) Lot No. 6781 Cad-85 (identical to Lot 7, Exh. “H”).
This will explain Beder Morandarte’s argument that when he applied for the Sales
Patent Lot 7 (identical to Lot 6781), the original technical description did not show the
Mipu-tak River. But it is inescapable though, that while originally, Lot 6781 is not
occupied by the river, at the time that the Sales Application was filed by Beder
Morandarte, the Miputak River was actually occupying said Lot 6781 or Lot 7 covered
by his Sales Application and the titles sought to be annulled in this case.
Rivers and their natural beds are undoubtedly properties of public dominion (Art.
502 par. 1, Civil Code of the Philippines). Whether navigable or not, rivers belong to
the public and cannot be acquired by prescription (Com vs. Meneses, 38 O.G. 2839, Paras,
Civil Code, p. 328, Vol. II, 12th Edition). In fact, a stream located within private land is
still property of public dominion, even if the Torrens Title of the land does not show
the existence of said stream (Talion vs. Sec. of Public Works and Highways, L-24281, May
16, 1967; Paras, supra).
Correspondingly, Art. 462 of the same Civil Code provides:
A.
RESPONDENT COURT COMMITTED A GRAVE ERROR OF LAW IN APPLYING
ARTICLE 462 OF THE CIVIL CODE TO THIS CASE WHEN THE CHANGE IN
COURSE OF THE OLD MIPUTAK RIVER WAS NOT DUE TO NATURAL CAUSES
BUT WAS ACCIDENTAL.
B.
ASSUMING ARGUENDO THAT THE CHANGE OF COURSE OF THE OLD
MIPUTAK RIVER WAS DUE TO NATURAL CAUSE ONLY A PORTION OF THE
SUBJECT PROPERTY OF PETITIONERS WAS AFFECTED THEREBY SO THAT THE
TITLE OF PETITIONERS TO THE REMAINING PORTION IS VALID AND CANNOT
BE NULLIFIED AS IT REMAINED PRIVATE PROPERTY.
C.
RESPONDENT COURT GRAVELY ERRED IN ORDERING THE REVERSION OF LOT
7, CSD-09-05-00078-D TO THE PUBLIC DOMAIN.
D.
RESPONDENT COURT GRAVELY ERRED IN NOT DECLARING AS NULL AND
VOID THE LEASE AGREEMENT EXECUTED IN FAVOR OF INTERVENORS.
E.
RESPONDENT COURT GRAVELY ERRED IN NOT DISMISSING THE COMPLAINT
CONSIDERING THAT NO FRAUD OR MISREPRESENTATION WAS EMPLOYED
BY THE SPOUSES MORANDARTE IN OBTAINING THE TITLE. 26

Art. 462. Whenever a river, changing its course by natural causes, opens a new bed through
a private estate, this bed shall become of public dominion. The Morandarte spouses emphatically argue that the CA failed to take into
The rule is the same that even if the new bed is on private property. The bed consideration the true state of the present Miputak River in relation to Lot 7.
becomes property of public dominion. Just as the old bed had been of public dominion
They contend that the Miputak River changed its course due to the closure of
before the abandonment, the new riverbed shall likewise be of public dominion (Hilario
the river bed through the construction of dikes by the Lacaya spouses, forcing
vs. City of Manila, L-19570, April 27, 1967). 23

the river to be diverted into Lot 6781-B. Thus, they submit that the applicable
provision is Article 77 of the Law of Waters, which provides that “[l]ands
On October 10, 1995, the Morandarte spouses filed a motion for
accidentally inundated by the waters of lakes, or by creeks, rivers and other streams
reconsideration. In its Resolution dated January 19, 1996, the CA found no
24

shall continue to be the property of their respective owners.”

justifiable cause or reason to modify or reverse its decision. 25

Furthermore, they staunchly claim that the Miputak River does not
Hence, the instant petition for review anchored on the following assigned
actually correspond to Lot 7. The Miputak River occupies only
errors:
_______________
_______________

Id., p. 15.
26

Id., p. 111.
23
222
Id., p. 120.
24

Rollo, p. 38.
25 222 SUPREME COURT REPORTS ANNOTATED
221 Morandarte vs. Court of Appeals
VOL. 436, AUGUST 12, 2004 221 12,162 square meters of Lot 7 which has an area of 45,499 square meters. Also,
Morandarte vs. Court of Appeals they insist that the lower courts made capital, albeit erroneously, of their
agreement to a reversion. The reversion agreed to refers only to the 12,162
square meters portion covered by the Miputak River, which should be voided,
while the portion unaffected by the Miputak River is valid and their title
thereto should be maintained and respected.
Moreover, they vigorously contend that the CA erred in sustaining the
validity of fishpond rights of the Lacaya spouses. They aver that the Lacaya
spouses violated the terms of the lease agreement by constructing dikes for the
fishponds which caused the Miputak River to traverse the property of the
Morandarte spouses.
Prefatorily, it must be stated that in petitions for review on certiorari, only
questions of law may be raised by the parties and passed upon by this
Court. Factual findings of the trial court, when adopted and confirmed by the
27
CA, are binding and conclusive upon the Supreme Court and generally will
not be reviewed on appeal. Inquiry upon the veracity of the CA’s factual
28
findings and conclusion is not the function of the Supreme Court for the Court
is not a trier of facts. 29
While this Court has recognized several exceptions to this rule, to wit: (1)
when the findings are grounded entirely on speculation, surmises, or
conjectures; (2) when the inference made is manifestly mistaken, absurd, or
impossible; (3) when there is grave abuse of discretion; (4) when the judgment
is based on a misapprehension of facts; (5) when the findings of facts are
conflicting; (6) when in making its findings, the CA went beyond the issues of
the case, or its findings are contrary to the admissions of both the appellant
and the appellee; (7) when the findings are contrary to the trial
_______________
27Tsai vs. Court of Appeals, 366 SCRA 324, 334 (2001); Producers Bank of the Philippines vs. Court
of Appeals, 365 SCRA 326, 334 (2001); and, Roble vs. Arbasa, 362 SCRA 69, 79 (2001).
28Lazaro vs. Court of Appeals, 372 SCRA 308, 311 (2001); Garrido vs. Court of Appeals, 370 SCRA
199, 206 (2001); Santos vs. Reyes, 368 SCRA 261 (2001); Yu Bun Guan vs. Ong, 367 SCRA 559, 567
(2001); Fernandez vs. Fernandez, 363 SCRA 811, 823-824 (2001); and, Nagkakaisang Kapisanan
Kapitbahayan sa Commonwealth Avenue vs. Court of Appeals, 361 SCRA 614, 619 (2001).
First Metro Investment Corporation vs. Este del Sol Mountain Reserve, Inc., 369 SCRA 99, 111
29
(2001).
223
VOL. 436, AUGUST 12, 2004 223
Morandarte vs. Court of Appeals
court; (8) when the findings are conclusions without citation of specific
evidence on which they are based; (9) when the facts set forth in the petition
as well as in the petitioner’s main and reply briefs are not disputed by the
respondent; (10) when the findings of fact are premised on the supposed
absence of evidence and contradicted by the evidence on record; and (11)
when the CA manifestly overlooked certain relevant facts not disputed by the
parties, which, if properly considered, would justify a different
conclusion, none of these exceptions find application here.
30
A complaint for reversion involves a serious controversy, involving a
question of fraud and misrepresentation committed against the government
and it seeks the return of the disputed portion of the public domain. It seeks
to cancel the original certificate of registration, and nullify the original
certificate of title, including the transfer certificate of title of the successors-in-
interest because the same were all procured through fraud and
misrepresentation. 31
The State, as the party alleging that fraud and misrepresentation attended
the application for free patent, bears the burden of proof. The circumstances
evidencing fraud and misrepresentation are as varied as the people who
perpetrate it in each case. It assumes different shapes and forms and may be
committed in as many different ways. Therefore, fraud and misrepresentation
32
are never presumed but must be proved by clear and convincing
evidence; mere preponderance of evidence not even being adequate.
33 34
In this case, the State failed to prove that fraud and misrepresentation
attended the application for free patent. The RTC, in
_______________
Langkaan Realty Development, Inc. vs. United Coconut Planters Bank, 347 SCRA 542, 549
30
(2000); Nokom vs. National Labor Relations Commission, 336 SCRA 97, 110 (2000); Commissioner of
Internal Revenue vs. Embroidery and Garments Industries (Phils.), Inc., 305 SCRA 70, 74 (1999);
and Sta. Maria vs. Court of Appeals, 285 SCRA 351, 357 (1998).
31Republic vs. Sebastian, 166 SCRA 140, 144 (1988).
32Republic vs. Heirs of Felipe Alejaga, St., 393 SCRA 361, 367 (2002), citing Siguan vs. Lim, 218
SCRA 725 (1999), and Destura vs. Court of Appeals, 325 SCRA 341 (2000).
33Cuizon vs. Court of Appeals, 260 SCRA 645, 671 (1996); Atilano vs. Inclan, 45 Phil. 246, 252
(1923).
34Palmares vs. Court of Appeals, 288 SCRA 422, 434 (1998); Inciong, Jr. vs. Court of Appeals, 257
SCRA 578, 586 (1996); and, Cu vs. Court of Appeals, 195 SCRA 647, 657 (1991).
224
224 SUPREME COURT REPORTS ANNOTATED
Morandarte vs. Court of Appeals
fact, recognized that no fraud attended the application for free patent but
35
declared reversion based on the judicial admission of the Morandarte spouses
that reversion is warranted due to the inalienability of the Miputak River.
Ordinarily, a judicial admission requires no proof and a party is precluded
from denying it except when it is shown that such admission was made
through palpable mistake or that no such admission was made. In this case, 36
the exception finds application since the records lay bare that such admission
was made through mistake and not in the context it was considered. As
reflected in the Order dated May 25, 1998, the Morandarte spouses essentially
37
agreed only to a reconveyance of the portion covering the Miputak River.
Undoubtedly, such acquiescence to return the portion covering the Miputak
River is not, and cannot be considered, an admission that fraud and
misrepresentation attended the application for free patent. This fact, standing
alone, does not prove fraud and misrepresentation.
Besides, it is undisputed that the original survey plan submitted by
Morandarte to the BOL reflected the true state of the Miputak River in Lot 1038
but the BOL did not approve the plan because a 1916 survey did not so indicate
the existence of a river traversing Lot 1038 such that Morandarte was directed
to submit an amended plan deleting the existence of the Miputak River. This
mothered the subsequent error of the BOL of approving the amended plan as
CAS-09-05-000078-D.
This error could have been discovered through a thorough ocular
inspection of the property claimed under the free patent application.
However, Aurelio F. Bureros, Hearing Officer I of the BOL, surprisingly failed
to notice the existence of the river traversing Lot 1038 in the field investigation
he conducted on January 10, 1976.
38
Neither did Bureros note the 13,339 square meter portion already covered
by an existing fishpond lease agreement granted by the BOF in favor of Felipe
B. Lacaya, the predecessor-in-interest of the Lacaya spouses. 39
_______________
RTC Decision, p. 14; Original Records, p. 306.
35
Section 4, Rule 129, Revised Rules of Court.
36
Original Records, p. 87.
37
Id., p. 162.
38
Exhibit “5” of Intervenor, Id., p. 274.
39
225
VOL. 436, AUGUST 12, 2004
Morandarte vs. Court of Appeals
The records reveal that as early as 1948, 4.6784 hectares of the public land
40
have been leased for fishpond purposes. Aguido S. Realiza was the initial
grantee of a fishpond lease agreement. Amor A. Realiza, Aguido’s son,
41
acquired his fishpond permit on May 29, 1953. Amor A. Realiza transferred
42
his fishpond rights to Felipe B. Lacaya on May 14, 1956. By 1960, the public
43
land leased for fishpond purposes had increased to 5.0335 hectares. Felipe B. 44
Lacaya transferred his fishpond rights to Virgilio B. Lacaya on October 25,
1977. Thus, the fishpond rights have been in existence since 1948, prior to the
45
1972 free patent application of Morandarte.
Regardless of the foregoing, Aurelio F. Bureros, concluded that
Morandarte is a qualified applicant and recommended that a free patent be
granted to him. This error culminated in the erroneous grant of a free patent
on July 27, 1976 covering the Miputak River and land subject of the fishpond
rights of Felipe B. Lacaya. 46
Be that as it may, the mistake or error of the officials or agents of the BOL
in this regard cannot be invoked against the government with regard to
property of the public domain. It has been said that the State cannot be
estopped by the omission, mistake or error of its officials or agents. 47
It is well-recognized that if a person obtains a title under the Public Land
Act which includes, by oversight, lands which cannot be registered under the
Torrens system, or when the Director of Lands did not have jurisdiction over
the same because it is a public domain, the grantee does not, by virtue of the
said certificate of title alone, become the owner of the land or property illegally
in-
_______________
Exhibit “1” of Intervenor, Id., p. 266.
40
41Exhibits “1”, “1-A” and “1-B” of Intervenor, Id., pp. 266-268.
42Exhibit “2” of Intervenor, Id., p. 269.
43Exhibit “3” of Intervenor, Id., p. 271.
44Exhibit “5” of Intervenor, Id., p. 274.
45Exhibit “7” of Intervenor, Id., p. 281.
46Id., p. 163.
47 Gordula vs. Court of Appeals, 284 SCRA 617, 633 (1988); Republic vs. Court of Appeals, 135 SCRA
156, 161-162 (1985); Director of Lands vs. Court of Appeals, 129 SCRA 689, 693 (1984); Republic vs.
Aquino, 120 SCRA 186, 191-192 (1983); and, Republic vs. Court of Appeals, 89 SCRA 648, 656 (1979).
226
226 SUPREME COURT REPORTS ANNOTATED
Morandarte vs. Court of Appeals
cluded. Otherwise stated, property of the public domain is incapable of
48
225 registration and its inclusion in a title nullifies that title. 49
The present controversy involves a portion of the public domain that was
merely erroneously included in the free patent. A different rule would apply
where fraud is convincingly shown. The absence of clear evidence of fraud
will not invalidate the entire title of the Morandarte spouses.
Accordingly, the 12,162-square meter portion traversed by the Miputak
River and the 13,339-square meter portion covered by the fishpond lease
agreement of the Lacaya spouses which were erroneously included in Free
Patent No. (IX-8) 785 and Original Certificate of Title No. P-21972 should be
reconveyed back to the State.
The Morandarte spouses cannot seek refuge in their claim that Antonio A.
Morandarte, their predecessor-in-interest, was already the owner of that
portion of Lot 1038 when the fishpond application of Aguido S. Realiza was
approved in 1948 because Lot 1038 was still part of the public domain then. It
was only in 1972, through Forestry Administrative Order No. 4-1257, which
was approved August 14, 1972, when Lot 1038 was declared alienable or
disposable property of the State. 50
 It is a settled rule that unless a public land is shown to have been
reclassified as alienable or actually alienated by the State to a private person,
that piece of land remains part of the public domain. Hence, Antonio A.
Morandarte’s occupation thereof, however long, cannot ripen into private
ownership. 51
_______________
Republic vs. Court of Appeals, 99 SCRA 742, 748 (1990); Republic vs. Animas, 56 SCRA 499, 503
48
In closing, we cannot but decry the carelessness of the BOL in having
issued the Free Patent in Morandarte’s favor which covered the Miputak River
and the fishpond rights of Felipe B. Lacaya. Surely, a more diligent search into
their records and thorough ocular inspection of Lot 7 would have revealed the
presence of the Miputak River traversing therein and an existing fishpond
right thereon. Had more vigilance been exercised by the BOL, the government
agency entrusted specifically with the task of administering and disposing of
public lands, the present litigation could have been averted.
WHEREFORE, the petition is partly GRANTED. The assailed Decision of

(1974); Vda. de Alfafara vs. Mapa, 95 Phil. 125(1954); and Ledesma vs. Municipality of Iloilo, 49 Phil.
769 (1926). the Court of Appeals, dated August 23, 1995, in CA-G.R. No. 36258 is
49Gordula vs. Court of Appeals, supra; Turquesa vs. Valera, 322 SCRA 573, 583 (2000); Director of REVERSED insofar only as it affirmed the nullity of Free Patent No. (IX-8) 785
Lands vs. Aquino, 192 SCRA 296, 304 (1990); and Vallarta vs. Intermediate Appellate Court, 151 SCRA and Original Certificate of Title No. P-21972, in the name of petitioner Beder
679, 693 (1987).
50Exhibit “11” of Intervenor, Original Records, p. 288.
Morandarte. In its
228
51Seville vs. National Development Company, 351 SCRA 112, 115 (2001); Menguito vs.
Republic, 348 SCRA 128, 139 (2000); Republic vs. De Guzman, 326 SCRA 574, 580 (2000); Ituralde vs. 228 SUPREME COURT REPORTS ANNOTATED
Falcasantos, 301 SCRA 293, 296 (1999); Republic vs. Intermediate Appellate Court, 155 SCRA 412, 419
(1987).
Fukuzumi vs. Sanritsu Great International Corporation
227 stead, petitioners Spouses Beder Morandarte and Marina Febrera are directed
VOL. 436, AUGUST 12, 2004 227 to reconvey to the respondent Republic of the Philippines within thirty (30)
days from the finality of this Decision the 12,162-square meter portion
Morandarte vs. Court of Appeals
traversed by the Miputak River and the 13,339-square meter portion covered
by the fishpond lease agreement of the Lacaya spouses. No pronouncement as
The Morandarte spouses also unsuccessfully harp on the inapplicability of
to costs.
Article 462 of the Civil Code by claiming that the change of course of the
SO ORDERED.
Miputak River was due to a man-made cause and not by natural means. They
offered no iota of evidence to substantiate this claim, other than the bare
Puno (Chairman), Callejo, Sr., Tinga and Chico-Nazario, JJ., concur.
testimony of Beder Morandarte. Neither is there proof that the movement of
Petition partly granted. Assailed decision reversed.
the river was caused by accident or calamity, such as a typhoon, and not by
the natural movements thereof. General statements, which are mere
conclusions of law and not proofs, are unavailing and cannot suffice.
Besides, at the time of the filing of the application for free patent in 1972, a
portion of the Miputak River was already in its present course, traversing Lot
1038, particularly Lot 7 of the amended plan submitted by Morandarte.
We need not delve on the question of whether the Lacaya spouses violated
the terms of the fishpond lease agreement. It is not material in this case in the
sense that it was not made an issue by the parties. Neither is there evidence to
corroborate the bare allegation of petitioners that the Lacaya spouses
constructed dikes for the fishponds which caused the Miputak River to
traverse Lot 7. What is significant here is the established fact that there was an
existing fishpond lease agreement between Felipe Lacaya and the Bureau of
Fisheries at the time of Morandarte’s application for free patent; in effect,
proving that the area covering the fishpond belongs to the Government and
petitioners have no rights thereto.
 G.R. No. 94283. March 4, 1991. * PETITION to review the decision of the Court of Appeals.
MAXIMO JAGUALING, ANUNCITA JAGUALING and MISAMIS
ORIENTAL CONCRETE PRODUCTS, INC., petitioners, vs. COURT OF
APPEALS (FIFTEENTH DIVISION), JANITA F. EDUAVE and RUDYGONDO
EDUAVE, respondents.
Ownership; Property; Accession; Island formed in a non-navigable and non-floatable
river; Under Art. 465, the island belongs to the owner of the land along the nearer margin;
Reasons.—The parcel of land in question is part of an island that formed in a non-
navigable and non-flotable river; from a small mass of eroded or segregated outcrop of
land, it increased to its present size due to the gradual and successive accumulation of
alluvial deposits. In this regard the Court of Appeals also did not err in applying Article
465 of the Civil Code. Under this provision, the island belongs to the owner of the land
along the nearer margin as sole owner thereof; or more accurately, because the island
is longer than the property of private respondents, they are deemed ipso jure to be the
owners of that portion which corresponds to the length of their property along the
margin of the river.
Same; Same; Same; Adverse possession; If the riparian owner failed to assert his claim,
the same may yield to the adverse possession of third parties.—What, then, about the adverse
possession established by petitioners? Are their rights as such not going to be
recognized? It is well-settled that lands formed by accretion belong to the riparian
owner. This preferential right is, under Article 465, also granted the owners of the land
located in the margin nearest the formed island for the reason that they are in the best
position to cultivate and attend to the exploitation of the same. In fact, no specific act
of possession over the accretion is required. If, however, the riparian owner fails to
assert his claim thereof, the same may yield to the adverse possession of third parties,
as indeed even accretion to land titled under the torrens system must itself still be
registered.
Same; Same; Same; Actions; Quasi-in rem; Judgment in action quasi-in rem is
conclusive only between the parties and does not bind the State.—We are not prepared,
unlike the trial court, to concede that the island is a delta which should be outside the
commerce of man and that it belongs to the State as property of the public domain in
the
________________
FIRST DIVISION.
*
608
608 SUPREME COURT REPORTS ANNOTATED
Jagualing vs. Court of Appeals
absence of any showing that the legal requirements to establish such a status
have been satisfied, which duty properly pertains to the State. However, We are also
well aware that this petition is an upshot of the action to quiet title brought by the
private respondents against petitioners. As such it is not technically an action in rem or
an action in personam, but characterized as quasi in rem, which is an action in
personam concerning real property. Thus, the judgment in proceedings of this nature is
conclusive only between the parties and does not bind the State or the other riparian
owners who may have an interest over the island involved herein.
The facts are stated in the opinion of the Court.
Cabanlas, Resma & Cabanlas Law Offices for petitioners.
Jaime Y. Sindiong for private respondents.
GANCAYCO, J.:
Between the one who has actual possession of an island that forms in a non-
navigable and non-flotable river and the owner of the land along the margin
nearest the island, who has the better right thereto? This is the issue to be
resolved in this petition.
The parties to this case dispute the ownership of a certain parcel of land
located in Sta. Cruz, Tagoloan, Misamis Oriental with an area of 16,452 square
meters, more or less, forming part of an island in a non-navigable river, and
more particularly described by its boundaries as follows:
North—by the Tagoloan River,
South—by the Tagoloan River,
East—by the Tagoloan River and
West—by the portion belonging to Vicente Neri.
Private respondents filed with the Regional Trial Court of Misamis
Oriental an action to quiet title and/or remove a cloud over the property in
1
question against petitioners.
________________
1 Civil Case No. 5890, 10th Judicial Region, Branch 22, Cagayan de Oro City, the Hon. Alfredo
J. Lagamon, Presiding Judge.
609
VOL. 194, MARCH 4, 1991 609
Jagualing vs. Court of Appeals
Respondent Court of Appeals summarized the evidence for the parties as
2
follows:
The appellant [private respondent Janita Eduave] claims that she inherited the land
from his [sic] father, Felomino Factura, together with his co-heirs, Reneiro Factura and
Aldenora Factura, and acquired sole ownership of the property by virtue of a Deed of
Extra Judicial Partition with sale (Exh. D). The land is declared for tax purposes under
Tax Decl. No. 26137 (Exh. E) with an area of 16,452 square meters more or less (Exh. D).
Since the death of her father on May 5, 1949, the appellant had been in possession of
the property although the tax declaration remains in the name of the deceased father.
The appellants further state that the entire land had an area of 16,452 square meters
appearing in the deed of extrajudicial partition, while in [the] tax declaration (Exh. E)
the area is only 4,937 square meters, and she reasoned out that she included the land
that was under water. The land was eroded sometime in November 1964 due to
typhoon Ineng, destroying the bigger portion and the improvements leaving only a
coconut tree. In 1966 due to the movement of the river deposits on the land that was
not eroded increased the area to almost half a hectare and in 1970 the appellant started
to plant bananas [sic]. In 1973 the defendants-appellees [petitioners herein] asked her
permission to plant corn and bananas provided that they prevent squatters to come to
the area.
The appellant engaged the services of a surveyor who conducted a survey and
placed concrete monuments over the land. The appellant also paid taxes on the land in
litigation, and mortgaged the land to the Luzon Surety and Co., for a consideration of
P6,000.00. The land was the subject of a reconveyance case, in the Court of First Instance
of Misamis Oriental, Branch V, at Cagayan de Oro City, Civil Case No. 5892, between
the appellant Janita Eduave vs. Heirs of Antonio Facturawhich was the subject of
judgment by compromise in view of the amicable settlement of the parties, dated May
31, 1979. (Exh. R);
That the heirs of Antonio Factura, who are presently the defendants-appellees in
this case had ceded a portion of the land with an area of 1,289 square meters more or
less, to the appellant, Janita Eduave, in a notarial document of conveyance, pursuant
to the deci-
________________
2 Fifteenth Division, composed of Justices Gloria C. Paras as Chairperson, Bonifacio A. Cacdac, Jr.,
as ponente, and Serafin V. C. Guingona, CA-G.R. CV No. 17419, 15 June 1990.
610
610 SUPREME COURT REPORTS ANNOTATED
Jagualing vs. Court of Appeals
sion of the Court of First Instance, after a subdivision of the lot No. 62 Pls-799, and
containing 1,289 square meters more or less was designated as Lot No. 62-A [sic], and
the subdivision plan was approved as Pls-799-Psd-10-001782. (Exh. R; R-1 and R-2);
The portion Lot No. 62-A, is described as follows:
“A parcel of land (Lot No. 62-A, Psd-10-001782 being a portion of Lot 62, Pls-799, Tagoloan Public
Land Subdivision) situated in Bo. Sta. Cruz, Municipality of Tagoloan, Province of Misamis
Oriental. Bounded on the W, and on the N along lines 4-5-1 by Lot 62-B of the subdivision plan-
10-001782; on the E by line 1-2 by Lot 64; Pls-799; on the S, along line 2-3-4 by Saluksok Creek,
containing an area of one thousand two hundred eighty nine (1,289) square meters more or less.”
Appellant also applied for concession with the Bureau of Mines to extract 200 cubic
meters of gravel (Exh. G & G-1); and after an ocular inspection the permit was granted
(Exh. K, and K-1 and K-2). That the appellant after permit was granted entered into an
agreement with Tagoloan Aggregates to extract sand and gravel (Exh. L; L-1; and L-2),
which agreement was registered in the office of the Register of Deeds (Exh. M; M-1;
and M-2).
The defendants-appellees [petitioners herein] denied the claim of ownership of the
appellant, and asserted that they are the real owners of the land in litigation containing
an area of 18,000 square meters more or less. During the typhoon Ineng in 1964 the
river control was washed away causing the formation of an island, which is now the
land in litigation. The defendants started occupying the land in 1969, paid land taxes
as evidenced by tax declaration No. 26380 (Exh. 4) and tax receipts (Exhs. 7 to 7-G), and
tax clearances (Exhs. 8 & 9). Photographs showing the actual occupation of the land by
the defendants including improvements and the house were presented as evidence
(Exh. 11 to 11-E). The report of the Commissioner who conducted the ocular inspection
was offered as evidence of the defendants (Exh. G).
The sketch plan prepared by Eng. Romeo Escalderon (Exh. 12) shows that the
plaintiffs’ [private respondents’] land was across the land in litigation (Exh. 12-A), and
in going to the land of the plaintiff, one has to cross a distance of about 68 meters of the
Tagoloan river to reach the land in litigation. 3
On 17 July 1987 the trial court dismissed the complaint for failure of private
respondents as plaintiffs therein to establish
______________
3Rollo, pp. 16-18.
611
VOL. 194, MARCH 4, 1991 611
Jagualing vs. Court of Appeals
by preponderance of evidence their claim of ownership over the land in
litigation. The court found that the island is a delta forming part of the river
bed which the government may use to reroute, redirect or control the course
of the Tagoloan River. Accordingly, it held that it was outside the commerce
of man and part of the public domain, citing Article 420 of the Civil Code. As 4
such it cannot be registered under the land registration law or be acquired by
prescription. The trial court, however, recognized the validity of petitioners’
possession and gave them preferential rights to use and enjoy the property.
The trial court added that should the State allow the island to be the subject of
private ownership, the petitioners have rights better than that of private
respondents. 5
On appeal to the Court of Appeals, respondent court found that the island
was formed by the branching off of the Tagoloan River and subsequent thereto
the accumulation of alluvial deposits. Basing its ruling on Articles 463 and 465
of the Civil Code, the Court of Appeals reversed the decision of the trial court,
6
declared private respondents as the lawful and true
________________
4 Art. 420. The following things are property of public dominion:
1. (1)Those intended for public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, banks, shores, roadsteads, and others of similar
character;
2. (2)Those which belong to the State, without being for public use, and are intended for
some public service or for the development of the national wealth.
5RTC Decision, Rollo, p. 32, et seq.
6Art. 463. Whenever the current of a river divides itself into branches, leaving a piece of land
or part thereof isolated, the owner of the land retains his ownership. He also retains it if a portion
of land is separated from the estate by the current. Art. 465. Islands which through successive
accumulation of alluvial deposits are formed in non-navigable and non-flotable rivers, belong to
the owners of the margins or banks nearest to each of them, or to the owners of both margins if
the island is in the middle of the river, in which case it shall be divided longitudinally in halves.
If a single island thus formed be more distant from one margin than from the other, the owner of
the nearer margin shall be the sole owner thereof.
612
612 SUPREME COURT REPORTS ANNOTATED
Jagualing vs. Court of Appeals
owners of the land subject of this case and ordered petitioners to vacate the
premises and deliver possession of the land to private respondents. 7
In the present petition, petitioners raise the following as errors of
respondent court, to wit:
1. 1.Whether [or not] respondent court correctly applied the provisions of
Articles 463 and 465 of the new Civil Code to the facts of the case at bar; and
2. 2.Whether [or not] respondent court gravely abused its discretion in the
exercise of its judicial authority in reversing the decision appealed from.
8
Petitioners point out as merely speculative the finding of respondent court that
the property of private respondents was split by the branching off or division
of the river. They argue that because, as held by the trial court, private
respondents failed to prove by preponderance of evidence the identity of their
property before the same was divided by the action of the river, respondent
court erred in applying Article 463 of the Civil Code to the facts of this case.
It must be kept in mind that the sole issue decided by respondent court is
whether or not the trial court erred in dismissing the complaint for failure of
private respondents [plaintiffs below] to establish by preponderance of
evidence their claim of ownership over the island in question. Respondent
court reversed the decision of the trial court because it did not take into
account the other pieces of evidence in favor of the private respondents. The
complaint was dismissed by the trial court because it did not accept the
explanation of private respondents regarding the initial discrepancy as to the
area they claimed: i.e., the prior tax declarations of private respondents refer
to an area with 4,937 square meters, while the ExtraJudicial Partition with Sale,
by virtue of which private respondents acquired ownership of the property,
pertains to land of about 16,452 square meters.
The trial court favored the theory of petitioners that private
______________
7Rollo, p. 19.
8Rollo, p. 8.
613
VOL. 194, MARCH 4, 1991 613
Jagualing vs. Court of Appeals
respondents became interested in the land only in 1979 not for agricultural
purposes but in order to extract gravel and sand. This, however, is belied by
other circumstances tantamount to acts of ownership exercised by private
respondents over the property prior to said year as borne out by the evidence,
which apparently the trial court did not consider at all in favor of private
respondents. These include, among others, the payment of land taxes thereon,
the monuments placed by the surveyor whose services were engaged by the
private respondent, as evidenced by the pictures submitted as exhibits, and
the agreement entered into by private respondents and Tagoloan Aggregates
to extract gravel and sand, which agreement was duly registered with the
Register of Deeds. Private respondents also presented in evidence the
testimony of two disinterested witnesses: Gregorio Neri who confirmed the
metes and bounds of the property of private respondents and the effects of the
typhoon on the same, and Candida Ehem who related on the agreement
between private respondents and petitioners for the latter to act as caretakers
of the former. The trial court disregarded their testimony without explaining
why it doubted their credibility and instead merely relied on the self-serving
denial of petitioners. 10
From the evidence thus submitted, respondent court had sufficient basis
for the finding that the property of private respondents actually existed and
was identified prior to the branching off or division of the river. The Court of
Appeals, therefore, properly applied Article 463 of the Civil Code which
allows the ownership over a portion of land separated or isolated by river
movement to be retained by the owner thereof prior to such separation or
isolation.11
Notwithstanding the foregoing and assuming arguendoas claimed by
petitioners that private respondents were not able to establish the existence
and identity of the property prior to the branching off or division of the
Tagoloan River, and hence, their right over the same, private respondents are
nevertheless entitled under the law to their respective portion of the island.
_______________
9Rollo, pages 25-26.
Rollo, page 32.
10
See note 6, supra.
11
614
614 SUPREME COURT REPORTS ANNOTATED
Jagualing vs. Court of Appeals
It is clear petitioners do not dispute that the land in litigation is an island that
appears in a non-flotable and non-navigable river; they instead anchor their
claim on adverse possession for about fifteen years. It is not even controverted
that private respondents are the owners of a parcel of land along the margin
of the river and opposite the island. On the other hand, private respondents
do not dispute that the island in question has been in the actual physical
possession of petitioners; private respondents insist only that such possession
by petitioners is in the concept of caretakers thereof with the permission of
private respondents.
This brings Us, as phrased earlier in this opinion, to the underlying nature
of the controversy in this case: between the one who has actual possession of
an island that forms in a non-navigable and non-flotable river and the owner
of the land along the margin nearest the island, who has the better right
thereto? The parcel of land in question is part of an island that formed in a
non-navigable and non-flotable river; from a small mass of eroded or
segregated outcrop of land, it increased to its present size due to the gradual
and successive accumulation of alluvial deposits. In this regard the Court of
Appeals also did not err in applying Article 465 of the Civil Code. Under this 12
provision, the island belongs to the owner of the land along the nearer margin
as sole owner thereof; or more accurately, because the island is longer than the
property of private respondents, they are deemed ipso jure to be the owners of
that portion which corresponds to the length of their property along the
margin of the river.
What, then, about the adverse possession established by petitioners? Are
their rights as such not going to be recognized? It is well-settled that lands
formed by accretion belong to the riparian owner. This preferential right is,
13
under Article 465, also granted the owners of the land located in the margin
nearest the formed island for the reason that they are in the best
_________________
See note 6, supra.
12
For the rationale thereof, see 2 A. Tolentino, Commentaries and Jurisprudence on the Civil
13
Code of the Philippines, pp. 116-117 (1983); see also Tuason v. CA, 147 SCRA 37 [1987].
615
VOL. 194, MARCH 4, 1991
Jagualing vs. Court of Appeals
position to cultivate and attend to the exploitation of the same. In fact, no
specific act of possession over the accretion is required. If, however, the
15
riparian owner fails to assert his claim thereof, the same may yield to the
adverse possession of third parties, as indeed even accretion to land titled
under the torrens system must itself still be registered. 16
Petitioners may, therefore, acquire said property by adverse possession for
the required number of years under the doctrine of acquisitive prescription.
Their possession cannot be considered in good faith, however, because they
are presumed to have notice of the status of private respondents as riparian
owners who have the preferential right to the island as recognized and
accorded by law; they may claim ignorance of the law, specifically Article 465
of the Civil Code, but such is not, under Articles 3 and 526 of the same code,
an adequate and valid defense to support their claim of good faith. Hence, not 17
qualifying as possessors in good faith, they may acquire ownership over the
island only through uninterrupted adverse possession for a period of thirty
years. By their own admission, petitioners have been in possession of the
18
property for only about fifteen years. Thus, by this token and under the theory
adopted
__________________
Id., at 129, citing 3 Manresa 263.
14
15 Roxas v. Tuazon, 9 Phil. 408 [1907] and Cortes v. City of Manila, 10 Phil. 567 [1908], as cited
in 2 A. Tolentino, Id., at 118-119.
16 Ignacio Grande, et al., v. CA, G.R. No. 17652, 115 Phil. 521, 5 SCRA 524 [1962].
17 Art. 526. He is deemed a possessor in good faith who is not aware that there exists in his
title or mode of acquisition any flaw which invalidates it.
He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing.
Mistake upon a doubtful or difficult question of law may be the basis of good faith.
Art. 3. Ignorance of the law excuses no one from compliance therewith.
18 The Civil Code provides:
Art. 1137. Ownership and other real rights over immovables also prescribe through
uninterrupted adverse possession thereof for thirty years, without need of title or of good faith.
616
616 SUPREME COURT REPORTS ANNOTATED
Jagualing vs. Court of Appeals
by petitioners, the island cannot be adjudicated in their favor.
This case is not between parties as opposing riparian owners contesting
ownership over an accession but rather between a riparian owner and the one
in possession of the island. Hence, there is no need to make a final
determination regarding the origins of the island, i.e.,whether the island was
initially formed by the branching off or division of the river and covered by
Article 463 of the Civil Code, in which case there is strictly no accession
because the original owner retains ownership, or whether it was due to the
615
action of the river under Article 465, or, as claimed by petitioners, whether it
was caused by the abrupt segregation and washing away of the stockpile of
14
the river control, which makes it a case of avulsion under Article 459. 19
We are not prepared, unlike the trial court, to concede that the island is a
delta which should be outside the commerce of man and that it belongs to the
State as property of the public domain in the absence of any showing that the
legal requirements to establish such a status have been satisfied, which duty
properly pertains to the State. However, We are also well aware that this
20
petition is an upshot of the action to quiet title brought by the private
respondents against petitioners. As such it is not technically an action in rem or
an action in personam,but characterized as quasi in rem, which is an action in
21
_________________

19Art. 459. Whenever the current of a river, creek or torrent segregates from an estate on its
bank a known portion of land and transfers it to another estate, the owner of the land to which
the segregated portion belonged retains the ownership of it, provided that he removes the same
within two years.
20Under Article 175 of the Spanish Law of Waters [3 August 1866], the State has the duty to
declare which rivers are navigable and which are not. The present law, Presidential Decree No.
1067 entitled A Decree Instituting a Water Code, Thereby Revising and Consolidating the Laws
Governing the Ownership, Appropriation, Utilization, Exploitation, Development, Conservation and
Protection of Water Resources [73 O.G. 3554, 1976], under Article 59 thereof, provides that rivers,
lakes and lagoons may, upon the recommendation of the Philippines Coast Guard, be declared
navigable either in whole or in part.
21Realty Sales Enterprise, Inc. v. Intermediate Appellate Court,
617
VOL. 194, MARCH 4, 1991 617
Jagualing vs. Court of Appeals
personam concerning real property. Thus, the judgment in proceedings of this
22

nature is conclusive only between the parties and does not bind the State or
23

the other riparian owners who may have an interest over the island involved
herein.
WHEREFORE, We find no error committed by respondent court and
DENY the petition for lack of sufficient merit. The decision of respondent
Court of Appeals is hereby AFFIRMED, without pronouncement as to costs.
SO ORDERED.
Narvasa (Chairman), Cruz, Griño-Aquino and Medialdea, JJ., concur.
Decision affirmed.
 G.R. No. 178411. June 23, 2010.*
OFFICE OF THE CITY MAYOR OF PARAÑAQUE CITY, OFFICE OF THE
CITY ADMINISTRATOR OF PARAÑAQUE CITY, OFFICE OF THE CITY
ENGINEER OF PARAÑAQUE CITY, OFFICE OF THE CITY PLANNING
AND DEVELOPMENT COORDINATOR, OFFICE OF THE BARANGAY
CAPTAIN AND SANGGUNIANG PAMBARANGAY OF BARANGAY
VITALEZ, PARAÑAQUE CITY, TERESITA A. GATCHALIAN, ENRICO R.
ESGUERRA, ERNESTO T. PRACALE, JR., MANUEL M. ARGOTE,
CONRADO M. CANLAS, JOSEPHINE S. DAUIGOY, ALLAN L. GONZALES,
ESTER C. ASEHAN, MANUEL A. FUENTES, and MYRNA P. ROSALES,
petitioners, vs. MARIO D. EBIO AND HIS CHILDREN/HEIRS namely,
ARTURO V. EBIO, EDUARDO V. EBIO, RENATO V. EBIO, LOURDES E.
MAGTANGOB, MILA V. EBIO, and ARNEL V. EBIO, respondents.
Actions; Injunction; An action for injunction is brought specifically to restrain or
command the performance of an act.—An action for injunction is brought specifically to
restrain or command the performance of an act. It is distinct from the ancillary remedy
of preliminary injunction, which cannot exist except only as part or as an incident to an
independent action or proceeding. Moreover, in an action for injunction, the auxiliary
remedy of a preliminary prohibitory or mandatory injunction may issue.
Ownership; Accretion; Alluvial deposits along the banks of a creek do not form part of
the public domain as the alluvial property automatically belongs to the owner of the estate to
which it may have been added.—It is an uncontested fact that the subject land was formed
from the alluvial deposits that have gradually settled along the banks of Cut-cut creek.
This being the case, the law that governs ownership over the accreted portion is Article
84 of the Spanish Law of Waters of 1866, which remains in effect, in relation to Article
457
_______________
* THIRD DIVISION.
556
556 SUPREME COURT REPORTS ANNOTATED
Offices of the City Mayor of Parañaque City vs. Ebio
of the Civil Code. Article 84 of the Spanish Law of Waters of 1866 specifically
covers ownership over alluvial deposits along the banks of a creek. It reads: ART. 84.
Accretions deposited gradually upon lands contiguous to creeks, streams, rivers, and
lakes, by accessions or sediments from the waters thereof, belong to the owners of such
lands. Interestingly, Article 457 of the Civil Code states: Art. 457. To the owners of
lands adjoining the banks of rivers belong the accretion which they gradually receive
from the effects of the current of the waters. It is therefore explicit from the foregoing
provisions that alluvial deposits along the banks of a creek do not form part of the
public domain as the alluvial property automatically belongs to the owner of the estate
to which it may have been added. The only restriction provided for by law is that the
owner of the adjoining property must register the same under the Torrens system;
otherwise, the alluvial property may be subject to acquisition through prescription by
third persons.
Parties; The State is not a necessary party to an action where no positive act shall be
required from it or where no obligation shall be imposed upon it, and neither would it be an
indispensable party if none of its properties shall be divested nor any of its rights infringed.—
An indispensable party is one whose interest in the controversy is such that a final
decree would necessarily affect his/her right, so that the court cannot proceed without
their presence. In contrast, a necessary party is one whose presence in the proceedings
is necessary to adjudicate the whole controversy but whose interest is separable such
that a final decree can be made in their absence without affecting them. In the instant
case, the action for prohibition seeks to enjoin the city government of Parañaque from
proceeding with its implementation of the road construction project. The State is
neither a necessary nor an indispensable party to an action where no positive act shall
be required from it or where no obligation shall be imposed upon it, such as in the case
at bar. Neither would it be an indispensable party if none of its properties shall be
divested nor any of its rights infringed.
Injunction; Words and Phrases; A right in esse means a clear and unmistakable right.—
A right in esse means a clear and unmistakable right. A party seeking to avail of an
injunctive relief must prove that he or she possesses a right in esse or one that is actual
or
557
VOL. 621, JUNE 23, 2010 557
Offices of the City Mayor of Parañaque City vs. Ebio
existing. It should not be contingent, abstract, or future rights, or one which may
never arise.
Land Registration; The purpose of land registration is not the acquisition of lands, but
only the registration of title which the applicant already possessed over the land—registration
was never intended as a means of acquiring ownership.—From these findings of fact by both
the trial court and the Court of Appeals, only one conclusion can be made: that for more
than thirty (30) years, neither Guaranteed Homes, Inc. nor the local government of
Parañaque in its corporate or private capacity sought to register the accreted portion.
Undoubtedly, respondents are deemed to have acquired ownership over the subject
property through prescription. Respondents can assert such right despite the fact that
they have yet to register their title over the said lot. It must be remembered that the
purpose of land registration is not the acquisition of lands, but only the registration of
title which the applicant already possessed over the land. Registration was never
intended as a means of acquiring ownership. A decree of registration merely confirms,
but does not confer, ownership.
Same; Confirmation of Imperfect Title; Confirmation of an imperfect title over a parcel of
land may be done either through judicial proceedings or through administrative process; The
State does not have any authority to convey a property through the issuance of a grant or a
patent if the land is no longer a public land.—Confirmation of an imperfect title over a
parcel of land may be done either through judicial proceedings or through
administrative process. In the instant case, respondents admitted that they opted to
confirm their title over the property administratively by filing an application for sales
patent. Respondents’ application for sales patent, however, should not be used to
prejudice or derogate what may be deemed as their vested right over the subject
property. The sales patent application should instead be considered as a mere
superfluity particularly since ownership over the land, which they seek to buy from
the State, is already vested upon them by virtue of acquisitive prescription. Moreover,
the State does not have any authority to convey a property through the issuance of a
grant or a patent if the land is no longer a public land. Nemo dat quod dat non habet.No
one can give what he does not have. Such principle is equally applicable even against
a sovereign entity that is the State.
558
558 SUPREME COURT REPORTS ANNOTATED
Offices of the City Mayor of Parañaque City vs. Ebio
PETITION for review on certiorari of the decision and resolution of the Court
of Appeals.
The facts are stated in the opinion of the Court.
VILLARAMA, JR., J.:
Before us is a petition for review on certiorari under Rule 45 of the 1997
Rules of Civil Procedure, as amended, assailing the January 31, 2007
Decision1 and June 8, 2007 Resolution2 of the Court of Appeals (CA) in CA-
G.R. SP No. 91350 allegedly for being contrary to law and jurisprudence. The
CA had reversed the Order3 of the Regional Trial Court (RTC) of Parañaque
City, Branch 196, issued on April 29, 2005 in Civil Case No. 05-0155.
Below are the facts.
Respondents claim that they are the absolute owners of a parcel of land
consisting of 406 square meters, more or less, located at 9781 Vitalez
Compound in BarangayVitalez, Parañaque City and covered by Tax
Declaration Nos. 01027 and 01472 in the name of respondent Mario D. Ebio.
Said land was an accretion of Cut-cut creek. Respondents assert that the
original occupant and possessor of the said parcel of land was their great
grandfather, Jose Vitalez. Sometime in 1930, Jose gave the land to his son,
Pedro Vitalez. From then on, Pedro continuously and exclusively occupied
and possessed the said lot. In 1966, after executing an affidavit declaring
possession and occupancy,4 Pedro was able to obtain a tax declaration over the
said property in his name.5 Since
_______________
1 Rollo, pp. 21-29. Penned by Associate Justice Myrna Dimaranan Vidal, with Associate
Justices Jose L. Sabio, Jr. and Jose C. Reyes, Jr. concurring.
2 Id., at p. 31.
3 Id., at pp. 119-121.
4 Id., at p. 52.
5 Id., at pp. 53-54.
559
VOL. 621, JUNE 23, 2010 559
Offices of the City Mayor of Parañaque City vs. Ebio
then, respondents have been religiously paying real property taxes for the said
property.6
Meanwhile, in 1961, respondent Mario Ebio married Pedro’s daughter,
Zenaida. Upon Pedro’s advice, the couple established their home on the said
lot. In April 1964 and in October 1971, Mario Ebio secured building permits
from the Parañaque municipal office for the construction of their house within
the said compound.7 On April 21, 1987, Pedro executed a notarized Transfer of
Rights8 ceding his claim over the entire parcel of land in favor of Mario Ebio.
Subsequently, the tax declarations under Pedro’s name were cancelled and
new ones were issued in Mario Ebio’s name.9
On March 30, 1999, the Office of the Sangguniang Barangay of Vitalez
passed Resolution No. 08, series of 199910 seeking assistance from the City
Government of Parañaque for the construction of an access road along Cut-cut
Creek located in the said barangay. The proposed road, projected to be eight
(8) meters wide and sixty (60) meters long, will run from Urma Drive to the
main road of Vitalez Compound11 traversing the lot occupied by the
respondents. When the city government advised all the affected residents to
vacate the said area, respondents immediately registered their opposition
thereto. As a result, the road project was temporarily suspended.12
In January 2003, however, respondents were surprised when several
officials from the barangay and the city planning office proceeded to cut eight
(8) coconut trees planted on the said lot. Respondents filed letter-complaints
before the
_______________
6 Id., at p. 26.
7 Id., at pp. 56-58.
8 Id., at p. 90.
9 Id., at p. 22.
10 Id., at pp. 91-94.
11 Id., at p. 92.
12 Id., at pp. 36-37.
560
560 SUPREME COURT REPORTS ANNOTATED
Offices of the City Mayor of Parañaque City vs. Ebio
Regional Director of the Bureau of Lands, the Department of Interior and Local
Government and the Office of the Vice Mayor. 13 On June 29, 2003,
the Sangguniang Barangay of Vitalez held a meeting to discuss the construction
of the proposed road. In the said meeting, respondents asserted their
opposition to the proposed project and their claim of ownership over the
affected property.14 On November 14, 2003, respondents attended another
meeting with officials from the city government, but no definite agreement
was reached by and among the parties.15
On March 28, 2005, City Administrator Noli Aldip sent a letter to the
respondents ordering them to vacate the area within the next thirty (30) days,
or be physically evicted from the said property.16 Respondents sent a letter to
the Office of the City Administrator asserting, in sum, their claim over the
subject property and expressing intent for a further dialogue. 17 The request
remained unheeded.
Threatened of being evicted, respondents went to the RTC of Parañaque
City on April 21, 2005 and applied for a writ of preliminary injunction against
petitioners.18 In the course of the proceedings, respondents admitted before the
trial court that they have a pending application for the issuance of a sales
patent before the Department of Environment and Natural Resources
(DENR).19
On April 29, 2005, the RTC issued an Order20 denying the petition for lack
of merit. The trial court reasoned that respondents were not able to prove
successfully that they have an established right to the property since they have
not insti-
_______________
13 Id., at pp. 37-38.
14 Id., at pp. 107-112.
15 Id., at p. 39.
16 Id., at p. 116.
17 Id., pp. 117-118.
18 Id., at pp. 32-51.
19 Id., at p. 119.
20 Supra note 3.
561
VOL. 621, JUNE 23, 2010 561
Offices of the City Mayor of Parañaque City vs. Ebio
tuted an action for confirmation of title and their application for sales patent
has not yet been granted. Additionally, they failed to implead the Republic of
the Philippines, which is an indispensable party.
Respondents moved for reconsideration, but the same was denied.21
Aggrieved, respondents elevated the matter to the Court of Appeals. On
January 31, 2007, the Court of Appeals issued its Decision in favor of the
respondents. According to the Court of Appeals—
“The issue ultimately boils down to the question of ownership of the lands
adjoining Cutcut Creek particularly Road Lot No. 8 (hereinafter RL 8) and the accreted
portion beside RL 8.
The evidentiary records of the instant case, shows that RL 8 containing an area of
291 square meters is owned by Guaranteed Homes, Inc. covered by TCT No. S-62176.
The same RL 8 appears to have been donated by the Guaranteed Homes to the City
Government of Parañaque on 22 March 1966 and which was accepted by the then
Mayor FLORENCIO BERNABE on 5 April 1966. There is no evidence however, when
RL 8 has been intended as a road lot.
On the other hand, the evidentiary records reveal that PEDRO VITALEZ possessed
the accreted property since 1930 per his Affidavit dated 21 March 1966 for the purpose
of declaring the said property for taxation purposes. The property then became the
subject of Tax Declaration No. 20134 beginning the year 1967 and the real property
taxes therefor had been paid for the years 1966, 1967, 1968, 1969, 1970, 1972, 1973, 1974,
1978, 1980, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, 2003, and 2004. Sometime in
1964 and 1971, construction permits were issued in favor of Appellant MARIO EBIO
for the subject property. On 21 April 1987, PEDRO VITALEZ transferred his rights in
the accreted property to MARIO EBIO and his successors-in-interest.
Applying [Article 457 of the Civil Code considering] the foregoing documentary
evidence, it could be concluded that Guaranteed Homes is the owner of the accreted
property considering its owner-
_______________
21 Id., at p. 136.
562
562 SUPREME COURT REPORTS ANNOTATED
Offices of the City Mayor of Parañaque City vs. Ebio
ship of the adjoining RL 8 to which the accretion attached. However, this is without the
application of the provisions of the Civil Code on acquisitive prescription which is
likewise applicable in the instant case.
xxxx
The subject of acquisitive prescription in the instant case is the accreted portion
which [was] duly proven by the Appellants. It is clear that since 1930, Appellants
together with their predecessor-in-interest, PEDRO VITALEZ[,] have been in exclusive
possession of the subject property and starting 1964 had introduced improvements
thereon as evidenced by their construction permits. Thus, even by extraordinary
acquisitive prescription[,] Appellants have acquired ownership of the property in
question since 1930 even if the adjoining RL 8 was subsequently registered in the name
of Guaranteed Homes. x x x.
xxxx
Further, it was only in 1978 that Guaranteed Homes was able to have RL 8
registered in its name, which is almost fifty years from the time PEDRO VITALEZ
occupied the adjoining accreted property in 1930. x x x.
xxxx
We likewise note the continuous payment of real property taxes of Appellants
which bolster their right over the subject property. x x x.
xxxx
In sum, We are fully convinced and so hold that the Appellants [have] amply
proven their right over the property in question.
WHEREFORE, premises considered, the instant appeal is hereby GRANTED. The
challenged Order of the court a quo is REVERSED and SET ASIDE.
SO ORDERED.” 22
On June 8, 2007, the appellate court denied petitioners’ motion for
reconsideration. Hence, this petition raising the following assignment of
errors:
_______________
 22 Id., at pp. 25-29. Emphasis supplied.
563
VOL. 621, JUNE 23, 2010
Offices of the City Mayor of Parañaque City vs. Ebio
I. WHETHER OR NOT THE DECISION AND RESOLUTION OF THE
HONORABLE COURT OF APPEALS THAT RESPONDENTS HAVE A
RIGHT IN ESSE IS IN ACCORD WITH THE LAW AND
ESTABLISHED JURISPRUDENCE[;]
II. WHETHER OR NOT THE DECISION AND RESOLUTION OF THE
HONORABLE COURT OF APPEALS THAT THE SUBJECT LOT IS
AVAILABLE FOR ACQUISITIVE PRESCRIPTION IS IN ACCORD
WITH THE LAW AND ESTABLISHED JURISPRUDENCE[;] AND
III. WHETHER OR NOT THE STATE IS AN INDISPENSABLE PARTY
TO THE COMPLAINT … FILED BY RESPONDENTS IN THE LOWER
COURT.23
The issues may be narrowed down into two (2): procedurally, whether the
State is an indispensable party to respondents’ action for prohibitory
injunction; and substantively, whether the character of respondents’
possession and occupation of the subject property entitles them to avail of the
relief of prohibitory injunction.
The petition is without merit.
An action for injunction is brought specifically to restrain or command the
performance of an act.24 It is distinct from the ancillary remedy of preliminary
injunction, which cannot exist except only as part or as an incident to an
independent action or proceeding. Moreover, in an action for injunction, the
auxiliary remedy of a preliminary prohibitory or mandatory injunction may
issue.25
In the case at bar, respondents filed an action for injunction to prevent the
local government of Parañaque City from proceeding with the construction of
an access road that will
_______________
23 Id., at pp. 12-13.
24 Manila Banking Corporation v. Court of Appeals, G.R. No. 45961, July 3, 1990, 187 SCRA 138,
144-145.
25 Id., at p. 145.
564
564 SUPREME COURT REPORTS ANNOTATED
Offices of the City Mayor of Parañaque City vs. Ebio
traverse through a parcel of land which they claim is owned by them by virtue
of acquisitive prescription.
Petitioners, however, argue that since the creek, being a tributary of the
river, is classified as part of the public domain, any land that may have formed
along its banks through time should also be considered as part of the public
domain. And respondents should have included the State as it is an
563 indispensable party to the action.
We do not agree.
It is an uncontested fact that the subject land was formed from the alluvial
deposits that have gradually settled along the banks of Cut-cut creek. This
being the case, the law that governs ownership over the accreted portion is
Article 84 of the Spanish Law of Waters of 1866, which remains in effect,26 in
relation to Article 457 of the Civil Code.
Article 84 of the Spanish Law of Waters of 1866specifically covers
ownership over alluvial deposits along the banks of a creek. It reads:
“ART. 84. Accretions deposited gradually upon lands contiguous to creeks,
streams, rivers, and lakes, by accessions or sediments from the waters thereof, belong
to the owners of such lands.” 27
Interestingly, Article 457 of the Civil Code states:
“Art. 457. To the owners of lands adjoining the banks of rivers belong the
accretion which they gradually receive from the effects of the current of the waters.”
It is therefore explicit from the foregoing provisions that alluvial deposits
along the banks of a creek do not form part of the public domain as the alluvial
property automatically be-
_______________
26 See Heirs of Emiliano Navarro v. Intermediate Appellate Court, G.R. No. 68166, February 12,
1997, 268 SCRA 74.
27 As cited in Government of the P.I. v. Colegio de San Jose, 53 Phil. 423, 430 (1929).
565
VOL. 621, JUNE 23, 2010 565
Offices of the City Mayor of Parañaque City vs. Ebio
longs to the owner of the estate to which it may have been added. The only
restriction provided for by law is that the owner of the adjoining property
must register the same under the Torrens system; otherwise, the alluvial
property may be subject to acquisition through prescription by third persons.28
In contrast, properties of public dominion cannot be acquired by
prescription. No matter how long the possession of the properties has been,
there can be no prescription against the State regarding property of public
domain.29 Even a city or municipality cannot acquire them by prescription as
against the State.30
Hence, while it is true that a creek is a property of public dominion, 31 the
land which is formed by the gradual and imperceptible accumulation of
sediments along its banks does not form part of the public domain by clear
provision of law.
Moreover, an indispensable party is one whose interest in the controversy
is such that a final decree would necessarily affect his/her right, so that the
court cannot proceed without their presence.32 In contrast, a necessary party is
one whose presence in the proceedings is necessary to adjudicate the whole
controversy but whose interest is separable such that a final decree can be
made in their absence without affecting them.33
_______________
28 Grande v. Court of Appeals, No. L-17652, June 30, 1962, 5 SCRA 524, 530-531.
29 Meneses v. El Commonwealth De Filipinas, 69 Phil. 647, 650 (1940).
30 See City of Manila v. Insular Government, 10 Phil. 327, 338 (1908).
31 Maneclang v. Intermediate Appellate Court, No. L-66575, September 30, 1986, 144 SCRA 553,
556.
3232 Regalado, Vol. I, Remedial Law Compendium, 9th edition, p. 91.
33 Id.
566
566 SUPREME COURT REPORTS ANNOTATED
Offices of the City Mayor of Parañaque City vs. Ebio
In the instant case, the action for prohibition seeks to enjoin the city
government of Parañaque from proceeding with its implementation of the
road construction project. The State is neither a necessary nor an indispensable
party to an action where no positive act shall be required from it or where no
obligation shall be imposed upon it, such as in the case at bar. Neither would
it be an indispensable party if none of its properties shall be divested nor any
of its rights infringed.
We also find that the character of possession and ownership by the
respondents over the contested land entitles them to the avails of the action.
A right in esse means a clear and unmistakable right.34A party seeking to
avail of an injunctive relief must prove that he or she possesses a right in esse or
one that is actual or existing.35 It should not be contingent, abstract, or future
rights, or one which may never arise.36
In the case at bar, respondents assert that their predecessor-in-interest,
Pedro Vitalez, had occupied and possessed the subject lot as early as 1930. In
1964, respondent Mario Ebio secured a permit from the local government of
Parañaque for the construction of their family dwelling on the said lot. In 1966,
Pedro executed an affidavit of possession and occupancy allowing him to
declare the property in his name for taxation purposes. Curiously, it was also
in 1966 when Guaranteed Homes, Inc., the registered owner of Road Lot No.
8 (RL 8) which adjoins the land occupied by the respondents, donated RL 8 to
the local government of Parañaque.
From these findings of fact by both the trial court and the Court of Appeals,
only one conclusion can be made: that for more than thirty (30) years, neither
Guaranteed Homes, Inc.
_______________
34 Philippine Leisure and Retirement Authority v. Court of Appeals, G.R. No. 156303, December
19, 2007, 541 SCRA 85, 100.
35 Duvaz Corporation v. Export and Industry Bank, G.R. No. 163011, June 7, 2007, 523 SCRA 405,
413.
36 Id., at p. 415.
567
VOL. 621, JUNE 23, 2010 567
Offices of the City Mayor of Parañaque City vs. Ebio
nor the local government of Parañaque in its corporate or private capacity
sought to register the accreted portion. Undoubtedly, respondents are deemed
to have acquired ownership over the subject property through prescription.
Respondents can assert such right despite the fact that they have yet to register
their title over the said lot. It must be remembered that the purpose of land
registration is not the acquisition of lands, but only the registration of title
which the applicant already possessed over the land. Registration was never
intended as a means of acquiring ownership.37 A decree of registration merely
confirms, but does not confer, ownership.38
Did the filing of a sales patent application by the respondents, which
remains pending before the DENR, estop them from filing an injunction suit?
We answer in the negative.
Confirmation of an imperfect title over a parcel of land may be done either
through judicial proceedings or through administrative process. In the instant
case, respondents admitted that they opted to confirm their title over the
property administratively by filing an application for sales patent.
Respondents’ application for sales patent, however, should not be used to
prejudice or derogate what may be deemed as their vested right over the
subject property. The sales patent application should instead be considered as
a mere superfluity particularly since ownership over the land, which they seek
to buy from the State, is already vested upon them by virtue of acquisitive
prescription. Moreover, the State does not have any authority to convey a
property through the issu-
_______________
37 Republic v. Court of Appeals, Nos. L-43105 & L-43190, August 31, 1984, 131 SCRA 532, 539.
38 Lopez v. Esquivel, Jr., G.R. No. 168734, April 24, 2009, 586 SCRA 545, 562; and Republic v.
Court of Appeals, G.R. No. 108998, August 24, 1994, 235 SCRA 567, 576.
568
568 SUPREME COURT REPORTS ANNOTATED
Offices of the City Mayor of Parañaque City vs. Ebio
ance of a grant or a patent if the land is no longer a public land.39
Nemo dat quod dat non habet. No one can give what he does not have. Such
principle is equally applicable even against a sovereign entity that is the State.
 WHEREFORE, the petition is DENIED for lack of merit. The January 31,
2007 Decision, as well as the July 8, 2007 Resolution, of the Court of Appeals
in CA-G.R. SP No. 91350 are hereby AFFIRMED.
With costs against petitioners.
SO ORDERED.
Carpio-Morales (Chairperson), Brion, Bersamin and Abad,** JJ., concur.
Petition denied, judgment and resolution affirmed.
 G.R. No. 176929. July 4, 2008.*
INOCENCIO Y. LUCASAN for himself and as the Judicial Administrator of
the Intestate Estate of the late JULIANITA SORBITO LUCASAN,
petitioner, vs. PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC)
as receiver and liquidator of the defunct PACIFIC BANKING
CORPORATION, respondent.
Remedial Law; Actions; Quieting of Title; Requisites to avail of the remedy of quieting of
title.—To avail of the remedy of quieting of title, two (2) indispensable requisites must
concur, namely: (1) the plaintiff or complainant has a legal or an equitable title to or
interest in the real property subject of the action; and (2) the deed, claim, encumbrance
or proceeding claimed to be casting a cloud on his title must be shown to be in fact
invalid or inoperative despite its prima facie appearance of validity or legal efficacy.
Stated differently, the plaintiff must show that he has a legal or at least an equitable
title over the real property in dispute, and that some deed or proceeding beclouds its
validity or efficacy.
PETITION for review on certiorari of the decision and resolution of the Court
of Appeals.
The facts are stated in the opinion of the Court.
Jose H. Las Piñas for petitioner.
The General Counsel for respondent.
NACHURA, J.:
On appeal is the March 23, 2006 Decision1 of the Court of Appeals (CA) in
CA-G.R. CV No. 81518, affirming the July 24,
_______________
* THIRD DIVISION.
1 Penned by Associate Justice Pampio A. Abarintos, with Associate Justices Enrico A.
Lanzanas and Apolinario D. Bruselas, Jr., concurring; Rollo, pp. 28-35.
307
VOL. 557, JULY 4, 2008 307
Lucasan vs. Philippine Deposit Insurance Corporation
2003 Order2 of the Regional Trial Court (RTC) of Bacolod City, Branch 43,
granting respondent’s motion to dismiss, as well as its subsequent
Resolution3 denying petitioner’s motion for reconsideration.
The factual antecedents are as follows.
Petitioner Inocencio Y. Lucasan (Lucasan) and his wife Julianita Sorbito
(now deceased) were the owners of Lot Nos. 1500-A and 229-E situated in
Bacolod City, respectively covered by TCT Nos. T-68115 and T-13816.
On August 3, 1972, Pacific Banking Corporation (PBC) extended a
P5,000.00 loan to Lucasan, with Carlos Benares as his co-maker. Lucasan and
Benares failed to pay the loan when it became due and demandable.
Consequently, PBC filed a collection case with the RTC of Bacolod City,
docketed as Civil Case No. 12188.
On April 30, 1979, the RTC rendered a decision ordering Lucasan and
Benares to jointly and severally pay PBC P7,199.99 with interest at 14% per
annum computed from February 7, 1979, until the full payment of the
obligation. Lucasan failed to pay the monetary award; thus, to satisfy the
judgment, the RTC issued a writ of execution directing the sheriff to effect a
levy on the properties owned by Lucasan and sell the same at public auction.
In compliance with the writ, the City Sheriff of Bacolod issued a Notice of
Embargo on January 8, 1981, which was annotated on Lucasan’s TCT Nos. T-
68115 and T-13816 as Entry No. 110107. Annotated as prior encumbrances on
the same titles were the mortgages in favor of Philippine National Bank (PNB)
and Republic Planter’s Bank (RPB) executed to secure Lucasan’s loans with
the banks.
On May 13, 1981, the lots were sold at public auction and were awarded to
PBC as the highest bidder. A certificate of
_______________
2 Rollo, pp. 21-29.
3 Id., at pp. 36-37.
308
308 SUPREME COURT REPORTS ANNOTATED
Lucasan vs. Philippine Deposit Insurance Corporation
sale was executed in its favor and was registered and annotated on TCT Nos.
T- 68115 and T-13816 as Entry No. 112552 on June 5, 1981. Neither PNB nor
RPB, the mortgagees, assailed the auction sale.
Lucasan, as well as the mortgagee banks, PNB and RPB, did not redeem
the properties within the redemption period. Nevertheless, PBC did not file a
petition for consolidation of ownership.
In January 1997, Lucasan, through counsel, wrote a letter to the Philippine
Deposit Insurance Corporation (PDIC), PBC’s receiver and liquidator seeking
the cancellation of the certificate of sale and offering to pay PBC’s claim against
Lucasan.4
Not long thereafter, Lucasan paid his loans with the PNB and RPB.
Consequently, the mortgagee banks executed their respective releases of
mortgage, resulting in the cancellation of the prior encumbrances in favor of
PNB and RPB.
On August 13, 2001, PDIC denied Lucasan’s request for the cancellation of
the certificate of sale stating:
“Please be informed that based on our records, TCT Nos. T-68115 and T-13816 have
already become part of the acquired assets of Pacific Banking Corporation by virtue of
a Certificate of Sale dated May 13, 1981 executed by the City Sheriff of Bacolod.
Subsequently, this document was registered on the titles on June 5, 1981 so that the last
day of the redemption period was June 5, 1982.
 With regard to your request, we regret to inform you that reacquisition of the
subject properties have to be through sale following PDIC’s policy on disposal.
Accordingly, these properties can be disposed through public bidding using the latest
appraised value in the total amount of P2,900,300.00 as of March 29, 2000 as a minimum
bid. If you are still interested to acquire the properties, please get in touch with our
Asset Management Group x x x.” 5
_______________
4 RTC records, p. 28.
5 Id., at p. 31.
309
VOL. 557, JULY 4, 2008 309
Lucasan vs. Philippine Deposit Insurance Corporation
Lucasan then filed a petition denominated as declaratory relief with the RTC of
Bacolod City docketed as Civil Case No. 02-11874.6 He sought confirmation of
his rights provided in the second paragraph of Section 1, Rule 63 of the Rules
of Court in relation to Section 75 of Presidential Decree (P.D.) No. 1529.
Lucasan also pleaded for the lifting and/or cancellation of the notice of
embargo and the certificate of sale annotated on TCT Nos. T-68115 and T-
13816, and offered to pay P100,000.00 or such amount as may be determined
by the RTC, as consideration for the cancellation.
PDIC moved to dismiss the complaint for lack of cause of action. It averred
that an action to quiet title under Section 1 of Rule 63 may only be brought
when there is a cloud on, or to prevent a cloud from being cast upon, the title
to real property. It asseverated that a cloud on the title is an outstanding
instrument record, claim, encumbrance or proceeding which is actually
invalid or inoperative, but which may nevertheless impair or affect injuriously
the title to property. PDIC claimed that the notice of embargo was issued
pursuant to a writ of execution in Civil Case No. 12188, while the certificate of
sale was executed as a result of a public bidding. Thus, their annotations on
the titles were valid, operative or effective. PDIC asserted that Lucasan’s
petition is nothing but a disguised attempt to compel PDIC to resell the
properties at a reduced price of P100,000.00. Accordingly, it prayed for the
dismissal of the petition.7
Lucasan opposed the motion.8 He countered that the subject properties
were still in his possession, and neither PBC nor PDIC instituted an action for
consolidation of ownership. Since the certificate of title was still in his name,
he contended that he could pursue all legal and equitable remedies, including
those provided for in Section 1, Rule 63 of the Rules of Court to reacquire the
properties. He also claimed that
_______________
6 Id., at pp. 1-12.
7 Id., at pp. 64-73.
8 Id., at pp. 84-88.
310
310 SUPREME COURT REPORTS ANNOTATED
Lucasan vs. Philippine Deposit Insurance Corporation
PDIC’s policy of disposing the subject properties through public bidding at
the appraised value of P2,900,300.00 was unjust, capricious and arbitrary,
considering that the judgment debt amounted only to P7,199.99 with interest
at 14% per annum. Lucasan urged the RTC to apply the liberal construction of
the redemption laws stressed in Cometa v. Court of Appeals.9
In its Order10 dated July 24, 2003, the RTC granted PDIC’s motion to
dismiss, thus:
“The clouds contemplated by the provision of law under Article 476 of the Civil
Code is one where the instrument, record, claim, encumbrance or proceeding is
apparently valid or effective on its face that nothing appears to be wrong, but in reality,
is null and void. Hence, the petition filed by [Lucasan] pursuant to the said article is
equivalent to questioning the validity of the subsequent annotation of Entry No. 110107
and Entry No. 112522 in TCT Nos. T-13816 and T-68115.
Records disclose that Entry No. 110107 which is a Notice of Embargo was issued
by virtue of a valid judgment rendered in Civil Case No. 12188 entitled “Pacific Banking
Corporation vs. [Inocencio] Lucasan, et al.,” whereby the Court found [Lucasan] liable in
favor of [PBC] the sum of P7,199.99 with 14% interest per annum to be computed from
February 7, 1979 until fully paid.
As mandated in Sec. 12, Rule 39 of the Revised Rules of Court, such levy on
execution create a lien in favor of [PBC] over the right, title and interest of [Lucasan]
over the two (2) subject parcels of land covered by TCT Nos. T-13816 and T-68115,
subject to liens and encumbrances then existing. The fact that [Lucasan] has redeemed
the mortgage properties from the first mortgages (sic), PNB and PNB (sic) Republic
Bank, does not vest him any title free from the lien of [PBC].
While the law requires that the judgment debtor, [Lucasan] must be served with a
notice of levy and even if not served therewith, the defect is cured by service on him of
the notice of sale prior to the sale, nowhere in the petition which alleges that [Lusasan
_______________
9 404 Phil. 107; 351 SCRA 294 (2001).
10 RTC records, pp. 113-119.
311
VOL. 557, JULY 4, 2008 311
Lucasan vs. Philippine Deposit Insurance Corporation
(sic)] refutes the validity of the execution sale. Thus, he is deemed to have received and
recognized the same.
As support for his thesis, [Lucasan] cites the case of Balanga vs. CA., et al. (supra).
However this Court is unable to agree that it is applicable to the present case. As
correctly argued by [PDIC], in that case the proceedings under execution suffered
infirmity from the very start as the levy and sale made by the sheriff of the land of
petitioner Balanga included the house erected on the land [and] constituted as a family
home which, under the law, exempt from execution. In the case at bar, no objection was
interposed by [Lucasan] as a valid levy has been made pursuant to Sec. 7, Rule 57 of
the Revised Rules of Court, as a consequence of which, the sale made pursuant to Sec.
11 of the same rule is also valid and effective.”
11
The dispositive portion of the RTC Order reads:
“WHEREFORE, finding the claim of any cloud over the titles of [Lucasan] to be
bereft of basis in fact and in law, the Motion to Dismiss filed by [PDIC] is granted.
Accordingly, this is hereby ordered DISMISSED.
SO ORDERED.” 12
Lucasan filed a motion for reconsideration, but the RTC denied it on October
20, 2003.13
On appeal, the CA affirmed in toto the RTC ruling. It declared that Lucasan
already lost his right to redeem the properties when he failed to exercise it
within the prescribed period. The effect of such failure was to vest in PBC
absolute ownership over the subject properties.14
The CA disposed, thus:
“WHEREFORE, in view of all the foregoing premises, the appeal is
hereby DENIED. Accordingly, the assailed Order of the Regional Trial Court of
Bacolod City, Branch 43 dated 24 July 2003
_______________
11 Id., at pp. 118-119.
12 Id., at p. 119.
13 Id., at p. 142.
14 Rollo, pp. 28-35.
312
312 SUPREME COURT REPORTS ANNOTATED
Lucasan vs. Philippine Deposit Insurance Corporation
dismissing [Lucasan’s] Petition for Declaratory Relief and the subsequent Order of
the same Court dated 20 October 2003 denying [Lucasan’s] motion for reconsideration
from the Order of Denial (sic) are hereby affirmed in toto. No costs.
SO ORDERED.” 15
Lucasan sought a reconsideration of the CA Decision, but the same was denied
on February 7, 2007.16
Before us, Lucasan impugns the CA Decision on the following grounds:
1—THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS
DISCRETION IN AFFIRMING THE ORDER OF DISMISSAL OF THE PETITIONER’S
PETITION IN THE REGIONAL TRIAL COURT WHEN IT DISREGARDED THE
CLEAR PROVISION OF SECTION 75 OF PRESIDENTIAL DECREE NO. 1529 AND
PUT TO NAUGHT THE APPLICABLE JURISPRUDENCE IN ZACARIAS
COMETA x x x AND THE CASES CITED THEREIN, INSPITE (sic) OF THE CLEAR
AND OUTSTANDING SIMILARITY OF FACTS WITH THE CASE UNDER
CONSIDERATION.
2—THE COURT OF APPEALS ALSO ERRED AND GRAVELY ABUSED ITS
DISCRETION WHEN IT FAILED TO CONSIDER THAT THE NOTICE OF EMBARGO
AND CERTIFICATE OF SALE ISSUED BY THE CITY SHERIFF WERE ONLY LEVY
ON THE INTEREST OF THE PETITIONER ON THE TWO (2) SUBJECT LOTS, AS
DECREED IN QUEZON BEARING & PARTS CORPORATION, x x x, WHICH IS
LIKEWISE APPLICABLE TO THE CASE AT BAR. 17
Lucasan posits that he has sufficient cause of action against PDIC; thus, he
chides the RTC for dismissing his complaint, and the CA for affirming the
dismissal. In support of his thesis, he cites Section 75 of Presidential Decree
(PD)
_______________
15 Id., at p. 35.
16 Id., at pp. 36-37.
17 Id., at p. 11.
313
VOL. 557, JULY 4, 2008 313
Lucasan vs. Philippine Deposit Insurance Corporation
No. 1529, or the Property Registration Decree18 and Cometa v. Court of Appeals.19
As gleaned from the averments of the complaint, Lucasan’s action was one
for quieting of title under Rule 63 of the Rules of Court. Essentially, he sought
the cancellation of the notice of embargo and the certificate of sale annotated
on TCT Nos. T-68115 and T-13816 claiming that the said annotations
beclouded the validity and efficacy of his title. The RTC, however, dismissed
his complaint for lack of cause of action which was affirmed by the CA in its
assailed Decision. Thus, the key issue for our consideration is whether the
dismissal of Lucasan’s complaint was proper.
Quieting of title is a common law remedy for the removal of any cloud of
doubt or uncertainty with respect to real property. The Civil Code authorizes
the said remedy in the following language:
“ART. 476. Whenever there is a cloud on title to real property or any interest
therein, by reason of any instrument, record, claim, encumbrance or proceeding which
is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable,
or unenforceable, and may be prejudicial to said title, an action may be brought to
remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real
property or any interest therein.
_______________
18 SEC. 75. Application for new certificate upon expiration of redemption period.—Upon the expiration of the
time, if any, allowed by law for redemption after the registered land has been sold on execution taken or sold
for the enforcement of a lien of any description, except a mortgage lien, the purchaser at such sale or anyone
claiming under him may petition the court for the entry of a new certificate of title to him.
Before the entry of new certificate of title, the registered owner may pursue all legal and equitable remedies
to impeach or annul such proceedings.
19 Supra note 9.
314
314 SUPREME COURT REPORTS ANNOTATED
Lucasan vs. Philippine Deposit Insurance Corporation
ART. 477. The plaintiff must have legal or equitable title to, or interest in the real
property which is the subject-matter of the action. He need not be in possession of said
property.”
To avail of the remedy of quieting of title, two (2) indispensable requisites
must concur, namely: (1) the plaintiff or complainant has a legal or an
equitable title to or interest in the real property subject of the action; and (2)
the deed, claim, encumbrance or proceeding claimed to be casting a cloud on
his title must be shown to be in fact invalid or inoperative despite its prima
facie appearance of validity or legal efficacy.20 Stated differently, the plaintiff
must show that he has a legal or at least an equitable title over the real property
in dispute, and that some deed or proceeding beclouds its validity or efficacy.
Unfortunately, the foregoing requisites are wanting in this case.
Admittedly, the subject parcels of land were levied upon by virtue of a writ
of execution issued in Civil Case No. 12188. On May 13, 1981, a public auction
of the subject parcels of land was held and the lots were awarded to PBC as
the highest bidder. A certificate of sale in favor of PBC was issued on the same
day, and was registered and annotated on TCT Nos. T-68115 and T-13816 as
Entry No. 112552 on June 5, 1981.
Under the 1964 Rules of Court, which were in effect at that time, the
judgment debtor or redemptioner had the right to redeem the property from
PBC within twelve (12) months from the registration of the certificate of
sale.21With the expiration of the twelve-month period of redemption and no
redemption having been made, as in this case, the judgment
_______________
20 Calacala v. Republic, G.R. No. 154415, July 28, 2005, 464 SCRA 438, 444.
21 See Development Bank of the Philippines v. Leonor Vda. de Moll, 150 Phil. 101; 43 SCRA 82
(1972).
315
VOL. 557, JULY 4, 2008 315
Lucasan vs. Philippine Deposit Insurance Corporation
debtor or the redemptioner lost whatever right he had over the land in
question.22
Lucasan admitted that he failed to redeem the properties within the
redemption period, on account of his then limited financial situation. 23 It was
only in January 1997 or fifteen (15) years later that he manifested his desire to
reacquire the properties. Clearly thus, he had lost whatever right he had over
Lot Nos. 1500-A and 229-E.
The payment of loans made by Lucasan to PNB and RPB in 1997 cannot, in
any way, operate to restore whatever rights he had over the subject properties.
Such payment only extinguished his loan obligations to the mortgagee banks
and the liens which Lucasan claimed were subsisting at the time of the
registration of the notice of embargo and certificate of sale.
Neither can Lucasan capitalize on PBC’s failure to file a petition for
consolidation of ownership after the expiration of the redemption period. As
we explained in Calacala v. Republic:24
“[P]etitioners’ predecessors-in-interest lost whatever right they had over [the] land in
question from the very moment they failed to redeem it during the 1-year period of
redemption. Certainly, the Republic’s failure to execute the acts referred to by the
petitioners within ten (10) years from the registration of the Certificate of Sale cannot,
in any way, operate to restore whatever rights petitioners’ predecessors-in-interest had
over the same. For sure, petitioners have yet to cite any provision of law or rule of
jurisprudence, and we are not aware of any, to the effect that the failure of a buyer in a
foreclosure sale to secure a Certificate of Final Sale, execute an Affidavit of
Consolidation of Ownership and obtain a writ of possession over the property thus
acquired, within ten (10) years from the registration of the Certificate of Sale will
operate to bring ownership back to him whose property has been previously foreclosed
and sold.
_______________
22 See Calacala v. Republic, supra note 20, at p. 445.
23 Letter dated October 30, 2001, RTC Records, pp. 32-33.
24 Supra, at pp. 445-447.
316
316 SUPREME COURT REPORTS ANNOTATED
Lucasan vs. Philippine Deposit Insurance Corporation
xxxx
Moreover, with the rule that the expiration of the 1-year redemption period
forecloses the obligor’s right to redeem and that the sale thereby becomes absolute, the
issuance thereafter of a final deed of sale is at best a mere formality and mere
confirmation of the title that is already vested in the purchaser. As this Court has said
in Manuel vs. Philippine National Bank, et al.:
Note must be taken of the fact that under the Rules of Court the expiration of
that one-year period forecloses the owner’s right to redeem, thus making the
sheriff’s sale absolute. The issuance thereafter of a final deed of sale becomes
a mere formality, an act merely confirmatory of the title that is already in the
purchaser and constituting official evidence of that fact.” (Emphasis
supplied.)
Certainly, Lucasan no longer possess any legal or equitable title to or interest
over the subject parcels of land; hence, he cannot validly maintain an action
for quieting of title.
Furthermore, Lucasan failed to demonstrate that the notice of embargo and
the certificate of sale are invalid or inoperative. In fact, he never put in issue
the validity of the levy on execution and of the certificate of sale duly
registered on June 5, 1981. It is clear, therefore, that the second requisite for an
action to quiet title is, likewise, absent.
 Concededly, Lucasan can pursue all the legal and equitable remedies to Petition denied. Judgment affirmed.
impeach or annul the execution sale prior to the issuance of a new certificate
of title in favor of PBC. Unfortunately, the remedy he had chosen cannot
prosper because he failed to satisfy the requisites provided for by law for an
action to quiet title. Hence, the RTC rightfully dismissed Lucasan’s complaint.
Lucasan tries to find solace in our ruling in Cometa v. Court of Appeals. Sadly
for him, that case is not on all fours with his case, for it was not for quieting of
title but a petition for issuance of a writ of possession and cancellation of lis
pendens. Likewise, in Cometa the registered owner assailed the validity of the
levy and sale, which Lucasan failed to do. 317
VOL. 557, JULY 4, 2008 317
Lucasan vs. Philippine Deposit Insurance Corporation
Undoubtedly, Lucasan’s right to redeem the subject properties had elapsed
on June 5, 1982. His offer to redeem the same in 1997 or long after the
expiration of the redemption period is not really one for redemption but for
repurchase. Thus, PBC and PDIC, its receiver and liquidator, are no longer
bound by the bid price. It is entirely within their discretion to set a higher price.
As we explained in De Robles v. Court of Appeals:25
“The right to redeem becomes functus officio on the date of its expiry, and its
exercise after the period is not really one of redemption but a repurchase. Distinction
must be made because redemption is by force of law; the purchaser at public auction is
bound to accept redemption. Repurchase however of foreclosed property, after
redemption period, imposes no such obligation. After expiry, the purchaser may or
may not re-sell the property but no law will compel him to do so. And, he is not bound
by the bid price; it is entirely within his discretion to set a higher price, for after all, the
property already belongs to him as owner.”
Accordingly, the condition imposed by the PDIC for the re-acquisition of the
property cannot be considered unjust or unreasonable.
Verily, in several cases,26 this Court allowed redemption even after the
lapse of the redemption period. But in those cases a valid tender was made by
the original owners within the redemption period. Even in Cometa, the
redemption was allowed beyond the redemption period because a valid
tender of payment was made within the redemption period. The same is not
true in the case before us.
In fine, we find that the RTC correctly dismissed Lucasan’s complaint for quieting
of title. Thus, the CA committed no reversible error in sustaining the RTC.

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of
Appeals in CA-G.R. CV No. 81518, are AFFIRMED. Costs against the petitioner.

SO ORDERED.

Ynares-Santiago, Chairperson, Austria-Martinez, Chico-Nazario, Reyes, JJ., concur.

 G.R. No. 175375. June 23, 2009.*
CONRADO O. LASQUITE and TEODORA I. ANDRADE, petitioners, vs.
VICTORY HILLS, INC., respondent.
Remedial Law; Appeals; In the exercise of its power of review, the Court does not normally
undertake a re-examination of the evidence presented by the contending parties during the trial
of the case considering that the findings of fact of the Court of Appeals are conclusive and
binding on the Court; There are, however, several recognized exceptions in which factual issues
may be resolved by this Court.—Often cited but rarely heeded is the rule that the Supreme
Court is not a trier of facts. In the exercise of its power of review, the Court does not
normally undertake a re-examination of the evidence presented by the contending
parties during the trial of the case considering that the findings of fact of the Court of
Appeals are conclusive and binding on the Court. However, there are several
recognized exceptions in which factual issues may be resolved by this Court. Two of
these exceptions find application in the present case, to wit: (1) when the findings of
fact of the appellate court are contrary to those of the trial court; and (2) when the
findings of fact are premised on the supposed absence of evidence and contradicted by
the evidence on record.
Land Registration; Land Titles; Guiding Principle in Case of Successive Registration.—
The relocation survey conducted by the DENR on October 25, 1993 positively
confirmed that the mother title of respondent’s TCT and the OCTs of petitioners cover
the same land. We are confronted, therefore, with a case of successive registration, in
the event of which we have been constantly guided that: In successive registrations,
where more than one certificate is issued in respect of a particular estate or interest in
land, the person claiming under the prior certificate is entitled to the estate or interest;
and the person is deemed to hold under the prior certificate who is the holder of, or
whose claim is derived directly or indirectly from the person who was the holder of
the earliest certificate issued in respect thereof.
_______________
* SECOND DIVISION.
617
VOL. 590, JUNE 23, 2009 617
Lasquite vs. Victory Hills, Inc.
Same; Same; A certified true copy of an original certificate of title shall be admissible as
evidence in our courts and shall be conclusive as to all matters contained therein except as
otherwise provided by Act No. 496; The evidentiary value of public documents must be
sustained in the absence of strong, complete and conclusive proof of its falsity or nullity.—
Section 47 of Act No. 496 or the Land Registration Act provides that a certified true
copy of an original certificate of title shall be admissible as evidence in our courts and
shall be conclusive as to all matters contained therein except as otherwise provided by
the Act. This is complementary to the rule on the admissibility of public documents as
evidence under Section 23, Rule 132 of the Rules of Court: x x x x Thus, the evidentiary
value of public documents must be sustained in the absence of strong, complete and
conclusive proof of its falsity or nullity.
Same; Same; A duly-registered certificate of title is considered a public document and the
entries found in it are presumed correct, unless the party who contests its accuracy can produce
evidence establishing otherwise; Records of public officers which are admissible in evidence are
limited to those matters which the public officer has authority to record.—A duly-registered
certificate of title is considered a public document and the entries found in it are
presumed correct, unless the party who contests its accuracy can produce evidence
establishing otherwise. Even then, records of public officers which are admissible in
evidence are limited to those matters which the public officer has authority to record.
Indisputably, it was beyond the power of the Register of Deeds to register a public land
based on an invalid, much worse, a non-existent patent. To sanction an otherwise
invalid document in the guise of upholding the stability of our land registration system
would run counter to the judicial devotion towards purging the system of illicit titles,
in accordance with our base task as the ultimate citadel of justice and legitimacy.
Same; Same; Reconveyance; The established legal principle in actions for annulment or
reconveyance of title is that a party seeking it should establish not merely by a preponderance of
evidence but by clear and convincing evidence that the land sought to be reconveyed is his.—
The established legal principle in actions for annulment or reconveyance of title is that
a party seeking it should establish not merely by a preponderance of evidence but by
clear and convincing evidence that the land sought to be reconveyed is his. It is rather
618
618 SUPREME COURT REPORTS ANNOTATED
Lasquite vs. Victory Hills, Inc.
obvious from the foregoing disquisition that respondent failed to dispense such
burden. Indeed, the records are replete with proof that respondent declared the lots
comprising Lot No. 3050 for taxation purposes only after it had instituted the present
case in court. This is not to say of course that tax receipts are evidence of ownership,
since they are not, albeit they are good indicia of possession in the concept of owner, for
no one would ordinarily be paying taxes for a property not in his actual or at least
constructive possession.
Same; Same; Same; Forgery; Whoever alleges forgery has the burden of proving the same;
Forgery cannot be presumed but should be substantiated with clear and convincing evidence.—
Respondent avers that petitioner Lasquite forged the Deed of Quitclaim/Assign-ment
of Rights to make it appear that Jose Manahan conveyed Lot No. 3050 to him. It must
be stressed, however, that whoever alleges forgery has the burden of proving the same.
Forgery cannot be presumed but should be substantiated with clear and convincing
evidence.
Same; Same; Same; Prescription; An action for reconveyance based on an implied trust
prescribes in 10 years; If the plaintiff, as the real owner of the property also remains in possession
of the property, the prescriptive period to recover title and possession of the property does not
run against him; Such an action for reconveyance, if nonetheless filed, would be in the nature
of a suit for quieting of title, an action that is imprescriptible.—Relevant to the issue of
prescription, we have ruled that to determine when the prescriptive period
commenced in an action for reconveyance, the plaintiff’s possession of the disputed
property is material. An action for reconveyance based on an implied trust prescribes
in 10 years. The reference point of the 10-year prescriptive period is the date of
registration of the deed or the issuance of the title. The prescriptive period applies only
if there is an actual need to reconvey the property as when the plaintiff is not in
possession of the property. However, if the plaintiff, as the real owner of the property
also remains in possession of the property, the prescriptive period to recover title and
possession of the property does not run against him. In such a case, an action for
reconveyance, if nonetheless filed, would be in the nature of a suit for quieting of title,
an action that is imprescriptible.
619
VOL. 590, JUNE 23, 2009 619
Lasquite vs. Victory Hills, Inc.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Conrado O. Lasquite for petitioners.
Farcon, Gabriel, Farcon & Associates for respondent.
QUISUMBING, J.:
This appeal seeks to annul the Decision1 dated November 8, 2006 of the
Court of Appeals in CA G.R. CV No. 77599. The Court of Appeals had set aside
the Decision2 dated July 2, 2002 of the Regional Trial Court (RTC) of San Mateo,
Rizal, Branch 77 in Civil Case No. 548 which upheld Original Certificate of
Title (OCT) Nos. NP-1973 and NP-198,4 in the names of petitioners Andrade
and Lasquite, respectively.
The antecedent facts are as follows:
On May 4, 1971, Jose Manahan5 executed a Deed of Quitclaim/Assignment
of Rights6 over a parcel of land designated as Lot No. 3050 at Barrio Ampid,
San Mateo, Rizal in favor of Conrado O. Lasquite. Lasquite applied for a free
patent over the lot, and pending approval of the application, sold half of the
_______________
1 Rollo, pp. 16-31. Penned by Associate Justice Rosmari D. Carandang, with Associate Justices
Renato C. Dacudao and Estela M. Perlas-Bernabe, concurring.
2 CA Rollo, pp. 84-105. Penned by Judge Francisco C. Rodriguez, Jr.
3 Exhibit “19,” folder of exhibits of defendant in Civil Case No. 548, p. 29.
4 Exhibit “16,” folder of exhibits of defendant in Civil Case No. 548, p. 23.
5 Referred to as Jose M. Manahan, Jose H. Manahan and Jose S. Manahan in some parts of the
records.
6 Exhibit “1-A,” folder of exhibits of defendant in Civil Case No. 548, p. 1.
620
620 SUPREME COURT REPORTS ANNOTATED
Lasquite vs. Victory Hills, Inc.
land to Juanito L. Andrade on January 11, 1981.7 Upon the grant of the patent
application, OCT Nos. NP-197 and NP-198 were issued in the names of
Andrade and Lasquite, respectively, on June 18, 1981.
Thereafter, on August 22, 19838 and October 22, 1983,9Simeona, Armentina,
Herminia, Zenaida, Gloria, Yolanda and Rodolfo, all surnamed Prescilla, filed
a protest with the Bureau of Lands to question the grant of free patent in favor
of petitioners. They claimed to have been in possession in concepto de dueno of
Lot No. 3050, planting and cultivating crops thereon since 1940. On March 8,
1989, the Prescillas also instituted a case for reconveyance and damages
against petitioners before the RTC of San Mateo, Rizal, Branch 77 which was
docketed as Civil Case No. 548-SM. They alleged that Lasquite forged the
signature of Jose M. Manahan in the Deed of Quitclaim/Assignment of Rights
since the latter has died on April 11, 1968.10
It also appears that a second complaint,11 for annulment of title,
reconveyance and damages, was filed by Roberto and Raquel Manahan, Maria
Gracia M. Natividad, the heirs of Leocadio Manahan, and the heirs of Joaquin
Manahan against petitioners on June 1, 1990. The Manahans asserted title over
Lot No. 3050 as successors of Jose S. Manahan whom they claimed to have
died on October 12, 1947.12 The case was docketed as Civil Case No. 680-90-SM
and raffled to Branch 76 of the San Mateo, Rizal RTC. Upon learning of Civil
Case No. 548-SM initiated by the Prescillas against petitioners, the Manahans
filed a Complaint in Interven-
_______________
7 Exhibits “13” and “13-A,” folder of exhibits of defendant in Civil Case No. 548, p. 16.
8 Records (Civil Case No. 548), Vol. 1, p. 13.
9 Id., at p. 14.
10 Records (Civil Case No. 548), Vol. 2-B, p. 102.
11 Records (Civil Case No. 680-90-SM), pp. 2-5.
12 Exhibit “A,” folder of exhibits of Victory Hills, Inc. in Civil Case No. 548, p. 1.
621
VOL. 590, JUNE 23, 2009 621
Lasquite vs. Victory Hills, Inc.
tion13 on June 23, 1993, and Civil Case No. 680-90-SM was consolidated
with Civil Case No. 548-SM.
It also appears that on January 11, 1994, respondent Victory Hills, Inc.
(Victory Hills) also intervened in Civil Case No. 548-SM. Victory Hills likewise
claimed to be the owner of the subject lot. Victory Hills traced its title to Lot
No. 3050 to OCT No. 38014 which was allegedly registered on January 4, 1937
to Jose H. Manahan by virtue of Homestead Patent No. H-1956215 dated
December 14, 1936. According to Victory Hills, Jose H. Manahan sold Lot No.
3050 to Rufino Hieras on May 17, 1944 to whom Transfer Certificate of Title
(TCT) No. 4621916 was issued. Hieras then conveyed the lot to Spouses Serafin
and Veronica Angeles, and Catalina Cayetano who obtained TCT No.
8508217 in their names. Later, the lot was transferred to Victory Hills on
September 6, 1961 under TCT No. 90816.18
On November 27, 1991, Victory Hills filed an Ex-ParteMotion for
Relocation Survey19 with the Department of Environment and Natural
Resources (DENR). Upon grant of the motion, the DENR released a Narration
Report of the Relocation Survey20 on December 9, 1993. The report noted that:
“x x x x
_______________
 13 Records (Civil Case No. 548), Vol. 1, pp. 355-361.
14 Records (Civil Case No. 548), Vol. 2-B, p. 101.
15 Id.
16 Exhibits “B,” “B-1” and “B-2,” folder of exhibits of Victory Hills, Inc. in Civil Case No. 548,
pp. 235-236.
17 Exhibits “C,” “C-1” and “C-2,” folder of exhibits of Victory Hills, Inc. in Civil Case No. 548,
pp. 237-238.
18 Exhibits “D,” “D-1” and “D-2,” folder of exhibits of Victory Hills, Inc. in Civil Case No.
548, pp. 239-240.
19 Exhibit “H,” folder of exhibits of Victory Hills, Inc. in Civil Case No. 548, p. 114.
20 Exhibit “J,” folder of exhibits of Victory Hills, Inc. in Civil Case No. 548, pp. 117-118.
622
622 SUPREME COURT REPORTS ANNOTATED
Lasquite vs. Victory Hills, Inc.
1. H-19562 and H-19887 had been accepted by Cad. 375-D, San Mateo
Cadastre and identical to Lot [No.] 3050 and Lot [No.] 258
respectively[;]
2. H-19562 had been issued a free patent and Original Certificate of Title
No. 380 in favor [of] Jose Manahan on June 4, 1937. That said title was
transferred to Rufin[o] Hieras on May 17, 1944 with TCT [No.] 46219,
cancelling O[CT] [No.] 3[8]0. Again TCT [No.] 46219-T-237 was
cancelled and TCT [No.] [8]5082 was issued to [Spouses] Serafin
Angeles and [Veronica] D. Angeles and Catalina Cayetano [on] March
17, 1961;
3. A consolidate[d] subdivision survey of H-19562 and H-19887 had been
approved by the LRC designated as plan (LRC) Pcs [-] [1586] surveyed
June 1-15, 1961; which was not projected in Cad. 375-D, San Mateo
Cadastre;
4. Lot [No.] 3050 which is identical to H-19562 was subdivided and
designated as plan Cad-04-002023-D, into two lots. (Emphasis
supplied.)21
x x x x”
Notwithstanding the said report, Branch 77 of the Rizal RTC, on July 2,
2002, promulgated a Decision which upheld the title of petitioners to Lot No.
3050. It decreed:
“Accordingly, the title of defendants, Conrado Lasquite and Jose Andrade,
involving the subject parcel of land under OCT No. NP-198 and OCT No. NP-197
registered on June 18, 1981, are sustained. Likewise, the title issued to plaintiffs
Prescilla, under OCT No. ON-333 involving Lot 3052 is sustained.
WHEREFORE, premises considered, judgment is hereby rendered dismissing
these cases.
No Costs.
SO ORDERED.” 22
_______________
21 Id., at p. 117.
22 CA Rollo, p. 105.
623
VOL. 590, JUNE 23, 2009 623
Lasquite vs. Victory Hills, Inc.
The trial court disregarded OCT No. 380 and ruled that it was spurious as
it lacked the signature of then Secretary of Agriculture and Commerce Eulogio
Rodriguez. The RTC also ruled that the complaints for reconveyance of the
Precillas, the Manahans and Victory Hills, which were all founded on extrinsic
fraud, had prescribed since more than four (4) years have elapsed since the
land was registered before they filed cases in court.
The Prescillas, the Manahans and Victory Hills interposed an appeal to the
Court of Appeals. On November 8, 2006, the appellate court set aside the
ruling of the RTC and declared Victory Hills the absolute owner of Lot No.
3050. The appellate court ruled:
“WHEREFORE, the Decision dated July 2, 2002 rendered by the Regional Trial
Court of San Mateo, Rizal, Branch 77 is ANNULLED and SET ASIDE and a new one
entered DECLARING VICTORY HILLS, INC. the absolute owner of the parcel of land
designated as Lot 3050 subject of the instant case and ORDERING the Register of
Deeds of Rizal to cancel OCT No. NP-198 and OCT No. NP-197 in the names of
defendants-appellees Conrado Lasquite and Juanito Andrade.
SO ORDERED.” 23
Aggrieved, petitioners elevated the case to us. Petitioners contend that the
Court of Appeals erred in
I.
…HOLDING THAT RESPONDENT’S OCT NO. 380 AND HOMESTEAD
PATENT NO. H-19562 ARE VALIDLY ISSUED;
II.
…HOLDING THAT RESPONDENT VICTORY HILLS, INC. HAS A BETTER
RIGHT OF TITLE AND OWNERSHIP OVER THE SUBJECT PROPERTY VIS-À-
VIS PETITIONERS CONRADO O. LASQUITE AND TEODORA I. ANDRADE;
_______________
23 Id., at pp. 264-265.
624
624 SUPREME COURT REPORTS ANNOTATED
Lasquite vs. Victory Hills, Inc.
III.
…GIVING WEIGHT AND CREDENCE TO RESPONDENT’S HOMESTEAD
PATENT NO. H-19562 DESPITE THE FACT THAT A COPY OF SAID HOMESTEAD
PATENT WAS NEVER PRESENTED DURING THE TRIAL NOR IN THE APPEAL;
IV.
…HOLDING THAT OCT NO. 380 IS AN EN TOTOTRANSCRIPTION OF
HOMESTEAD PATENT NO. H-19562 NOTWITHSTANDING THE FACT THAT NO
EVIDENCE RELATIVE THERETO WAS ADDUCED IN THE LOWER COURT;
 V.
…NOT RESOLVING THE ISSUE THAT RESPONDENT’S CLAIM HAD
ALREADY PRESCRIBED. 24
Condensed, the twin issues for our determination are: (1) whether
respondent Victory Hills, Inc. is entitled to reconveyance of Lot No. 3050; and
(2) whether respondent’s claim had prescribed.
Petitioners assail the validity of OCT No. 380 as the source of respondent’s
derivative title. They fault the appellate court for according weight to the
certificate of title even if it does not bear the signature of the Secretary of
Agriculture and Commerce. They stress that the Bureau of Lands has no
record of Patent No. H-19562 which respondent cited as the basis for the
issuance of its title to Lot No. 3050 and yet the appellate court still concluded
that the transcription of Patent No. H-19562 in OCT No. 380 was conclusive
proof of its due execution. Petitioners likewise call for a review of the facts in
this case owing to the conflicting findings of the RTC and the Court of
Appeals.
On the other hand, respondent relies on OCT No. 380 as evidence of the
earlier registration of Lot No. 3050 in the name of its predecessor, Jose H.
Manahan. Such recording,
_______________
24 Rollo, pp. 127-128.
625
VOL. 590, JUNE 23, 2009 625
Lasquite vs. Victory Hills, Inc.
respondent asserts, has rendered OCT No. 380 indefeasible one year following
its issuance on January 4, 1937 and has effectively segregated Lot No. 3050
from the domain of public lands. Respondent further justifies that the notation
“sgd” in OCT No. 380 was sufficient indication that the original copy of
Homestead Patent No. H-19562 had been signed by then Secretary of
Agriculture and Commerce Eulogio Rodriguez. In any case, respondent
invokes the presumption of regularity in the performance of duty by the
Register of Deeds in issuing OCT No. 380. It finally argues against the issue of
prescription since petitioners raised the same only for the first time on appeal.
Often cited but rarely heeded is the rule that the Supreme Court is not a
trier of facts. In the exercise of its power of review, the Court does not normally
undertake a re-examination of the evidence presented by the contending
parties during the trial of the case considering that the findings of fact of the
Court of Appeals are conclusive and binding on the Court. However, there are
several recognized exceptions25 in which factual issues may be resolved by this
Court.
_______________
25 Delos Santos v. Elizalde, G.R. Nos. 141810 and 141812, February 2, 2007, 514 SCRA 14, 33.
The recognized exceptions to this rule are: (1) when the findings are grounded entirely on
speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd
or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in making its
findings the Court of Appeals went beyond the issues of the case, or its findings are contrary to
the admissions of both the appellant and the appellee; (7) when the findings are contrary to the
trial court; (8) when the findings are conclusions without citation of specific evidence on which
they are based; (9) when the facts set forth in the petition as well as in the petitioner’s main and
reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on the
supposed absence of evidence and contradicted by the evidence on record; and (11) when the
Court of Appeals manifestly overlooked
626
626 SUPREME COURT REPORTS ANNOTATED
Lasquite vs. Victory Hills, Inc.
Two of these exceptions find application in the present case, to wit: (1) when
the findings of fact of the appellate court are contrary to those of the trial
court;26 and (2) when the findings of fact are premised on the supposed absence
of evidence and contradicted by the evidence on record.
The assailed Decision of the Court of Appeals upheld OCT No. 380 as the
origin of TCT No. 90816 in the name of respondent Victory Hills. The appellate
court ruled that the homestead patent which was awarded to respondent’s
predecessor, Jose H. Manahan, in 1936 cannot simply be defeated by the
subsequent grant of free patent to petitioners 45 years later. It accepted the
transcript of Homestead Patent No. H-19562 in OCT No. 380 as a faithful
reproduction of the original. Also, the Court of Appeals recognized the
notation “sgd” in OCT No. 380 as customary to signify that the original copy
of the patent had been signed by the Secretary of Agriculture and Commerce.
After carefully poring over all the evidence submitted in this case, we find
the petition to be impressed with merit.
The relocation survey conducted by the DENR on October 25, 1993
positively confirmed that the mother title of respondent’s TCT and the OCTs
of petitioners cover the same land. We are confronted, therefore, with a case
of successive registration, in the event of which we have been constantly
guided that:
“In successive registrations, where more than one certificate is issued in respect of
a particular estate or interest in land, the person claiming under the prior certificate is
entitled to the estate or interest; and the person is deemed to hold under the prior
certificate who is the holder of, or whose claim is derived directly or indirectly from
_______________
certain relevant facts not disputed by the parties, which, if properly considered, would justify a different
conclusion.
26 Buenaventura v. Republic, G.R. No. 166865, March 2, 2007, 517 SCRA 271, 282.
627
 VOL. 590, JUNE 23, 2009 627
Lasquite vs. Victory Hills, Inc.
the person who was the holder of the earliest certificate issued in respect thereof.” 27
However, we find that the circumstances attendant in this case militate
against a forthright application of this rule.
Section 105 of Act No. 2874,28 the governing law when Homestead Patent
No. H-19562 was purportedly issued, speaks of who must sign the patents and
certificates granted pursuant to the Act:
“Sec. 105. All patents or certificates for lands granted under this Act shall be
prepared in the Bureau of Lands and shall issue in the name of the Government of the
Philippine Islands under the signature of the Governor-General, countersigned by
the Secretary of Agriculture and Natural Resources, but such patents or certificates
shall be effective only for the purposes defined in section one hundred and twenty-two
of the Land Registration Act; and the actual conveyance of the land shall be effected
only as provided in said section.” (Emphasis supplied.)
Noteworthy, Section 4729 of Act No. 496 or the Land Registration
Act30 provides that a certified true copy of an original certificate of title shall be
admissible as evidence in our courts
_______________
27 Manotok Realty, Inc. v. CLT Realty Development Corporation, G.R. Nos. 123346 and 134385,
December 14, 2007, 540 SCRA 304, 336.
28 AN ACT TO AMEND AND COMPILE THE LAWS RELATIVE TO LANDS OF THE PUBLIC DOMAIN,
AND FOR OTHER PURPOSES, approved on November 29, 1919.
29 SEC. 47. The original certificate in the registration book, any copy thereof duly certified
under the signature of the clerk, or of the register of deeds of the province or city where the land
is situated, and the seal of the court, and also the owner’s duplicate certificate, shall be received
as evidence in all the courts of the Philippine Islands and shall be conclusive as to all matters
contained therein except as far as otherwise provided in this Act.
30 AN ACT TO PROVIDE FOR THE ADJUDICATION AND REGISTRATION OF TITLES TO LANDS IN THE
PHILIPPINE ISLANDS, approved on November 6, 1902.
628
628 SUPREME COURT REPORTS ANNOTATED
Lasquite vs. Victory Hills, Inc.
and shall be conclusive as to all matters contained therein except as otherwise
provided by the Act. This is complementary to the rule on the admissibility of
public documents as evidence under Section 23, Rule 132 of the Rules of Court:
“SEC. 23. Public documents as evidence.—Documents consisting of entries in
public records made in the performance of a duty by a public officer are prima
facie evidence of the facts therein stated. All other public documents are evidence, even
against a third person, of the fact which gave rise to their execution and of the date of
the latter.”
Thus, the evidentiary value of public documents must be sustained in the
absence of strong, complete and conclusive proof of its falsity or nullity.31
In the case at bar, the appellate court gave credence to the certified true
copy of OCT No. 380 as proof of ownership of respondent’s predecessor. Yet,
it is readily apparent from a cursory reading of said copy that OCT No. 380
was supposedly signed,32 not by the Secretary of Agriculture and Natural
Resources, as mandated by law, but by the Secretary of Agriculture and
Commerce. Hence, it is plain to see that to give OCT No. 380 probative value
in court would be to allow variance or an evasion or circumvention of the
requirement laid down in Section 105 of Act No. 2874. We are thus warned
that any title sourced from the flawed OCT No. 380 could be void. On this
basis, we are justified to consider with great care any claims derived
therefrom.
What taints OCT No. 380 even more is the fact that the records of the
Community Environment and Natural Resources
_______________
31 Palileo v. National Irrigation Administration, G.R. No. 148574, October 11, 2005, 472 SCRA
288, 297.
32 CA Rollo, pp. 104-105. Acting Deputy Register of Deeds of Rizal Rolando Golla testified
that the original OCT No. 380 on file with the Registry of Deeds of Rizal bore only the notation
“sgd” before the name of the Secretary of Agriculture and Commerce (TSN, June 16, 1999, pp. 14-
16).
629
VOL. 590, JUNE 23, 2009 629
Lasquite vs. Victory Hills, Inc.
Office (CENRO) are devoid of evidence to prove that Homestead Patent No.
H-19562,33 much less a patent application34 for Lot No. 3050 with the Bureau of
Lands ever existed. The certification35 from the Bureau of Lands that Lot No.
3050 was surveyed in the name of Jose Manahan suggests, at best, that he was
a survey claimant. Neither do we find the derivative titles of OCT No. 380 free
from any taint of irregularity. While TCT No. 46219 in the name of Hieras
indicated January 4, 1937 as the original registration date of Lot No. 3050, the
TCTs of subsequent transferees designated a different date—May 17, 1944.
True, a duly-registered certificate of title is considered a public document
and the entries found in it are presumed correct, unless the party who contests
its accuracy can produce evidence establishing otherwise.36 Even then, records
of public officers which are admissible in evidence are limited to those matters
which the public officer has authority to record.37 Indisputably, it was beyond
the power of the Register of Deeds to register a public land based on an invalid,
much worse, a non-existent patent. To sanction an otherwise invalid
document in the guise of upholding the stability of our land registration
system would run counter to the judicial devotion towards purging the system
of illicit titles, in accordance with our base task as the ultimate citadel of justice
and legitimacy.38
_______________
33 Exhibits “FF” and “FF-1,” folder of exhibits of Victory Hills, Inc. in Civil Case No. 548, p.
61.
34 Exhibits “DD” and “DD-1,” folder of exhibits of Victory Hills, Inc. in Civil Case No. 548,
p. 59.
35 Exhibit “Q,” folder of exhibits of Victory Hills, Inc. in Civil Case No. 548, p. 29.
36 Cf. Delfin v. Billones, G.R. No. 146550, March 17, 2006, 485 SCRA 38, 52-53.
37 Crisolo v. Macadaeg, et al., 94 Phil. 862, 866 (1954).
38 Manotok Realty, Inc. v. CLT Realty Development Corporation, supranote 27, at p. 319.
630
630 SUPREME COURT REPORTS ANNOTATED
Lasquite vs. Victory Hills, Inc.
The established legal principle in actions for annulment or reconveyance
of title is that a party seeking it should establish not merely by a
preponderance of evidence but by clear and convincing evidence that the land
sought to be reconveyed is his.39 It is rather obvious from the foregoing
disquisition that respondent failed to dispense such burden. Indeed, the
records are replete with proof that respondent declared the lots comprising
Lot No. 3050 for taxation purposes only after it had instituted the present case
in court. This is not to say of course that tax receipts are evidence of ownership,
since they are not, albeit they are good indicia of possession in the concept of
owner, for no one would ordinarily be paying taxes for a property not in his
actual or at least constructive possession.40
Other than paying taxes from 1994-1997, however, respondent has not
shown that it exercised dominion over Lot No. 3050. In contrast, petitioner
Lasquite has been continuously paying taxes on the land since 1972,41 and has
utilized the land as a farm, planted fruit trees and raised goats thereon.
Petitioners have likewise built structures and managed to entrust the property
to the care of certain individuals without any objection from respondent.
Respondent avers that petitioner Lasquite forged the Deed of
Quitclaim/Assignment of Rights to make it appear that Jose Manahan
conveyed Lot No. 3050 to him. It must be stressed, however, that whoever
alleges forgery has the burden of proving the same. Forgery cannot be
presumed but should be substantiated with clear and convincing evidence.42
_______________
39 Id., at pp. 344-345.
40 Premiere Development Bank v. Court of Appeals, G.R. Nos. 128122, 128184 and 128229, March
18, 2005, 453 SCRA 630, 651.
41 Exhibit “10,” folder of exhibits of defendant in Civil Case No. 548, p. 13.
42 Aznar Brothers Realty Company v. Court of Appeals, G.R. No. 128102, March 7, 2000, 327 SCRA
359, 374.
631
VOL. 590, JUNE 23, 2009 631
Lasquite vs. Victory Hills, Inc.
Regrettably, Victory Hills was unable to establish that the Jose H. Manahan
from whom it derived its title is the same Jose Manahan from whom petitioner
Lasquite bought Lot No. 3050. During the trial of this case, several death
certificates had been proferred by the parties, albeit, inconclusive to establish
the identity of Jose Manahan as the common origin of all their titles.
Respondent Victory Hills obtained its title from Jose H. Manahan. Meanwhile,
the records disclose that the Jose S. Manahan from whom the Manahans
derived title was 54 years old and married when he died of infectious hepatitis
on October 12, 1947.43For their part, the Prescillas traced their title from Jose M.
Manahan, who was supposedly 68 years old and single when he succumbed
to acute myocardial infarction on April 11, 1968.44 This was however belied by
the List of Register of Deaths in the Municipality of San Mateo Rizal for the
year 1968.45
Relevant to the issue of prescription, we have ruled that to determine when
the prescriptive period commenced in an action for reconveyance, the
plaintiff’s possession of the disputed property is material. An action for
reconveyance based on an implied trust prescribes in 10 years. The reference
point of the 10-year prescriptive period is the date of registration of the deed
or the issuance of the title. The prescriptive period applies only if there is an
actual need to reconvey the property as when the plaintiff is not in possession
of the property. However, if the plaintiff, as the real owner of the property also
remains in possession of the property, the prescriptive period to recover title
and possession of the property does not run against him. In such a case, an
action for reconveyance, if
_______________
43 Records (Civil Case No. 548), Vol. 2-B, p. 103.
44 Id., at p. 102.
45 Exhibits “23,” “23-A,” “23-B,” “23-C” and “23-D,” folder of exhibits of defendant in Civil
Case No. 548, pp. 33-37.
632
632 SUPREME COURT REPORTS ANNOTATED
Lasquite vs. Victory Hills, Inc.
nonetheless filed, would be in the nature of a suit for quieting of title, an action
that is imprescriptible.46
The records reveal that it was only on January 11, 1994 or nearly 13 years
after OCT Nos. NP-197 and NP-198 were issued that respondent filed a Motion
for Leave to Admit Complaint in Intervention47 and Complaint in
Intervention48 before the RTC of Rizal. Nevertheless, respondent claimed to be
in actual possession in concepto de dueno of a sizeable portion of Lot No. 3050.
Thus, the action assumed the nature of a suit to quiet title; hence,
imprescriptible.
 However, in our view, respondent Victory Hills has failed to show its
entitlement to a reconveyance of the land subject of the action.
WHEREFORE, the petition is GRANTED. The Decision dated November
8, 2006 of the Court of Appeals in CA G.R. CV No. 77599 is hereby REVERSED
and SET ASIDE. The Decision dated July 2, 2002 of the Regional Trial Court of
San Mateo, Rizal, Branch 77, is REINSTATED. No pronouncement as to costs.
SO ORDERED.
Ynares-Santiago,** Chico-Nazario,*** Leonardo-De Castro,**** and Brion, JJ.,
concur.
 G.R. No. 144208. September 11, 2007. *
EFREN TANDOG, FELIX TANDOG, FELIPE TANDOG, JOSEFINO
TANDOG, HELEN TANDOG, CATALINA TANDOG, ROMEO TANDOG,
DOMINGO TANDOG, CATALINA SANTOS, MARIA BAUTISTA
CATANYAG, ARTEMIO CATANYAG, ANGELES CATANYAG,
APOLONIA CATANYAG, ADORACION CATANYAG, ARCELY
CATANYAG, and AMPARO CATANYAG, all represented by EFREN
TANDOG, petitioners, vs.RENATO MACAPAGAL, SPOUSES ALFONSO
and MARINA CALDERON, and the LANDS MANAGEMENT BUREAU,
respondents.
_______________
*FIRST DIVISION.
551
VOL. 532, SEPTEMBER 11, 2007 551
Tandog vs. Macapagal
Actions; Quieting of Title; Prescription; A cloud which may be removed by suit to quiet
title is not created by mere verbal or parol assertion of ownership of or an interest in property—
this rule is subject to qualification, where there is a written or factual basis for the asserted
right.—As a general rule, a cloud which may be removed by suit to quiet title is not
created by mere verbal or parol assertion of ownership of or an interest in property.
This rule is subject to qualification, where there is a written or factual basis for the
asserted right. Thus, a claim of right based on acquisitive prescription or adverse
possession has been held to constitute a removable cloud on title.
Same; Evidence; Formal Offer of Evidence; Pleadings and Practice; Documents which
may have been marked as exhibits during the hearing, but which were not formally offered in
evidence, cannot be considered as evidence, nor can they be given any evidentiary
value.— While petitioners alleged that respondents’ claim of adverse possession is a
cloud on their (petitioners’) interest in the land, however, such allegation has not been
proved. The alleged falsified documents relied upon by respondents to justify their
possession were merely marked as exhibits but were never formally offered in evidence
by petitioners. We have consistently ruled that documents which may have been
marked as exhibits during the hearing, but which were not formally offered in
evidence, cannot be considered as evidence, nor can they be given any evidentiary
value.
Same; Same; Declarations about Pedigree; Requisites.—It is important that
petitioners must first establish their legal or equitable title to, or interest in the real
property which is the subject matter of the action. Petitioners failed to do so.
Parenthetically, they did not present any evidence to prove that Casimiro Policarpio
“existed” and that he is their predecessor-in-interest. Their testimonies can not be
considered declarations about pedigree. In order that pedigree may be proved by acts
or declarations of relatives under Section 39 of the Revised Rules of Evidence, it is
necessary that (a) the actor or declarant is dead or unable to testify; (b) the act or
declaration is made by a person related to the subject by birth or marriage; (c) the
relationship between the declarant or the actor and the subject is shown by evidence
other than such act or declaration; and (d) the act or declaration was made ante litem
motam, or prior to the controversy.
552
552 SUPREME COURT REPORTS ANNOTATED
Tandog vs. Macapagal
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Angeles and Associates for petitioners.
Amadeo R. Fulgado for private respondents.
SANDOVAL-GUTIERREZ, J.:
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of
Civil Procedure, as amended, assailing the Decision dated July 31, 2000 of the
1
Court of Appeals in CA-G.R. CV No. 57812.
The facts as found by the Court of Appeals are:
The subject of the controversy is a land consisting of 147,991 square meters
situated at Sitio Inarawan, Barangay Inuman, San Isidro, Antipolo City.
The above-named petitioners claim that they and their predecessors-in-
interest have been in actual, open, continuous, exclusive, and notorious
possession of the land since time immemorial. They trace their rights to
Casimiro Policarpio, unmarried, who died in 1945. He was survived by his
nephews and nieces, now deceased, except Maria Bautista Catanyag. She and
Casimiro’s grand nieces and grand nephews (herein petitioners) have
continued possessing and cultivating the land.
When petitioners decided to apply for the judicial registration of the
property, they found that portions of the land have been occupied by spouses
Alfonso and Marina Calderon and Renato Macapagal, respondents.
According to petitioners, spouses Calderon used falsified documents to justify
their possession of 20,116 square meters of the land which they
_______________
Penned by Associate Justice Roberto A. Barrios and concurred in by Associate Justice Ebulo
1
G. Verzola (both deceased) and Associate Justice Eriberto U. Rosario, Jr. (retired); Rollo, pp. 23-30.
553
VOL. 532, SEPTEMBER 11, 2007 553
Tandog vs. Macapagal
sold to the government. For his part, Renato Macapagal applied for and was
granted Free Patent No. 045802-1165 which led to the issuance to him of
Original Certificate of Title (OCT) No. P-665 over an area of 18,787 square
meters. Because of these incidents, petitioners filed with the Regional Trial
Court, Bracnh 73, Antipolo City a complaint for quieting of title, docketed as
Civil Case No. 92-2418.
Respondent Marina Calderon, in her answer, specifically denied
petitioners’ allegations in their complaint. She alleged that she and her
husband bought their property in 1958 and, since then, have been in
possession of the same. They planted trees and crops thereon. Also, they have
been paying the corresponding realty taxes. She does not know petitioners
who are all strangers in the place.
Before the hearing of the case, or on July 20, 1993, petitioners and
Macapagal entered into a Compromise Agreement. Petitioners acknowledged
2
therein his ownership of the portions of the land consisting of 18,787 square
meters covered by OCT No. P-665. This agreement was approved by the trial
court.
After petitioners had presented their evidence, spouses Calderon filed a
demurrer to evidence. In an Order dated March 20, 1995, the trial court
granted their motion and dismissed the complaint.
On appeal by petitioners, the Court of Appeals rendered a Decision dated
July 31, 2000 affirming the Order of the trial court dismissing their complaint.
The appellate court held:
“Under Article 476 of the Civil Code, a claimant must show that there is an instrument,
record, claim, encumbrance or proceeding which constitutes or casts a cloud, doubt,
question or shadow upon the owner’s title to or interest in real property. The ground
or reason for filing a complaint for quieting of title must therefore be “an instrument,
record, claim, encumbrance or proceeding.” Under the maxim “expresio unius est
exclusio alterius,” these grounds are
_______________
2 Annex “F” of the petition, id., pp. 107-108.
554
554 SUPREME COURT REPORTS ANNOTATED
Tandog vs. Macapagal
exclusive so that other reasons outside of the purview of these reasons may not be
considered valid for the same action. (Titong v. CA, G.R. No. 111141, March 6, 1998, 287
SCRA 102)
The appellants had nothing to show for this. The most that they did was to mark a
DEED OF ABSOLUTE SALE OF REAL PROPERTY & OR RIGHTS OR INTERESTS
THEREIN as Exh. “D” and a SPECIAL POWER OF ATTORNEY as Exh. “E,” which
allegedly are the falsified documents used by the appellees as basis for their claim over
the subject lot. x x x
xxx
Under Section 34 of Rule 132 of the Rules of Court, it is clear that for the evidence
to be considered, the same must be formally offered. Corollarily, the mere fact that a
particular document is identified and marked as an exhibit does not mean that it has
already been offered as part of the evidence of a party. (Vda de Oñate v. CA, G.R. 116149,
Nov. 23, 1995, 250 SCRA 283) Any evidence which a party desires to submit for the
consideration of the court must formally be offered by him, otherwise it is excluded
and rejected. x x x
It does not help either that the testimonies presented are on the whole hearsay and
unreliable as to the existence and right of the amorphous Casimero Policarpio and the
hereditary link between him and the appellants.”
Hence, this present petition.
Petitioners contend that the allegations of spouses Calderon that they
purchased their property and Macapagal’s claim that he applied for a Free
Patent are judicial admissions which they (petitioners) consider as cloud upon
their interest in the disputed property.
The petition must fail.
Article 476 of the Civil Code provides:
“Art. 476. Whenever there is a cloud on title to real property or any interest therein, by
reason of any instrument, record, claim, encumbrance or proceeding which is
apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or
unenforceable, and may be prejudicial to said title, an action may be brought to remove
such cloud or to quiet the title.
555
VOL. 532, SEPTEMBER 11, 2007 555
Tandog vs. Macapagal
An action may also be brought to prevent a cloud from being cast upon title to real
property or any interest therein.”
As a general rule, a cloud which may be removed by suit to quiet title is not
created by mere verbal or parol assertion of ownership of or an interest in
property. This rule is subject to qualification, where there is a written or factual
basis for the asserted right. Thus, a claim of right based on acquisitive
prescription or adverse possession has been held to constitute a removable
cloud on title. 3
While petitioners alleged that respondents’ claim of adverse possession is
a cloud on their (petitioners’) interest in the land, however, such allegation has
not been proved. The alleged falsified documents relied upon by respondents
to justify their possession were merely marked as exhibits but were never
formally offered in evidence by petitioners. We have consistently ruled that
documents which may have been marked as exhibits during the hearing, but
which were not formally offered in evidence, cannot be considered as
evidence, nor can they be given any evidentiary value. 4
It is important that petitioners must first establish their legal or equitable
title to, or interest in the real property which is the subject matter of the
action. Petitioners failed to do so. Parenthetically, they did not present any
5
evidence to prove that Casimiro Policarpio “existed” and that he is their
predecessor-in-interest. Their testimonies can not be considered declarations
about pedigree. In order that pedigree may be proved by acts or declarations
of relatives under Section 39 of the Revised Rules of Evidence, it is necessary
that (a) the actor or declarant is dead or unable to testify; (b) the act or
declaration is made by a person related to the subject by birth or marriage; (c)
the relationship between the declarant or the

_______________

Tolentino, Civil Code of the Philippines, Volume II, p. 152.

3

Vda. de Flores, et al. v. Workmen’s Compensation Commission, et al., L-43316, July 21, 1977, 78
4

SCRA 17.
Art. 477, Civil Code of the Philippines.
5

556
556 SUPREME COURT REPORTS ANNOTATED
Tandog vs. Macapagal
actor and the subject is shown by evidence other than such act or declaration;
and (d) the act or declaration was made ante litem motam, or prior to the
controversy. 6

Records show that petitioners failed to establish by evidence any or all the
above requisites.
WHEREFORE, we DENY the petition and AFFIRM the assailed Decision
of the Court of Appeals in CA-G.R. CV No. 57812. Costs against petitioners.
SO ORDERED.
Puno (C.J., Chairperson), Corona, Azcuna and Garcia, JJ., concur.
Petition denied, assailed decision affirmed.
 G.R. No. 168222. April 18, 2006. *
SPS. TEODULO RUMARATE, (deceased) and ROSITA RUMARATE;
deceased TEODULO RUMARATE is represented herein by his
Heirs/Substitutes, namely, ANASTACIA RUMARATE, CELSO RUMARATE,
MARINA RUMARATE, ROMEO RUMARATE, GUILLERMO RUMARATE,
FIDEL RUMARATE, MERLINDA RUMARATE, MARISSA RUMARATE,
CLEMENCIA RUMARATE, SANCHO RUMARATE and NENITA
RUMARATE, petitioners, vs. HILARIO HERNANDEZ, JOAQUIN
HERNANDEZ, SALVADOR HERNANDEZ, BENJAMIN HERNANDEZ,
LEONORA HERNANDEZ-LAZA, VICTORIA HERNANDEZ-MERCURIO,
RODRIGO HERNANDEZ, BERNARDO HERNANDEZ, LOURDES
HERNANDEZ-CABIDA, MARIO SALVATIERRA, ADELAIDA FONTILA-
CIPRIANO, and THE REGISTER OF DEEDS OF QUEZON PROVINCE,
respondents.
Actions; Quieting of Title; Requisites; In an action for quieting of title, the court is tasked
to determine the respective rights of the parties so that the complainant and those claiming under
him may be forever free from any danger of hostile claim.—In an action for quieting of title,
the court is tasked to determine the respective rights of the parties so that the
complainant and those claiming under him may be forever free from any danger of
hostile claim. Under Article 476 of the Civil Code, the remedy may be availed of only
when, by reason of any instrument, record, claim, encumbrance or proceeding, which
appears valid but is, in fact, invalid, ineffective, voidable or unenforceable, a cloud is
thereby cast on the complainant’s title to real property or any interest therein. Article
477 of the same Code states that the plaintiff must have legal or equitable title to, or
interest in the real property which is the subject matter of the suit. For an action to quiet
title to prosper, two indispensable requisites must concur, namely: (1) the plaintiff or
complainant has a legal or an equitable title to or interest in the real property subject of
the action; and (2) the deed, claim, encumbrance or proceeding claimed to be casting
cloud on his title must be shown to be in fact invalid or inop-
_______________
*FIRST DIVISION.
318
318 SUPREME COURT REPORTS ANNOTATED
Rumarate vs. Hernandez
erative despite its prima facie appearance of validity or legal efficacy.
Same; Same; Land Registration; Confirmation of Imperfect Ti-tle; The confirmation
proceedings would, in truth be little more than a formality, at the most limited to ascertaining
whether the possession claimed is of the required character and length of time, and registration
under the Public Land Act (C.A. No. 141) would not confer title, but simply recognize the title
vested.—In the instant case, we find that Teodulo’s open, continuous, exclusive,
notorious possession and occupation of Lot No. 379, in the concept of an owner for
more than 30 years vested him and his heirs title over the said lot. The law applicable
at the time Teodulo completed his 30-year possession (from 1929 to 1959) of Lot No.
379, in the concept of an owner was Sec. 48(b) of Commonwealth Act No. 141 or the
Public Land Act, as amended by Republic Act (RA) No. 1942, effective June 22, 1957. *
* *: When the conditions specified therein are complied with, the possessor is deemed
to have acquired, by operation of law, a right to a government grant, without necessity
of a certificate of title being issued, and the land ceases to be part of the public domain.
The confirmation proceedings would, in truth be little more than a formality, at the
most limited to ascertaining whether the possession claimed is of the required character
and length of time; and registration thereunder would not confer title, but simply
recognize a title already vested. The proceedings would not originally convert the land
from public to private land, but only confirm such conversion already effected by
operation of law from the moment the required period of possession became complete.
Same; Same; Same; Appeals; Witnesses; It is a settled rule in civil cases as well as in
criminal cases that in the matter of credibility of witnesses, the findings of the trial courts are
given great weight and highest degree of respect by the appellate court.—In the instant case,
the trial court gave full faith and credence to the testimony of Teodulo and his
witnesses that his (Teodulo’s) possession of the land since 1929 was open, continuous,
adverse, exclusive, and in the concept of an owner. It is a settled rule in civil cases as
well as in criminal cases that in the matter of credibility of witnesses, the findings of
the trial courts are given great weight and highest degree of respect by the appellate
court considering that the latter is in a better position to decide the question, having
heard the witnesses
319
VOL. 487, APRIL 18, 2006 319
Rumarate vs. Hernandez
themselves and observed their deportment and manner of testifying during the
trial.
Same; Same; Same; Statutory Construction; Words and Phrases; The law speaks of
“possession and occupation” and since these words are separated by the conjunction “and,” the
clear intention of the law is not to make one synonymous with the other; Taken together with
the words open, continuous, exclusive and notorious, paragraph (b) of Section 54 of Act 956,
the possession of the land must not be mere fiction.—Respondents adopted the theory that
Santiago acquired title over Lot No. 379 not from the April 21, 1925 Decision of the CFI
of Tayabas which merely recognized his rights over said lot, but from his more than 30
years of possession since 1925 up to 1964 when he sold same lot to their (respondents)
predecessors-in-interest, the spouses Cipriano Hernandez and Julia Zoleta. On the
basis of said claim, said spouses filed an action for, and successfully obtained,
confirmation of imperfect title over Lot No. 379, pursuant to Sec. 48 (b) of the Public
Land Act. However, the records do not support the argument of respondents that
Santiago’s alleged possession and cultivation of Lot No. 379 is in the nature
contemplated by the Public Land Act which requires more than constructive
possession and casual cultivation. As explained by the Court in Director of Lands v.
Intermediate Appellate Court, 209 SCRA 214, 222-223 (1992): It must be underscored that
the law speaks of “possession and occupation.” Since these words are separated by the
conjunction and, the clear intention of the law is not to make one synonymous with the
other. Possession is broader than occupation because it includes constructive
possession. When, therefore, the law adds the word occupation, it seeks to delimit the
all-encompassing effect of constructive possession. Taken together with the
words open, continuous, exclusive and notorious, the word occupation serves to highlight
the fact that for one to qualify under paragraph (b) of the aforesaid section, his
possession of the land must not be mere fiction.
Same; Same; Land Titles; Nemo potest plus juris ad alium transferre quam ipse habet—
No one can transfer a greater right to another than he himself has; The spring cannot rise higher
than the source.—In the instant case, Santiago’s short-lived possession and cultivation
of Lot No. 379 could not vest him title. While he tilled the land in 1925, he ceased to
possess and cultivate the same since 1928.
320
320 SUPREME COURT REPORTS ANNOTATED
Rumarate vs. Hernandez
He abandoned the property and allowed Teodulo to exercise all acts of
ownership. His brief possession of Lot No. 379 could not thus vest him title. Nemo potest
plus juris ad alium transferre quam ipse habet. No one can transfer a greater right to another
than he himself has. Hence, spouses Cipriano Hernandez and Julia Zoleta and herein
respondents did not acquire any right over the questioned lot and the title issued in
their names are void, because of the legal truism that the spring cannot rise higher than
the source.
Same; Same; Same; Prescription; The settled rule is that an action for quieting of title is
imprescriptible, where the person seeking relief is in possession of the disputed property; A
person in actual possession of a piece of land under claim of ownership may wait until his
possession is disturbed or his title is attacked before taking steps to vindicate his right.—On the
issue of prescription, the settled rule is that an action for quieting of title is
imprescriptible, as in the instant case, where the person seeking relief is in possession
of the disputed property. A person in actual possession of a piece of land under claim
of ownership may wait until his possession is disturbed or his title is attacked before
taking steps to vindicate his right, and that his undisturbed possession gives him the
continuing right to seek the aid of a court of equity to ascertain and determine the
nature of the adverse claim of a third party and its effect on his title. Considering that
petitioners herein continuously possessed Lot No. 379 since 1929 up to the present,
their right to institute a suit to clear the cloud over their title cannot be barred by the
statute of limitations.
Same; Same; Laches; Laches need not be specifically pleaded—on its own initiative, the
court may consider it in determining the rights of the parties; It is an enshrined rule that even
a registered owner may be barred from recovering possession of property by virtue of laches.—
Neither could petitioners’ action be barred by laches because they continuously
enjoyed the possession of the land and harvested the fruits thereof up to the present to
the exclusion of and without any interference from respondents. They cannot therefore
be said to have slept on their rights as they in fact exercised the same by continuously
possessing Lot No. 379. On the contrary, we find that it is respondents who are actually
guilty of laches. Though not specifically pleaded, the Court can properly address the
issue of laches based on petitioners’ allegation in the complaint that
321
VOL. 487, APRIL 18, 2006 321
Rumarate vs. Hernandez
“[n]either spouses Cipriano Hernandez and Julia Zoleta x x x nor [herein
respondents] had taken steps to possess or lay adverse claim to said parcel of land from
the date of their registration of title in November, 1965 up to the present.” Such
averment is sufficient to impute abandonment of right on the part of respondents. At
any rate, laches need not be specifically pleaded. On its own initiative, a court may
consider it in determining the rights of the parties. The failure or neglect, for an
unreasonable length of time to do that which by exercising due diligence could or
should have been done earlier constitutes laches. It is negligence or omission to assert
a right within a reasonable time, warranting a presumption that the party entitled to
assert it has either abandoned it or declined to assert it. While it is by express provision
of law that no title to registered land in derogation of that of the registered owner shall
be acquired by prescription or adverse possession, it is likewise an enshrined rule that
even a registered owner may be barred from recovering possession of property by
virtue of laches.
Same; Same; Same; Elements.—The elements of laches are: (1) conduct of a party
on the basis of which the other party seeks a remedy; (2) delay in asserting one’s rights,
despite having had knowledge or notice of the other party’s conduct and having been
afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part
of a party that the person against whom laches is imputed would assert the right; and
(4) injury or prejudice to the party asserting laches in the event the suit is allowed to
prosper.
Same; Same; Ownership; Possession; Taxes; Payment of taxes without possession could
hardly be construed as an exercise of ownership.—Payment of taxes alone will not save the
day for respondents. Only a positive and categorical assertion of their supposed rights
against petitioners would rule out the application of laches. It means taking the
offensive by instituting legal means to wrest possession of the property which,
however, is absent in this case. Respondents’ payment of taxes alone, without
possession could hardly be construed as an exercise of ownership. What stands out is
their overwhelming passivity by allowing petitioners to exercise acts of ownership and
to enjoy the fruits of the litigated lot for 22 years without any interference.
322
322 SUPREME COURT REPORTS ANNOTATED
Rumarate vs. Hernandez
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Eliezer L. Castellano for petitioners.
Manuel M. Maramba for respondents.
YNARES-SANTIAGO, J.:
Assailed in this petition for review is the May 26, 2005 De-cision of the Court1
of Appeals in CA-G.R. CV No. 57053, which reversed and set aside the March
31, 1997 Decision of the Regional Trial Court of Calauag, Quezon, Branch 63,
2
in Civil Case No. C-964, declaring petitioners as owners of Lot No. 379 with
an area of 187,765 square meters and located in Barrio Catimo, Municipality3
of Guinayangan, Province of Quezon.
 The facts show that on September 1, 1992, petitioner spouses Teodulo _______________
Rumarate (Teodulo) and Rosita Rumarate filed an action for reconveyance of
TSN, September 23, 1993, pp. 14-22.
real property and/or quieting of title with damages against respondent heirs
5

6TSN February 9, 1994, pp. 7-11.

of the late spouses Cipriano Hernandez and Julia Zoleta. Teodulo averred that
4
7Id., pp. 7-8.
Lot No. 379 was previously possessed and cultivated by his godfather, 8TSN, September 23, 1993, p. 28.
Santiago Guerrero (Santiago), a bachelor, who used to live with the Rumarate 9Exhibit “B,” Folder of Exhibits for the Plaintiffs.
TSN, September 23, 1993, pp. 29-30.
family in San Pablo City. Between 1923 and 1924, Santiago and the Ru-marate
10

11Exhibit “C-1,” Folder of Exhibits for the Plaintiffs.

family transferred residence to avail of the land distribution in Catimo, 12TSN, February 9, 1994, pp. 33-36.
Guinayangan, Quezon. From 1925 to 1928, Santiago occupied Lot No. 379 324
cultivating five hectares thereof. Before moving to Kagakag, Lopez, Quezon in 324 SUPREME COURT REPORTS ANNOTATED
1929, Rumarate vs. Hernandez
P9,000.00. Respondents alleged that on April 21, 1925, the CFI of Tayabas
13

_______________
rendered a Decision written in Spanish, declaring Lot No. 379 as a public land
Penned by Associate Justice Amelita G. Tolentino and concurred in by Associate Justices
1 and recognizing Santiago as claimant thereof in Cadastral Proceeding No. 12.
Roberto A. Barrios and Vicente S.E. Veloso, Rollo, pp. 39-58. However, no title was issued to Santiago because he failed to file an Answer.
Penned by Judge Rodolfo V. Garduque, Id., at pp. 59-91.
2
Spouses Cipriano Hernandez and Julia Zoleta filed a motion to re-open
Also spelled as “Katimo” in the Records.
Cadastral Proceeding No. 12, alleging that though no title was issued in the
3

Records, p. 1.
4

323
VOL. 487, APRIL 18, 2006
Rumarate vs. Hernandez
Santiago orally bequeathed his rights over Lot No. 379 to Teodulo and
entrusted to him a copy of a Decision of the Court of First Instance (CFI) of
Tayabas dated April 21, 1925 recognizing his (Santiago) rights over Lot No.
name of Santiago, the same decision is, nevertheless, proof that Santiago was
323 in possession of Lot No. 379 since 1925 or for more than 30 years. Having
succeeded in the rights of Santiago, the spouses prayed that Cadastral
Proceeding No. 12 be re-opened and that the corresponding title over Lot No.
379 be issued in their name. On September 13, 1965, the CFI of Tayabas
rendered a decision adjudicating Lot No. 379 in favor of the spouses, in whose
name Original Certificate of Title (OCT) No. O-11844 was issued on the same
14

379. Since Teodulo was only 14 years old then, his father helped him cultivate
date. Cipriano Hernandez planted coconut trees on the land through the help
5

15

the land. Their family thereafter cleared the land, built a house and planted
of a certain Fredo who was instituted as caretaker. In 1970, Fredo informed
6 7

16

coconut trees, corn, palay and vegetables thereon. In 1960, Santiago executed
Cipriano Hernandez that he will no longer stay on the land because there are
8

an “Affidavit (quit-claim)” ratifying the transfer of his rights over Lot No. 379
people instructing him to discontinue tilling the same.
9

17

to Teodulo. Between 1960 and 1970, three conflagrations razed the land
After the death of the spouses, respondents executed a deed of partition
18

reducing the number of coconut trees growing therein to only 400, but by the
over the subject lot and were issued TCT No. T- 237330 on June 28, 1988 in lieu
time Teodulo testified in 1992, the remaining portions of the land was almost
of OCT No. O-11844. 19

entirely cultivated and planted with coconuts, coffee, jackfruits, mangoes and
vegetables. From 1929, Teodulo and later, his wife and 11 children possessed
10
_______________
the land as owners and declared the same for taxation, the earliest being in
1961. 11 “Bilihang Lampasan ng mga Mejoras na Nakatani sa Isang Palagay na Lupang Govierno,”
13

In 1970, Teodulo discovered that spouses Cipriano Hernandez and Julia Folder of Exhibit “1,” Records of Cadastral Case No. 12.
Exhibit “3,” Folder of Exhibits for the Plaintiffs.
Zoleta, respondents’ predecessors-in-interest, were able to obtain a title over
14

Exhibit “1,” Records of Cadastral Case No. 12, Folder of Exhibits for the Defendants.
15

Lot No. 379. He did not immediately file a case against respondents because Referred to as “Alfredo” in the Answer.
16

he was advised to just remain on the land and pay the corresponding taxes TSN, April 25, 1996, pp. 7-10.
17

thereon. 12
Cipriano Hernandez died in 1971 while Julia Zoleta died in 1973 (TSN, May 10, 1996, p. 25).
18

Exhibit “4,” Folder of Exhibits for the Plaintiffs.

Respondents, on the other hand, claimed that on November 11, 1964,
19

325
Santiago sold the questioned lot to their parents, the spouses Cipriano
VOL. 487, APRIL 18, 2006 325
Hernandez and Julia Zoleta, for
 Rumarate vs. Hernandez
Respondent Joaquin Hernandez (Joaquin) testified that in 1964, he
accompanied his father in inspecting the lot which was then planted with
coconut trees. Thereafter, he visited the land twice, once in 1966 and the other
20
in 1970. From 1966 up to the time he testified, his family declared the lot for
taxation and paid the taxes due thereon. Joaquin explained that after the death
21
of his father in 1971, he no longer visited the land and it was only when the
complaint was filed against them when he learned that petitioners are in actual
possession of the property. He added that his siblings had planned to convert
22
Lot No. 379 into a grazing land for cattle but decided to put it off for fear of
the rampant operations then of the New People’s Army between the years
1965-1970. 23
On March 31, 1997, the trial court rendered a decision in favor of
petitioners. It held that since the latter possessed the land in the concept of an
owner since 1929, they became the owners thereof by acquisitive prescription
after the lapse of 10 years, pursuant to the Code of Civil Procedure. Thus,
when Santiago sold the lot to respondents’ parents in 1964, the former no
longer had the right over the property and therefore transmitted no title to
said respondents. The dispositive portion of the trial court’s decision, reads:
“WHEREFORE, in the light of all the foregoing considerations judgment is hereby
rendered in favor of the plaintiffs and against the defendants, to wit:
1. 1.Declaring that the parcel of land (Lot No. 379 of the Cadastral Survey of
Guinayangan, Cadastral Case No. 12, LRC Cadastral Record No. 557),
situated in Brgy. Katimo, Tagkawayan, Quezon had been fraudulently,
deceitfully and mistakenly registered in the names of the spouses Cipriano
Hernandez and Julia Zoleta;
2. 2.Declaring that herein defendants [heirs] of spouses Cipriano Hernandez and
Julia Zoleta have no better rights than their
_______________
20 TSN, May 10, 1996, pp. 5-6.
21 Id., at pp. 11-14.
22 Id., at pp. 15-16.
23 Id., at pp. 18-20.
326
326 SUPREME COURT REPORTS ANNOTATED
Rumarate vs. Hernandez
1. parents/predecessors-in-interest, they having stepped only on (sic) their
shoes;
2. 3.Declaring that the plaintiff Rosita Victor Rumarate and substitute plaintiffs-
[heirs] of the deceased Teodulo Rumarate are the true, real and legal
owners/or the owners in fee simple absolute of the above described parcel
of land;
3. 4.Ordering the defendants to convey the above-described parcel of land to
plaintiff Rosita Victor Rumarate and to the substitute plaintiffs (heirs) of the
deceased Teodulo Rumarate;
4. 5.Ordering the Register of Deeds for Quezon Province in Lucena City to cancel
Transfer Certificate of Title No. T-237330 and to issue in lieu thereof a new
certificate of title in favor of plaintiff Rosita Victor Rumarate and the
substitute plaintiffs (heirs) of the deceased plaintiff Teodulo Rumarate, in
accordance with law and settled jurisprudence; and
5. 6.Ordering the defendants to pay the costs of the suit.
SO ORDERED.” 24
Respondents appealed to the Court of Appeals which on May 26, 2005,
reversed and set aside the decision of the trial court. It ruled that Teodulo did
not acquire title over Lot No. 379, either by donation or acquisitive
prescription; that Teodulo’s bare allegation that Santiago orally bequeathed to
him the litigated lot is insufficient to prove such transfer of ownership; and
that even assuming that the property was truly donated by Santiago to
Teodulo in 1929, or in the 1960 Affidavit, said conveyance is void for not
complying with the formalities of a valid donation which require the donation
and the acceptance thereof by the donee to be embodied in a public
instrument. Both requirements, however, are absent in this case because in
1929, the alleged donation was not reduced to writing while the purported
1960 donation was never accepted in a public document by Teodulo. The
appellate court thus surmised that since it was not established that Santiago
donated Lot No. 379 to Teodulo, it follows that the latter also
_______________
Rollo, pp. 90-91.
24
327
V\OL. 487, APRIL 18, 2006 327
Rumarate vs. Hernandez
failed to prove that he possessed the land adversely, exclusively and in the
concept of an owner, a vital requisite before one may acquire title by
acquisitive prescription. In conclusion, the Court of Appeals ruled that even
assuming further that Teodulo had a right over the property, his cause of
action is now barred by laches because he filed an action only in 1992
notwithstanding knowledge as early as 1970 of the issuance of title in the name
of spouses Cipriano Hernandez and Julia Zoleta. The decretal portion of the
decision states:
“WHEREFORE, premises considered, the instant appeal is GRANTED. The assailed
March 31, 1997 decision of the Regional Trial Court of Calauag, Quezon, Branch 63,
in Civil Case No. C-964 is hereby REVERSED and SET ASIDE. No costs.
 SO ORDERED.” 25
Hence, the instant appeal.
The issue to be resolved is to whom should Lot No. 379 be awarded? To
petitioners who possessed and cultivated the lot since 1929 up to the present,
but do not have a certificate of title over the property, or to respondents who
have a certificate of title but are not in possession of the controverted lot?
In an action for quieting of title, the court is tasked to determine the
respective rights of the parties so that the complainant and those claiming
under him may be forever free from any danger of hostile claim. Under 26
Article 476 of the
27
_______________
25 Id., at p. 57.
26 Calacala v. Republic, G.R. No. 154415, July 28, 2005, 464 SCRA 438, 443.
27 Article 476. Whenever there is a cloud on title to real property or any interest therein, by
reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or
effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be
prejudicial to said title, an action may be brought to remove such cloud or to quiet An action may
also be brought to prevent a cloud from being cast upon title to real property. x x x.
328
328 SUPREME COURT REPORTS ANNOTATED
Rumarate vs. Hernandez
Civil Code, the remedy may be availed of only when, by reason of any
instrument, record, claim, encumbrance or proceeding, which appears valid
but is, in fact, invalid, ineffective, voidable or unenforceable, a cloud is thereby
cast on the complainant’s title to real property or any interest therein. Article
477 of the same Code states that the plaintiff must have legal or equitable title
to, or interest in the real property which is the subject matter of the suit.
For an action to quiet title to prosper, two indispensable requisites must
concur, namely: (1) the plaintiff or complainant has a legal or an equitable title
to or interest in the real property subject of the action; and (2) the deed, claim,
encumbrance or proceeding claimed to be casting cloud on his title must be
shown to be in fact invalid or inoperative despite its prima facie appearance of
validity or legal efficacy. 28
In Evangelista v. Santiago, it was held that title to real property refers to that
29
upon which ownership is based. It is the evidence of the right of the owner or
the extent of his interest, by which means he can maintain control and, as a
rule, assert a right to exclusive possession and enjoyment of the property.
In the instant case, we find that Teodulo’s open, continuous, exclusive,
notorious possession and occupation of Lot No. 379, in the concept of an owner
for more than 30 years vested him and his heirs title over the said lot. The law
applicable at the time Teodulo completed his 30-year possession (from 1929 to
1959) of Lot No. 379, in the concept of an owner was Sec. 48(b) of
Commonwealth Act No. 141 or the Public Land Act, as amended by Republic
Act (RA) No. 1942, effective June 22, 1957 which provides: 30
_______________
Calacala v. Republic, supra at p. 444.
28
G.R. No. 157447, April 29, 2005, 457 SCRA 744, 766.
29
Sec. 48(b) has been further amended by Presidential Decree (PD) No. 1073 which took effect
30
on January 25, 1977. Sec. 48(b) of the Public Land Act, now reads:
329
VOL. 487, APRIL 18, 2006 329
Rumarate vs. Hernandez
“Sec. 48. The following-described citizens of the Philippines, occupying lands of the
public domain or claiming to own any such lands or an interest therein, but whose titles
have not been perfected or completed, may apply to the Court of First Instance (now
Regional Trial Courts) of the province where the land is located for confirmation of
their claims and the issuance of a certificate of title thereafter, under the Land
Registration Act (now Property Registration Decree), to wit:
xxxx
(b) Those who by themselves or through their predecessors-in-interest have been,
in continuous, exclusive, and notorious possession and occupation of agricultural
lands of the public domain, under a bona fide claim of acquisition or ownership, for at
least thirty years immediately preceding the filing of the application for confirmation
of title, except when prevented by war or force majeure. Those shall be conclusively
presumed to have performed all the conditions essential to a government grant and
shall be entitled to a certificate of title under the provisions of this chapter.”
When the conditions specified therein are complied with, the possessor is
deemed to have acquired, by operation of law, a right to a government grant,
without necessity of a certificate of title being issued, and the land ceases to be
part of the public domain. The confirmation proceedings would, in truth be
little more than a formality, at the most limited to ascertaining whether the
possession claimed is of the required character and length of time; and
registration thereunder
_______________
“(b) Those who by themselves or through their predecessors-in-interest have been in open, continuous,
exclusive and notorious possession and occupation of agricultural lands of the public domain, under a bona
fide claim of acquisition or ownership, since June 12, 1945, or earlier, immediately preceding the filing of the application
for confirmation of title, except when prevented by wars or force majeure. Those shall be conclusively presumed to
have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title
under the provisions of this chapter.” (Abejaron v. Nabasa, 411 Phil. 552, 570; 359 SCRA 47, 58 [2001]).
330
330 SUPREME COURT REPORTS ANNOTATED
Rumarate vs. Hernandez
would not confer title, but simply recognize a title already vested. The
proceedings would not originally convert the land from public to private land,
but only confirm such conversion already effected by operation of law from
the moment the required period of possession became complete. 31
In the instant case, the trial court gave full faith and credence to the
testimony of Teodulo and his witnesses that his (Teodulo’s) possession of the
land since 1929 was open, continuous, adverse, exclusive, and in the concept
of an owner. It is a settled rule in civil cases as well as in criminal cases that in
the matter of credibility of witnesses, the findings of the trial courts are given
great weight and highest degree of respect by the appellate court considering
that the latter is in a better position to decide the question, having heard the
witnesses themselves and observed their deportment and manner of testifying
during the trial.
32
A careful examination of the evidence on record shows that Teodulo
possessed and occupied Lot No. 379 in the concept of an owner. Since 1929,
Teodulo cultivated the controverted land, built his home, and raised his 11
children thereon. In 1957, he filed a homestead application over Lot No. 379
but failed to pursue the same. After his demise, all his 11 children, the
33
youngest being 28 years old, continued to till the land. From 1929 to 1960,
34
Santiago never challenged Teodulo’s possession of Lot No. 379 nor demanded
or received the produce of said land. For 31 years Santiago never exercised any
act of ownership over Lot No. 379. And, in 1960, he confirmed
_______________
Abejaron v. Nabasa, supra at pp. 568-570; pp. 56-57, citing Director of Lands v. Intermediate
31
Appellate Court, 230 Phil. 590; 146 SCRA 509(1986).
32Concepcion v. Court of Appeals, 381 Phil. 90, 96; 324 SCRA 85, 91 (2000).
33TSN, November 26, 1993, pp. 46-49.
34Notice of Death and Request for Substitution of Deceased Plaintiff, Records, p. 185.
331
VOL. 487, APRIL 18, 2006
Rumarate vs. Hernandez
that he is no longer interested in asserting any right over the land by executing
in favor of Teodulo a quitclaim.
Indeed, all these prove that Teodulo possessed and cultivated the land as
owner thereof since 1929. While the oral donation in 1929 as well as the 1960
quitclaim ceding Lot No. 379 to Teodulo are void for non-compliance with the
formalities of donation, they nevertheless explain Teodulo and his family’s
long years of occupation and cultivation of said lot and the nature of their
possession thereof.
In Bautista v. Poblete, the Court sustained the registration of a parcel of
35
land in the name of the successors-in-interest of the donee notwithstanding
the invalidity of the donation inasmuch as said donee possessed the property
in the concept of an owner. Thus—
“There is no question that the donation in question is invalid because it involves an
immovable property and the donation was not made in a public document as required
by Article 633 of the old Civil Code, in connection with Article 1328 of the same Code
(concerning gifts propter nuptias), but it does not follow that said donation may not
serve as basis of acquisitive prescription when on the strength thereof the donee has
taken possession of the property adversely and in the concept of owner.”
It follows therefore that Teodulo’s open, continuous, exclusive, and notorious
possession and occupation of Lot No. 379 for 30 years, or from 1929 to 1959 in
the concept of an owner, earned him title over the lot in accordance with Sec.
48 (b) of the Public Land Act. Considering that Lot No. 379 became the private
property of Teodulo in 1959, Santiago had no more right to sell the same to
spouses Cipriano Hernandez and Julia Zoleta in 1964. Consequently, the latter
and herein respondents did not acquire ownership over Lot No. 379 and the
titles issued in their name are void.
_______________
35G.R. No. 141007, September 13, 2005, 469 SCRA 579, 585, citing Espique v. Espique, 99 Phil.
448 (1956).
332
332 SUPREME COURT REPORTS ANNOTATED
Rumarate vs. Hernandez
Interestingly, respondents adopted the theory that Santiago acquired title over
Lot No. 379 not from the April 21, 1925 Decision of the CFI of Tayabas which
merely recognized his rights over said lot, but from his more than 30 years of
possession since 1925 up to 1964 when he sold same lot to their (respondents)
predecessors-in-interest, the spouses Cipriano Hernandez and Julia Zoleta. On
the basis of said claim, said spouses filed an action for, and successfully
obtained, confirmation of imperfect title over Lot No. 379, pursuant to Sec. 48
331 (b) of the Public Land Act.
However, the records do not support the argument of respondents that
Santiago’s alleged possession and cultivation of Lot No. 379 is in the nature
contemplated by the Public Land Act which requires more than constructive
possession and casual cultivation. As explained by the Court in Director of
Lands v. Intermediate Appellate Court: 36
“It must be underscored that the law speaks of “possession and occupation.” Since
these words are separated by the conjunction and, the clear intention of the law is not
to make one synonymous with the other. Possession is broader than occupation
because it includes constructive possession. When, therefore, the law adds the
word occupation, it seeks to delimit the all-encompassing effect of constructive
possession. Taken together with the words open, continuous, exclusive and notorious, the
word occupationserves to highlight the fact that for one to qualify under paragraph (b)
of the aforesaid section, his possession of the land must not be mere fiction. As this
Court stated, through then Mr. Justice Jose P. Laurel, in Lasam vs. The Director of Lands:
“x x x Counsel for the applicant invokes the doctrine laid down by us in Ramos vs. Director of
Lands (39 Phil. 175, 180). (See also Rosales vs. Director of Lands, 51 Phil. 302, 304.) But it should be
observed that the application of the doctrine of constructive possession in that case is subject to
certain qualifications, and this court was careful to observe that among these qualifications is ‘one
particularly relating to the size of
_______________
36 G.R. No. 68946, May 22, 1992, 209 SCRA 214, 222-223.
333
VOL. 487, APRIL 18, 2006 333
Rumarate vs. Hernandez
the tract in controversy with reference to the portion actually in possession of the claimant.’ While,
therefore, ‘possession in the eyes of the law does not mean that a man has to have his feet on every
square meter of ground before it can be said that he is in possession’, possession under paragraph
6 of section 54 of Act No. 926, as amended by paragraph (b) of section 45 of Act No. 2874, is not
gained by mere nominal claim. The mere planting of a sign or symbol of possession cannot justify
a Magellan-like claim of dominion over an immense tract of territory. Possession as a means of
acquiring ownership, while it may be constructive, is not a mere fiction x x x.”
Earlier, in Ramirez vs. The Director of Lands, this Court noted:
“x x x The mere fact of declaring uncultivated land for taxation purposes and visiting it every once
in a while, as was done by him, does not constitute acts of possession.”
In the instant case, Santiago’s short-lived possession and cultivation of Lot No.
379 could not vest him title. While he tilled the land in 1925, he ceased to
possess and cultivate the same since 1928. He abandoned the property and
allowed Teodulo to exercise all acts of ownership. His brief possession of Lot
No. 379 could not thus vest him title. Nemo potest plus juris ad alium transferre
quam ipse habet. No one can transfer a greater right to another than he himself
has. Hence, spouses Cipriano Hernandez and Julia Zoleta and herein
respondents did not acquire any right over the questioned lot and the title
issued in their names are void, because of the legal truism that the spring
cannot rise higher than the source. 37
Furthermore, spouses Cipriano Hernandez and Julia Zoleta cannot be
considered as purchasers in good faith because they had knowledge of facts
and circumstances that would impel a reasonably cautious man to make such
in-
_______________
Dela Merced v. Government Service Insurance System, 417 Phil. 324, 340; 365 SCRA 1, 15 (2001).
37
334
334 SUPREME COURT REPORTS ANNOTATED
Rumarate vs. Hernandez
quiry. The Court notes that Santiago was not residing in Lot No. 379 at the
38
time of the sale. He was already 81 years old, too old to cultivate and maintain
an 18-hectare land. These circumstances should have prompted the spouses to
further inquire who was actually tilling the land. Had they done so, they
would have found that Teodulo and his family are the ones possessing and
cultivating the land as owners thereof.
In the same vein, respondents could not be considered as third persons or
purchasers in good faith and for value or those who buy the property and pay
a full and fair price for the same because they merely inherited Lot No. 379 from
39
spouses Cipriano Hernandez and Julia Zoleta.
Then too, even if Santiago acquired title over Lot No. 379 by virtue of the
April 21, 1925 Decision of the CFI of Tayabas, and not on account of his alleged
30-year possession thereof, we will still arrive at the same conclusion. This is
so because the declaration of this Court that petitioners are the rightful owners
of the controverted lot is based on Teodulo’s own possession and occupation
of said lot under a bona fide claim of acquisition of ownership, regardless of the
manner by which Santiago acquired ownership over same lot.
On the issue of prescription, the settled rule is that an action for quieting
of title is imprescriptible, as in the instant case, where the person seeking relief
is in possession of the disputed property. A person in actual possession of a
piece of land under claim of ownership may wait until his possession is
disturbed or his title is attacked before taking steps to vindicate his right, and
that his undisturbed possession gives him the continuing right to seek the aid
of a court of equity to ascertain and determine the nature of the adverse claim
of a
_______________
Sigaya v. Mayuga, G.R. No. 143254, August 18, 2005, 467 SCRA 341, 354-355.
38
Occeña v. Esponilla, G.R. No. 156973, June 4, 2004, 431 SCRA 116, 124.
39
335
VOL. 487, APRIL 18, 2006 335
Rumarate vs. Hernandez
third party and its effect on his title. Considering that petitioners herein
40
continuously possessed Lot No. 379 since 1929 up to the present, their right to
institute a suit to clear the cloud over their title cannot be barred by the statute
of limitations.
Neither could petitioners’ action be barred by laches because they
continuously enjoyed the possession of the land and harvested the fruits
thereof up to the present to the exclusion of and without any interference from
respondents. They cannot therefore be said to have slept on their rights as they
in fact exercised the same by continuously possessing Lot No. 379.
On the contrary, we find that it is respondents who are actually guilty of
laches. Though not specifically pleaded, the Court can properly address the
issue of laches based on petitioners’ allegation in the complaint that “[n]either
spouses Cipriano Hernandez and Julia Zoleta x x x nor [herein respondents]
had taken steps to possess or lay adverse claim to said parcel of land from the
date of their registration of title in November, 1965 up to the present.” Such
41 _______________
averment is sufficient to impute abandonment of right on the part of
Villegas v. Court of Appeals, G.R. No. 129977, February 1, 2001, 351 SCRA 69, 77.
respondents. At any rate, laches need not be specifically pleaded. On its own
43

Id., at p. 78.
44

initiative, a court may consider it in determining the rights of the parties. 42

Id.
45

The failure or neglect, for an unreasonable length of time to do that which
by exercising due diligence could or should have been done earlier constitutes
laches. It is negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to assert it has either
abandoned it or declined to assert it. While it is by express
_______________
David v. Malay, 376 Phil. 825, 835-836; 318 SCRA 711, 720-721 (1999).
40
Complaint, Records, p. 5.
41
337
VOL. 487, APRIL 18, 2006 337
Rumarate vs. Hernandez
siblings had a plan to convert the land into a grazing land for cattle but decided
to put it off for fear of the rampant operations of the New People’s Army
between the years 1965-1970. However, even after said years, respondents
took no step to implement their plan. Worse, among the siblings of spouses
Cipriano Hernandez and Julia Zoleta who are all living in the
Philippines, only Joaquin Hernandez visited the land and only thrice, i.e.,
46

Logronio v. Taleseo, 370 Phil. 907, 918; 312 SCRA 52, 62 (1999).
42
once in each years of 1964, 1966 and 1970. Thereafter, not one of them paid
336
visit to Lot No. 379, up to the time Joaquin Hernandez testified in
336 SUPREME COURT REPORTS ANNOTATED 1996, despite the fact that two of them are living only in Calauag, Quezon; one
47

Rumarate vs. Hernandez in Agdangan, Quezon; and two in Lucena City. Neither did they send a
48 49

provision of law that no title to registered land in derogation of that of the
registered owner shall be acquired by prescription or adverse possession, it is
likewise an enshrined rule that even a registered owner may be barred from
recovering possession of property by virtue of laches. 43
In applying the doctrine of laches, we have ruled that where a party allows
the following number of years to lapse from the emergence of his cause of
action without enforcing his claim, laches sets in: 36 years; 12 years; 50 years;
34 years; 37 years; 32 years; 20 years; 47 years; 11 years; 25 years; 40 years; 19
years; 27 years; 7 years; 44 years; 4 years; and 67 years. 44
The elements of laches are: (1) conduct of a party on the basis of which the
other party seeks a remedy; (2) delay in asserting one’s rights, despite having
had knowledge or notice of the other party’s conduct and having been
afforded an opportunity to institute a suit; (3) lack of knowledge or notice on
the part of a party that the person against whom laches is imputed would
assert the right; and (4) injury or prejudice to the party asserting laches in the
event the suit is allowed to prosper. 45
All these elements are present in this case. Petitioners’ continuous
possession and occupation of Lot No. 379 should have prompted the
respondents to file an action against petitioners, but they chose not to.
Respondents cannot deny knowledge of said possession by petitioners as they
notice or correspondence to petitioners invoking their right over the property.
From all indications, the late spouses Cipriano Hernandez and Julia Zoleta as
well respondents, have neglected Lot No. 379. Were it not for this action
instituted by petitioners in 1992, their conflicting claims over the property
could not have been settled. It goes without saying that to lose a property that
has been in the family from 1929 up to the present, or for 77 years will certainly
cause irreparable pecuniary and moral injury to petitioners, especially so if the
same ancestral land will be lost under most unfair circumstances in favor of
respondents who appear to have no real interest in cultivating the same.
Finally, payment of taxes alone will not save the day for respondents. Only
a positive and categorical assertion of their supposed rights against petitioners
would rule out the application of laches. It means taking the offensive by
instituting legal means to wrest possession of the property which, however, is
absent in this case. Respondents’ payment of taxes alone, without possession
could hardly be construed as an exercise of ownership. What stands out is their
overwhelming
_______________
TSN, May 10, 1996, p. 215.
46

Id., at p. 28.
47

even asserted in their Answer that in 1970, Teodulo ousted the tenant they Id., at p. 15.
48

(respondents) instituted in the lot. From 1970 up to the filing of petitioners’ Id., at pp. 23-24.
49

complaint in 1992, or after 22 years, respondents never bothered to assert any 338
right over Lot No. 379. Respondent Joaquin Hernandez testified that he and 338 SUPREME COURT REPORTS ANNOTATED
his Rumarate vs. Hernandez
passivity by allowing petitioners to exercise acts of ownership and to enjoy the
fruits of the litigated lot for 22 years without any interference.
In sum, the Court finds that Lot No. 379 should be adjudicated in favor of
petitioners.
One last point. Notwithstanding this Court’s declaration that Lot No. 379
should be awarded in favor of petitioners, their title over the same is imperfect
and is still subject to the filing of the proper application for confirmation of
title under Section 48 (b) of the Public Land Act, where the State and other
oppositors may be given the chance to be heard. It was therefore premature
for the trial court to direct the Register of Deeds of Lucena City to issue a
certificate of title in the name of petitioners.
Nevertheless, the imperfect title of petitioners over Lot No. 379 is enough
to defeat the certificate of title issued to respondents. 50

WHEREFORE, the petition is GRANTED and the May 26, 2005 Decision of
the Court of Appeals in CA-G.R. CV No. 57053, is REVERSED and SET ASIDE.
The March 31, 1997 Decision of the Regional Trial Court of Calauag, Quezon,
Branch 63, in Civil Case No. C-964, awarding Lot No. 379 in favor petitioners
and ordering the cancellation of respondents’ Transfer Certificate of Title No.
T-237330, is REINSTATED with the MODIFICATION deleting the trial court’s
order directing the Register of Deed of Lucena City to issue a certificate of title
in the name of petitioners.
SO ORDERED.
Panganiban (C.J., Chairperson), Austria-Martinez,Callejo, Sr. and Chico-
Nazario, JJ., concur.

_______________

Heirs of Simplicio Santiago v. Heirs of Mariano Santiago, G.R. No. 151440, June 17, 2003, 404
50

SCRA 193, 204.

339
VOL. 487, APRIL 18, 2006 339
Intercontinental Broadcasting Corporation (IBC-13) vs. Alonzo-Legasto
Petition granted, judgment reversed and set aside. That of the trial court reinstated
with modification.
 G.R. No. 141970. September 10, 2001. * PANGANIBAN, J.:
METROPOLITAN BANK & TRUST COMPANY, petitioner, vs. Hon. FLORO
T. ALEJO, in His Capacity as Presiding Judge of Branch 172 of the Regional In a suit to nullify an existing Torrens Certificate of Title (TCT) in which a real
Trial Court of Valenzuela; and SY TAN SE, represented by his Attorney-in- estate mortgage is annotated, the mortgagee is an indispensable party. In such
Fact, SIAN SUAT NGO, respondents. suit, a decision canceling the TCT and the mortgage annotation is subject to a
Remedial Law; Judgment; Relief from Judgment; Relative to a motion for relief on the petition for annulment of
ground of fraud, accident, mistake or excusable negligence—Rule 38 of the Rules of Court only 814
applies when the one deprived of his right is a party to the case.—It must be emphasized that 814 SUPREME COURT REPORTS ANNOTATED
petitioner was never a party to Civil Case No. 4930-V-96. In Lagula, et al. v. Casimiro,
Metropolitan Bank & Trust Company vs. Alejo
et al. the Court held that—relative to a motion for relief on the ground of fraud,
accident, mistake, or excusable negligence—Rule 38 of the Rules of Court “only applies judgment, because the non-joinder of the mortgagee deprived the court of
when the one deprived of his right is a party to the case.” Since petitioner was never a jurisdiction to pass upon the controversy.
party to the case or even summoned to appear therein, then the remedy of relief from The Case
judgment under Rule 38 of the Rules of Court was not proper. Before this Court is a Petition for Review on Certiorari under Rule 45 of the
1

_______________
*THIRD DIVISION.
813
VOL. 364, SEPTEMBER 10, 2001 813
Metropolitan Bank & Trust Company vs. Alejo
Same; Actions; An action for quieting of title is filed only when there is a cloud on title
to real property or any interest therein.—Equally important, an action for quieting of title
is filed only when there is a cloud on title to real property or any interest therein. As
defined, a “cloud on title is a semblance of title which appears in some legal form but
which is in fact unfounded.” In this case, the subject judgment cannot be considered as
a cloud on petitioner’s title or interest over the real property covered by TCT No. V-
41319, which does not even have a semblance of being a title.
Same; Same; Parties; The absence of indispensable parties renders all subsequent
Rules of Court, assailing the March 25, 1999 Resolution of the Court of Appeals
(CA) in CA-GR SP No. 50638, which states in full:
“This resolves the petition for annulment of judgment based on ‘external (sic) fraud’
filed by petitioner Metropolitan Bank and Trust Company seeking to annul the
Decision dated August 12, 1998 rendered by respondent judge, Honorable Flora T.
Alejo, Presiding Judge of the Regional Trial Court, Branch 172, Valenzuela, Metro
Manila, in Civil Case No. 4930-V-96 entitled ‘Sy Tan Se, represented by his attorney-in-
fact Sian Suat Ngo v. Raul Acampado, et al.
“This Court has observed that petitioner knew of the questioned Decision
sometime [i]n October 1998 (Petition, Rollo, p. 3). This being the case, petitioner should
have first sought recourse by way of petition for relief from judgment under Rule 38 of
the 1997 Rules of Civil Procedure. Accordingly, the petition for annulment of judgment
is DENIED DUE COURSE and DISMISSED outright for being insufficient in form and
substance (Section 2, Rule 47, 1997 Rules of Civil Procedure).”
Also challenged is the January 27, 2000 CA Resolution denying petitioner’s
2

actuations of the court null and void.—It is clear that the presence of indispensable parties
Motion for Reconsideration.
is necessary to vest the court with jurisdiction, which is “the authority to hear and
determine a cause, the right to act in a case.” We stress that the absence of indispensable The Facts
parties renders all subsequent actuations of the court null and void, because of that On November 21, 1995 and January 30, 1996, Spouses Raul and Cristina
3 4

court’s want of authority to act, not only as to the absent parties but even as to those Acampado obtained loans from petitioner in the amounts of P5,000,000 and
present. P2,000,000, respectively. As security for the payment of these credit
Civil Law; Property; Mortgages; A real mortgage is a real right and a real property by accommodations, the Acampados
itself.—Although a mortgage affects the land itself and not merely the TCT covering it,
the cancellation of the TCT and the mortgage annotation exposed petitioner to real _______________
prejudice, because its rights over the mortgaged property would no longer be known
and respected by third parties. Necessarily, therefore, the nullification of TCT No. V- 1Rollo, pp. 17-19; penned by Justice Omar U. Amin and concurred in by Justices Hector L.
41319 adversely affected its property rights, considering that a real mortgage is a real Hofileña (Division chairman) and Martin S. Villarama, Jr. (member).
right and a real property by itself. 2Rollo, p. 20.
PETITION for review on certiorari of a decision of Court of Appeals. 3Records, p. 21.
Ibid.,p. 23.
The facts are stated in the opinion of the Court.
4

815
Santiago, Corpuz & Ejercito for petitioner.
VOL. 364, SEPTEMBER 10, 2001 815
Cea & Associates Law Office for private respondents.
Metropolitan Bank & Trust Company vs. Alejo
executed in favor of petitioner a Real Estate Mortgage and an Amendment of
5
Ruling of the Court of Appeals
Real Estate Mortgage over a parcel of land registered in their names. The land
6
For being insufficient in form and substance, the Petition for Annulment was
was covered by TCT No. V-41319 in the Registry of Deeds of Valenzuela City, outrightly dismissed by the CA. It ruled that petitioner ought to have filed,
where the contracts were also registered on November 20, 1995 and January instead, a petition for relief from judgment or an action for quieting of title.
23, 1996, re-spectively. 7
Hence, this Petition. 13

On June 3, 1996, a Complaint for Declaration of Nullity of TCT No. V-41319 Issues
was filed by Respondent Sy Tan Se against Spouses Acampado. In the In its Memorandum, petitioner presents the following issues:
Regional Trial Court (RTC) of Valenzuela, Branch 172, it was docketed as Civil
Case No. 4930-V-96, the progenitor of the present controversy.
8
“I
Despite being the registered mortgagee of the real property covered by the
title sought to be annulled, petitioner was not made a party to Civil Case No. x x x [W]hether or not a petition for annulment of judgment under Rule 47 of the 1997
4930-V-96, nor was she notified of its existence.
9 Rules of Civil Procedure is the proper remedy available to petitioner under the
Because the spouses defaulted in the payment of their loan, ex-trajudicial circumstances.”
foreclosure proceedings over the mortgaged property were initiated on April
19, 1997. II
On June 17, 1997, the sheriff of Valenzuela conducted an auction sale of the
x x x [W]hether or not the judgment of the trial court in Civil Case No. 4930-V-
property, during which petitioner submitted the highest and winning bid. On 10

96 should be annulled.” 14

July 15, 1997, a Certificate of Sale was issued in its favor. This sale was entered
11

in the Registry of Deeds of Valenzuela on July 28, 1997. _______________

When the redemption period lapsed exactly a year after, on July 28, 1998,
petitioner executed an Affidavit of Consolidation of Ownership to enable the 12Records, pp. 18-20.
Registry of Deeds of Valenzuela to issue a new TCT in its name. 13This case was deemed submitted for resolution on January 25, 2001, upon receipt by this
Court of respondent’s 3-page Memorandum, which was signed by Atty. Melencio A. Cea.
Upon presentation to the Register of Deeds of the Affidavit of
Petitioner’s Memorandum, signed by Atty. Renato B. Corpuz, Jr. of Santiago Corpuz & Ejercito,
Consolidation of Ownership, petitioner was informed of the exis- was filed earlier on December 29, 2000.
14Petitioner’s Memorandum; Rollo, p. 69.
_______________ 817
VOL. 364, SEPTEMBER 10, 2001 817
5Id.,pp. 25-28.
6Id.,pp. 29-30. Metropolitan Bank & Trust Company vs. Alejo
7Id., p. 47. The Court’s Ruling
Records, p. 56.
The Petition is meritorious.
8

9Petition, p. 6; Rollo, p. 13.

10Records, p. 50. First Issue:
Ibid.
Proper Remedy
11

816
816 SUPREME COURT REPORTS ANNOTATED
Metropolitan Bank & Trust Company vs. Alejo
tence of the August 12, 1998 RTC Decision in Civil Case No. 4930-V-96,
annulling TCT No. V-41319. The dispositive portion of the Decision stated:
12
‘WHEREFORE, judgment is hereby rendered declaring as null and void Transfer
Certificate of Title No. V-41319 in the name of defendant Raul Acampado for having
proceeded from an illegitimate source. With costs against the defendant.
SO ORDERED.”
On January 27, 1999, petitioner filed with the Court of Appeals a Petition for
Annulment of the RTC Decision.
Respondents aver that a petition for annulment is not proper, because there
were three different remedies available but they were not resorted to by
petitioner.
We are not persuaded. First, a petition for relief, the remedy pointed to by
the Court of Appeals, was not available to petitioner. Section 1, Rule 38 of the
Rules of Court, states:
“Petition for relief from judgment, order, or other proceedings.—When a judgment or final
order is entered, or any other proceeding is thereafter taken against a party in any court
through fraud, accident, mistake, or excusable negligence, he may file a petition in such
court and in the same case praying that the judgment, order or proceeding be set aside.”
(Italics supplied)
It must be emphasized that petitioner was never a party to Civil Case No.
4930-V-96. In Lagula, et al. v. Casimiro, et al. the Court held that—relative to a
15
motion for relief on the ground of fraud, accident, mistake, or excusable
negligence—Rule 38 of the Rules of Court “only applies when the one
deprived of his right is a party to the case.” Since petitioner was never a party
to the case or even summoned to appear therein, then the remedy of relief from
judgment under Rule 38 of the Rules of Court was not proper. This is plainly
provided in the italicized words of the present provision just quoted.
Second, in denying petitioner’s Motion for Reconsideration of the Decision
dismissing the Petition for Annulment of Judgment, the Court of Appeals
reasoned that another remedy, an action for quieting of title, was also available
to petitioner.
We do not agree. It should be stressed that this case was instituted to ask
for relief from the peremptory declaration of nullity of
_______________
98 Phil. 102, December 17, 1955, per Bautista Angelo, J.
15
818
818 SUPREME COURT REPORTS ANNOTATED
Metropolitan Bank & Trust Company vs. Alejo
TCT No. V-41319, which had been issued without first giving petitioner an
opportunity to be heard. Petitioner focused on the judgment in Civil Case No.
4930-V-96 which adversely affected it, and which it therefore sought to annul.
Filing an action for quieting of title will not remedy what it perceived as a
disregard of due process; it is therefore not an appropriate remedy.
Equally important, an action for quieting of title is filed only when there is
a cloud on title to real property or any interest therein. As defined, a “cloud
on title is a semblance of title which appears in some legal form but which is
in fact unfounded.” In this case, the subject judgment cannot be considered as
16
a cloud on petitioner’s title or interest over the real property covered by TCT
No. V-41319, which does not even have a semblance of being a title.
It would not be proper to consider the subject judgment as a cloud that
would warrant the filing of an action for quieting of title, because to do so
would require the court hearing the action to modify or interfere with the
judgment or order of another co-equal court. Well-entrenched in our
jurisdiction is the doctrine that a court has no power to do so, as that action
may lead to confusion and seriously hinder the administration of
justice. Clearly, an action for quieting of title is not an appropriate remedy in
17
this case.
Third, private respondent cites a last remedy: the intervention by petitioner
in Civil Case No. 4930-V-96. The availability of this remedy hinges on
petitioner’s knowledge of the pendency of that case, which would have
otherwise been alerted to the need to intervene therein. Though presumed by
private respondent, any such knowledge prior to October 1998 is, however,
emphatically denied by petitioner.
The Petition for Annulment before the Court of Appeals precisely alleged
that private respondent purposely concealed the case by excluding petitioner
as a defendant in Civil Case No. 4930-V-96, even if the latter was an
indispensable party. Without due process
_______________
Tolentino, Civil Code, Vol. II, 1992 ed., p. 150.
16
Wack Wack Condominium Corp. v. Court of Appeals, 215 SCRA 850, November 23, 1992; Mas v.
17
Dumaraog, 12 SCRA 34, September 29 1964.
819
VOL. 364, SEPTEMBER 10, 2001 819
Metropolitan Bank & Trust Company vs. Alejo
of law, the former intended to deprive petitioner of the latter’s duly registered
property right. Indeed, the execution of the Decision in Civil Case No. 4930-V-
96 necessarily entailed its enforcement against petitioner, even though it was
not a party to that case. Hence, the latter concludes that annulment of
judgment was the only effective remedy open to it.
The allegation of extrinsic fraud, if fully substantiated by a preponderance
of evidence, may be the basis for annulling a judgment. The resort to 18
annulment becomes proper because of such allegation, coupled with the
unavailability of the other remedies pointed to by respondents.
Second Issue:
Lack of Jurisdiction
It is undisputed that the property covered by TCT No. V-41319 was mortgaged
to petitioner, and that the mortgage was annotated on TCT No. V-41319 before
the institution of Civil Case No. 4930-V-96. It is also undisputed that all
subsequent proceedings pertaining to the foreclosure of the mortgage were
entered in the Registry of Deeds. The nullification and cancellation of TCT No.
V-41319 carried with it the nullification and cancellation of the mortgage
annotation.
Although a mortgage affects the land itself and not merely the TCT
covering it, the cancellation of the TCT and the mortgage annotation exposed
petitioner to real prejudice, because its rights over the mortgaged property
would no longer be known and respected by third parties. Necessarily,
therefore, the nullification of TCT No. V-41319 adversely affected its property
rights, considering that a real mortgage is a real right and a real property by
itself. 19
 Evidently, petitioner is encompassed within the definition of an
indispensable party; thus, it should have been impleaded as a defendant in
Civil Case No. 4930-V-96.
_______________
Islamic Da Wah Council of the Phils, v. Court of Appeals, 178 SCRA 178, September 29, 1989.
18
Paras, Civil Code Annotated, Vol. V, 1995 ed., pp. 1043-1044.
19
820
820 SUPREME COURT REPORTS ANNOTATED
Metropolitan Bank & Trust Company vs. Alejo
“An indispensable party is a party who has such an interest in the controversy or
subject matter that a final adjudication cannot be made, in his absence, without injuring
or affecting that interest[;] a party who has not only an interest in the subject matter of
the controversy, but also has an interest of such nature that a final decree cannot be
made without affecting his interest or leaving the controversy in such a condition that
its final determination may be wholly inconsistent with equity and good conscience. It
has also been considered that an indispensable party is a person in whose absence there
cannot be a determination between the parties already before the court which is
effective, complete, or equitable. Further, an indispensable party is one who must be
included in an action before it may properly go forward.
“A person is not an indispensable party, however, if his interest in the controversy
or subject matter is separable from the interest of the other parties, so that it will not
necessarily be directly or injuriously affected by a decree which does complete justice
between them.” 20
The joinder of indispensable parties to an action is mandated by Section 7, Rule
3 of the Revised Rules of Civil Procedures, which we quote:
“SEC. 7. Compulsory joinder of indispensable parties.—Parties in interest without whom
no final determination can be had of an action shall be joined either as plaintiffs or
defendants.”
Aside from the above provision, jurisprudence requires such joinder, as the
following excerpts indicate:
“Indispensable parties must always be joined either as plaintiffs or defendants, for the
court cannot proceed without them. x x x. Indispensable parties are those with such an
interest in the controversy that a final decree would necessarily affect their rights, so
that the courts cannot proceed without their presence.” 21
_______________
20Arcelona v. Court of Appeals, 280 SCRA 20, 39-40, October 2, 1997, per
Panganiban, J.; Servicewide Specialists, Inc. v. Court of Appeals, 318 SCRA 493, November 19, 1999.
21Seno v. Mangubat, 156 SCRA 113, 118-119, December 2, 1987, per Gancayco, J.; Quiombing v.
Court of Appeals, 189 SCRA 325, 330, August 30, 1990.
821
VOL. 364, SEPTEMBER 10, 2001 821
Metropolitan Bank & Trust Company vs. Alejo
“x x x. Without the presence of indispensable parties to a suit or proceeding, a judgment
of a Court cannot attain real finality.” 22
‘Whenever it appears to the court in the course of a proceeding that an
indispensable party has not been joined, it is the duty of the court to stop the trial and
to order the inclusion of such party. (The Revised Rules of Court, Annotated &
Commented by Senator Vicente J. Francisco, Vol. I, p. 271, 1973 ed., See also Cortez vs.
Avila, 101 Phil. 705.) Such an order is unavoidable, for the ‘general rule with reference
to the making of parties in a civil action requires the joinder of all necessary parties
wherever possible, and the joinder of all indispensable parties under any and all
conditions, the presence of those latter parties being a sine qua non of the exercise of
judicial power,’ (Borlasa vs. Polistico, 47 Phil. 345, at p. 347.) It is precisely ‘when an
indispensable party is not before the court (that) the action should be dismissed,’
(People vs. Rodriguez, 106 Phil. 325. at p. 327.) The absence of an indispensable party
renders all subsequent actuations of the court null and void, for want of authority to act, not
only as to the absent parties but even as to those present.” (emphasis supplied)
23
“The evident aim and intent of the Rules regarding the joinder of indispensable
and necessary parties is a complete determination of all possible issues, not only
between the parties themselves but also as regards to other persons who may be
affected by the judgment. A valid judgment cannot even be rendered where there is
want of indispensable parties.” 24
From the above, it is clear that the presence of indispensable parties is
necessary to vest the court with jurisdiction, which is “the authority to hear
and determine a cause, the right to act in a case” We stress that the absence of
25
indispensable parties renders all subsequent actuations of the court null and
void, because of
_______________
22 Servicewide Specialists, Inc. v. Court of Appeals, 318 SCRA 493, November 19, 1999, per
Purisima, J.
23 Lim Tanhu v. Ramolete, 66 SCRA 425, August 29, 1975, per Barredo, J.
24 Director of Lands v.Court of Appeals, 93 SCRA 238, 248, September 25, 1979.
25 People v. Mariano, 71 SCRA 600, June 30, 1976, per Muñoz-Palma, J.; Century Insurance Co.,
Inc. v. Fuentes, 2 SCRA 1168, August 31, 1961—citing Herrera v. Barreto and Joaquin, 25 Phil. 245,
September 10, 1913; and Napa v. Weissenhagen, 29 Phil 180, January 6, 1915. See also United BF
Homeowner’s Association v. BF Homes, Inc., 310 SCRA 304, July 14, 1999.
822
822 SUPREME COURT REPORTS ANNOTATED
Metropolitan Bank & Trust Company vs. Alejo
that court’s want of authority to act, not only as to the absent parties but even
as to those present.
It is argued that petitioner cannot possibly be an indispensable party, since
the mortgage may not even be valid because of the possible absence of
compliance with the requirement that the mortgagor be the absolute owner
26
of the thing mortgaged. It should be emphasized, however, that at the time the
mortgage was constituted, there was an existing TCT (No. V-41319), which
named the mortgagors, the Acampado spouses, as the registered owners of Melo (Chairman), Vitug, Gonzaga-Reyes and Sandoval-Gutierrez,
the property. In Seno v. Mangubat this Court held as follows:
27 JJ., concur.
“The well-known rule in this jurisdiction is that a person dealing with a registered land Petition granted, resolutions reversed. RTC decision nullified and set aside.
has a right to rely upon the face of the Torrens Certificate of Title and to dispense with
the need of inquiring further, except when the party concerned has actual knowledge
of facts and circumstances that would impel a reasonably cautious man to make such
inquiry.
xxx xxx xxx
“Thus, where innocent third persons relying on the correctness of the certificate of
title issued, acquire rights over the property, the court cannot disregard such rights and
order the total cancellation of the certificate for that would impair public confidence in
the certificate of title; otherwise everyone dealing with property registered under the
Torrens system would have to inquire in every instance as to whether the title ha[s]
been regularly or irregularly issued by the court. Indeed this is contrary to the evident
purpose of the law.”
The peremptory disregard of the annotations registered and entered in TCT
No. V-41319 constituted a deprivation of private property without due process
of law and was therefore unquestionably unjust and iniquitous. This, we
cannot countenance. Clearly, it was the trial court’s duty to order petitioner’s
inclusion as a party to Civil Case No. 4930-V-96. This was not done. Neither
the court nor private respondents bothered to implead petitioner as a party to
the case. In the absence of petitioner, an indispensable party, the trial court
had no authority to act on the

_______________

Under Article 2085, par. (2) of the Civil Code.

26

156 SCRA 113, 118-119, December 2, 1987, per Gancayco, J.

27

823
VOL. 364, SEPTEMBER 10, 2001 823
Metropolitan Bank & Trust Company vs. Alejo
case. Its judgment therein was null and void due to lack of jurisdiction over an
indispensable party.
In Leonor v. Court of Appeals and Arcelona v. Court of Appeals, we held thus:
28 29

“A void judgment for want of jurisdiction is no judgment at all. It cannot be the source
of any right nor the creator of any obligation. All acts performed pursuant to it and all
claims emanating from it have no legal effect. Hence, it can never become final and any
writ of execution based on it is void:”x x x it may be said to be a lawless thing which
can be treated as an outlaw and slain at sight, or ignored wherever and whenever it
exhibits its head.”
WHEREFORE, the Petition is GRANTED and the assailed Resolutions of the
Court of Appeals are REVERSED. The Decision of the Regional Trial Court in
Civil Case No. 4930-V-41319 is hereby NULLIFIED and SET ASIDE. No costs.
SO ORDERED.
 G.R. No. 143365. December 4, 2008.*
GENEROSO SALIGUMBA, ERNESTO SALIGUMBA, and HEIRS OF
SPOUSES VALERIA SALIGUMBA AND ELISEO SALIGUMBA, SR.,
petitioners, vs. MONICA PALANOG, respondent.
Actions; Judgments; Revival of Judgments; An action for revival of judgment is no more
than a procedural means of securing the execution of a previous judgment which has become
dormant after the passage of five years without it being executed upon motion of the prevailing
party—it is not intended to re-open any issue affecting the merits of the judgment debtor’s case
nor the propriety or correctness of the first judgment.—An action for revival of judgment is
no more than a procedural means of securing the execution of a previous judgment
which has become dormant after the passage of five years without it being executed
upon motion of the prevailing party. It is not intended to re-open any issue affecting
the merits of the judgment debtor’s case nor the propriety or correctness of the first
judgment. An action for revival of judgment is a new and independent action, different
and distinct from either the recovery of property case or the reconstitution case,
wherein the cause of action is the decision itself and not the merits of the action upon
which the judg-
_______________
* FIRST DIVISION.
9 withdrawal of record; at least, so far as the opposite party is concerned, the relation
ment sought to be enforced is rendered. Revival of judgment is premisedon the
assumption that the decission to be revived, either by motion or by independent action,
is already final and executory.
Same; Death of a Party; Quieting of Title; An action for quieting of title with damages,
an action involving real property, is an action that survives pursuant to Section 1, Rule 87 as
the claim is not extinguished by the death of a party.—Civil Case No. 2570 is an action for
quieting of title with damages which is an action involving real property. It is an action
that survives pursuant to Section 1, Rule 87 as the claim is not extinguished by the
death of a party. And when a party dies in an action that survives, Section 17 of Rule 3
of the Revised Rules of Court provides for the procedure.
Same; Same; Section 17, Rule 3 of the Revised Rules of Court is explicit that the duty of
the court to order the legal representative or heir to appear arises only “upon proper notice”—a
notation “Party-Deceased” on the unserved notices could not be the “proper notice”
contemplated by the rule.—Section 17 is explicit that the duty of the court to order the
legal representative or heir to appear arises only “upon proper notice.” The notation
“Party-Deceased” on the unserved notices could not be the “proper notice”
contemplated by the rule. As the trial court could not be expected to know or take
judicial notice of the death of a party without the proper manifestation from counsel,
the trial court was well within its jurisdiction to proceed as it did with the case.
Moreover, there is no showing that the court’s proceedings were tainted with
irregularities.
Same; Same; It is the duty of counsel for the deceased to inform the court of the death of
his client; The rules operate on the presumption that the attorney for the deceased party is in a
better position than the attorney for the adverse party to know about the death of his client and
to inform the court of the name and address of his legal representative.—It is the duty of
counsel for the deceased to inform the court of the death of his client. The failure of
counsel to comply with his duty under Section 16 to inform the court of the death of
his client and the non-substitution of such party will not invalidate the proceedings
and the judgment thereon if the action survives the death of such party. The decision
rendered shall bind the party’s successor-in-interest. The rules operate on the
presumption that the attorney for the deceased party is in a better position than the
attor-10ney for the adverse party to know about the death of his client and to inform
the court of the name and address of his legal representative.
Same; Same; Attorneys; Withdrawal of Counsel; The counsel of record is obligated to
protect his client’s interest until he is released from his professional relationship with his client;
Until his withdrawal shall have been approved, the lawyer remains counsel of record who is
expected by his client as well as by the court to do what the interests of his client require—the
attorney-client relation does not terminate formally until there is a withdrawal of record.—This
notwithstanding, when Valeria Saligumba died on 2 February 1985, Atty. Miralles
again did not inform the trial court of the death of Valeria Saligumba. There was no
formal substitution nor submission of proof of death of Valeria Saligumba. Atty.
Miralles was remiss in his duty under Section 16, Rule 3 of the Revised Rules of Court.
The counsel of record is obligated to protect his client’s interest until he is released from
his professional relationship with his client. For its part, the court could recognize no
other representation on behalf of the client except such counsel of record until a formal
substitution of attorney is effected. An attorney must make an application to the court
to withdraw as counsel, for the relation does not terminate formally until there is a
otherwise continues until the end of the litigation. Unless properly relieved, the counsel
is responsible for the conduct of the case. Until his withdrawal shall have been
approved, the lawyer remains counsel of record who is expected by his client as well
as by the court to do what the interests of his client require. He must still appear on the
date of hearing for the attorney-client relation does not terminate formally until there
is a withdrawal of record.
PETITION for review on certiorari of the decision of the Regional Trial Court
of Kalibo, Aklan, Br. 5.
The facts are stated in the opinion of the Court.
Public Attorney’s Office for petitioners.
Porferio T. Taplac for respondent.
11CARPIO, J.:
The Case
This is a petition for review of the Decision dated 24 May 2000 of the
Regional Trial Court, Branch 5, Kalibo, Aklan (RTC-Branch 5) in Civil Case
No. 5288 for Revival of Judgment. The case is an offshoot of the action for
Quieting of Title with Damages in Civil Case No. 2570.
The Facts
Monica Palanog, assisted by her husband Avelino Palanog (spouses
Palanogs), filed a complaint dated 28 February 1977 for Quieting of Title with
Damages against defendants, spouses Valeria Saligumba and Eliseo
Saligumba, Sr. (spouses Saligumbas), before the Regional Trial Court, Branch
3, Kalibo, Aklan (RTC-Branch 3). The case was docketed as Civil Case No.
2570. In the complaint, spouses Palanogs alleged that they have been in actual,
open, adverse and continuous possession as owners for more than 50 years of
a parcel of land located in Solido, Nabas, Aklan. The spouses Saligumbas
allegedly prevented them from entering and residing on the subject premises
and had destroyed the barbed wires enclosing the land. Spouses Palanogs
prayed that they be declared the true and rightful owners of the land in
question.
When the case was called for pre-trial on 22 September 1977, Atty. Edilberto
Miralles (Atty. Miralles), counsel for spouses Saligumbas, verbally moved for
the appointment of a commissioner to delimit the land in question. Rizalino
Go, Deputy Sheriff of Aklan, was appointed commissioner and was directed
to submit his report and sketch within 30 days.1 Present during the
delimitation were spouses Palanogs,
_______________
1 Records of Civil Case No. 2570, p. 23.
12spouses Saligumbas, and Ernesto Saligumba, son of spouses Saligumbas.2
After submission of the Commissioner’s Report, spouses Palanogs, upon
motion, were granted 10 days to amend their complaint to conform with the
items mentioned in the report.3
Thereafter, trial on the merits ensued. At the hearing on 1 June 1984, only
the counsel for spouses Palanogs appeared. The trial court issued an order
resetting the hearing to 15 August 1984 and likewise directed spouses
Saligumbas to secure the services of another counsel who should be ready on
that date.4 The order sent to Eliseo Saligumba, Sr. was returned to the court
unserved with the notation “Party-Deceased” while the order sent to
defendant Valeria Saligumba was returned with the notation “Party in
Manila.”5
At the hearing on 15 August 1984, spouses Palanogs’ direct examination
was suspended and the continuation of the hearing was set on 25 October
1984. The trial court stated that Atty. Miralles, who had not withdrawn as
counsel for spouses Saligumbas despite his appointment as Municipal Circuit
Trial Court judge, would be held responsible for the case of spouses
Saligumbas until he formally withdrew as counsel. The trial court reminded
Atty. Miralles to secure the consent of spouses Saligumbas for his
withdrawal.6 A copy of this order was sent to Valeria Saligumba but the same
was returned unserved with the notation “Party in Manila.”7
The hearing set on 25 October 1984 was reset to 25 January 1985 and the
trial court directed that a copy of this order be sent to Eliseo Saligumba, Jr. at
COA, PNB, Manila.8
_______________
2 Id., at p. 31, Commissioner’s Report.
3 Id., at p. 55.
4 Id., at p. 102.
5 Id., at pp. 104-105.
6 Id., at p. 108.
7 Id., at p. 112.
8 Id., at p. 115.
13
The presentation of evidence for spouses Palanogs resumed on 25 January
1985 despite the motion of Atty. Miralles for postponement on the ground that
his client was sick. The exhibits were admitted and plaintiffs spouses Palanogs
rested their case. Reception of evidence for the defendants spouses Saligumbas
was scheduled on 3, 4, and 5 June 1985.9
On 3 June 1985, only spouses Palanogs and counsel appeared. Upon
motion of the spouses Palanogs, spouses Saligumbas were deemed to have
waived the presentation of their evidence.
On 3 August 1987, after a lapse of more than two years, the trial court
considered the case submitted for decision.
On 7 August 1987, RTC-Branch 3 rendered a judgment in Civil Case No.
2570 declaring spouses Palanogs the lawful owners of the subject land and
ordering spouses Saligumbas, their agents, representatives and all persons
acting in privity with them to vacate the premises and restore possession to
spouses Palanogs.
The trial court, in a separate Order dated 7 August 1987, directed that a
copy of the court’s decision be furnished plaintiff Monica Palanog and
defendant Valeria Saligumba.
Thereafter, a motion for the issuance of a writ of execution of the said
decision was filed but the trial court, in its Order dated 8 May 1997, ruled that
since more than five years had elapsed after the date of its finality, the decision
could no longer be executed by mere motion.
Thus, on 9 May 1997, Monica Palanog (respondent), now a widow, filed a
Complaint seeking to revive and enforce the Decision dated 7 August 1987 in
Civil Case No. 2570 which she claimed has not been barred by the statute of
limitations. She impleaded petitioners Generoso Saligumba and Ernesto
Saligumba, the heirs and children of the spouses Saligumbas,
_______________
9 Id., at pp. 119-120.
14as defendants. The case was docketed as Civil Case No. 5288 before the RTC-
Branch 5.
Petitioner Generoso Saligumba, for himself and in representation of his
brother Ernesto who was out of the country working as a seaman, engaged the
services of the Public Attorney’s Office, Kalibo, Aklan which filed a motion for
time to allow them to file a responsive pleading. Petitioner Generoso
Saligumba filed his Answer10 alleging that: (1) respondent had no cause of
action; (2) the spouses Saligumbas died while Civil Case No. 2570 was pending
and no order of substitution was issued and hence, the trial was null and void;
and (3) the court did not acquire jurisdiction over the heirs of the spouses
Saligumbas and therefore, the judgment was not binding on them.
Meanwhile, on 19 December 1997, the trial court granted respondent’s
motion to implead additional defendants namely, Eliseo Saligumba, Jr. and
Eduardo Saligumba, who are also the heirs and children of spouses
Saligumbas.11 They were, however, declared in default on 1 October 1999 for
failure to file any responsive pleading.12
The Trial Court’s Ruling
On 24 May 2000, the RTC-Branch 5 rendered a decision in favor of respondent
ordering the revival of judgment in Civil Case No. 2570. The trial court ruled
that the non-substitution of the deceased spouses did not have any legal
significance. The land subject of Civil Case No. 2570 was the exclusive
property of defendant Valeria Saligumba who inherited the same from her
deceased parents. The death of her husband, Eliseo Saligumba, Sr., did not
change the complexion of the ownership of the property that would require
his substitution. The spouses Saligumbas’ children, who are the petitioners in
_______________
10 Records of Civil Case No. 5288, pp. 10-12.
11 Id., at p. 25.
12 Id., at p. 49.
15this case, had no right to the property while Valeria Saligumba was still alive.
The trial court further found that when defendant Valeria Saligumba died, her
lawyer, Atty. Miralles, did not inform the court of the death of his client. The
trial court thus ruled that the non-substitution of the deceased defendant was
solely due to the negligence of counsel. Moreover, petitioner Ernesto
Saligumba could not feign ignorance of Civil Case No. 2570 as he was present
during the delimitation of the subject land. The trial court likewise held that
the decision in Civil Case No. 2570 could not be the subject of a collateral
attack. There must be a direct action for the annulment of the said decision.
Petitioners elevated the matter directly to this Court. Hence, the present
petition.
The Court’s Ruling
The instant case is an action for revival of judgment and the judgment
sought to be revived in this case is the decision in the action for quieting of
title with damages in Civil Case No. 2570. This is not one for annulment of
judgment.
An action for revival of judgment is no more than a procedural means of
securing the execution of a previous judgment which has become dormant
after the passage of five years without it being executed upon motion of the
prevailing party. It is not intended to re-open any issue affecting the merits of
the judgment debtor’s case nor the propriety or correctness of the first
judgment.13 An action for revival of judgment is a new and independent action,
different and distinct from either the recovery of property case or the
reconstitution case, wherein the cause of action is the decision itself and not
the
_______________
13 Panotes v. City Townhouse Development Corporation, G.R. No. 154739, 23 January 2007, 512
SCRA 269; Filipinas Investment and Finance Corporation v. Intermediate Appellate Court, G.R. Nos.
66059-60, 4 December 1989, 179 SCRA 728; Azotes v. Blanco, 85 Phil. 90 (1949).
16merits of the action upon which the judgment sought to be enforced is
rendered.14 Revival of judgment is premised on the assumption that the
decision to be revived, either by motion or by independent action, is already
final and executory.15
The RTC-Branch 3 Decision dated 7 August 1987 in Civil Case No. 2570
had been rendered final and executory by the lapse of time with no motion for
reconsideration nor appeal having been filed. While it may be true that the
judgment in Civil Case No. 2570 may be revived and its execution may be had,
the issue now before us is whether or not execution of judgment can be issued
against petitioners who claim that they are not bound by the RTC-Branch 3
Decision dated 7 August 1987 in Civil Case No. 2570.
Petitioners contend that the RTC-Branch 3 Decision of 7 August 1987 in
Civil Case No. 2570 is null and void since there was no proper substitution of
the deceased spouses Saligumbas despite the trial court’s knowledge that the
deceased spouses Saligumbas were no longer represented by counsel. They
argue that they were deprived of due process and justice was not duly served
on them.
Petitioners argue that the trial court even acknowledged the fact of death of
spouses Saligumbas but justified the validity of the decision rendered in that
case despite lack of substitution because of the negligence or fault of their
counsel. Petitioners contend that the duty of counsel for the deceased spouses
Saligumbas to inform the court of the death of his clients and to furnish the
name and address of the executor, administrator, heir or legal representative
of the decedent under Rule 3 presupposes adequate or active representation
by counsel. However, the relation of attorney and client was already
terminated by the appointment of counsel on record,
_______________
14 Juco v. Heirs of Tomas Siy Chung Fu, G.R. No. 150233, 16 February 2005, 451 SCRA
464; Santana-Cruz v. Court of Appeals, 414 Phil. 47; 361 SCRA 520 (2001).
15 Bañares II v. Balising, 384 Phil. 567; 328 SCRA 36 (2000).
17Atty. Miralles, as Municipal Circuit Trial Court judge even before the deaths
of the spouses Saligumbas were known. Petitioners invoke the Order of 1 June
1984 directing the spouses Saligumbas to secure the services of another lawyer
to replace Atty. Miralles. The registered mail containing that order was
returned to the trial court with the notation that Eliseo Saligumba, Sr. was
“deceased.” Petitioners thus question the decision in Civil Case No. 2570 as
being void and of no legal effect because their parents were not duly
represented by counsel of record. Petitioners further argue that they have
never taken part in the proceedings in Civil Case No. 2570 nor did they
voluntarily appear or participate in the case. It is unfair to bind them in a
decision rendered against their deceased parents. Therefore, being a void
judgment, it has no legal nor binding effect on petitioners.
Civil Case No. 2570 is an action for quieting of title with damages which is
an action involving real property. It is an action that survives pursuant to
Section 1, Rule 8716 as the claim is not extinguished by the death of a party.
And when a party dies in an action that survives, Section 17 of Rule 3 of the
Revised Rules of Court17 provides for the procedure, thus:
16 Section 1, Rule 87 of the Revised Rules of Court provides:
SECTION 1. Actions which may and which may not be brought against executor or
administrator.—No action upon a claim for the recovery of money or debt or interest
thereon shall be commenced against the executor or administrator; but actions to recover
real or personal property, or an interest therein, from the estate, or to enforce a lien
thereon, and actions to recover damages for an injury to person or property, real or
personal, may be commenced against him.
17 Spouses Eliseo Saligumba, Sr. and Valeria Saligumba died before the effectivity of the 1997
Rules on Civil Procedure. Section 17, Rule 3 of the Rules of Court was amended and is now Section
16, Rule 3 of the 1997 Rules on Civil Procedure which reads:
Section 16. Death of a party; duty of counsel.—Whenever a party to a pending action
dies, and the claim is not thereby extinguished, it shall be the duty of his counsel to in-
18
“Section 17. Death of Party.—After a party dies and the claim is not thereby
extinguished, the court shall order, upon proper notice, the legal representative of the
deceased to appear and to be substituted for the deceased, within a period of thirty (30)
days, or within such time as may be granted. If the legal representative fails to appear
within said time, the court may order the opposing party to procure the appointment
of a legal representative of the deceased within a time to be specified by the court, and
the representative shall immediately appear for and on behalf of the interest of the
deceased. The court charges involved in procuring such appointment, if defrayed by
the opposing party, may be recovered as costs. The heirs of the deceased may be
allowed to be substituted for the deceased, without requiring the appointment of an
executor or administrator and the court may appoint guardian ad litem for the minor
heirs.” (Emphasis and italics supplied)
Under the express terms of Section 17, in case of death of a party, and upon
proper notice, it is the duty of the court to order the legal representative or heir
of the deceased to appear for the deceased. In the instant case, it is true that
the
_______________
form the court within thirty (30) days after such death of the fact thereof, and to give the
name and address of his legal representative or representatives. Failure of counsel to
comply with this duty shall be a ground for disciplinary action.
The heirs of the deceased may be allowed to be substituted for the deceased, without
requiring the appointment of an executor or administrator and the court may appoint a
guardian ad litem for the minor heirs.
The court shall forthwith order said legal representative or representatives to appear
and be substituted within a period of thirty (30) days from notice.
If no legal representative is named by the counsel for the deceased party, or if the
one so named shall fail to appear within the specified period, the court may order the
opposing party, within a specified time, to procure the appointment of an executor or
administrator for the estate of the deceased and the latter shall immediately appear for
and on behalf of the deceased. The court charges in procuring such appointment, if
defrayed by the opposing party, may be recovered as costs.
19trial court,after receiving an informal notice of death by the mere notation in
the envelopes, failed to order the appearance of the legal representative or heir
of the deceased. There was no court order for deceased’s legal representative
or heir to appear, nor did any such legal representative ever appear in court to
be substituted for the deceased. Neither did the respondent ever procure the
appointment of such legal representative, nor did the heirs ever ask to be
substituted.
It appears that Eliseo Saligumba, Sr. died on 18 February 1984 while
Valeria Saligumba died on 2 February 1985. No motion for the substitution of
the spouses was filed nor an order issued for the substitution of the deceased
spouses Saligumbas in Civil Case No. 2570. Atty. Miralles and petitioner Eliseo
Saligumba, Jr., despite notices sent to them to appear, never confirmed the
death of Eliseo Saligumba, Sr. and Valeria Saligumba. The record is bereft of
any evidence proving the death of the spouses, except the mere notations in
the envelopes enclosing the trial court’s orders which were returned unserved.
Section 17 is explicit that the duty of the court to order the legal
representative or heir to appear arises only “upon proper notice.” The notation
“Party-Deceased” on the unserved notices could not be the “proper notice”
contemplated by the rule. As the trial court could not be expected to know or
take judicial notice of the death of a party without the proper manifestation
from counsel, the trial court was well within its jurisdiction to proceed as it
did with the case. Moreover, there is no showing that the court’s proceedings
were tainted with irregularities.18
Likewise, the plaintiff or his attorney or representative could not be expected
to know of the death of the defendant if the attorney for the deceased
defendant did not notify the plaintiff or his attorney of such death as required
by the
_______________
18 Florendo, Jr. v. Coloma, 214 Phil. 268; 129 SCRA 304 (1984).
20rules.19 The judge cannot be blamed for sending copies of the orders and
notices to defendants spouses in the absence of proof of death or manifestation
to that effect from counsel.20
Section 16, Rule 3 of the Revised Rules of Court likewise expressly
provides:
“SEC. 16. Duty of attorney upon death, incapacity or incompetency of party.—
Whenever a party to a pending case dies, becomes incapacitated or incompetent, it shall
be the duty of his attorney to inform the court promptly of such death, incapacity or
incompetency, and to give the name and residence of his executor, administrator,
guardian or other legal representative.”
It is the duty of counsel for the deceased to inform the court of the death of his
client. The failure of counsel to comply with his duty under Section 16 to
inform the court of the death of his client and the non-substitution of such
party will not invalidate the proceedings and the judgment thereon if the
action survives the death of such party. The decision rendered shall bind the
party’s successor-in-interest.21
The rules operate on the presumption that the attorney for the deceased
party is in a better position than the attorney for the adverse party to know
about the death of his client and to inform the court of the name and address
of his legal representative.22
Atty. Miralles continued to represent the deceased spouses even after the
latter’s demise. Acting on their behalf, Atty. Miralles even asked for
postponement of the hearings and did not even confirm the death of his clients
nor his appointment
_______________
19 Republic v. Bagtas, No. L-17474, 25 October 1962, 6 SCRA 262.
20 Ang Kek Chen v. Judge Andrade, 376 Phil. 136; 318 SCRA 11 (1999).
21 Benavidez v. Court of Appeals, 372 Phil. 615; 313 SCRA 714 (1999).
22 Heirs of Maximo Regoso v. Court of Appeals, G.R. No. 91879, 6 July 1992, 211 SCRA 348.
21as Municipal Circuit Trial Court judge. These clearly negate petitioners’
contention that Atty. Miralles ceased to be spouses Saligumbas’ counsel.
Atty. Miralles still remained the counsel of the spouses Saligumbas despite
the alleged appointment as judge. Records show that when Civil Case No.
2570 was called for trial on 25 October 1984, Atty. Miralles appeared and
moved for a postponement. The 25 October 1984 Order reads:
ORDER
Upon petition of Judge Miralles who is still the counsel on record of this case and
who is held responsible for anything that will happen in this case, postpone the hearing
of this case to JANUARY 25, 1985 AT 8:30 in the morning. x x x 23
The trial court issued an Order dated 1 June 1984 directing the defendants to
secure the services of another counsel. This order was sent to Eliseo
Saligumba, Sr. by registered mail but the same was returned with the notation
“Party-Deceased” while the notice to Valeria Saligumba was returned with the
notation “Party in Manila.”24 Eliseo Saligumba, Sr. died on 18 February 1984.
When Atty. Miralles appeared in court on 25 October 1984, he did not affirm
nor inform the court of the death of his client. There was no formal
substitution. The trial court issued an order resetting the hearing to 25 January
1985 and directed that a copy of the order be furnished petitioner Eliseo
Saligumba, Jr. at COA, PNB, Manila by registered mail.25When the case was
called on 25 January 1985, Atty. Miralles sought for another postponement on
the ground that his client was sick and under medical treatment in
Manila.26 Again, there was no manifestation from counsel about the death of
Eliseo Saligumba, Sr. The trial court is-
_______________
23 Records of Civil Case No. 2570, p. 115.
24 Id., at pp. 104-105.
25 Id., at p. 115.
26 Id., at p. 119.
22sued an Order dated 25 January 1985 setting the reception of evidence for
the defendants on 3, 4, and 5 June 1985. A copy of this order was sent to Eliseo
Saligumba, Jr. by registered mail. Nonetheless, as the trial court in Civil Case
No. 5288 declared, the non-substitution of Eliseo Saligumba, Sr. did not have
any legal significance as the land subject of Civil Case No. 2570 was the
exclusive property of Valeria Saligumba who inherited it from her deceased
parents.
This notwithstanding, when Valeria Saligumba died on 2 February 1985,
Atty. Miralles again did not inform the trial court of the death of Valeria
Saligumba. There was no formal substitution nor submission of proof of death
of Valeria Saligumba. Atty. Miralles was remiss in his duty under Section 16,
Rule 3 of the Revised Rules of Court. The counsel of record is obligated to
protect his client’s interest until he is released from his professional
relationship with his client. For its part, the court could recognize no other
representation on behalf of the client except such counsel of record until a _______________
formal substitution of attorney is effected.27
30 Orcino v. Gaspar, 344 Phil. 792; 279 SCRA 379 (1997).
An attorney must make an application to the court to withdraw as counsel,
31 Records of Civil Case No. 2570, p. 31.
for the relation does not terminate formally until there is a withdrawal of 24
record; at least, so far as the opposite party is concerned, the relation otherwise WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 24
continues until the end of the litigation.28 Unless properly relieved, the counsel May 2000 of the Regional Trial Court, Branch 5, Kalibo, Aklan in Civil Case
is responsible for the conduct of the case.29 Until his withdrawal shall have No. 5288. Costs against petitioners.
been approved, the lawyer remains counsel of record who is expected by his SO ORDERED.
client as well as by the court to do what the interests of his client require. He Puno (C.J., Chairperson), Corona and Azcuna, JJ.,concur.
must still appear on the date of hearing for the attorney-client Tinga, J.,** In the result.
Petition denied, judgment affirmed.
_______________

27 Wack Wack Golf and Country Club, Inc. v. Court of Appeals, 106 Phil. 501 (1959).
28 Visitacion v. Manit, 137 Phil. 348; 27 SCRA 523 (1969).
29 Tumbagahan v. Court of Appeals, No. L-32684, 20 September 1988, 165 SCRA 485; Cortez v.
Court of Appeals, 172 Phil. 400; 83 SCRA 31 (1978).
23relation does not terminate formally until there is a withdrawal of record.30
Petitioners should have questioned immediately the validity of the
proceedings absent any formal substitution. Yet, despite the court’s alleged
lack of jurisdiction over the persons of petitioners, petitioners never bothered
to challenge the same, and in fact allowed the proceedings to go on until the
trial court rendered its decision. There was no motion for reconsideration,
appeal or even an action to annul the judgment in Civil Case No. 2570.
Petitioners themselves could not feign ignorance of the case since during the
pendency of Civil Case No. 2570, petitioner Ernesto Saligumba, son of the
deceased spouses, was among the persons present during the delimitation of
the land in question before the Commissioner held on 5 November
1977.31 Petitioner Eliseo Saligumba, Jr. was likewise furnished a copy of the
trial court’s orders and notices. It was only the Answer filed by petitioner
Generoso Saligumba in Civil Case No. 5288 that confirmed the dates when the
spouses Saligumbas died and named the latter’s children. Consequently, Atty.
Miralles was responsible for the conduct of the case since he had not been
properly relieved as counsel of record. His acts bind his clients and the latter’s
successors-in-interest.
In the present case for revival of judgment, the other petitioners have not
shown much interest in the case. Petitioners Eliseo Saligumba, Jr. and Eduardo
Saligumba were declared in default for failure to file their answer. Petitioner
Ernesto Saligumba was out of the country working as a seaman. Only
petitioner Generoso Saligumba filed an Answer to the complaint. The petition
filed in this Court was signed only by petitioner Generoso Saligumba as
someone signed on behalf of petitioner Ernesto Saligumba without the latter’s
authority to do so.
 G.R. No. 163876. July 9, 2008.*
ROSALINA CLADO-REYES, ALICIA REYES-POTENCIANO, ANTONIO C.
REYES, BERNARDO C. REYES, JOVITO C. REYES, MARIA REYES-DIZON,
BERNARDA REYES-LLANZA, deceased represented by BONG R. LLANZA
and REYNALDO C. REYES (deceased), represented by NINO R. REYES,
petitioners, vs. SPOUSES JULIUS and LILY LIMPE, respondents.
Civil Law; Land Titles; Property; Two Indispensable Requisites in order that an Action
to Quiet Title Could Prosper.—Under Articles 476 and 477 of the New Civil Code, there
are two indispensable requisites in order that an action to quiet title could prosper: (1)
that the plaintiff or complainant has a legal or an equitable title to or interest in the real
property subject of the action; and (2) that the deed, claim, encumbrance or proceeding
claimed to be casting cloud on his title must be shown to be in fact invalid or
inoperative despite its prima facie appearance of validity or legal efficacy.
_______________
* SECOND DIVISION.
401
VOL. 557, JULY 9, 2008 401
Clado-Reyes vs. Limpe
Same; Same; Same; Evidence; Time and again Supreme Court has held that a mere
allegation is not evidence, and he who alleges has the burden of proving the allegation with the
requisite quantum of evidence.—To prove their case, petitioners merely cited Section 4 of
Article XIII of the 1987 Constitution and Section 2 of the Comprehensive Agrarian
Reform Law and stated that their title was founded upon those provisions. They hardly
argued on the matter. Neither was there positive evidence (1) that their predecessor
had legal title, i.e., a certificate of land transfer; (2) that the lot was an agricultural lot
and not a commercial one as contended by respondents; and (3) that they are qualified
beneficiaries under the Agrarian Reform Law. Time and again we have held that a mere
allegation is not evidence, and he who alleges has the burden of proving the allegation
with the requisite quantum of evidence.
Same; Same; Same; Realty tax payments constitute proof that the holder has a claim of
title over the property.—Although tax declarations or realty tax receipts are not
conclusive evidence of ownership, nevertheless, they are good indicia of possession in
the concept of an owner, for no one in his right mind would be paying taxes for a
property that is not in his actual or at least constructive possession. As we previously
held, such realty tax payments constitute proof that the holder has a claim of title over
the property.
PETITION for review on certiorari of the decision and resolution of the Court
of Appeals.
The facts are stated in the opinion of the Court.
Ernesto M. Tomaneng for petitioners.
Mario P. Ontal for respondents.
QUISUMBING, J.:
This petition for review seeks to set aside the Decision1dated February 20,
2004 and the Resolution2 dated June 9,
_______________
1 Rollo, pp. 17-23. Penned by Associate Justice Eloy R. Bello, Jr., with Associate Justices
Amelita G. Tolentino and Arturo D. Brion (now a member of this Court) concurring.
2 Id., at p. 29.
402
402 SUPREME COURT REPORTS ANNOTATED
Clado-Reyes vs. Limpe
2004, of the Court of Appeals in CA-G.R. CV No. 70170, which had affirmed
the Decision3 dated January 9, 2001 of the Regional Trial Court (RTC), Branch
81, of Malolos, Bulacan in Civil Case No. 61-M-95 for quieting of title,
reconveyance and damages.
Subject of the present controversy is a 2,445-square meter portion of a
certain lot in Guiguinto, Bulacan covered by Transfer Certificate of Title (TCT)
No. RT-32498 (T-199627),4 having a total lot area of 20,431 square meters, more
or less.
On February 1, 1995,5 petitioners filed an action to quiet title, reconveyance
and damages against respondents and alleged that they have been occupying
the disputed lot since 1945 through their predecessor-in-interest, Mamerto B.
Reyes. They claimed that during his lifetime, Mamerto had accepted a verbal
promise of the former lot owner, Felipe Garcia, to give the disputed lot to him
in exchange for the surrender of his tenancy rights as a tiller thereof. To prove
that Mamerto was a former tenant of Felipe; that during his lifetime he had
worked on the lot; and that he owned and possessed the same, 6 petitioners
presented two documents, namely: (1) Certification7 dated October 12, 1979
and (2)
_______________
3 Records, Vol. 1, pp. 621-624. Penned by Acting Presiding Judge Oscar P. Barrientos.
4 Id., at p. 7.
5 Id., at pp. 2-6.
6 Id., at pp. 326-327.
7 Id., at p. 338.
CERTIFICATION
TO WHOM IT MAY CONCERN:
THIS IS TO CERTIFY that the deceased MAMERTO REYES had been and used to be a tenant
and agricultural worker of our late father, MR. FELIPE GARCIA, in our small agricultural lot in
Barrio Cabay, Guiguinto, Bulacan from the period since post liberation year of 1945 up to
sometime in the year 1959 prior to the . . . disposition of said lot to a certain MR. JOSE GARIN.
xxxx
403
VOL. 557, JULY 9, 2008 403
 Clado-Reyes vs. Limpe
“Pagpapatunay” dated November 17, 1982 allegedly executed by Simeon I.
8 corresponding real property taxes. These pieces of evidence, said the trial
Garcia, the eldest son of Felipe, attesting to such facts. Petitioners also alleged
that whenever respondents visited the lot, respondent Julius Limpe would
promise to deliver the certificate of title to them. However, sometime in
October 1994, petitioners received a letter9 from respondents asserting
ownership over the disputed lot.
In their answer, respondents contended that they are the legal owners of
the lot by virtue of a Deed of Exchange of Real
_______________
(signed)
SIMEON I. GARCIA
Judge
City Court of Manila, Br. I
(Eldest Son of the late Felipe Garcia)
8 Id., at p. 337.
PAGPAPATUNAY
Ako na si SIMEON I. GARCIA . . . ay nagpapatunay:
Na ang namatay na si MAMERTO REYES . . . ay aming ginawang tagapagsaka ng aking
namatay na ama na si FELIPE GARCIA, sa aming maliit na taniman na lote sa Barrio Cabay,
Guiguinto, Bula[c]an, simula noong taong, 1945, hanggang taong 1959;
Na ayon sa nakita ko ang sukat ng lupang kanilang dapat na magawi sa nasabing Mamerto
Reyes . . . ay may sukat na 2,445 metros kuadrados humigit kumulang na karatig ng Sapang
Guiguinto, na may lapad na 16 na metros hanggang sa sulot ng Corner 6 simula sa gawing SUR
na makikita sa Sketch ng plano.
Na ayon dito sa pagkaka alam ko ang nasabing lupa ay nagkaruon na ng Cadastral Lot No.
1159, ngunit ang nasabing dapat na makuha ng Mamerto Reyes, ay nasakop ng nasabing Lote ng
ito ay cadastruhin.
xxxx
(signed)
SIMEON I. GARCIA
Nagpapatunay
9 Id., at pp. 335-336.
404
404 SUPREME COURT REPORTS ANNOTATED
Clado-Reyes vs. Limpe
Estate10 and Deed of Absolute Sale11 executed on July 5, 1974 and February 28,
1974, respectively, between them and Farm-Tech Industries, Incorporated. To
further assert ownership over the lot, they presented TCT No. T-199627, Tax
Declaration Nos. 1517212 and 952913 and realty tax receipts14 of the lot, which
were all registered and declared in their names.
In its Decision dated January 9, 2001, the trial court ruled in favor of
respondents and held that the certificate of title, tax declarations and realty tax
receipts presented in court indisputably established respondents’ ownership
over the lot. The certificate of title was registered in respondents’ names and
the realty tax receipts showed that respondents consistently paid the
court, prevail over petitioners’ allegation of an “undocumented promise” by
the former lot owner, which in itself, is ineffective or unenforceable under the
law. Accordingly, the trial court ordered petitioners to reconvey the disputed
lot to respondents.
On February 20, 2004, the Court of Appeals affirmed the trial court’s ruling
and held that petitioners have no title whatsoever upon which respondents’
title could cast a cloud, as they were the ones casting doubt on respondents’
title.15 It held that the documents allegedly executed by Simeon I. Garcia
showed no indicia that the alleged owner, Felipe Garcia, donated the disputed
lot to them. It further held that Simeon I. Garcia was not the real owner of the
lot; thus, he could not make an effective conveyance thereof. Consequently, it
upheld respondents’ title over the disputed lot. The decretal portion of the
decision reads,
_______________
10 Id., at pp. 479-481.
11 Id., at pp. 477-478.
12 Id., at p. 474.
13 Id., at p. 475.
14 Id., at pp. 485-492 and 494.
15 Rollo, p. 11.
405
VOL. 557, JULY 9, 2008 405
Clado-Reyes vs. Limpe
“WHEREFORE, the appeal is hereby DISMISSED. The decision of the Regional
Trial Court of Malolos, Bulacan, Branch 81, dated January 9, 2001 is AFFIRMED.
SO ORDERED.” 16
Petitioners now before this Court raise the sole issue of:
WHETHER THE [PETITIONERS] HAVE A CAUSE OF ACTION TO QUIET TITLE,
RECONVEYANCE AND DAMAGES AGAINST RESPONDENTS. 17
Petitioners cite Section 418 of Article XIII of the 1987 Constitution and
Section 219 of the Comprehensive Agrarian Re-
_______________
16 Id., at p. 23.
17 Id., at pp. 84-85.
18 Sec. 4. The State shall, by law, undertake an agrarian reform program founded on the
right of farmers and regular farmworkers, who are landless, to own directly or collectively the
lands they till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To
this end, the State shall encourage and undertake the just distribution of all agricultural lands,
subject to such priorities and reasonable retention limits as the Congress may prescribe, taking
into account ecological, developmental, or equity considerations, and subject to the payment of
just compensation. In determining retention limits, the State shall respect the rights of small
landowners. The State shall further provide incentives for voluntary land-sharing. (Emphasis
supplied.)
19 SEC. 2. Declaration of Principles and Policies.—It is the policy of the State to pursue a
Comprehensive Agrarian Reform Program (CARP). . . .
To this end, a more equitable distribution and ownership of land, with due regard to the
rights of landowners to just compensation . . . , shall be undertaken to provide farmers and
farmworkers with the opportunity to enhance their dignity and improve the quality of their
lives through greater productivity of agricultural lands.
The agrarian reform program is founded on the right of farmers and regular farmworkers,
who are landless, to own directly or collectively the lands they till . . .
406
406 SUPREME COURT REPORTS ANNOTATED
Clado-Reyes vs. Limpe
form Law and state that their title was founded upon those provisions, which
were enacted for the benefit of farmers, majority of whom are educationally
deficient, if not uneducated. Next, they contend that respondents are not
purchasers in good faith because they were fully aware of petitioners’ actual
possession of the lot when they purchased the same. Conformably, according
to petitioners, respondents are liable for damages under Article 1920 of the Civil
Code of the Philippines.
Respondents counter that they are the true and lawful owners of the
disputed lot as evidenced by TCT No. RT-32498 (T-199627), Tax Declaration
Nos. 15172 and 9529 and realty tax receipts, all registered and declared in their
names. They claim that they are buyers in good faith when they purchased the
lot from Farm-Tech Industries, Incorporated, free from all liens and
encumbrances. They aver that they are not obliged to go beyond the face of a
TCT in the absence of any cloud therein.
Respondents also argue that petitioners’ cause of action must fail because
they failed to prove (1) that their predecessor-in-interest, Mamerto B. Reyes,
was a farmer; (2) that the lot was agricultural and not a commercial lot; and (3)
that they are qualified beneficiaries under the agrarian reform law. They point
out that Simeon I. Garcia, who allegedly executed the Certification and
“Pagpapatunay,” was not presented in court to prove the veracity of the
contents of those two documents. They also aver that the property mentioned
in the document “Pagpapatunay” was not specifically described as the
property litigated herein. Thus, according to respondents, those documents
have no binding effect on third persons, are hearsay, and have no probative
value.
_______________
x x x x (Emphasis supplied.)
20 ART. 19. Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith.
407
VOL. 557, JULY 9, 2008 407
Clado-Reyes vs. Limpe
After considering the submissions of the parties and the issue before us,
we are in agreement that the petition lacks merit.
To begin with, an action for quieting of title originated in equity
jurisprudence to secure an adjudication that a claim of title to or an interest in
property, adverse to that of the complainant, is invalid, so that the
complainant and those claiming under him may be forever free from any
danger of hostile claim. Thus, our courts are tasked to determine the respective
rights of the contending parties, not only to put things in their proper places,
but also to benefit both parties, so that he who has the right would see every
cloud of doubt over the property dissipated, and he could afterwards without
fear introduce the improvements he may desire, to use and even to abuse the
property as he may deem best.21
Under Articles 47622 and 47723 of the New Civil Code, there are two
indispensable requisites in order that an action to quiet title could prosper: (1)
that the plaintiff or complainant has a legal or an equitable title to or interest
in the real property subject of the action; and (2) that the deed, claim,
encumbrance or proceeding claimed to be casting cloud on his
_______________
21 Heirs of Susana De Guzman Tuazon v. Court of Appeals, G.R. No. 125758, January 20, 2004,
420 SCRA 219, 226, citing Baricuatro, Jr. v. Court of Appeals, G.R. No. 105902, February 9, 2000, 325
SCRA 137, 146-147.
22 ART. 476. Whenever there is a cloud on title to real property or any interest therein, by
reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or
effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be
prejudicial to said title, an action may be brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real property
or any interest therein.
23 ART. 477. The plaintiff must have legal or equitable title to, or interest in the real
property which is the subject matter of the action. He need not be in possession of said property.
408
408 SUPREME COURT REPORTS ANNOTATED
Clado-Reyes vs. Limpe
title must be shown to be in fact invalid or inoperative despite its prima
facie appearance of validity or legal efficacy.24
To prove their case, petitioners merely cited Section 4 of Article XIII of the
1987 Constitution and Section 2 of the Comprehensive Agrarian Reform Law
and stated that their title was founded upon those provisions. They hardly
argued on the matter. Neither was there positive evidence (1) that their
predecessor had legal title, i.e., a certificate of land transfer;25 (2) that the lot
was an agricultural lot and not a commercial one as contended by
respondents; and (3) that they are qualified beneficiaries under the Agrarian
Reform Law. Time and again we have held that a mere allegation is not
evidence, and he who alleges has the burden of proving the allegation with
the requisite quantum of evidence.26
Next, the documentary evidence petitioners presented, namely, the
“Certification” and “Pagpapatunay,” did not confirm their title over the
disputed lot. First, original copies of those documents were not presented in
court.27Second, as the
_______________
24 Heirs of Enrique Diaz v. Virata, G.R. No. 162037, August 7, 2006, 498 SCRA 141, 162.
25 Del Castillo v. Orciga, G.R. No. 153850, August 31, 2006, 500 SCRA 498, 505-506 (A
Certificate of Land Transfer (CLT) is a document issued to a tenant-farmer, which proves inchoate
ownership of an agricultural land . . . It is issued in order for the tenant-farmer to acquire the land.
This certificate prescribes the terms and conditions of ownership over said land and likewise
describes the landholding––its area and its location. A CLT is the provisional title of ownership
over the landholding while the lot owner is awaiting full payment of the land’s value or for as
long as the beneficiary is an “amortizing owner.”)
26 Heirs of Basanes v. Cortes, OCA IPI No. 01-1065-P, March 31, 2003, pp. 1, 5 (Unsigned
Resolution).
27 Rules of Court, Rule 130,
SEC. 3. Original document must be produced; exceptions.—When the subject of
inquiry is the contents of a document, no evidence shall be admissible other than
409
VOL. 557, JULY 9, 2008 409
Clado-Reyes vs. Limpe
appellate court pointed out, Simeon I. Garcia, the declarant in those
documents, was not presented in court to prove the veracity of their
contents.28 Third, even a cursory examination of those documents would not
show any transfer or intent to transfer title or ownership of the disputed lot
from the alleged owner, Felipe Garcia, to petitioners or their predecessor-in-
interest, Mamerto B. Reyes. Fourth, petitioners did not bother to adduce
evidence that Simeon I. Garcia, as the eldest son of the late Felipe Garcia,
inherited the entire lot as to effectively convey title or ownership over the
disputed lot, i.e. thru extrajudicial settlement of the estate of the late Felipe
Garcia. Accordingly, we agree that the documents allegedly executed by
Simeon I. Garcia are purely hearsay and have no probative value.
In contrast, respondents presented evidence which clearly preponderates
in their favor. First, the transfer certificate of title, tax declarations and realty
tax receipts were all in their names. Second, pursuant to the Torrens System,
TCT No. RT-32498 (T-199627) enjoys the conclusive presumption of validity
and is the best proof of ownership of the lot.29 Third, al-
_______________
the original document itself, except in the following cases:
(a) When the original has been lost or destroyed, or cannot be produced in court,
without bad faith on the part of the offeror;
(b) When the original is in the custody or under the control of the party against
whom the evidence is offered, and the latter fails to produce it after reasonable notice;
(c) When the original consists of numerous accounts or other documents which
cannot be examined in court without great loss of time and the fact sought to be
established from them is only the general result of the whole; and
(d) When the original is a public record in the custody of a public officer or is
recorded in a public office. (Emphasis supplied.)
28 Rollo, p. 19.
29 Records, Vol. I, p. 7.
410
410 SUPREME COURT REPORTS ANNOTATED
Clado-Reyes vs. Limpe
though tax declarations or realty tax receipts are not conclusive evidence of
ownership, nevertheless, they are good indicia of possession in the concept of
an owner, for no one in his right mind would be paying taxes for a property
that is not in his actual or at least constructive possession. As we previously
held, such realty tax payments constitute proof that the holder has a claim of
title over the property.30
Worth stressing, in civil cases, the plaintiff must establish his cause of
action by preponderance of evidence; otherwise, his suit will not
prosper.31 After carefully considering the arguments of the parties, as well as
their respective evidence, we unanimously agree that the petitioners were not
able to prove that they have any legal or equitable title over the disputed lot.
Thus, we find no reversible error in the assailed decisions of the courts below.
WHEREFORE, the instant petition is DENIED for utter lack of merit. The
Decision dated February 20, 2004 and the Resolution dated June 9, 2004, of the
Court of Appeals in CA-G.R. CV No. 70170 are AFFIRMED. Costs against
petitioners.
SO ORDERED.
Carpio,** Carpio-Morales, Tinga and Velasco, Jr., JJ.,concur.
Petition denied, judgment and resolution affirmed.
 G.R. No. 173415. March 28, 2008.*
MARIANO TANENGLIAN, petitioner, vs. SILVESTRE LORENZO, MARIO
DAPNISAN, TIMOTEO DAPNISAN, FELIX DAPNISAN, TONAS TAMPIC,
REGINA TOBANES, NORMA SIMEON, RODOLFO LACHICA, ARNES
SERIL, RODOLFO LAVARO, FAUSTINO SALANGO, PEDRO SANTIAGO,
TEOFILO FULMANO, GEORGE KITOYAN, PEPTIO GAPAD, DAMIAN
PENERIA, MIKE FERNANDEZ, PABLO SACPA, WILFREDO AQUINO,
ANDREW HERRERO, ROGELIO CARREON, MANUEL LAGARTERA and
LORENTINO SANTOS, respondents.
Actions; Appeals; The general rule is that appeal is perfected by filing a notice of appeal
and paying the requisite docket fees and other lawful fees; Exceptions.—The general rule is
that appeal is perfected by filing a notice of appeal and paying the requisite docket fees
and other lawful fees. However, all general rules admit of certain exceptions. In Mactan
Cebu International Airport Authority v. Mangubat, 312 SCRA 463 (1999), where the docket
fees were paid six days late, we said that where the party showed willingness to abide
by the rules by immediately paying the required fees and taking into consideration the
importance of the issues raised in the case, the same calls for judicial leniency, thus: In
all, what emerges from all of the above is that the rules of procedure in the matter of
paying the
_______________
* THIRD DIVISION.
349
VOL. 550, MARCH 28, 2008 349
Tanenglian vs. Lorenzo
docket fees must be followed. However, there are exceptions to the stringent
requirement as to call for a relaxation of the application of the rules, such as: (1) most
persuasive and weighty reasons; (2) to relieve a litigant from an injustice not
commensurate with his failure to comply with the prescribed procedure; (3) good faith
of the defaulting party by immediately paying within a reasonable time from the time
of the default; (4) the existence of special or compelling circumstances; (5) the merits of
the case; (6) a cause not entirely attributable to the fault or negligence of the party
favored by the suspension of the rules; (7) a lack of any showing that the review sought
is merely frivolous and dilatory; (8) the other party will not be unjustly prejudiced
thereby; (9) fraud, accident, mistake or excusable negligence without appellant’s fault;
(10) peculiar legal and equitable circumstances attendant to each case; (11) in the name
of substantial justice and fair play; (12) importance of the issues involved; and (13)
exercise of sound discretion by the judge guided by all the attendant circumstances.
Concomitant to a liberal interpretation of the rules of procedure should be an effort on
the part of the party invoking liberality to adequately explain his failure to abide by the
rules. Anyone seeking exemption from the application of the Rule has the burden of
proving that exceptionally meritorious instances exist which warrant such departure.
Same; Same; Administrative Law; Procedural Rules and Technicalities; If the Highest
Court of the land itself relaxes its rules in the interest of substantive justice, then what more the
administrative bodies which exercise quasi-judicial functions? The loss of a person’s properties
due to a day’s delay in paying the appeal fee is too harsh a consequence.—We have not been
oblivious to or unmindful of the extraordinary situations that merit liberal application
of the Rules, allowing us, depending on the circumstances, to set aside technical
infirmities and give due course to the appeal. In cases where we dispense with the
technicalities, we do not mean to undermine the force and effectivity of the periods set
by law. In those rare cases where we did not stringently apply the procedural rules,
there always existed a clear need to prevent the commission of a grave injustice. Our
judicial system and the courts have always tried to maintain a healthy balance between
the strict enforcement of procedural laws and the guarantee that every litigant be given
the full opportunity for the just and proper disposition of his cause. If the Highest Court
of the land itself relaxes its rules in the interest of substantive350
350 SUPREME COURT REPORTS ANNOTATED
Tanenglian vs. Lorenzo
justice, then what more the administrative bodies which exercise quasi-judicial
functions? It must be emphasized that the goal of courts and quasi-judicial bodies,
above else, must be to render substantial justice to the parties. In this case, petitioner
was only one day late in paying the appeal fee, and he already stands to lose his titles
to the subject properties. We find this too harsh a consequence for a day’s delay.
Worthy to note is the fact that petitioner actually paid the appeal fee; only, he was a day
late. That petitioner immediately paid the requisite appeal fee a day after the deadline
displays his willingness to comply with the requirement therefor.
Same; Same; Same; Department of Agrarian Reform Adjudication Board (DARAB); The
remedy from an order, award, judgment or final order of the DARAB is a petition for review
taken to the Court of Appeals under Rule 43 and not a petition for certiorari under Rule 65.—
When petitioner sought recourse to the Court of Appeals via a Petition
for Certiorari under Rule 65 of the Rules of Court, his Petition was dismissed. The Court
of Appeals held that the petitioner availed himself of the wrong remedy as an appeal
from the order, award, judgment or final order of the DARAB shall be taken to the
Court of Appeals by filing a petition for review under Rule 43 of the Rules of Court and
not a petition for certiorari under Rule 65. On this point, we agree with the Court of
Appeals.
Same; Same; Procedural Rules and Technicalities; A petition for certiorari is dismissible
for being the wrong remedy; Exceptions.—All things considered, however, we do not agree
in the conclusion of the Court of Appeals dismissing petitioner’s Petition based on a
procedural faux pax. While a petition for certiorari is dismissible for being the wrong
remedy, there are exceptions to this rule, to wit: (a) when public welfare and the
advancement of public policy dictates; (b) when the broader interest of justice so
requires; (c) when the writs issued are null and void; or (d) when the questioned order
amounts to an oppressive exercise of judicial authority.
Same; Same; Same; It is a far better and more prudent cause of action for the court to
excuse a technical lapse and afford the parties a review of the case to attain the ends of justice,
rather than dispose of the case on technicality and cause grave injustice to the parties, giving a
false impression of speedy disposal of cases while actually resulting in more delay, if not a
miscarriage of justice.—The Court has allowed some meritorious cases to proceed
despite inherent proce-351
VOL. 550, MARCH 28, 2008 351
Tanenglian vs. Lorenzo
 dural defects and lapses. This is in keeping with the principle that rules of
procedure are mere tools designed to facilitate the attainment of justice and that strict
and rigid application of rules which would result in technicalities that tend to frustrate
rather than promote substantial justice must always be avoided. It is a far better and
more prudent cause of action for the court to excuse a technical lapse and afford the
parties a review of the case to attain the ends of justice, rather than dispose of the case
on technicality and cause grave injustice to the parties, giving a false impression of
speedy disposal of cases while actually resulting in more delay, if not a miscarriage of
justice.
Same; Same; Same; Administrative Law; There can be no blinking at the fact that under
Rule 43, Section 4 of the Rules of Court, “the Court of Appeals may grant an additional period
of fifteen (15) days only within which to file the petition for review”—in other words, the period
to appeal from quasi-judicial agencies to the Court of Appeals under Rule 43 is neither an
impregnable nor an unyielding rule.—The period to appeal had lapsed so that even if the
Court of Appeals considered the petition as one for review under Rule 43 of the Rules
of Court, still the petition was filed beyond the reglementary period. But, there can be
no blinking at the fact that under Rule 43, Section 4 of the Rules of Court, “the Court of
Appeals may grant an additional period of fifteen (15) days only within which to file
the petition for review.” By any reckoning, the Court of Appeals may even grant an
additional period of fifteen (15) days within which to file the petition under Rule 43 of
the Rules of Court. In other words, the period to appeal from quasi-judicial agencies to
the Court of Appeals under Rule 43 is neither an impregnable nor an unyielding rule.
Same; Administrative Law; Department of Agrarian Reform Adjudication Board
(DARAB); Jurisdiction; Tenancy; Elements; For DARAB to have jurisdiction over a case, there
must exist a tenancy relationship between the parties; Tenants are defined as persons who—in
themselves and with the aid available from within their immediate farm householders—they
cultivate the lands belonging to or possessed by another with the latter’s consent, for purposes
of production, they share the produce with the landholder under the share tenancy system, or
pay to the landholder a price certain or ascertainable in produce of money or both under the
leasehold tenancy system.—The issue involved in this case is no less than the352
352 SUPREME COURT REPORTS ANNOTATED
Tanenglian vs. Lorenzo
jurisdiction of the Regional Arbitrator to render its Decision dated 16 August
1999 declaring the subject properties as ancestral lands. As well, it is too flagrant to be
ignored that these lands are covered by a Torrens title in the name of the petitioner.
The Court of Appeals should have looked past rules of technicality to resolve the case
on its merits. For DARAB to have jurisdiction over a case, there must exist a tenancy
relationship between the parties. A tenancy relationship cannot be presumed. There
must be evidence to prove the tenancy relations such that all its indispensable elements
must be established, to wit: (1) the parties are the landowner and the tenant; (2) the
subject is agricultural land; (3) there is consent by the landowner; (4) the purpose is
agricultural production; (5) there is personal cultivation; and (6) there is sharing of the
harvests. All these requisites are necessary to create tenancy relationship, and the
absence of one or more requisites will not make the alleged tenant a de facto tenant.
In Heirs of Rafael Magpily v. De Jesus, 474 SCRA 366 (2005), tenants are defined as
persons who—in themselves and with the aid available from within their immediate
farm householders—they cultivate the lands belonging to or possessed by another with
the latter’s consent; for purposes of production, they share the produce with the
landholder under the share tenancy system, or pay to the landholder a price certain or
ascertainable in produce of money or both under the leasehold tenancy system.
Same; Same; Same; National Commission on Indigenous Cultural
Communities/Indigenous People (NICP); R.A. No. 8371; The National Commission on
Indigenous Cultural Communities/Indigenous People (NICP) is the primary government
agency responsible for the formulation and implementation of policies, plans and programs to
promote and protect the rights and well-being of the indigenous cultural
communities/indigenous people and the recognition of their ancestral domains as well as their
rights thereto; A Department of Agrarian Reform Adjudication Board (DARAB) Regional
Adjudicator oversteps the boundaries of his jurisdiction when he makes a declaration that certain
properties are ancestral lands and proceeds to award the same to the claimants—jurisdiction
over the delineation and recognition of the same is explicitly conferred on the National
Commission on Indigenous Cultural Communities/Indigenous People (NICP).—Republic Act
No. 8371 creates the National Commission on Indigenous Cultural
Communities/Indigenous People (NCIP) which shall be the primary government
agency responsible for the formula-353
VOL. 550, MARCH 28, 2008 353
Tanenglian vs. Lorenzo
tion and implementation of policies, plans and programs to promote and protect
the rights and well-being of the indigenous cultural communities/indigenous people
(ICCs/IPs) and the recognition of their ancestral domains as well as their rights thereto.
Prior to Republic Act No. 8371, ancestral domains and lands were delineated under the
Department of Environment and Natural Resources (DENR) and governed by DENR
Administrative Order No. 2, series of 1993. Presently, the process of delineation and
recognition of ancestral domains and lands is guided by the principle of self-
delineation and is set forth under Sections 52 and 53, Chapter VIII of Republic Act No.
8371; and in Part I, Rule VII of NCIP Administrative Order No. 01-98 (Rules and
Regulations Implementing Republic Act No. 8371). Official delineation is under the
jurisdiction of the Ancestral Domains Office (ADO) of the NCIP. It is irrefragable,
therefore, that the Regional Adjudicator overstepped the boundaries of his jurisdiction
when he made a declaration that the subject properties are ancestral lands and
proceeded to award the same to the respondents, when jurisdiction over the
delineation and recognition of the same is explicitly conferred on the NCIP.
Same; Same; Same; Land Titles; Quieting of Title; Words and Phrases; The Department
of Agrarian Reform Adjudication Board (DARAB) Regional Adjudicator acts without
jurisdiction in entertaining a collateral attack on a party’s Transfer Certificates of Titles (TCTs);
A suit for quieting of title is an action quasi in rem, which is conclusive only to the parties to
the suit; A collateral attack is made when, in another action to obtain a different relief, an attack
on the judgment is made as an incident to said action, as opposed to a direct attack against a
judgment which is made through an action or proceeding, the main object of which is to annul,
set aside, or enjoin the enforcement of such judgment, if not yet carried into effect, or, if the
property has been disposed of, the aggrieved party may sue for recovery.—The Regional
Adjudicator acted without jurisdiction in entertaining a collateral attack on petitioner’s
TCTs. In an earlier case for quieting of title instituted by the petitioner before the trial
court, which reached this Court as G.R. No. 118515, petitioner’s ownership and titles to
the subject properties had been affirmed with finality, with entry of judgment having
been made therein on 15 January 1996. A suit for quieting of title is an action quasi in
rem, which is conclusive only to the parties to the suit. It is too glaring to escape our
attention that several of the respondents herein were the defen-354
354 SUPREME COURT REPORTS ANNOTATED
Tanenglian vs. Lorenzo
dants in the suit for quieting of title before the trial court and the subsequent
petitioners in G.R. No. 118515. The finality of the Decision in G.R. No. 118515 is
therefore binding upon them. Although the Decision in G.R. No. 118515 is not binding
on the other respondents who were not parties thereto, said respondents are still
confronted with petitioner’s TCTs which they must directly challenge before the
appropriate tribunal. Respondents, thus, cannot pray for the Regional Adjudicator to
declare petitioner’s TCTs null and void, for such would constitute a collateral attack on
petitioner’s titles which is not allowed under the law. A Torrens title cannot be
collaterally attacked. A collateral attack is made when, in another action to obtain a
different relief, an attack on the judgment is made as an incident to said action, as
opposed to a direct attack against a judgment which is made through an action or
proceeding, the main object of which is to annul, set aside, or enjoin the enforcement
of such judgment, if not yet carried into effect; or, if the property has been disposed of,
the aggrieved party may sue for recovery.
Same; Same; Same; Same; Once a decree of registration is made under the Torrens
System, and the reglementary period has passed within which the decree may be questioned, the
title is perfected and cannot be collaterally questioned later on—it has become an ancient rule
that the issue on the validity of title, i.e., whether or not it was fraudulently issued, can only be
raised in an action expressly instituted for that purpose.—The petitioner’s titles to the
subject properties have acquired the character of indeafeasibility, being registered
under the Torrens System of registration. Once a decree of registration is made under
the Torrens System, and the reglementary period has passed within which the decree
may be questioned, the title is perfected and cannot be collaterally questioned later on.
To permit a collateral attack on petitioner’s title, such as what respondents attempt,
would reduce the vaunted legal indeafeasibility of a Torrens title to meaningless
verbiage. It has, therefore, become an ancient rule that the issue on the validity of
title, i.e., whether or not it was fraudulently issued, can only be raised in an action
expressly instituted for that purpose.
Same; Judgments; Any decision rendered without jurisdiction is a total nullity and may
be struck down anytime.—Any decision rendered without jurisdiction is a total nullity
and may be struck down anytime. In Tambunting, Jr. v. Sumabat, 470 SCRA 92 (2005),
we declared that a void judgment is in legal effect no judgment, by 355
VOL. 550, MARCH 28, 2008 355
Tanenglian vs. Lorenzo
which no rights are divested, from which no rights can be obtained, which
neither binds nor bonds anyone, and under which all acts performed and all claims
flowing therefrom are void. In the Petition at bar, since the Regional Adjudicator is
evidently without jurisdiction to rule on respondents’ complaint without the existence
of a tenancy relationship between them and the petitioner, then the Decision he
rendered is void.
PETITION for review on certiorari of the resolutions of the Court of Appeals.
The facts are stated in the opinion of the Court.
Erwin Go, Francisco Gerardo C. Llamas and Paul A. Bernardino for petitioner.
Timoteo L. Dapnisan for and in his own behalf and in behalf of all other
respondents.
CHICO-NAZARIO, J.:
This is an appeal by certiorari under Rule 45 of the 1997 Rules of Civil
Procedure seeking the reversal and setting aside of the Resolution1 dated 5
April 2006 of the Court of Appeals in CA-G.R. SP No. 93668 dismissing
outright the petition for certiorari filed therewith by petitioner Mariano
Tanenglian on the grounds that it was the wrong remedy and it was filed
beyond the 15-day reglementary period. Likewise assailed herein is the
Resolution2 dated 4 July 2006 of the appellate court denying petitioner’s
Motion for Reconsideration.
This case involves two parcels of land (subject properties), located and
adjacent to the Sto. Tomas Baguio Road, with areas of 7,860 square meters and
21,882 square meters, covered respectively by Transfer Certificates of Title
(TCT) No.
_______________
1 Penned by Associate Justice Marina L. Buzon with Associate Justices Aurora Santiago-
Lagman and Arcangelita Romilla-Lontok, concurring. Rollo, pp. 30-34.
2 Id., at pp. 36-41.
356
356 SUPREME COURT REPORTS ANNOTATED
Tanenglian vs. Lorenzo
T-29281 and T-29282 registered in the Registry of Deeds of Baguio City both in
the name of petitioner.
Respondents Silvestre Lorenzo, et al., members of the Indigenous Cultural
Minority of the Cordillera Administrative Region, filed a Petition3 for
Redemption under Sec. 12, Republic Act No. 3844 4 dated 29 July 1998 before
the Department of Agrarian Reform Adjudication Board (DARAB) praying
that: (1) they be allowed to exercise their right of redemption over the subject
properties; (2) TCTs No. T-29281and T-29282 in the name of petitioner be
declared null and void; (3) the subject properties be declared as ancestral land
pursuant to Section 9 of Republic Act No. 6657; 5 and (4) petitioner be ordered
to pay disturbance compensation to respondents.
In a Decision dated 16 August 1999, the Regional Adjudicator held:
WHEREFORE, ALL THE PREMISES CONSIDERED AND IN THE BEST
INTEREST OF AGRARIAN JUSTICE, JUDGMENT IS HEREBY RENDERED IN
FAVOR OF [HEREIN RESPONDENTS] AND AGAINST [HEREIN PETITIONER] AS
FOLLOWS:
1. Declaring that the parcels of land respectively occupied by
[respondents] as ancestral lands pursuant to the provisions of Section 9 of
Republic Act No. 6657.
 2. Declaring [respondents] as the ancestral landowners of the parcels of
land which they are occupying and tilling;
_______________
3 Docketed as DCN 0117-98-B-CAR to DCN-0140-98-B-CAR.
4 Code of Agrarian Reform of the Philippines also known as “An Act To Ordain The Agricultural Land
Reform Code And To Institute Land Reforms In The Philippines, Including The Abolition Of Tenancy And The
Channeling Of Capital Into Industry, Provide For The Necessary Implementing Agencies, Appropriate Funds
Therefor And For Other Purposes.” Section 12 reads:
Sec. 12. Lessee’s Right of Redemption.—In case the landholding is sold to a third person without
the knowledge of the agricultural lessee, the latter shall have the right to redeem the same at a
reasonable price and consideration: x x x.
5 The Comprehensive Agrarian Reform Law of 1988.
357
VOL. 550, MARCH 28, 2008 357
Tanenglian vs. Lorenzo
3. Ordering the Department of Agrarian Reform through its Regional
Office, the Cordillera Administrative Region, Baguio City to acquire the said
parcels of land respectively occupied by [respondents] for distribution to them
in order to ensure their economic, social and cultural well-being pursuant to
provisions of Section 9 of RA No. 6657;
4. Ordering the Regional Engineering Office of DAR-CAR, Baguio City to
conduct subdivision survey on the said parcels of land occupied by
[respondents] and for DAR-CAR to issue individual Certificate of Land
Ownership Awards (CLOA’s) and have the same registered with the Office of
the Registry of Deeds of Baguio City;
5. Ordering [petitioner] or anybody under his command not to disturb the
peaceful possession of [respondents]’ ancestral landholdings; and
6. Ordering the Office of the Register of Deeds, Baguio City to cancel
Transfer Certificates of Title Nos. T-29281 and T-29282 both in the name of
[petitioner] and for the latter to surrender to the Office of the Register of Deeds
of Baguio City the owner’s duplicate certificate copies of said titles.” 6
Petitioner received a copy of the afore-quoted Decision on 27 August
1999. He filed with the Regional Adjudicatora motion for reconsideration
thereof on 13 September 1999, which the Regional Adjudicator denied in his
Order dated 11 October 1999. Petitioner received the Regional
Adjudicator’s Order denying his motion on 19 October 1999. On the same
day, 19 October 1999, petitioner filed a Notice of Appeal,7 but the appeal fee of
P500.00 in postal money order was postmarked 20 October 1999.Petitioner’s
Notice of Appeal was denied by the Regional Adjudicator in his Order dated
26 October 1999.8 The Regional Adjudicator’s latest Order reads:
_______________
6 Rollo, pp. 81-82.
7 Id., at p. 83.
8 Id., at p. 85.
358
358 SUPREME COURT REPORTS ANNOTATED
Tanenglian vs. Lorenzo
ORDER
Submitted before the Board through this Adjudicator is a “NOTICE OF APPEAL,”
dated October 19, 1999, of the DECISION in the above-entitled case dated August 16,
1999 with a POSTAL MONEY ORDER in the amount of FIVE HUNDRED PESOS
(P500.00) ONLY (APPEAL FEE) POSTMARKED Makati Central Post Office, M.M.,
dated October 20, 1999 filed by [herein petitioner] through counsel.
It is noteworthy that both the aforesaid “NOTICE OF APPEAL” and “APPEAL
FEE” were not filed and paid, respectively, within the REGLEMENTARY PERIOD as
provided for by the DARAB NEW RULES OF PROCEDURE under Section 5, Rule XIII
which states:
SECTION 5. Requisites and perfection of the Appeal.
a) The Notice of Appeal shall be filed within the reglementary period as
provided for in Section 1 of this Rule. x x x
b) An appeal fee of Five Hundred Pesos (P500.00) shall be paid by the
appellant within the reglementary period to the DAR Cashier where the Office
of the Adjudicator is situated. x x x.
Under the 3rd paragraph of said SECTION 5, it further states:
Non-compliance with the above-mentioned requisites shall be a ground for
the dismissal of the appeal.”
The records of this case show that the [petitioner] through counsel filed his “Motion
for Reconsideration” of the Decision of this case on September 13, 1999 which was the
15th day of said Reglementary Period. The 15th day was supposed to have been on
September 11, 1999 counted from August 28, 1999, the following day after [petitioner]
through counsel received a copy of the Decision on August 27, 1999 but because
September 11, 1999 was a Saturday, the 15th day was September 13, 1999, the following
working day. Now, nowhere on the records of this case show that the required “Appeal
Fee” was paid on or before the 15th day of the Reglementary Period.
The records of this case also show that this instant “NOTICE OF APPEAL” was filed
on October 19, 1999, (Postmarked Makati Central P.O., M.M.) the day when [petitioner]
through counsel re-359
VOL. 550, MARCH 28, 2008 359
Tanenglian vs. Lorenzo
ceived copy of the Denial of the said “MOTION FOR RECONSIDERATION.” Since
September 13, 1999 was the 15th day of said 15-day reglementary period, this instant
‘NOTICE OF APPEAL” is considered filed out of time. Even the “Appeal Fee” of Five
Hundred Pesos (P500.00) in POSTAL MONEY ORDER, it is postmarked October 20,
1999, MAKATI CENTRAL P.O. M.M. Since September 13, 1999 was the 15th day of said
15-day reglementary period, this “APPEAL FEE” is considered paid out of time.
Additionally, even granting without admitting that this instant “NOTICE OF
APPEAL” and “APPEAL FEE” were filed and paid, respectively, within the required
reglementary period, [petitioner] through counsel miserably failed to state any ground
in the Notice of Appeal as provided for under SECTION 2, RULE XIII of the DARAB
NEW RULES OF PROCEDURE. 9
 WHEREFORE, premises considered, and pursuant to the provisions of SECTION
5 and SECTION 2, Rule XIII of the DARAB NEW RULES OF PROCEDURE, this instant
“NOTICE OF APPEAL” is hereby DENIED.” 10
Petitioner filed a Motion for Reconsideration on 5 November 1999 but the
same was denied by the Regional Adjudicator on 15 November 1999.
Respondents filed a Motion for Execution on 27 October 1999. The
Regional Adjudicator issued a Writ of Execution dated 17 November 1999. 11
Petitioner thereafter filed an original action for certiorari before the DARAB
to annul the Order dated 26 October 1999,
_______________
9 Section 1. Grounds.—The aggrieved party may appeal to the Board from a final order,
resolution or decision of the Adjudicator on any of the following grounds:
a) That errors in the findings of facts or conclusions of laws were committed which,
if not corrected, would cause grave and irreparable damage or injury to the appellant;
xxxx
c) That the order, resolution or decision was obtained through fraud or coercion.
10 Rollo, pp. 85-86.
11 Memorandum of Respondents, temporary Rollo, p. 3.
360
360 SUPREME COURT REPORTS ANNOTATED
Tanenglian vs. Lorenzo
Order dated 15 November 1999 and the Writ of Execution dated 17 November
1999, all issued by the Regional Adjudicator. In a Resolution dated 5 May 2005,
the DARAB denied petitioner’s petition for certiorari for lack of merit,12holding
that:
“While it is true that the filing of the Notice of Appeal dated October 19, 1999 was
made within the reglementary period to perfect the same, however, the required appeal
fee was not paid within the reglementary period because the last day to perfect an
appeal is October 19, 1999, while the appeal fee in a form of postal money order is
postmarked October 20, 1999. Precisely, there is no payment of appeal fee within the
15-day reglementary period to perfect an appeal. Therefore, the order of the [Regional
Adjudicator] denying the notice of appeal of the petitioner is well within the ambit of
the provisions of the above-quoted Rule, particularly the last paragraph thereof, hence
the instant petition must necessarily fail.” 13
Petitioner’s motion for reconsideration of the foregoing resolution was
denied by the DARAB in another Resolution dated 17 January 2006, 14 a copy
of which was received by petitioner on 2 February 2006.
Refusing to concede, petitioner filed a Petition for Certiorari15 under Rule 65
with the Court of Appeals on 17 March 2006.
In a Resolution dated 5 April 2006, the Court of Appeals dismissed the
Petition, reasoning as follows:
“Sections 1 and 4, Rule 43 of the 1997 Rules of Civil Procedure provide that an
appeal from the award, judgment, final order or resolution of the Department of
Agrarian Reform under Republic Act No. 6657, among other quasi-judicial agencies,
shall be taken by filing with the Court of Appeals a petition for review within fifteen
(15) days from notice thereof, or of the denial of the motion for new
_______________
12 Rollo, p. 89.
13 Id., at pp. 94-95.
14 Id., at p. 99.
15 Id., at p. 103.
361
VOL. 550, MARCH 28, 2008 361
Tanenglian vs. Lorenzo
trial or reconsideration duly filed in accordance with the governing law of the court or
agency a quo.
xxxx
Even if we consider the instant petition for certiorari as a petition for review, the
same must still be dismissed for having been filed beyond the reglementary period of
fifteen (15) days from receipt of a copy of the Resolution dated January 17, 2006. As
pointed out in the above-cited case, appeals from all quasi-judicial bodies shall be made
by way of petition for review with the Court of Appeals regardless of the nature of the
question raised.
Well-settled is the rule that certiorari is not available where the proper remedy is
appeal in due course and such remedy was lost because of respondent’s failure to take
an appeal. The special civil action of certiorari is not and can not be made a substitute
for appeal or a lost appeal.” 16
Petitioner’s motion for reconsideration of the afore-quoted ruling was
denied by the appellate court in a Resolution dated 4 July 2006.
Hence, the present Petition, raising the following issues:
“(a) Whether or not the Court of Appeals correctly dismissed the Petition under
Rule 65 filed by the Petitioner mainly on the ground that the proper remedy is a Petition
under Rule 43 of the Rules of Court.
(b) Whether or not the Regional Adjudicator acted within his authority when he
declared the subject parcels of land as “ancestral lands.”
(c) Whether or not the Regional Adjudicator acted within his authority when he
declared that the titles of the petitioner should be declared null and void.”
Preliminarily, petitioner is actually asking us to rule on the propriety of (1)
the denial of his Notice of Appeal by the Regional Adjudicator, affirmed by
the DARAB; and (2) the dismissal of his Petition for Certiorari by the Court of
Appeals.
_______________
16 Id., at pp. 31-34.
362
362 SUPREME COURT REPORTS ANNOTATED
Tanenglian vs. Lorenzo
 The Regional Adjudicator denied petitioner’s Notice of Appeal because the
latter was delayed for one day in the payment of appeal fee.
The 2003 Rules of Procedure of the DARAB lays down the following
procedure:
RULE XIV
APPEALS
Section 1. Appeal to the Board.—An appeal may be taken to the Board from a
resolution, decision or final order of the Adjudicator that completely disposes of the
case by either or both of the parties within a period of fifteen (15) days from receipt of
the resolution/decision/final order appealed from or of the denial of the movant’s
motion for reconsideration in accordance with Section 12, Rule IX, by:
1.1 filing a Notice of Appeal with the Adjudicator who rendered the
decision or final order appealed from;
1.2 furnishing copies of said Notice of Appeal to all parties and the Board;
and
1.3 paying an appeal fee of Seven Hundred Pesos (Php700.00) to the DAR
Cashier where the Office of the Adjudicator is situated or through postal money
order, payable to the DAR Cashier where the Office of the Adjudicator is
situated, at the option of the appellant.
A pauper litigant shall be exempt from the payment of the appeal fee.
Proof of service of Notice of Appeal to the affected parties and to the Board and
payment of appeal fee shall be filed, within the reglementary period, with the
Adjudicator a quo and shall form part of the records of the case.
Non-compliance with the foregoing shall be a ground for dismissal of the appeal.
SECTION 4. Perfection of Appeal.—An appeal is deemed perfected upon
compliance with Section 1 of this Rule.
A pauper litigant’s appeal is deemed perfected upon the filing of the Notice of
Appeal in accordance with said Section 1 of this Rule.”
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VOL. 550, MARCH 28, 2008 363
Tanenglian vs. Lorenzo
The general rule is that appeal is perfected by filing a notice of appeal and
paying the requisite docket fees and other lawful fees.17
However, all general rules admit of certain exceptions. In Mactan Cebu
International Airport Authority v. Mangubat18 where the docket fees were paid
six days late, we said that where the party showed willingness to abide by the
rules by immediately paying the required fees and taking into consideration
the importance of the issues raised in the case, the same calls for judicial
leniency, thus:
“In all, what emerges from all of the above is that the rules of procedure in the
matter of paying the docket fees must be followed. However, there are exceptions to
the stringent requirement as to call for a relaxation of the application of the rules, such
as: (1) most persuasive and weighty reasons; (2) to relieve a litigant from an injustice
not commensurate with his failure to comply with the prescribed procedure; (3) good
faith of the defaulting party by immediately paying within a reasonable time from the
time of the default; (4) the existence of special or compelling circumstances; (5) the
merits of the case; (6) a cause not entirely attributable to the fault or negligence of the
party favored by the suspension of the rules; (7) a lack of any showing that the review
sought is merely frivolous and dilatory; (8) the other party will not be unjustly
prejudiced thereby; (9) fraud, accident, mistake or excusable negligence without
appellant’s fault; (10) peculiar legal and equitable circumstances attendant to each case;
(11) in the name of substantial justice and fair play; (12) importance of the issues
involved; and (13) exercise of sound discretion by the judge guided by all the attendant
circumstances. Concomitant to a liberal interpretation of the rules of procedure should
be an effort on the part of the party invoking liberality to adequately explain his failure
to abide by the rules. Anyone seeking exemption from the application of the Rule has
the burden of
_______________
17 Baniqued v. Ramos, G.R. No. 158615, 4 March 2005, 452 SCRA 813, 818.
18 371 Phil. 394; 312 SCRA 463 (1999).
364
364 SUPREME COURT REPORTS ANNOTATED
Tanenglian vs. Lorenzo
proving that exceptionally meritorious instances exist which warrant such departure.” 19
We have not been oblivious to or unmindful of the extraordinary situations
that merit liberal application of the Rules, allowing us, depending on the
circumstances, to set aside technical infirmities and give due course to the
appeal. In cases where we dispense with the technicalities, we do not mean to
undermine the force and effectivity of the periods set by law. In those rare
cases where we did not stringently apply the procedural rules, there always
existed a clear need to prevent the commission of a grave injustice. Our judicial
system and the courts have always tried to maintain a healthy balance between
the strict enforcement of procedural laws and the guarantee that every litigant
be given the full opportunity for the just and proper disposition of his
cause.20 If the Highest Court of the land itself relaxes its rules in the interest of
substantive justice, then what more the administrative bodies which exercise
quasi-judicial functions? It must be emphasized that the goal of courts and
quasi-judicial bodies, above else, must be to render substantial justice to the
parties.
In this case, petitioner was only one day late in paying the appeal fee, and
he already stands to lose his titles to the subject properties. We find this too
harsh a consequence for a day’s delay. Worthy to note is the fact that
petitioner actually paid the appeal fee; only, he was a day late. That petitioner
immediately paid the requisite appeal fee a day after the deadline displays his
willingness to comply with the requirement therefor.
_______________
19 KLT Fruits, Inc. v. WSR Fruits, Inc., G.R. No. 174219, 23 November 2007, 538 SCRA
713; Villena v. Rupisan, G.R. No. 167620, 3 April 2007, 520 SCRA 346, 367-368.
 20 Neypes v. Court of Appeals, G.R. No. 141524, 14 September 2005, 469 SCRA 633, 643.
365
VOL. 550, MARCH 28, 2008 365
Tanenglian vs. Lorenzo
When petitioner sought recourse to the Court of Appeals via a Petition
for Certiorari under Rule 65 of the Rules of Court, his Petition was dismissed.
The Court of Appeals held that the petitioner availed himself of the wrong
remedy as an appeal from the order, award, judgment or final order of the
DARAB shall be taken to the Court of Appeals by filing a petition for review
under Rule 43 of the Rules of Court and not a petition for certiorari under Rule
65.
On this point, we agree with the Court of Appeals.
Pertinent provisions of Rule 43 of the Rules of Court governing appeals
from quasi-judicial agencies to the Court of Appeals, provide:
“SECTION 1. Scope.—This Rule shall apply to appeals from judgments or final
orders of the Court of Tax Appeals and from awards, judgments, final orders or
resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-
judicial functions. Among these agencies are the Civil Service Commission, Central
Board of Assessment Appeals, Securities and Exchange Commission, Office of the
President, Land Registration Authority, Social Security Commission, Civil Aeronautics
Board, Bureau of Patents, Trademarks and Technology Transfer, National
Electrification Administration, Energy Regulatory Board, National
Telecommunications Commission, Department of Agrarian Reform under Republic
Act No. 6657, Government Service Insurance System, Employees Compensation
Commission, Agricultural Inventions Board, Insurance Commission, Philippine
Atomic Energy Commission, Board of Investments, Construction Industry Arbitration
Commission, and voluntary arbitrators authorized by law.
xxxx
SEC. 3. Where to appeal.—An appeal under this Rule may be taken to the Court of
Appeals within the period and in the manner herein provided, whether the appeal
involves questions of fact, of law, or mixed questions of fact and law.
SEC. 4. Period of appeal.—The appeal shall be taken within fifteen (15) days from
notice of the award, judgment, final order or resolution, or from the date of its last
publication, if publication is required by law for its effectivity, or of the denial of
petitioner’s motion for new trial or reconsideration duly filed in accordance with366
366 SUPREME COURT REPORTS ANNOTATED
Tanenglian vs. Lorenzo
the governing law of the court or agency a quo. Only one (1) motion for reconsideration
shall be allowed. Upon proper motion and the payment of the full amount of the docket
fee before the expiration of the reglementary period, the Court of Appeals may grant
an additional period of fifteen (15) days only within which to file the petition for
review. No further extension shall be granted except for the most compelling reason
and in no case to exceed fifteen (15) days.”
In Nippon Paint Employees Union-Olalia v. Court of Appeals,21 we clarified:
“It is elementary in remedial law that the use of an erroneous mode of appeal is
cause for dismissal of the petition for certiorari and it has been repeatedly stressed that
a petition for certiorari is not a substitute for a lost appeal. This is due to the nature of a
Rule 65 petition for certiorari which lies only where there is “no appeal,” and “no plain,
speedy and adequate remedy in the ordinary course of law.” As previously ruled by
this Court:
x x x We have time and again reminded members of the bench and bar that
a special civil action for certiorari under Rule 65 lies only when “there is no
appeal nor plain, speedy and adequate remedy in the ordinary course of law.”
Certiorari can not be allowed when a party to a case fails to appeal a judgment
despite the availability of that remedy, certiorari not being a substitute for lost
appeal. The remedies of appeal and certiorari are mutually exclusive and not
alternative or successive.”
Petitioner clearly availed himself of the wrong mode of appeal in bringing
his case before the Court of Appeals for review.
Petitioner filed with the Court of Appeals the special civil action
of certiorari under Rule 65 of the Rules of Court instead of a petition for review
under Rule 43, not because it was the only plain, speedy, and adequate remedy
available to him under the law, but, obviously, to make up for the loss of his
right to an ordinary appeal. It is elementary that the special civil action
of certiorari is not and cannot be a substitute
_______________
21 G.R. No. 159010, 19 November 2004, 443 SCRA 286, 291.
367
VOL. 550, MARCH 28, 2008 367
Tanenglian vs. Lorenzo
for an appeal, where the latter remedy is available, as it was in this case. A
special civil action under Rule 65 of the Rules of Court cannot cure a party’s
failure to timely file a petition for review under Rule 43 of the Rules of Court.
Rule 65 is an independent action that cannot be availed of as a substitute for
the lost remedy of an ordinary appeal, including that under Rule 43, especially
if such loss or lapse was occasioned by a party’s neglect or error in the choice
of remedies.22
All things considered, however, we do not agree in the conclusion of the
Court of Appeals dismissing petitioner’s Petition based on a procedural faux
pax. While a petition for certiorari is dismissible for being the wrong remedy,
there are exceptions to this rule, to wit: (a) when public welfare and the
advancement of public policy dictates; (b) when the broader interest of justice
so requires; (c) when the writs issued are null and void; or (d) when the
questioned order amounts to an oppressive exercise of judicial authority. 23
In Sebastian v. Morales,24 we ruled that rules of procedure must be faithfully
followed except only when, for persuasive reasons, they may be relaxed to
relieve a litigant of an injustice not commensurate with his failure to comply _______________
with the prescribed procedure, thus:
“[C]onsidering that the petitioner has presented a good cause for the proper and just 26 Id.
369
determination of his case, the appellate court should have relaxed the stringent
application of technical rules of procedure and yielded to consideration of substantial VOL. 550, MARCH 28, 2008 369
justice.”
25
Tanenglian vs. Lorenzo
cies to the Court of Appeals under Rule 43 is neither an impregnable nor an
_______________
unyielding rule.
22 See Centro Escolar University Faculty and Allied Workers Union-Independent v. Court of
The issue involved in this case is no less than the jurisdiction of the
Appeals, G.R. No. 165486, 31 May 2006, 490 SCRA 61, 69; Hanjin Engineering and Construction Co., Regional Arbitrator to render its Decision dated 16 August 1999 declaring the
Ltd. v. Court of Appeals, G.R. No. 165910, 10 April 2006, 487 SCRA 78, 100. subject properties as ancestral lands. As well, it is too flagrant to be ignored
23 Hanjin Enginerring and Construction Co., Ltd. v. Court of Appeals,ibid. that these lands are covered by a Torrens title in the name of the petitioner.
24 445 Phil. 595, 604; 397 SCRA 549, 558-559 (2003).
25 Vallejo v. Court of Appeals, G.R. No. 156413, 14 April 2004, 427 SCRA 658, 668.
The Court of Appeals should have looked past rules of technicality to resolve
368 the case on its merits.
368 SUPREME COURT REPORTS ANNOTATED For DARAB to have jurisdiction over a case, there must exist a tenancy
relationship between the parties. A tenancy relationship cannot be presumed.
Tanenglian vs. Lorenzo
There must be evidence to prove the tenancy relations such that all its
The Court has allowed some meritorious cases to proceed despite inherent
indispensable elements must be established, to wit: (1) the parties are the
procedural defects and lapses. This is in keeping with the principle that rules
landowner and the tenant; (2) the subject is agricultural land; (3) there is
of procedure are mere tools designed to facilitate the attainment of justice and
consent by the landowner; (4) the purpose is agricultural production; (5) there
that strict and rigid application of rules which would result in technicalities
is personal cultivation; and (6) there is sharing of the harvests. All these
that tend to frustrate rather than promote substantial justice must always be
requisites are necessary to create tenancy relationship, and the absence of one
avoided. It is a far better and more prudent cause of action for the court to
or more requisites will not make the alleged tenant a de facto tenant.27
excuse a technical lapse and afford the parties a review of the case to attain the
In Heirs of Rafael Magpily v. De Jesus,28 tenants are defined as persons who—
ends of justice, rather than dispose of the case on technicality and cause grave
in themselves and with the aid available from within their immediate farm
injustice to the parties, giving a false impression of speedy disposal of cases
householders—they cultivate the lands belonging to or possessed by another
while actually resulting in more delay, if not a miscarriage of justice.26
with the latter’s consent; for purposes of production, they share the produce
We find that petitioner’s case fits more the exception rather than the
with the landholder under the share tenancy system, or pay to the landholder
general rule. Taking into account the importance of the issues raised in the
a price certain or ascertainable in produce of money or both under the
Petition, and what petitioner stands to lose, the Court of Appeals should have
leasehold tenancy system.
given due course to the said Petition and treated it as a petition for review. By
In this case, respondents did not allege much less prove that they are
dismissing the Petition outright, the Court of Appeals absolutely foreclosed
tenants of the subject properties. There is likewise no independent evidence to
the resolution of the issues raised therein. Indubitably, justice would have
prove any of the requisites of
been better served if the Court of Appeals resolved the issues that were raised
in the Petition. _______________
Conspicuously, the period to appeal had lapsed so that even if the Court
of Appeals considered the petition as one for review under Rule 43 of the Rules 27 Suarez v. Saul, G.R. No. 166664, 20 October 2005, 473 SCRA 628, 634.
of Court, still the petition was filed beyond the reglementary period. But, there 28 G.R. No. 167748, 8 November 2005, 474 SCRA 366, 375.
370
can be no blinking at the fact that under Rule 43, Section 4 of the Rules of Court,
“the Court of Appeals may grant an additional period of fifteen (15) days only 370 SUPREME COURT REPORTS ANNOTATED
within which to file the petition for review.” By any reckoning, the Court of Tanenglian vs. Lorenzo
Appeals may even grant an additional period of fifteen (15) days within which a tenancy relationship between petitioner and respondents. What they insist
to file the petition under Rule 43 of the Rules of Court. In other words, the upon is that they are occupying their ancestral lands covered by the protection
period to appeal from quasi-judicial agen- of the law.
 In his Decision, the Regional Adjudicator himself found that there was no
tenancy relationship between petitioner and respondents, to wit:
“[Herein petitioner] pleaded for his defense to the claims of [herein respondents]
right of redemption contending that the [respondents] have not proven any tenurial
relationship with him. Indeed, the records show that herein [respondents] have not
proven their tenurial relationship with [petitioner], hence Section 12 of Republic Act
No. 3844, as amended, does not apply to the said claim of right of redemption.
As to the claim of [respondents], that is, for “disturbance compensation” under
Section 36(1) of Republic Act No. 3844, said provision of law to the opinion of the Board
through this Adjudicator, cannot apply in the said claim since [respondents] have not
also proven tenancy-relationship which is a requirement to be entitled to “disturbance
compensation.” 29
Under law and settled jurisprudence, and based on the records of this case,
the Regional Adjudicator evidently has no jurisdiction to hear and resolve
respondents’ complaint. In the absence of a tenancy relationship, the case falls
outside the jurisdiction of the DARAB; it is cognizable by the Regular Courts.30
Moreover, the Regional Adjudicator in his Decision dated 16 August 1999
found that:
“The third claim of herein Petitioners as prayed for is their right to “ancestral
lands” under Section 9 of Republic Act No. 6657 which provides as follows:
_______________
29 Rollo, p. 78.
30 Suarez v. Saul, supra note 27 at p. 634.
371
VOL. 550, MARCH 28, 2008 371
Tanenglian vs. Lorenzo
SECTION 9. ANCESTRAL LANDS.—For purposes of this act, ancestral
lands of each indigenous cultural community shall include but not limited to
lands in the actual, continuous and open possession and occupation of the
community and its members: Provided, that the Torrens System shall be
respected.
The rights of these communities of their ancestral land shall be protected to insure
their economic, social and cultural well-being. In line with the principles of self-
determination and autonomy, the system of land ownership, land use and the modes
of settling land disputes of all these communities must be recognized and respected.
(Italics Supplied.)
Any provision of law to the contrary notwithstanding, the PARC may suspend the
implementation of the act with respect to ancestral lands for the purpose of identifying
and delineating such lands; Provided, that in the autonomous regions, the respective
legislatures may enact their own laws in ancestral domain subject to the provisions of
the constitution and the principles enumerated, initiated in this Act and other (sic).
Applying the aforecited provisions of law, it is clear without fear of contradiction
that herein Petitioners are members of the indigenous cultural community (the
Kankanais and Ibalois) of the Cordillera Administrative Region (CAR). It is also clear
that they have been in the actual, continuous and in open possession and occupation
of the community as evidenced by residential houses, tax declarations and
improvements as seen during the ocular inspection (the property in question).
While it is true that the aforecited provisions of law provides an exception—that is:
“Provided, that the Torrens System shall be respected,” so that in this instant case, there
is a CONFLICT in that while the property in question is occupied by herein Petitioners,
the same property is titled (T-29281 and T-29282) in the name of herein Respondent,
MARIANO TAN ENG LIAN married to ALETA SO TUN (a Chinese) who are not
members of the cultural minority.
In this case, the Torrens System shall be respected. But under the 2nd paragraph of said
law, it went further to say, “THE RIGHT OF THESE COMMUNITIES TO THEIR
ANCESTRAL LANDS SHALL BE PROTECTED TO ENSURE THEIR ECONOMIC,
SOCIAL AND CULTURAL WELL-BEING. IN LINE WITH THE372
372 SUPREME COURT REPORTS ANNOTATED
Tanenglian vs. Lorenzo
PRINCIPLES OF SELF-DETERMINATION AND AUTONOMY, THE SYSTEM OF
LAND OWNERSHIP, LAND USE AND THE MODES OF SETTLING LAND
DISPUTES OF ALL THESE COMMUNITIES MUST BE RECOGNIZED AND
RESPECTED. (Italics supplied.) It is therefore the considered opinion of the Board
through this Adjudicator that the property subject of this case which is an ancestral
land be acquired by the government (through the Regional Office of the Department of
Agrarian Reform of the Cordillera Administrative Region, Baguio City), for eventual
distribution to the herein Petitioners. This is the spirit of the law.”
31
It is worthy to note that the Regional Adjudicator, in ruling that the subject
properties are ancestral lands of the respondents, relied solely on the
definition of ancestral lands under Section 9 of Republic Act No. 6657.
However, a special law, Republic Act No. 8371, otherwise known as the
Indigenous People’s Rights Act of 1997, specifically governs the rights of
indigenous people to their ancestral domains and lands.
Section 3(a) and (b)32 of Republic Act No. 8371 provides a more thorough
definition of ancestral domains and ancestral lands:
“SECTION 3. Definition of Terms.—For purposes of this Act, the following terms
shall mean:
a) Ancestral Domains—Subject to Section 56 hereof, refers to all areas generally
belonging to ICCs/IPs comprising lands, inland waters, coastal areas, and natural
resources therein, held under a claim of ownership, occupied or possessed by
ICCs/IPs, by themselves or through their ancestors, communally or individually since
time immemorial, continuously to the present except when interrupted by war, force
majeure or displacement by force, deceit, stealth or as a consequence of government
projects or any other voluntary dealings entered into by government and private
individuals/corporations, and which are necessary to ensure their economic, social and
cultural welfare. It shall include ancestral lands, forests, pas-
_______________
31 Rollo, pp. 78-79.
32 The Indigenous People’s Rights Act of 1997.
373
 VOL. 550, MARCH 28, 2008 373
Tanenglian vs. Lorenzo
ture, residential, agricultural, and other lands individually owned whether alienable
and disposable or otherwise, hunting grounds, burial grounds, worship areas, bodies
of water, mineral and other natural resources, and lands which may no longer be
exclusively occupied by ICCs/IPs but from which they traditionally had access to for
their subsistence and traditional activities, particularly the home ranges of ICCs/IPs
who are still nomadic and/or shifting cultivators;
b) Ancestral Lands—Subject to Section 56 hereof, refers to lands occupied,
possessed and utilized by individuals, families and clans who are members of the
ICCs/IPs since time immemorial, by themselves or through their predecessors-in-
interest, under claims of individual or traditional group ownership, continuously, to
the present except when interrupted by war, force majeure or displacement by force,
deceit, stealth, or as a consequence of government projects and other voluntary
dealings entered into by government and private individuals/corporations, including,
but not limited to, residential lots, rice terraces or paddies, private forests, swidden
farms and tree lots.”
Republic Act No. 8371 creates the National Commission on Indigenous
Cultural Communities/Indigenous People (NCIP) which shall be the primary
government agencyresponsible for the formulation and implementation of
policies, plans and programs to promote and protect the rights and well-being
of the indigenous cultural communities/indigenous people (ICCs/IPs) and
the recognition of their ancestral domains as well as their rights thereto.33
Prior to Republic Act No. 8371, ancestral domains and lands were
delineated under the Department of Environment and Natural Resources
(DENR) and governed by DENR Administrative Order No. 2, series of 1993.
Presently, the process of delineation and recognition of ancestral domains and
lands is guided by the principle of self-delineation and is set forth under
Sections 52 and 53, Chapter VIII of Republic Act
_______________
33 Section 38.
374
374 SUPREME COURT REPORTS ANNOTATED
Tanenglian vs. Lorenzo
No. 8371;34 and in Part I, Rule VII of NCIP Administrative
_______________
34 Sec. 52. Delineation Process.—The identification and delineation of ancestral domains
shall be done in accordance with the following procedures:
a) Ancestral Domains Delineated Prior to this Act.—The provisions hereunder shall
not apply to ancestral domains/lands already delineated according to DENR
Administrative Order No. 2, series of 1993, nor to ancestral lands and domains delineated
under any other community/ancestral domain program prior to the enactment of this
law. ICCs/IPs whose ancestral lands/domains were officially delineated prior to the
enactment of this law shall have the rights to apply for the issuance of a Certificate of
Ancestral Domain Title (CADT) over the area without going through the process outlined
hereunder;
b) Petition for Delineation.—The process of delineating a specific perimeter may be
initiated by the NCIP with the consent of the ICC/IP concerned, or through a Petition for
Delineation filed with the NCIP, by a majority of the members of the ICCs/IPs;
c) Delineation Proper.—The official delineation of ancestral domain boundaries
including census of all community members therein, shall be immediately undertaken by
the Ancestral Domains Office upon filing of the application by the ICCs/IPs concerned.
Delineation will be done in coordination with the community concerned and shall at all
times include genuine involvement and participation by the members of the communities
concerned;
d) Proof Required.—Proof of Ancestral Domain claims shall include the testimony of
elders or community under oath, and other documents directly or indirectly attesting to
the possession or occupation of the area since time immemorial by such ICCs/IPs in the
concept of owners which shall be any one (1) of the following authentic documents:
(1) Written accounts of the ICCs/IPs customs and traditions;
(2) Written accounts of the ICCs/IPs political structure and institution;
(3) Pictures showing long term occupation such as those of old
improvements, burial grounds, sacred places and old villages;
(4) Historical accounts, including pacts and agreements concerning
boundaries entered into by the ICCs/IPs concerned with other ICCs/IPs;
(5) Survey plans and sketch maps;
(6) Anthropological data;
(7) Genealogical surveys;
(8) Pictures and descriptive histories of traditional communal forests and
hunting grounds;
(9) Pictures and descriptive histories of traditional landmarks such as
mountains, rivers, creeks, ridges, hills, terraces and the like; and
(10) Write-ups of names and places derived from the native dialect of the
community.
e) Preparation of Maps.—On the basis of such investigation and the findings of fact
based thereon, the Ancestral Domains Office of the NCIP shall prepare a perimeter map,
complete with technical description, and a description of the natural features and
landmarks embraced therein;
375
VOL. 550, MARCH 28, 2008 375
Tanenglian vs. Lorenzo
Order No. 01-98 (Rules and Regulations Implementing Re-
_______________
f) Report of Investigation and Other Documents.—A complete copy of the preliminary
census and a report of investigation, shall be prepared by the Ancestral Domains Office
of the NCIP.
g) Notice and Publication.—A copy of each document, including a translation in the
native language of the ICCs/IPs concerned shall be posted in a prominent place therein
for at least fifteen (15) days. A copy of the document shall also be posted at the local,
provincial and regional offices of the NCIP, and shall be published in a newspaper of
general circulation once a week for two (2) consecutive weeks to allow other claimants to
file opposition thereto within fifteen (15) days from date of such publication: Provided,
 That in areas where no such newspaper exists, broadcasting in a radio station will be a
valid substitute: Provided, further, That mere posting shall be deemed sufficient if both
newspaper and radio station are not available.
h) Endorsement to NCIP.—Within fifteen (15) days from publication, and of the
inspection process, the Ancestral Domains Office shall prepare a report to the NCIP
endorsing a favorable action upon a claim that is deemed to have sufficient proof.
However, if the proof is deemed insufficient, the Ancestral Domains Office shall require
the submission of additional evidence: Provided, That the Ancestral Domains Office shall
reject any claim that is deemed patently false or fraudulent after inspection and
verification: Provided, further, That in case of rejection, the Ancestral Domains Office shall
give the applicant due notice, copy furnished all concerned, containing the grounds for
denial. The denial shall be appealable to the NCIP: Provided, furthermore, That in cases
where there are conflicting claims among ICCs/IPs on the boundaries of ancestral
domain claims, the Ancestral Domains Office shall cause the contending parties to meet
and assist them in coming up with a preliminary resolution of the conflict, without
prejudice to its full adjudication according to the section below;
i) Turnover of Areas Within Ancestral Domains Managed by Other Government
Agencies.—The Chairperson of the NCIP shall certify that the area covered is an ancestral
domain. The secretaries of the Department of Agrarian Reform, Department of
Environment and Natural Resources, Department of the Interior and Local Government,
and Department of Justice, the Commissioner of the National Development Corporation,
and any other government agency claiming jurisdiction over the area shall be notified
thereof. Such notification shall terminate any legal basis for the jurisdiction previously
claimed;
j) Issuance of CADT.—ICCs/IPs whose ancestral domains have been officially
delineated and determined by the NCIP shall be issued a CADT in the name of the
community concerned, containing a list of all those identified in the census; and
k) Registration of CADTs.—The NCIP shall register issued certificates of ancestral
domain titles and certificates of ancestral lands titles before the Register of Deeds in the
place where the property is situated.
SEC. 53. Identification, Delineation and Certification of Ancestral Lands;
a) The allocation of lands within any ancestral domain to individual or indigenous
corporate (family or clan) claimants shall be left to the ICCs/IPs concerned to decide in
accordance with customs and traditions;
b) Individual and indigenous corporate claimants of ancestral lands which are not
within ancestral domains, may have their claims officially estab-
376
376 SUPREME COURT REPORTS ANNOTATED
Tanenglian vs. Lorenzo
public Act No. 8371).35 Official delineation is under the juris-
_______________
lished by filing applications for the identification and delineation of their claims with the
Ancestral Domains Office. An individual or recognized head of a family or clan may file
such application in his behalf or in behalf of his family or clan, respectively;
c) Proofs of such claims shall accompany the application form which shall include
the testimony under oath of elders of the community and other documents directly or
indirectly attesting to the possession or occupation of the areas since time immemorial by
the individual or corporate claimants in the concept of owners which shall be any of the
authentic documents enumerated under Sec. 52(d) of this Act, including tax declarations
and proofs of payment of taxes;
d) The Ancestral Domains Office may require from each ancestral claimant the
submission of such other documents, Sworn Statements and the like, which in its opinion,
may shed light on the veracity of the contents of the application/claim;
e) Upon receipt of the applications for delineation and recognition of ancestral land
claims, the Ancestral Domains Office shall cause the publication of the application and a
copy of each document submitted including a translation in the native language of the
ICCs/IPs concerned in a prominent place therein for at least fifteen (15) days. A copy of
the document shall also be posted at the local, provincial, and regional offices of the NCIP
and shall be published in a newspaper of general circulation once a week for two (2)
consecutive weeks to allow other claimants to file opposition thereto within fifteen (15)
days from the date of such publication: Provided, That in area where no such newspaper
exists, broadcasting in a radio station will be a valid substitute: Provided, further, That
mere posting shall be deemed sufficient if both newspapers and radio station are not
available;
f) Fifteen (15) days after such publication, the Ancestral Domains Office shall
investigate and inspect each application, and if found to be meritorious, shall cause a
parcellary survey of the area being claimed. The Ancestral Domains Office shall reject
any claim that is deemed patently false or fraudulent after inspection and verification. In
case of rejection, the Ancestral Domains Office shall give the applicant due notice, copy
furnished all concerned, containing the grounds for denial. The denial shall be appealable
to the NCIP. In case of conflicting claims among individual or indigenous corporate
claimants, the Ancestral Domains Office shall cause the contending parties to meet and
assist them in coming up with a preliminary resolution of the conflict, without prejudice
to its full adjudication according to Sec. 62 of this Act. In all proceedings for the
identification or delineation of the ancestral domains as herein provided, the Director of
Lands shall represent the interest of the Republic of the Philippines; and
g) The Ancestral Domains Office shall prepare and submit a report on each and
every application surveyed and delineated to the NCIP which shall, in turn, evaluate the
report submitted. If the NCIP finds such claim meritorious, it shall issue a certificate of
ancestral land, declaring and certifying the claim of each individual or corporate (family
or clan) claimant over ancestral lands.
35 NCIP ADMINISTRATIVE ORDER NO. 01-98. RULES AND REGULATIONS
IMPLEMENTING REPUBLIC ACT NO. 8371. RULE VIII, Delineation and Recognition of
Ancestral Domains, PART I, Delineation and Recognition of Ancestral Domains/Lands:
377
VOL. 550, MARCH 28, 2008 377
Tanenglian vs. Lorenzo
diction of the Ancestral Domains Office (ADO) of the NCIP. 36
It is irrefragable, therefore, that the Regional Adjudicator overstepped the
boundaries of his jurisdiction when he made a declaration that the subject
properties are ancestral lands and proceeded to award the same to the
respondents, when jurisdiction over the delineation and recognition of the
same is explicitly conferred on the NCIP.
The Regional Adjudicator even made the following disposition on
petitioner’s TCTs:
“As to the two (2) TCT’s (T-29281 and T-29282) issued to herein respondent, the
records (Annex “C” for Respondent) of this case
_______________
 SECTION 1. Principle of Self Delineation.—Ancestral domains shall be identified and delineated
by the ICCs/IPs themselves through their respective Council of Elders/Leaders whose members are
identified by them through customary processes. The metes and bounds of ancestral domains shall be
established through traditionally recognized physical landmarks, such as, but not limited to, burial
grounds, mountains, ridges, hills, rivers, creeks, stone formations and the like.
Political or administrative boundaries, existing land uses, leases, programs and projects or
presence of non-ICCs in the area shall not limit the extent of an ancestral domain nor shall these be
used to reduce its area.
xxxx
SECTION 2. Procedure on Ancestral Domain Delineation.—The Ancestral Domains Office (ADO)
shall be responsible for the official delineation of ancestral domains and lands. For this purpose the
ADO, at its option and as far as practicable, may create mechanisms to facilitate the delineation pro-
cess, such as the organization of teams of facilitators which may include, among others, an NGO
representative chosen by the community, the Municipal Planning and Development Officer of the
local government units where the domain or portions thereof is located, and representatives from the
IP community whose domains are to be delineated. The ADO will ensure that the mechanisms created
are adequately supported financially and expedient delineation of the ancestral domains.
36 Section 46(a), Republic Act No. 8371, provides that: “The Ancestral Domains Office (ADO) shall be
responsible for the official delineation of ancestral domains and lands. x x x”
378
378 SUPREME COURT REPORTS ANNOTATED
Tanenglian vs. Lorenzo
show under the 3rd and 4th paragraphs of the DECISION dated June 28, 1991 provides:
The subject parcels of land were originally titled in the name of ULBANA
ALSIO under Original Certificate of Title No. 0-131 which she obtained on July
15, 1965 (Exhibit “D”) through a petition for the judicial reopening of Civil
Reservation Case No. 1, G.L.R.O. Record No. 211` (Exhibits “A” and “B”) that
was granted by the Court of First Instance of the City of Baguio in its decision
dated February 08, 1965 (Exhibit “C”) subsequently by Alsio to Jose Perez
(Exhibit “I”) in turn to Rosario Oreta (Exhibit “J”) and then to Lutgarda Platon
on April 30, 1972 (Exhibit “K”). At the time Platon acquired the property, it was
already subdivided into two (2) lots hence, she was issued TCT Nos. T-20830
(Exhibit “G”) and T-20831 (Exhibit “H”).
Meanwhile, on December 22, 1977, P.D. 1271 was issued nullifying all decrees
of registration and certificates of title issued pursuant to decisions of the Court
of First Instance of Baguio and Benguet in petition for the judicial reopening of
Civil Reservation Case No. 1, G.L.R.O. Record No. 211 on the ground of lack of
jurisdiction but allowed time to the title holders concerned to apply for the
validation of their titles under certain conditions.
The aforecited two (2) paragraphs give credence to the allegation of the Petitioners
in their original petition (nos. 16, 17 and 18) that the titles of Respondent’s
predecessors-in-interest were secured through fraud. They referred as an example a
letter (Annex “E” for Petitioners) coming from the Land Management Bureau, Manila
which made the recommendation as follows:
RECOMMENDATION
In view of the foregoing findings, it is respectfully recommended that the steps be
taken in the proper court of justice for the cancellation of the Original Certificates of
Title No. 0-131 of Ulbano Alsio and its corresponding derivative titles so that the land
be reverted to the mass of the public domain and thereafter, dispose the same to
qualified applicants under the provisions of RA No. 730.” 37
_______________
37 Rollo, p. 81.
379
VOL. 550, MARCH 28, 2008 379
Tanenglian vs. Lorenzo
Once more, the Regional Adjudicator acted without jurisdiction in
entertaining a collateral attack on petitioner’s TCTs.
In an earlier case for quieting of title instituted by the petitioner before the
trial court, which reached this Court as G.R. No. 118515,38 petitioner’s
ownership and titles to the subject properties had been affirmed with finality,
with entry of judgment having been made therein on 15 January 1996. A suit
for quieting of title is an action quasi in rem,39which is conclusive only to the
parties to the suit. It is too glaring to escape our attention that several of the
respondents herein were the defendants in the suit for quieting of title before
the trial court and the subsequent petitioners in G.R. No. 118515. 40 The finality
of the Decision in G.R. No. 118515 is therefore binding upon them. 41 Although
the Decision in G.R. No. 118515 is not binding on the other respondents who
were not parties thereto, said respondents are still confronted with petitioner’s
TCTs which they must directly challenge before the appropriate tribunal.
Respondents, thus, cannot pray for the Regional Adjudicator to declare
petitioner’s TCTs null and void, for such would constitute a collateral attack
on petitioner’s titles which is not allowed under the law. A Torrens title cannot
be collaterally attacked.42 A collateral attack is made when, in another action
_______________
38 Entitled, Maximo Lapid v. Court of Appeals, Annex “H,” Rollo, p. 74.
39 Suits to quiet title are characterized as proceedings quasi in rem. Technically they are
neither in rem nor in personam. In an action quasi in rem, an individual is named as defendant.
40 Mario Dapnisan, Rodolfo Lachica, Silvestre Lorenzo and Timoteo Dapnisan, who are
among the respondents in the petition herein, were also among the petitioners in G.R. No.
118515, Rollo, p. 61.
41 Portic v. Cristobal, G.R. No. 156171, 22 April 2005, 456 SCRA 577, 585.
42 [A] decree of registration and the certificate of title issued pursuant thereto may be
attacked on the ground of actual fraud
380
380 SUPREME COURT REPORTS ANNOTATED
Tanenglian vs. Lorenzo
to obtain a different relief, an attack on the judgment is made as an incident to
said action,43 as opposed to a direct attack against a judgment which is made
through an action or proceeding, the main object of which is to annul, set aside,
or enjoin the enforcement of such judgment, if not yet carried into effect; or, if
the property has been disposed of, the aggrieved party may sue for recovery.44
The petitioner’s titles to the subject properties have acquired the character
of indeafeasibility, being registered under the Torrens System of registration.
Once a decree of registration is made under the Torrens System, and the
reglementary period has passed within which the decree may be questioned,
the title is perfected and cannot be collaterally questioned later on.45 To permit
a collateral attack on petitioner’s title, such as what respondents attempt,
would reduce the vaunted legal indeafeasibility of a Torrens title to
meaningless verbiage.46 It has, therefore, become an ancient rule that the issue
on the validity of title, i.e., whether or not it was fraudulently issued, can only
be raised in an action expressly instituted for that purpose. 47

_______________

within one (1) year from the date of its entry. Such an attack must be direct and not by a collateral
proceeding (Section 48, Presidential Decree No. 1526; Legarda v. Saleeby, 31 Phil. 590 (1915); Ybañez
v. Intermediate Appellate Court, G.R. No. 68291, 6 March 1991, 194 SCRA 743, 749). The validity of
the certificate of title in this regard can be threshed out only in an action expressly filed for the
purpose. (Magay v. Estiandan, G.R. No. L-28975, 27 February 1976, 69 SCRA 48; Ybañez v.
Intermediate Appellate Court, id.)
43 Noblejas and Noblejas, Registration of Land Titles and Deeds (1992 Revised Ed.).
44 Banco Español-Filipino v. Palanca, 37 Phil. 921 (1918).
45 Abad v. Government of the Philippines, 103 Phil. 247, 251 (1958).
46 Tichangco v. Enriquez, G.R. No. 150629, 30 June 2004, 433 SCRA 324, 337.
47 Halili v. Court of Industrial Relations, 326 Phil. 982, 992; 257 SCRA 174, 184 (1996); Hemedes
v. Court of Appeals, 374 Phil.
381
VOL. 550, MARCH 28, 2008 381
Tanenglian vs. Lorenzo
Any decision rendered without jurisdiction is a total nullity and may be
struck down anytime.48 In Tambunting, Jr. v. Sumabat,49 we declared that a void
judgment is in legal effect no judgment, by which no rights are divested, from
which no rights can be obtained, which neither binds nor bonds anyone, and
under which all acts performed and all claims flowing therefrom are void. In
the Petition at bar, since the Regional Adjudicator is evidently without
jurisdiction to rule on respondents’ complaint without the existence of a
tenancy relationship between them and the petitioner, then the Decision he
rendered is void.
Wherefore, premises considered, the instant petition is Granted. The
Resolutions of the Court of Appeals dated 5 April 2006 and 4 July 2006 are
REVERSED and SET ASIDE. The Decision dated 16 August 1999 of the
Regional Adjudicator in Cases No. DCN NO 0117-98 B CAR to DCN 0140-98
B CAR is declared NULL and VOID, and the respondents’ petition therein is
ordered DISMISSED, without prejudice to the filing of the proper case before
the appropriate tribunal. No costs.
SO ORDERED.
Austria-Martinez (Acting Chairperson), Tinga,**Nachura and Reyes,
JJ., concur.
 G.R. No. 151016. August 6, 2008.*
SPOUSES SOFRONIO SANTOS and NATIVIDAD SANTOS, FROILAN
SANTOS, CECILIA M. MACASPAC, and R TRANSPORT CORPORATION,
petitioners, vs. HEIRS OF DOMINGA LUSTRE, namely TARCISIO
MANIQUIZ, TERESITA BURGOS, FLORITA M. REYES and LERMIE
MANIQUIZ, respondents.
Forum Shopping; Forum shopping exists when the elements of litis pendentia are present
or when a final judgment in one case will amount to res judicata in the other.—Forum
shopping exists when the elements of litis pendentia are present or when a final
judgment in one case will amount to res judicata in the other. Among its elements are
identity of the parties, identity of the subject matter and identity of the causes of action
in the two cases.
Civil Procedure; Causes of Action; There is identity of causes of action if the same
evidence needed in the first case will sustain the second action, and this principle applies even
if the reliefs sought in the two cases are different.—The causes of action in Civil Case No.
1330 and Civil Case No. 2115 are identical. There is identity of causes of action if the
same evidence needed in the first case will sustain the second action, and this principle
applies even if the reliefs sought in the two cases are different. Without a doubt, the
same evidence will be necessary to sustain the causes of action in these two cases which
are substantially based on the same series of transactions. In fact, similar reliefs are
prayed for in the two cases. Both complaints ultimately seek the cancellation of the title
of the alleged transferees and the recovery of the subject property.
Ownership; The fact of being a co-owner does not necessarily mean that a plaintiff is
acting for the benefit of the co-ownership when he files an action respecting the co-owned
property.—As pointed out by petitioners, plaintiffs in both cases are the heirs of
Dominga Lustre; they are therefore co-owners of the property. However, the fact of
being a co-owner does not necessarily mean that a plaintiff is acting for the benefit of
the co-ownership when he files an action
_______________
* THIRD DIVISION.
121
VOL. 561, AUGUST 6, 2008 121
Santos vs. Heirs of Dominga Lustre
respecting the co-owned property. Co-owners are not parties inter se in relation
to the property owned in common. The test is whether the “additional” party, the co-
owner in this case, acts in the same capacity or is in privity with the parties in the former
action.
Parties; The issue of whether the additional parties are indispensable parties or not
acquires real significance only when considering the validity of the judgment that will be
rendered in the earlier case.—The determination of whether there is identity of parties
rests on the commonality of the parties’ interest, regardless of whether they are
indispensable parties or not. The issue of whether the additional parties are
indispensable parties or not acquires real significance only when considering the
validity of the judgment that will be rendered in the earlier case. This is so, because if
the additional parties are indispensable parties, then no valid judgment can be
rendered against them in the earlier case in which they did not participate, and this will
foreclose the application of res judicata which requires the existence of a final judgment.
Same; A co-owner may bring an action to recover the co-owned property without the
necessity of joining all the other co-owners as co-plaintiff because the suit is deemed to be
instituted for the benefit of all.—Without question, a co-owner may bring an action to
recover the co-owned property without the necessity of joining all the other co-owners
as co-plaintiffs because the suit is deemed to be instituted for the benefit of all. In such
case, the other heirs are merely necessary parties. Parenthetically, the inclusion among
the defendants of Cecilia Macaspac, who refused to join the other heirs as plaintiffs in
Civil Case No. 2115, was not actually necessary.
Same; The absence of an indispensable party renders all subsequent actions of the court
null and void for want of authority to act, not only as to the absent parties but even as to those
present.—If the action is for the benefit of the plaintiff alone, as in Civil Case No. 1330,
the action will not prosper unless he impleads the other co-owners who are
indispensable parties. The absence of an indispensable party renders all subsequent
actions of the court null and void for want of authority to act, not only as to the absent
parties but even as to those present. The trial court does not acquire jurisdiction over
the indispensable parties who are not impleaded in the case, and judgment thereon
cannot be valid and binding against them. A122
122 SUPREME COURT REPORTS ANNOTATED
Santos vs. Heirs of Dominga Lustre
decision that is null and void for want of jurisdiction on the part of the trial court
is not a decision in contemplation of law; hence, it can never become final and
executory.
Same; Worth mentioning is the doctrine that any adverse ruling in the earlier case will
not, in any way, prejudice the heirs who did not join, even if such case was actually filed in
behalf of all the co-owners.—Worth mentioning is the doctrine that any adverse ruling in
the earlier case will not, in any way, prejudice the heirs who did not join, even if such
case was actually filed in behalf of all the co-owners. In fact, if an action for recovery of
property is dismissed, a subsequent action by a co-heir who did not join the earlier case
should not be barred by prior judgment. Any judgment of the court in favor of the co-
owner will benefit the others, but if the judgment is adverse, the same cannot prejudice
the rights of the unimpleaded co-owners.
Land Titles; Reconveyance; The action for reconveyance on the ground that the certificate
of title was obtained by means of a fictitious deed of sale is virtually an action for the declaration
of its nullity, which does not prescribe.—On the issue of prescription and laches, we fully
agree with the CA. The action for reconveyance on the ground that the certificate of
title was obtained by means of a fictitious deed of sale is virtually an action for the
declaration of its nullity, which does not prescribe. Moreover, a person acquiring
property through fraud becomes, by operation of law, a trustee of an implied trust for
the benefit of the real owner of the property. An action for reconveyance based on an
implied trust prescribes in ten years. And in such case, the prescriptive period applies
only if there is an actual need to reconvey the property as when the plaintiff is not in
possession of the property. Otherwise, if plaintiff is in possession of the property,
prescription does not commence to run against him. Thus, when an action for
reconveyance is nonetheless filed, it would be in the nature of a suit for quieting of title,
an action that is imprescriptible.
 Same; Same; It is true that an action for reconveyance will not prosper when the property
to be reconveyed is in the hands of an innocent purchaser for value.—It is true that an action
for reconveyance will not prosper when the property sought to be reconveyed is in the
hands of an innocent purchaser for value. In this case, however, the protection of the
rights of any alleged innocent purchaser is123
VOL. 561, AUGUST 6, 2008 123
Santos vs. Heirs of Dominga Lustre
a matter that should be threshed out in the main case and not in these
proceedings.
PETITION for review on certiorari of the decision and resolution of the Court
of Appeals.
The facts are stated in the opinion of the Court.
Gaspar V. Tagalo and Rom-Voltaire C. Quizon for petitioners.
Ricardo C. Valmonte for respondents.
NACHURA, J.:
This petition for review seeks the reversal of the Court of Appeals (CA)
Decision1 dated August 23, 2001, and Resolution dated December 10, 2001,
which denied petitioners’ Motion to Dismiss Civil Case No. 2115, an action for
Annulment of Transfer Certificate of Title and Deed of Absolute Sale.
The facts, as borne by the records, are as follows:
Dominga Lustre, who died on October 15, 1989, owned a residential lot
which is located in San Antonio, Nueva Ecija, with an area of 390 square
meters, and covered by Transfer Certificate of Title (TCT) No. NT-50384. On
September 20, 1974, Dominga Lustre mortgaged the lot to spouses Sofronio
and Natividad Santos (spouses Santos) for P38,000.00.2
On May 16, 1976, Dominga Lustre sold the property to Natividad M.
Santos for P15,000.00 through a Deed of Absolute Sale.3 The mortgage appears
to have been canceled on March 20, 1976.4 The cancellation of the mortgage
and the sale of the
_______________
1 Penned by Associate Justice Delilah Vidallon-Magtolis, with Associate Justices Teodoro P.
Regino and Josefina Guevara-Salonga, concurring, Rollo, pp. 76-85.
2 CA Rollo, pp. 101-102.
3 Id., at p. 104
4 Id., at p. 103.
124
124 SUPREME COURT REPORTS ANNOTATED
Santos vs. Heirs of Dominga Lustre
property were both inscribed at the back of TCT No. NT-50384 on April 17,
1984.
As a result of the sale, TCT No. NT-50384 was canceled and TCT No. NT-
183029 was issued in the name of the spouses Santos. Subsequently, the latter
executed a Deed of Sale transferring the property to their son, Froilan M.
Santos (petitioner). By virtue of this deed, TCT No. NT-183029 was canceled
and TCT No. 1939735 issued in the name of Froilan Santos.
On April 14, 1994, Cecilia Macaspac (also a petitioner) and Tarcisio
Maniquiz, both heirs of Dominga Lustre, filed with the Regional Trial Court
(RTC) of Gapan, Nueva Ecija, a Complaint for Declaration of the Inexistence
of Contract, Annulment of Title, Reconveyance and Damages6against Froilan
M. Santos. That case was docketed as Civil Case No. 1330. Later, the plaintiffs
sought the amendment of the complaint to include Eusebio Maniquiz as
plaintiff and to include a certification against forum shopping. However, the
records in this case are bereft of any information as to whether the same was
allowed by the trial court.7 We note, however, that only Cecilia Macaspac
executed a Verification and Certification against Forum Shopping8 in that case.
According to the Amended Complaint in Civil Case No. 1330, plaintiffs Cecilia
and Tarcisio are the legitimate children, while Eusebio is the spouse of
Dominga Lustre, who allegedly left them the subject property when she died
on October 15, 1989. They averred that the sale of the property to Natividad
Santos was simulated, spurious or fake, and that they discovered that spouses
Santos transferred the property to Froilan Santos when the latter filed an
ejectment suit against them. Thereafter, Froilan Santos, through fraud and
_______________
5 Id., at p. 84.
6 Id., at pp. 78-80.
7 Id., at pp. 175-176.
8 Id., at p. 176.
125
VOL. 561, AUGUST 6, 2008 125
Santos vs. Heirs of Dominga Lustre
deceit, succeeded in transferring the property. On the mistaken belief that the
sale between Dominga Lustre and Natividad Santos occurred on April 17,
1984, plaintiffs prayed that the trial court issue judgment—
“1. Ordering the inexistence of sale dated April 17, 1984 between Dominga Lustre
and Natividad Santos and subsequent thereto;
2. Ordering the cancellation of TCT No. NT-193973 in favor of defendant
and reconvey the same to the plaintiff;
3. Ordering the defendant to pay plaintiffs the sum of P20,000.00 as attorney’s fee,
P20,000.00 as moral damages; P20,000.00 as litigation expenses; P20,000.00 as
exemplary damages;
4. Ordering defendant to pay the cost of the suit;
5. General relief[s] are likewise prayed for in the premises.” (Emphasis ours.) 9
On September 12, 1994, the RTC, Branch 87, to which Civil Case No. 1330
was raffled, ordered the records of the case to be referred to the municipal trial
court for adjudication on the ground that the assessed value of the subject
property was below the amount within its jurisdiction.10
On May 14, 1999, while Civil Case No. 1330 was still pending, Dominga
Lustre’s other heirs, namely, Eusebio Maniquiz, Teresita Burgos, Tarcisio
Maniquiz, Florita M. Reyes and Lermie Maniquiz filed a Complaint for
Annulment of Transfer Certificate of Title and Deed of Absolute Sale 11 against
spouses Sofronio and Natividad Santos, Froilan Santos, Cecilia M. Macaspac,
R Transport Corporation, and the Register of Deeds of Cabanatuan City, with
the same RTC. Cecilia Macaspac, plaintiff in Civil Case No. 1330, was
impleaded as defendant because she refused to join the other heirs as plain-
_______________
9 Id., at pp. 79-80.
10 Id., at p. 177.
11 Rollo, pp. 128-132.
126
126 SUPREME COURT REPORTS ANNOTATED
Santos vs. Heirs of Dominga Lustre
tiffs. The case was docketed as Civil Case No. 2115 and was raffled to Branch
34.
The complaint alleged that the spouses Santos simulated the Deed of Sale
dated May 16, 1976 by forging Dominga Lustre’s signature; that thereafter, the
spouses Santos simulated another Deed of Sale transferring the property to
Froilan Santos, which led to the issuance of TCT No. 193973 in his name; that
this title became the basis of Froilan’s ejectment suit against them; and that R
Transport Corporation (also a petitioner), was claiming that it bought the
property from Froilan but there was no evidence to prove such claim.
According to the plaintiffs (herein respondents), they had been residing in the
property since birth and the house standing on the lot was built by their
ancestors. They posited that the transferees of the property could not be
considered as buyers in good faith. The complaint prayed that judgment be
rendered:
“a. Annulling and declaring null and void the Deed of Absolute Sale, Annex “C”
hereof; that between spouses Santos and their son Froilan; and that purportedly
between defendant Froilan and defendant corporation;
b. Annulling and declaring null and void Transfer Certificate of Title No. NT-
183029 appearing to be in the name of defendant spouses; TCT No. NT-193973 in the
name of defendant Froilan M. Santos and Transfer Certificate of Title, if any, in the
name of defendant corporation;
c. Reinstating Transfer Certificate of Title No. NT-50384 in the name of Dominga
Lustre and directing the Register of Deeds to do so or to issue [a] new one in the name
of the deceased Dominga Lustre and canceling all titles mentioned in the immediately
preceding paragraph which [were] made to cancel Lustre’s title;
d. Ordering defendants, jointly and severally, to pay plaintiffs the following:
1.) Moral damages of P200,000.00;
2.) Exemplary damages of P100,000.00;
3.) Attorney’s fee of P50,000.00, plus cost of suit.127
VOL. 561, AUGUST 6, 2008 127
Santos vs. Heirs of Dominga Lustre
Plaintiffs further pray for such other affirmative reliefs as are deemed just and
equitable in the premises.” 12
Alleging that the plaintiffs’ right of action for annulment of the Deed of
Sale and TCT Nos. 183029 and 193973 had long prescribed and was barred by
laches, petitioners filed a Motion to Dismiss Civil Case No. 2115. 13 They later
filed an Omnibus/Supplemental Motion to Dismiss on the ground of litis
pendentia.14
On January 11, 2000, the RTC denied the Motion to Dismiss as well as the
Supplemental Motion to Dismiss for lack of merit.15 On April 5, 2000, the RTC
denied the Joint Motion for Reconsideration filed by petitioners. 16
They then filed a petition for certiorari with the Court of Appeals (CA),
assailing the denial of their motion to dismiss. On August 23, 2001, the CA
dismissed the petition for lack of merit based on its finding that the RTC did
not commit grave abuse of discretion in denying the motion to dismiss. 17 On
December 10, 2001, the CA denied petitioners’ motion for reconsideration.18
In the assailed decision, the CA pronounced that the respondents were not
guilty of forum shopping. There was no identity of parties because Cecilia
Macaspac, who was a plaintiff in Civil Case No. 1330, was a defendant in Civil
Case No. 2115; and there was only one defendant in Civil Case No. 1330, while
there were several additional defendants in Civil Case No. 2115. Moreover, the
reliefs demanded in the two cases differed. In Civil Case No. 1330, plaintiffs
were seeking the declaration of the inexistence of a sale dated April 17,
_______________
12 Id., at pp. 131-132. (Emphasis supplied.)
13 Id., at pp. 133-134.
14 Id., at p. 142.
15 Id., at pp. 123-125.
16 Id., at pp. 126-127.
17 Id., at pp. 76-84.
18 Id., at p. 87.
128
128 SUPREME COURT REPORTS ANNOTATED
Santos vs. Heirs of Dominga Lustre
1984, cancellation of Froilan M. Santos’ certificate of title, and the
reconveyance of the property to plaintiffs. On the other hand, plaintiffs in Civil
Case No. 2115 were praying for the annulment of the Deed of Absolute Sale
dated May 16, 1976, cancellation of TCT No. NT-183029 and the succeeding
TCTs, and reinstatement of TCT No. NT-50384 in the name of Dominga
Lustre.19
On the issue of prescription and laches, the CA declared that an action for
the declaration of the inexistence of a contract does not prescribe, and laches
could not have set in since there was no unreasonable delay in the filing of the
case.20
In this petition for review, the sole issue submitted for resolution is
whether the RTC committed grave abuse of discretion in not dismissing the
case based on forum shopping and prescription or laches. 21
The petition has no merit. The RTC did not commit grave abuse of
discretion in denying petitioners’ motion to dismiss.
Forum shopping exists when the elements of litis pendentia are present or
when a final judgment in one case will amount to res judicata in the
other.22 Among its elements are identity of the parties, identity of the subject
matter and identity of the causes of action in the two cases. 23
The dispute in this case centers on whether there exist identity of causes
of action and identity of parties between Civil Case No. 1330 and Civil Case
No. 2115.
Concededly, the causes of action in Civil Case No. 1330 and Civil Case No.
2115 are identical. There is identity of causes of action if the same evidence
needed in the first case
_______________
19 Id., at p. 82.
20 Id., at pp. 83-84.
21 Id., at p. 345.
22 Reyes v. Alsons Development and Investment Corporation, G.R. No. 153936, March 2, 2007, 517
SCRA 244, 251.
23 Nery v. Leyson, 393 Phil. 644, 654; 339 SCRA 232, 239-240 (2000).
129
VOL. 561, AUGUST 6, 2008
Santos vs. Heirs of Dominga Lustre
will sustain the second action, and this principle applies even if the reliefs
sought in the two cases are different.24Without a doubt, the same evidence will
be necessary to sustain the causes of action in these two cases which are
substantially based on the same series of transactions. In fact, similar reliefs
are prayed for in the two cases. Both complaints ultimately seek the
cancellation of the title of the alleged transferees and the recovery of the
subject property.
Despite this similarity, however, we hold that respondents are not guilty
of forum shopping because the element of identity of parties is not present.
In insisting that the parties are identical, petitioners stress that all the
plaintiffs are heirs of Dominga Lustre, while the defendants are past and
present holders of the certificates of title covering the subject property. They
argue that Cecilia Macaspac’s being a defendant in the second case does not
change whatever interest she has in the former case, considering that she is an
indispensable party in both cases. They posit that additional parties will not
prevent the application of the rule on res judicata.25
While we agree with the CA that there is no identity of parties in the two
cases, we do not agree with the rationale behind its conclusion. To recall, the
CA ratiocinated that there was no identity of parties because Cecilia Macaspac,
while a plaintiff in Civil Case No. 1330, is a defendant in Civil Case No. 2115,
and there are several additional defendants in Civil Case No. 2115.
The CA appears to have overlooked the principle that what is required is
only substantial, and not absolute, identity of parties. There is substantial
identity of parties when there is a community of interest between a party in
the first case and a party in the second case, even if the latter was not im-
_______________
24 Korea Exchange v. Gonzales, G.R. Nos. 142286-87, April 15, 2005, 456 SCRA 224, 244.
25 Rollo, p. 348.
130
130 SUPREME COURT REPORTS ANNOTATED
Santos vs. Heirs of Dominga Lustre
pleaded in the first case.26 Moreover, the fact that the positions of the parties
are reversed, i.e., the plaintiffs in the first case are the defendants in the second
case, or vice versa, does not negate the identity of parties for purposes of
determining whether the case is dismissible on the ground of litis pendentia.27
Following these legal principles, it appears that there is identity of parties
in the two cases. However, a closer look at the facts and a deeper
understanding of pertinent jurisprudence will lead to a different conclusion:
there is actually no identity of parties because the plaintiff in Civil Case No.
129 1330 does not, in fact, share a common interest with the plaintiffs in Civil Case
No. 2115.
As pointed out by petitioners, plaintiffs in both cases are the heirs of
Dominga Lustre; they are therefore co-owners of the property. However, the
fact of being a co-owner does not necessarily mean that a plaintiff is acting for
the benefit of the co-ownership when he files an action respecting the co-
owned property. Co-owners are not parties inter se in relation to the property
owned in common. The test is whether the “additional” party, the co-owner
in this case, acts in the same capacity or is in privity with the parties in the
former action.28
Notably, plaintiff Cecilia Macaspac in Civil Case No. 1330 filed the
complaint seeking the reconveyance of the property to her, and not to
Dominga Lustre or her heirs. This is a clear act of repudiation of the co-
ownership which would negate a conclusion that she acted in privity with the
other heirs or that she filed the complaint in behalf of the co-ownership. In
contrast, respondents were evidently acting for the benefit of the co-ownership
when they filed the complaint in Civil Case
_______________
26 Sendon v. Ruiz, 415 Phil. 376, 385; 363 SCRA 155, 163 (2001).
27 Agilent Technologies Singapore (PTE) Ltd. v. Integrated Silicon Technology Philippines
Corporation, G.R. No. 154618, April 14, 2004, 427 SCRA 593, 602
28 Nery v. Leyson, supra note 23, at p. 655; p. 241.
131
VOL. 561, AUGUST 6, 2008 131
Santos vs. Heirs of Dominga Lustre
No. 2115 wherein they prayed that TCT No. NT-50384 in the name of Dominga
Lustre be reinstated, or a new certificate of title be issued in her name.
The petitioners and respondents have squabbled over whether the
additional parties in the second case are indispensable or necessary parties on
the assumption that the proper characterization of the parties will have a
bearing on the determination of the existence of identity of parties. In support
of their position, the petitioners cite Juan v. Go Cotay29 when they theorize that
“there is still identity of parties although in the second action there is one party
who was not joined in the former action, if it appears that such party is not a
necessary party either in the first or in the second action.”30
We note, however, that the party who was not impleaded in Go Cotay was,
technically speaking, a necessary party (as opposed to an indispensable party
as defined under the Rules of Court), being the plaintiff’s wife who also had
an interest in the case. Possibly, and, indeed, it seems probable that the
petitioners may not have used the term “necessary party” in the strict legal
sense. They could really have been referring to an “indispensable party.” In
challenging petitioners’ allegation, respondents obviously understood the
statement as referring to an indispensable party. They were, therefore, quick
to point out that the additional plaintiffs in Civil Case No. 2115 are
indispensable parties, being co-owners of the property.31
By this debate, the parties have only muddled the issue. The determination
of whether there is identity of parties rests on the commonality of the parties’
interest, regardless of whether they are indispensable parties or not. The issue
of whether the additional parties are indispensable parties or not acquires real
significance only when considering the valid-
_______________
29 26 Phil. 328 (1913).
30 Rollo, p. 350.
31 Id., at pp. 372-373.
132
132 SUPREME COURT REPORTS ANNOTATED
Santos vs. Heirs of Dominga Lustre
ity of the judgment that will be rendered in the earlier case. This is so, because
if the additional parties are indispensable parties, then no valid judgment can
be rendered against them in the earlier case in which they did not participate,
and this will foreclose the application of res judicata which requires the
existence of a final judgment.
Without question, a co-owner may bring an action to recover the co-owned
property without the necessity of joining all the other co-owners as co-
plaintiffs because the suit is deemed to be instituted for the benefit of all. In
such case, the other heirs are merely necessary parties. Parenthetically, the
inclusion among the defendants of Cecilia Macaspac, who refused to join the
other heirs as plaintiffs in Civil Case No. 2115, was not actually necessary.
However, if the action is for the benefit of the plaintiff alone, as in Civil
Case No. 1330, the action will not prosper unless he impleads the other co-
owners who are indispensable parties.32 The absence of an indispensable party
renders all subsequent actions of the court null and void for want of authority
to act, not only as to the absent parties but even as to those present. 33 The trial
court does not acquire jurisdiction over the indispensable parties who are not
impleaded in the case, and judgment thereon cannot be valid and binding
against them. A decision that is null and void for want of jurisdiction on the
part of the trial court is not a decision in contemplation of law; hence, it can
never become final and executory.34
Worth mentioning is the doctrine that any adverse ruling in the earlier case
will not, in any way, prejudice the heirs who did not join, even if such case
was actually filed in behalf
_______________
32 Baloloy v. Hular, G.R. No. 157767, September 9, 2004, 438 SCRA 80, 90-91.
33 Orbeta v. Sendiong, G.R. No. 155236, July 8, 2005, 463 SCRA 180, 192.
34 Arcelona v. Court of Appeals, 345 Phil. 250, 267; 280 SCRA 20, 37 (1997).
133
VOL. 561, AUGUST 6, 2008 133
Santos vs. Heirs of Dominga Lustre
of all the co-owners. In fact, if an action for recovery of property is dismissed,
a subsequent action by a co-heir who did not join the earlier case should not
be barred by prior judgment.35 Any judgment of the court in favor of the co-
owner will benefit the others, but if the judgment is adverse, the same cannot
prejudice the rights of the unimpleaded co-owners.36
Applying these principles to the instant case, we rule that there is no
identity of parties and thus, the second action is not barred by litis pendentia.
 On the issue of prescription and laches, we fully agree with the CA. The
action for reconveyance on the ground that the certificate of title was obtained
by means of a fictitious deed of sale is virtually an action for the declaration of
its nullity, which does not prescribe.37Moreover, a person acquiring property
through fraud becomes, by operation of law, a trustee of an implied trust for
the benefit of the real owner of the property. An action for reconveyance based
on an implied trust prescribes in ten years. And in such case, the prescriptive
period applies only if there is an actual need to reconvey the property as when
the plaintiff is not in possession of the property. Otherwise, if plaintiff is in
possession of the property, prescription does not commence to run against
him. Thus, when an action for reconveyance is nonetheless filed, it would be
in the nature of a suit for quieting of title, an action that is imprescriptible. 38
It follows then that the respondents’ present action should not be barred
by laches. Laches is a doctrine in equity, which may be used only in the
absence of, and never against, statu-

_______________

35 Nery v. Leyson, supra note 29, at pp. 655-656; p. 242.

36 Baloloy v. Hular, G.R. No. 157767, September 9, 2004, 438 SCRA 80, 91.
37 Philippine National Bank v. Heirs of Estanislao Militar and Deogracias Militar, G.R. No. 164801,
August 18, 2005, 467 SCRA 377, 388.
38 Spouses Anita and Honorio Aguirre v. Heirs of Lucas Villanueva, G.R. No. 169898, June 8, 2007,
524 SCRA 492, 494.
134
134 SUPREME COURT REPORTS ANNOTATED
Santos vs. Heirs of Dominga Lustre
tory law. Obviously, it cannot be set up to resist the enforcement of an
imprescriptible legal right.39
Finally, it is true that an action for reconveyance will not prosper when the
property sought to be reconveyed is in the hands of an innocent purchaser for
value. In this case, however, the protection of the rights of any alleged innocent
purchaser is a matter that should be threshed out in the main case and not in
these proceedings.
WHEREFORE, premises considered, the petition is DENIED. The Court of
Appeals Decision dated August 23, 2001, and Resolution dated December 10,
2001, are AFFIRMED.
SO ORDERED.
Ynares-Santiago (Chairperson), Austria-Martinez, Chico-Nazario and Reyes,
JJ., concur.
Petition denied, judgment and resolution affirmed.
 G.R. No. 158121. December 12, 2007. *
HEIRS OF VALERIANO S. CONCHA, SR. NAMELY: TERESITA CONCHA-
PARAN, VALERIANO P. CONCHA, JR., RAMON P. CONCHA, EDUARDO
P. CONCHA, REPRESENTED BY HIS LEGAL GUARDIAN, REYNALDO P.
CONCHA, ALBERTO P. CONCHA, BERNARDO P. CONCHA and GLORIA
P. CONCHA-NUNAG, petitioners, vs. SPOUSES GREGORIO J.
LUMOCSO and BIENVENIDA GUYA, CRISTITA J. LUMOCSO VDA. DE
1
DAAN, AND SPOUSES JACINTO J. LUMOCSO and BALBINA T.
LUMOCSO, respondents.
2
Actions; Jurisdictions; Words and Phrases; Jurisdiction over the subject matter is the
power to hear and determine cases of the
_______________
*FIRST DIVISION.
1Also referred to as “Lomocso” or “Lumucso” in the Records.
2 The Court of Appeals was removed as public respondent pursuant to Section 4, Rule 45 of the Rules of
Court and our ruling in Serg’s Products, Inc. v. PCI Leasing and Finance, Inc., G.R. No. 137705, August 22, 2000, 338
SCRA 499, 504.
2
2 SUPREME COURT REPORTS ANNOTATED
Heirs of Valeriano S. Concha, Sr. vs. Lumocso
general class to which the proceedings in question belong.—Jurisdiction over the
subject matter is the power to hear and determine cases of the general class to which
the proceedings in question belong. It is conferred by law and an objection based on
this ground cannot be waived by the parties. To determine whether a court has
jurisdiction over the subject matter of a case, it is important to determine the nature of
the cause of action and of the relief sought.
Same; Same; Reconveyance; Land Registration; An action for reconveyance respects the
decree of registration as incontrovertible but seeks the transfer of property, which has been
wrongfully or erroneously registered in other persons’ names, to its rightful and legal owners,
or to those who claim to have a better right; There is no special ground for an action for
reconveyance.—The trial court correctly held that the instant cases involve actions for
reconveyance. An action for reconveyance respects the decree of registration as
incontrovertible but seeks the transfer of property, which has been wrongfully or
erroneously registered in other persons’ names, to its rightful and legal owners, or to
those who claim to have a better right. There is no special ground for an action for
reconveyance. It is enough that the aggrieved party has a legal claim on the property
superior to that of the registered owner and that the property has not yet passed to the
hands of an innocent purchaser for value.
Same; Same; Same; Quieting of Title; In actions for reconvey-ance or actions to remove
cloud on one’s title, the applicable law to determine which court has jurisdiction is Section 19(2)
of B.P. 129, as amended by R.A. No. 7691.—These cases may also be considered as actions
to remove cloud on one’s title as they are intended to procure the cancellation of an
instrument constituting a claim on petitioners’ alleged title which was used to injure or
vex them in the enjoyment of their alleged title. Being in the nature of actions for
reconveyance or actions to remove cloud on one’s title, the applicable law to determine
which court has jurisdiction is Section 19(2) of B.P. 129, as amended by R.A. No.
7691, viz.: Section 19. Jurisdiction in Civil Cases.—Regional Trial Courts shall exercise
exclusive original jurisdiction: x x x (2) In all civil actions which involve the title to, or
possession of, real property, or any interest therein, where the assessed value of the
property involved exceeds Twenty thousand pesos (P20,000.00) or for civil actions in
Metro Manila, where such value exceeds Fifty thousand pesos (P50,000.00) except
actions for forcible
3
VOL. 540, DECEMBER 12, 2007 3
Heirs of Valeriano S. Concha, Sr. vs. Lumocso
entry into and unlawful detainer of lands or buildings, original jurisdiction over
which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts.
Same; Same; Same; Same; Actions for reconveyance of or for cancellation of title to or to
quiet title over real property are actions that fall under the classification of cases that involve
“title to, or possession of, real property, or any interest therein.”—Petitioners’ contention
that this case is one that is incapable of pecuniary estimation under the exclusive
original jurisdiction of the RTC pursuant to Section 19(1) of B.P. 129 is erroneous. In a
number of cases, we have held that actions for reconveyance of or for cancellation of
title to or to quiet title over real property are actions that fall under the classification of
cases that involve “title to, or possession of, real property, or any interest therein.”
Same; Same; Same; Same; Under the present law, original jurisdiction over cases the
subject matter of which involves “title to, possession of, real property or any interest therein”
under Section 19(2) of B.P. 129 is divided between the first and second level courts, with the
assessed value of the real property involved as the bench-mark.—The original text of Section
19(2) of B.P. 129 as well as its forerunner, Section 44(b) of R.A. 296, as amended, gave
the RTCs (formerly courts of first instance) exclusive original jurisdiction “[i]n all civil
actions which involve the title to, or possession of, real property, or any interest therein, except
actions for forcible entry into and unlawful detainer of lands or buildings, original
jurisdiction over which is conferred upon Metropolitan Trial Courts, [MTCs], and
Municipal Circuit Trial Courts (conferred upon the city and municipal courts under
R.A. 296, as amended).” Thus, under the old law, there was no substantial effect on
jurisdiction whether a case is one, the subject matter of which was incapable of
pecuniary estimation, under Section 19(1) of B.P. 129 or one involving title to property
under Section 19(2). The distinction between the two classes became crucial with the
amendment introduced by R.A. No. 7691 in 1994 which expanded the exclusive
original jurisdiction of the first level courts to include “all civil actions which involve
title to, or possession of, real property, or any interest therein where the assessed value of
the property or interest therein does not exceed Twenty thousand pesos (P20,000.00) or, in civil
actions in Metro Manila, where such assessed value does not exceed Fifty thousand pesos
(P50,000.00)
4
4 SUPREME COURT REPORTS ANNOTATED
Heirs of Valeriano S. Concha, Sr. vs. Lumocso
exclusive of interest, damages of whatever kind, attorney’s fees, litigation expenses and
costs.” Thus, under the present law, original jurisdiction over cases the subject matter
of which involves “title to, possession of, real property or any interest therein” under
Section 19(2) of B.P. 129 is divided between the first and second level courts, with the
assessed value of the real property involved as the benchmark. This amendment was
introduced to “unclog the overloaded dockets of the RTCs which would result in the
speedier administration of justice.”
Same; Same; Same; Same; While it is true that the recovery of the value of the trees cut
from the subject properties may be included in the term “any interest therein,” the law is
emphatic, however, that in determining which court has jurisdiction, it is only the assessed
value of the realty involved that should be computed.—Petitioners’ contention that the value
of the trees cut in the subject properties constitutes “any interest therein (in the subject
properties)” that should be computed in addition to the respective assessed values of
the subject properties is unavailing. Section 19(2) of B.P. 129, as amended by R.A. No.
7691, is clear that the RTC shall exercise jurisdiction “in all civil actions which involve
the title to, or possession of, real property, or any interest therein, where the assessed
value of the property involved exceeds Twenty thousand pesos (P20,000.00) or for civil actions
in Metro Manila, where such value exceeds Fifty thousand pesos (P50,000.00).” It is true that
the recovery of the value of the trees cut from the subject properties may be included
in the term “any interest therein.” However, the law is emphatic that in determining
which court has jurisdiction, it is only the assessed value of the realty involved that
should be computed. In this case, there is no dispute that the assessed values of the
subject properties as shown by their tax declarations are less than P20,000.00. Clearly,
jurisdiction over the instant cases belongs not to the RTC but to the MTC.
PETITION for review on certiorari of the decision and resolution of the Court
of Appeals.
The facts are stated in the opinion of the Court.
Alberto P. Concha for petitioners.
Edgar J. Baguio for respondent.
5
VOL. 540, DECEMBER 12, 2007 5 22556 issued to defendants as null and void ab initio;
Heirs of Valeriano S. Concha, Sr. vs. Lumocso
PUNO, C.J.:
On appeal by certiorari under Rule 45 of the Rules of Court are the
decision and resolution of the Court of Appeals (CA) in CA-G.R. SP No.
3 4
59499, annulling the resolutions and or-der of the Regional Trial Court (RTC)
5 6
of Dipolog City, Branch 9, in Civil Case Nos. 5188, 5433 and 5434 which denied
the separate motions to dismiss and Joint Motion for Reconsideration filed by
the respondents.
The relevant facts are undisputed.
Petitioners, heirs of spouses Dorotea and Valeriano Concha, Sr., claim to
be the rightful owners of Lot No. 6195 (Civil Case No. 5188), a one-hectare
portion of Lot No. 6196-A (Civil Case No. 5433), and a one-hectare portion of
Lot Nos. 6196-B and 7529-A (Civil Case No. 5434), all situated in Cogon,
Dipolog City, under Section 48(b) of Commonwealth Act No. 141 (C.A. No.
141), otherwise known as the Public Land Act. Respondent siblings Gregorio
Lumocso (Civil Case No. 5188), Cristita Lumocso Vda. de Daan (Civil Case
No. 5433) and Jacinto Lumocso (Civil Case No. 5434), are the patent holders
and registered owners of the subject lots.
The records show that on August 6, 1997, Valeriano Sr. and his children,
7
petitioners Valeriano Jr., Ramon, Eduardo, Alberto, Bernardo, Teresita,
Reynaldo, and Gloria, all surnamed Concha, filed a complaint for
Reconveyance and/or Annulment of Title with Damages against “Spouses
Gregorio Lomocso and Bienvenida Guya.” They sought to annul Free Patent
No. (IX-8)985 and the corresponding Original Certificate of Title (OCT) No. P-
22556 issued in the name of “Gregorio Lumocso” covering Lot No. 6195. The
case was raffled to the RTC of Dipolog City, Branch 9, and docketed as
_______________
3Promulgated on November 29, 2002; Rollo, pp. 7-14.
4Promulgated on April 10, 2003; id., at p. 16.
5Annexes “M,” “N” and “O” of the Petition; id., at pp. 281-295.
6Annex “R” of the Petition; id., at pp. 305-306.
7Died on May 12, 1999.
6
6 SUPREME COURT REPORTS ANNOTATED
Heirs of Valeriano S. Concha, Sr. vs. Lumocso
Civil Case No. 5188. In their Amended Complaint, petitioners prayed that
judgment be rendered:
1. “1.Declaring Free Patent No. (IX-8)985 and Original Certificate of Title No.
2. 2.Declaring Lot No. 6195 or 1.19122-hectare as private property of the
plaintiffs under Sec. 48(b) of CA No. 141 otherwise known as the Public Land
Act as amended by RA 1942;
3. 3.Ordering the defendant Lomocsos to reconvey the properties (sic) in
question Lot No. 6195 or the 1.19122 hectares in favor of the plaintiffs within
30 days from the finality of the decision in this case and if they refuse,
ordering the Clerk of Court of this Honorable Court to execute the deed of
reconveyance with like force and effect as if executed by the defendant[s]
themselves;
4. 4.Ordering defendant Lomocsos to pay P60,000.00 for the 21 forest trees
illegally cut; P50,000.00 for moral damages; P20,000.00 for Attorney’s fees;
P20,000.00 for litigation expenses; and to pay the cost of the proceedings;
5. 5.Declaring the confiscated three (sic) flitches kept in the area of the plaintiffs
at Dampalan San Jose, Dipolog with a total volume of 2000 board feet a[s]
property of the plaintiff [they] being cut, collected and taken from the land
possessed, preserved, and owned by the plaintiffs;
6. 6.The plaintiffs further pray for such other reliefs and remedies which this
Honorable Court may deem just and equitable in the premises.” 8
On September 3, 1999, two separate complaints for Reconveyance with
Damages were filed by petitioners, this time against “Cristita Lomocso Vda.
9
de Daan” for a one-hectare portion of Lot No. 6196-A and “Spouses Jacinto
Lomocso and Balbina T. Lomocso” for a one-hectare portion of Lot Nos. 6196-
B and 7529-A. The two complaints were also raffled to Branch 9 of the RTC of
Dipolog City and docketed as Civil
_______________
8Rollo, pp. 98-99.
9Id., at pp. 119-125, 143-149.
7
VOL. 540, DECEMBER 12, 2007 7
Heirs of Valeriano S. Concha, Sr. vs. Lumocso
Case Nos. 5433 and 5434, respectively. In Civil Case No. 5433, petitioners
prayed that judgment be rendered:
1. “1.Declaring [a] portion of Lot 6196-A titled under OCT (P23527) 4888
equivalent to one hectare located at the western portion of Lot 4888 as
private property of the plaintiffs under Sec. 48(B) CA 141 otherwise known
as Public Land OCT (sic) as amended by RA No. 1942;
2. 2.Ordering the defendant to reconvey the equivalent of one (1) hectare
forested portion of her property in question in favor of the plaintiffs within
30 days from the finality of the decision in this case segregating one hectare
from OCT (P23527) 4888, located at its Western portion and if she refuse (sic),
ordering the Clerk of Court of this Honorable Court to execute the deed of
reconveyance with like force and effect, as if executed by the defenda[n]t
herself;
3. 3.Ordering defendant to pay P30,000.00 for the 22 forest trees illegally cut;
P20,000.00 for moral damages; P20,000.00 for Attorney’s fees; P20,000.00 for
litigation expenses; and to pay the cost of the proceedings.”
10
In Civil Case No. 5434, petitioners prayed that judgment be rendered:
1. “1.Declaring [a] portion of Lot 7529-A under OCT (P-23207) 12870 and Lot
6196-B OCT (P-20845) 4889 equivalent to one hectare located as (sic) the
western portion of said lots as private property of the plaintiffs under Sec.
48(b) of [C.A. No.] 141 otherwise know[n] as the [P]ublic [L]and [A]ct as
amended by RA 1942;
2. 2.Ordering the defendants to reconvey the equivalent of one (1) hectare
forested portion of their properties in question in favor of the plaintiffs
within 30 days from the finality of the decision in this case segregating one
hectare from OCT (P-23207) 12870 and OCT (T-20845)-4889 all of defendants,
located at its Western portion and if they refuse, ordering the Clerk of Court
of this Honorable Court to execute the deed of reconveyance with like force
and effect as if executed by the defendants themselves[;]
_______________
Id., at p. 124.
10
8
8 SUPREME COURT REPORTS ANNOTATED
Heirs of Valeriano S. Concha, Sr. vs. Lumocso
1. 3.Ordering defendants to pay P20,000.00 for the six (6) forest trees illegally
cut; P20,000.00 for moral damages; P20,000.00 for Attorney’s fees; P20,000.00
for litigation expenses; and to pay the cost of the proceedings.” 11
The three complaints commonly alleged: a) that on May 21, 1958, petitioners’
12
parents (spouses Valeriano Sr. and Dorotea Concha) acquired by homestead a
24-hectare parcel of land situated in Cogon, Dipolog City; b) that since 1931,
spouses Concha “painstakingly preserved” the forest in the 24-hectare land,
including the excess four (4) hectares “untitled forest land” located at its
eastern portion; c) that they possessed this excess 4 hectares of land (which
consisted of Lot No. 6195, one-hectare portion of Lot No. 6196-A and one-
hectare portion of Lot Nos. 6196-B and 7529-A) “continuously, publicly,
notoriously, adversely, peacefully, in good faith and in concept of the (sic)
owner since 1931;” d) that they continued possession and occupation of the 4-
hectare land after the death of Dorotea Concha on December 23, 1992 and
Valeriano Sr. on May 12, 1999; e) that the Concha spouses “have preserved the
forest trees standing in [the subject lots] to the exclusion of the defendants
(respondents) or other persons from 1931” up to November 12, 1996 (for Civil
Case No. 5188) or January 1997 (for Civil Case Nos. 5433 and 5434) when
respondents, “by force, intimidation, [and] stealth forcibly entered the
premises, illegally cut, collected, [and] disposed” of 21 trees (for Civil Case No.
5188), 22 trees (for Civil Case No. 5433) or 6 trees (for Civil Case No. 5434); f)
that “the land is private land or that even assuming it was part of the public
domain, plaintiffs had already acquired imperfect title thereto” under Sec.
48(b) of C.A. No. 141, as amended by Republic Act (R.A.) No. 1942; g) that
respondents allegedly cut into flitches the trees felled in Lot No. 6195 (Civil
Case No. 5188) while the logs taken from the subject lots in Civil Case
_______________
11Id., at pp. 148-149.
12Id., at pp. 93-106 (Civil Case No. 5188), 119-132 (Civil Case No. 5433), 143-158 (Civil Case
No. 5434).
9
VOL. 540, DECEMBER 12, 2007 9
Heirs of Valeriano S. Concha, Sr. vs. Lumocso
Nos. 5433 and 5434 were sold to a timber dealer in Katipunan, Zamboanga del
Norte; h) that respondents “sur-reptitiously” filed free patent applications
over the lots despite their full knowledge that petitioners owned the lots; i)
that the geodetic engineers who conducted the original survey over the lots
never informed them of the survey to give them an opportunity to oppose
respondents’ applications; j) that respondents’ free patents and the
corresponding OCTs were issued “on account of fraud, deceit, bad faith and
misrepresentation”; and k) that the lots in question have not been transferred
to an innocent purchaser.
On separate occasions, respondents moved for the dismissal of the
respective cases against them on the same grounds of: (a) lack of jurisdiction
of the RTC over the subject matters of the complaints; (b) failure to state causes
of action for reconveyance; (c) prescription; and (d) waiver, abandonment,
laches and estoppel. On the issue of jurisdiction, respondents contended that
13
the RTC has no jurisdiction over the complaints pursuant to Section 19(2)
of Batas Pambansa Blg. (B.P.) 129, as amended by R.A. No. 7691, as in each case,
the assessed values of the subject lots are less than P20,000.00.
Petitioners opposed, contending that the instant cases involve actions the
14
subject matters of which are incapable of pecuniary estimation which, under
Section 19(1) of B.P. 129, as amended by R.A. 7691, fall within the exclusive
original jurisdiction of the RTCs. They also contended that they have
_______________
Motion for Preliminary Hearing of Affirmative Defenses for the Dismissal of the Complaint
13
and the Instant Case (Civil Case No. 5188), id., at pp. 169-189; Motion to Dismiss (Civil Case No.
5434), id., at pp. 191-210; Motion to Dismiss (Civil Case No. 5433), id., at pp. 212-231.
Opposition to Motion for the Dismissal of the Complaint (Civil Case No. 5188), id., at pp.
14
233-248; Opposition to Motion [to] Dismiss (Civil Case No. 5433), id., at pp. 249-264; Opposition
to Motion [to] Dismiss (Civil Case No. 5434), id., at pp. 265-280.
10
10 SUPREME COURT REPORTS ANNOTATED
Heirs of Valeriano S. Concha, Sr. vs. Lumocso
two main causes of action: for reconveyance and for recovery of the value of
the trees felled by respondents. Hence, the totality of the claims must be
considered which, if computed, allegedly falls within the exclusive original
jurisdiction of the RTC.
The trial court denied the respective motions to dismiss of
respondents. The respondents filed a Joint Motion for Re-consideration, to no
15 16
avail. 17
Dissatisfied, respondents jointly filed a Petition for Certiorari, Prohibition
and Preliminary Injunction with Prayer for Issuance of Restraining Order Ex
Parte with the CA, dock-eted as CA-G.R. SP No. 59499. In its Decision, the CA
18 19
reversed the resolutions and order of the trial court. It held that even assuming
that the complaints state a cause of action, the same have been barred by the
statute of limitations. The CA ruled that an action for reconveyance based on
fraud prescribes in ten (10) years, hence, the instant complaints must be
dismissed as they involve titles issued for at least twenty-two (22) years prior
to the filing of the complaints. The CA found it unnecessary to resolve the
other issues.
Hence, this appeal in which petitioners raise the following issues, viz.:
FIRST—WHETHER OR NOT RESPONDENT COURT OF APPEALS (FORMER FIRST
DIVISION) ERRED IN REVERSING THE ORDER OF THE COURT A QUO DENYING
THE MOTION FOR DISMISSAL, CONSIDERING THE DISMISSAL OF A PARTY
COMPLAINT IS PREMATURE AND TRIAL ON THE MERITS SHOULD BE
CONDUCTED TO THRESH OUT EVIDENTIARY MATTERS.
_______________
In its separate Resolutions all dated December 9, 1999; id., at pp. 281-285, 286-290, 291-295.
15
Id., at pp. 296-301.
16
Order dated May 10, 2000; id., at pp. 305-306.
17
Id., at pp. 307-334.
18
Dated November 29, 2002; id., at pp. 7-14.
19
11
VOL. 540, DECEMBER 12, 2007 11
Heirs of Valeriano S. Concha, Sr. vs. Lumocso
SECOND—WHETHER OR NOT THE RESPONDENT COURT OF APPEALS
(FORMER FIRST DIVISION) ERRED IN DISMISSING THE PETITIONERS’
COMPLAINTS ON [THE] GROUND OF PRESCRIPTION.
THIRD—WHETHER OR NOT THE RESPONDENT COURT OF APPEALS
(FORMER FIRST DIVISION) ERRED IN CONCLUDING THAT THERE IS NO
DOCUMENTARY EVIDENCE ON RECORD TO SHOW THAT PETITIONERS OWN
THE SUBJECT FOREST PORTION OF THE PROPERTIES ERRONEOUSLY
INCLUDED IN THE TITLES OF PRIVATE RESPONDENTS.
FOURTH—WHETHER OR NOT THE PETITION OF HEREIN PRIVATE
RESPONDENTS FILED WITH THE RESPONDENT COURT OF APPEALS (FORMER
FIRST DIVISION) SHOULD HAVE BEEN DISMISSED OUTRIGHTLY FOR PRIVATE
RE-SPONDENTS’ THEREIN FAILURE TO COMPLY WITH THE MANDATORY
REQUIREMENT OF SECTION 1 RULE 65 OF THE RULES OF COURT TO SUBMIT
CERTIFIED TRUE COPIES OF THE ASSAILED ORDERS OF THE TRIAL COURT
WHICH RENDERED THEIR PETITION (CA-G.R. 59499) DEFICIENT IN FORM AND
SUBSTANCE CITING THE CASE OF CATUIRA VS. COURT OF APPEALS(172 SCRA
136). 20
In their memorandum, respondents reiterated their arguments in the courts
21
below that: a) the complaints of the petitioners in the trial court do not state
causes of action for reconveyance; b) assuming the complaints state causes of
action for reconveyance, the same have already been barred by prescription;
c) the RTC does not have jurisdiction over the subject matter of the instant
cases; d) the claims for recon-veyance in the complaints are barred by waiver,
abandonment, or otherwise extinguished by laches and estoppel; and e) there G.R. No. 125008, June 19, 1997, 274 SCRA 439.
27

13
is no special reason warranting a review by this Court.
Since the issue of jurisdiction is determinative of the resolution of the VOL. 540, DECEMBER 12, 2007 13
instant case yet the CA skirted the question, we Heirs of Valeriano S. Concha, Sr. vs. Lumocso
prayed by petitioners exceeds twenty thousand pesos (P20,000.00). Hence,
_______________ they contend that the RTC has jurisdiction under Section 19(2) of B.P. 129.
Jurisdiction over the subject matter is the power to hear and determine
Id., at pp. 36-37.
20

Id., at pp. 568-641.

21
cases of the general class to which the proceedings in question belong. It is 28

12 conferred by law and an objection based on this ground cannot be waived by

12 SUPREME COURT REPORTS ANNOTATED the parties. To determine whether a court has jurisdiction over the subject
29

matter of a case, it is important to determine the nature of the cause of action

Heirs of Valeriano S. Concha, Sr. vs. Lumocso
and of the relief sought. 30

resolved to require the parties to submit their respective Supplemental

The trial court correctly held that the instant cases involve actions for
Memoranda on the issue of jurisdiction. 22

reconveyance. An action for reconveyance respects the decree of registration

31

In their Supplemental Memorandum, petitioners contend that the nature

as incontrovertible but seeks the transfer of property, which has been
23

of their complaints, as denominated therein and as borne by their allegations,

wrongfully or erroneously registered in other persons’ names, to its rightful
are suits for reconveyance, or annulment or cancellation of OCTs and
and legal owners, or to those who claim to have a better right. There is no 32

damages. The cases allegedly involve more than just the issue of title and
special ground for an action for reconveyance. It is enough that the aggrieved
possession since the nullity of the OCTs issued to respondents and the
party has a legal claim on the property superior to that of the registered
reconveyance of the subject properties were also raised as issues. Thus, the
owner and that
33

RTC has jurisdiction under Section 19(1) of B.P. 129, which provides that the
RTC has jurisdiction “[i]n all civil actions in which the subject of the litigation _______________
is incapable of pecuniary estimation.” Petitioners cited: a) Ray-mundo v.
CA which set the criteria for determining whether an action is one not capable
24
Allied Domecq Phil., Inc. v. Villon, G.R. No. 156264, September 30, 2004, 439 SCRA 667, 672,
28

of pecuniary estimation; b) Swan v. CA where it was held that an action for

25 citing Reyes v. Diaz, 73 Phil. 484, 486 (1941).
Republic v. Sangalang, L-58822, April 8, 1988, 159 SCRA 515.
annulment of title is under the jurisdiction of the RTC; c) Santos v. CA where
29
26

Philippine Association of Free Labor Unions, et al. v. Padilla, et al., 106 Phil. 591 (1959),
30

it was similarly held that an action for annulment of title, reversion and citing Perkins v. Roxas, 72 Phil. 514 (1941).
damages was within the jurisdiction of the RTC; and d) Commodities Storage Rollo, pp. 283, 288, 293.
31

and ICE Plant Corporation v. CA where it was held that “[w]here the action
27 Hi-Tone Marketing Corp. v. Baikal Realty Corp., G.R. No. 149992, August 20, 2004, 437 SCRA
32

121, 143, citing Walstrom v. Mapa, Jr., G.R. No. 38387, January 29, 1990, 181 SCRA 431, 442.
affects title to the property, it should be filed in the RTC where the property is
Ponce, D.R. Florencio, THE PHILIPPINE TORRENS SYSTEM(1965), p. 213.
33

located.” Petitioners also contend that while it may be argued that the assessed 14
values of the subject properties are within the original jurisdiction of the 14 SUPREME COURT REPORTS ANNOTATED
municipal trial court (MTC), they have included in their prayers “any interest
included therein” consisting of 49 felled natural grown trees illegally cut by
Heirs of Valeriano S. Concha, Sr. vs. Lumocso
respondents. Combining the assessed values of the properties as shown by the property has not yet passed to the hands of an innocent purchaser for
their respective tax declarations and the estimated value of the trees cut, the value. 34

total amount The reliefs sought by the petitioners in the instant cases typify an action for
reconveyance. The following are also the common allegations in the three
_______________ complaints that are sufficient to constitute causes of action for
reconveyance, viz.:
22 Id., at pp. 703-710.
23 Id., at pp. 722-733. 1. (a)That plaintiff Valeriano S. Concha, Sr. together with his spouse Dorotea
24 G.R. No. 97805, September 2, 1992, 213 SCRA 457.
Concha have painstakingly preserve[d] the forest standing in the area [of
25 G.R. No. 97319, August 4, 1992, 212 SCRA 114.
26 G.R. No. 61218, September 23, 1992, 214 SCRA 162. their 24-hectare homestead] including the four hectares untitled forest land
 located at the eastern portion of the forest from 1931 when they were newly
married, the date they acquired this property by occupation or possession;
2. (b)That spouses Valeriano S. Concha Sr. and Dorotea P. Concha have
preserved the forest trees standing in [these parcels] of land to the exclusion
of the defendants Lomocsos or other persons from 1931 up to November 12,
1996 [for Civil Case No. 5188] and January 1997 [for Civil Case Nos. 5433
and 5434] when defendants[,] by force, intimidation, [and] stealth[,] forcibly
entered the premises, illegal[ly] cut, collected, disposed a total of [twenty-
one (21) trees for Civil Case No. 5188, twenty-two (22) trees for Civil Case
No. 5433 and six (6) trees for Civil Case No. 5434] of various sizes; 36
3. (c)That this claim is an assertion that the land is private land or that even
assuming it was part of the public domain, plaintiff had already acquired
(2) In all civil actions which involve the title to, or possession of, real property, or
35 any interest therein, where the assessed value of the property involved exceeds Twenty
thousand pesos (P20,000.00) or for civil actions in Metro Manila, where such value
exceeds Fifty thousand pesos (P50,000.00) except actions for forcible entry into and
unlawful detainer of lands or buildings, original jurisdiction over which is conferred
upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit
Trial Courts;
x x x.”
_______________
Id., at pp. 96, 122, 146.
39

imperfect title thereto under Sec. 48(b) of [C.A.] No. 141[,] otherwise known Ibid.
40

as the Public Land Act[,] as amended by [R.A.] No. [7691]; 37

Id., at pp. 97, 123, 147.
41

See TOLENTINO,ARTURO M., COMMENTARIES AND JURISPRUDENCE ON THE CIVIL

4. (d)That [respondents and their predecessors-in-interest knew when they]
42

CODE OF THE PHILIPPINES Vol. II (1992), pp. 148-149.

surreptitiously filed [their respective patent ap-
38

16
16 SUPREME COURT REPORTS ANNOTATED
_______________
Heirs of Valeriano S. Concha, Sr. vs. Lumocso
34Philippine Economic Zone Authority v. Fernandez, G.R. No. 138971, June 6, 2001, 358 SCRA 489, In the cases at bar, it is undisputed that the subject lots are situated in Cogon,
499, citing Lucena v. Court of Appeals, G.R. No. 77468, August 25, 1999, 313 SCRA 47. Dipolog City and their assessed values are less than P20,000.00, to wit:
35Rollo, pp. 94, 120, 144.
36 Id., at pp. 95, 121, 145. Civil Case No. Lot No. Assessed Value
37 Ibid. 5188 6195 P1,030.00
Id., at pp. 95-96, 121-122, 145-146.
5433 6196-A 4,500.00
38

15
VOL. 540, DECEMBER 12, 2007 15 5434 6196-B 4,340.00
Heirs of Valeriano S. Concha, Sr. vs. Lumocso 7529-A 1,880.00. 43

1. plications and were issued their respective] free patents and original
certificates of title [that the subject lots belonged to the petitioners];
2. (e)[That respondents’ free patents and the corresponding original certificates
of titles were issued] on account of fraud, deceit, bad faith and
Hence, the MTC clearly has jurisdiction over the instant cases.
Petitioners’ contention that this case is one that is incapable of pecuniary
39
estimation under the exclusive original jurisdiction of the RTC pursuant to
Section 19(1) of B.P. 129 is erroneous.
In a number of cases, we have held that actions for reconveyance of or for 44

misrepresentation; and
40 cancellation of title to or to quiet title over real property are actions that fall
45 46

3. (f)The land in question has not been transferred to an innocent purchaser. 41

under the classification of cases that involve “title to, or possession of, real
property, or any interest therein.”
These cases may also be considered as actions to remove cloud on one’s title
as they are intended to procure the cancellation of an instrument constituting _______________
a claim on petitioners’ alleged title which was used to injure or vex them in
Rollo, pp. 105, 132, 157, 158.
43

the enjoyment of their alleged title. 42

Abrin v. Campos, G.R. No. 52740, November 12, 1991, 203 SCRA 420, 421; Estate of the late
44

Being in the nature of actions for reconveyance or actions to remove cloud Mercedes Jacob v. Court of Appeals, G.R. No. 120435, December 22, 1997, 283 SCRA 474.
on one’s title, the applicable law to determine which court has jurisdiction is Santos v. Court of Appeals, G.R. No. 61218, September 23, 1992, 214 SCRA 162, 163; Swan v.
45

Section 19(2) of B.P. 129, as amended by R.A. No. 7691, viz.:
“Section 19. Jurisdiction in Civil Cases.—Regional Trial Courts shall exercise exclusive
Court of Appeals, G.R. No. 97319, August 4, 1992, 212 SCRA 114, 121; Heirs of Susana De Guzman
Tuazon v. Court of Appeals, G.R. No. 125758, January 20, 2004, 420 SCRA 219.
Mendoza v. Teh, G.R. No. 122646, March 14, 1997, 269 SCRA 764, 768; Heirs of Susana De
46

original jurisdiction: x x x Guzman Tuazon v. Court of Appeals, supra.

17
 VOL. 540, DECEMBER 12, 2007 17
Heirs of Valeriano S. Concha, Sr. vs. Lumocso
The original text of Section 19(2) of B.P. 129 as well as its forerunner, Section
44(b) of R.A. 296, as amended, gave the RTCs (formerly courts of first
47
instance) exclusive original jurisdiction “[i]n all civil actions which involve
the title to, or possession of, real property, or any interest therein, except
actions for forcible entry into and unlawful detainer of lands or buildings,
original jurisdiction over which is conferred upon Metropolitan Trial Courts,
[MTCs], and Municipal Circuit Trial Courts (conferred upon the city and
municipal courts under R.A. 296, as amended).” Thus, under the old law, there
was no substantial effect on jurisdiction whether a case is one, the subject
matter of which was incapable of pecuniary estimation, under Section 19(1) of
B.P. 129 or one involving title to property under Section 19(2). The distinction
between the two classes became crucial with the amendment introduced by
R.A. No. 7691 in 1994 which expanded the exclusive original jurisdiction of
48
the first level courts to include “all civil actions which involve title to, or
possession of, real property, or any interest therein where the assessed value
of the property or interest therein does not exceed Twenty thousand pesos
(P20,000.00) or,
_______________
Also known as “The Judiciary Act of 1948,” as amended, which provides that:
47
SECTION 44. Original jurisdiction.—Courts of First Instance shall have original jurisdiction: x x x
(b) In all civil actions which involve the title to or possession of real property, or any interest therein, or the
legality of any tax, impost or assessment, except actions of forcible entry into and detainer of lands or buildings,
original jurisdiction of which is conferred by this Act upon city and municipal courts; x x x.
An Act Expanding the Jurisdiction of the Metropolitan Trial Courts, Municipal Trial Courts,
48
and Municipal Circuit Trial Courts, Amending for the Purpose Batas Pambansa Blg. 129,
otherwise known as the “Judiciary Reorganization Act of 1980,” approved on March 25, 1994.
18
18 SUPREME COURT REPORTS ANNOTATED
Heirs of Valeriano S. Concha, Sr. vs. Lumocso
in civil actions in Metro Manila, where such assessed value does not exceed
Fifty thousand pesos (P50,000.00) exclusive of interest, damages of whatever
kind, attorney’s fees, litigation expenses and costs.” Thus, under the present
law, original jurisdiction over cases the subject matter of which involves “title
to, possession of, real property or any interest therein” under Section 19(2) of
B.P. 129 is divided between the first and second level courts, with the assessed
value of the real property involved as the benchmark. This amendment was
introduced to “unclog the overloaded dockets of the RTCs which would result
in the speedier administration of justice.” 49
The cases of Raymundo v. CA and Commodities Storage and ICE Plant
50
Corporation v. CA, relied upon by the petitioners, are inapplicable to the cases
51
at bar. Raymundo involved a complaint for mandatory injunction, not one for
re-conveyance or annulment of title. The bone of contention was whether the
case was incapable of pecuniary estimation considering petitioner’s
contention that the pecuniary claim of the complaint was only attorney’s fees
of P10,000, hence, the MTC had jurisdiction. The Court defined the criterion
for determining whether an action is one that is incapable of pecuniary
estimation and held that the issue of whether petitioner violated the
provisions of the Master Deed and Declaration of Restriction of the
Corporation is one that is incapable of pecuniary estimation. The claim for
attorney’s fees was merely incidental to the principal action, hence, said
amount was not determinative of the court’s jurisdiction. Nor can Commodities
Storage and ICE Plant Corporationprovide any comfort to petitioners for the
issue resolved by the Court in said case was venue and not jurisdiction. The
action therein
_______________
Sponsorship Speech of Senator Biazon, Record of the Senate dated October 6, 1993.
49
Supra Note 24.
50
Supra Note 27.
51
19
VOL. 540, DECEMBER 12, 2007 19
Heirs of Valeriano S. Concha, Sr. vs. Lumocso
was for damages, accounting and fixing of redemption period which was filed
on October 28, 1994, before the passage of R.A. No. 7691. In resolving the issue
of venue, the Court held that “[w]here the action affects title to property, it
should be instituted in the [RTC] where the property is situated. The Sta. Maria
Ice Plant & Cold Storage is located in Sta. Maria, Bulacan. The venue in Civil
Case No. 94-727076 was therefore improperly laid.”
Worse, the cases of Swan v. CA and Santos v. CA cited by the petitioners,
52 53
contradict their own position that the nature of the instant cases falls under
Section 19(1) of B.P. 129. The complaints in Swan and Santos were filed prior to
the enactment of R.A. No. 7691. In Swan, the Court held that the action being
one for annulment of title, the RTC had original jurisdiction under Section
19(2) of B.P. 129. In Santos, the Court similarly held that the complaint for
cancellation of title, reversion and damages is also one that involves title to
and possession of real property under Section 19(2) of B.P. 129. Thus, while
the Court held that the RTC had jurisdiction, the Court classified actions for
“annulment of title” and “cancellation of title, reversion and damages” as civil
actions that involve “title to, or possession of, real property, or any interest
therein” under Section 19(2) of B.P. 129.
Petitioners’ contention that the value of the trees cut in the subject
properties constitutes “any interest therein (in the subject properties)” that
should be computed in addition to the respective assessed values of the subject
properties is unavailing. Section 19(2) of B.P. 129, as amended by R.A. No.
7691, is clear that the RTC shall exercise jurisdiction “in all civil actions which
involve the title to, or possession of, real property, or any interest
therein, where the assessed value of the property involved exceeds Twenty
thousand pesos (P20,000.00) or for civil actions in Metro Manila,

_______________

Supra Note 25.

52

Supra Note 26.

53

20
20 SUPREME COURT REPORTS ANNOTATED
Heirs of Valeriano S. Concha, Sr. vs. Lumocso
where such value exceeds Fifty thousand pesos (P50,000.00).” It is true that
the recovery of the value of the trees cut from the subject properties may be
included in the term “any interest therein.” However, the law is emphatic that
in determining which court has jurisdiction, it is only the assessed value of the
realty involved that should be com-puted. In this case, there is no dispute that
54

the assessed values of the subject properties as shown by their tax declarations
are less than P20,000.00. Clearly, jurisdiction over the instant cases belongs not
to the RTC but to the MTC.
IN VIEW WHEREOF, the decision of the Court of Appeals is hereby
AFFIRMED that the RTC of Dipolog City, Branch 9, has no jurisdiction in Civil
Case Nos. 5188, 5433 and 5434. No costs.
SO ORDERED.
Ynares-Santiago, Sandoval-Gutierrez, Corona and Az-cuna, JJ., concur.
Judgment affirmed.
 G.R. No. 168943. October 27, 2006. *
IGLESIA NI CRISTO, petitioner, vs. HON. THELMA A. PONFERRADA, in
her capacity as Presiding Judge, Regional Trial Court, Br. 104, Quezon City,
and HEIRS OF ENRIQUE G. SANTOS, respondents.
Actions; Pleadings and Practice; Verification; The purpose of verification is simply to
secure an assurance that the allegations of the petition (or complaint) have been made in good
faith, or are true and correct, and not merely speculative; Verification is only a formal, not a
jurisdictional requirement.— The purpose of verification is simply to secure an assurance
that the allegations of the petition (or complaint) have been made in good faith; or are
true and correct, not merely speculative. This requirement is simply a condition
affecting the form of pleadings, and noncompliance therewith does not necessarily
render it fatally defective. Indeed, verification is only a formal, not a jurisdictional
requirement.
Same; Same; Same; The verification requirement is deemed substantially complied with
when only one of the heirs-plaintiffs, who has sufficient knowledge and belief to swear to the
truth of the allegations in the petition (complaint), signed the verification attached to it.—The
issue in the present case is not the lack of verification but the sufficiency of one executed
by only one of plaintiffs. This Court held in Ateneo de Naga University v. Manalo, 458
SCRA 325 (2005), that the verification requirement is deemed substantially complied
with when, as in the present case, only one of the heirs-plaintiffs, who has sufficient
knowledge and belief to swear to the truth of the allegations in the petition (complaint),
signed the verification attached to it. Such verification is deemed sufficient assurance
that the matters alleged in the petition have been made in good faith or are true and
correct, not merely speculative.
Same; Same; Same; Certification Against Forum Shopping; The same liberality
obtaining in the case of verifications should likewise be applied to the certification against forum
shopping.—The same liberality should likewise be applied to the certification against
forum shopping. The general rule is that the certification must be signed by all plaintiffs
in a case and the signature of only one of them is insufficient. However, the Court has
also
_______________
*FIRST DIVISION.
829
VOL. 505, OCTOBER 27, 2006 829
Iglesia ni Cristo vs. Ponferrada
stressed in a number of cases that the rules on forum shopping were designed to
promote and facilitate the orderly administration of justice and thus should not be
interpreted with such absolute literalness as to subvert its own ultimate and legitimate
objective. The rule of substantial compliance may be availed of with respect to the
contents of the certification. This is because the requirement of strict compliance with
the provisions merely underscores its mandatory nature in that the certification cannot
be altogether dispensed with or its requirements completely disregarded.
Same; Same; Same; Same; Co-Ownership; Since heirs are considered co-owners pro
indiviso of the whole property, the signature of one of them in the verification and certification
is sufficient for the trial court to take cognizance of the case.—It is noteworthy that in all of
the above cases, the Court applied the rule on substantial compliance because of the
commonality of interest of all the parties with respect to the subject of the controversy.
Applying the doctrines laid down in the above cases, we find and so hold that the CA
did not err in affirming the application of the rule on substantial compliance. In the
instant case, the property involved is a 936-square-meter real property. Both parties
have their respective TCTs over the property. Respondents herein who are plaintiffs in
the case below have a common interest over the property being the heirs of the late
Enrique Santos, the alleged registered owner of the subject property as shown in one
of the TCTs. As such heirs, they are considered co-owners pro indiviso of the whole
property since no specific portion yet has been adjudicated to any of the heirs.
Consequently, as one of the heirs and principal party, the lone signature of Enrique G.
Santos in the verification and certification is sufficient for the RTC to take cognizance
of the case. The commonality of their interest gave Enrique G. Santos the authority to
inform the RTC on behalf of the other plaintiffs therein that they have not commenced
any action or claim involving the same issues in another court or tribunal, and that
there is no other pending action or claim in another court or tribunal involving the
same issues. Hence, the RTC correctly denied the motion to dismiss filed by petitioner.
Same; Same; Same; Same; Same; Procedural Rules and Technicalities; The ends of
justice are better served when cases are determined on the merits—after all the parties are given
full opportunity to ventilate their causes and defense—rather than on technicality or some
procedural imperfections.— Considering that at stake in the present case is the ownership
and possession over a prime property in Quezon City, the apparent merit of the
substantive aspects of the case should be deemed as a special circumstance or
compelling reason to allow the relaxation of the rule. Time and again, this Court has
held that rules of procedure are established to secure substantial justice.
830
830 SUPREME COURT REPORTS ANNOTATED
Iglesia ni Cristo vs. Ponferrada
Being instruments for the speedy and efficient administration of justice, they may
be used to achieve such end, not to derail it. In particular, when a strict and literal
application of the rules on non-forum shopping and verification will result in a patent
denial of substantial justice, these may be liberally construed. The ends of justice are
better served when cases are determined on the merits—after all parties are given full
opportunity to ventilate their causes and defenses—rather than on technicality or some
procedural imperfections.
Same; Same; Same; Same; Same; Same; As co-owners, each of the heirs may properly
bring an action for ejectment, forcible entry and detainer, or any kind of action for the recovery
of possession.—Anent the issue of the authority of Enrique G. Santos to represent his co-
heirs/co-plaintiffs, we find no necessity to show such authority. Respondents herein
are co-owners of the subject property. As such co-owners, each of the heirs may
properly bring an action for ejectment, forcible entry and detainer, or any kind of action
for the recovery of possession of the subject properties. Thus, a co-owner may bring
such an action, even without joining all the other co-owners as co-plaintiffs, because
the suit is deemed to be instituted for the benefit of all.
Same; Same; Quieting of Title; The nature of an action is determined by the material
allegations of the complaint and the character of the relief sought by the plaintiff, and the law in
effect when the action was filed irrespective of whether he is entitled to all or only some of such
relief; A cloud is said to be a semblance of a title, either legal or equitable, or a cloud of an interest
in land appearing in some legal form but which is, in fact, unfounded, or which it would be
inequitable to enforce.—The nature of an action is determined by the material allegations
of the complaint and the character of the relief sought by plaintiff, and the law in effect
when the action was filed irrespective of whether he is entitled to all or only some of
such relief. As gleaned from the averments of the complaint, the action of respondents
was one for quieting of title under Rule 64 of the Rules of Court, in relation to Article
476 of the New Civil Code. The latter provision reads: Art. 476. Whenever there is a
cloud on title to real property or any interest therein, by reason of any instrument,
record, claim, encumbrance or proceeding which is apparently valid or effective but is,
in truth and in fact, invalid, ineffective, voidable, or unenforceable, and may be
prejudicial to said title, an action may be brought to remove such cloud or to quiet the
title. An action may also be brought to prevent a cloud from being cast upon title to
real property or any interest therein. A cloud is said to be a semblance of a title, either
legal or equitable, or a cloud of an interest in land appearing in some legal form but
which is, in fact, unfounded, or which it would be inequitable to enforce. An action for
831
VOL. 505, OCTOBER 27, 2006 831
Iglesia ni Cristo vs. Ponferrada
quieting of title is imprescriptible until the claimant is ousted of his possession.
Same; Same; Same; The owner of a real property, as plaintiff, is entitled to the relief of
quieting of title even if, at the time of the commencement of his action, he was not in actual
possession of real property.—The owner of a real property, as plaintiff, is entitled to the
relief of quieting of title even if, at the time of the commencement of his action, he was
not in actual possession of real property. After all, under Article 477 of the New Civil
Code, the owner need not be in possession of the propery. If on the face of TCT No.
321744 under the name of plaintiff, its invalidity does not appear but rests partly in pais,
an action for quieting of title is proper.
Same; Same; Same; An accion reinvindicatoria is a remedy seeking the recovery of
ownership and includes jus possidendi, jus utendi, and jus fruendi as well—it is an action
whereby a party claims ownership over a parcel of land and seeks recovery of its full
possession.—Admittedly, respondents interposed the alternative reinvindicatory action
against petitioner. An accion reinvindicatoria does not necessarily presuppose that the
actual and material possession of the property is on defendant and that plaintiff seeks
the recovery of such possession from defendant. It bears stressing that an accion
reinvindicatoria is a remedy seeking the recovery of ownership and includes jus
possidendi, jus utendi, and jus fruendi as well. It is an action whereby a party claims
ownership over a parcel of land and seeks recovery of its full possession. Thus, the
owner of real property in actual and material possession thereof may file an accion
reinvindicatoriaagainst another seeking ownership over a parcel of land including jus
vindicandi, or the right to exclude defendants from the possession thereof. In this case,
respondents filed an alternative reinvindicatory action claiming ownership over the
property and the cancellation of TCT No. 321744 under the name of petitioner. In fine,
they sought to enforce their jus utendi and jus vindicandiwhen petitioner claimed
ownership and prevented them from fencing the property.
Same; Same; Same; Prescription; The prescriptive period for the reinvidicatory action has
not yet commenced to run where the plaintiff was in actual or physical possession of the property
when he filed his complaint.— Since respondents were in actual or physical possession of
the property when they filed their complaint against petitioner on October 24, 2001, the
prescriptive period for the reinvindicatory action had not even commenced to run,
even if petitioner was able to secure TCT No. 321744 over the property in 1984. The
reason for this is that x x x one who is in actual possession of a piece of land claiming
to be the owner thereof may wait until his possession is
832
832 SUPREME COURT REPORTS ANNOTATED
Iglesia ni Cristo vs. Ponferrada
disturbed or his title is attacked before taking steps to vindicate his right, the
reason for the rule being, that his undisturbed possession gives him a continuing right
to seek the aid of a court of equity to ascertain and determine the nature of the adverse
claim of a third party and its effect on his own title, which right can be claimed only by
one who is in possession.
PETITION for review on certiorari of the decision and resolution of the Court
of Appeals.
The facts are stated in the opinion of the Court.
Lazaro, Tuazon, Santos & Associates Law Offices for petitioner.
Lenito T. Serrano for respondents.
CALLEJO, SR., J.:
This is a Petition for Review on Certiorari of the Decision of the Court of
1
Appeals (CA) in CA-G.R. SP No. 72686 and its Resolution denying the motion
2
for reconsideration of the said decision.
On October 24, 2001, Alicia, Alfredo, Roberto, Enrique and Susan, all
surnamed Santos, and Sonia Santos-Wallin, represented by Enrique G. Santos,
filed a complaint for Quieting of Title and/or Accion Reinvindicatoria before
3
the Regional Trial Court (RTC) of Quezon City against the Iglesia Ni
Cristo (INC), defendant therein.
Plaintiffs alleged therein that, during his lifetime, Enrique Santos was the
owner of a 936-square-meter parcel of land located in Tandang Sora, Quezon
City covered by Transfer Certificate of Title (TCT) No. 57272 issued by the
Register of Deeds on July 27, 1961 which cancelled TCT No. 57193-289. He had
been in possession of the owner’s duplicate of said title and had been in
continuous, open, adverse and peaceful possession of the property. He died
on February 9, 1970 and was survived by his wife, Alicia Santos, and other
plaintiffs, who were their children. Thereafter, plaintiffs took peaceful and ad-
_______________
1Penned by Associate Justice Mario L. Guariña III, with Associate Justices Marina L. Buzon
and Santiago Javier Ranada, concurring; Rollo, pp. 21-28.
2Rollo, p. 39.
3Id., at pp. 60-65.
833
VOL. 505, OCTOBER 27, 2006 833
 Iglesia ni Cristo vs. Ponferrada
verse possession of the property, and of the owner’s duplicate of said title.
When the Office of the Register of Deeds of Quezon City was burned on June
11, 1988, the original copy of said title was burned as well. The Register of
Deeds had the title reconstituted as TCT No. RT-110323, based on the owner’s
duplicate of TCT No. 57272. Sometime in February 1996, plaintiffs learned that
defendant was claiming ownership over the property based on TCT No.
321744 issued on September 18, 1984 which, on its face, cancelled TCT No.
320898, under the name of the Philippine National Bank, which allegedly
cancelled TCT No. 252070 in the names of the spouses Marcos and Romana
dela Cruz. They insisted that TCT Nos. 321744, 320898 and 252070 were not
among the titles issued by the Register of Deeds of Quezon City and even if
the Register of Deeds issued said titles, it was contrary to law. Enrique Santos,
during his lifetime, and his heirs, after his death, never encumbered or
disposed the property. In 1996, plaintiffs had the property fenced but
defendant deprived them of the final use and enjoyment of their property.
Plaintiffs prayed that, after due proceedings, judgment be rendered in their
favor, thus:
“WHEREFORE, it is respectfully prayed that, after due hearing, judgment be rendered
quieting the title of plaintiffs over and/or recover possession of their said property in
the name of deceased Enrique Santos, covered by said TCT No. RT-110323(57272) of
the Register of Deeds at Quezon City and that:
1. 1.The title of defendant, TCT No. 321744 be ordered cancelled by the Register
of Deeds of Quezon City;
2. 2.The defendant be ordered to pay plaintiffs’ claims for actual damages in the
sum of P100,000.00;
3. 3.The defendant be ordered to pay plaintiffs’ claims for compensatory
damages in the sum of at least P1,000,000.00;
4. 4.The defendant be ordered to pay plaintiffs’ claims for reimbursement of the
lawyer’s professional fees consisting of the aforesaid P50,000.00 acceptance
fee and reimbursement of the said success fee in par. 10 above; and lawyer’s
expenses of P2,000.00 for each hearing in this case;
5. 5.The defendant be ordered to pay expenses and costs of litigation in the sum
of at least P200,000.00.
834
834 SUPREME COURT REPORTS ANNOTATED
Iglesia ni Cristo vs. Ponferrada
Other reliefs that are just and equitable in the premises are, likewise, prayed for.”
As gleaned from the caption of the complaint, plaintiffs appear to be the heirs
of Enrique Santos, represented by Enrique G. Santos. The latter signed the
Verification and Certificate of Non-Forum Shopping which reads:
“I, ENRIQUE G. SANTOS, of legal age, under oath, state that I am one of the children
of the late Enrique Santos and I represent the heirs of said Enrique Santos who are my
co-plaintiffs in the above-captioned case and that I directed the preparation of the
instant complaint, the contents of which are true and correct to the best of my
knowledge and the attachments are faithful reproductions of the official copies in my
possession.
I hereby certify that I have not commenced any other action or proceeding
involving the same issues in the Supreme Court, the Court of Appeals, or different
Divisions thereof, or any other tribunal or agency, and to the best of my knowledge, no
such action or proceeding is pending in the Supreme Court, the Court of Appeals, or
different Divisions thereof, or any other tribunal or agency, and that I shall notify this
Commission within three days from notice that a similar action or proceeding has been
filed or is pending thereat.
IN WITNESS WHEREOF, I hereby affix my signature this 23rd day of October 2001
at Pasig City, Metro Manila.
(Sgd.)
ENRIQUE G. SANTOS
SUBSCRIBED AND SWORN to before me this 23rd day of October 2001 at Pasig
City, affiant exhibiting to me his CTC No. 07303074 issued at Sta. Cruz, Laguna on
April 16, 2001.
(Sgd.)
PETER FRANCIS G. ZAGALA
Notary Public
Until December 31, 2002
PTR No. 0287069
Issued on 1-10-01
At Pasig City5
_______________
4CA Rollo pp. 24-25.
5Id., at p. 26.
835
VOL. 505, OCTOBER 27, 2006 835
Iglesia ni Cristo vs. Ponferrada
Defendant moved to dismiss plaintiffs’ complaint on the following grounds:
(1) plaintiffs failed to faithfully comply with the procedural requirements set
forth in Section 5, Rule 7 of the 1997 Rules of Civil Procedure; (2) the action
(either Quieting of Title or Accion Reinvindicatoria) had prescribed, the same
having been filed only on October 24, 2001 beyond the statutory ten-year
period therefor; and (3) that the complaint is defective in many respects. 6
4 Defendant asserted that the case involved more than one plaintiff but the
verification and certification against forum shopping incorporated in the
complaint was signed only by Enrique Santos. Although the complaint alleges
that plaintiffs are represented by Enrique Santos, there is no showing that he
was, indeed, authorized to so represent the other plaintiffs to file the complaint
and to sign the verification and certification of non-forum shopping. Thus,
7 the address of plaintiffs in the complaint does not warrant the dismissal of the
plaintiffs failed to comply with Section 5, Rule 7 of the Rules of Court. complaint.
Defendant cited the ruling of this Court in Loquias v. Office of the Ombudsman. 8 Defendant filed a motion for reconsideration, which the court likewise
Defendant maintained that the complaint is defective in that, although denied in an Order dated July 10, 2002.
13

there is an allegation that Enrique Santos represents the other heirs, there is Unsatisfied, defendant, as petitioner, filed a Petition for Certiorari and
nothing in the pleading to show the latter’s authority to that effect; the Prohibition with Prayer for the Issuance of a Temporary Re-
complaint fails to aver with particularity the facts showing the capacity of
defendant corporation to sue and be sued; and the pleading does not state the _______________
address of plaintiffs. Defendant likewise averred that the complaint should be
CA Rollo, pp. 81-89.
dismissed on the ground of prescription. It argued that plaintiffs anchor their
9

Id., at pp. 83-84.

10

claim on quieting of title and considering that they are not in possession of the Penned by Judge Thelma A. Ponferrada; Rollo, pp. 117-118.
11

land in question, their cause of action prescribed after ten years. On the other 393 Phil. 734, 738; 339 SCRA 306, 310 (2000).
12

hand, if the supposed right of plaintiffs is based on accion reinvindicatoria, Rollo, pp. 139-144.
13

837
prescription would set in after 10 years from dispossession. In both cases,
defendant asserts, the reckoning point is 1984 when defendant acquired TCT VOL. 505, OCTOBER 27, 2006 837
No. 321744 and possession of the land in question. Iglesia ni Cristo vs. Ponferrada
straining Order and/or Preliminary Injunction before the CA, raising the
14

_______________ following issues:

6Id., at p. 72. I.
7Id., at p. 73.
8392 Phil. 596; 338 SCRA 62 (2000).
836 WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER
DISCRETION WHEN SHE HELD THAT THE CERTIFICATION OF NON-FORUM
836 SUPREME COURT REPORTS ANNOTATED
SHOPPING SIGNED BY ENRIQUE G. SANTOS ALONE IS A SUBSTANTIAL
Iglesia ni Cristo vs. Ponferrada COMPLIANCE WITH SECTION 5, RULE 7 OF THE 1997 RULES OF CIVIL
In their Comment on the motion, plaintiffs averred that the relationship of a
9 PROCEDURE, IN CLEAR CONTRAVENTION OF THE RULES OF COURT, AND
co-owner to the other co-owners is fiduciary in character; thus, anyone of them THE RULING IN LOQUIAS V. OFFICE OF THE OMBUDSMAN, G.R. NO.
could effectively act for another for the benefit of the property without need 1399396 (SIC), AUGUST 16, 2000, 338 SCRA 62, AND ORTIZ V. COURT OF
for an authorization. Consequently, Enrique Santos had the authority to APPEALS, G.R. NO. 127393, 299 SCRA 708 (DECEMBER 4, 1998).
represent the other heirs as plaintiffs and to sign the verification and
II.
certification against forum shopping. On the issue of prescription, plaintiffs
10

argued that the prescriptive period for the actions should be reckoned from WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED
1996, when defendant claimed ownership over the property and barred HER DISCRETION IN APPLYING THE RULING IN DAR, ET AL. V. HON. ROSE
plaintiffs from fencing their property, not in 1984 when TCT No. 321744 was MARIE ALONZO-LEGASTO, ET AL., G.R. NO. 143016, AUGUST 30, 2000 TO THE
issued by the Register of Deeds in the name of defendant as owner. INSTANT CASE.
In its reply, defendant averred that absent any authority from his co-heirs,
Enrique Santos must implead them as plaintiffs as they are indispensable III.
parties. In response, plaintiffs aver that a co-owner of a property can execute
an action for quieting of title without impleading the other co-owners. WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED
The trial court issued an Order denying defendant’s motion to dismiss. It
11
HER DISCRETION WHEN SHE HELD THAT THE AUTHORITY OF ENRIQUE G.
SANTOS TO REPRESENT HIS CO-HEIRS IN THE FILING OF THE COMPLAINT
declared that since Enrique Santos was one of the heirs, his signature in the
AGAINST THE “INC” IS A MATTER OF EVIDENCE.
verification and certification constitutes substantial compliance with the
Rules. The court cited the ruling of this Court in Dar v. Alonzo-Legasto. The 12

IV.
court, likewise, held that prescription had not set in and that failure to state
 WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED dismiss. As the Court held in DAR v. Alonzo-Legasto and in Gudoy v.
18

HER DISCRETION WHEN SHE HELD THAT THE ACTION FOR QUIETING OF Guadalquiver, the certification signed by
19

TITLE AND/OR ACCION REINVINDICATORIA (CIVIL CASE NO. Q-01-45415) HAS

NOT YET PRESCRIBED. 15
_______________
Petitioner averred that, of the plaintiffs below, only plaintiff Enrique Santos
signed the verification and certification of non-forum shopping. Under Section Supra note 12.
16

5, Rule 7 of the 1997 Rules of Civil Procedure, all the plaintiffs must sign, Supra note 1.
17

Supra note 12.

unless one of them is authorized by
18

G.R. No. 151136, May 27, 2004, 429 SCRA 722, 726.
19

839
_______________
VOL. 505, OCTOBER 27, 2006 839
Id., at pp. 40-56.
14 Iglesia ni Cristo vs. Ponferrada
Id., at pp. 45-46.
15
one with respect to a property over which he shares a common interest with
838
the rest of the plaintiffs (respondents herein) substantially complied with the
838 SUPREME COURT REPORTS ANNOTATED Rules. As to the issue of prescription, the appellate court held that the
Iglesia ni Cristo vs. Ponferrada prescriptive period should be reckoned from 1996, when petitioner claimed
a special power of attorney to sign for and in behalf of the others. Petitioner ownership and barred respondents from fencing the property.
argues that the bare claim of Enrique Santos that he signed the verification and Petitioner is now before this Court on petition for review on certiorari,
certification in his behalf and of the other plaintiffs who are his co-heirs/co- raising the following issues:
owners of the property does not even constitute substantial compliance of the
rule. Contrary to the ruling of the trial court, the absence or existence of an I.
authority of Enrique Santos to sign the verification and certification for and in
behalf of his co-plaintiffs is not a matter of evidence. The defect is fatal to the WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE
complaint of respondents and cannot be cured by an amendment of the CERTIFICATION OF NON-FORUM SHOPPING SIGNED BY RESPONDENT
ENRIQUE G. SANTOS ALONE IS A SUBSTANTIAL COMPLIANCE WITH SECTION
complaint. The trial court erred in applying the ruling of this Court in Dar v.
5, RULE 7 OF THE 1997 RULES OF CIVIL PROCEDURE AND IN APPLYING THE
Alonzo-Legasto. 16

CASE OF GUDOY V. GUADALQUIVER, 429 SCRA 723, WITHOUT REGARD TO

Petitioner maintained that the action of respondents, whether it be one for MORE RECENT JURISPRUDENCE.
quieting of title or an accion reinvindicatoria, had prescribed when the
complaint was filed on October 24, 2001. Petitioner asserts that this is because II.
when respondents filed their complaint, they were not in actual or physical
possession of the property, as it (petitioner) has been in actual possession of WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT HELD THAT
the property since 1984 when TCT No. 321744 was issued to it by the Register THE AUTHORITY OF RESPONDENT ENRIQUE G. SANTOS TO REPRESENT HIS
of Deeds. This is evident from the nature of a reinvindicatory action itself— CO-HEIRS IN THE FILING OF THE COMPLAINT AGAINST THE PETITIONER IS A
which is an action whereby plaintiff alleges ownership over the subject parcel MATTER OF EVIDENCE.
of land and seeks recovery of its full possession. By their action, respondents
III.
thereby admitted that petitioner was in actual possession of the property, and
as such, respondents’ action for quieting of title or accion reinvindicatoria may
WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT
prescribe in ten (10) years from 1984 or in 1994, it appearing that it acted in THE ACTION FOR QUIETING OF TITLE AND/OR ACCION
good faith when it acquired the property from the registered owner, REINVINDICATORIA (CIVIL CASE NO. Q-01-45415) HAS NOT YET PRESCRIBED. 20

conformably with Article 555(4) of the New Civil Code.
On April 7, 2005, the CA rendered the assailed decision dismissing the
17
petition, holding that the RTC did not commit grave abuse of its discretion
amounting to lack or excess of jurisdiction in denying petitioner’s motion to
Petitioner reiterated its arguments in support of its petition in the CA as its
arguments in support of its petition in the present case.
Sections 4 and 5, Rule 7 of the Revised Rules of Court on verification and
certification against forum shopping read:
_______________
Rollo, p. 7.
20
840
840 SUPREME COURT REPORTS ANNOTATED
Iglesia ni Cristo vs. Ponferrada
“Sec. 4. Verification.—Except when otherwise specifically required by law or rule,
pleadings need not be under oath, verified or accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read the pleading and that
the allegations therein are true and correct of his personal knowledge or based on
authentic records.
A pleading required to be verified which contains a verification based on
“information and belief” or upon “knowledge, information and belief,” or lacks a
proper verification, shall be treated as an unsigned pleading.
Sec. 5. Certification against forum shopping.—The plaintiff or principal party shall
certify under oath in the complaint or other initiatory pleading asserting a claim for
relief, or in a sworn certification annexed thereto and simultaneously filed therewith:
(a) that he has not theretofore commenced any action or filed any claim involving the
same issues in any court, tribunal or quasi-judicial agency and, to the best of his
knowledge, no such other action or claim is pending therein; (b) if there is such other
pending action or claim, a complete statement of the present status thereof; and (c) if
he should thereafter learn that the same or similar action or claim has been filed or is
pending, he shall report that fact within five (5) days therefrom to the court wherein
his aforesaid complaint or initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by mere
amendment of the complaint or other initiatory pleading but shall be cause for the
dismissal of the case without prejudice, unless otherwise provided, upon motion and
after hearing. The submission of a false certification or non-compliance with any of the
undertakings therein shall constitute indirect contempt of court, without prejudice to
the corresponding administrative and criminal actions. If the acts of the party or his
counsel clearly constitute willful and deliberate forum shopping, the same shall be
ground for summary dismissal with prejudice and shall constitute direct contempt, as
well as a cause for administrative sanctions.
The purpose of verification is simply to secure an assurance that the
allegations of the petition (or complaint) have been made in good faith; or are
true and correct, not merely speculative. This requirement is simply a
condition affecting the form of pleadings, and noncompliance therewith does
not necessarily render it fatally defective.
841
VOL. 505, OCTOBER 27, 2006 841
Iglesia ni Cristo vs. Ponferrada
Indeed, verification is only a formal, not a jurisdictional requirement.
21
The issue in the present case is not the lack of verification but the
sufficiency of one executed by only one of plaintiffs. This Court held in Ateneo
de Naga University v. Manalo, that the verification requirement is deemed
22
substantially complied with when, as in the present case, only one of the heirs-
plaintiffs, who has sufficient knowledge and belief to swear to the truth of the
allegations in the petition (complaint), signed the verification attached to it.
Such verification is deemed sufficient assurance that the matters alleged in the
petition have been made in good faith or are true and correct, not merely
speculative.
The same liberality should likewise be applied to the certification against
forum shopping. The general rule is that the certification must be signed by all
plaintiffs in a case and the signature of only one of them is insufficient.
However, the Court has also stressed in a number of cases that the rules on
forum shopping were designed to promote and facilitate the orderly
administration of justice and thus should not Rbe interpreted with such
absolute literalness as to subvert its own ultimate and legitimate objective. The
rule of substantial compliance may be availed of with respect to the contents
of the certification. This is because the requirement of strict compliance with
the provisions merely underscores its mandatory nature in that the
certification cannot be altogether dispensed with or its requirements
completely disregarded. 23
The substantial compliance rule has been applied by this Court in a
number of cases: Cavile v. Heirs of Cavile, where the Court sus-
24
_______________
Estares v. Court of Appeals, G.R. No. 144755, June 8, 2005, 459 SCRA 604, 616.
21
22G.R. No. 160455, May 9, 2005, 458 SCRA 325, 333-334, citing Torres v. Specialized Packaging
Development Corporation, 433 SCRA 455, 463-464 (2000).
23Heirs of Agapito T. Olarte v. Office of the President of the Philippines, G.R. No. 165821, June 21,
2005, 460 SCRA 561; Cavile v. Heirs of Clarita Cavile, 448 Phil. 302, 311; 400 SCRA 255, 262 (2003).
24Supra.
842
842 SUPREME COURT REPORTS ANNOTATED
Iglesia ni Cristo vs. Ponferrada
tained the validity of the certification signed by only one of petitioners because
he is a relative of the other petitioners and co-owner of the properties in
dispute; Heirs of Agapito T. Olarte v. Office of the President of the
Philippines, where the Court allowed a certification signed by only two
25
petitioners because the case involved a family home in which all the
petitioners shared a common interest; Gudoy v. Guadalquiver, where the Court 26
considered as valid the certification signed by only four of the nine petitioners
because all petitioners filed as co-owners pro indiviso a complaint against
respondents for quieting of title and damages, as such, they all have joint
interest in the undivided whole; and Dar v. Alonzo-Legasto, where the Court
27
sustained the certification signed by only one of the spouses as they were sued
jointly involving a property in which they had a common interest.
 It is noteworthy that in all of the above cases, the Court applied the rule on
substantial compliance because of the commonality of interest of all the parties
with respect to the subject of the controversy.
Applying the doctrines laid down in the above cases, we find and so hold
that the CA did not err in affirming the application of the rule on substantial
compliance. In the instant case, the property involved is a 936-square-meter
real property. Both parties have their respective TCTs over the property.
Respondents herein who are plaintiffs in the case below have a common
interest over the property being the heirs of the late Enrique Santos, the alleged
registered owner of the subject property as shown in one of the TCTs. As such
heirs, they are considered co-owners pro indiviso of the whole property since
no specific portion yet has been adjudicated to any of the heirs. Consequently,
as one of the heirs and principal party, the lone signature of Enrique G. Santos
in the verification and certification is sufficient for the RTC to take cognizance
of the case. The commonality of their interest gave Enrique G. Santos the
authority to inform the RTC on behalf of the other plaintiffs therein that they
have not commenced any action or
_______________
Supra.
25
Supra note 19.
26
Supra note 12.
27
843
VOL. 505, OCTOBER 27, 2006 843
Iglesia ni Cristo vs. Ponferrada
claim involving the same issues in another court or tribunal, and that there is
no other pending action or claim in another court or tribunal involving the
same issues. Hence, the RTC correctly denied the motion to dismiss filed by
petitioner.
Considering that at stake in the present case is the ownership and
possession over a prime property in Quezon City, the apparent merit of the
substantive aspects of the case should be deemed as a special circumstance or
compelling reason to allow the relaxation of the rule.
Time and again, this Court has held that rules of procedure are established
to secure substantial justice. Being instruments for the speedy and efficient
administration of justice, they may be used to achieve such end, not to derail
it. In particular, when a strict and literal application of the rules on non-forum
shopping and verification will result in a patent denial of substantial justice,
these may be liberally construed. The ends of justice are better served when
28
cases are determined on the merits—after all parties are given full opportunity
to ventilate their causes and defenses—rather than on technicality or some
procedural imperfections. 29
Indeed, this Court strictly applied the rules on verification and certification
against forum shopping as in the cases of Loquias v. Office of the
Ombudsman and Tolentino v. Rivera. However, in both cases, the commonality
30 31
of interest between or among the parties is wanting. In Loquias, the co-parties
were being sued in their individual capacities as mayor, vice mayor and
members of the municipal board. In Tolentino, the lone signature of Tolentino
was held insufficient because he had no authority to sign in behalf of the
Francisco spouses. In such case, the Court concluded that Tolentino merely
used the spouses’ names for whatever mileage he thought he could gain. It is
thus clear from these cases that the commonality of interest is material in the
relaxation of the Rules.
_______________
Ateneo de Naga University v. Manalo, supra note 22, at p. 336.
28
Id.
29
Supra note 8.
30
G.R. No. 149665, January 25, 2006, 480 SCRA 87.
31
844
844 SUPREME COURT REPORTS ANNOTATED
Iglesia ni Cristo vs. Ponferrada
Anent the issue of the authority of Enrique G. Santos to represent his co-
heirs/co-plaintiffs, we find no necessity to show such authority. Respondents
herein are co-owners of the subject property. As such co-owners, each of the
heirs may properly bring an action for ejectment, forcible entry and detainer,
or any kind of action for the recovery of possession of the subject properties.
Thus, a co-owner may bring such an action, even without joining all the other
co-owners as co-plaintiffs, because the suit is deemed to be instituted for the
benefit of all. 32
We uphold the validity of the complaint because of the following
circumstances: (1) the caption of the instant case is Heirs of Enrique Santos v.
Iglesia ni Cristo; (2) the opening statement of the complaint states that plaintiffs
33
are the heirs of Enrique Santos and likewise names the particular heirs of the
latter who instituted the complaint below; (3) the case involves a property
34
owned by the predecessor-in-interest of plaintiffs therein; and (4) the
35
verification signed by Enrique G. Santos clearly states that he is one of the
children of the late Enrique Santos and that he represents the heirs of said
Enrique Santos. 36
On the issue of prescription of action, petitioner avers that the action of
respondents is one to quiet title and/or accion reinvindicatoria, and that
respondents asserted ownership over the property and sought the recovery of
possession of the subject parcel of land. It insists that the very nature of the
action presupposes that respondents had not been in actual and material
possession of the property, and that it was petitioner which had been in
possession of the property since 1984 when it acquired title thereon. The action
of respondent prescribed in ten years from 1984 when petitioner allegedly
dispossessed respondents, in accordance with Article 555(4) of the New Civil
Code.
_______________
32Celino v. Heirs of Alejo and Teresa Santiago, G.R. No. 161817, July 30, 2004, 435 SCRA 690, 694
citing Sering v. Plaza, 166 SCRA 85, 86 (1988); Tolentino, Civil Code (1983).
33Rollo, p. 60.
34Id.
35Id., at p. 61.
36Id., at p. 65.
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VOL. 505, OCTOBER 27, 2006
Iglesia ni Cristo vs. Ponferrada
The contention of petitioner has no merit. The nature of an action is
determined by the material allegations of the complaint and the character of
the relief sought by plaintiff, and the law in effect when the action was filed
irrespective of whether he is entitled to all or only some of such relief. As
gleaned from the averments of the complaint, the action of respondents was
one for quieting of title under Rule 64 of the Rules of Court, in relation to
Article 476 of the New Civil Code. The latter provision reads:
“Art. 476. Whenever there is a cloud on title to real property or any interest therein, by
reason of any instrument, record, claim, encumbrance or proceeding which is
apparently valid or effective but is, in truth and in fact, invalid, ineffective, voidable,
or unenforceable, and may be prejudicial to said title, an action may be brought to
remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real
property or any interest therein.”
A cloud is said to be a semblance of a title, either legal or equitable, or a cloud
of an interest in land appearing in some legal form but which is, in fact,
unfounded, or which it would be inequitable to enforce. An action for 38
quieting of title is imprescriptible until the claimant is ousted of his
possession. 39
The owner of a real property, as plaintiff, is entitled to the relief of quieting
of title even if, at the time of the commencement of his action, he was not in
actual possession of real property. After all, under Article 477 of the New Civil
Code, the owner need not be in possession of the propery. If on the face of TCT
No. 321744 under the name of plaintiff, its invalidity does not appear but rests
partly in pais, an action for quieting of title is proper. 40
_______________
37Barangay Piapi v. Talip, G.R. No. 138248, September 7, 2005, 469 SCRA 409; Hilario v.
Salvador, G.R. No. 160384, April 29, 2005, 457 SCRA 815; Serdoncillo v. Benolirao, 358 Phil. 83; 297
SCRA 448 (1998).
38Shults v. Shults, 42 NE 800 (1958).
39Sapto v. Fabiana, 103 Phil. 683 (1958); Ordoñez v. Court of Appeals, G.R. No. 84046, July 30,
1990, 188 SCRA 109.
40Gaves v. Ashburn, 215 US 331, 30 S.Ct. 168.
846
846 SUPREME COURT REPORTS ANNOTATED
Iglesia ni Cristo vs. Ponferrada
In the present case, respondents herein, as plaintiffs below, alleged in their
complaint, that their father, Enrique Santos, was the owner of the property
based on TCT No. 57272 issued on July 27, 1961; and that, after his death on
February 9, 1970, they inherited the property; Enrique Santos, during his
845 lifetime, and respondents, after the death of the former, had been in actual,
continuous and peaceful possession of the property until 1994 when petitioner
claimed ownership based on TCT No. 321744 issued on September 18, 1984
and barred respondents from fencing their property.
Petitioner’s claim that it had been in actual or material possession of the
37
property since 1984 when TCT No. 321744 was issued in its favor is belied by
the allegations in the complaint that respondents had been in actual and
material possession of the property since 1961 up to the time they filed their
complaint on October 24, 2001.
Admittedly, respondents interposed the alternative reinvindicatory action
against petitioner. An accion reinvindicatoria does not necessarily presuppose
that the actual and material possession of the property is on defendant and
that plaintiff seeks the recovery of such possession from defendant. It bears
stressing that an accion reinvindicatoria is a remedy seeking the recovery of
ownership and includes jus possidendi, jus utendi, and jus fruendi as well. It is
an action whereby a party claims ownership over a parcel of land and seeks
recovery of its full possession. Thus, the owner of real property in actual and
41
material possession thereof may file an accion reinvindicatoria against another
seeking ownership over a parcel of land including jus vindicandi, or the right
to exclude defendants from the possession thereof. In this case, respondents
filed an alternative reinvindicatory action claiming ownership over the
property and the cancellation of TCT No. 321744 under the name of petitioner.
In fine, they sought to enforce their jus utendiand jus vindicandi when
petitioner claimed ownership and prevented them from fencing the property.
Since respondents were in actual or physical possession of the property
when they filed their complaint against petitioner on October 24, 2001, the
prescriptive period for the reinvindicatory action
_______________
41 Capacete v. Baroro, 453 Phil. 392, 402; 405 SCRA 457, 464 (2003).
 847
VOL. 505, OCTOBER 27, 2006 847
Iglesia ni Cristo vs. Ponferrada
had not even commenced to run, even if petitioner was able to secure TCT No.
321744 over the property in 1984. The reason for this is that
“x x x one who is in actual possession of a piece of land claiming to be the owner thereof
may wait until his possession is disturbed or his title is attacked before taking steps to
vindicate his right, the reason for the rule being, that his undisturbed possession gives
him a continuing right to seek the aid of a court of equity to ascertain and determine
the nature of the adverse claim of a third party and its effect on his own title, which
right can be claimed only by one who is in possession.” 42

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The decision

of the Court of Appeals in CA-G.R. SP No. 72686 is AFFIRMED. Costs against
petitioner.
SO ORDERED.
Panganiban (C.J., Chairperson), Ynares-Santiago, Austria-
Martinez and Chico-Nazario, JJ., concur.
Petition denied, judgment affirmed.