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200 SUPREME COURT REPORTS ANNOTATED
Department of Education, Division of Albay vs. Oñate
G.R. No. 161758. June 8, 2007.*
DEPARTMENT OF EDUCATION, DIVISION OF ALBAY represented by
its SCHOOL’S DIVISION SUPERINTENDENT, petitioner, vs. CELSO
OÑATE, respondent.
State Immunity; An unincorporated government agency, such as the
Department of Education, Culture and Sports can be sued without its
permission as a result of its being privy to a Deed of Donation over a
disputed property.—We rule that petitioner DECS can be sued without its
permission as a result of its being privy to the Deed of Donation executed
by the Municipality of Daraga, Albay over the disputed property. When it
voluntarily gave its consent to the donation, any dispute that may arise
from it would necessarily bring petitioner DECS down to the level of an
ordinary citizen of the State vulnerable to a suit by an interested or
affected party. It has shed off its mantle of immunity and relinquished
and forfeited its armor of non-suability of the State.
Same; Parties; In a situation involving a contract between a
government department and a third party, the Republic of the Philippines
need not be impleaded as a party to a suit resulting from said contract as
it is assumed that the authority granted to such department to enter into
such contract carries with it the full responsibility and authority to sue
and be sued in its name.—The auxiliary issue of non-joinder of the
Republic of the Philippines is likewise resolved in the negative. While it is
true that petitioner is an unincorporated government agency, and as such
technically requires the Republic of the Philippines to be impleaded in
any suit against the former, nonetheless, considering our resolution of the
main issue below, this issue is deemed mooted. Besides, at this point, we
deem it best to lift such procedural technicality in order to finally resolve
the long litigation this case has undergone. Moreover, even if we give due
course to said issue, we will arrive at the same ruling. The Republic of the
Philippines need not be impleaded as a party-defendant in Civil Case No.
8715 considering that it impliedly gave its approval to the involvement of
petitioner DECS in the Deed of Donation. In a situation involving a
contract between a government department and a third
_______________
* SECOND DIVISION.
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Department of Education, Division of Albay vs.
Oñate
party, the Republic of the Philippines need not be impleaded as a
party to a suit resulting from said contract as it is assumed that the
authority granted to such department to enter into such contract carries
with it the full responsibility and authority to sue and be sued in its
name.
Laches; Elements; Verily, laches serves to deprive a party guilty of it
to any judicial remedies.—Laches is defined as the failure or neglect, for
an unreasonable and unexplained length of time, to do that which—by
the exercise of due diligence—could or should have been done earlier.
Verily, laches serves to deprive a party guilty of it to any judicial
remedies. Its elements are: (1) conduct on the part of the defendant, or of
one under whom the defendant claims, giving rise to the situation which
the complaint seeks a remedy; (2) delay in asserting the complainant’s
rights, the complainant having had knowledge or notice of the
defendant’s conduct as having been afforded an opportunity to institute a
suit; (3) lack of knowledge or notice on the part of the defendant that the
complainant would assert the right in which the defendant bases the suit;
and (4) injury or prejudice to the defendant in the event relief is accorded
to the complainant, or the suit is not held barred.
Same; Evidence; Laches applies even to imprescriptible actions, its
elements must be proved positively—laches is evidentiary in nature which
could not be established by mere allegations in the pleadings and can not
be resolved in a motion to dismiss.—In Felix Gochan and Sons Realty
Corporation, 409 SCRA 306 (2003), we held that “[t]hough laches applies
even to imprescriptible actions, its elements must be proved positively.
Laches is evidentiary in nature which could not be established by mere
allegations in the pleadings and can not be resolved in a motion to
dismiss (emphases supplied).” In the same vein, we explained in Santiago
v. Court of Appeals, 278 SCRA 98 (1997), that there is “no absolute rule
as to what constitutes laches or staleness of demand; each case is to be
determined according to its particular circumstances.”
Same; Common experience tells us that one who owns a property and
takes possession of it cannot fail to discover and know that an existing
elementary school was built and standing on the lot from the time that the
owner starts possessing a property.—Respondent testified that he came to
know of Lot 6849 only in 1973 when he was 23 years old. He asserted that
he took possession of said lot in the
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2 SUPREME COURT REPORTS
02 ANNOTATED
Department of Education, Division of Albay vs.
Oñate
same year when his two (2) uncles, the brothers of his late father,
passed on to him the disputed lot as his father’s share of the inheritance
from the late Claro Oñate and Gregoria Los Baños (his grandparents).
However, it is interesting to note that he testified that he only came to
know in 1991 that the elementary school was built on a portion of Lot
6849, now Lot 6849-A. These assertions are irreconcilable. Common
experience tells us that one who owns a property and takes possession of
it cannot fail to discover and know that an existing elementary school was
built and standing on the lot from the time that the owner starts
possessing a property.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
The Solicitor General for petitioners.
Edgardo R. Raneses for respondent.
VELASCO, JR., J.:
A little neglect may lead to great prejudice.
The Case
This is a Petition for Review on Certiorari 1 under Rule 45 seeking to
reverse and set aside the January 14, 2004 Decision 2 of the Court of
Appeals (CA) in CA-G.R. CV No. 60659, which affirmed the November 3,
1997 Decision3 of the Legaspi City Regional Trial Court (RTC), Branch I,
declaring as null and void the December 21, 1998 Deed of
Donation4 executed by the Municipality of Daraga, Albay in favor of
petitioner, and directing the latter to return to respondent Celso Oñate
_______________
Rollo, pp. 13-48.
1
2 Id., at pp. 50-60. The Decision was penned by Associate Justice
Sergio L. Pestaño and concurred in by Associate Justices Marina L.
Buzon (Chairperson) and Jose C. Mendoza.
3 Id., at pp. 61-82.
4 Records, pp. 6-7.
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Department of Education, Division of Albay vs. Oñate
the possession of the portion of land occupied by the school site of the
Daraga North Central Elementary School.
The Facts
Spouses Claro Oñate and Gregoria Los Baños owned Lot No. 6849
(disputed lot) with an area of around 27,907 square meters registered
under the Torrens System of land registration under Original Certificate
of Title (OCT) No. 2563. Claro Oñate had three children, namely:
Antonio, Rafael, and Francisco, all surnamed Oñate. Respondent Celso
Oñate is the grandson of Claro Oñate, being the son of Francisco Oñate.
In 1940, Bagumbayan Elementary School of Daraga was constructed
on a portion of the disputed lot. The school was eventually renamed
Daraga North Central Elementary School. The Municipality of Daraga
leveled the area while petitioner Department of Education Culture and
Sports (DECS; now Department of Education [DepEd]) developed and
built various school buildings and facilities on the disputed lot.
Sometime in 1991, respondent filed a reconstitution proceeding of
OCT No. 2563 which was granted by the Legaspi City RTC, Branch V
after due notice, publication, and hearing. Consequently, OCT No. RO-
189715 was issued in the name of spouses Claro Oñate and Gregoria Los
Baños.
On August 26, 1991, a Deed of Extrajudicial Settlement of Estate and
Cession was executed by respondent and his three (3) sisters, namely:
Melba O. Napil, Cielo O. Lardizabal, and Maria Visia O. Maldo, who
waived their successional rights in favor of respondent Celso Oñate.
Asserting that the disputed lot was inherited by his father, Francisco
Oñate, from the latter’s father, Claro Oñate, by virtue of a prior partition
among the three (3) sons of Claro Oñate and Gregoria Los
_______________
5 Issued on October 16, 1992.
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204 SUPREME COURT REPORTS ANNOTATED
Department of Education, Division of Albay vs. Oñate
Baños, respondent in turn claimed ownership of said lot through the deed
of extrajudicial settlement.
Meanwhile, the issue of whether respondent’s father, Francisco Oñate,
truly acquired the disputed lot through a prior partition among Claro
Oñate’s three (3) children had been passed upon in another case, Civil
Case No. 8724 for Partition, Reconveyance and Damages filed by the
heirs of Rafael Oñate before the Legaspi City RTC, Branch IX.6 In said
case, respondent Celso Oñate, the defendant, prevailed and the case was
dismissed by the trial court.
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Thereafter, respondent caused Lot No. 6849 to be subdivided into five
(5) lots, all under his name, except Lot No. 6849-B which is under the
name of Mariano M. Lim. On October 26, 1992, the subdivided lots were
issued Transfer Certificate of Titles (TCTs): (1) Lot No. 6849-A (13,072
square meters) under TCT No. T-83946;7 (2) Lot No. 6849-B (3,100 square
meters) under TCT No. T-84049;8 (3) Lot No. 6849-C (10,000 square
meters) under TCT No. T-83948;9 (4) Lot No. 6849-D (1,127 square
meters) under TCT No. T-83949;10 and (5) Lot No. 6849-E (608 square
meters) under TCT No. T-83950.11
On December 15, 1992, through his counsel, respondent sent a letter
to petitioner apprising it about the facts and circumstances affecting the
elementary school and its occupancy of Lot No. 6849-A with an area of
13,072 square meters. Respondent proposed to petitioner DECS that it
purchase Lot No. 6849-A at the Fair Market Value (FMV) of PhP 400 per
square meter and also requested for reasonable rent-
_______________
6 Records, pp. 164-171. See the August 14, 1995 Decision
entitled Heirs of Rafael Oñate, represented by Diego Oñate v. Spouses
Celso Oñate and Allem Vellez .
7 Id., at pp. 178-179.
8 Id., at pp. 180-181.
9 Id., at pp. 182-183.
10 Id., at pp. 184-185.
11 Id., at pp. 186-187.
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Department of Education, Division of Albay vs. Oñate
als from 1960.12 The records show that then DECS Director IV Jovencio
Revil subsequently referred the matter to the DECS Division
Superintendent Rizalina D. Saquido for investigation.13
On February 24, 1993, through his counsel, respondent likewise wrote
to Engr. Orlando Roces, District Engineer, Albay Engineering District
about the on-going construction projects in the school.14 Engr. Roces then
informed respondent’s counsel that petitioner DECS is the owner of the
school site having acquired the disputed lot by virtue of a Deed of
Donation executed by the Municipality of Daraga, Albay in favor of
petitioner.15
Consequently, on March 18, 1993, respondent instituted a
Complaint16 for Annulment of Donation and/or Quieting of Title with
Recovery of Possession of Lot No. 6849 located at Barrio Bagumbayan,
Daraga, Albay before the Legaspi City RTC, docketed as Civil Case No.
8715, against petitioner DECS, Division of Albay, represented by the
Division Superintendent of Schools, Mrs. Rizalina D. Saquido; and the
Municipality of Daraga, Albay, represented by the Municipal Mayor,
Honorable Cicero Triunfante.
In its April 28, 1993 Answer,17 the Municipality of Daraga, Albay,
through Mayor Cicero Triunfante, denied respondent’s ownership of the
disputed lot as it alleged that sometime in 1940, the Municipality bought
said lot from Claro Oñate, respondent’s grandfather, and since then it
had continually occupied said lot openly and publicly in the concept of an
owner until 1988 when the Municipality donated the school site to
petitioner DECS; thus asserting that it could also claim ownership also
through adverse possession. Moreover,
_______________
12 Id., at pp. 190-191.
13 Id., at p. 192.
14 Id., at p. 193.
15 Id., at p. 194.
16 Id., at pp. 1-4.
17 Id., at pp. 24-27.
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206 SUPREME COURT REPORTS ANNOTATED
Department of Education, Division of Albay vs. Oñate
it claimed that the disputed lot had been declared in the name of
defendant municipality in the Municipal Assessor’s Office under Tax
Declaration No. 31954 from 1940 until 1988 for purposes of exemption
from real estate taxes. Further, defendant Municipality contended that
respondent was guilty of laches and was estopped from assailing
ownership over the disputed lot.
Similarly, petitioner’s April 29, 1993 Answer18 reiterated in essence
the defenses raised by the Municipality of Daraga, Albay and further
contended that respondent had no cause of action because it acquired
ownership over the disputed lot by virtue of a Deed of Donation executed
on December 21, 1988 in its favor; and that respondent’s claim was vague
as it was derived from a void Deed of Extrajudicial Settlement of Estate
and Cession disposing of the disputed lot which was already sold to the
Municipality of Daraga, Albay in 1940. Petitioner likewise assailed the
issuance of a reconstituted OCT over Lot 6849 when the lower court
granted respondent’s petition for reconstitution without notifying
petitioner.
During the ensuing trial where both parties presented documentary
and testimonial evidence, respondent testified that he came to know of
the disputed lot in 1973 when he was 23 years old; that he took
possession of the said lot in the same year; that he came to know that the
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elementary school occupied a portion of the said lot only in 1991; and that
it was only in 1992 that he came to know of the Deed of Donation
executed by the Municipality of Daraga, Albay.19 Also, Felicito Armenta,
a tenant cultivating a portion of disputed Lot 6849, testified that
respondent indeed owned said lot and the share of the crops cultivated
were paid to respondent.20
_______________
18 Id., at pp. 29-31.
19 TSN, November 3, 1993 and July 12, 1994.
20 TSN, February 14, 1994 and August 3, 1995.
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VOL. 524, JUNE 8, 2007 207
Department of Education, Division of Albay vs. Oñate
However, after respondent testified, defendants in said case filed a Joint
Motion to Dismiss21 on the ground that respondent’s suit was against the
State which was prohibited without the latter’s consent. Respondent
countered with his Opposition to Joint Motion to Dismiss. 22 Subsequently,
the trial court denied the Joint Motion to Dismiss, ruling that the State
had given implied consent by entering into a contract.23
Aside from the reconstituted OCT No. RO-18971, respondent
presented the TCTs covering the five (5) portions of the partitioned Lot
6849, Tax Declaration No. 04-006-0068124 issued for said lot, and the
April 20, 1992 Certification25 from the Office of the Treasurer of the
Municipality of Daraga, Albay attesting to respondent’s payment of realty
taxes for Lot 6849 from 1980 to 1990.
After respondent rested his case, the defense presented and marked
their documentary exhibits of Tax Declaration No. 30235 issued in the
name of the late Claro Oñate, which was cancelled in 1938; Tax
Declaration 31954,26 which cancelled Tax Declaration No. 30235, in the
name of Municipality of Daraga with the annotation of Ex Officio Deputy
Assessor Natalio Grageda attesting to the purchase by the Municipality
under Municipal Voucher No. 69, August 1940 accounts and the issuance
of TCT No. 4812 in favor of the Municipality; Tax Declaration No.
892627 in the name of the Municipality which cancelled Tax Declaration
No. 31954; and the sub-
_______________
21 Records, pp. 97-100.
22 Id., at pp. 106-111.
23 Id., at pp. 112-117, March 11, 1994 Order of the RTC.
24 Id., at p. 189.
25 Id., at p. 195.
26 Id., at p. 101.
27 Id., at p. 102.
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208 SUPREME COURT REPORTS ANNOTATED
Department of Education, Division of Albay vs. Oñate
sequent Tax Declaration Nos. 22184,28 332,29 and 04-006-00068.30
The defense presented the testimony of Mr. Jose Adra,31 the Principal
of Daraga North Central Elementary School, who testified on the
Municipality’s donation of disputed Lot 6849 to petitioner and the
improvements on said lot amounting to more than PhP 11 million; and
Mrs. Toribia Milleza,32 a retired government employee and resident of
Bagumbayan, Daraga, Albay since 1955, who testified on the
Municipality’s continuous and adverse possession of the disputed lot since
1940.
As mentioned earlier, Civil Case No. 8724 for Partition, Reconveyance
and Damages was instituted by the heirs of Rafael Oñate in Legaspi City
RTC, Branch IX against Spouses Celso Oñate and Allem Vellez, involving
the same disputed lot. Petitioner and co-defendant Municipality of
Daraga, Albay were about to file a complaint for intervention in said case,
but it was overtaken by the resolution of the case on August 14, 1995
with the trial court dismissing the complaint.
The Ruling of the RTC
On November 3, 1997, the trial court rendered a Decision in favor of
respondent Celso Oñate. The dispositive portion declared, thus:
“WHEREFORE, premises considered, judgment is hereby rendered in
favor of the plaintiff and against the defendants:
1. 1.Declaring the Deed of Donation executed by the Municipality of
Daraga, Albay in favor of the defendant Department of Educa
_______________
28 Id., at p. 103.
29 Id., at p. 104.
30 Id., at p. 105.
31 TSN, February 22, 1996.
32 TSN, September 30, 1996.
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Department of Education, Division of Albay vs. Oñate
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1. tion Culture and Sports through the Albay Schools Division as
null and void;
2. 2.Declaring the plaintiff as the owner in fee simple of Lots Nos.
6849-A, 6849-C, 6849-D and 6849-E which are registered in his
name;
3. 3.Commanding the defendants to return the possession of the
portion of the land occupied by the school site to the herein
plaintiff Celso Oñate;
4. 4.Ordering the plaintiff for reason of equity, to pay the defendant
Municipality of Daraga, Albay the amount of Fifty Thousand
(50,000.00) Pesos pursuant to Article 479 of the New Civil Code
of the Philippines;
5. 5.The defendant Department of Education Culture and Sports
being a builder in good faith, the provisions of Article 448 of the
New Civil Code of the Philippines shall be observed by the
parties; and
6. 6.Ordering the defendants to pay the costs of the suit. No
attorney’s fees is hereby adjudged in favor of plaintiff’s counsel.
SO ORDERED.”33
The trial court ratiocinated that it was clear that subject Lot 6849 was
originally registered under the Torrens System in the name of Spouses
Claro Oñate and Gregoria Los Baños as evidenced by OCT No. RO-18971.
The right of respondent Celso Oñate over the disputed lot had not been
proven otherwise or overturned in Civil Case No. 8724, and this was
bolstered by the Deed of Extrajudicial Settlement of Estate and Cession,
where respondent’s sister waived their successional rights in his favor.
Thus, the trial court ruled in favor of respondent’s title. Besides, it
further ruled that defendants could not assail the registered title of
respondent in a collateral proceeding.
While the Municipality of Daraga, Albay anchored its prior ownership
over the disputed lot by virtue of a sale in 1940 and mentioned TCT No.
4812 supposedly issued in its name,
_______________
33 Supra note 3, at pp. 81-82.
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210 SUPREME COURT REPORTS ANNOTATED
Department of Education, Division of Albay vs. Oñate
it however failed to submit any deed of conveyance in its favor, as well as
a copy of the alleged TCT No. 4812. Hence, the trial court held that its
claim over disputed Lot 6849 was based solely on adverse prescription
which could not prevail over respondent’s registered title.
The trial court concluded that given these factual and evidentiary
proofs, petitioner had no right to occupy Lot 6849-A, and the Deed of
Donation executed by the Municipality of Daraga, Albay in favor of
petitioner must be nullified. Finally, the trial court awarded PhP 50,000
to the Municipality of Daraga, Albay for the cost of landfill and ordered
that Article 44834 of the New Civil Code be followed by the parties as
petitioner was a builder in good faith.
The Ruling of the Court of Appeals
Aggrieved, petitioner DECS and Municipality of Daraga, Albay filed their
respective Notices of Appeal35 assailing the trial court’s Decision before
the CA. However, on June 17, 1998, the appellate court declared the
appeals of both petitioners abandoned and dismissed for their failure to
pay the required docket fees within the reglementary period. 36 Peti-
_______________
34 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 456 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.
35 Records, pp. 296 & 298.
36 CA Rollo, p. 17.
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Department of Education, Division of Albay vs. Oñate
tioner then filed a Motion for Reconsideration 37of the said June 17, 1998
Resolution and its appeal was subsequently reinstated.38 The
Municipality of Daraga, Albay, however, totally lost its appeal due to
inaction, and the appellate court correspondingly issued a Partial Entry
of Judgment on July 9, 1998.39
Moreover, the appellate court held that there was no jurisdictional
defect in the reconstitution proceeding being one in rem, and in the
issuance of OCT No. RO-18971 based on the destroyed or lost OCT No.
2563, even if no notice was sent to petitioner. Thus, the CA ruled that
respondent’s claim of ownership over Lot 6849-A occupied by the school is
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conclusive for being soundly predicated on TCT No. T-83946 which
cancelled the reconstituted OCT No. RO-18971. Furthermore, it
reiterated the trial court’s holding that petitioner is precluded from
attacking collaterally respondent’s title over the disputed lot in this
proceeding.
The CA emphasized that petitioner’s failure to present TCT No.
4812—allegedly issued in the name of the Municipality of Daraga, Albay
in 1940 in lieu of OCT No. 2563 and the Deed of Conveyance executed by
the original owner, Claro Oñate, in favor of the Municipality—was fatal
to the defense. It reasoned that “all the more had their claim of ownership
become doubtful when defendants-appellants [sic] failed to explain from
their pleadings and the evidence submitted before Us their failure to
present the two documents.”40 The appellate court concluded that given
these facts, no title in the name of the Municipality ever existed and thus
it could not have validly donated the subject property to petitioner.
_______________
37 Id., at pp. 18-19.
38 Id., at p. 21.
39 Id., at p. 28.
40 Id., at p. 59.
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212 SUPREME COURT REPORTS ANNOTATED
Department of Education, Division of Albay vs. Oñate
Anent the issue of the applicability of Amigable v. Cuenca,41 the CA
affirmed the doctrine enunciated in said case that “to uphold the State’s
immunity from suit would subvert the ends of justice.” In fine, the
appellate court pointed out the inconvenience and impossibility of
restoring possession of Lot 6849-A to respondent considering the
substantial improvements built on said lot by the government which
amounted to almost PhP 12 million; and that the only relief available was
for the government to pay just compensation in favor of respondent
computed on the basis of the value of the property at the time of the
government’s taking of the land.
Through its assailed Decision,42 the CA dismissed petitioner’s appeal
for lack of merit and affirmed the trial court’s decision in toto. It reasoned
that laches does not apply, its application rests on the sound discretion of
the court, and where the court believes that its application would result
in manifest wrong or injustice, it is constrained not to be guided strictly
by said doctrine. Besides, it opined that laches could not defeat the rights
of a registered owner.
The Issues
Hence, we have the instant petition where petitioner raises the following
assignment of errors:
I
THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL
COURT’S FINDING THAT RESPONDENT’S CAUSE OF ACTION TO
RECOVER POSSESSION OF THE SUBJECT PROPERTY IS NOT YET
BARRED BY LACHES.
II
THE COURT OF APPEALS ERRED IN ACCORDING GREAT
WEIGHT ON RESPONDENT’S RECONSTITUTED ORIGINAL
_______________
41 G.R. No. L-26400, February 29, 1972, 43 SCRA 360.
42 Supra note 2.
213
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Department of Education, Division of Albay vs. Oñate
CERTIFICATE OF TITLE (OCT) NO. 2563 COVERING SUBJECT
PROPERTY.
III
THE COURT OF APPEALS ERRED IN RULING THAT
PETITIONER MAY BE SUED IN VIOLATION OF THE STATE’S
IMMUNITY FROM SUIT.
IV
THE COURT OF APPEALS ERRED IN RULING THAT
PETITIONER MAY BE SUED INDEPENDENTLY OF THE REPUBLIC
OF THE PHILIPPINES.43
Petitioner basically raises two issues—the application of laches and the
non-suability of the State.
The threshold issue is whether petitioner DECS can be sued in Civil
Case No. 8715 without its consent. A supplementary issue is whether
petitioner DECS can be sued independently of the Republic of the
Philippines.
We rule that petitioner DECS can be sued without its permission as a
result of its being privy to the Deed of Donation executed by the

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Municipality of Daraga, Albay over the disputed property. When it
voluntarily gave its consent to the donation, any dispute that may arise
from it would necessarily bring petitioner DECS down to the level of an
ordinary citizen of the State vulnerable to a suit by an interested or
affected party. It has shed off its mantle of immunity and relinquished
and forfeited its armor of non-suability of the State.44
The auxiliary issue of non-joinder of the Republic of the Philippines is
likewise resolved in the negative. While it is true that petitioner is an
unincorporated government agency,
_______________
Rollo, pp. 25-26.
43
44 See United States of America v. Guinto, G.R. Nos. 76607, 79470,
80018 & 80258, February 26, 1990, 182 SCRA 644; and Department of
Agrarian Reform v. National Labor Relations Commission, G.R. No.
104269, November 11, 1993, 227 SCRA 693.
214
214 SUPREME COURT REPORTS ANNOTATED
Department of Education, Division of Albay vs. Oñate
and as such technically requires the Republic of the Philippines to be
impleaded in any suit against the former, nonetheless, considering our
resolution of the main issue below, this issue is deemed mooted. Besides,
at this point, we deem it best to lift such procedural technicality in order
to finally resolve the long litigation this case has undergone. Moreover,
even if we give due course to said issue, we will arrive at the same ruling.
The Republic of the Philippines need not be impleaded as a party-
defendant in Civil Case No. 8715 considering that it impliedly gave its
approval to the involvement of petitioner DECS in the Deed of Donation.
In a situation involving a contract between a government department and
a third party, the Republic of the Philippines need not be impleaded as a
party to a suit resulting from said contract as it is assumed that the
authority granted to such department to enter into such contract carries
with it the full responsibility and authority to sue and be sued in its
name.
Main Issue: Equitable Remedy of Laches
Petitioner strongly asserts that the Municipality of Daraga, Albay had
continuous, open, and adverse possession in the concept of an owner over
the disputed lot since 1940 until December 21, 1988 or for about 48 years.
Significantly, it maintains that Tax Declaration No. 31954 covering the
disputed lot in the name of the Municipality of Daraga, Albay contains an
annotation certifying that said lot was “under voucher No. 69, August,
1940 accounts. The corresponding Transfer Title No. 4812 has been
issued by the Register of Deeds Office of Albay on August 3, 1940.” 45
When petitioner received the lot as donation from the Municipality on
December 21, 1988, it possessed the subject lot also in the concept of an
owner and continued to introduce improvements on the lot. Consequently,
when respondent
_______________
45 Records, p. 213.
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VOL. 524, JUNE 8, 2007 215
Department of Education, Division of Albay vs. Oñate
instituted the instant case in 1993, petitioner and its predecessor-in-
interest Municipality of Daraga, Albay had possessed the subject lot for a
combined period of about fifty two (52) years.
Petitioner strongly avers that Claro Oñate, the original owner of
subject lot, sold it to the Municipality. At the very least it asserts that
said Claro Oñate allowed the Municipality to enter, possess, and enjoy
the lot without protest. In fact, Claro Oñate neither protested nor
questioned the cancellation of his Tax Declaration No. 30235 covering the
disputed lot and its substitution by Tax Declaration No. 31954 in the
name of the Municipality on account of his sale of the lot to the latter. In
the same vein, when Claro Oñate and his spouse died, their children
Antonio, Rafael, and Francisco who succeeded them also did not take any
steps to question the ownership and possession by the Municipality of the
disputed lot until they died on June 8, 1990, June 12, 1991, and October
22, 1957, respectively.
Petitioner maintains that significantly, respondent and his siblings—
succeeding their father Francisco as the alleged owners, from his death
on October 22, 1957—also did not take any action to recover the
questioned lot from 1957 until 1993 when the instant suit was
commenced. Petitioner avers that if they were really the owners of said
lot, they would not have waited 52 long years to institute the suit
assuming they have a cause of action against the Municipality or
petitioner. Thus, petitioner submits that the equitable principle of laches
has indubitably set in to bar respondent’s action to recover possession of,
and title to, the disputed lot.
Laches and its elements
Indeed, it is settled that rights and actions can be lost by delay and by the
effect of delay as the equitable defense of laches does not concern itself
with the character of the defendant’s title, but only with plaintiff’s long
inaction or inexcus-
216
216 SUPREME COURT REPORTS ANNOTATED
7
Usufruct
Department of Education, Division of Albay vs. Oñate
able neglect to bar the latter’s action as it would be inequitable and
unjust to the defendant.
Laches is defined as the failure or neglect, for an unreasonable and
unexplained length of time, to do that which—by the exercise of due
diligence—could or should have been done earlier. 46 Verily, laches serves
to deprive a party guilty of it to any judicial remedies. Its elements are:
(1) conduct on the part of the defendant, or of one under whom the
defendant claims, giving rise to the situation which the complaint seeks a
remedy; (2) delay in asserting the complainant's rights, the complainant
having had knowledge or notice of the defendant's conduct as having been
afforded an opportunity to institute a suit; (3) lack of knowledge or notice
on the part of the defendant that the complainant would assert the right
in which the defendant bases the suit; and (4) injury or prejudice to the
defendant in the event relief is accorded to the complainant, or the suit is
not held barred.47
In Felix Gochan and Sons Realty Corporation, we held that
“[t]hough laches applies even to imprescriptible actions, its
elements must be proved positively. Laches is evidentiary in
nature which could not be established by mere allegations in the
pleadings and can not be resolved in a motion to dismiss (emphases
supplied).”48 In the same vein, we explained in Santiago v. Court of
Appeals that there is “no absolute rule as to what constitutes laches or
staleness of
_______________
46 Soliva v. The Intestate Estate of Marcelo M. Villalba, G.R. No.
154017, December 8, 2003, 417 SCRA 277, 286; citing Ramos v. Heirs of
Ramos, Sr., G.R. No. 140848, April 25, 2002, 381 SCRA 594, 605;
and Westmont Bank v. Ong, G.R. No. 132560, January 30, 2002, 375
SCRA 212, 222.
47 Felix Gochan and Sons Realty Corporation v. Heirs of Baba, G.R.
No. 138945, August 19, 2003, 409 SCRA 306, 315; citing Santos v.
Santos, G.R. No. 133895, October 2, 2001, 366 SCRA 395, 405-406.
48 Id.
217
VOL. 524, JUNE 8, 2007 217
Department of Education, Division of Albay vs. Oñate
demand; each case is to be determined according to its particular
circumstances.”49
Issue of laches not barred by adverse judgment against Daraga,
Albay
It is unfortunate that defendant Municipality of Daraga, Albay lost its
appeal in CA-G.R. CV No. 60659 before the CA for its failure to pay the
required docket fees within the reglementary period. As a result, a
Partial Entry of Judgment was made on July 9, 1998 and consequently,
the dispositions in the November 3, 1997 Decision, rendered by the
Legaspi City RTC, Branch I in favor of respondent Celso Oñate, became
final and executory as against defendant Municipality of Daraga, Albay.
As an off-shoot, with respect to the Municipality of Daraga, the Deed
of Donation in favor of petitioner DECS was annulled——respondent
Oñate was declared owner in fee simple of the disputed lots and entitled
to possession but was required to pay PhP 50,000 to the Daraga
Municipal Government and the costs of suit. By reason of the finality of
the Decision against the Municipality of Daraga, Tax Declaration Nos.
04-006-00068, 332, 22184, 31954, and 8926 are all cancelled and annulled
(if not yet cancelled).
What are the effects of the final judgment against Municipality of
Daraga on its co-defendant, petitioner DECS?
Generally, it has no impact on the appeal of DECS unless the decision
affects its defenses. In this petition, DECS no longer questions the
declaration of nullity of the Deed of Donation over the disputed lot and
hence can be considered as a final resolution of the issue. Likewise, it
does not challenge the ownership of Oñate of the disputed lots, but
merely relied on the defense of laches. The final directive for Municipality
of Daraga to return possession of the land has no significance
_______________
49 G.R. No. 103959, August 21, 1997, 278 SCRA 98, 112.
218
218 SUPREME COURT REPORTS ANNOTATED
Department of Education, Division of Albay vs. Oñate
on DECS’ appeal since precisely, it is DECS’ position that it should retain
possession of the land. From these considerations, the final RTC
November 3, 1997 Decision against the Municipality of Daraga has no
substantial and material effect upon the DECS’ appeal.
The only remaining issue left is whether laches can inure to the
benefit of petitioner DECS considering the fact that Lot No. 6849-A was
devoted to public education when the elementary school was built in 1940
under the supervision and control of DECS up to 1993 when Civil Case
No. 8715 was filed by respondent Oñate.
We rule in the affirmative.
Laches has set in
A brief scrutiny of the records does show tell-tale signs of laches. The first
element is undisputed: the then Bagumbayan Elementary School of
8
Usufruct
Daraga was constructed in 1940 on a portion of disputed Lot 6849,
specifically Lot No. 6849-A containing 13,072 square meters under TCT
No. T-83946. Moreover, Mrs. Toribia Milleza,50 a retired government
employee and resident of Bagumbayan, Daraga since 1955 pertinently
testified, thus:
Q: How long have you been residing in this place,
Bagumbayan, Daraga, Albay?
A: Maybe I stayed there in 1955 until the present.51
xxxx
Q: Now, can you further recall the kind of building that
was constructed in this property?
A: Seva type, building.
Q: At present how many buildings were constructed in
this property?
A: Plenty of school buildings.
_______________
50 Supra note 32.
51 Id., at p. 4.
219
VOL. 524, JUNE 8, 2007 219
Department of Education, Division of Albay vs. Oñate
Q: Now, how many buildings were first
constructed in [sic] this property?
A: In 1955 only one, the Seva type, then there was
constructed five (5) Marcos Type buildings
during the Marcos time.52
The devotion of Lot No. 6849-A to education started in 1940 and
continued up to December 21, 1988 when said lot was donated to the
DECS. From then on, DECS built various buildings and introduced
improvements on said lot. Lot No. 6849-A was continuously used for
public education until March 18, 1993 when respondent Oñate filed Civil
Case No. 8715 and thereafter up to the present.
Thus, for a total period of more than fifty-two (52) years, Lot No. 6849-
A was exclusively and completely utilized by DECS for public education.
This fact was not successfully challenged nor refuted by respondent.
The second element of laches was likewise proven. No evidence was
presented to show that respondent or his predecessors-in-interest ever
took any action, administrative or judicial, nor either party questioned or
protested the Municipality’s adverse occupation of a portion of Lot 6849.
As petitioner had demonstrated laches by persuasive and credible
evidence, it is incumbent upon respondent to show that his predecessors-
in-interest indeed protected their rights of ownership over the lot. Thus,
as early as 1940, when the first Seva type school building was constructed
over a portion of the disputed lot, now Lot 6849-A, respondent must prove
that his predecessors-in-interest indeed undertook activities to contest
the occupation of the portion of the lot by the Municipality and
subsequently by petitioner DECS. Unfortunately, respondent failed to
substantiate such defense of ownership and possession of the lot and even
skirted this issue.
_______________
52 Id., at p. 5.
220
220 SUPREME COURT REPORTS ANNOTATED
Department of Education, Division of Albay vs. Oñate
Respondent testified that he came to know of Lot 6849 only in 1973 when
he was 23 years old.53 He asserted that he took possession of said lot in
the same year when his two (2) uncles, the brothers of his late father,
passed on to him the disputed lot as his father’s share of the inheritance
from the late Claro Oñate and Gregoria Los Baños (his grandparents).
However, it is interesting to note that he testified that he only came to
know in 1991 that the elementary school was built on a portion of Lot
6849, now Lot 6849-A. These assertions are irreconcilable. Common
experience tells us that one who owns a property and takes possession of
it cannot fail to discover and know that an existing elementary school was
built and standing on the lot from the time that the owner starts
possessing a property.
Nonetheless, even granting that respondent indeed only came to know
of such encroachment or occupation in 1991, his rights cannot be better
than that of his predecessors-in-interest, that is, Claro Oñate and his
uncles, Antonio and Rafael, who died in 1990 and 1991, respectively.
Since respondent’s right over the lot originated from his predecessorsin-
interest, then he cannot have better rights over Lot No. 6849-A than the
latter. The spring cannot rise higher than its source. Besides, respondent
has not proffered any explanation why his predecessors-in-interest did
not protest and challenge the Municipality’s occupancy over a portion of
their lot. Verily, with the span of around 52 years afforded respondent
and his predecessors-in-interest, their inaction and delay in protecting
their rights were certainly excessive and unjustified.
In the third element, the records clearly bear out the fact that
petitioner DECS did not know nor anticipate that their possession and
occupancy of a portion of Lot 6849 would later be questioned. In fact,
9
Usufruct
petitioner built additional school buildings and facilities on the school site
amounting to more than PhP 11 million. Mr. Jose Adra, School Principal
of the Daraga
_______________
53 Supra note 19.
221
VOL. 524, JUNE 8, 2007 221
Department of Education, Division of Albay vs. Oñate
North Central Elementary School, testified on the donation of the
disputed lot to petitioner and the cost of the improvements on it. 54 After
more than forty-eight (48) years of unquestioned, peaceful, and
uninterrupted possession by petitioner DECS, it had no knowledge nor
reason to believe that respondent would assert any right over the lot after
the lapse of such long occupation coupled with a tax declaration in the
name of the Daraga Municipality.
Finally, the last element is likewise proven by the antecedent facts
that clearly show grave prejudice to the government, in general, and to
petitioner, in particular, if the instant action is not barred without even
considering the cost of the construction of the school buildings and
facilities and the deleterious effect on the school children and affected
school teachers and personnel if Lot No. 6849-A would be returned to
respondent.
Verily, the application of laches is addressed to the sound discretion of
the court as its application is controlled by equitable considerations. In
the instant case, with the foregoing considerations, we are constrained
from giving approbation to the trial and appellate courts’ ruling that the
application of the principle of laches would subvert the ends of justice.
Indeed, it is unjust for the State and the affected citizenry to suffer after
respondent and his predecessors-in-interest had slept on their rights for
52 years.
Also, the inaction of respondent Oñate and his predecessors-in-
interest for over 50 years has reduced their right to regain possession of
Lot 6849-A to a stale demand.
Laches holds over the actual area possessed and occupied by
petitioner
We, however, make the clear distinction that laches applies in favor of
petitioner only as regards Lot 6849-A which is
_______________
54 Supra note 31.
222
222 SUPREME COURT REPORTS ANNOTATED
Department of Education, Division of Albay vs. Oñate
actually possessed and occupied by it. Laches does not apply to Lot Nos.
6849-B, 6849-C, 6849-D, and 6849-E. These portions were never occupied
by the Municipality and petitioner. Agricultural tenant Felicito Armenta
testified that his father, Antonio Armenta, started cultivating portions of
Lot 6849 way back in the 1940s and that he took over the tenancy in 1960
when his father stopped tilling the land. Besides, if the Municipality
indeed owned Lot 6849 by virtue of a purchase, it is likewise guilty of
laches in not protecting or contesting the cultivation by Oñates’
agricultural tenants of said portions of Lot 6849.
Transfer Certificates of Title on portions of Lot 6849 valid
Petitioner contends that the reconstitution of OCT No. 2563—covering
subject lot in 1991 or 52 years after the Municipality owned said lot—
does not in any way affect the latter’s preferential and superior right over
the disputed lot. In the same vein, it maintains that it is inconsequential
that petitioner and the Municipality failed to present as evidence the
deed of conveyance in favor of the Municipality, as well as TCT No. 4812
as a registered land owner may lose the right to recover possession of a
registered property by reason of laches. Petitioner concludes that the long
delayed reconstitution of OCT No. 2563 by respondent was a mere
afterthought and intended to camouflage his and his predecessor’s
unreasonably long inaction which indicates an awareness that they have
no valid claim whatsoever over disputed Lot 6849.
We disagree.
It must be noted that a reconstitution proceeding is one in rem and is
thus binding to the whole world. While it is true that laches has set in so
far as it pertains to the portion of Lot 6849, specifically Lot 6849-A where
the Municipality and petitioner DECS had constructed the existing
school, such does not hold true for the totality of Lot 6849 as explained
above. Indeed, the reconstitution proceeding being one in rem,
223
VOL. 524, JUNE 8, 2007 223
Department of Education, Division of Albay vs. Oñate
the consequent issuance of OCT No. RO-18971 in lieu of the lost or
destroyed OCT No. 2563 is valid.
Anent the issue of non-notification, we agree with the observation of
the courts a quo that even granting arguendo that petitioner was not
notified about the reconstitution proceeding, such deficiency is not
jurisdictional as to nullify and prevail over the final disposition of the
trial court in a proceeding in rem.
More so, while petitioner strongly asserts that the certification in Tax
Declaration No. 31954 attesting to the payment of the disputed lot under
10
Usufruct
Municipal Voucher No. 69 and the issuance of TCT No. 4812, which was
never disputed nor controverted by respondent, should have been given
evidentiary weight by the trial and appellate courts as the presumptions
of regularity and validity of such official act have not been overcome, such
documents cannot defeat the registered title of respondent.
Between a clear showing of ownership evidenced by a registered title
and a certification in a tax declaration, albeit done in an official capacity,
the former holds as the latter is only persuasive evidence. Indeed, tax
declarations in land cases per se do not constitute ownership without
other substantial pieces of evidence.
The records do not show and petitioner has not given any cogent
explanation why the Deed of Conveyance in favor of the Municipality of
Daraga, Albay and TCT No. 4812 were not presented. With clear and
affirmative defenses set up by petitioner and Municipality of Daraga,
Albay, it is incumbent for them to present these documents. Therefore,
the unmistakable inference is that there was indeed no sale and
conveyance by Claro Oñate of Lot 6849 in favor of the Municipality.
Consequently, the TCTs cancelling OCT No. RO-18971 covering Lot Nos.
6849-A, 6849-B, 6849-C, 6849-D, and 6849-E were likewise validly issued.
Thus, notwithstanding valid titles over the portions of Lot 6849,
respondent Oñate cannot now take possession over Lot
224
224 SUPREME COURT REPORTS ANNOTATED
Department of Education, Division of Albay vs. Oñate
No. 6849-A for reason of laches. In the recent case of De Vera-Cruz v.
Miguel, we reiterated the principle we have consistently applied in
laches:
“The law55 provides that no title to registered land in derogation of that of
the registered owner can be acquired by prescription or adverse
possession. Nonetheless, while it is true that a Torrens Title is
indefeasible and imprescriptible, the registered landowner may lose his
right to recover the possession of his registered property by reason of
laches.”56
Thus, with our resolution of the principal issue of applicability of the
equitable remedy of laches, the issue of suability of the State has been
mooted.
A final word. Considering our foregoing disquisition and upon grounds
of equity, a modification of the final decision prevailing between
respondent Oñate and the Municipality of Daraga, Albay is in order. It
would be grossly iniquitous for respondent Oñate to pay PhP 50,000 to
the Municipality of Daraga, Albay considering that he is not entitled to
recover the possession and usufruct of Lot No. 6849-A.
WHEREFORE, the instant petition is GRANTED and the January 14,
2004 Decision of the CA in CA-G.R. CV No. 60659 affirming the
November 3, 1997 Decision of the Legaspi City RTC is AFFIRMED with
the following MODIFICATIONS:
1. 1)Declaring the DepEd (formerly DECS), Division of Albay to
have the rights of possession and usufruct over Lot 6849-A with
an area of 13,072 square meters under TCT No. T-83946 of the
Registry of Deeds of Albay, as a result of laches on the part of
respondent Celso Oñate
_______________
55 Act No. 496, Sec. 46 (The Land Registration Act), now P.D. No. 1529
(Property Registration Decree).
56 G.R. No. 144103, August 31, 2005, 468 SCRA 506, 518;
citing Isabela Colleges, Inc. v. Heirs of Nieves Tolentino-Rivera, G.R. No.
132677, October 20, 2000, 344 SCRA 95, 106-107.
225
VOL. 524, JUNE 8, 2007 225
Department of Education, Division of Albay vs. Oñate
1. and his predecessors-in-interest. Respondent Celso Oñate, his
heirs, assigns, and successors-in-interest are prohibited from
selling, mortgaging, or encumbering Lot 6849-A while the said
lot is still being used and occupied by petitioner DECS.
However, the rights of possession and usufruct will be restored
to respondent the moment petitioner DECS no longer needs the
said lot. The Registry of Deeds of Albay is ordered to annotate
the aforementioned restrictions and conditions at the back of
TCT No. T-83946-A in the name of respondent Celso Oñate.
Item No. 2 of the November 3, 1997 Decision of the Legaspi City
RTC is modified accordingly;
2. 2)Declaring Celso Oñate as the true and legal owner in fee simple
of the following lots:
1. a.Lot 6849-C with an area of 10,000 square meters under TCT
No. T-83948 of the Registry of Deeds of Albay;
2. b.Lot 6849-D with an area of 1,127 square meters under TCT No.
T-83949 of the Registry of Deeds of Albay; and
3. c.Lot 6849-E with an area of 608 square meters under TCT No. T-
83950 of the Registry of Deeds of Albay.
11
Usufruct

1. 3)Declaring Mariano M. Lim as true and legal owner of Lot 6849-

B with an area of 3,100 square meters under TCT No. T-84049 of
the Registry of Deeds of Albay;
2. 4)Ordering petitioner DECS and all other persons claiming under
said department to return the possession of Lots 6849-C, 6849-
D, and 6849-E to respondent Celso Oñate and Lot 6849-B to
Mariano M. Lim; and
3. 5)Deleting Item No. 4 of the November 3, 1997 Decision of the
Legaspi City RTC, which ordered respondent Celso Oñate to pay
Fifty Thousand Pesos (PhP 50,000) to defendant Municipality of
Daraga, Albay.

226
226 SUPREME COURT REPORTS ANNOTATED
Navarro vs. Coca-Cola Bottlers Phils., Inc.
The November 3, 1997 Decision of the Legaspi City RTC is AFFIRMED in ——o0o——
all other respects.
No costs.
September 17, 2008. G.R. No. 177667.*
SO ORDERED.
CLEODIA U. FRANCISCO and CEAMANTHA U. FRANCISCO,
Quisumbing (Chairperson), Carpio, Carpio-Morales and Tinga,
represented by their grandmother DRA. MAIDA G. URIARTE as their
JJ., concur.
Attorney-in-Fact, petitioners, vs. SPOUSES JORGE C. GONZALES and
Petition granted, judgment affirmed with modifications. PURIFICACION W. GONZALES, respondents.
Notes.—When the State gives its consent to be sued, it does not
Judgments; Execution; The power of the court in executing judgments
thereby necessarily consent to an unrestrained execution against it.
extends only to properties unquestionably belonging to the judgment
(Republic vs. National Labor Relations Commission, 263 SCRA
debtor alone.—The Court finds that it was grave error for the RTC to
290 [1996])
proceed with the execution, levy and sale of the subject property. The
An unincorporated government agency such as the Department of
power of the court in executing judgments extends only to
Public Works and Highways (DPWH) is without any separate juridical
properties unquestionably belonging to the judgment debtor alone,
personality of its own and hence enjoys immunity from suit. (Republic vs.
in the present case to those belonging to Michele and Matrai. One man’s
Nolasco, 457 SCRA 400 [2005])
goods shall not be sold for another man’s debts.
Family Law; Conjugal Partnership; A wife may bind the conjugal
partnership only when she purchases things necessary for the support of
the family, or when she borrows money for that purpose upon her
husband’s failure to deliver the needed sum, when administration of the
conjugal partnership is transferred to the wife by the
_______________

* THIRD DIVISION.

639

VOL. 565, SEPTEMBER 17, 6

12
Usufruct

2008 39 answer was incurred by Michele and her partner, Matrai.

Respondents allege that the lease of the property in Lanka Drive
Francisco vs. Gonzales
redounded to the benefit of the family. By no stretch of one’s imagination
courts or by the husband, or when the wife gives moderate donations
can it be concluded that said debt/obligation was incurred for the benefit
for charity.—A wife may bind the conjugal partnership only when she
of the conjugal partnership or that some advantage accrued to the welfare
purchases things necessary for the support of the family, or when she
of the family. In BA Finance Corporation v. Court of Appeals, 161 SCRA
borrows money for that purpose upon her husband’s failure to deliver the
608 (1988), the Court ruled that the petitioner cannot enforce the
needed sum; when administration of the conjugal partnership is
obligation contracted by Augusto Yulo against his conjugal properties
transferred to the wife by the courts or by the husband; or when the wife
with respondent Lily Yulo because it was not established that the
gives moderate donations for charity. Failure to establish any of these
obligation contracted by the husband redounded to the benefit of the
circumstances means that the conjugal asset may not be bound to answer
conjugal partnership under Article 161 of the Civil Code. The Court
for the wife’s personal obligation. Considering that the foregoing
stated: In the present case, the obligation which the petitioner is seeking
circumstances are evidently not present in this case as the liability
to enforce against the conjugal property managed by the private
incurred by Michele arose from a judgment rendered in an unlawful
respondent Lily Yulo was undoubtedly contracted by Augusto Yulo for his
detainer case against her and her partner Matrai.
own benefit because at the time he incurred the obligation he had already
Judgments; Execution; While the trial courts has the competence to
abandoned his family and had left their conjugal home. Worse, he made it
identify and to secure properties and interest therein held by the judgment
appear that he was duly authorized by his wife in behalf of A & L
debtor for the satisfaction of a money judgment rendered against him,
Industries, to procure such loan from the petitioner. Clearly, to make A &
such exercise of its authority is premised on one important fact: that the
L Industries liable now for the said loan would be unjust and contrary to
properties levied upon, or sought to be levied upon, are properties
the express provision of the Civil Code. (Emphasis supplied)
unquestionably owned by the judgment debtor and are not exempt by law
Same; Same; Same; To hold the property in Taal St. liable for the
from execution.—While the trial court has the competence to identify and
obligations of Michele and Matrai would be going against the spirit and
to secure properties and interest therein held by the judgment debtor for
avowed objective of the Civil Code to give the utmost concern for the
the satisfaction of a money judgment rendered against him, such exercise
solidarity and well-being of the family as a unit.—Similarly in this case,
of its authority is premised on one important fact: that the properties
Michele, who was then already living separately from Cleodualdo, rented
levied upon, or sought to be levied upon, are properties unquestionably
the house in Lanka Drive for her and Matrai’s own benefit. In fact, when
owned by the judgment debtor and are not exempt by law from
they entered into the lease agreement, Michele and Matrai purported
execution. Also, a sheriff is not authorized to attach or levy on property
themselves to be husband and wife. Respondents’ bare allegation that
not belonging to the judgment debtor, and even incurs liability if he
petitioners lived with Michele on the leased property is not sufficient to
wrongfully levies upon the property of a third person. A sheriff has no
support the conclusion that the judgment debt against Michele and
authority to attach the property of any person under execution except
Matrai in the ejectment suit redounded to the benefit of the family of
that of the judgment debtor.
Michele and Cleodualdo and petitioners. Thus, in Homeowners Savings
Civil Law; Obligations; Conjugal Partnerships; In BA Finance
and Loan Bank v. Dailo, 453 SCRA 283 (2005), the Court stated thus: x x
Corporation v. Court of Appeals (161 SCRA 608 [1988]), the court ruled
x Ei incumbit probatio qui dicit, non qui negat (he who asserts, not he
that the petitioner cannot enforce the obligation contracted by Augusto
who denies, must prove). Petitioner’s sweeping conclusion that the loan
Yulo against his conjugal properties with respondent Lily Yulo because it
obtained by the late Marcelino Dailo, Jr. to finance the construction of
was not established that the obligation contracted by the husband
housing units without a doubt redounded to the benefit of his family,
redounded to the benefit of the conjugal partnership under Article 161 of
without adducing adequate proof, does not persuade641
the Civil Code.—It should be noted that the judgment debt for which the
subject property was being made to640
VOL. 565, SEPTEMBER 17, 6
6 SUPREME COURT 2008 41
40 REPORTS ANNOTATED Francisco vs. Gonzales
this Court. Other than petitioner’s bare allegation, there is nothing
Francisco vs. Gonzales
from the records of the case to compel a finding that, indeed, the loan
13
Usufruct
obtained by the late Marcelino Dailo, Jr. redounded to the benefit of the
family. Consequently, the conjugal partnership cannot be held liable for
the payment of the principal obligation. To hold the property in Taal St.
liable for the obligations of Michele and Matrai would be going against
the spirit and avowed objective of the Civil Code to give the utmost
concern for the solidarity and well-being of the family as a unit.
Same; Same; Same; Ownership; It is clear that both Michele and
Cleodualdo have waived their title to and ownership of the house and lot
in Taal St. in favor of petitioners—the property should not have been
levied and sold at execution sale, for lack of legal basis.—It is clear that
both Michele and Cleodualdo have waived their title to and ownership of
the house and lot in Taal St. in favor of petitioners. The property should
not have been levied and sold at execution sale, for lack of legal basis.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
M.B. Tomacruz & Associates Law Offices for petitioners.
M.A. Aguinaldo and Associates for petitioner-intervenor.
Ubano, Ancheta, Sianghio & Lozada for private respondents.
AUSTRIA-MARTINEZ,J.:
Assailed in the present petition for review on certiorari under Rule 45
of the Rules of Court is the Court of Appeals (CA) Decision dated April 30,
2007, which affirmed the Regional Trial Court (RTC) Orders dated June
4, 2003 and July 31, 2003, denying petitioners’ motion to stop execution
sale.
Petitioners Cleodia U. Francisco and Ceamantha U. Francisco are the
minor children of Cleodualdo M. Francisco (Cleodualdo) and Michele
Uriarte Francisco (Michele). In a642
642 SUPREME COURT REPORTS
ANNOTATED
Francisco vs. Gonzales
Partial Decision dated November 29, 2000 rendered by the RTC of
Makati, Branch 144, in Civil Case No. 93-2289 for Declaration of Nullity
of Marriage, the Compromise Agreement entered into by the estranged
couple was approved. The Compromise Agreement contained in part the
following provisions:
In their desire to manifest their genuine concern for their children,
Cleodia and Ceamantha, Cleodualdo and Michele have voluntarily agreed
to herein set forth their obligations, rights and responsibilities on matters
relating to their children’s support, custody, visitation, as well as to the
dissolution of their conjugal partnership of gains as follows: “7.
Title and ownership of the conjugal property consisting of a
house and lot located in Ayala Alabang, Muntinlupa, Metro
Manila shall be transferred by way of a deed of donation to
Cleodia and Ceamantha, as co-owners, when they reach nineteen
(19) and eighteen (18) y (a)ears old, respectively, subject to the
following conditions:
x x x”1
The property subject of the Compromise Agreement is a house and lot
covered by Transfer Certificate of Title No. 167907 in the name of
Cleodualdo M. Francisco, married to Michele U. Francisco, with an area
of 414 square meters, and located in 410 Taal St., Ayala Alabang Village,
Muntinlupa City.2
Meanwhile, in a case for Unlawful Detainer with Preliminary
Attachment filed by spouses Jorge C. Gonzales and Purificacion W.
Gonzales (respondents) against George Zoltan Matrai (Matrai) and
Michele, the Metropolitan Trial Court (MeTC) of Muntinlupa City,
Branch 80, rendered a Decision dated May 10, 2001, ordering Matrai and
Michele to vacate the premises leased to them located in
264 Lanka Drive,
_______________
1 Rollo, pp. 74-75.
2 Id., at pp. 64-65.
643
VOL. 565, SEPTEMBER 17, 2008 643
Francisco vs. Gonzales
Ayala Alabang Village, Muntinlupa City, and to pay back rentals, unpaid
telephone bills and attorney’s fees.3
Pending appeal with the RTC of Muntinlupa, Branch 256, an order
was issued granting respondents’ prayer for the execution of the MeTC
Decision.4 A notice of sale by execution was then issued by the sheriff
covering the real property under Transfer Certificate of Title No. T-
167907 in the name of Cleodualdo M. Francisco, married to Michele U.
Francisco.5
When petitioners’ grandmother learned of the scheduled auction, she,
as guardian-in-fact of petitioners, filed with the RTC an Affidavit of Third
Party Claim6 and a Very Urgent Motion to Stop Sale by Execution 7 but
this was denied in the Order dated June 4, 2003.8 Petitioners’ motion for
reconsideration was denied per RTC Order dated July 31, 2003.9
Petitioners then filed a petition for certiorari with the CA.
Pending resolution by the CA, the RTC issued an Order dated July 8,
2005, granting respondents’ petition for the issuance of a new certificate
of title.10 The RTC also issued an Order on February 13, 2006, granting
respondents’ motion for the issuance of a writ of possession. 11
14
Usufruct

On April 30, 2007, the CA dismissed the petition, the dispositive those belonging to Michele and Matrai. One man’s goods shall not be sold
portion of which reads: for another man’s debts.16
“WHEREFORE, premises considered, the Petition is hereby To begin with, the RTC should not have ignored that TCT No. 167907
DISMISSED. The Order(s), dated June 4, 2003 and July 31, 2003, of the is in the name of “Cleodualdo M. Francisco, married to Michele U.
Regional Trial Court of Muntinlupa City, Br. 256, in Civil Case No. 01- Francisco.” On its face, the title shows that the registered owner of the
201, STAND. Costs against the Petitioners. property is not Matrai and Michele but Cleodualdo, married to Michele.
_______________ This describes the
_______________
3 Rollo, p. 60.
4 Id., at p. 61. 12 Rollo, p. 44.
5 Id., at pp. 62-65. 13 Id., at p. 557.
6 Id., at pp. 66-67. 14 Id., at pp. 16-24.
7 Id., at pp. 69-71. 15 Go v. Yamane, G.R. No. 160762, May 3, 2006, 489 SCRA 107, 124.
8 Id., at pp. 79-80. 16 Yao v. Perello, 460 Phil. 658, 662; 414 SCRA 474, 477 (2003).
9 Id., at p. 81.
10 Id., at pp. 504-505. 645
11 Id., at p. 513. VOL. 565, SEPTEMBER 17, 2008 645
Francisco vs. Gonzales
civil status of Cleodualdo at the time the property was acquired. 17
644
Records show that Cleodualdo and Michele were married on June 12,
1986, prior to the effectivity of the Family Code on August 3, 1988. As
644 SUPREME COURT REPORTS
such, their property relations are governed by the Civil Code on conjugal
ANNOTATED partnership of gains.
Francisco vs. Gonzales The CA acknowledged that ownership of the subject property is
SO ORDERED.”12 conjugal in nature;18 however, it ruled that since Michele’s obligation was
not proven to be a personal debt, it must be inferred that it is conjugal
Hence, herein petition. As prayed for, the Court issued a temporary and redounded to the benefit of the family, and hence, the property may
restraining order on July 11, 2007, enjoining respondents, the RTC, the be held answerable for it.19
Register of Deeds, and the Sheriff from implementing or enforcing the The Court does not agree.
RTC Order dated July 8, 2005, canceling TCT No. 167907 and Order A wife may bind the conjugal partnership only when she purchases
dated February 13, 2006, issuing a writ of possession, until further orders things necessary for the support of the family, or when she borrows
from the Court.13 money for that purpose upon her husband’s failure to deliver the needed
Petitioners argue that: (1) they are the rightful owners of the property sum; when administration of the conjugal partnership is transferred to
as the Partial Decision issued by the RTC of Makati in Civil Case No. 93- the wife by the courts or by the husband; or when the wife gives moderate
2289 had already become final; (2) their parents already waived in their donations for charity. Failure to establish any of these circumstances
favor their rights over the property; (3) the adjudged obligation of Michele means that the conjugal asset may not be bound to answer for the wife’s
in the ejectment case did not redound to the benefit of the family; (4) personal obligation.20 Considering that the foregoing circumstances are
Michele’s obligation is a joint obligation between her and Matrai, not joint evidently not present in this case as the liability incurred by Michele
and solidary.14 arose from a judgment rendered in an unlawful detainer case against her
The Court finds that it was grave error for the RTC to proceed with and her partner Matrai.
the execution, levy and sale of the subject property. The power of the _______________
court in executing judgments extends only to properties unquestionably
belonging to the judgment debtor alone,15 in the present case to 646
646 SUPREME COURT REPORTS
15
Usufruct
ANNOTATED
Francisco vs. Gonzales
Furthermore, even prior to the issuance of the Notice of Levy on
Execution on November 28, 2001,21 there was already annotated on the
title the following inscription:
Entry No. 23341-42/T-167907—Nullification of Marriage
By order of the Court RTC, NCR, Branch 144, Makati City dated July
4, 2001, which become final and executory on October 18, 2001 declaring
the Marriage Contract between Michelle Uriarte and Cleodualdo M.
Francisco, Jr. is null & void ab initio and title of ownership of the
conjugal property consisting of the above-described property shall be
transferred by way of a Deed of Donation to Cleodia Michaela U.
Francisco and Ceamantha Maica U. Francisco, as co-owners when they
reach nineteen (19) and eighteen (18) yrs. old to the condition that
Cleodualdo, shall retain usufructuary rights over the property until he
reaches the age of 65 yrs. Old.
Date of instrument—Oct 18, 2001
Date of inscription—Oct 22, 2001.22
This annotation should have put the RTC and the sheriff on guard, and
they should not have proceeded with the execution of the judgment debt
of Michele and Matrai.
While the trial court has the competence to identify and to secure
properties and interest therein held by the judgment debtor for the
satisfaction of a money judgment rendered against him, such exercise of
its authority is premised on one important fact: that the properties levied
upon, or sought to be levied upon, are properties unquestionably
owned by the judgment debtor and are not exempt by law from
execution.23 Also, a sheriff is not authorized to attach or levy on property
not belonging to the judgment debtor, and even incurs liability if he
wrongfully levies upon the property of a third person. A sheriff has no
authority to attach the property
_______________
647
VOL. 565, SEPTEMBER 17, 2008 647
Francisco vs. Gonzales
of any person under execution except that of the judgment debtor. 24
It should be noted that the judgment debt for which the subject
property was being made to answer was incurred by Michele and her
partner,25 Matrai. Respondents allege that the lease of the property in
Lanka Drive redounded to the benefit of the family. 26 By no stretch of
one’s imagination can it be concluded that said debt/obligation was
incurred for the benefit of the conjugal partnership or that some
advantage accrued to the welfare of the family. In BA Finance
Corporation v. Court of Appeals,27 the Court ruled that the petitioner
cannot enforce the obligation contracted by Augusto Yulo against his
conjugal properties with respondent Lily Yulo because it was not
established that the obligation contracted by the husband redounded to
the benefit of the conjugal partnership under Article 161 of the Civil
Code. The Court stated:
“In the present case, the obligation which the petitioner is seeking to
enforce against the conjugal property managed by the private respondent
Lily Yulo was undoubtedly contracted by Augusto Yulo for his own
benefit because at the time he incurred the obligation he had already
abandoned his family and had left their conjugal home. Worse, he made it
appear that he was duly authorized by his wife in behalf of A & L
Industries, to procure such loan from the petitioner. Clearly, to make A &
L Industries liable now for the said loan would be unjust and contrary to
the express provision of the Civil Code.” (Emphasis supplied)
Similarly in this case, Michele, who was then already living
separately from Cleodualdo,28 rented the house in Lanka Drive for her
and Matrai’s own benefit. In fact, when they
_______________
648
648 SUPREME COURT REPORTS
ANNOTATED
Francisco vs. Gonzales
entered into the lease agreement, Michele and Matrai purported
themselves to be husband and wife.29 Respondents’ bare allegation that
petitioners lived with Michele on the leased property is not sufficient to
support the conclusion that the judgment debt against Michele and
Matrai in the ejectment suit redounded to the benefit of the family of
Michele and Cleodualdo and petitioners. Thus, in Homeowners Savings
and Loan Bank v. Dailo, the Court stated thus:
“x x x Ei incumbit probatio qui dicit, non qui negat (he who asserts,
not he who denies, must prove). Petitioner’s sweeping conclusion that the
loan obtained by the late Marcelino Dailo, Jr. to finance the construction
of housing units without a doubt redounded to the benefit of his family,
without adducing adequate proof, does not persuade this Court. Other
than petitioner’s bare allegation, there is nothing from the records of the
case to compel a finding that, indeed, the loan obtained by the late
Marcelino Dailo, Jr. redounded to the benefit of the family. Consequently,
the conjugal partnership cannot be held liable for the payment of the
principal obligation.”30
16
Usufruct
To hold the property in Taal St. liable for the obligations of Michele
and Matrai would be going against the spirit and avowed objective of the
Civil Code to give the utmost concern for the solidarity and well-being of
the family as a unit.31
In justifying the levy against the property, the RTC went over the
Compromise Agreement as embodied in the Partial Decision dated
November 29, 2000. Oddly, the RTC ruled that there was no effective
transfer of ownership to the siblings Cleodia and Ceamantha Francisco.
In the same breath, the RTC astonishingly ruled that Michele is now the
owner of the property inasmuch as Cleodualdo already waived his rights
over the property. The Compromise Agreement must not be
_______________
29 See Complaint in Civil Case No. 4905, p. 147.
30 G.R. No. 153802, March 11, 2005, 453 SCRA 283, 292.
31 Luzon Surety Co., Inc. v. Garcia, 140 Phil. 509; 30 SCRA 111
(1969).
649
VOL. 565, SEPTEMBER 17, 2008 649
Francisco vs. Gonzales
read piece-meal but in its entirety. It is provided therein, thus:
In their desire to manifest their genuine concern for their children,
Cleodia and Ceamantha, “7. Cleodualdo and Michelle have
voluntarily agreed to herein set forth their obligations, rights and
responsibilities on matters relating to their children’s support, custody,
visitation, as well as to the dissolution of their conjugal partnership of
gains as follows:
(a)Title and ownership of the conjugal property
consisting of a house and lot located in Ayala Alabang,
Muntinlupa, Metro Manila shall be transferred by way of a
deed of donation to Cleodia and Ceamantha, as co-owners,
when they reach nineteen (19) and eighteen (18) years old,
respectively, subject to the following conditions:
Cleodualdo shall retain usufructuary rights over the property
until he reaches the age of 65 years old, with the following rights
and responsibilities: a.1.
x x x x”32 (Emphasis supplied)
From the foregoing, it is clear that both Michele and Cleodualdo have
waived their title to and ownership of the house and lot in Taal St. in
favor of petitioners. The property should not have been levied and sold at
execution sale, for lack of legal basis.
Verily, the CA committed an error in sustaining the RTC Orders
dated June 4, 2003 and July 31, 2003.
WHEREFORE, the petition is GRANTED. The assailed Court of
Appeals Decision dated April 30, 2007, affirming RTC Orders dated June
4, 2003 and July 31, 2003, are hereby NULLIFIED and SET ASIDE. The
temporary restraining order issued by the Court per Resolution of July
11, 2007 is hereby made PERMANENT.
Costs against respondents.
_______________
32 Rollo, pp. 74-75.
VOL. 456, APRIL 13, 2005 17
National Housing Authority vs. Court of
Appeals
G.R. No. 148830. April 13, 2005.*
NATIONAL HOUSING AUTHORITY, petitioner, vs. COURT OF
APPEALS, BULACAN GARDEN CORPORATION and MANILA
SEEDLING BANK FOUNDATION, INC., respondents.
Actions; Appeals; Even though the matter raised in a petition for
review under Rule 45 is factual, it deserves resolution if the findings of the
trial court and the appellate court conflict on several points.—Rule 45 of
the 1997 Rules of Civil Procedure limits the jurisdiction of this Court to
the review of errors of law. Absent any of the established grounds for
exception, this Court will not disturb findings of fact of lower courts.
Though the matter raised in this petition is factual, it deserves resolution
because the findings of the trial court and the appellate court conflict on
several points.
Usufruct; A usufruct may be constituted for a specified term and
under such conditions as the parties may deem convenient subject to the
legal provisions on usufruct; A usufructuary may lease the object held in
usufruct.—A usufruct may be constituted for a specified term and under
such conditions as the parties may deem convenient subject to the legal
provisions on usufruct. A usufructuary may lease the object held in
usufruct. Thus, the NHA may not evict BGC if the 4,590 square meter
portion MSBF leased to BGC is within the seven-hectare area held in
usufruct by MSBF. The owner of the property must respect the lease
entered into by the usufructuary so long as the usufruct exists. However,
the NHA has the right to evict BGC if BGC occupied a portion outside of
the seven-hectare area covered by MSBF’s usufructuary rights.
Same; Manila Seedling Bank Foundation, Inc.’s (MSBF) right as a
usufructuary as granted by Proclamation No. 1670 should rest on
something more substantial than where it chose to place a gate.—More
17
Usufruct
evidence supports MSBF’s stand on the location of the seven-hectare
area. The main structures of MSBF are found in the area indicated by
MSBF’s survey. These structures are the main office, the three green
houses, the warehouse and the composting area. On
_______________
* FIRST DIVISION.
18
1 SUPREME COURT REPORTS
8 ANNOTATED
National Housing Authority vs.
Court of Appeals
the other hand, the NHA’s delineation of the seven-hectare area
would cover only the four hardening bays and the display area. It is easy
to distinguish between these two groups of structures. The first group
covers buildings and facilities that MSBF needs for its operations. MSBF
built these structures before the present controversy started. The second
group covers facilities less essential to MSBF’s existence. This distinction
is decisive as to which survey should prevail. It is clear that the MSBF
intended to use the yellow-shaded area primarily because it erected its
main structures there. Inobaya testified that his main consideration in
using Agham Road as the starting point for his survey was the presence
of a gate there. The location of the gate is not a sufficient basis to
determine the starting point. MSBF’s right as a usufructuary as granted
by Proclamation No. 1670 should rest on something more substantial
than where MSBF chose to place a gate. To prefer the NHA’s survey to
MSBF’s survey will strip MSBF of most of its main facilities. Only the
main building of MSBF will remain with MSBF since the main building
is near the corner of EDSA and Quezon Avenue. The rest of MSBF’s main
facilities will be outside the seven-hectare area.
Same; A usufructuary has the duty to protect the owner’s inter-ests—
a usufruct gives a right to enjoy the property of another with the obligation
of preserving its form and substance, unless the title constituting it or the
law otherwise provides.—This Court cannot countenance MSBF’s act of
exceeding the seven-hectare portion granted to it by Proclamation No.
1670. A usufruct is not simply about rights and privileges. A usufructuary
has the duty to protect the owner’s interests. One such duty is found in
Article 601 of the Civil Code which states: ART. 601. The usufructuary
shall be obliged to notify the owner of any act of a third person, of which
he may have knowledge, that may be prejudicial to the rights of
ownership, and he shall be liable should he not do so, for damages, as if
they had been caused through his own fault. A usufruct gives a right
to enjoy the property of another with the obligation of preserving its form
and substance, unless the title constituting it or the law otherwise
provides. This controversy would not have arisen had MSBF respected
the limit of the beneficial use given to it. MSBF’s encroachment of its
benefactor’s property gave birth to the confusion that attended this case.
To put this matter entirely to rest, it is not enough to remind the NHA to
respect MSBF’s choice of the location of its seven-hectare area. MSBF, for
its part, must vacate the area that is not part of its usu-
19
VOL. 456, APRIL 13, 2005 1
9
National Housing Authority vs.
Court of Appeals
fruct. MSBF’s rights begin and end within the seven-hectare portion
of its usufruct. This Court agrees with the trial court that MSBF has
abused the privilege given it under Proclamation No. 1670. The direct
corollary of enforcing MSBF’s rights within the seven-hectare area is the
negation of any of MSBF’s acts beyond it.
Same; Corporation Law; The law clearly limits any usufruct
constituted in favor of a corporation or association to 50 years—a usufruct
is meant only as a lifetime grant.—The law clearly limits any usufruct
constituted in favor of a corporation or association to 50 years. A usufruct
is meant only as a lifetime grant. Unlike a natural person, a corporation
or association’s lifetime may be extended indefinitely. The usufruct would
then be perpetual. This is especially invidious in cases where the usufruct
given to a corporation or association covers public land. Proclamation No.
1670 was issued 19 September 1977, or 28 years ago. Hence, under
Article 605, the usufruct in favor of MSBF has 22 years left.
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.
Fregillana, Jr., D.D. for respondents.
CARPIO, J.:
The Case
This is a petition for review1 seeking to set aside the Decision2 dated 30
March 2001 of the Court of Appeals (“appellate court”) in CA-G.R. CV No.
48382, as well as its Resolution dated 25 June 2001 denying the motion
18
Usufruct
for reconsideration. The appellate court reversed the Decision3 of Branch
87 of the
_______________
Under Rule 45 of the 1997 Rules on Civil Procedure.
1 4
Penned by Justice Bennie Adefuin-Dela Cruz, with Associate
2
Justices Andres B. Reyes, Jr. and Josefina Guevara-Salonga, concurring.
3 Penned by Judge Elsie Ligot Telan.
20
20 SUPREME COURT REPORTS
ANNOTATED
National Housing Authority vs. Court of
Appeals
Regional Trial Court of Quezon City (“trial court”) dated 8 March 1994
in Civil Case No. Q-53464. The trial court dismissed the complaint for
injunction filed by Bulacan Garden Corporation (“BGC”) against the
National Housing Authority (“NHA”). BGC wanted to enjoin the NHA
from demolishing BGC’s facilities on a lot leased from Manila Seedling
Bank Foundation, Inc. (“MSBF”). MSBF allegedly has usufructuary
rights over the lot leased to BGC.
Antecedent Facts
On 24 October 1968, Proclamation No. 481 issued by then President
Ferdinand Marcos set aside a 120-hectare portion of land in Quezon City
owned by the NHA4 as reserved property for the site of the National
Government Center (“NGC”). On 19 September 1977, President Marcos
issued Proclamation No. 1670, which removed a seven-hectare portion
from the coverage of the NGC. Proclamation No. 1670 gave MSBF
usufructuary rights over this segregated portion, as follows:
Pursuant to the powers vested in me by the Constitution and the laws of
the Philippines, I, FERDINAND E. MARCOS, President of the Republic
of the Philippines, do hereby exclude from the operation of Proclamation
No. 481, dated October 24, 1968, which established the National
Government Center Site, certain parcels of land embraced therein and
reserving the same for the Manila Seedling Bank Foundation, Inc., for
use in its operation and projects, subject to private rights if any there
be, and to future survey, under the administration of the
Foundation.
This parcel of land, which shall embrace 7 hectares, shall be
determined by the future survey based on the technical descriptions
found in Proclamation No. 481, and most particularly on the original
survey of the area, dated July 1910 to June 1911, and on the subdivision
survey dated April 19-25, 1968. (Emphasis added)
MSBF occupied the area granted by Proclamation No. 1670. Over the
years, MSBF’s occupancy exceeded the seven-
_______________
Under TCT No. 309814. Records, p. 286.
21
VOL. 456, APRIL 13, 2005 21
National Housing Authority vs. Court of
Appeals
hectare area subject to its usufructuary rights. By 1987, MSBF occupied
approximately 16 hectares. By then the land occupied by MSBF was
bounded by Epifanio de los Santos Avenue (“EDSA”) to the west, Agham
Road to the east, Quezon Avenue to the south and a creek to the north.
On 18 August 1987, MSBF leased a portion of the area it occupied to
BGC and other stallholders. BGC leased the portion facing EDSA, which
occupies 4,590 square meters of the 16-hectare area.
On 11 November 1987, President Corazon Aquino issued
Memorandum Order No. 127 (“MO 127”) which revoked the reserved
status of “the 50 hectares, more or less, remaining out of the 120 hectares
of the NHA property reserved as site of the National Government
Center.” MO 127 also authorized the NHA to commercialize the area and
to sell it to the public.
On 15 August 1988, acting on the power granted under MO 127, the
NHA gave BGC ten days to vacate its occupied area. Any structure left
behind after the expiration of the ten-day period will be demolished by
NHA.
BGC then filed a complaint for injunction on 21 April 1988 before the
trial court. On 26 May 1988, BGC amended its complaint to include
MSBF as its co-plaintiff.
The Trial Court’s Ruling
The trial court agreed with BGC and MSBF that Proclamation No. 1670
gave MSBF the right to conduct the survey, which would establish the
seven-hectare area covered by MSBF’s usufructuary rights. However, the
trial court held that MSBF failed to act seasonably on this right to
conduct the survey. The trial court ruled that the previous surveys
conducted by MSBF covered 16 hectares, and were thus inappropriate to
determine the seven-hectare area. The trial court concluded that to allow
MSBF to determine the seven-hectare area now would be grossly unfair
to the grantor of the usufruct.
22
22 SUPREME COURT REPORTS
ANNOTATED
19
Usufruct
National Housing Authority vs. Court of
Appeals
On 8 March 1994, the trial court dismissed BGC’s complaint for
injunction. Thus:
“Premises considered, the complaint praying to enjoin the National
Housing Authority from carrying out the demolition of the plaintiff’s
structure, improvements and facilities in the premises in question is
hereby DISMISSED, but the suggestion for the Court to rule that
Memorandum Order 127 has repealed Proclamation No. 1670 is
DENIED. No costs.
SO ORDERED.”5
The NHA demolished BGC’s facilities soon thereafter.
The Appellate Court’s Ruling
Not content with the trial court’s ruling, BGC appealed the trial court’s
Decision to the appellate court. Initially, the appellate court agreed with
the trial court that Proclamation No. 1670 granted MSBF the right to
determine the location of the seven-hectare area covered by its
usufructuary rights. However, the appellate court ruled that MSBF did in
fact assert this right by conducting two surveys and erecting its main
structures in the area of its choice.
On 30 March 2001, the appellate court reversed the trial court’s
ruling. Thus:
“WHEREFORE, premises considered, the Decision dated March 8, 1994
of the Regional Trial Court of Quezon City, Branch 87, is hereby
REVERSED and SET ASIDE. The National Housing Authority is
enjoined from demolishing the structures, facilities and improvements of
the plaintiff-appellant Bulacan Garden Corporation at its leased premises
located in Quezon City which premises were covered by Proclamation No.
1670, during the existence of the contract of lease it (Bulacan Garden)
had entered with the plaintiff-appellant Manila Seedling Bank
Foundation, Inc.
No costs.
_______________
5 Rollo, p. 43.
23
VOL. 456, APRIL 13, 2005 23
National Housing Authority vs. Court of
Appeals
SO ORDERED.”6
The NHA filed a motion for reconsideration, which was denied by the
appellate court on 25 June 2001.
Hence, this petition.
The Issues
The following issues are considered by this Court for resolution:
WHETHER THE PETITION IS NOW MOOT BECAUSE OF THE
DEMOLITION OF THE STRUCTURES OF BGC; and
WHETHER THE PREMISES LEASED BY BGC FROM MSBF IS
WITHIN THE SEVEN-HECTARE AREA THAT PROCLAMATION NO.
1670 GRANTED TO MSBF BY WAY OF USUFRUCT.
The Ruling of the Court
We remand this petition to the trial court for a joint survey to determine
finally the metes and bounds of the seven-hectare area subject to MSBF’s
usufructuary rights.
Whether the Petition is Moot because of the
Demolition of BGC’s Facilities
BGC claims that the issue is now moot due to NHA’s demolition of BGC’s
facilities after the trial court dismissed BGC’s complaint for injunction.
BGC argues that there is nothing more to enjoin and that there are no
longer any rights left for adjudication.
We disagree.
BGC may have lost interest in this case due to the demolition of its
premises, but its co-plaintiff, MSBF, has not. The issue for resolution has
a direct effect on MSBF’s usufructu-
_______________
6 Ibid., p. 31.
24
24 SUPREME COURT REPORTS
ANNOTATED
National Housing Authority vs. Court of
Appeals
ary rights. There is yet the central question of the exact location of the
seven-hectare area granted by Proclamation No. 1670 to MSBF. This
issue is squarely raised in this petition. There is a need to settle this
issue to forestall future disputes and to put this 20-year litigation to rest.
On the Location of the Seven-Hectare Area Granted by
Proclamation No. 1670 to MSBF as Usufructuary
Rule 45 of the 1997 Rules of Civil Procedure limits the jurisdiction of this
Court to the review of errors of law.7 Absent any of the established
grounds for exception,8 this Court will
20
Usufruct
_______________
7 Section 1 of Rule 45 states:
SECTION 1. Filing of petition with Supreme Court.—A party desiring to
appeal by certiorari from a judgment or final order or resolution of the
Court of Appeals, the Sandiganbayan, the Regional Trial Court or other
courts whenever authorized by law, may file with the Supreme Court a
verified petition for review on certiorari. The petition shall raise only
questions of law which must be distinctly set forth.
8As laid out in BPI Credit Corporation v. Court of Appeals, G.R.
96755, 4 December 1991, 204 SCRA 601:
1. (1)When the conclusion is a finding grounded entirely on
speculation, surmises and conjectures;
2. (2)When the inference made is manifestly mistaken, absurd or
impossible;
3. (3)When there is a grave abuse of discretion;
4. (4)When the judgment is based on a misapprehension of facts;
5. (5)When the findings of facts [of the trial court and the appellate
court] are conflicting;
6. (6)When the [appellate court] in making its findings, went beyond
the issues of the case and the same is contrary to the admissions
of both appellant and appellee;
7. (7)When the findings of the [appellate court] are contrary to those
of the trial court;
25
VOL. 456, APRIL 13, 2005 25
National Housing Authority vs. Court of
Appeals
not disturb findings of fact of lower courts. Though the matter raised in
this petition is factual, it deserves resolution because the findings of the
trial court and the appellate court conflict on several points.
The entire area bounded by Agham Road to the east, EDSA to the
west, Quezon Avenue to the south and by a creek to the north measures
approximately 16 hectares. Proclamation No. 1670 gave MSBF a usufruct
over only a seven-hectare area. The BGC’s leased portion is located along
EDSA.
A usufruct may be constituted for a specified term and under such
conditions as the parties may deem convenient subject to the legal
provisions on usufruct.9 A usufructuary may lease the object held in
usufruct.10 Thus, the NHA may not evict BGC if the 4,590 square meter
portion MSBF leased to BGC is within the seven-hectare area held in
usufruct by MSBF. The owner of the property must respect the lease
entered into by the usufructuary so long as the usufruct
exists.11 However, the NHA has the right to evict BGC if BGC occupied a
portion outside of the seven-hectare area covered by MSBF’s
usufructuary rights.
MSBF’s survey shows that BGC’s stall is within the seven-hectare
area. On the other hand, NHA’s survey shows otherwise. The entire
controversy revolves on the question of whose land survey should prevail.
_______________
26
26 SUPREME COURT REPORTS
ANNOTATED
National Housing Authority vs. Court of
Appeals
MSBF’s survey plots the location of the seven-hectare portion by starting
its measurement from Quezon Avenue going northward along EDSA up
until the creek, which serves as the northern boundary of the land in
question. Mr. Ben Malto (“Malto”), surveyor for MSBF, based his survey
method on the fact that MSBF’s main facilities are located within this
area.
On the other hand, NHA’s survey determines the seven-hectare
portion by starting its measurement from Quezon Avenue going towards
Agham Road. Mr. Rogelio Inobaya (“Inobaya”), surveyor for NHA, based
his survey method on the fact that he saw MSBF’s gate fronting Agham
Road.
BGC presented the testimony of Mr. Lucito M. Bertol (“Bertol”),
General Manager of MSBF. Bertol presented a map, 12 which detailed the
area presently occupied by MSBF. The map had a yellow-shaded portion,
which was supposed to indicate the seven-hectare area. It was clear from
both the map and Bertol’s testimony that MSBF knew that it had
occupied an area in excess of the seven-hectare area granted by
Proclamation No. 1670.13 Upon cross-examination, Bertol admitted that
he personally did not know the exact boundaries of the seven-hectare
area.14 Bertol also admitted that MSBF prepared the map without
consulting NHA, the owner of the property.15
BGC also presented the testimony of Malto, a registered forester and
the Assistant Vice-President of Planning, Research and Marketing of
MSBF. Malto testified that he conducted the land survey, which was used
to construct the map presented by Bertol. 16 Bertol clarified that he
authorized two surveys, one in 1984 when he first joined MSBF, and the
other in 1986.17 In both instances, Mr. Malto testified that he
_______________
21
Usufruct
27
VOL. 456, APRIL 13, 2005 27
National Housing Authority vs. Court of
Appeals
was asked to survey a total of 16 hectares, not just seven hectares. Malto
testified that he conducted the second survey in 1986 on the instruction of
MSBF’s general manager. According to Malto, it was only in the second
survey that he was told to determine the seven-hectare portion. Malto
further clarified that he based the technical descriptions of both surveys
on a previously existing survey of the property. 18
The NHA presented the testimony of Inobaya, a geodetic engineer
employed by the NHA. Inobaya testified that as part of the NHA’s Survey
Division, his duties included conducting surveys of properties
administered by the NHA.19 Inobaya conducted his survey in May 1988 to
determine whether BGC was occupying an area outside the seven-hectare
area MSBF held in usufruct.20 Inobaya surveyed the area occupied by
MSBF following the same technical descriptions used by Malto. Inobaya
also came to the same conclusion that the area occupied by MSBF, as
indicated by the boundaries in the technical descriptions, covered a total
of 16 hectares. He further testified that the seven-hectare portion in the
map presented by BGC,21 which was constructed by Malto, does not tally
with the boundaries BGC and MSBF indicated in their complaint.
Article 565 of the Civil Code states:
ART. 565. The rights and obligations of the usufructuary shall be those
provided in the title constituting the usufruct; in default of such title, or
in case it is deficient, the provisions contained in the two following
Chapters shall be observed.
In the present case, Proclamation No. 1670 is the title constituting the
usufruct. Proclamation No. 1670 categorically states that the seven-
hectare area shall be determined “by
_______________
18 Ibid., pp. 4-5.
19 TSN, 5 April 1989, p. 2.
20 Ibid., p. 7.
21 Exhibit “A”, supra note 12.
28
28 SUPREME COURT REPORTS
ANNOTATED
National Housing Authority vs. Court of
Appeals
future survey under the administration of the Foundation subject to
private rights if there be any.” The appellate court and the trial court
agree that MSBF has the latitude to determine the location of its seven-
hectare usufruct portion within the 16-hectare area. The appellate court
and the trial court disagree, however, whether MSBF seasonably
exercised this right.
It is clear that MSBF conducted at least two surveys. Although both
surveys covered a total of 16 hectares, the second survey specifically
indicated a seven-hectare area shaded in yellow. MSBF made the first
survey in 1984 and the second in 1986, way before the present
controversy started. MSBF conducted the two surveys before the lease to
BGC. The trial court ruled that MSBF did not act seasonably in
exercising its right to conduct the survey. Confronted with evidence that
MSBF did in fact conduct two surveys, the trial court dismissed the two
surveys as self-serving. This is clearly an error on the part of the trial
court. Proclamation No. 1670 authorized MSBF to determine the location
of the seven-hectare area. This authority, coupled with the fact that
Proclamation No. 1670 did not state the location of the seven-hectare
area, leaves no room for doubt that Proclamation No. 1670 left it to MSBF
to choose the location of the seven-hectare area under its usufruct.
More evidence supports MSBF’s stand on the location of the seven-
hectare area. The main structures of MSBF are found in the area
indicated by MSBF’s survey. These structures are the main office, the
three green houses, the warehouse and the composting area. On the other
hand, the NHA’s delineation of the seven-hectare area would cover only
the four hardening bays and the display area. It is easy to distinguish
between these two groups of structures. The first group covers buildings
and facilities that MSBF needs for its operations. MSBF built these
structures before the present controversy started. The second group
covers facilities less essential to MSBF’s existence. This distinction is
decisive as to which survey should prevail. It is clear that the MSBF
intended to
29
VOL. 456, APRIL 13, 2005 29
National Housing Authority vs. Court of
Appeals
use the yellow-shaded area primarily because it erected its main
structures there.
Inobaya testified that his main consideration in using Agham Road as
the starting point for his survey was the presence of a gate there. The
location of the gate is not a sufficient basis to determine the starting
point. MSBF’s right as a usufructuary as granted by Proclamation No.
1670 should rest on something more substantial than where MSBF chose
to place a gate.
22
Usufruct
To prefer the NHA’s survey to MSBF’s survey will strip MSBF of most
of its main facilities. Only the main building of MSBF will remain with
MSBF since the main building is near the corner of EDSA and Quezon
Avenue. The rest of MSBF’s main facilities will be outside the seven-
hectare area.
On the other hand, this Court cannot countenance MSBF’s act of
exceeding the seven-hectare portion granted to it by Proclamation No.
1670. A usufruct is not simply about rights and privileges. A usufructuary
has the duty to protect the owner’s interests. One such duty is found in
Article 601 of the Civil Code which states:
ART. 601. The usufructuary shall be obliged to notify the owner of any act
of a third person, of which he may have knowledge, that may be
prejudicial to the rights of ownership, and he shall be liable should he not
do so, for damages, as if they had been caused through his own fault.
A usufruct gives a right to enjoy the property of another with the
obligation of preserving its form and substance, unless the title
constituting it or the law otherwise provides.22 This controversy would
not have arisen had MSBF respected the limit of the beneficial use given
to it. MSBF’s encroachment of its benefactor’s property gave birth to the
confusion that attended this case. To put this matter entirely to rest, it is
not enough to remind the NHA to respect MSBF’s choice of the
_______________
22 Civil Code, Art. 562.
30
30 SUPREME COURT REPORTS
ANNOTATED
National Housing Authority vs. Court of
Appeals
location of its seven-hectare area. MSBF, for its part, must vacate the
area that is not part of its usufruct. MSBF’s rights begin and end within
the seven-hectare portion of its usufruct. This Court agrees with the trial
court that MSBF has abused the privilege given it under Proclamation
No. 1670. The direct corollary of enforcing MSBF’s rights within the
seven-hectare area is the negation of any of MSBF’s acts beyond it.
The seven-hectare portion of MSBF is no longer easily determinable
considering the varied structures erected within and surrounding the
area. Both parties advance different reasons why their own surveys
should be preferred. At this point, the determination of the seven-hectare
portion cannot be made to rely on a choice between the NHA’s and
MSBF’s survey. There is a need for a new survey, one conducted jointly
by the NHA and MSBF, to remove all doubts on the exact location of the
seven-hectare area and thus avoid future controversies. This new survey
should consider existing structures of MSBF. It should as much as
possible include all of the facilities of MSBF within the seven-hectare
portion without sacrificing contiguity.
A final point. Article 605 of the Civil Code states:
ART. 605. Usufruct cannot be constituted in favor of a town,
corporation, or association for more than fifty years. If it has been
constituted, and before the expiration of such period the town is
abandoned, or the corporation or association is dissolved, the usufruct
shall be extinguished by reason thereof. (Emphasis added)
The law clearly limits any usufruct constituted in favor of a corporation
or association to 50 years. A usufruct is meant only as a lifetime grant.
Unlike a natural person, a corporation or association’s lifetime may be
extended indefinitely. The usufruct would then be perpetual. This is
especially invidious in cases where the usufruct given to a corporation or
association covers public land. Proclamation No. 1670 was
31
VOL. 456, APRIL 13, 2005 31
National Housing Authority vs. Court of
Appeals
issued 19 September 1977, or 28 years ago. Hence, under Article 605, the
usufruct in favor of MSBF has 22 years left.
MO 127 released approximately 50 hectares of the NHA property as
reserved site for the National Government Center. However, MO 127
does not affect MSBF’s seven-hectare area since under Proclamation No.
1670, MSBF’s seven-hectare area was already “exclude[d] from the
operation of Proclamation No. 481, dated October 24, 1968, which
established the National Government Center Site.”
WHEREFORE, the Decision of the Court of Appeals dated 30 March
2001 and its Resolution dated 25 June 2001 in CA-G.R. CV No. 48382 are
SET ASIDE. This case is REMANDED to Branch 87 of the Regional Trial
Court of Quezon City, which shall order a joint survey by the National
Housing Authority and Manila Seedling Bank Foundation, Inc. to
determine the metes and bounds of the seven-hectare portion of Manila
Seedling Bank Foundation, Inc. under Proclamation No. 1670. The seven-
hectare portion shall be contiguous and shall include as much as possible
all existing major improvements of Manila Seedling Bank Foundation,
Inc. The parties shall submit the joint survey to the Regional Trial Court
for its approval within sixty days from the date ordering the joint survey.
SO ORDERED.
Davide, Jr. (C.J., Chairman), Quisumbing, Ynares-
Santiago and Azcuna, JJ., concur.
23
Usufruct
Judgment and resolution set aside, case remanded to Regional Trial
Court, Branch 87, Quezon City for further proceedings.
Notes.—Under the Spanish Civil Code of 1889, a spouse who is
survived by brothers or sisters or children of brothers or sisters of the
decedent, was entitled to receive in usufruct the part of the inheritance
pertaining to said heirs. (Noel vs. Court of Appeals, 240 SCRA 78 [1995])
32
32 SUPREME COURT REPORTS
ANNOTATED
Aberdeen Court, Inc. vs. Agustin, Jr.
In a usufruct, only the jus utendi and jus fruendi over the property is
transferred to the usufructuary—the owner of the property maintains
the jus disponendi or the power to alienate, encumber, transform, and
even destroy the same. (Hemedes vs. Court of Appeals, 316 SCRA
347 [1999])
——o0o——
© Copyright 2019 Central Book Supply, Inc. All rights reserve
[No. L-2659. October 12, 1950]
In the matter of the testate estate of Emil Maurice Bachrach, deceased.
MARY McDONALD BACHRACH, petitioner and appellee, vs. SOPHIE
SEIFERT and ELISA ELIANOFF, oppositors and appellants.
1. 1.USUFRUCT; STOCK DIVIDEND CONSIDERED CIVIL FRUIT
AND BELONGS TO USUFRUCTUARY.—Under the
Massachusetts rule, a stock dividend is considered part of the
capital and belongs to the remainderman; while under the
Pennsylvania rule, all earnings of a corporation, when declared
as dividends in whatever form, made during the lifetime of the
usufructuary, belong to the latter.
1. 2.ID.; ID.—The Pennsylvania rule is more in accord with our
statutory laws than the Massachusetts rule. Under section 16 of
our Corporation Law, no corporation may make or
declare any dividend except from the surplus profits arising
from its business. Any dividend, therefore, whether cash or
stock, represents surplus profits. Article 471 of the Civil Code
provides that the usufructuary shall be entitled to receive all the
natural, industrial, and civil fruits of the property in usufruct.
The stock dividend in question in this case is a civil fruit of the
original investment. The shares of stock issued in payment of
said dividend may be sold independently of the original shares,
just as the offspring of a domestic animal may be sold
independently of its mother.
APPEAL from an order of the Court of First Instance of Manila. Rodas, J.
The facts are stated in the opinion of the Court.
Ross, Selph, Carrascoso & Janda for appellants.
Delgado & Flores for appellee.
OZAETA, J.:
Is a stock dividend fruit or income, which belongs to the usufructuary, or
is it capital or part of the corpus of the
484
484 PHILIPPINE REPORTS
ANNOTATED
Bachrach vs. Seifert and Elianoff
estate, which pertains to the remainderman? That is the question raised
in this appeal.
The deceased E. M. Bachrach, who left no forced heir except his widow
Mary McDonald Bachrach, in his last will and testament made various
legacies in cash and willed the remainder of his estate as follows:
"Sixth: It is my will and do herewith bequeath and devise to my beloved
wife Mary McDonald Bachrach for life all the fruits and usufruct of the
remainder of all my estate after payment of the legacies, bequests, and
gifts provided for above; and she may enjoy said usufruct and use or
spend such fruits as she may in any manner wish."
The will further provided that upon the death of Mary McDonald
Bachrach, one-half of all his estate "shall be divided share and share alike
by and between my legal heirs, to the exclusion of my brothers."
The estate of E. M. Bachrach, as owner of 108,000 shares of stock of
the Atok-Big Wedge Mining Co., Inc., received from the latter 54,000
shares representing 50 per cent stock dividend on the said 108,000
shares. On June 10, 1948, Mary McDonald Bachrach, as usufructuary or
life tenant of the estate, petitioned the lower court to authorize the
Peoples Bank and Trust Company, as administrator of the estate of E. M.
Bachrach, to transfer to her the said 54,000 shares of stock dividend by
indorsing and delivering to her the corresponding certificate of stock,
claiming that said dividend, although paid out in the form of stock, is
fruit or income and therefore belonged to her as usufructuary or life
tenant. Sophie Siefert and Elisa Elianoff, legal heirs of the deceased,
24
Usufruct
opposed said petition on the ground that the stock dividend in question
was not income but formed part of the capital and therefore belonged not
to the usufructuary but to the remainderman. And they have appealed
from the order granting the petition and overruling their objection.
While appellants admit that a cash dividend is an income, they
contend that a stock dividend is not, but merely repre-
485
VOL. 87, OCTOBER 12, 1950 485
Bachrach vs. Seifert and Elianoff
sents an addition to the invested capital. The so-called Massachusetts
rule, which prevails in certain jurisdictions in the United States, supports
appellants' contention. It regards cash dividends, however large, as
income, and stock dividends, however made, as capital. (Minot vs. Paine,
99 Mass., 101; 96 Am. Dec., 705.) It holds that a stock dividend is not in
any true sense any dividend at all since it involves no division or
severance from the corporate assets of the subject of the dividend; that it
does not distribute property but simply dilutes the shares as they existed
before; and that it takes nothing from the property of the corporation, and
adds nothing to the interests of the shareholders.
On the other hand, the so-called Pennsylvania rule, which prevails in
various other jurisdictions in the United States, supports appellee's
contention. This rule declares that all earnings of the corporation made
prior to the death of the testator stockholder belong to the corpus of the
estate, and that all earnings, when declared as dividends in whatever
form, made during the lifetime of the usufructuary or life tenant are
income and belong to the usufructuary or life tenant. (Earp's Appeal, 28
Pa., 368.)
"'* * * It is clear that testator intended the remaindermen should have
only the corpus of the estate he left in trust, and that all dividends should
go to the life tenants. It is true that profits realized are not dividends
until declared by the proper officials of the corporation, but distribution of
profits, however made, is dividends, and the form of the distribution is
immaterial." (In re Thompson's Estate, 262 Pa., 278; 105 Atl. 273, 274.)
In Hite vs. Hite (93 Ky., 257; 20 S. W., 778, 780), the Court of Appeals of
Kentucky, speaking thru its Chief Justice, said:
"* * * Where a dividend, although declared in stock, is based upon the
earnings of the company, it is in reality, whether called by one name or
another, the income of the capital invested in it. It is but a mode of
distributing the profit. If it be not income, what is it? If it is, then it is
rightfully and equitably the property of the life tenant. If it be really
profit, then he should have it, whether
486
486 PHILIPPINE REPORTS
ANNOTATED
Bachrach vs. Seifert and Elianoff
paid in stock or money. A stock dividend proper is the issue of new shares
paid for by the transfer of a sum equal to their par value from the profit
and loss account to that representing capital stock; and really a
corporation has no right to declare a dividend, either in cash or stock,
except from its earnings; and a singular state of case—it seems to us, an
unreasonable one—is presented if the company, although it rests with it
whether it will declare a dividend, can bind the courts as to the proper
ownership of it, and by the mode of payment substitute its will for that of
the testator, and favor the life tenants or the remainder-men, as it may
desire. It cannot, in reason, be considered that the testator contemplated
such a result. The law regards substance, and not form, and such a rule
might result not only in a violation of the testator's intention, but it
would give the power to the corporation to beggar the life tenants, who, in
this case, are the wife and children of the testator, for the benefit of the
remainder-men, who may perhaps be unknown to the testator, being
unborn when the will was executed. We are unwilling to adopt a rule
which to us seems so arbitrary, and devoid of reason and justice. If the
dividend be in fact a profit, although declared in stock, it should be held
to be income. It has been so held in Pennsylvania and many other states,
and we think it the correct rule. Earp's Appeal, 28 Pa. St. 368; Cook,
Stocks & S. sec. 554. * * *"
We think the Pennsylvania rule is more in accord with our statutory laws
than the Massachusetts rule. Under section 16 of our Corporation Law,
no corporation may make or declare any dividend except f rom the
surplus profits arising from its business. Any dividend, therefore,
whether cash or stock, represents surplus profits. Article 471 of the Civil
Code provides that the usufructuary shall be entitled to receive all the
natural, industrial, and civil fruits of the property in usufruct. And
articles 474 and 475 provide as follows:
"ART. 474. Civil fruits are deemed to accrue day by day, and belong to the
usufructuary in proportion to the time the usufruct may last.
"ART. 475. When a usufruct is created on the right to receive an
income or periodical revenue, either in money or fruits, or the interest on
bonds or securities payable to bearer, each matured payment shall be
considered as the proceeds or fruits of such right.
"When it consists of the enjoyment of the benefits arising from an
interest in an industrial or commercial enterprise, the profits
487
VOL. 87, OCTOBER 13, 1950 487
25
Usufruct
Gorospe vs. Millan
of which are not distributed at fixed periods, such profits shall have the
same consideration.
"In either case they shall be distributed as civil fruits, and shall be
applied in accordance with the rules prescribed by the next preceding
article."
The 108,000 shares of stock are part of the property in usufruct. The
54,000 shares of stock dividend are civil fruits of the original investment
They represent profits. and the delivery of the certificate of stock
covering' said dividend is equivalent to the payment of said profits. Said
shares may be sold independently of the original shares just as the
offspring of a domestic animal may be sold independently of its mother.
The order appealed from, being in accordance with the above- quoted
provisions of the Civil Code, is hereby affirmed, with costs against the
appellants.
Moran, C.
J., Parás, Feria. Pablo, Bengzon. Tuason. Montemayor, and Reyes,
JJ., concur.
Order affirmed
_______________
© Copyright 2019 Central Book Supply, Inc. All rights
VOL. 38, MARCH 27, 1971 85
Gaboya vs. Cui
No. L-19614. March 27, 1971.
JESUS M. GABOYA, as Administrator of the Estate of DON MARIANO
CUI, plaintiff-appellant, vs. ANTONIO MA. CUI, MERCEDES CUI-
RAMAS, and GIL RAMAS, defendants-appellees, JESUS MA. CUI, JOSE
MA. CUI, SERAFEN MA. CUI, JORGE MA. CUI, ROSARIO CUI DE
ENCARNACION, PRECILLA C. VELEZ, and LOURDES C. VELEZ,
intervenors-appellants, VICTORINO REYNES, defendant-incounterclaim
and appellee.
Civil law; Accession; Industrial accession by edification on the
principal land.—Under the articles of the Civil Code on industrial
accession by edification on the principal land (Articles 445 to 456 of the
Civil Code), such accession is limited either to buildings erected on the
land of another, or buildings constructed by the owner of the land
with materials owned by someone else.
Same; Mortgage; Mortgagor does not become directly liable for
payment of loan secured by mortgage.—A mortgagor does not become
directly liable for the payment of the loan secured by the mortgage, in the
absence of stipulation to that effect; and his subsidiary role as guarantor
does not entitle him to the ownership of the money borrowed, for which
the mortgage is mere security.
Same; Waiver; Waiver should appear in writing.—As a gratuitous
renunciation of a real right over immovable property that wag created by
public document, the least to be expected in the regular course of
business is that the waiver should also appear in writing.
Obligations and contracts; Rescission of contract; Right not
absolute.—Under the third paragraph of article 1124 of the Civil Code,
the court is given a discretionary power to allow a period within which a
person in default may be permitted to perform the stipulation upon which
the claim for resolution of the contract is based. The right to resolve or
rescind a contract for nonperformance of one of its stipulations is,
therefore, not absolute.
26
Usufruct
DIRECT APPEAL from a decision of the Court of First Instance of Cebu.
Diez, J.
The facts are stated in the opinion of the Court.
86
86 SUPREME COURT REPORTS
ANNOTATED
Gaboya vs. Cui
Vicente Jayme for plaintiff-appellant.
Hector L. Hofileña, Candido Vasquez & Jaime R. Nuevas for
defendants-appellees.
Jose W. Diokno for intervenors-appellants.
REYES, J.B.L., J.:
Direct appeal (before Republic Act 5440) from a decision of the Court of
First Instance of Cebu (in its Civil Case No. R-1720) denying resolution of
a contract of sale of Lots 2312, 2313 and 2319 executed on 20 March 1946
by the late Don Mariano Cui in favor of three of his children, Antonio Ma.
Cui, Mercedes Cui de Ramas and Rosario Cui de Encarnacion, but
sentencing the first two, Antonio Cui and Mercedes Cui, to pay, jointly
and severally (in solidum), to the Judicial Administrator of the Estate of
Mariano Cui (appellant Jesus M. Gaboya) the amount of P100,088.80,
with legal interest from the interposition of the complaint (5 November
1951), plus P5,000.00 attorney’s fees and the costs.
The antecedents of the case are stated in the previous decision of this
Supreme Court rendered on 31 July 1952, in the case of Antonio
and Mercedes Cui vs. Judge Piccio, et al., 91 Phil. 712:
“Don Mariano Cui, widower, as owner of lots Nos. 2312, 2313 and 2319
situated in the City of Cebu, with an area of 152 square meters, 144
square meters and 2,362 square meters, respectively, or a total extension
of 2,658 square meters, on March 8, 1946, sold said three lots to three of
his children named Rosario C. de Encarnacion, Mercedes C. de Ramas
and Antonio Ma. Cui, pro indiviso for the sum of P64,000. Because
Rosario C. de Encarnacion for lack of funds was unable to pay her
corresponding share of the purchase price, the sale to her was cancelled
and the one-third of the property corresponding to her was returned to
the vendor. These three lots are commercial. The improvements thereon
were destroyed during the last Pacific War so that at the time of the sale
in 1946, there were no buildings or any other improvements on them.
Because of the sale of these lots pro indiviso and because of the
cancellation of the sale to one of the three original vendees, Don Mariano
and his children Mercedes and Antonio became co-owners of the whole
mass in equal portions. In the deed of sale vendor Don Mariano retained
for himself the usufruct of the property
87
VOL. 38, MARCH 27, 1971 87
Gaboya vs. Cui
in the following words:
‘. . .do hereby sell, transfer, and convey to Messrs. Rosario C. de
Encarnacion, Mercedes C. de Ramas and Antonio Ma. Cui, the above-
mentioned parcel of land in equal parts, . . .and the further consideration,
that I, shall enjoy the fruits and rents of the same, as long as my natural
life shall last. Granting and conveying unto the said buyers the full rights
as owners to enjoy the constructive possession of the same, improve,
construct and erect a building in the lot, or do whatever they believe to be
proper and wise, as long as the same will not impair nor obstruct my right
to enjoy the fruits and rents of the same. . .’
“Subsequently, a building was erected on a portion of this mass facing
Calderon street and was occupied by a Chinese businessman for which he
paid Don Mariano P600 a month as rental. The date when the building
was constructed and by whom do not appear in the record.
“Sometime after the sale to Mercedes and Antonio the two applied to
the Rehabilitation Finance Corporation (RFC) for a loan of P130,000 with
which to construct a 12-door commercial building presumably on a
portion of the entire parcel corresponding to their share. In order to
facilitate the granting of the loan and inasmuch as only two of the three
co-owners applied for the loan, Don Mariano on January 7, 1947,
executed an authority to mortgage (Annex U) authorizing his two
children co-owners to mortgage his share, the pertinent portion of said
authority reading thus:
‘That by virtue of these presents, I hereby agree, consent, permit and
authorize my said co-owners to mortgage, pledge my share so that they
may be able to construct a house or building in the said property,
provided however, that the rents of the said land shall not be impaired
and will always be received by me.’
The loan was eventually granted and was secured by a mortgage on
the three lots in question, Don Mariano being included as one of the three
mortgagors and signing the corresponding promissory note with his two
co-owners. He did not however, join in the construction of the 12-door
commercial building as may be gathered from the “Convenio de
Asignacion de Parte’ (Annex V) wherein it was agreed among the three
co-owners to assign to Don Mariano that one-third of the whole mass
facing Calderon street and on which was erected the building already
27
Usufruct
referred to as being occupied by a Chinese businessman and for which he
was paying Don Mariano P600 a month rental. The area of this one-third
portion was fixed at 900 square meters approximately one-third of the
total area
88
88 SUPREME COURT REPORTS
ANNOTATED
Gaboya vs. Cui
of these three lots. The pertinent portion of this Annex Vreads as follows:
‘Que como quiera que, la propiedad arriba descrita está actualmente
hipotecada a la Rehabilitation Finance Corporation para garantizar
la construcción que mis condueños contruyeron en la parte que les
corresponde;
‘Y que como quiera que, el Sr. Don Mariano Cui, uno de los
condueños, no ha querido unirse a la construcción de dicho edificio, y
desea que la parte que le corresponda sea la 1/3 que esté dando frente a la
Calle Calderon.’
The 12-door commercial building was eventually constructed and the
builder-owners thereof Mercedes and Antonio received and continued to
receive the rents thereof amounting to P4,800 a month and paying
therefrom the installments due for payment on the loan to the
Rehabilitation Finance Corporation.
On March 25, 1948, two other children of Don Mariano named Jesus
and Jorge brought an action (Civil case No. 599-R) in the Court of First
Instance of Cebu for the purpose of annulling the deed of sale of the three
lots in question on the ground that they belonged to the conjugal
partnership of Don Mariano and his deceased wife Antonia Perales.
Thereafter, plaintiffs Jesus and Jorge applied for the appointment of a
receiver to take charge of the lots and of the rentals of the building. This
petition was denied on November 8, 1948.
On March 19, 1949, Rosario C. Encarnacion, that daughter of Don
Mariano who was one of the original vendees, filed a petition to declare
her father incompetent and to have a guardian appointed for his
property, in Special Proceeding No. 481-R of the Court of First Instance of
Cebu. In May 1949 the petition was granted and Don Mariano was
declared incompetent and Victorino Reynes was appointed guardian of
his property. Thereafter, the complaint in civil case No. 599-R seeking to
annul the deed of sale of the three lots in favor of Mercedes and Antonio
was amended so as to include as plaintiffs not only the guardian Victorino
Reynes but also all the other children of Don Mariano.
On June 15, 1949, guardian Victorino Reynes filed a motion in the
guardianship proceedings seeking authority to collect the rentals from
the three lots in question and asking the Court to order Antonio and
Mercedes to deliver to him as guardian all the rentals they had
previously collected from the 12-door commercial building, together with
all the papers belonging to his ward. This motion was denied by Judge
Piccio in his order of July 12, 1949. The guardian did not appeal from this
order.
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VOL. 38, MARCH 27, 1971 89
Gaboya vs. Cui
“On May 22, 1951, Judge Saguin rendered a decision in civil case No. 599-
R and found that the three lots in question were not conjugal property
but belonged exclusively to Don Mariano and so upheld the sale of two-
thirds of said lots to Antonio and Mercedes. The plaintiffs appealed to the
Court of Appeals where the case is now pending.”
From the Court of Appeals the case was brought to the Supreme
Court, and the decision of Judge Saguin upholding the validity of the sale
in favor of Antonio and Mercedes Cui was finally affirmed on 21 February
1957, in Cui vs. Cui, 100 Phil. 914.
This third case now before Us was started by the erstwhile guardian
of Don Mariano Cui (while the latter was still alive) in order to recover
P126,344.91 plus legal interest from Antonio Cui and Mercedes Cui
(Record on Appeal, pages 2-3) apparently as fruits due to his ward by
virtue of his usufruct. The guardian’s complaint was supplemented and
amplified by a 1957 complaint in intervention (duly admitted) filed by the
other compulsory heirs of Mariano Cui, who had died on 29 July 1952,
some nine months after the present case was instituted in the court below
(Record on Appeal, pages 67-68).
In essence, the complaint alleges that the usufructuary right reserved
in favor of Don Mariano Cui extends to and includes the rentals of the
building constructed by Antonio Cui and Mercedes Cui on the land sold to
them by their father; that the defendants retained those rentals for
themselves; that the usufructuary rights of the vendor were of the
essence of the sale, and their violation entitled him to rescind (or resolve)
the sale. It prayed either for rescission with accounting, or for delivery of
the rentals of the building with interests, attorneys’ fees and costs
(Record on Appeal, pages 12-38).
The amended answer, while admitting the reserved usufruct and the
collection of rentals of the building by the defendants, denied that the
usufructuary rights included or extended to the said rentals, or that such
usufruct was of the essence of the sale; that the vendor (Don Mariano
Cui) had waived and renounced the usufruct and that the defendants
vendees gave the vendor P400.00 a
90
28
Usufruct
90 SUPREME COURT REPORTS
ANNOTATED
Gaboya vs. Cui
month by way of aid; that the original complaint having sought
fulfillment of the contract, plaintiff can not thereafter seek rescission;
that such action is barred by res judicata (on account of the two previous
decisions of the Supreme Court and by extinctive prescription.
Defendants counterclaimed for actual and moral damages and attorney’s
fees.
Plaintiffs denied the allegations in the counterclaim.
From a consideration of the pleadings, the basic and pivotal issue
appears to be whether the usufruct reserved by the vendor in the deed of
sale, over the lots in question that were at the time vacant and
unoccupied, gave the usufructuary the right to receive the rentals of the
commercial building constructed by the vendees with funds borrowed
from the Rehabilitation and Finance Corporation, the loan being secured
by a mortgage over the lots sold. Similarly, if the usufruct extended to the
building, whether the failure of the vendees to pay over its rentals to the
usufructuary entitled the latter to rescind, or more properly, resolve the
contract of sale. In the third place, should the two preceding issues be
resolved affirmatively, whether the action for rescission due to breach of
the contract could still be enforced and was not yet barred.
The court below declared that the reserved right of usufruct in favor of
the vendor did not include, nor was it intended to include, the rentals of
the building subsequently constructed on the vacant lots, but that it did
entitle the usufructuary to receive a reasonable rental for the portion of
the land occupied by the building, which the Court a quo fixed at
P1,858.00 per month; and that the rentals for the land from November,
1947, when the building was rented, to 29 July 1952, when Don Mariano
died, amounted to P100,088.80. It also found no preponderant evidence
that the seller, Don Mariano Cui, had ever waived his right of usufruct,
as contended by the defendants; and that the Supreme Court, in denying
reconsideration of its second (1957) decision (100 Phil. 914), had, like the
court of origin, refused to pass upon the extent of
91
VOL. 38, MARCH 27, 1971 91
Gaboya vs. Cui
the usufructuary rights of the seller, specially because the present case
was already pending in the Court of First Instance, hence no res
judicata existed. No attorney’s fees were awarded to the defendants, but
they were sentenced to pay counsel fees to plaintiffs.
Both parties appealed from the decision of the court a quo.
We find no error in the decision appealed from. As therein pointed out,
the terms of the 1946 deed of sale of the vacant lots in question made by
the late Don Mariano Cui in favor of his three children, Rosario,
Mercedes and Antonio Cui, in consideration of the sum of P64,000.00 and
the reserved usufruct of the said lot in favor of the vendor, as amplified
by the deed of 7 January 1947, authorizing Mercedes, and Antonio Cui to
borrow money, with the security of a mortgage over the entirety of the
lots, in order to enable them to construct a house or building thereon—
“provided, however, that the rents of said land shall not be impaired and
will always received by me.”
clearly prove that the reserved usufruct in favor of the vendor, Mariano
Cui, was limited to the rentals of the land alone. Had it been designed to
include also the rents of the buildings intended to be raised on the land,
an express provision would have been included to that effect, since in
both documents (heretofore quoted) the possibility of such construction
was clearly envisaged and mentioned.
Appellants, however, argue that the terms of the deed constituting the
usufruct are not determinative of the extent of the right conferred; and
that by law, the enjoyment of the rents of the building subsequently
erected passed to the usufructuary, by virtue of Article 571 of the Civil
Code of the Philippines (Article 479 of the Spanish Civil Code of 1889)
prescribing that:
“Art. 571. The usufructuary shall have the right to enjoy any increase
which the thing in usufruct may acquire through accession, the
servitudes established in its favor, and, in general, all the benefits
inherent therein”,
inasmuch as (in the appellants’ view) the building con-
92
92 SUPREME COURT REPORTS
ANNOTATED
Gaboya vs. Cui
structed by appellees was an accession to the land.
This argument is not convincing. Under the articles of the Civil Code
on industrial accession by edification on the principal land (Articles 445
to 456 of the Civil Code) such accession is limited either to buildings
erected on the land of another, or buildings constructed by the owner of
the land with materials owned by someone else.
Thus, Article 445, establishing the basic rule of industrial accession,
prescribes that—
“Whatever is built, planted or sown on the land of another, and the
improvements or repairs made thereon, belong to the owner of the land
subject to the provisions of the following articles.”
29
Usufruct
while Article 449 states:
“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.” (Italics
supplied)
Articles 447 and 445, in turn, treat of accession produced by the
landowner’s building, planting and sowing “with the materials of another”
and when “the materials, plants or seeds belong to a third person” other
than the landowner or the builder, planter or sower.
Nowhere in these articles on industrial accession is there, any
mention of the case of landowner building on his own land with materials
owned by himself (which is the case of appellees Mercedes and Antonio
Cui). The reason for the omission is readily apparent: recourse to the
rules of accession are totally unnecessary and inappropriate where the
ownership of land and of the materials used to build thereon are
concentrated on one and the same person. Even if the law did not provide
for accession, the landowner would necessarily own the building, because
he has paid for the materials and labor used in constructing it. We deem
it unnecessary to belabor this obvious point.
There is nothing in the authorities (Manresa, Venezian, Santamaria,
and Borrell) cited by appellants that specifically deals with constructions
made by a party on his own land, with his own materials, and at his own
expense. The
93
VOL. 38, MARCH 27, 1971 93
Gaboya vs. Cui
authorities cited merely indicate the application in general of the rules of
accession. But as already stated above, the Civil Code itself limits the
cases of industrial accession to those involving land and materials
belonging to different owners. Anyway, commentators’ opinions are not
binding where not in harmony with the law itself.
The author that specifically analyses the situation of the
usufructuary vis-á-vis constructions made by the landowner with his own
materials is Scaevola (Codigo Civil, 2d Edition, pages 288 to 297); and his
conclusion after elaborate discussion is that, at the most—
“(b) El nudo propietario no podria, sin el consentimiento del
usufructuario, hacer construcciones, plantaciones y siembras en el predio
objecto del usufructo; y en el caso de que aquel las cosintiese, la
utilizacion será común en los frutos y productos de lo sembrado y
plantado, y con respecto a las construcciones, el usufructuario tendra
derecho a la renta que de mutuo acuerdo se fije a las mismas; en su
defecto, por la autoridad judicial.” (Author cit., Italics supplied)
Scaevola’s opinion is entirely in harmony with Article 595 of the Civil
Code of the Philippines, prescribing that—
“The owner may construct any works and make any improvements of
which the immovable in usufruct is susceptible, or make new plantings
thereon if it be rural, provided that such acts do not cause a diminution in
the value of the usufruct or prejudice the right of the usufructuary.”
Note that if the income from constructions made by the owner during the
existence of the usufruct should be held to accrue automatically to the
usufructuary under Article 571, such improvements could not diminish
the value of the usufruct nor prejudice the right of the usufructuary; and
the qualifications by Article 595 on the owner’s right to build would be
redundant. The limitations set by Article 595 to the construction rights of
the naked owner of the land are evidently premised upon the fact that
such constructions would necessarily reduce the area of the land under
usufruct, for which the latter should be indemnified. This is precisely
what the court a quo has done in sentencing the appellee owners of the
building to pay to the usufructuary’ a monthly rent of P1,758.00 for the
area oc-
94
94 SUPREME COURT REPORTS
ANNOTATED
Gaboya vs. Cui
cupied by their building, after mature consideration of the rental values
of lands in the neighborhood.
Additional considerations against the thesis sustained by appellants
are (1) that the amount invested in the building represents additional
capital of the landowners not foreseen when the usufruct was created;
and (2) that no landowner would be willing to build upon vacant lots
under usufruct if the gain therefrom were to go to the usufructuary while
the depreciation of the value of the building (as distinguished from the
necessary repairs) and the amortization of its cost would burden
exclusively the owner of the land. The unproductive situation of barren
lots would thus be prolonged for an indefinite time, to the detriment of
society. In other words, the rule that appellants advocate would
contradict the general interest and be against public policy.
Appellants urge, in support of their stand, that the loan for the
construction of the building was obtained upon the security of a mortgage
not only upon the share of appellees but also upon the undivided interest
of Don Mariano Cui in the lots in question. That factor is irrelevant to the
ownership of the building, because the money used for the building was
loaned exclusively to the appellees, and they were the ones primarily
responsible for its repayment. Since the proceeds of the loan was
exclusively their property,1 the building constructed with the funds
30
Usufruct
loaned is likewise their own. A mortgagor does not become directly liable
for the payment of the loan secured by the mortgage, in the absence of
stipulation to that effect; and his subsidiary role as guarantor does not
entitle him to the ownership of the money borrowed, for which the
mortgage is mere security.
We agree with the trial court that there was no adequate proof that
the vendor, Don Mariano Cui, ever renounced his usufruct. The alleged
waiver was purely verbal, and is supported solely by the testimony of
Antonio Cui, one
_______________
1 “ART. 1953. A person who receives a loan of money or any other
fungible thing acquires the ownership thereof, and is bound to pay the
creditor an equal amount of the same kind and quality.”
95
VOL. 38, MARCH 27, 1971 95
Gaboya vs. Cui
of the alleged beneficiaries thereof. As a gratuitous renunciation of a real
right over immovable property that was created by public document, the
least to be expected in the regular course of business is that the waiver
should also appear in writing. Moreover, as pointed out in the appealed
decision (Record on Appeal, page 184, et seq.), in previous pleadings
sworn to by Antonio Cui himself, in Civil Case No. 599 and Special
Proceeding 481-R of the Cebu Court of First Instance (Exhibits “I,” “J,”
and “20-A”), he and his sister Mercedes had contended that Don Mariano
Cui had been receiving from them P400.00 per month as the value of his
usufruct, and never claimed that the real right had been renounced or
waived. The testimony of Antonio Cui on the alleged waiver, given after
the usufructuary had been declared incompetent and could no longer
contradict him, is obviously of negligible probative value.
Turning now to the second issue tendered by herein appellants, that
the non-compliance with the provisions concerning the usufruct
constituted sufficient ground for the rescission (or resolution) of the sale
under the tacit resolutory condition established by Article 1191 of the
Civil Code. What has been stated previously in discussing the import of
Don Mariano’s usufruct shows that the alleged breach of contract by the
appellees Antonio and Mercedes Cui could only consist in their failure to
pay to the usufructuary the rental value of the area occupied by the
building constructed by them. But as the rental value in question had not
been ascertained or fixed either by the parties or the court, prior to the
decision of 31 October 1961, now under appeal, nor had Don Mariano Cui,
or anyone else in his behalf, made any previous demand for its payment,
the default, if any, can not be exclusively blamed upon the defendants-
appellees. Hence, the breach is not “so substantial and fundamental as to
defeat the object of the parties in making the agreement”2 as to justify the
_______________
Banahaw, Inc. vs. Dejarme, 55 Phil. 338; Song Fo & Co. vs.
2
Hawaiian Philippine Co., 47 Phil. 821, 827.
96
96 SUPREME COURT REPORTS
ANNOTATED
Gaboya vs. Cui
radical remedy of rescission. This Court, in Banahaw, Inc. vs.
Dejarme, 55 Phil. 338, ruled that—
“. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. Under the third paragraph of article 11243 of the Civil Code, the court is
given a discretionary power to allow a period within which a person in
default may be permitted to perform the stipulation upon which the claim
for resolution of the contract is based. The right to resolve or rescind a
contract for nonperformance of one of its stipulations is, therefore, not
absolute.”
We have stated “the default, if any,” for the reason that without previous
ascertainment of the exact amount that the defendants-appellees were
obligated to turn over to the usufructuary by way of reasonable rental
value of the land occupied by their building, said parties can not be
considered as having been in default (mora) for failure to turn over such
monies to the usufructuary. “Ab illiquido non fit mora”: this principle has
been repeatedly declared by the jurisprudence of Spanish Supreme Court
(v. Manresa, Commentaries to the Spanish Civil Code [5th Ed.], Vol. 8,
No. 1, page 134) that is of high persuasive value in the absence of local
adjudications on the point.
“No puede estimarse que incurre en mora el obligado al pago de cantidad
mientras esta no sea líquida, y tenga aquél conocimiento por virtud de
requirimiento o reclamación judicial de lo que debe abonar” (Sent. TS of
Spain, 13 July 1904) “Según tiene declarado esta sala con repetición, no
se puede establecer que hay morosidad, ni condenar por tal razón al
abono de intereses, cuando no se conoce la cantidad liquida reclamable”
(Sent. TS of Spain, 29 November 1912)
“. . .es visto que no existiendo obligacion de entregar cantidad hasta
tanto que se liquide, no puede estimarse, segun jurisprudencia, que los
recurridos incurran en mora, y por tanto que hayan de pagar intereses
legales de la cantidad que en su caso resulte.” (Sent. TS of Spain, 29 April
1914)
31
Usufruct
In the absence of default on the part of the defendants-vendees, Article
1592 of the Civil Code of the Philippines,
_______________
3 Now Article 1191, Civil Code of the Philippines.
4 “ART. 1592. In the sale of immovable property, even though it may
have been stipulated that upon failure to pay
97
VOL. 38, MARCH 27, 1971 97
Gaboya vs. Cui
that is invoked by appellants in support of their alleged right to rescind
the sale, is not applicable: for said article (which is a mere variant of the
general principle embodied in Article 1191, of the same Code)
presupposes default of the purchasers in the fulfillment of their
obligations. As already noted, no such default or breach could occur before
liquidation of the usufructuary’s credit; and the time for paying such
unliquidated claim can not be said to have accrued until the decisions
under appeal was rendered, fixing the rectal value of the land occupied by
the building.
The filing of the initial complaint by Victoriano Reynes then guardian
of the late Don Mariano in 1951, seeking to recover P126,344.91 plus
interest, did not place appellees in default, for that complaint proceeded
on the theory that the usufructuary was entitled to all the rentals of the
building constructed by the appellees on the lot under usu-fruct; and as
We have ruled, that theory was not legally tenable. And the 1957
complaint in intervention, seeking rescission of the sate as alternative
remedy, was only interposed after the death of the usufructuary in 1952,
and the consequent extinction of the usufruct, conformably to Article 603,
paragraph (1), of the Civil Code.
It is also urged by the appellants that the usufruct was a condition
precedent to the conveyance of ownership over the land in question to
herein appellees, and their failure to comply with their obligations under
the usufruct prevented the vesting of title to the property in said
appellees. We need not consider this argument, since We have found that
the usufruct over the land did not entitle the usufruc-tuary to either the
gross or the net income of the building erected by the vendees, but only to
the rental value of the portion of the land occupied by the structure (in so
far as the usufructuary was prevented from utilizing
_______________
the price at the time agreed upon the rescission of the contract shall of
right take place, the vendee may pay even after the expiration of the
period, as long as no demand for rescission of the contract has teen made
upon him either judicially or by a notarial act. After the demand, the
court may not grant him a new term.”
98
98 SUPREME COURT REPORTS
ANNOTATED
Gaboya vs. Cui
said portion), and that rental value was not liquidated when the
complaints were filed in the court below; hence, there was no default in
its payment. Actually, this theory of appellants fails to take into account
that Don Mariano could not retain ownership of the land and, at the same
time, be the usufructuary thereof. His intention of the usufructuary
rights in itself imports that he was no longer its owner. For usufruct is
essentially jus in re aliena; and to be a usufructuary of one’s own property
is in law a contradiction in terms, and a conceptual absurdity.
The decision (Exhibit “30”) as well as the resolution of this Court upon
the motion to reconsider filed in the previous case (100 Phil. 914) refusing
to adjudicate the usufructuary rights of Don Mariano in view of the
pendency of the present litigation (Exhibit “22”) amply support the trial
court’s overruling of the defense of res judicata.
Summing up, We find and hold:
1. (1)That the usufructuary rights of the late Don Mariano Cui,
reserved in the deed of sale (Exhibit “A” herein), was over the
land alone and did not entitle him to the rents of the building
later constructed thereon by defendants Mercedes and Antonio
Cui at their own expense.
2. (2)That said usufructuary was entitled only to the reasonable
rental value of the land occupied by the building
aforementioned.
3. (3)That such rental value not having been liquidated until the
judgment under appeal was rendered, Antonio and Mercedes
Cui were not in default prior thereto, and the deed of sale was,
therefore, not subject to rescission.
4. (4)That, as found by the court below, the reasonable rental value
of the land occupied by the defendants’ building totalled
P100,088.80 up to the time the usufructuary died and the
usufruct terminated.
5. (5)That pursuant to Articles 2208 (No. 11), 2210 and 2213 of the
Civil Code,5 the trial court had discretion to
_______________
5 “ART. 2208. In the absence of stipulation, attorney’s
32
Usufruct
99
VOL. 38, MARCH 27, 1971 99
Gaboya vs. Cui
1. equitably award legal interest upon said sum of P100,088.-80, as
well as P5,000.00 attorney’s fees, considering that defendants
Cui have enjoyed the said rental value of the land during all
those years.
WHEREFORE, finding no reversible error in the appealed decision, the
same is hereby affirmed. Costs against appellant-intervenors, Jesus Ma.
Cui, Jose Ma. Cui, Serafin Ma. Cui, Jorge Ma. Cui, Rosario Cui de
Encarnacion, Precilla C. Velez, and Lourdes C. Velez.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Teehankee, Barred
o, Villamor and Makasiar, JJ., concur.
Castro and Fernando, JJ., did not take part.
Decision affirmed.
Notes.—(a) Extent of right of usufructuary over improvements
introduced by owner.—Any advantage or increase in the use or enjoyment
of the thing due to the improvements or plantings introduced by the
owner will inure to the benefit of the usufructuary. But the usufructuary
is not bound to pay interest on the investment of the owner, because the
investments have been made voluntarily by the latter (II Tolentino,
Commentaries and Jurisprudence on the Civil Code of the
Philippines, 289, citing 4 Manresa 491-492).
(b) Nature of breach required for rescission.—A slight casual breach is
not a ground for rescission. It must be so substantial as to defeat the
object of the parties (Gregorio Araneta, Inc. vs. Tuason de Paterno, L-
2886, Aug.
_______________
fees and expenses of litigation, other than judicial costs, cannot be
recovered, except:”
xxxxx xxxxx xxxxx
“(1) In any other case where the court deems it just and equitable that
attorney’s fees and expenses of litigation should be recovered.
“In all cases, the attorney’s fees and expenses of litigation must be
reasonable.”
“ART. 2210. Interest may, in the discretion of the court, be allowed
upon damages awarded for breach of contract.”
“ART. 2213. Interest cannot be recovered upon unliquidated claims or
damages, except when the demand can be established with reasonable
certainty.”
100
100 SUPREME COURT REPORTS
ANNOTATED
Philippine Marine Officers’ Guild vs.
Compañia Maritima
22, 1962, 49 O.G. 45; Villanueva vs. Yulo, L-12985, Dec. 29, 1959). And
where time is not of the essence of the agreement, a slight delay on the
part of one party in the performance of his obligation is not a sufficient
ground for the rescission of the agreement (Biando vs. Embestro, L-11919,
July 27, 1959).
See also Universal Food Corporation vs. Court of Appeals, L-29155,
May 13, 1970, 33 SCRA 1.
_______________
© Copyright 2019 Central Book Supply, Inc. All rights reserved.
[No. L-123. December 12, 1945]
JOSEFA FABIA, petitioner, vs. JOSE GUTIERREZ DAVID, Judge of
First Instance of Manila, NGO Boo Soo and JUAN GREY, respondents.
1. 1.ACTIONS: UNLAWFUL DETAINER; WHAT DETERMINES
WHETHER MUNICIPAL COURT OR COURT OF FlRST
INSTANCE HAS ORIGINAL JURISDICTION.—In determining
whether a possessory action is within the original jurisdiction of
the municipal court or of the Court of First Instance, the
averments of the complaint and character of the relief sought
are primarily to be consulted. The defendant in such an action
cannot defeat the jurisdiction of the justice of the peace or
municipal court by setting up title in himself. The factor which
defeats the jurisdiction of said court is the necessity to
adjudicate the question of title.
1. 2.LANDLORD AND TENANT; RIGHT OF USUFRUCTUARY OF
RENTS TO OCCUPY PROPERTY.—A usufructuary of the
33
Usufruct
rents, as a corollary to the right to all the rents, to choose the
tenant, and to fix the amount of the rent, necessarily has the
right to choose himself as the tenant, provided that the
obligations he has assumed towards the owner of the property
are fulfilled.
1. 3.MANDAMUS; REFUSAL OF JUDGE OF FIRST INSTANCE
TO HEAR AND DECIDE UNLAWFUL DETAINER CASE
APPEALED FROM MUNICIPAL COURT.—Under section 3 of
Rule 67, when any tribunal unlawfully neglects the performance
of an act which the law specifically enjoins as a duty resulting
from an office, and there is no other plain, speedy, and adequate
remedy in the ordinary course of law, it may be compelled by
mandamus to do the act required to be done to protect the rights
of the petitioner. It appearing that the case before the
respondent judge is one of unlawful detainer appealed from the
municipal court, the law specifically requires him to hear and
decide that case on the merits, and his refusal to do so would
constitute an unlawful neglect in the performance of that duty.
Taking into consideration that the law requires that an unlawful
detainer case be promptly decided (secs. 5 and 8, Rule 72), it is
evident that an appeal from the order of dismissal would not be
a speedy and adequate remedy and that mandamus lies in this
case.
1. 4,APPEAL; JUDGMENT OF MUNICIPAL COURT; WHEN
DOES PERIOD TO APPEAL BEGIN TO RUN IN CASE OF
SUBSEQUENT MODIFICATION.— When a judgment of the
municipal court is subsequently modified, the time to appeal
therefrom does not run until after the party concerned is notified
of said judgment as modified.
537
VOL. 75, DECEMBER 12, 1945 537
Fabie vs. Gutierrez David
ORIGINAL ACTION in the Supreme Court. Certiorari.
The facts are stated in the opinion of the court.
Sancho Onocencio for petitioner.
Severino B. Orlina for respondent Ngo Soo.
No appearance for other respondents,
OZAETA, J.:
The petitioner Josefa Fabie is the usufructuary of the income of certain
houses located at 372-376 Santo Cristo, Binondo, and 950-956 Ongpin,
Santa Cruz, Manila, under the ninth clause of the will of the deceased
Rosario Fabie xv Grey, which textually reads as follows:
"NOVENO.—Lego a mi ahijada menor de edad, Maria Josefa de la Paz
Fabie, en usufructo vitalicio las rentas de las fincas situadas en la Calle
Santo Cristo Números 372 al 376 del Distrito de Binondo, de esta Ciudad
de Manila, descrita en el Certificado Original de Título No. 3824; xv en la
Calle Ongpin, Números 950 al 956 del Distrito de Santa Cruz, Manila,
descrita en el Certificado Original de Título No. 5030, expedidos por el
Registrador de Títulos de Manila, xv prohibo enajene, hipoteque, permute
xv transfiera de algún modo mientras que élla sea menor de edad.
Nombro a Serafín Fabie Macario, mi primo por línea paterna tutor de la
persona xv bienes de mi ahijada menor, Maria Josefa de la Paz Fabie."
The owner of the Santo Cristo property above mentioned is the
respondent Juan Grey, while those of the Ongpin property are other
persons not concerned herein. Previous to September 1944 litigation
arose between Josefa Fabie as plaintiff and Juan Grey as defendant and
the owners of the Ongpin property as intervenors, involving the
administration of the houses mentioned in clause 9. of the will above
quoted (civil case No. 1659 of the Court of First Instance of Manila). That
suit was decided by the court on September 2,1944, upon a stipulation in
writing submitted by the parties to and approved by the court. The
pertinent portions of said stipulation read as follows:
* * * * * * *
"(4) Heretofore, the rents of said properties have been collected at times
by the respective owners of the properties, at other times
538
538 PHILIPPINE REPORTS
ANNOTATED
Fabie vs. Gutierrez David
by the usufructuary, and lastly by the defendant Juan Grey as agent
under a written agreement dated March 31, 1942, between the owners of
both properties and the usufructuary.
"(5) When the rents were collected by the owners, the net amounts
thereof were duly paid to the usufructuary after the expenses for real
estate taxes, repairs and insurance premiums, including the documentary
stamps, on the properties and the expenses of collecting the rents had
been deducted, and a certain amount set aside as a reserve for contingent
liabilities. When the rents were collected by the usufructuary, she herself
paid the expenses aforesaid. When the rents were collected by the
34
Usufruct
defendant Juan Grey under the agreement of March 31, 1942, the net
amounts thereof were duly paid to the usufructuary, after deducting and
setting aside the items aforesaid, monthly, until the month of October
1943, when the usufructuary refused to continue with the agreement of
March 31, 1942.
* * * * * * * Dominga, Pasay; that defendant was duly notified on March 24 and April
"II. The parties hereto jointly petition the Court to render judgment
adopting the foregoing as finding of facts and disposing that:
"(8) Beginning with the month of September 1944, the usufructuary
shall collect all the rents of both the Sto. Cristo and the Ongpin
properties.
"(9) The usufructuary shall, at her own cost and expense, pay all the
real estate taxes, special assessments, and insurance premiums,
including the documentary stamps, and make all the necessary repairs on
each of the properties, promptly when due or, in the case of repairs, when
necessary, giving immediate, written notice to the owner or owners of the
property concerned after making such payment or repairs. In case of
default on the part of the usufructuary, the respective owners of the
properties shall have the right to make the necessary payment, including
penalties and interest, if any, on the taxes and special assessments, and
the repairs, and in that event the owner or owners shall be entitled to
collect all subsequent rents of the property concerned until the amount
paid by him or them and the expenses of collection are fully covered
thereby, after which the usufructuary shall again collect the rents in
accordance herewith.
"(10) The foregoing shall be in effect during the term of the usufruct
and shall be binding on the successors and assigns of each of the parties.
"(11) Nothing herein shall be understood as affecting any right which
the respective owners of the properties have or may have as such and
which is not specifically the subject of this stipulation."
539
VOL. 75, DECEMBER 12, 1945 539
Fabie vs. Gutierrez David
In June 1945 Josefa Fabie commenced an action of unlawful detainer
against the herein respondent Ngo Boo Soo (who says that his correct
name is Ngo Soo), alleging in her amended complaint that the defendant
is occupying the premises located at 372-376 Santo Cristo on a month-to-
month rental payable in advance not later than the 5th of each month;
that she is the administratrix and usufructuary of said premises; "that
the defendant offered to pay P300 monthly rent payable in advance not
later than the 5th of every month, beginning the month of April 1945, for
the said premises including the one door which said defendant, without
plaintiff's consent and contrary to their agreement, had subleased to
another Chinese, but plaintiff refused, based on the fact that the herein
plaintiff very badly needs the said house to live in, as her house was
burned by the Japanese on the occasion of the entry of the American
liberators in the City and which was located then at No. 38 Flores,
14, 1945, to leave the said premises, but he ref used"; and she prayed for
judgment of eviction and for unpaid rentals.
The defendant answered alleging that he was and since 1908 had been
a tenant of the premises in question, which he was using and had always
used principally as a store and secondarily for living quarters; that he
was renting it from its owner and administrator Juan Grey; "that
plaintiff is merely the usufructuary of the income therefrom, and by
agreement between her and said owner, which is embodied in a final
judgment of the Court of First Instance of Manila, her only right as
usufructuary of the income is to receive the whole of such income; that
she has no right or authority to eject tenants, such right being in the
owner and administrator of the house, the aforesaid Juan Grey, who has
heretofore petitioned this Court for permission to intervene in this action;
that plaintiff herein has never had possession of said property; that
540
540 PHILIPPINE REPORTS
ANNOTATED
Fabie vs. Gutierrez David
defendant's lease contract with the owner of the house is for 5-year
period, with renewal option at the end of each period, and that his
present lease is due to expire on December 31, 1945 * * *; that on June 1,
1945, defendant made a written offer to plaintiff to compromise and settle
the question of the amount of rent to be paid by defendant * * * but said
plaintiff rejected the same for no valid reason whatever and instituted the
present action; that the reason plaintiff desires to eject defendant from
the property is that she wishes to lease the same to other persons for a
higher rent, ignoring the fact that as usufructuary of the income of the
property she has no right to lease the property; that the defendant has
subleased no part of the house to any person whomsoever."
Juan Grey intervened in the unlawful detainer suit, alleging in his
complaint in intervention that he is the sole and absolute owner of the
premises in question; that the plaintiff Josefa Fabie is the usufructuary of
the income of said premises; that the defendant Ngo Soo is the tenant of
said premises by virtue of a contract between him and the intervenor
which will expire on December 81, 1945, with the option to renew it "f or
another period of five years from and after said date; that under the
agreement between the intervenor and the plaintiff Josefa Fabie in civil
35
Usufruct
case No. 1659 of the Court of First Instance of Manila, which was
approved by the court and incorporated in its decision of September 2,
1944, the only right recognized in favor of Josefa Fabie as usufructuary of
the income of said premises is to receive the rents therefrom when due;
and that as usufructuary she has no right nor authority to administer the
said premises nor to lease them nor to evict tenants, which right and
authority are vested in the intervenor as owner of the premises.
The municipal court (Judge Mariano Nable presiding) found that
under paragraph 94 of the stipulation incorporated in the decision of the
Court of First Instance of Manila in civil case No. 1659, the plaintiff
usufructuary is
541
VOL. 75, DECEMBER 12, 1945 541
Fabie vs. Gutierrez David
the administratrix of the premises in question, and that the plaintiff had
proved her cause. Judgment was accordIngly rendered ordering the
defendant Ngo Soo to vacate the premises and to pay the rents at the rate
of P137.50 a month beginning April 1, 1945. The complaint in
intervention was dismissed.
Upon appeal to the Court of First Instance of Manila the latter (thru
Judge Arsenio P. Dizon) dismissed the case for the following reason: "The
main issue * * * is not a mere question of possession but precisely who is
entitled to administer the property subject matter of this case and who
should be the tenant, and the conditions of the lease. These issues were
beyond the jurisdiction of the municipal court. This being the case, this
Court, as appellate court, is likewise without jurisdiction to take
cognizance of the present case." A motion for reconsideration filed by the
plaintiff was denied by Judge Jose Gutierrez David, who sustianed the
opinion of Judge Dizon.
The present original action was instituted in this Court by Josefa
Fabie to annul the order of dismissal and to require the Court of First
Instance to try and decide the case on the merits. The petitioner further
prays that the appeal of the intervenor Juan Grey be declared out of time
on the ground that he received copy of the decision on August 3 but did
not file his notice of appeal until August 25, 1945.
1. The first question to determine is whether the action instituted by
the petitioner Josefa Fabie in the municipal court is a purely possessory
action and as such within the jurisdiction of said court, or an action
founded on property right and therefore beyond the jurisdiction of the
municipal court. In other words, is it an action of unlawful detainer
within the purview of section 1 of Rule 72, or an action involving the title
to or the respective interests of the parties in the property subject of the
litigation ?
542
542 PHILIPPINE REPORTS
ANNOTATED
Fabie vs. Gutierrez David
Said section 1 of Rule 72 provides that "a landlord, vendor, vendee, or
other person against whom the possession 01 any land or building is
unlawfully withheld after the expiration or termination of the right to
hold possession, by virtue of any contract, express or implied, or the legal
representatives or assigns of any such landlord, vendor, vendee, or other
person, may, at any time within one year after such unlawful deprivation
or withholding of possession, bring an action in the proper inferior court
against the person or persons unlawfully withholding or depriving of
possession, or any person or persons claiming under them, for the
restitution of such possession, to gether with damages and costs."
It is admitted by the parties that the petitioner Josefa Fabie is the
usufructuary of the income of the property in question and that the
respondent Juan Grey is the owner thereof. It is likewise admitted that
by virtue of a final judgment entered in. civil case No, 1659 of the Court
of First Instance of Manila between the usufructuary and the owner, the
former has the right to collect all the rents of said property for herself
with the obligation on her part to pay all the real estate taxes, special
assessments, and insurance premiums, and make all the necessary
repairs thereon, and in case of default on her part the owner shall have
the right to do all those things, in which event he shall be entitled to
collect all subsequent rents of the property concerned until the amount
paid by him and the expenses of collection are fully satisfied, after which
the usufructuary shall again collect the rents. There is therefore no
dispute as to the title to or the respective Interests of the parties in the
property in question. The naked title to the property is admittedly in the
respondent Juan Grey, but the right to all the rents thereof, with the
obligation to pay the taxes and insurance premiums and make the
necessary repairs, is, also admittedly, vested in the usufructuary, the
petitioner Josefa Fabie, during her lifetime.
543
VOL. 75, DECEMBER 12, 1945 543
Fabie vs. Gutierrez David
The only question between the plaintiff and the intervenor is, Who has
the right to manage or administer the property—to select the tenant and
to fix the amount of the rent? Whoever has that right has the right to the
control and possession of the property in question, regardless of the title
thereto. Therefore, the action is purely possessory and not one in any way
involving the title to the property. Indeed, the averments and the prayer
of the complaint filed in the municipal court so indicate, and as a matter
of fact the defendant Ngo Soo does not pretend to be the owner of the
36
Usufruct
property but on the contrary admits to be a mere tenant thereof. We have
repeatedly held that in determining whether an action of this kind is
within the original jurisdiction of the municipal court or of the Court of
First Instance, the averments of the complaint and the character of the
relief sought are primarily to be consulted; that the defendant in such an
action cannot defeat the jurisdiction of the justice of the peace or
municipal court by setting up title in himself; and that the factor which
defeats the jurisdiction of said court is the necessity to adjudicate the
question 01 title. (Mediran vs. Villanueva, 37 Phil., 752,
759; Medel vs. Militante, 41 Phil, 526, 529; Sevilla vs. Tolentino, 51 Phil.,
333; Supia and Batioco vs. Quintero and Ayala, 59 Phil.,
812; Lizo vs. Carandang, G. R. No. 47833, 2 Off. Gaz.,
302; Aguilar vs. Cabrera and Flameño, G. R. No. 49129.)
The Court of First Instance was evidently confused and led to
misconstrue the real issue by the complaint in intervention of Juan Grey,
who, allying himself with the defendant Ngo Soo, claimed that he is the
administrator of the property with the right to select the tenant and
dictate the conditions of the lease, thereby implying that it was he and
not the plaintiff Josefa Fabie who had the right to bring the action and
oust the tenant if necessary. For the guidance of that court and to obviate
such confusion in its disposal of the case 011 the merits, we deem it
544
544 PHILIPPINE REPORTS
ANNOTATED
Fabie vs. Gutierrez David
necessary and proper to construe the judgment entered by the Court of
First Instance of Manila 111 civil case No. 1659, entitled "Josefa Fabie
and Jose Carandang, plaintiffs, vs. Juan Grey, defendant, and Nieves G.
Vda. de Grey, et al., intervenors-defendants," which judgment was
pleaded by the herein respondents Juan Grey and Ngo Soo in the
municipal court. According to the decision, copy of which was submitted
to this Court as Appendix F of the petition and as Annex 1 of the answer,
there was an agreement, dated March 31, 1942, between the
usufructuary Josefa Fabie and the owner Juan Grey whereby the
latter as agent collected the rents of the property in question and
delivered the same to the usufructuary after deducting the expenses for
taxes, repairs, insurance premiums, and the expenses of collection; that
in the month of October 1948 the usufructuary refused to continue with
the said agreement of March 31, 1942, and thereafter the said case arose
between the parties, which by stipulation approved by the court was
settled among them in the following manner: Beginning with the month
of September 1944 the usufructuary shall collect all the rents of the
property in question; shall, at her own cost and expense, pay all the real
estate taxes, special assessments, and insurance premiums, including the
documentary stamps, and make all the necessary repairs on the property;
and in case of default on her part the owner shall have the right to do any
or all of those things, in which event he shall be entitled to collect all
subsequent rents until the amounts paid by him are fully satisfied, after
which the usufructuary shall again collect the rents. It was further
stipulated by the parties and decreed by the court that "the foregoing
shall be in effect during the term of the usufruct and shall be binding on
the successors and assigns of each of the parties."
Construing said judgment in the light of the ninth clause of the will of
the deceased Rosario Fabie y Grey, which was quoted in the decision and
by which Josefa Fabie
545
VOL. 75, DECEMBER 12, 1945 545
Fabie vs. Gutierrez David
was made the usufructuary during her lifetime of the income of the
property in question, we find that the said usufructuary has the right to
administer the property in question. All the acts of administration—to
collect the rents for herself, and to conserve the property by making all
necessary repairs and paying all the taxes, special assessments, and
insurance premiums thereon—were by said judgment vested in the
usufructuary. The pretension of the respondent Juan Grey that he is the
administrator of the property with the right to choose the tenants and to
dictate the conditions of the lease is contrary to both the letter and the
spirit of the said clause of the will, the stipulation of the parties, and the
judgment of the court. He cannot manage or administer the property
after all the acts of management or administration have been vested by
the court, with his consent, in the usufructuary. He admitted that before
said judgment he had been collecting the rents as agent of the
usufructuary under an agreement with the latter. What legal justification
or valid excuse could he have to claim the right to choose the tenant and
fix the amount of the rent when under the will, the stipulation of the
parties, and the final judgment of the court it is not he but the
usufructuary who is entitled to said rents? As long as the property is
properly conserved and insured he can have no cause for complaint, and
his right in that regard is fully protected by the terms of the stipulation
and the judgment of the court above mentioned. To permit him to
arrogate to himself the privilege to choose the tenant, to dictate the
conditions of the lease, and to sue when the lessee fails to comply
therewith, would be to place the usufructuary entirely at his mercy. It
would place her in the absurd situation of having a certain indisputable
right without the power to protect, enforce, and fully enjoy it.
One more detail needs clarification: In her complaint
for desahucio Josefa Fabie alleges that she needs the premises in
question to live in, as her former residence was burned.
37
Usufruct
546
546 PHILIPPINE REPORTS
ANNOTATED
Fabie vs. Gutierrez David
Has she the right under the will and the judgment in question to occupy
said premises herself? We think that, as a corollary to her right to all the
rent, to choose the tenant, and to fix the amount of the rent, she
necessarily has the right to choose herself as the tenant thereof, if she
wishes to; and, as long as she fulfills her obligation to pay the taxes and
insure and conserve the property properly, the owner has no legitimate
cause to complain. As Judge Nable of the municipal court said in his
decision, "the pretension that the plaintiff, being a mere usu"f ructuary of
the rents, cannot occupy the property, is illogical if it be taken into
account that that could not have been the intention of the testatrix."
We find that upon the pleadings, the undisputed facts, and the law
the action instituted in the municipal court by the petitioner Josefa Fabie
against the respondent Ngo Soo is one of unlawful detainer, within the
original jurisdiction of said court, and that therefore Judges Dizon and
Gutierrez David of the Court of First Instance erred in holding otherwise
and in quashing the case upon appeal
2. The next question to determine is the propriety of the remedy
availed of by the petitioner in this Court. Judging from the allegations
and the prayer of the petition, it is in the nature of certiorari and
mandamus, to annul the order of dismissal and to require the Court of
First Instance to try and decide the appeal on the merits. Under section 3
of Rule 67, when any tribunal unlawfully neglects the performance of an
act which the law specifically enjoins as a duty resulting from an office,
and there is no other plain, speedy, and adequate remedy in the ordinary
course of law, it may be compelled by mandamus to do the act required to
be done to protect the rights of the petitioner. If, as we find, the case
before the respondent judge is one of unlawful detainer, the law
specifically requires him to hear and decide that case on the merits, and
his refusal to do so would constitute an unlawful neglect in the
performance of that duty within
547
VOL. 75, DECEMBER 12, 1945 547
Fabie vs. Gutierrez David
section 3 of Rule 67. Taking into consideration that the law requires that
an unlawful detainer case be promptly decided (sections 5 and 8, Rule
72), it is evident that an appeal from the order of dismissal would not be a
speedy and adequate remedy; and under the authority
of Cecilio vs. Belmonte (48 Phil., 243, 255), and Aguilar vs. Cabrera and
Flameño (G. R. No. 49129), we hold that mandamus lies in this case.
3. The contention of the petitioner that the appeal 01 the intervenor
Juan Grey was filed out of time is not well founded. Although said
respondent received copy of the decision of the municipal court on August
3, 1945, according to the petitioner (on August 6, 1945, according to the
said respondent), it appears from the sworn answer of the respondent
Ngo Soo in this case that on August 8, he filed a motion for
reconsideration, which was granted in part on August 18. Thus, if the
judgment was modified on August 18, the time for the intervenor Juan
Grey to appeal therefrom did not run until he was notified of said
judgment as modified, and since he filed his notice of appeal on August
23, it would appear that his appeal was filed on time. However, we
observe in this connection that said appeal of the intervenor Juan Grey,
who chose not to answer the petition herein, would be academic in view of
the conclusions we have reached above that the rights between him as
owner and Josefa Fabie as usufructuary of the property in question have
been definitely settled by final judgment in civil case No. 1659 of the
Court of First Instance of Manila in the sense that the usufructuary has
the right to administer and possess the property in question, subject to
certain specified obligations on her part.
The orders of dismissal of the respondent Court of First Instance,
dated September 22 and October 31, 1945, in the desahucio case (No.
71149) are set aside and that court is directed to try and decide the said
case on the merits: with the costs hereof against the respondent Ngo Soo.
548
548 PHILIPPINE REPORTS
ANNOTATED
De Leon Vda. de Lontok vs. Padua
Moran, C. J., Parás, Jaranilla, Feria, De
Joya, Pablo, Perfecto, Bengzon, and Briones, JJ., concur.
HILADO, J., concurring:
I concur on the sole ground that, in my opinion, the amended complaint,
dated July 12, 1945, filed by plaintiff in the Municipal Court of Manila,
expressly alleges an agreement between her and defendant Ngo Boo Soo
regarding the leasing of the premises in question, and that said amended
complaint contains further allegations which, together with the
allegations of said agreement, under a liberal construction (Rule 1,
section 2, Rules of Court), would constitiute a prima facie showing that
the case is one of unlawful detainer. Of course, this is only said in view of
the allegations of the amended complaint, without prejudice to the
evidence which the parties may adduce at the trial in the merits, in view
of which the court will judge whether or not, in point of fact, the case is
one of unlawful detainer.
38
Usufruct

Orders set aside; case remanded for further proceedings.

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August 3, 2006. G.R. No. 152809.*
MERCEDES MORALIDAD, petitioner, vs. SPS. DIOSDADO PERNES
and ARLENE PERNES, respondents.

Usufruct; Words and Phrases; Usufruct, in essence, is nothing else

but simply allowing one to enjoy another’s property—it is also defined as
the right to enjoy the property of another temporarily, including both the
jus utendi and the jus fruendi, with the owner retaining the jus
disponendi or the power to alienate the same.562. Usufruct gives a right to
enjoy the property of another with the obligation of preserving its form
and substance, unless the title constituting it or the law otherwise
provides. Usufruct, in essence, is nothing else but simply allowing one to
enjoy another’s property. It is also defined as the right to enjoy the
property of another temporarily, including both the —The Court is
inclined to agree with the CA that what was constituted between the
parties herein is one of usufruct over a piece of land, with the petitioner
being the owner of the property upon whom the naked title thereto
remained and the respondents being two (2) among other unnamed
usufructuaries who were simply referred to as petitioner’s kin. The Court,
however, cannot go along with the CA’s holding that the action for
unlawful detainer must be dismissed on ground of prematurity. Usufruct
is defined under Article 562 of the Civil Code in the following wise:
39
Usufruct
ART. jus utendi and the jus fruendi, with the owner retaining the jus
disponendi or the power to alienate the same.
Same; The term or period of the usufruct originally specified provides
only one of the bases for the right of a usufructuary to hold and retain
possession of the thing given in usufruct.By the death of the usufructuary,
unless a contrary intention clearly appears; (2) By expira- —We
disagree with the CA’s conclusion of law on the matter. The term or
period of the usufruct originally specified provides only one of the bases
for the right of a usufructuary to hold and retain possession of the thing
given in usufruct. There are other modes or instances whereby the
usufruct shall be considered terminated or extinguished. For sure, the
Civil Code enumerates such other modes of extinguishment: ART. 603.
Usufruct is extinguished: (1)
_______________
* SECOND DIVISION.
533
VOL. 497, AUGUST 3, 2006 5
33
Moralidad vs. Parnes
tion of the period for which it was constituted, or by the
fulfillment of any resolutory condition provided in the title
creating the usufruct; (3) By merger of the usufruct and ownership in
the same person; (4) By renunciation of the usufructuary; (5) By the total
loss of the thing in usufruct; (6) By the termination of the right of the
person constituting the usufruct; (7) By prescription.
Same; By express provision of law, the usufructuaries do not have the
right to reimbursement for the improvements they may have introduced on
the property.—The relationship between the petitioner and respondents
respecting the property in question is one of owner and usufructuary.
Accordingly, respondents’ claim for reimbursement of the improvements
they introduced on the property during the effectivity of the usufruct
should be governed by applicable statutory provisions and principles on
usufruct. In this regard, we cite with approval what Justice Edgardo
Paras wrote on the matter: If the builder is a usufructuary, his
rights will be governed by Arts. 579 and 580. In case like this, the
terms of the contract and the pertinent provisions of law should govern (3
Manresa 215-216; se also Montinola vs. Bantug, 71 Phil. 449). (Emphasis
ours.) By express provision of law, respondents, as usufructuary, do not
have the right to reimbursement for the improvements they may have
introduced on the property. We quote Articles 579 and 580 of the Civil
Code: Art. 579.The usufructuary may make on the property held in
usufruct such useful improvements or expenses for mere pleasure as he
may deem proper, provided he does not alter its form or substance; but
he shall have no right to be indemnified therefor. He may, however,
remove such improvements, should it be possible to do so without damage
to the property. (Emphasis supplied.) Art. 580. The usufructuary may set
off the improvements he may have made on the property against any
damage to the same.
Same; If the rule on reimbursement or indemnity were otherwise,
then the usufructuary might improve the owner out of his property.—
Given the foregoing perspective, respondents will have to be ordered to
vacate the premises without any right of reimbursement. If the rule on
reimbursement or indemnity were otherwise, then the usufructuary
might, as an author pointed out, improve the owner out of his property.
The respondents may, however, remove or destroy the improvements they
may have introduced thereon without damaging the petitioner’s
property.534
5 SUPREME COURT
34 REPORTS ANNOTATED
Moralidad vs. Parnes
Same; Equity; The disposition herein arrived is not only legal and
called for by the law and facts of the case—it is also right.—Out of the
generosity of her heart, the petitioner has allowed the respondent spouses
to use and enjoy the fruits of her property for quite a long period of time.
They opted, however, to repay a noble gesture with unkindness. At the
end of the day, therefore, they really cannot begrudge their aunt for
putting an end to their right of usufruct. The disposition herein arrived is
not only legal and called for by the law and facts of the case. It is also
right.
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.
Fajardo, Ruiz-Valenzuela Law Firm for petitioner.
Arnel C. Gonzales for respondents.
GARCIA,J.:
Under consideration is this petition for review on certiorari under
Rule 45 of the Rules of Court to nullify and set aside the following
issuances of the Court of Appeals (CA) in CA-G.R. SP No. 61610, to wit:
Decision dated September 27, 2001, 1.1 affirming an earlier decision
of the Regional Trial Court (RTC) of Davao City which reversed that of
the Municipal Trial Court in Cities (MTCC), Davao City, Branch 1, in an
40
Usufruct
action for unlawful detainer thereat commenced by the petitioner against
the herein respondents; and
Resolution dated February 28, 2002, 2.2 denying petitioner’s motion
for reconsideration.
_______________
1 Penned by Associate Justice Remedios A. Salazar-Fernando with
then Associate Justice Romeo A. Brawner (now ret.) and Associate Justice
Mariano C. Del Castillo, concurring; Rollo, pp. 51-58.
2 Id., at pp. 59-64.
535
VOL. 497, AUGUST 3, 2006 535
Moralidad vs. Parnes
At the heart of this controversy is a parcel of land located in Davao
City and registered in the name of petitioner Mercedes Moralidad under
Transfer Certificate of Title (TCT) No. T-123125 of the Registry of Deeds
of Davao City.
In her younger days, petitioner taught in Davao City, Quezon City
and Manila. While teaching in Manila, she had the good fortune of
furthering her studies at the University of Pennsylvania, U.S.A. While
schooling, she was offered to teach at the Philadelphia Catholic
Archdiocese, which she did for seven (7) years. Thereafter, she worked at
the Mental Health Department of said University for the next seventeen
(17) years.
During those years, she would come home to the Philippines to spend
her two-month summer vacation in her hometown in Davao City. Being
single, she would usually stay in Mandug, Davao City, in the house of her
niece, respondent Arlene Pernes, a daughter of her younger sister,
Rosario.
Back in the U.S.A. sometime in 1986, she received news from Arlene
that Mandug at the outskirts of Davao City was infested by NPA rebels
and many women and children were victims of crossfire between
government troops and the insurgents. Shocked and saddened about this
development, she immediately sent money to Araceli, Arlene’s older
sister, with instructions to look for a lot in Davao City where Arlene and
her family could transfer and settle down. This was why she bought the
parcel of land covered by TCT No. T-123125.
Petitioner acquired the lot property initially for the purpose of letting
Arlene move from Mandug to Davao City proper but later she wanted the
property to be also available to any of her kins wishing to live and settle
in Davao City. Petitioner made known this intention in a document she
executed on July 21, 1986.3 The document reads:
_______________
3 Id., at p. 65.
536
536 SUPREME COURT REPORTS
ANNOTATED
Moralidad vs. Parnes
I, MERCEDES VIÑA MORALIDAD, of legal age, single, having been
born on the 29th day of January, 1923, now actually residing at 8021
Lindbergh Boulevard, Philadelphia, Pennsylvania, U.S.A., wishes to
convey my honest intention regarding my properties situated at Palm
Village Subdivision, Bajada, Davao City, 9501, … and hereby declare:
That it is my desire that Mr. and Mrs. Diosdado M. Pernes
may build their house therein and stay as long as they like; 1.
That anybody of my kins who wishes to stay on the
aforementioned real property should maintain an atmosphere of
cooperation, live in harmony and must avoid bickering with one
another; 2.
That anyone of my kins may enjoy the privilege to stay therein
and may avail the use thereof. Provided, however, that the same is
not inimical to the purpose thereof; 3.
That anyone of my kins 4. who cannot conform with the
wishes of the undersigned may exercise the freedom to look for his
own;
That any proceeds or income derived from the aforementioned
properties shall be allotted to my nearest kins who have less in life
in greater percentage and lesser percentage to those who are
better of in standing. 5.
xxx xxx xxx
Following her retirement in 1993, petitioner came back to the
Philippines to stay with the respondents’ on the house they build on the
subject property. In the course of time, their relations turned sour
because members of the Pernes family were impervious to her
suggestions and attempts to change certain practices concerning matters
of health and sanitation within their compound. For instance, Arlene’s
eldest son, Myco Pernes, then a fourth year veterinary medicine student,
would answer petitioner back with clenched fist and at one time hurled
profanities when she corrected him. Later, Arlene herself followed suit.
Petitioner brought the matter to the local barangay lupon where she
lodged a complaint for slander, harassment, threat and defamation
against the Pernes
537
41
Usufruct
VOL. 497, AUGUST 3, 2006 537
Moralidad vs. Parnes
Family. Deciding for petitioner, the lupon apparently ordered the Pernes
family to vacate petitioner’s property but not after they are reimbursed
for the value of the house they built thereon. Unfortunately, the parties
could not agree on the amount, thus prolonging the impasse between
them.
Other ugly incidents interspersed with violent confrontations
meanwhile transpired, with the petitioner narrating that, at one occasion
in July 1998, she sustained cuts and wounds when Arlene pulled her
hair, hit her on the face, neck and back, while her husband Diosdado held
her, twisting her arms in the process.
Relations having deteriorated from worse to worst, petitioner, on July
29, 1998, lodged a formal complaint before the Regional Office of the
Ombudsman for Mindanao, charging the respondent spouses, who were
both government employees, with conduct unbecoming of public servants.
This administrative case, however, did not prosper.
Then, on August 3, 1998, petitioner filed with the MTCC of Davao
City an unlawful detainer suit against the respondent spouses. Petitioner
alleged that she is the registered owner of the land on which the
respondents built their house; that through her counsel, she sent the
respondent spouses a letter demanding them to vacate the premises and
to pay rentals therefor, which the respondents refused to heed.
In their defense, the respondents alleged having entered the property
in question, building their house thereon and maintaining the same as
their residence with petitioner’s full knowledge and express consent. To
prove their point, they invited attention to her written declaration of July
21, 1986, supra, wherein she expressly signified her desire for the spouses
to build their house on her property and stay thereat for as long as they
like.
The MTCC, resolving the ejectment suit in petitioner’s favor, declared
that the respondent spouses, although builders in good faith vis-à-vis the
house they built on her property, cannot invoke their bona fides as a valid
excuse for not com-
538
538 SUPREME COURT REPORTS
ANNOTATED
Moralidad vs. Parnes
plying with the demand to vacate. To the MTCC, respondents’ continued
possession of the premises turned unlawful upon their receipt of the
demand to vacate, such possession being merely at petitioner’s tolerance,
and sans any rental. Accordingly, in its decision dated November 17,
1999,4 the MTCC rendered judgment for the petitioner, as plaintiff
therein, to wit:
“WHEREFORE, judgment is hereby rendered in favor of herein
plaintiff and against the defendants, as follows:
Directing the defendants, their agents and other persons acting
on their behalf to vacate the premises and to yield peaceful
possession thereof to plaintiff; a)
Ordering defendants to pay P2,000.00 a month from the filing
of this complaint until they vacate premises; b)
Sentencing defendants to pay the sum of P120,000.00 c)5 as
attorney’s fees and to pay the cost of suit.
Defendants counterclaim are hereby dismissed except with respect to
the claim for reimbursement of necessary and useful expenses which
should be litigated in an ordinary civil actions.” (sic)
Dissatisfied, the respondent spouses appealed to the RTC of Davao
City.
In the meantime, petitioner filed a Motion for Execution Pending
Appeal. The motion was initially granted by the RTC in its Order of
February 29, 2000, but the Order was later withdrawn and vacated by its
subsequent Order dated May 9, 2000 6 on the ground that immediate
execution of the appealed decision was not the prudent course of action to
take, consid-
_______________
4 Id., at pp. 33-42.
5 Later changed to P20,000.00 as per Order dated December 16, 1999
of the Regional Trial Court of Davao City, Branch 1, rectifying the clerical
error found on page 10 of the Decision dated November 17, 1999 in Civil
Case No. 5938-A-98.
6 Rollo, p. 44.
539
VOL. 497, AUGUST 3, 2006 539
Moralidad vs. Parnes
ering that the house the respondents constructed on the subject property
might even be more valuable than the land site.
Eventually, in a decision7 dated September 30, 2000, the RTC
reversed that of the MTCC, holding that respondents’ possession of the
property in question was not, as ruled by the latter court, by mere
tolerance of the petitioner but rather by her express consent. It further
ruled that Article 1678 of the Civil Code on reimbursement of
improvements introduced is inapplicable since said provision
contemplates of a lessor-lessee arrangement, which was not the factual
42
Usufruct
milieu obtaining in the case. Instead, the RTC ruled that what governed
the parties’ relationship are Articles 448 and 546 of the Civil Code,
explaining thus:
“Since the defendants-appellees [respondents] are admittedly
possessors of the property by permission from plaintiff [petitioner], and
builders in good faith, they have the right to retain possession of the
property subject of this case until they have been reimbursed the cost of
the improvements they have introduced on the property.
Indeed, this is a substantive right given to the defendants by law, and
this right is superior to the procedural right to [sic] plaintiff to
immediately ask for their removal by a writ of execution by virtue of a
decision which as we have shown is erroneous, and therefore invalid.”
(Words in brackets supplied),
and accordingly dismissed petitioner’s appeal, as follows:
“WHEREFORE, in view of the foregoing, the Decision appealed from
is REVERSED and declared invalid. Consequently, the motion for
execution pending appeal is likewise denied.
Counter-claims of moral and exemplary damages claimed by
defendants are likewise dismissed. However, attorney’s fees in the
amount of fifteen thousand pesos is hereby awarded in favor of
defendants-appellants, and against plaintiffs.
SO ORDERED.”8
_______________
7 Id., at pp. 45-50
8 Id., at p. 50.
540
540 SUPREME COURT REPORTS
ANNOTATED
Moralidad vs. Parnes
Therefrom, petitioner went to the CA in CA-G.R. SP No. 61610.
On September 27, 2001, the CA, while conceding the applicability of
Articles 448 and 546 of the Civil Code to the case, ruled that it is still
premature to apply the same considering that the issue of whether
respondents’ right to possess a portion of petitioner’s land had already
expired or was already terminated was not yet resolved. To the CA, the
unlawful detainer suit presupposes the cessation of respondents’ right to
possess. The CA further ruled that what governs the rights of the parties
is the law on usufruct but petitioner failed to establish that respondents’
right to possess had already ceased. On this premise, the CA concluded
that the ejectment suit instituted by the petitioner was premature. The
appellate court thus affirmed the appealed RTC decision, disposing:
“WHEREFORE, premises considered, the instant petition for review is
hereby denied for lack of merit. Accordingly, the petitioner’s complaint for
Unlawful Detainer is DISMISSED.
SO ORDERED.”
With the CA’s denial of her motion for reconsideration in its
Resolution of February 28, 2002, petitioner is now before this Court
raising the following issues:
WHETHER OR NOT THE COURT OF APPEALS ERRED IN
DISMISSING THE UNLAWFUL DETAINER CASE FOR BEING
PREMATURE WHICH DECISION IS NOT IN ACCORDANCE WITH
LAW AND JURISPRUDENCE. I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN
APPLYING ARTICLES 448 AND 546 AND THE PROVISIONS OF THE
CODE ON USUFRUCT INSTEAD OF ARTICLE 1678 OF THE CIVIL
CODE. II.
The Court rules for the petitioner.
The Court is inclined to agree with the CA that what was constituted
between the parties herein is one of usufruct over a piece of land, with the
petitioner being the owner of the
541
VOL. 497, AUGUST 3, 2006 541
Moralidad vs. Parnes
property upon whom the naked title thereto remained and the
respondents being two (2) among other unnamed usufructuaries who
were simply referred to as petitioner’s kin. The Court, however, cannot go
along with the CA’s holding that the action for unlawful detainer must be
dismissed on ground of prematurity.
Usufruct is defined under Article 562 of the Civil Code in the following
wise:
Usufruct gives a right to enjoy the property of another with the
obligation of preserving its form and substance, unless the title
constituting it or the law otherwise provides.” 562. “ART.
Usufruct, in essence, is nothing else but simply allowing one to enjoy
another’s property.9 It is also defined as the right to enjoy the property of
another temporarily, including both the jus utendi and the jus
fruendi,10 with the owner retaining the jus disponendi or the power to
alienate the same.11
It is undisputed that petitioner, in a document dated July 21,
1986, supra, made known her intention to give respondents and her other
43
Usufruct
kins the right to use and to enjoy the fruits of her property. There can
also be no quibbling about the respondents being given the right “to build
their own house” on the property and to stay thereat “as long as they like.”
Paragraph #5 of the same document earmarks “proceeds or income
derived from the aforementioned properties” for the petitioner’s “nearest
kins who have less in life in greater percentage and lesser percentage to
those who are better of (sic) in standing.” The established facts
undoubtedly gave respondents not only the right to use the property but
also granted
_______________
9 Hemedes vs. Court of Appeals, G.R. No. 107132, October 8, 1999,
316 SCRA 309.
10 Eleizegui vs. Manila Lawn Tennis Club, 2 Phil. 309 (1909); cited in
De Leon & De Leon, Jr., Comments & Cases on Property, 2003 ed., p. 397.
11 Art. 581, Civil Code.
542
542 SUPREME COURT REPORTS
ANNOTATED
Moralidad vs. Parnes
them, among the petitioner’s other kins, the right to enjoy the fruits
thereof. We have no quarrel, therefore, with the CA’s ruling that
usufruct was constituted between petitioner and respondents. It is thus
pointless to discuss why there was no lease contract between the parties.
However, determinative of the outcome of the ejectment case is the
resolution of the next issue, i.e., whether the existing usufruct may be
deemed to have been extinguished or terminated. If the question is
resolved in the affirmative, then the respondents’ right to possession,
proceeding as it did from their right of usufruct, likewise ceased. In that
case, petitioner’s action for ejectment in the unlawful detainer case could
proceed and should prosper.
The CA disposed of this issue in this wise:
x x x Section 1, Rule 70 of the 1997 Rules of Civil Procedure, as
amended, provides x x x
xxx xxx xxx
From the foregoing provision, it becomes apparent that for an action for
unlawful detainer to prosper, the plaintiff [petitioner] needs to prove that
defendants’ [respondents’] right to possess already expired and
terminated. Now, has respondents’ right to possess the subject portion of
petitioner’s property expired or terminated? Let us therefore examine
respondents’ basis for occupying the same.
It is undisputed that petitioner expressly authorized respondents to
occupy portion of her property on which their house may be built. Thus—
“it is my desire that Mr. and Mrs. Diosdado M. Pernes may build their
house therein and stay as long as they like.” From this statement, it
seems that petitioner had given the respondents the usufructuary rights
over the portion that may be occupied by the house that the latter would
build, the duration of which being dependent on how long respondents
would like to occupy the property. While petitioner had already
demanded from the respondents the surrender of the premises, this Court
is of the opinion that the usufructuary rights of respondents had not been
terminated by the said demand considering the clear statement of
petitioner that she is allowing respondents to occupy portion of her land
as long as the
543
VOL. 497, AUGUST 3, 2006 543
Moralidad vs. Parnes
latter want to. Considering that respondents still want to occupy the
premises, petitioner clearly cannot eject respondents.12
We disagree with the CA’s conclusion of law on the matter. The term
or period of the usufruct originally specified provides only one of the
bases for the right of a usufructuary to hold and retain possession of the
thing given in usufruct. There are other modes or instances whereby the
usufruct shall be considered terminated or extinguished. For sure, the
Civil Code enumerates such other modes of extinguishment:
Usufruct is extinguished: 603. ART.
By the death of the usufructuary, unless a contrary intention clearly
appears; (1)
By expiration of the period for which it was constituted, or (2) by
the fulfillment of any resolutory condition provided in the title
creating the usufruct;
By merger of the usufruct and ownership in the same person; (3)
By renunciation of the usufructuary; (4)
By the total loss of the thing in usufruct; (5)
By the termination of the right of the person constituting the usufruct;
(6)
By prescription. (Emphasis supplied.) (7)
The document executed by the petitioner dated July 21,
1986 constitutes the title creating, and sets forth the conditions of, the
usufruct. Paragraph #3 thereof states “[T]hat anyone of my kins may
enjoy the privilege to stay therein and may avail
the use thereof. Provided, however, that the same is not inimical to
the purpose thereof” (Emphasis supplied). What may be inimical to the
purpose constituting the usufruct may be gleaned from the preceding
44
Usufruct
paragraph wherein petitioner made it abundantly clear “that anybody of
my kins who wishes to stay on the aforementioned property
_______________
12 Rollo, pp. 56-57.
544
544 SUPREME COURT REPORTS
ANNOTATED
Moralidad vs. Parnes
should maintain an atmosphere of cooperation, live in harmony
and must avoid bickering with one another.” That the maintenance
of a peaceful and harmonious relations between and among kin
constitutes an indispensable condition for the continuance of the usufruct
is clearly deduced from the succeeding Paragraph #4 where petitioner
stated “[T]hat anyone of my kins who cannot conform with the wishes
of the undersigned may exercise the freedom to look for his own.” In fine,
the occurrence of any of the following: the loss of the atmosphere of
cooperation, the bickering or the cessation of harmonious relationship
between/among kin constitutes a resolutory condition which, by
express wish of the petitioner, extinguishes the usufruct.
From the pleadings submitted by the parties, it is indubitable that
there were indeed facts and circumstances whereby the subject usufruct
may be deemed terminated or extinguished by the occurrence of the
resolutory conditions provided for in the title creating the usufruct,
namely, the document adverted to which the petitioner executed on July
21, 1986.
As aptly pointed out by the petitioner in her Memorandum,
respondents’ own evidence before the MTCC indicated that the relations
between the parties “have deteriorated to almost an irretrievable
level.”13 There is no doubt then that what impelled petitioner to file
complaints before the local barangay lupon, the Office of the Ombudsman
for Mindanao, and this instant complaint for unlawful detainer before the
MTCC is that she could not live peacefully and harmoniously with the
Pernes family and vice versa.
Thus, the Court rules that the continuing animosity between the
petitioner and the Pernes family and the violence and humiliation she
was made to endure, despite her advanced age and frail condition, are
enough factual bases to consider the usufruct as having been terminated.
_______________
13 Id., at p. 185.
545
VOL. 497, AUGUST 3, 2006 545
Moralidad vs. Parnes
To reiterate, the relationship between the petitioner and respondents
respecting the property in question is one of owner and usufructuary.
Accordingly, respondents’ claim for reimbursement of the improvements
they introduced on the property during the effectivity of the usufruct
should be governed by applicable statutory provisions and principles on
usufruct. In this regard, we cite with approval what Justice Edgardo
Paras wrote on the matter:
If the builder is a usufructuary, his rights will be governed by
Arts. 579 and 580. In case like this, the terms of the contract and the
pertinent provisions of law should govern (3 Manresa 215-216; se also
Montinola vs. Bantug, 71 Phil. 449).14 (Emphasis ours.)
By express provision of law, respondents, as usufructuary, do not have
the right to reimbursement for the improvements they may have
introduced on the property. We quote Articles 579 and 580 of the Civil
Code:
Art. 579.The usufructuary may make on the property held in usufruct
such useful improvements or expenses for mere pleasure as he may deem
proper, provided he does not alter its form or substance; but he shall
have no right to be indemnified therefor. He may, however, remove
such improvements, should it be possible to do so without damage to the
property. (Emphasis supplied.)
Art. 580.The usufructuary may set off the improvements he may have
made on the property against any damage to the same.
Given the foregoing perspective, respondents will have to be ordered
to vacate the premises without any right of reimbursement. If the rule on
reimbursement or indemnity were otherwise, then the usufructuary
might, as an author pointed out, improve the owner out of his
property.15 The respondents
_______________
14 Paras, Civil Code of the Philippines Annotated, Vol. II, 13th Ed.
(1994), p. 211.
15 De Leon & De Leon, Jr., Comments & Cases on Property, 2003 ed.,
p. 417.
546
546 SUPREME COURT REPORTS
ANNOTATED
Moralidad vs. Parnes
45
Usufruct

may, however, remove or destroy the improvements they may have

introduced thereon without damaging the petitioner’s property.
Out of the generosity of her heart, the petitioner has allowed the
respondent spouses to use and enjoy the fruits of her property for quite a
long period of time. They opted, however, to repay a noble gesture with
unkindness. At the end of the day, therefore, they really cannot begrudge
their aunt for putting an end to their right of usufruct. The disposition
herein arrived is not only legal and called for by the law and facts of the
case. It is also right.
WHEREFORE, the petition is GRANTED. The assailed Decision and
Resolution of the CA are REVERSED and SET ASIDE. Accordingly, the
decision of the MTCC is REINSTATED with MODIFICATION that all of
respondents’ counterclaims are dismissed, including their claims for
reimbursement of useful and necessary expenses.
No pronouncement as to costs.
SO ORDERED.
Puno (Chairman), Sandoval-Gutierrez, Corona and Azcuna,
JJ., concur.

Petition granted, assailed decision and resolution reversed and set

aside. That of the MTCC reinstated with modification.

Note.—The annotation of usufructuary rights in a certificate of title

in favor of another does not impose upon the mortgagee the obligation to
investigate the validity of its mortgagor’s title. In a usufruct, only the jus
utendi and jus fruendi over the property is transferred to the
usufructuary—the owner of the property maintains the jus disponendi or
the power to alienate, encumber, transform, and even destroy the same.
(Hemedes vs. Court of Appeals, 316 SCRA 347 [1999])
——o0o——

© Copyright 2019 Central Book Supply, Inc. All rights reserved.

April 30, 2008. .R. No. 105608.*
TIRSO D. MONTEROSO, petitioner, vs. COURT OF APPEALS,
SOLEDAD MONTEROSO-CAGAMPANG, REYGULA MONTEROSO-
BAYAN, PERFECTO L. CAGAMPANG, SR., SOFIA PENDEJITO VDA.
DE MONTEROSO, FLORENDA MONTEROSO, ALBERTO
MONTEROSO, HEIRS OF FABIAN MONTEROSO, JR., REYNATO
MONTEROSO, RUBY MONTEROSO, MARLENE MONTEROSO-

46
Usufruct

POSPOS, ADELITA MONTEROSO-BERENGUEL, and HENRIETO conveyance of a determinate portion of the properties.—The fact that Tirso
MONTEROSO, respondents. and the other compulsory heirs of Don Fabian were excluded from the
April 30, 2008. G.R. No. 113199.* possession of their legitime and the enjoyment of the fruits thereof does
SOFIA PENDEJITO VDA. DE MONTEROSO, SOLEDAD not per se argue against the existence of a co-ownership. While Tirso may
MONTEROSO-CAGAMPANG, PERFECTO L. CAGAMPANG, SR., not have expressly pleaded the theory of co-ownership, his demand from,
REYGULA MONTEROSO-BAYAN, FLORENDA MONTEROSO, and act of initiating Civil Case No. 1332 against, the Cagampang spouses
ALBERTO MONTEROSO, RUBY MONTEROSO, MARLENE for his share necessarily implies that he was asserting his right as co-
MONTEROSO-POSPOS, HENRIETO MONTEROSO, ADELITA owner or co-heir of the properties unjustly withheld by the Cagampang
MONTEROSO-BERENGUEL, and REYNATO MONTEROSO, spouses through the instrumentality of simulated deeds of sale covering
petitioners, vs. COURT OF APPEALS and TIRSO D. MONTEROSO, some of the hereditary properties. By asserting his right as a compulsory
respondents. heir, Tirso has effectively brought into the open the reality that the
Cagampang spouses were holding some of the subject properties in trust
Civil Law; Property; Co-Ownership; Partition; Prescription; The and that he is a co-owner of all of them to the extent of his legal share or
right to seek partition is imprescriptible and cannot be barred by laches; legitime thereon. Consequently, we are one with the trial and appellate
The only exception to the imprescriptibility of an action for partition courts that partition is the proper remedy for compulsory or legal heirs to
against a co-owner is when a co-owner repudiates the co-ownership.— get their legitime or share of the inheritance from the decedent. An action
What the appellate court tried to convey is clear and simple: partition is for partition is at once an action for declaration of co-ownership and for
the proper remedy available to Tirso who is a co-owner of the subject segregation and conveyance of a determinate portion of the properties
properties by virtue of his being a compulsory heir, like siblings Soledad, involved.
Reygula, and Benjamin, of Don Fabian. The right to seek partition is Same; Same; Same; Same; Same; As a matter of law, acquisitive
imprescriptible and cannot be barred by laches. Consequently, acquisitive prescription does not apply nor set in against compulsory heirs insofar as
prescription or laches does not lie in favor of the Cagampang spouses and their pro indiviso share or legitime is concerned, unless said heirs
against Tirso, the general rule being that prescription does not run repudiate their share.—Being a compulsory heir of Don Fabian, Tirso has
against a co-owner or co-heir. The only exception to the imprescriptibility the right to compel partition of the properties comprising the intestate
of an action for estate of Don Fabian as a measure to get his hereditary share. His right
_______________ as an heir to a share of the inheritance covers all the properties
comprising the intestate estate of Don Fabian at the moment of his
* SECOND DIVISION. death, i.e., on October 26, 1948. Before partition and eventual
distribution of Don Fabian’s intestate estate,68
67
6 SUPREME COURT REPORTS
VOL. 553, APRIL 30, 2008 6
8 ANNOTATED
7
Office of the Court Administrator vs.
Office of the Court Administrator vs.
Pardo
Pardo
a regime of co-ownership among the compulsory heirs existed over
partition against a co-owner is when a co-owner repudiates the co- the undivided estate of Don Fabian. Being a co-owner of that intestate
ownership. Thus, the appellate court ruled that by invoking extinctive estate, Tirso’s right over a share thereof is imprescriptible. As a matter of
prescription as a defense, the lone exception against imprescriptibility of law, acquisitive prescription does not apply nor set in against compulsory
action by a co-owner, the Cagampang spouses are deemed to have heirs insofar as their pro indiviso share or legitime is concerned, unless
contextually recognized the co-ownership of Tirso and must have said heirs repudiate their share. Contrary to petitioners’ stance,
repudiated such co-ownership in order for acquisitive prescription to set reconveyance is not the proper remedy available to Tirso. Be it
in. remembered in this regard that Tirso is not asserting total ownership
Same; Same; Same; Same; Same; An action for partition is at once rights over the subject properties, but only insofar as his legitime from
an action for declaration of co-ownership and for segregation and the intestate estate of his father, Don Fabian, is concerned.
47
Usufruct
Same; Same; Same; Same; Same; Acquisitive prescription, however,
may still set in favor of a co-owner, “where there exists a clear repudiation
of the co-ownership, and the co-owners are apprised of the claim of adverse
and exclusive ownership.”—Acquisitive prescription, however, may still
set in favor of a co-owner, “where there exists a clear repudiation of the
co-ownership, and the co-owners are apprised of the claim of adverse and
exclusive ownership.” In the instant case, however, no extinctive or
acquisitive prescription has set in against Tirso and other compulsory
heirs in favor of the Cagampang spouses because effective repudiation
had not timely been made against the former. As aptly put by the
appellate court, the repudiation which must be clear and open as to
amount to an express disavowal of the co-ownership relation happened
not when the deeds of absolute sale were executed in 1939, as these could
not have amounted to a clear notice to the other heirs, but in 1961 when
the Cagampang spouses refused upon written demand by Tirso for the
partition and distribution of the intestate estate of Don Fabian. Since
then, Tirso was deemed apprised of the repudiation by the Cagampang
spouses.
Same; Same; Same; Same; Same; Under the law on co-ownership, it
behooves on the person desiring to exclude another from the co-ownership
to do the repudiating.—Tirso’s acknowledgment of Pendejito and her
children’s possession of Parcels S-1, S-2, S-3, and S-4 cannot be viewed as
the required repudiation to bar Tirso from pursuing his right to seek
partition. Under the law on co-ownership, it behooves on the person
desiring to exclude another from the co-ownership to do the repudiating.
Verily, the records do not show that Pendejito and her children performed
acts clearly indicating an69
VOL. 553, APRIL 30, 2008 6 four from each union.
9
Office of the Court Administrator vs.
Pardo
intention to repudiate the co-ownership and then apprising Tirso
and other co-owners or co-compulsory heirs of such intention.
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.
De Castro & Cagampang Law Offices for Sofia Pendejito Vda. de
Monteroso, et al.
Humphrey T. Monteroso for Tirso D. Monteroso.
VELASCO, JR.,J.:
The Case
Before us are two petitions for review under Rule 45, the first
docketed as G.R. No. 105608, and the second docketed as G.R. No.
113199, both assailing the Decision1dated March 31, 1992 of the Court of
Appeals (CA) in CA-G.R. CV No. 15805 which modified the June 9, 1987
Decision2 of the Regional Trial Court (RTC), Branch 4 in Butuan City
in Civil Case Nos. 1292 and 1332.
The Facts
It is not unusual. Acrimonious litigation between and among siblings
and immediate relatives over inheritance does occur. It is unfortunate
when the decedent had, while still alive, taken steps to precisely avoid a
bruising squabble over inheritance.
_______________
1 Rollo (G.R. No. 113199), pp. 66-172. Penned by Associate Justice
Cancio C. Garcia (now a retired member of this Court) and concurred in
by Associate Justices Serafin E. Camilon and Jorge S. Imperial (both
retired).
2 Records, Vol. 1, pp. 999-1092.
70
70 SUPREME COURT REPORTS
ANNOTATED
Office of the Court Administrator vs.
Pardo
In a sense, Don Fabian B. Monteroso, Sr., a former justice of the peace
and municipal mayor of Cabadbaran, Agusan del Norte, started it all.
During his lifetime, Don Fabian married twice and sired eight children,
In 1906, Don Fabian married Soledad Doldol. Out of this marriage
were born Soledad, Reygula, Benjamin, and Tirso. On April 8, 1927,
Soledad Doldol Monteroso passed away.
A little over a year later, Don Fabian contracted a second marriage
with Sofia Pendejito. From this union were born Florenda, Reynato,
Alberto, and Fabian, Jr.
After the death of his first wife, but during the early part of his second
marriage, Don Fabian filed before the Court of First Instance (CFI) of
Agusan an intestate proceeding for the estate of his deceased first wife,
Soledad D. Monteroso, docketed as Special Proceeding (SP) No. 309,
apparently to obviate any dispute over the inheritance of his children
from his first marriage. Subsequently, the CFI received––and later
approved per an Orden3 (Order) dated March 11, 1936––a Proyecto de
Particion4 (Project of Partition) dated February 21, 1935.
The partition in SP No. 309 covered Parcels F-1 to F-5, and
adjudicated to Don Fabian the whole of Parcels F-1, F-2, and F-3, and
48
Usufruct

one-half of Parcel F-5, while the intestate estate of Soledad D. Monteroso (+ 02/01/47)
comprised the whole of Parcel F-4 and one-half of Parcel F-5. The Mauricia
intestate estate of Soledad D. Monteroso was partitioned and distributed Nakila
to her four children in equal shares. Perfecto
Subsequently, a Mocion5 (Motion) was filed for the delivery to Soledad Cagampang, Sr.
D. Monteroso’s four children, her legal heirs, their respective shares in Jose Bayan
her intestate estate, as adjudicated Melecia Taña
_______________ Florenda M.
Reynato M.
3 Exhibit “A-9,” exhibits folder, p. 16. Alberto M.
4 Exhibit “A-8,” id., at pp. 11-15. Fabian M., Jr.
5 Exhibit “A-10,” id., at p. 17. (+ 1970)
Caridad C.
71 Ruby M.
VOL. 553, APRIL 30, 2008 71 Marlene M.
Office of the Court Administrator vs. Adelita M.
Henrieto M.
Pardo
Lucien M.
among them under the duly CFI-approved Project of Partition.
Mario M.
In the meantime, the children of Don Fabian from his first marriage
Reynante M.
married accordingly: The eldest, Soledad to Atty. Perfecto Cagampang,
Elvira M.
Sr.; Reygula to Jose Bayan; Benjamin to Mauricia Nakila; and Tirso to
Cristina M.
Melecia Taña. Benjamin died on February 1, 1947 leaving behind four
Mansueto
children with wife Nakila, namely: Ruby, Marlene, Adelita, and Henrieto.
Pospos
A year and a half later, or on October 26, 1948, Don Fabian also passed
Francis
away.
Berenguel
Before and shortly after Don Fabian’s demise, conveyances involving
73
certain of parcels thus mentioned were purportedly made.
The following is an illustration of the lineal relation of the parties or VOL. 553, APRIL 30, 2008 73
the family tree of the direct descendants of Don Fabian from his two Office of the Court Administrator vs.
marriages:72 Pardo
72 SUPREME COURT REPORTS This brings us to the objects of the squabble: the conjugal patrimonies
ANNOTATED of Don Fabian from his two successive marriages.
During the lifetime of Don Fabian, the following properties were
Office of the Court Administrator vs.
acquired, viz.:
Pardo PARCEL F-ONE
Soledad Doldol A parcel of coconut plantation on sitio Pandanon, Cabadbaran,
(+ 04/08/27) Agusan described as follows: North by the property of Telesforo Ago and
Fabian Monteroso, Sr. Gregorio Cupay; East by Miguel Y Climaco Cabonce, Isidro Maamo and
(+ 10/26/48) Buenaventura Sandigan and Pandanon River, and West by Gregorio
Sofia Pendejito Axamin, Alex Fores and Ventura Sandigan with a superficial extension of
Soledad M. 10 has. 62 ares and 42 centares.
Reygula M. PARCEL F-TWO
Tirso M.
Benjamin M.
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Usufruct
A parcel of coconut land situated on sitio Pandanon, Cabadbaran,
Agusan, with a superficial extension of 6 hectares, 50 ares bearing Tax
No. 14801 of the Municipality of Cabadbaran, Agusan, x x x.
PARCEL F-THREE
A parcel of coconut land under Tax No. 17167 situated on sitio
Calibunan, Cabadbaran, Agusan with superficial extension of 8 hectares
and 34 centares x x x.
PARCEL F-FOUR
A parcel of coconut land under Tax No. 14600 situated on sitio
Pandanon, Cabadbaran, Agusan, with a superficial extension of 27
hectares, 96 ares and 28 centares x x x.
PARCEL F-FIVE
A parcel of residential lot under Tax No. 18477 situated within the
Poblacion of the Municipality of Cabadbaran, Agusan, with a house of
strong materials found on the same lot with a superficial extension of 660
square meters x x x.
PARCEL F-SIX
A parcel of residential lot under Tax No. 5374 situated within the
Poblacion of the Municipality of Cabadbaran, Agusan, with a superficial
extension of 3,890 square meters x x x.74
74 SUPREME COURT REPORTS
ANNOTATED
Office of the Court Administrator vs.
Pardo
PARCEL F-SEVEN
A parcel of coconut and corn land under Tax No. 1769 situated at
Ambahan, Tubay, Agusan, with a superficial extension of 8 hectares x x x.
PARCEL F-EIGHT
A parcel of coconut land situated at Ambahan, Tubay, Agusan, under
Tax No. 2944, with a superficial extension of 7 hectares, 59 ares and 96
centares x x x.6
PARCEL S-ONE
A parcel of land situated at Tagbongabong, Cabadbaran, Agusan
under Tax Dec. No. 5396 with an area of 24 hectares more or less x x x.
PARCEL S-TWO
A parcel of coconut land situated at Dal-as, Bay-ang, Cabadbaran,
Agusan under Tax No. 69 with an area of 24 hectares more or less x x x.
PARCEL S-THREE
A parcel of coconut land situated at Pandanon, Mabini, Cabadbaran,
Agusan, under Tax No. 21639 with an area of 1.4080 hectares more or
less x x x.
PARCEL S-FOUR
A parcel of land situated at Mabini, Cabadbaran, Agusan under Tax
No. 3367 with an area of 1,000 sq. m. bounded x x x.7
The “F” designation signified that the covered properties were
acquired during the first marriage, to distinguish them from those
acquired during the second marriage which are designated as “S”
properties.
On July 28, 1969, the children of the late Benjamin D. Monteroso,
namely: Ruby Monteroso, Marlene M. Pospos, Henrieto Monteroso, and
Adelita Monteroso-Berenguel, filed
_______________
6 Records, Vol. 1, pp. 2-4.
7 Id., at pp. 8-9.
75
VOL. 553, APRIL 30, 2008 75
Office of the Court Administrator vs.
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with the RTC a Complaint for Recovery of Property with Damages against
their uncle, Tirso D. Monteroso. Docketed as Civil Case No. 1292, and
later raffled to Branch 4 of the court, the complaint involved a portion of
Parcel F-4, described in the Project of Partition, as follows:
One parcel of coconut land with the improvements thereon existing,
Tax No. 14600 with a superficial extension of 6 hectares, 99 ares and 32
centares, bounded as follows: on the North, Regula Monteroso; on the
East by the Provincial Road Butuan-Cabadbaran; on the Sourth Tirso
Monteroso and on the West Diego Calo.” “(1)8
As the heirs of Benjamin alleged in their complaint, their uncle, Tirso,
was entrusted with the above-described one-fourth portion of Parcel F-4
as part of the share from the estate of Soledad D. Monteroso allotted to
their father per SP No. 309. However, their uncle refused to surrender
and deliver the same when they demanded such delivery upon their
reaching the majority age.
Tirso countered that the portion pertaining to Benjamin was never
entrusted to him; it was in the possession of their sister, Soledad
Monteroso-Cagampang, who was not entitled to any share in Parcel F-4,
having previously opted to exchange her share in said property for
another parcel of land, i.e., Parcel F-7, then being occupied by her.
On April 14, 1970, Tirso, in turn, filed a Complaint for Partition and
Damages with Receivership docketed as Civil Case No. 1332, involving 12
parcels of land (i.e., Parcels F-1 to F-8 and Parcels S-1 to S-4, mentioned
above) against his stepmother, Pendejito, and all his full and half-siblings
50
Usufruct
and/or their representatives. The complaint in Civil Case No. 1332 was
subsequently amended to include Perfecto, as co-defendant, and
Pendejito, as guardian ad litem for the minor
_______________
8 Id., at p. 677.
76
76 SUPREME COURT REPORTS
ANNOTATED
Office of the Court Administrator vs.
Pardo
children of Fabian P. Monteroso, Jr., who died in 1970 after the filing of
the complaint.
In Civil Case No. 1332, Tirso, inter alia, alleged the following: (1) the
aforementioned 12 parcels of land belong to the conjugal partnerships of
the first and second marriages contracted by Don Fabian; (2) SP No. 309,
which purportedly judicially settled the intestate estate of his mother, is
null and void for the reason that the project of partition failed to
comprehend the entire estate of the decedent as Parcels F-6, F-7, and F-8
were excluded, thereby depriving Tirso of his one-fourth share or legitime
over the said three parcels of land; and (3) Parcels S-1 to S-4, having been
acquired during the second marriage of Don Fabian, are not paraphernal
properties of Sofia Pendejito Vda. de Monteroso.
Answering, the defendants in Civil Case No. 1332 contended that Don
Fabian acquired Parcel F-6 during the second marriage, while Parcels F-7
and F-8 were Don Fabian’s exclusive properties having been acquired
through a donation from the heirs of one Benito Tinosa. They further
maintained the validity of the judicial partition under SP No. 309 which
operates as res judicata insofar as Parcels F-1 to F-5 are concerned. In
particular, they asserted that Parcels F-1, F-2, F-3, and one-half of F-5
were adjudicated to Don Fabian as his share in the conjugal partnership
of the first marriage, while Parcel F-4 and the other half of Parcel F-5
were equally divided among the four children of the first marriage; that
during his lifetime, Don Fabian sold Parcels F-1, F-2, F-3, F-7, and F-8 to
Soledad Monteroso-Cagampang; that Soledad Monteroso-Cagampang,
Tirso D. Monteroso, and Mauricia Nakila Vda. de Benjamin Monteroso
donated Parcel F-6 to Reygula Monteroso-Bayan; and that Parcels S-1 to
S-4 are truly paraphernal properties of Sofia Pendejito Vda. de Monteroso
as Parcel S-1 was acquired by her through a homestead patent, Parcel S-2
through adverse possession, and Parcels S-3 and S-4 by purchase.77
VOL. 553, APRIL 30, 2008 77
Office of the Court Administrator vs.
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The Initial Ruling of the RTC
Involving practically the same properties and parties, Civil Case Nos.
1292 and 1332 were consolidated and jointly heard. After a long drawn-
out trial spanning almost 15 years, with six different judges successively
hearing the case, the RTC, presided by Judge Miguel Rallos, rendered on
July 22, 1985 a Decision,9 dismissing Civil Case No. 1292 on the ground
of failure to state a cause of action, but finding, in Civil Case No. 1332, for
Tirso.
What appears to be a victory for Tirso was, however, short-lived.
Acting on four separate motions for reconsideration duly filed by the
various defendants in Civil Case No. 1332, a new judge, who took over the
case from Judge Rallos who inhibited himself from the case, rendered a
new decision.
The Subsequent Ruling of the RTC
Dated June 9, 1987, the new Decision set aside the July 22, 1985 RTC
Decision of Judge Rallos and gave due course to both Civil Case Nos. 1292
and 1332. In full, the fallo of the new decision reads:
“WHEREFORE, premises considered, both complaints in Civil Cases
No. 1292 and 1332 are hereby given due course and judgment is hereby
rendered as follows:
Declaring, confirming and ordering that Lot 380, Pls-736 located at
Pandanon, Cabadbaran, belongs to the children of first marriage and
partitioned as per subdivision survey map made by Geodetic Engineer
Antonio Libarios, Exh. ‘7,’ page 72 of the records as follows: 1.
Lot 380-A, Share of Soledad Monteroso Cagampang with an
area of 5.3376 hectares, with technical description therein; (a.)
Lot 380-B, Share of Reygula Monteroso Bayan with an area of
5.3376 hectares, with technical description therein; (b.)
_______________
9 Id., at pp. 799-826.
78
78 SUPREME COURT REPORTS
ANNOTATED
Office of the Court Administrator vs.
Pardo
Lot 380-C, Share of the Heirs of Benjamin D. Monteroso with
an area of 5.3376 hectares with technical description therein; (c.)
51
Usufruct
Lot 380-D, Share of Tirso D. Monteroso with an area of 5.3376
hectares and Lot 351, Pls-736 with an area of 6,099 sq. meters,
with both technical description therein; (d.)
It is hereby ordered that Tirso D. Monteroso must deliver, return,
relinquish, cede, waive and/or quit claim immediately the area of 3.7815
hectares being portion of Lot 380-C, Pls-736 indicated in the subdivision
survey plan by Engr. Libarios, page 72, Records, Civil Case No. 1292,
Folio 2, Exh. “V,” to the Heirs of Benjamin D. Monteroso who are absolute
owners of Lot 380-C, Pls-736 and to pay, return and deliver immediately
to the said Heirs of Benjamin D. Monteroso the net income in arrears
from 1948 to 1983, the total sum of Two Hundred Sixty Thousand Eight
Hundred Forty Four and 70/100 (P260,844.70) Pesos with interest of 12%
2. per annum compounded annually from January 1, 1984 up to the
present and until fully paid;
It is hereby ordered that Reygula Monteroso Bayan must deliver,
return, relinquish, cede, waive and/or quit claim immediately the area of
1.6128 hectares which is part of Lot 380-C, Pls-736, indicated in the
subdivision survey plan by Engr. Libarios, page 72, Records (Civil Case
No. 1292, Folio 2), Exh. ‘V,’ to the Heirs of Benjamin D. Monteroso who
are the absolute owners of Lot 380-C, Pls-736 and to pay, return and
deliver immediately to the said Heirs of Benjamin D. Monteroso the net
income in arrears from 1948 to 1983 the total sum of One Hundred Six
Thousand Nine Hundred Sixty and 40/100 (P106,960.40) Pesos with
interest of 12% 3. per annum compounded annually from January 1,
1984 up to the present and until fully paid;
It is hereby ordered that Soledad Monteroso Cagampang must deliver,
return, relinquish, cede, waive and/or quit claim immediately the area of
1.0929 hectares being portion of Lot 380-C, Pls-736, indicated in the
subdivision survey plan by Engr. Libarios, page 72, Records (Civil Case
No. 1292, Folio 2), Exh. ‘V,’ to her sister Reygula Monteroso Bayan who is
the absolute owner of Lot 380-C, Pls-736 and to pay, return and deliver
immediately to the said Reygula Monteroso Bayan the net income in
arrears from 1948 to 1983, the total sum of Seventy Seven Thousand Six
Hundred Twenty Five and 96/100 (P77,625.96) Pesos with interest of 12%
4. per annum com-79
VOL. 553, APRIL 30, 2008 79
Office of the Court Administrator vs.
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pounded annually from January 1, 1984 up to the present and until fully
paid, subject to deduction of whatever cash advances, if any, was ever
received by Reygula M. Bayan.
The three alleged Absolute Sale, Exh. ‘C,’ ‘D’ and ‘E’ with all its
submarkings are declared fictitious, simulated and no consideration. It
can never be considered a donation because aside from being inofficious
and impairing the legitime of other heirs, the vendee had not signed
therein which could be considered acceptance and above all, these
documents were prepared and acknowledged by Notary Public squarely
disqualified and highly prohibited. Therefore, all are declared null and
void and of no legal effect. 5.
So, parcels F-1, F-2, F-3, F-6, F-7 and F-8 [remain] as part of the
intestate estate of Don Fabian B. Monteroso, Sr.
The Register of Deeds and the Provincial Assessor, both in the
Province of Agusan del Norte are hereby ordered to cancel as the same
are cancelled and nullified, all transfer of certificates and tax declarations
now in the name of Soledad Monteroso de Cagampang and Atty. Perfecto
L. Cagampang, Sr. which parcels of land originally were registered and
declared in the name of Don Fabian B. Monteroso, Sr., and to register and
declare again in the name of Heirs of Don Fabian B. Monteroso, Sr., more
particularly the following: 6.
[TCT No. RT-203] (420) for Lot 432, Cad. 121, with an area of
10.0242 hectares under Tax Dec. No. 02-018-0224, Series of 1980,
PIN-02-019-05-050 known as Parcel F-1; (a.)
TCT No. RT-205 (424) for Lot 100, Cad. 121, with an area of
1.9083 hectares under Tax Dec. No. 02-019-0488, Series of 1980,
PIN-02-019-08-002 known as F-2; (b.)
TCT No. RT-204 (423) for Lot 103, Cad. 121, with an area of
2.8438 hectares under Tax Declaration No. 02-019-0335, Series of
1980, PIN-02-019-08-017 known as F-2; (c.)
Parcel of coconut land located at Poblacion, Cabadbaran,
known as F-3 with area of 6.3100 hectares under Tax Dec. No. 02-
001-1810, Series of 1980 and PIN-02-001-30-027; (d.)
Residential Lot, known as F-5 located at Poblacion, Cabadbaran
under Tax Dec. No. 18447 then under Tax Dec. No. 1922,
containing an area of 660 sq. meters bounded on the North by
Washington Street; on the East by Progresso Street; (e.)80
80 SUPREME COURT REPORTS
ANNOTATED
Office of the Court Administrator vs.
Pardo
on the South by Rizal Street; and on the West by Ramon Cabrera.
Residential Lot known as F-6 located at Poblacion under Tax
Dec. No. 5374, Series of 1949 and Tax Dec. No. 499, Series of 1954,
consisting of 3,890 sq. meters bounded as follows: (f.)
North – Andres Atega
South – Rill
East – Luis Jamboy now Celestino Udarbe,
52
Usufruct
Sixto Ferrer and New Road
West – Atega Street;
Coconut land known as F-7, located at Ambajan, Tubay,
Agusan del Norte under Tax Dec. No. 1769, Series of 1955 and Tax
Dec. No. 10-03-0273, Series of 1980 with an area of [8.000]
hectares; (g.)
Parcel of coconut land known as F-8, located at Ambajan,
Tubay, Agusan del Norte with an area of 7.5996 hectares under
Tax Dec. No. 2944 and Tax Dec. No. 10-03-0273, Series of 1980;
(h.)
Parcel of S-1, located at Tagbongabong, Cabadbaran under Tax
Dec. No. 11506, Series of 1963 with an area of 24 hectares in the
name of Sofia Vda. de Monteroso; (i.)
Parcel of S-2, located at Dal-as, Bay-ang, Cabadbaran, under
Tax Dec. No. 1888, Se (j.)ries of 1948, Tax Dec. No. 669, Series of
1952, and subsequently transferred in fraud of other heirs, in the
name of Florenda P. Monteroso under Tax Dec. No. 11507, Series
of 1964, Tax Dec. No. 3381, Series of 1972, Tax Dec. No. 5036,
Series of 1974, Tax Dec. No. 02-006-0047, Series of 1980;
Parcel of S-3, located at Pandanon, Mabini, Cabadbaran, under
Tax Dec. No. 5373, Series of 1949 with an area of 1.4080 hectares
and bounded as follows: (k.)
North – Pandanon River
South – Crisanto Dolleroso
East – Pandanon River
West – Pandanon River and Peregrino Aznar;81
VOL. 553, APRIL 30, 2008 81
Office of the Court Administrator vs.
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Parcel S-4, located at Mabini, Cabadbaran, under Tax Dec. No.
3367 with an area of 1.6500 hectares and bounded as follows: (l.)
North – Hrs. of G. Corvera
South – C. Vda. de Alburo
East – Ellodoro Delleroso
West – A. Ventura
It is hereby declared that upon the death of Don Fabian B. Monteroso,
Sr. on March 26, 1948, the following are the properties belonging to his
intestate estate: 7.
Whole parcel Lot 432, F-1; (a.)
Whole parcels Lot 100 and 103, F-2; (b.)
Whole parcel cocoland, Calibunan, F-3; (c.)
One-half (1/2) parcel F-5; (d.)
One-half (1/2) parcel F-6; (e.)
One-half (1/2) parcel F-7; (f.)
One-half (1/2) parcel F-8; (g.)
One-half (1/2) parcel S-1; (h.)
One-half (1/2) parcel S-2; (i.)
One-half (1/2) parcel S-3; (j.)
One-half (1/2) parcel S-4. (k.)
It is hereby ordered that Lot 432 under TCT [No.] RT-203 (420) with
an area of 10.0242 hectares under Tax Dec. No. 02-018-0224 (1980) is
hereby divided into nine (9) equal shares for the eight (8) children of Don
Fabian B. Monteroso and the one-ninth (1/9) share be held in usufruct by
the widow Sofia Pendejito Monteroso during her lifetime. 8.
Sofia Pendejito Monteroso being in possession and enjoying the fruits
or income of F-1 is hereby ordered to pay and deliver immediately to the
following heirs the corresponding amount of net income of F-1, Lot 432,
from 1948 to 1983:
To Soledad Monteroso Cagampang – P78,521.32 (a.)
To Reygula Monteroso Bayan – P78,521.32 (b.)
To Hrs. of Benjamin D. Monteroso – P78,521.32 (c.)
To Tirso D. Monteroso – P78,521.32 (d.)82
82 SUPREME COURT REPORTS
ANNOTATED
Office of the Court Administrator vs.
Pardo
To Florenda P. Monteroso – P78 (e.),521.32
To Reynato P. Monteroso – P78,521.32 (f.)
To Alberto P. Monteroso – P78,521.32 (g.)
To Hrs. of Fabian P. Monteroso, Jr. – P78,521.32 (h.)
The above-mentioned [amounts] shall be subject to deduction for
whatever cash advance any heir may have received. Then the net balance
of said [amounts] shall be subject to interest at the rate of twelve percent
(12%) per annum compounded annually from January 1, 1984 to the
present until fully paid.
It is hereby ordered that Lot 100 under [TCT No. RT-205] (424) with
an area of 1.9083 hectares under Tax Dec. No. 02-019-0488, Series of
1980 and Lot No. 103 under [TCT No. RT-204] (423) with an area of
2.8438 hectares and under Tax Dec. No. 02-019-0335, Series of 1980,
[both known as Parcel F-2,] shall be divided into nine (9) equal shares for
the eight (8) children of Fabian B. Monteroso, Sr. and one-ninth (1/9)
share shall be held in usufruct by the widow, Sofia P. Monteroso, during
her lifetime. 9.
Soledad Monteroso Cagampang and Atty. Perfecto L. Cagampang, Sr.
are ordered to deliver to [their] co-heirs their shares in these parcels of
53
Usufruct
land, F-2, free from any lien and encumbrances whatsoever, and to pay
each of them the net income in arrears from 1948 to 1983, namely:
To Reygula Monteroso Bayan – P34,976.85 (a.)
To Hrs. of Benjamin D. Monteroso – P34,976.85 (b.)
To Tirso D. Monteroso – P34,976.85 (c.)
To Florenda P. Monteroso – P34,976.85 (d.)
To Reynato P. Monteroso – P34,976.85 (e.)
To Alberto P. Monteroso – P34,976.85 (f.)
To Hrs. of Fabian P. Monteroso, Jr. – P34,976.85 (g.)
To Sofia P. Monteroso (usufruct) – P34,976.85 (h.)
The above-mentioned [amounts] shall be subjected to deduction of
whatever amount any heir may have received by way of cash advances.
The net amount shall be subjected to an interest at the rate of twelve
percent (12%) per annum compounded annually from January 1, 1984 to
the present or until fully paid.83
VOL. 553, APRIL 30, 2008 83
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Soledad Monteroso Cagampang and Atty. Perfecto L. Cagampang, Sr.
being in possession and enjoying the fruits and income of Parcel F-3, are
hereby ordered to pay to the following heirs, the net income in arrears
from 1948 to 1983: 10.
To Reygula Monteroso Bayan – P49,727.35 (a.)
To Hrs. of Benjamin D. Monteroso – P49,727.35 (b.)
To Tirso D. Monteroso – P49,727.35 (c.)
To Florenda P. Monteroso – P49,727.35 (d.)
To Reynato P. Monteroso – P49,727.35 (e.)
To Alberto P. Monteroso – P49,727.35 (f.)
To Hrs. of Fabian P. Monteroso, Jr. – P49,727.35 (g.)
To Sofia P. Monteroso (usufruct) – P49,727.35 (h.)
The above-mentioned [amounts] shall be subject to deduction for
whatever cash advance, if any, such heir may have received. Then the net
[amounts] shall be subject to interest at the rate of twelve percent
(12%) per annum compounded annually from January 1, 1984 to the
present until fully paid.
Soledad Monteroso Cagampang and Atty. Perfecto L. Cagampang, Sr.
are both ordered to deliver to the above-mentioned co-heirs their
respective shares free from any lien and encumbrances whatsoever.
Parcels F-5, F-6, F-7 and F-8 are declared real properties belonging to
the first marriage. Hence one-half (1/2) of each of these four parcels shall
equally be divided by the four (4) children of the first marriage and the
other half must be divided into nine (9) equal shares for the eight (8)
children of Fabian B. Monteroso, Sr., and one-ninth (1/9) shall be held in
usufruct by the widow, Sofia Pendejito Vda. de Monteroso. 11.
Therefore, it is hereby ordered that F-6 is divided as follows:
To Soledad Monteroso Cagampang 702 sq. m. (a.)
To Reygula Monteroso Bayan 702 sq. m. (b.)
To Hrs. of Benjamin D. Monteroso 702 sq. m. (c.)
To Tirso D. Monteroso 702 sq. (d.) m.
To Florenda P. Monteroso 216 sq. m. (e.)
To Reynato P. Monteroso 216 sq. m. (f.)
To Alberto P. Monteroso 216 sq. m. (g.)84
84 SUPREME COURT REPORTS
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To Hrs. of Fabian Monteroso, Jr. 216 sq. m. (h.)
To Sofia P. Monteroso 216 sq. m. (i.)
It is hereby ordered, that Soledad Monteroso Cagampang and Atty.
Perfecto L. Cagampang, Sr. must deliver to all heirs their respective
shares on F-7 and F-8 including usufruct of Sofia P. Monteroso as
declared in paragraph five (5) and in addition, must pay and deliver the
net income in arrears from 1948 to 1983, summarized as follows: 12.
To Reygula Monteroso Bayan P189,665.88 (a.)
To Hrs. of Benjamin D. Monteroso P189,665.88 (b.)
To Tirso D. Monteroso P189,665.88 (c.)
To Florenda P. Monteroso P 58,358.73 (d.)
To Reynato P. Monteroso P 58,358.73 (e.)
To Alberto P. Monteroso P 58,358.73 (f.)
To Hrs. of Fabian Monteroso, Jr. P 58,358.73 (g.)
To Sofia P. Monteroso (usufruct) P 58,358.73 (h.)
all with interest at the rate of twelve percent (12%) per
annum compounded annually from January 1, 1984 to the present until
fully paid. However, it is subject to deduction of whatever cash advances,
if ever any heir, may have received.
The Deed of Donation in 1948, Exh. “F,” over parcel known as F-5, is
declared null and void because the same was prepared and acknowledged
before a Notary Public disqualified and prohibited to do so under Notarial
Law (Barretto vs. Cabreza, 33 Phil. Reports 112). Hence, the transfer of
tax declaration is hereby ordered cancelled and the same must be
declared again in the name of the Heirs of Fabian B. Monteroso, Sr. and
ordered partitioned in the proportion stated in paragraph eleven (11)
hereof. 13.
Parcels of land known as S-1, S-2, S-3 and S-4 are declared conjugal
properties of the second marriage. Hence, one-half (1/2) thereof belongs to
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Sofia Pendejito Monteroso and one-half (1/2) shall be equally divided into
nine (9) shares for the eight (8) children of Don Fabian B. Monteroso, Sr.
where the one-ninth (1/9) shall be held in usufruct by Sofia P. Monteroso
during her lifetime. 14.
For the net income in arrears of S-1 located at Tagbongabong,
Cabadbaran, from 1948 to 1983, Sofia Pendejito Monteroso is 15.85
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hereby ordered to pay and deliver to the following heirs the corresponding
share:
To Soledad Monteroso Cagampang P93,998.12 (a.)
To Reygula Monteroso Bayan P93,998.12 (b.)
To Hrs. of Benjamin D. Monteroso P93,998.12 (c.)
To Tirso D. Monteroso P93,998.12 (d.)
To Florenda P. Monteroso P93,998.12 (e.)
To Reynato P. Monteroso P93,998.12 (f.)
To Alberto P. Monteroso P93,998.12 (g.)
To Hrs. of Fabian P. Monteroso, Jr. P93,998.12 (h.)
However, all these amounts shall be subject to deduction, if any cash
advance was ever made or received by any heir.
The above-mentioned [amounts are] subject to an interest at the rate
of twelve percent (12%) compounded annually from January 1, 1948 to
the present until fully paid.
The alleged Deed of Absolute Sale executed by Sofia P. Monteroso in
favor of Florenda P. Monteroso over a coconut land located at Dal-as,
Bay-ang, Cabadbaran, consisting of 24 hectares is hereby declared null
and void being in fraud of other heirs. It is clearly inofficious and impairs
the legitime of her brothers, sisters and nephews and nieces. Therefore,
the tax declaration in the name of Florenda P. Monteroso under Tax Dec.
No. 11507, Series of 1964, Tax Dec. No. 3381, Series of 1972, Tax Dec. No.
5036, Series of 1974 and Tax Dec. No. 02-006-0047, PIN-02-006-02-002
are hereby ordered cancelled and the said land shall be declared again in
the name of Heirs of Fabian B. Monteroso. 16.
Sofia Pendejito Monteroso is not required to render accounting as to
the income of S-2 because the coconut trees therein were planted by her
while being already a widow. One-half (1/2) of the land where the coconut
trees are planted shall be her share and the other one-half (1/2) shall be
divided into nine (9) shares for the eight (8) children of Fabian B.
Monteroso including her 1/9 usufruct thereon.
Sofia Pendejito Monteroso is hereby ordered to pay and deliver
immediately the net income in arrears of parcel S-3 located at Pandanon
to the following heirs with the corresponding amount: 17.86
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To Soledad Monteroso Cagampang P49,349.02 (a.)
To Reygula Monteroso Bayan P49,349.02 (b.)
To Hrs. of Benjamin D. Monteroso P49,349.02 (c.)
To Tirso D. Monteroso P49,349.02 (d.)
To Florenda P. Monteroso P49,349.02 (e.)
To Reynato P. Monteroso P49,349.02 (f.)
To Alberto P. Monteroso P49,349.02 (g.)
To Hrs. of Fabian P. Monteroso, Jr. P49,349.02 (h.)
However, [the] above-mentioned [amounts] shall be subject to
deductions, if any cash advance was ever made or received by any heir.
Then the net amount receivable shall be subject to an interest at the
rate of twelve percent (12%) compounded annually from January 1, 1984
to the present until fully paid.
For the net income in arrears of parcel S-4, located at Mabini,
Cabadbaran, from 1948 to 1983, Sofia P. Monteroso is hereby ordered to
pay and deliver to the following heirs their corresponding shares: 18.
To Soledad Monteroso Cagampang P6,477.54 (a.)
To Reygula Monteroso Bayan P6,477.54 (b.)
To Hrs. of Benjamin D. Monteroso P6,477.54 (c.)
To Tirso D. Monteroso P6,477.54 (d.)
To Florenda P. Monteroso P6,477.54 (e.)
To Reynato P. Monteroso P6,477.54 (f.)
To Alberto P. Monteroso P6,477.54 (g.)
To Hrs. of Fabian P. Monteroso, Jr. P6,477.54 (h.)
However, all these amounts shall be subject to deductions, if any cash
advance was ever made or received by any heir.
The above-mentioned amount is subject to an interest at the rate of
twelve percent (12%) compounded annually from January 1, 1984 to the
present until fully paid.
Sofia Pendejito Monteroso is ordered to deliver to the above-
mentioned heirs their respective shares free from any lien and
encumbrances whatsoever.
These cases involved inheritance, hence the Bureau of Internal Revenue
(BIR) of Agusan del Norte at Butuan City is hereby 19.87
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notified for prompt, proper and appropriate action. Likewise, the
Provincial Treasurer of Agusan del Norte and the Municipal Treasurers
of Cabadbaran and Tubay are hereby informed and reminded for their
prompt, proper and appropriate action in the assessment and collection of
real estate taxes including transfer’s tax.
That all the heirs are hereby directed, and ordered to pay all taxes due
in favor of the Government of the Republic of the Philippines within
thirty (30) days from the finality of judgment hereof, otherwise, upon
proper application or manifestation by appropriate or concerned
government agency, a portion of the intestate estate of Don Fabian B.
Monteroso, Sr., shall be sold at public auction for such purpose. 20.
Under Civil Case No. 1292, Tirso D. Monteroso or his heirs, assigns
and successors-in-interest, is hereby ordered to pay Ruby Monteroso,
Marlene Monteroso-Pospos, Adelita Monteroso-Berenguel and Henrieto
Monteroso the following sums of money: 21.
P10,000.00 for moral damages; (a.)
P10,000.00 for exemplary damages; (b.)
P3,000.00 for costs of suit; and (c.)
P10,000.00 for attorney’s fees. (d.)
Under Civil Case No. 1292, Soledad Monteroso de Cagampang and
Reygula Monteroso Bayan are hereby ordered jointly and severally to pay
Ruby Monteroso, Marlene Monteroso-Pospos, Adelita Monteroso-
Berenguel and Henrieto Monteroso the following sums of money: 22.
P10,000.00 for moral damages; (a.)
P10,000.00 for exemplary damages; (b.)
P2,000.00 for costs of suit; and (c.)
P10,000.00 for attorney’s fees. (d.)
Under Civil Case No. 1332, Soledad Monteroso Cagampang, Atty.
Perfecto L. Cagampang, Sr. and Sofia Pendejito Vda. de Monteroso or
their heirs, assigns and successors-in-interest, are hereby ordered to pay
jointly and severally, unto and in favor of Tirso D. Monteroso or his heirs,
assigns and successors-in-interest, the following sums of money: 23.
P20,000.00 for moral damages; (a.)
P20,000.00 for exemplary damages; (b.)88
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P5,000.00 for costs of suit; and (c.)
P10,000.00 for attorney’s fees. (d.)
It is hereby ordered that a judicial administrator of the intestate
estate of Don Fabian B. Monteroso, Sr. shall be appointed by this Court
upon written recommendation by all the parties within thirty (30) days
from promulgation of this decision. Should the parties fail to submit
unanimously a recommendee, the Court at its discretion may appoint an
administrator, unless none of the parties appeal this decision and this
judgment is complied with by all the parties and/or so executed in
accordance with the provisions of the New Rules of Court. 24.
SO ORDERED.”10
As regards Civil Case No. 1292, the RTC found that the heirs of
Benjamin have indeed been deprived of their inheritance which
corresponds to one-fourth share due their father from the intestate estate
of their grandmother, Soledad D. Monteroso. Thus, the court ordered the
equal distribution of Parcel F-4, i.e., Lot 380, Pls-736 located in
Pandanon, Cabadbaran, Agusan del Norte, among the children of the first
marriage of Don Fabian, and partitioned it based on the subdivision
survey map prepared by a geodetic engineer.
Turning on the alleged sale of Parcels F-1, F-2, F-3, F-7, and F-8 by
Don Fabian to Soledad Monteroso-Cagampang, the RTC found the
covering three deeds of absolute sale 11 to be null and void for the reason
that the alleged conveyances were fictitious, simulated, and/or without
sufficient consideration. Alternatively, the RTC ruled that the
conveyances, even if considered as donation, would be inofficious for
impairing the legitime of the other compulsory heirs, not to mention the
lack of due acceptance of the donation by Soledad Monteroso-Cagampang.
Adding a vitiating element to the conveyances, as the RTC noted, was the
fact that the corresponding documents were prepared by and
acknowledged before Perfecto,
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10 Supra note 2, at pp. 1076-1092.
11 Exhibits “C,” “D,” and “E,” exhibits folder, pp. 31, 39, 56-57.
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who happened to be the husband of the alleged vendee, Soledad
Monteroso-Cagampang.
The RTC also declared as null and void the donation of Parcel F-5 to
Reygula Monteroso-Bayan owing to clear legal infirmities attaching to
the covering deed of donation.12 For one, the parcel in question, while
purportedly donated free from any liens or encumbrance, was in fact the
subject of a deed of absolute sale between Don Fabian and the
Cagampang spouses. For another, one of the signatory-donors, Mauricia
Nakila, Benjamin’s widow, did not have the right to effect a donation
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because she was not a compulsory heir of her husband by representation.
The RTC added that the real owners of the rights and interests of
Benjamin over Parcel F-5 are her children as representative heirs.
Finally, the RTC declared the Order dated March 11, 1936 issued in
SP No. 309 approving the Project of Partition to be valid, and that it
constitutes res judicata on the affected properties, i.e., Parcel F-4 and
one-half of Parcel F-5, which were equally distributed to the heirs of
Soledad D. Monteroso. Pursuing this point and on the finding that
Parcels F-1 to F-8 were acquired during the first marriage and Parcels S-
1 to S-4 during the second, the RTC thus held that Don Fabian’s intestate
estate consisted of the whole of Parcels F-1, F-2, and F-3; and half of
Parcels F-5 to F-8 and half of Parcels S-1 to S-4, to be distributed in
accordance with the law on intestate succession. This means, the RTC
concluded, that the estate shall descend to Don Fabian’s compulsory heirs
and their representatives, as in the case of the late Benjamin and Fabian,
Jr., subject to accounting of the income or produce of the subject
properties for the applicable period, less advances made or received by
any heir, if any.
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12 Exhibit “F,” id., at p. 63.
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The Ruling of the CA
From the above June 9, 1987 Decision, Tirso, defendant in Civil Case
No. 1292, appealed to the CA, so did the Cagampang spouses, defendants
in Civil Case No. 1332. The other defendants in Civil Case No. 1332,
namely: Sofia Pendejito Vda. de Monteroso, Florenda Monteroso, Alberto
Monteroso, Heirs of Fabian Monteroso, Jr., Reynato Monteroso, and
Reygula Monteroso-Bayan, also interposed their own appeal. The
separate appeals were consolidated and docketed as CA-G.R. CV No.
15805.
On March 31, 1992, the CA rendered the assailed decision, affirming
with modification the June 9, 1987 RTC Decision, disposing as follows:
“WHEREFORE, the decision appealed from is hereby modified, as
follows:
In the event that a homestead patent over Parcel S-1 is issued
by the Bureau of Lands pursuant to the patent application of Sofia
Pendejito Vda. de Monteroso, said patent shall issue not in the
name of the applicant but in favor of the eight heirs of Fabian
Monteroso, Sr. who thereafter shall be declared absolute owners of
the said parcel of land in the proportion stated in this decision but
who nevertheless shall allow Sofia Pendejito Vda. de Monteroso to
exercise during her lifetime usufructuary rights over a portion of
the said parcel of land equivalent to the share therein of each of
the heirs of her deceased husband; a)
The said heirs of Fabian Monteroso, Sr. are hereby declared
absolute owners of Parcel F-6 to the extent of their respective
shares therein as presently individually possessed by them
pursuant to an extrajudicial partition of the said parcel of land
which the Court hereby declares as a valid contract among the
said heirs; and b)
With the exception of those pertaining to Parcel F-4 as stated
in this decision, the parties thus found to have unjustly
misappropriated the fruits of the subject parcels of land are
hereby directed to render an accounting thereof consistent with
our findings in the case at bar. c)91
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With the exception of the foregoing modifications, the decision under
review is hereby AFFIRMED in all other respects.
No pronouncement as to costs.
SO ORDERED.”13
The CA summarized into three issues the multifarious assignments of
errors raised by the parties, to wit: first, whether or not the intestate
estate of Soledad Doldol Monteroso was settled in SP No. 309, thus
according the Project of Partition approved therein the effect of res
judicata; second, whether or not it was appropriate to partition Parcels F-
1, F-2, and F-3, and half of Parcels F-5, F-6, F-7, F-8, S-1, S-2, S-3, and S-
4; and third, whether or not Tirso D. Monteroso is entitled to damages.
The CA resolved the first issue in the affirmative, SP No. 309 being a
valid and binding proceedings insofar as the properties subject thereof
are concerned, i.e., Parcels F-1 to F-5 of which the whole of Parcel F-4 and
one-half of Parcel F-5, as Soledad D. Monteroso’s intestate estate, were
distributed to her heirs. This is not to mention that the authenticity and
due execution of the documents filed or issued in relation therewith—
referring to the Proyecto de Particion dated February 12, 1935 which is a
carbon copy of the original, the Orden issued by the CFI on March 11,
1936, and the Mocion dated March 18, 1936—having duly been
established. Affirming the RTC, the CA rejected Tirso’s claim that SP No.
309 is void for settling only a part of the estate of Soledad D. Monteroso.
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The CA held that partial settlement is not a ground for the nullification of
the judicial partition under either the Spanish Civil Code of 1889 or the
present Civil Code. The appellate court added that the proper remedy in
such a situation is to ask for the partition and the subsequent
distribution of the property omitted.
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13 Supra note 1, at pp. 170-172.
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The CA likewise disposed of the second issue in the affirmative,
dismissing the opposition of the Cagampang spouses and Reygulo
Monteroso-Bayan who all claimed ownership over some of the parcels of
land on the strength of the deeds of conveyance executed in their favor.
The CA upheld the RTC’s finding that the three deeds of absolute sale in
which Don Fabian purportedly sold Parcels F-1, F-2, F-3, F-7, and F-8 to
Soledad Monteroso-Cagampang were infirm. The CA noted that even the
Cagampang spouses recognized these infirmities, and instead of denying
their existence, they tried to justify the same and seek an exception
therefrom.
On the alleged donation of Parcel F-5 by Don Fabian to Reygula
Monteroso-Bayan, the CA likewise agreed with the RTC’s finding on the
nullity thereof. The CA pointed out that Reygula Monteroso-Bayan did
not controvert the RTC’s finding, except to gratuitously say that the trial
court’s declaration of nullity was wrong since nobody questioned the
authenticity of the donation in the first place.
Apropos Parcel S-1, a disposable agricultural land of the public
domain which is the subject of a homestead patent application by Don
Fabian, the CA, as opposed to the RTC’s disposition, held that a patent, if
eventually issued, ought to be in the name of the legal heirs of Don
Fabian, not of his surviving spouse, Pendejito. This conclusion, so the CA
explained, is in line with the provision of Section 105 of the Public Land
Act or Commonwealth Act No. 141 (CA 141), as amended.
As to Parcel S-2, the CA agreed with the RTC that it is a conjugal
property acquired during the second marriage through a deed of
sale14 executed on August 15, 1947 by Marcelo Morancel. Likewise, the
CA said that Parcels S-3 and S-4 are conjugal properties as no evidence
was adduced supporting the alleged purchase by Pendejito of said
properties with her own funds.
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14 Exhibit “K-1,” exhibits folder, p. 137.
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Anent the RTC’s order partitioning Parcel F-6, the CA agreed with the
defendants in Civil Case No. 1332 that Parcel F-6 has long been
partitioned equitably among all the eight children of Don Fabian. Thus,
the CA further modified the RTC on this point.
On the third and last issues, the CA set aside all awards of actual
damages made by the RTC premised on the income generating capacity of
the subject properties, except that of Parcel F-4, as an order of accounting
of the fruits of the other subject properties unjustly appropriated by them
would address the issue of damages.
It bears to stress at this juncture that, save for the grant of damages
and the disposition of Parcels F-6 and S-1, the CA affirmed the
questioned RTC Decision on all other points. On June 15, 1992, Tirso D.
Monteroso thereafter filed before the Court his partial petition for review
under Rule 45, docketed as G.R. No. 105608.
On the other hand, Pendejito, together with the other defendants in
Civil Case No. 1332, first interposed a joint motion for partial
reconsideration, which the CA denied per its equally assailed December
16, 1993 Resolution,15 before elevating the case via a petition for review
under Rule 45, docketed as G.R. No. 113199.
G.R. No. 105608 Denied with Finality
Per its Resolution16 dated June 29, 1992, the Court denied Tirso D.
Monteroso’s petition under G.R. No. 105608 for late payment of fees and
non-compliance with the requirements of the Rules of Court and Circular
Nos. 1-88 and 28-91 on the submission of a certified copy of the assailed
decision/order and a certification of non-forum shopping. Another
Resolution17 of August 12, 1992 followed, this time denying with
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15 Rollo (G.R. No. 113199), p. 194.
16 Rollo (G.R. No. 105608), p. 227.
17 Id., at p. 353.
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Office of the Court Administrator vs. Whether the [CA] committed reversible error in granting reliefs not
Pardo prayed for in the Complaint in favor of parties who did not assert or claim
such relief, such as partition and accounting among the parties and the
finality Tirso D. Monteroso’s motion for reconsideration filed on July 29,
nullification of the donation in favor of petitioner Reygula Bayan when
1992. On August 31, 1992, an Entry of Judgment18 was issued.
x x x Tirso Monteroso and the petitioners herein who are signatories to
In net effect, the March 31, 1992 CA Decision in CA-G.R. CV No.
the Deed of Donation did not question or ask for the nullification of the
15805 is final and executory as to Tirso D. Monteroso, and the Court need
donation in favor of Reygula Bayan. 6.
not pass upon the issues he raised in his petition under G.R. No. 105608,
Whether the [CA] committed reversible error in ordering the partition
albeit we shall take stock of his Comment19 and Memorandum20 in G.R.
of parcels S-1, S-2, S-3 and S-4 which are admitted in the Complaint to be
No. 113199.
in the exclusive, adverse possession of petitioners Sofia vda. de
Monteroso, Florenda, Alberto and Reynato and the Heirs of Fabian
The Issues
Monteroso, Jr. since the death of Fabian Monteroso, Sr. in 1948,
appropriating the harvests unto themselves, to the exclusion of plaintiff
Petitioners in G.R. No. 113199 raise the following issues for our
(private respondent Tirso Monteroso) who was deprived of his share
consideration:
continuously up to the present.” 7.21
Whether the finding that the Deeds of Sale (Exhibits “C”, “D” and “E”)
were not supported by valuable consideration and sham, fictitious and
The Court’s Ruling
simulated is supported by the evidence. “1.
Whether the finding or conclusion that petitioners Spouses Atty.
After a circumspect consideration of the arguments earnestly pressed
Perfecto and Soledad Cagampang did not dispute the finding of the trial
by the parties and in the light of the practically parallel findings of the
Court that the Deeds of Sale in question are sham, fictitious and
RTC and CA, we find the petition under G.R. No. 113199 to be devoid of
simulated is supported by evidence. 2.
merit.
Whether the [CA] committed reversible error in concluding that, “By
It is a rule of long standing that:
invoking the benefits of prescription in their favor, the Cagampang
“[T]he jurisdiction of the Court in cases brought before it from the
spouses are deemed to have admitted the existence of a co-ownership.”
Court of Appeals via Rule 45 of the Rules of Court is limited to reviewing
3.
errors of law. Findings of fact of the latter are conclusive, except in the
Whether the [CA] committed reversible error in upholding partition as
following instances: (1) when the findings are grounded entirely on
the proper remedy of private respondent Tirso Monteroso to recover the
speculation, surmises, or conjectures; (2) when the inference made is
properties sold by Fabian Monteroso, Sr. to Soledad D. Monteroso de
manifestly mistaken, absurd, or impossible; (3) when there is grave abuse
Cagampang when co-ownership is not pleaded as theory in the
of discretion; (4) when the judgment is based on a misapprehension of
Complaint. 4.
facts; (5) when the findings of fact are conflicting; (6) when in making its
Whether the [CA] committed reversible error in holding that the cause
findings the Court of Appeals went beyond the issues of the case, or its
of action of private respondent Tirso Monteroso is not barred by
findings are contrary to the admissions of both the appellant and the
extinctive prescription and laches. 5.
appellee; (7) when the findings are contrary to those of 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
18 Id., at p. 498.
as in the
19 Rollo (G.R. No. 113199), pp. 202-267.
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20 Id., at pp. 311-425.

95 21 Id., at pp. 455-456.

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petitioner’s main and reply briefs are not disputed by the respondent; and
(10) when the findings of fact are premised on the supposed absence of
evidence and contradicted by the evidence on record.”22
None of the above exceptions, however, obtains in the instant case.
First and Second Issues: Simulated Sale
In connection with the first two related issues, petitioners maintain
that the CA erred when it affirmed the RTC’s conclusion on the fictitious
or simulated nature, for lack or inadequate consideration, of the Deeds of
Sale (Exhibits “C,” “D,” and “E”), noting that Tirso failed to present
substantial evidence to support the alleged infirmity of the underlying
sale. The fact that one of the lots sold under Exhibit “C” on May 10,
1939 for PhP 2,500 was used as collateral for a PhP 600 loan is not, so
petitioners claim, proof that the amount of PhP 600 represents the
maximum loan value of the property or that the sale in question is not
supported by valuable consideration.
Moreover, petitioners belabored to explain that the trial court erred in
concluding that the property conveyed under Exhibit “C” and covered by
Transfer Certificate of Title (TCT) No. RT-203 (420) in the name of
Soledad Monteroso-Cagampang, married to Perfecto, was fictitious on the
ground that the certificate did not indicate that it was a conjugal
property. Petitioners assert that the registration of a property only in the
name of one of the spouses is not proof that no consideration was paid
therefor. As petitioners would stress, what determines whether a given
property is conjugal or
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22 Maglucot-aw v. Maglucot, G.R. No. 132518, March 28, 2000, 329
SCRA 78, 88-89; citing Sta. Maria v. Court of Appeals, G.R. No. 27549,
January 28, 1998, 285 SCRA 351 and Medina v. Asistio, Jr., G.R. No.
75450, November 8, 1990, 191 SCRA 218, 223-224.
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separate is the law itself, not what appears in the certificate of title.
Lastly, petitioners take exception from the appellate court’s posture
that the Cagampang spouses did not dispute the trial court’s finding that
the deeds of sale (Exhibits “C,” “D,” and “E”) were simulated and fictitious
for lack of consideration. Petitioners insist that they in fact contested
such conclusion of the RTC in their brief before the CA, adding they only
raised the issue of prescription as an alternative defense without
conceding the RTC’s findings on contract infirmity.
We are not persuaded.
The antecedent facts, as borne by the records, strongly indicate the
simulated character of the sale covered by the deeds of absolute sale over
Parcels F-1 (Exhibit “C”), F-2 (Exhibit “D”), F-3, F-5, F-7, and F-8
(Exhibit “E”). As found below, Don Fabian never relinquished possession
of the covered properties during his lifetime. The first deed, Exhibit
“E,” was executed on May 1, 1939; the second, Exhibit “C,” on May 10,
1939; and the third, Exhibit “D,” on September 24, 1939. Soledad
Monteroso-Cagampang, however, only took possession of the subject
properties after Don Fabian’s death in 1948 or nine years after contract
execution. The gap, unexplained as it were, makes for a strong case that
the parties to the sale never intended to be bound thereby.
The more telling circumstance, however, is the fact that Perfecto had
judicially sought the amendment of the corresponding TCTs so that only
the name of his wife, Soledad, shall be inscribed as real party-in-
interest on the Memorandum of Encumbrances at the back portion of the
titles. If only to stress the point, when the deeds were executed in 1939,
Soledad and Perfecto Cagampang, the notarizing officer, were already
married.
A property acquired during the existence of a marriage is presumed
conjugal. This postulate notwithstanding, Perfecto Cagampang went out
of his way to make it appear that the98
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subject parcels of land were effectively his wife’s paraphernal properties.
No explanation was given for this unusual move.
Hence, we agree with the trial and appellate courts that the
unexplained situations described above sufficiently show that the
purported conveyances were simulated. We also accord credence to Tirso’s
allegation that the Cagampang spouses tricked Don Fabian into believing
that his creditors were after the properties which have to be “hidden” by
means of simulated conveyances to Soledad Monteroso-Cagampang. The
fact that only one of the subject lots was used as collateral for a PhP 600
loan which the Cagampang spouses took out does not weaken the
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conclusion on the simulated character of the contracts, as logically drawn
from the twin circumstances adverted to.
The Court can allow that petitioners indeed attempted to traverse,
before the CA, the RTC’s findings on the area of simulated sale and that
they only raised the matter of acquisitive prescription as an alternative
defense. However, as we shall explain shortly, the fact of petitioners
having made the attempt aforestated will not carry the day for them.
Third Issue: Recognition of Co-ownership in
Acquisitive Prescription
In its assailed decision, the CA declared, “By invoking the benefits of
prescription in their favor, the Cagampang spouses are deemed to have
admitted the existence of a co-ownership x x x.” The petitioners tag this
declaration as flawed since the benefit of prescription may be availed of
without necessarily recognizing co-ownership. Prescription and co-
ownership, they maintain, are so diametrically opposed legal concepts,
such that one who invokes prescription is never deemed to admit the
existence of co-ownership.
Petitioners are mistaken; their error flows from compartmentalizing what
the CA wrote. The aforecited portion of the CA’s decision should not have
been taken in isolation. It should have been read in the context of the
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disquisition on the matter of Tirso being a co-owner of the subject
undivided properties whose rights thereto, as a compulsory heir, accrued
at the moment of death of Don Fabian, vis-à-vis the defense of acquisitive
prescription foisted by the Cagampang spouses. For clarity, we reproduce
the pertinent portion of the assailed decision:
“Nor do we find any merit in the third. From the allegation in the
Complaint in Civil Case No. 1332 as well as from the arguments
advanced by the parties on the issues raised therein, this Court is
convinced that therein plaintiff Tirso Monteroso’s principal cause of
action is unmistakably one for partition which by its very nature is
imprescriptible and cannot be barred by laches x x x. The only exception
to the rule on the imprescriptibility of an action for partition is provided
in a case where the co-ownership of the properties sought to be
partitioned had been properly repudiated by a co-owner at which instance
the remedy available to the aggrieved heirs lies not in action for partition
but for reconveyance which is subject to the rules on extinctive
prescription. By invoking the benefits of prescription in their
favor, the Cagampang spouses are deemed to have admitted the
existence of a co-ownership among the heirs of Fabian
Monteroso, Sr. over the properties forming the decedent’s
estate.”23 (Emphasis ours.)
From the foregoing disquisition, what the appellate court tried to
convey is clear and simple: partition is the proper remedy available to
Tirso who is a co-owner of the subject properties by virtue of his being a
compulsory heir, like siblings Soledad, Reygula, and Benjamin, of Don
Fabian. The right to seek partition is imprescriptible and cannot be
barred by laches. Consequently, acquisitive prescription or laches does
not lie in favor of the Cagampang spouses and against Tirso, the general
rule being that prescription does not run against a co-owner or co-heir.
The only exception to the imprescriptibility of an action for partition
against a co-owner is when a co-owner repudiates the co-ownership. Thus,
the ap-
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23 Rollo (G.R. No. 113199), p. 140.
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pellate court ruled that by invoking extinctive prescription as a defense,
the lone exception against imprescriptibility of action by a co-owner, the
Cagampang spouses are deemed to have contextually recognized the co-
ownership of Tirso and must have repudiated such co-ownership in order
for acquisitive prescription to set in. Taking off from that premise, the
appellate court then proceeded to tackle the issue of repudiation by the
Cagampang spouses. Therefore, we hold that the appellate court did not
err in finding that the Cagampang spouses are effectively barred from
invoking prescription, given that the subject properties are conjugal
properties of the decedent, Don Fabian, which cannot be subjected to
acquisitive prescription, the necessary consequence of recognizing the co-
ownership stake of other legal heirs.
Fourth and Fifth Issues: Partition Proper, not Barred
by Laches nor by Acquisitive Prescription
Being inextricably intertwined, we tackle both issues together.
Petitioners, citing Article 494 of the Civil Code 24 and Art. 1965 of the
Spanish Civil Code, aver that the right to ask partition is proper only
where co-ownership is recognized. They also suggest that no co-ownership
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obtains in this case considering that no less than Tirso avers in his
complaint in Civil Case No. 1332 that from the time of Don Fabian’s
death in 1948, the lots in question have been in the exclusive, adverse,
and public possession of the Cagampang spouses. Assayed against this
perspective, petitioners submit that parti-
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24No co-owner shall be obliged to remain in the co-ownership. Each
co-owner may demand at any 494. Art. time the partition of the thing
owned in common, insofar as his share is concerned.
Nevertheless, an agreement to keep the thing undivided for a certain
period of time, not exceeding ten years shall be valid. This term may be
extended by a new agreement.
A donor or testator may prohibit partition for a period which shall not
exceed twenty years.
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tion is not proper, ergo unavailing, but an action for reconveyance which
is subject to the rules on extinctive prescription.
Corollary to the posture above taken, petitioners assert that there
being no co-ownership over the properties sold by Don Fabian to Soledad
Monteroso-Cagampang, Tirso’s cause of action, under the Code of Civil
Procedure (Act No. 190) in relation to Art. 1116 of the Civil Code, 25 had
already prescribed, either in 1949, i.e., 10 years after the subject
properties were registered in Soledad Monteroso-Cagampang’s name, or
in 1958, i.e., 10 years after the cause of action accrued in 1948 (death of
Don Fabian), citing Osorio v. Tan.26 Tirso’s complaint in Civil Case No.
1332 was commenced in 1970.
Petitioners contend that the evidence adduced clearly demonstrates
that Soledad Monteroso-Cagampang acquired ownership of the subject
properties by virtue of the deeds of sale executed in 1939 by Don Fabian.
After the sale, she registered them under her name and then took
exclusive, adverse, and public possession over them. Thus, they submit
that the prescriptive period applicable to the instant case under Act No.
190 had long expired, adding that the CA erred in finding that Soledad
Monteroso-Cagampang repudiated the co-ownership only in 1961 when
she and the other heirs ignored the demand of Tirso for partition.
As a final point, petitioners alleged that the exclusion of Tirso from
the enjoyment of the fruits of the subject properties since after the death
of Don Fabian in 1948 is consistent with Soledad Monteroso-Cagampang’s
claim of exclusive ownership and dominion.
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25Prescription already running before the effectivity of this Code shall
be governed by laws previously in force; but if since the time this Code
took effect the entire period herein required from prescription should
elapse, the present Code shall be applicable, even though by the former
laws a longer period might be required. 1116. Art.
26 98 Phil. 55 (1955).
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We cannot subscribe to petitioners’ theory.
The fact that Tirso and the other compulsory heirs of Don Fabian were
excluded from the possession of their legitime and the enjoyment of the
fruits thereof does not per se argue against the existence of a co-
ownership. While Tirso may not have expressly pleaded the theory of co-
ownership, his demand from, and act of initiating Civil Case No. 1332
against, the Cagampang spouses for his share necessarily implies that he
was asserting his right as co-owner or co-heir of the properties unjustly
withheld by the Cagampang spouses through the instrumentality of
simulated deeds of sale covering some of the hereditary properties. By
asserting his right as a compulsory heir, Tirso has effectively brought into
the open the reality that the Cagampang spouses were holding some of
the subject properties in trust and that he is a co-owner of all of them to
the extent of his legal share or legitime thereon.
Consequently, we are one with the trial and appellate courts that
partition is the proper remedy for compulsory or legal heirs to get their
legitime or share of the inheritance from the decedent. An action for
partition is at once an action for declaration of co-ownership and for
segregation and conveyance of a determinate portion of the properties
involved.27 Also, Sec. 1, Rule 69 of the Rules of Court pertinently
provides:
1. “SECTIONComplaint in action for partition of real estate.—
A person having the right to compel the partition of real
estate may do so as provided in this Rule, setting forth in his complaint
the nature and extent of his title and an adequate description of the real
estate of which partition is demanded and joining as defendants all other
persons interested in the property.” (Emphasis ours.)
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Usufruct
27 Balo v. Court of Appeals, G.R. No. 129704, September 30, 2005, 471
SCRA 227, 239.
103
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Being a compulsory heir of Don Fabian, Tirso has the right to compel
partition of the properties comprising the intestate estate of Don Fabian
as a measure to get his hereditary share. His right as an heir to a share of
the inheritance covers all the properties comprising the intestate estate of
Don Fabian at the moment of his death,28 i.e., on October 26, 1948. Before
partition and eventual distribution of Don Fabian’s intestate estate, a
regime of co-ownership among the compulsory heirs existed over the
undivided estate of Don Fabian. Being a co-owner of that intestate estate,
Tirso’s right over a share thereof is imprescriptible. 29 As a matter of law,
acquisitive prescription does not apply nor set in against compulsory
heirs insofar as their pro indiviso share or legitime is concerned, unless
said heirs repudiate their share.30 Contrary to petitioners’ stance,
reconveyance is not the proper remedy available to Tirso. Be it
remembered in this regard that Tirso is not asserting total ownership
rights over the subject properties, but only insofar as his legitime from
the intestate estate of his father, Don Fabian, is concerned.
Acquisitive prescription, however, may still set in favor of a co-owner,
“where there exists a clear repudiation of the co-ownership, and the co-
owners are apprised of the claim of adverse and exclusive
ownership.”31 In the instant case, how-
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28 Art. 777 of the Civil Code pertinently provides: The rights to the
succession are transmitted from the moment of the death of the decedent.
29 See Heirs of Flores Restar v. Heirs of Dolores R. Chichon, G.R. No.
161720, November 22, 2005, 475 SCRA 731.
30 Art. 856 of the Civil Code pertinently provides: A voluntary heir
who dies before the testator transmits nothing to his heirs.
A compulsory heir who dies before the testator, a person incapacitated
to succeed, and one who renounces the inheritance, shall transmit no
right to his own heirs except in cases expressly provided for in this Code.
(Emphasis ours.)
31 Bargayo v. Camumot, 40 Phil. 857, 862 (1920) and Heirs of
Segunda Maningding v. Court of Appeals, G.R. No. 121157, July 31, 1997,
276 SCRA 601, 608.
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ever, no extinctive or acquisitive prescription has set in against Tirso and
other compulsory heirs in favor of the Cagampang spouses because
effective repudiation had not timely been made against the former. As
aptly put by the appellate court, the repudiation which must be clear and
open as to amount to an express disavowal of the co-ownership relation
happened not when the deeds of absolute sale were executed in 1939, as
these could not have amounted to a clear notice to the other heirs, but in
1961 when the Cagampang spouses refused upon written demand by
Tirso for the partition and distribution of the intestate estate of Don
Fabian. Since then, Tirso was deemed apprised of the repudiation by the
Cagampang spouses.
However, considering that the new Civil Code was already then in
effect, Art. 1141 of said Code32 applies; thus, Tirso has at the very least 10
years and at the most 30 years to file the appropriate action in court. The
records show that Tirso’s cause of action has not prescribed as he
instituted an action for partition in 1970 or only nine years after the
considered express repudiation. Besides, acquisitive prescription also
does not lie against Tirso even if we consider that a valid express
repudiation was indeed made in 1961 by the Cagampang spouses since in
the presence of evident bad faith, the required extraordinary prescription
period33 of 30 years has not yet lapsed, counted from said considered
repudiation. Such would still be true even if the period is counted from
the time of the death of Don Fabian when the Cagampang spouses took
exclusive possession of the subject properties.
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32Real actions over immovables prescribe after thirty years. 1141.
Art.
This provision is without prejudice to what is established for the
acquisition of ownership and other real rights by prescription.
33Ownership and other real rights over immovables also prescribe
through uninterrupted adverse possession thereof for thirty years,
without need of title or of good faith. 1137. Art.
105
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Sixth Issue: Partition Proper for Conjugal
Properties of Second Marriage
On the ground of prescription under Act No. 190, petitioners assert
that Tirso lost the right to seek the partition of Parcels S-1, S-2, S-3, and
S-4, he having admitted, as early as 1948, the adverse, exclusive, and
public possession thereof by Pendejito and her children. This type of
possession, they maintain, works as a repudiation by Pendejito and her
children of the co-ownership claim of Tirso. They further argue that
Parcel S-1 pertains to Pendejito as her paraphernal property since the
homestead application therefor was under her name.
We are not persuaded.
Tirso’s acknowledgment of Pendejito and her children’s possession of
Parcels S-1, S-2, S-3, and S-4 cannot be viewed as the required
repudiation to bar Tirso from pursuing his right to seek partition. Under
the law on co-ownership, it behooves on the person desiring to exclude
another from the co-ownership to do the repudiating. Verily, the records
do not show that Pendejito and her children performed acts clearly
indicating an intention to repudiate the co-ownership and then apprising
Tirso and other co-owners or co-compulsory heirs of such intention.
To be sure, Tirso and his siblings from the first marriage have a stake
on Parcels S-2, S-3, and S-4, even if these parcels of land formed part of
the conjugal partnership of gains of the second marriage. There can be no
serious dispute that the children of the first marriage have a hereditary
right over the share of Don Fabian in the partnership assets of the first
marriage.
Anent Parcel S-1, we join the CA in its holding that it belongs to the
heirs of Don Fabian under Sec. 105 of CA 141, which pertinently
provides:
If at any time the applicant or grantee shall die before the issuance of the
patent or the final grant of the land, or 105. “Sec.106
106 SUPREME COURT REPORTS
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Office of the Court Administrator vs.
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during the life of the lease, or while the applicant or grantee still has
obligations pending towards the Government, in accordance with this Act,
he shall be succeeded in his rights and obligations with respect to
the land applied for or granted or issued under this Act by his
heirs in law, who shall be entitled to have issued to them the
patent or final concession if they show that they have complied with
the requirements therefor, and who shall be subrogated in all his rights
and obligations for the purposes of this Act.” (Emphasis ours.)
It is undisputed that Don Fabian was the homestead patent applicant
who was subrogated to the rights of the original applicants, spouses
Simeon Cagaanan and Severina Naranjo, by purchasing from the latter
Parcel S-1 on May 8, 1943. Don Fabian cultivated the applied area and
declared it for taxation purposes. The application, however, would be
rejected because death supervened. In 1963, Pendejito filed her own
homestead application for Parcel S-1.
Assayed against the foregoing undisputed facts in the light of the
aforequoted Sec. 105 of CA 141, the heirs of Don Fabian are entitled to
Parcel S-1. Said Sec. 105 has been interpreted in Soliman v. Icdang34 as
having abrogated the right of the widow of a deceased homestead
applicant to secure under Sec. 3 of Act No. 926, otherwise known as the
Public Land Act of 1903, a patent in her own name, thus:
‘[W]e should bear in mind that, although Adolfo Icdang was married
to plaintiff when he filed the homestead application, “an applicant may be
said to have acquired a vested right over a homestead only by the
presentation of the final proof and its approval by the Director of Lands.”
(Ingara vs. Ramelo, 107 Phil. 498; Balboa vs. Farrales, 51 Phil.
498; Republic vs. Diamon, 97 Phil. 838.) In the case at bar, the final proof
appears to have been presented to, and approved by the Director of
Lands, in 1954, or several years after the death of Adolfo Icdang and the
dissolution of his conjugal partnership with plaintiff herein. Hence, the
land in question could not have formed part of the assets of said
partnership. It belonged to the heirs
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34 No. L-15924, May 31, 1961, 2 SCRA 515.
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of Adolfo Icdang, pursuant to section 105 of Commonwealth Act No. 141,
reading:
xxxx
It is worthy of notice that, under the Public Land Act of 1903 (Act No.
926, section 3), “in the event of the death of an applicant prior to the
issuance of a patent, his widow shall be entitled to have a patent for the
land applied for issue to her upon showing that she has consummated the
requirements of law for homesteading the lands,” and that only in case
the deceased applicant leaves no widow shall his interest in the land
descend and the patent issue to his legal heirs. Incorporated substantially
in section 103 of the Public Land Act of 1919 (Act No. 2874), this policy
64
Usufruct
was changed by Act No. 3517, pursuant to which the deceased shall be
succeeded no longer by his widow, but “by his heirs in law, who
shall be entitled to have issued to them the patent—if they show
that they have complied with the requirements therefore.” And
this is, in effect, the rule maintained in the above quoted section 105 of
Commonwealth Act No. 141.’35 (Emphasis added.)
It appearing that Don Fabian was responsible for meeting the
requirements of law for homesteading Parcel S-1, said property,
following Soliman, cannot be categorized as the paraphernal property of
Pendejito. Thus, the homestead patent thereto, if eventually issued, must
be made in the name of the compulsory heirs of Don Fabian. Over it,
Pendejito shall be entitled, pursuant to Art. 834 of the Spanish Civil Code
of 1889, only to a usufructuary right over the property equal to the
corresponding share of each of Don Fabian’s compulsory heirs, i.e., his
eight children.
Seventh Issue: Judgment Must not Only be
Clear but Must Also be Complete
Petitioners bemoan the fact that both the trial and appellate courts
granted relief and remedies not prayed for by the parties. As argued,
Civil Case No. 1292, initiated by the heirs
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35 Id., at pp. 519-520.
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of Benjamin against Tirso, basically sought recovery of real properties;
while Civil Case No. 1332, a countersuit filed by Tirso, was for partition
and damages, the main thrust of which is to recover his alleged share
from properties in the exclusive possession and enjoyment of other heirs
since the death of Don Fabian in 1948. Thus, petitioners take issue
against both decisions of the trial and appellate courts which ordered
partition not only in favor of Tirso but also in favor of the other
petitioners he sued. What is particularly appalling, according to them, is
the order for accounting which no one requested.
Petitioners’ lament, while understandable, is specious. Our judicial
system requires courts to apply the law and grant remedies when
appropriately called for by law and justice. In the exercise of this
mandate, courts have the discretion to apply equity in the absence or
insufficiency of the law. Equity has been defined as justice outside law,
being ethical rather than jural and belonging to the sphere of morals than
of law. It is grounded on the precepts of conscience and not on any
sanction of positive law, for equity finds no room for application where
there is law.36
In the instant case, a disposition only ordering partial partition and
without accounting, as petitioners presently urge, would be most
impractical and against what we articulated in Samala v. Court of
Appeals.37 There, we cautioned courts against being dogmatic in
rendering decisions, it being preferable if they take a complete view of the
case and in the process come up with a just and equitable judgment,
eschewing rules tending to frustrate rather than promote substantial
justice.
_______________
36 Philippine Long Distance Telephone Co. v. National Labor
Relations Commission, No. L-80609, August 23, 1988, 164 SCRA 671,
681.
37 Samala v. Court of Appeals, G.R. No. 128628, August 23, 2001, 363
SCRA 535.
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Surely, the assailed path taken by the CA on the grant of relief not
specifically sought is not without precedent. In National Housing
Authority v. Court of Appeals, where the petitioner questioned the
competence of the courts a quo to resolve issues not raised in the
pleadings, and to order the disposition of the subject property when what
was raised was the issue of right to possession, this Court in dismissing
the challenge stated that “a case should be decided in its totality,
resolving all interlocking issues in order to render justice to all concerned
and to end the litigation once and for all.”38 Verily, courts should always
strive to settle the entire controversy in a single proceeding leaving no
root or branch to bear the seed of future litigation.39
Eighth Issue: Deed of Donation Null and Void
Finally, as an incidental issue, petitioners asseverate that the deed of
donation (Exhibit “F”) executed on September 19, 1948, or after the death
of Don Fabian, in favor of Reygula M. Bayan, is valid, particularly so
since Tirso and the heirs of Benjamin, as represented by their mother,
65
Usufruct
Nakila, do not question the validity of said deed as they in fact signed the
same. That the donated property was the same property described and
included in the deed of sale (Exhibit “E”) in favor of Soledad Monteroso-
Cagampang is not, they contend, an invalidating factor since what Don
Fabian sold under Exhibit “E” did not extend beyond his conjugal share
thereon.
Just like the issue of the nullity of the three deeds of absolute sale
(Exhibits “C,” “D,” and “E”) heretofore discussed, we agree with the
determination of the RTC and CA as to the
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38 National Housing Authority v. Court of Appeals, No. L-50877, April
28, 1983, 121 SCRA 777, 783.
39 Latchme Motoomull v. Dela Paz, G.R. No. 45302, July 24, 1990, 187
SCRA 743, 754; citing Alger Electric, Inc. v. Court of Appeals, No. L-
34298, February 28, 1985, 135 SCRA 43 and Gayos v. Gayos, No. L-
27812, September 26, 1975, 67 SCRA 146.
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invalidity of the donation of Parcel F-5 to Reygula M. Bayan. We need not
repeat the reasons for such determination, except the most basic. We
refer to the authority of the person who executed the deed of donation. As
it were, the widow of Benjamin, Nakila, signed the deed of donation. She,
however, cannot give consent to the donation as she has no disposable
right thereto. The legal maxim nemo dat quod non habet40 applies to this
instance as Nakila only has usufructuary right equal to the share of her
children under Art. 834 of the Spanish Civil Code of 1889. Besides,
Nakila signed the deed of donation in her name and not in the name of
her children who are the heirs in representation of their father,
Benjamin. Lest it be overlooked, the then minor children were not under
the legal guardianship of Nakila, a situation which thus disqualifies her
from signing on their behalf.
The fact that nobody objected to the donation is of little consequence,
for as the CA aptly observed, “The circumstance that parties to a void
contract choose to ignore its nullity can in no way enhance the invalid
character of such contract. It is axiomatic that void contracts cannot be
the subject of ratification, either express or implied.” 41
WHEREFORE, the petition in G.R. No. 113199 is DENIED for lack of
merit. The assailed Decision and Resolution dated March 31, 1992 and
December 16, 1993, respectively, of the CA in CA-G.R. CV No. 15805 are
hereby AFFIRMED IN TOTO. Costs against the petitioners.
SO ORDERED.
Quisumbing (Chairperson), Carpio-Morales, Tinga and Brion,
JJ., concur.
Petition in G.R. No. 113199 denied, assailed decision and resolution
affirmed in toto.
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40 One cannot give what one does not have.
41 Rollo (G.R. No. 113199), pp. 149-150.
© Copyright 2019 Central Book Supply, Inc. All rights reserved.
[No. 4452. October 1, 1908.]
JUANA PICHAY, plainitiff and appellee, vs. EULALIO QUEROL ET AL.,
defendants and appellants.
1. 1.PARTITION ; EFFECT UPON USUFRUCTUARY RIGHTS.—A
partition made by the owners of land is binding upon a person
who has a usufructuary right in an undivided part of the land,
although the latter took no part in the partition of the property.
1. 2.PLEADING AND PRACTICE; BILL OF
EXCEPTIONS; REVIEW.—Plaintiff excepted to the judgment,
but presented no bill of exceptions. Held, That, in the absence of
such a bill, the errors assigned could not be discussed.
(Naval vs. Benavides, 8 Phil. Rep., 250; Puruganan vs. Martin, 8
Phil. Rep., 519; Ullmann vs. Ullmann & Co., 10 Phil. Rep., 459.)
APPEAL from a judgment of the Court of First Instance of Ilocos Sur.
(No. 356. September 18, 1907.)
The facts are stated in the opinion of the court.
Evaristo Singson, for appellants.
Jose M. del Valle, and Lucas Paredes, for appellee.
WILLARD, J.:
From the admissions made in the pleadings, and from the facts agreed
upon in the court below, it appears that the plaintiff, Juana Pichay, in
April, 1905, conveyed to the defendants an undivided one-third interest in
twentyfive parcels of land situated in the Province of Ilocos Sur, as
66
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payment of a debt of P1,500 which she owed them. The contract by which
this conveyance was made contained the following clause:
“Third. The one-third part of these lands belongs to me, it being my share
in the inheritance left by my deceased parents; but I have requested my
said creditors to allow me to enjoy the usufruct of the same until my
death,
387
VOL. 11, OCTOBER 1, 1908 337
PICHAY VS. QUEROL ET AL.
notwithstanding the fact that I have conveyed the said lands to them in
payment of my debt, and I bind myself not to sell, mortgage, or leave the
said lands as inheritance to any person.”
The defendants and appellants claim that this clause above quoted gave
plaintiff no right of usufruct in the land, saying that it appears that she
only asked for this right and it does not appear that the defendants gave
it to her. This contention can not be sustained. The only reason for
inserting this clause in the contract was for the purpose of securing to the
plaintiff the right which is therein set out. The form of the words used is
not sufficient to defeat this purpose.
On the 10th of August, 1905, the owners of the twentyfive parcels of
land made a partition thereof among themselves, in which the plaintiff
took no part, and in this partition certain specific tracts of land were
assigned to the defendants as the third to which they were entitled by
reason of the conveyance from the plaintiff to them. They have been in
possession of the tracts so assigned to them in the partition since the date
thereof, and are now in such possession, and have refused to recognize in
the plaintiff any right of usufruct therein.
In February, 1907, the plaintiff brought this action against the
defendants, asking that it be declared that she had a right of usufruct in
a third of the twenty-flve parcels of land; that she had the right to the
administration of all of the land, and that the appellees pay to her the
rents which they had received during the time of her dispossession.
The court rendered the following judgment:
“In view of the allegations and evidence adduced by the parties, the court
concludes: (1) That all the lands described in the complaint be delivered
to Juana Pichay for administration; (2) that Juana Pichay has a right of
usufruct in a third part of the said lands until her death; (3) that the
partition of the said lands, made by the coöwners of Juana Pichay can not
affect the latter; (4) Eulalio Querol is hereby directed to deliver to Juana
Pichay two crops from the third part of the lands in question,
388
388 PHILIPPINE REPORTS
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PICHAY VS. QUEROL ET AL.
or the equivalent thereof, taking as a basis the present crop—that is, the
crop to be harvested within a short time—and (5) Juana Pichay is
sentenced to indemnify Eulalio Querol in the sum of P300 on account of
the past suit, without costs.”
The first proposition contained in this judgment finds no support in the
record, and there is nothing therein to show that the plaintiff had any
acquired right to the administration of all the lands described in the
complaint.
The second proposition finds its support in the record if it is limited to
the lands which were assigned to the defendants in the partition.
The third proposition can not be supported. Article 490 of the Civil
Code is as follows:
“ART. 490. The usufructuary of part of a thing held in common shall
exercise all the rights corresponding to the owner thereof with regard to
the administration and collection of fruits or interests. Should the
community cease by reason of the division of the thing possessed in
common, the usufruct of the part awarded to the owner or coöwner shall
appertain to the usufructuary.”
As to the fourth proposition, the -agreed statement of facts shows that,
while the defendants were in possession of the tracts which had been
assigned to them, they received the crops for only two years; that the crop
for the year 1906 amounted to 14 uyones and 13 manojos, of the value of
P4. for each uyon, and that the crop of 1907 amounted to 15 uyones and
4 manojos, of the value of P6.25 for each uyon. These are the only
amounts which the plaintiff is entitled to recover.
As to the fifth proposition, while it appears that the plaintiff excepted
to the judgment, and stated that she desired to present a bill of
exceptions, yet she in fact did not present any. The error, therefore,
assigned by her with reference to this fifth proposition can not be
considered. (Naval vs. Benavides, 8 Phil. Rep.,
250; Puruganan vs. Martin, 8 Phil. Rep., 519; Ullmann vs. Ullmann &
Co., 10 Phil. Rep., 459.)
The judgment of the court below is reversed and the case remanded,
with directions to enter a judgment in
389
VOL. 11, OCTOBER 1, 1908 339
IN THE MATTER OF THE ESTATE OF
MARTINEZ.
67
Usufruct
favor of the plaintiff to the effect that she is entitled to the right of
usufruct in the lands assigned to the defendants by the partition of
August 10, 1905, and to enter a judgment against the plaintiff and in
favor of the defendant Querol for ?149.48 without costs to either party. No
costs will be allowed to either party in this court. So ordered.
Arellano, C.J., Torres, Mapa, Carson, and Tracey, JJ., concur.
Judgment reversed.
___________
© Copyright 2019 Central Book Supply, Inc. All rights reserved.
VOL. 79, SEPTEMBER 30, 1977 309
Baluran vs. Navarro
No. L-44428. September 30, 1977.*
AVELINO BALURAN, petitioner, vs. HON. RICARDO Y. NAVARRO,
Presiding Judge, Court of First Instance of Ilocos Norte, Branch I and
ANTONIO OBEDENCIO, respondents.
Contracts; Barter; The courts are not bound by the name contracting
parties given to their contracts.—It is a settled rule that to determine the
nature of a contract courts are not bound by the name or title given to it
by the contracting parties. This Court has held that contracts are not
what the parties may see fit to call them but what they really are as
determined by the principles of law. Thus, in the instant case, the use of
the term “barter” in describing the agreement of February 2, 1964, is not
controlling.
Same; Same; Usurfruct; No barter agreement for purposes of
transferring ownership of lands can be inferred when it is clear that the
parties merely intended to transfer material possession thereof.—The
stipulations in said document are clear enough to indicate that there was
no intention at all on the part of the signatories thereto to convey the
ownership of their respective properties; all that was intended, and it was
so provided in the agreement, was to transfer the material possession
thereof. (condition No. 1, see page 1 of this Decision) In fact, under
condition No. 3 of the agreement, the parties retained the right to
alienate their respective properties which right is an element of
ownership. With the material possession being the only one transferred,
all that the parties acquired was the right of usufruct which in essence is
the right to enjoy the
_____________
* FIRST DIVISION.
310
3 SUPREME COURT REPORTS
10 ANNOTATED
Baluran vs. Navarro
property of another. Under the document in question, spouses
Paraiso would harvest the crop of the unirrigated riceland while the other
party, Avelino Baluran, could build a house on the residential lot, subject,
however, to the condition, that when any of the children of Natividad
Paraiso Obedencio, daughter of spouses Paraiso, shall choose to reside in
the municipality and build his house on the residential lot, Avelino
68
Usufruct
Baluran shall be obliged to return the lot to said children “with damages
to be incurred.” (Condition No. 2 of the Agreement) Thus, the mutual
agreement—each party enjoying “material possession” of the other’s
property—was subject to a resolutory condition the happening of which
would terminate the right of possession and use.
Same; Same; Same; Same; The manner of terminating the right of
usufruct is primarily determined by the stipulation of the parties, such as
the happening of a resolutory condition.—Usufruct may be constituted by
the parties for any period of time and under such conditions as they may
deem convenient and beneficial subject to the provisions of the Civil Code,
Book II, Title VI on Usufruct. The manner of terminating or
extinguishing the right of usufruct is primarily determined by the
stipulations of the parties which in this case now before Us is the
happening of the event agreed upon. Necessarily, the plaintiff or
respondent Obedencio could not demand for the recovery of possession of
the residential lot in question, not until he acquired that right from his
mother, Natividad Obedencio, and which he did acquire when his mother
donated to him the residential lot on October 4, 1974. Even if We were to
go along with petitioner in his argument that the fulfillment of the
condition cannot be left to an indefinite, uncertain period, nonetheless, in
the case at bar, the respondent, in whose favor the resolutory condition
was constituted, took immediate steps to terminate the right of petitioner
herein to the use of the lot. Obedencio’s present complaint was filed in
May of 1975, barely several months after the property was donated to
him.
Same; Same; Same; Usufructuary may remove improvements on
property subject of usufruct as provided for in Article 579 of the new Civil
Code.—However, We apply Art. 579 of the Civil Code and hold that
petitioner will not forfeit the improvement he built on the lot but may
remove the same without causing damage to the property.
311
VOL. 79, SEPTEMBER 30, 1977 311
Baluran vs. Navarro
PETITION for review the decision of the Court of First Instance of Ilocos
Norte. Navarro, J.
The facts are stated in the opinion of the Court.
Alipio V. Flores for petitioner.
Rafael B. Ruiz for private respondent.
MUÑOZ PALMA, J.:
Spouses Domingo Paraiso and Fidela Q. Paraiso were the owners of a
residential lot of around 480 square meters located in Sarrat, Ilocos
Norte. On or about February 2, 1964, the Paraisos executed an agreement
entitled “BARTER” whereby as party of the first part they agreed to
“barter and exchange” with spouses Avelino and Benilda Baluran their
residential lot with the latter’s unirrigated riceland situated in Sarrat,
Ilocos Norte, of approximately 223 square meters without any permanent
improvements, under the following conditions:
1. “1.That both the Party of the First Part and the Party of the
Second Part shall enjoy the material possession of their
respective properties; the Party of the First Part shall reap the
fruits of the unirrigated riceland and the Party of the Second
Part shall have a right to build his own house in the residential
lot.
2. “2.Nevertheless, in the event any of the children of Natividad P.
Obedencio, daughter of the First Part, shall choose to reside in
this municipality and build his own house in the residential lot,
the Party of the Second Part shall be obliged to return the lot
such children with damages to be incurred.
3. “3.That neither the Party of the First Part nor the Party of the
Second Part shall encumber, alienate or dispose of in any
manner their respective properties as bartered without the
consent of the other.
4. “4.That inasmuch as the bartered properties are not yet
registered in accordance with Act No. 496 or under the Spanish
Mortgage Law, they finally agreed and covenant that this deed
be registered in the Office of the Register of Deeds of Ilocos
Norte pursuant to the provisions of Act No. 3344 as amended.”
(P. 28, rollo)
On May 6, 1975 Antonio Obendencio filed with the Court of First
Instance of Ilocos Norte the present complaint to recover the above-
mentioned residential lot from Avelino Baluran claiming
312
312 SUPREME COURT REPORTS
ANNOTATED
Baluran vs. Navarro
that he is the rightful owner of said residential lot having acquired the
same from his mother, Natividad Paraiso Obedencio, and that he needed
the property for purposes of constructing his house thereon inasmuch as
he had taken residence in his native town, Sarrat. Obedencio accordingly
prayed that he be declared owner of the residential lot and that defendant
69
Usufruct
Baluran be ordered to vacate the same forfeiting his (Obedencio) favor the
improvements defendant Baluran had built in bad faith.1
Answering the complaint, Avelino Baluran alleged inter alia (1) that
the “barter agreement” transferred to him the ownership of the
residential lot in exchange for the unirrigated riceland conveyed to
plaintiff’s predecessor-in-interest, Natividad Obedencio, who in fact is
still in possession thereof; and (2) that the plaintiff’s cause of action if any
had prescribed.2
At the pre-trial, the parties agreed to submit the case for decision on
the basis of their stipulation of facts. It was likewise admitted that the
aforementioned residential lot was donated on October 4, 1974 by
Natividad Obedencio to her son Antonio Obedencio, and that since the
execution of the agreement of February 2, 1964 Avelino Baluran was in
possession of the residential lot, paid the taxes of the property, and
constructed a house thereon with an assessed value of P250.00. 3 On
November 8, 1975, the trial Judge Ricardo Y. Navarro rendered a
decision the dispositive portion of which reads as follows:
“Consequently, the plaintiff is hereby declared owner of the property in
question, the defendant is hereby ordered to vacate the same. With costs
against defendant.”
Avelino Baluran to whom We shall refer as petitioner, now seeks a review
of that decision under the following assignment of errors:
“I—The lower Court erred in holding that the barter agreement did not
transfer ownership of the lot in suit to the petitioner.
“II—The lower Court erred in not holding that the right to rebarter or
re-exchange of respondent Antonio Obedencio had been barred by the
statute of limitation.” (p. 14, ibid.)
The resolution of this appeal revolves on the nature of the undertaking or
contract of February 2, 1964 which is entitled “Barter Agreement.”
____________
1 pp. 21-22, rollo
2 p. 23, ibid.
3 pp. 26-27, ibid.
313
VOL. 79, SEPTEMBER 30, 1977 313
Baluran vs. Navarro
It is a settled rule that to determine the nature of a contract courts are
not bound by the name or title given to it by the contracting parties. 4 This
Court has held that contracts are not what the parties may see fit to call
them but what they really are as determined by the principles of
law.5 Thus, in the instant case, the use of the term “barter” in describing
the agreement of February 2, 1964, is not controlling. The stipulations in
said document are clear enough to indicate that there was no intention at
all on the part of the signatories thereto to convey the ownership of their
respective properties; all that was intended, and it was so provided in the
agreement, was to transfer the material possession thereof. (condition No.
1, see page 1 of this Decision) In fact, under condition No. 3 of the
agreement, the parties retained the right to alienate their respective
properties which right is an element of ownership.
With the material possession being the only one transferred, all that
the parties acquired was the right of usufruct which in essence is the
right to enjoy the property of another. 6 Under the document in question,
spouses Paraiso would harvest the crop of the unirrigated riceland while
the other party, Avelino Baluran, could build a house on the residential
lot, subject, however, to the condition, that when any of the children of
Natividad Paraiso Obedencio, daughter of spouses Paraiso, shall choose
to reside in the municipality and build his house on the residential lot,
Avelino Baluran shall be obliged to return the lot to said children “with
damages to be incurred.” (Condition No. 2 of the Agreement) Thus, the
mutual agreement—each party enjoying “material possession” of the
other’s property—was subject to a resolutory condition the happening of
which would terminate the right of possession and use.
A resolutory condition is one which extinguishes rights and
obligations already existing.7 The right of “material possession”
______________
Shell Co. of the Philippines Ltd. vs. Firemen’s Insurance Co. of
4
Newark, N.J., et al., 100 Phil. 757, 764 (1957)
5 Borromeo vs. Court of Appeals, et al., 47 SCRA 65 (1972)
6 Art. 562 of the Civil Code provides: “ART. 562 Usufruct gives a right
to enjoy the property of another with the obligation of preserving its form
and substance, unless the title constituting it or the law otherwise
provides.”
7 Tolentino, Commentaries on the Civil Code of the Philippines, Vol.
IV, pp. 140, 143 1973 ed.
314
314 SUPREME COURT REPORTS
ANNOTATED
Baluran vs. Navarro
granted in the agreement of February 2, 1964, ends if and when any of
the children of Natividad Paraiso Obedencio (daughter of spouses
Paraiso, party of the First Part) would reside in the municipality and
build his house on the property. Inasmuch as the condition imposed is not
70
Usufruct
dependent solely on the will of one of the parties to the contract—the
spouses Paraiso—but is partly dependent on the will of third persons—
Natividad Obedencio and any of her children—the same is valid.8
When there is nothing contrary to law, morals, and good customs or
public policy in the stipulations of a contract, the agreement constitutes
the law between the parties and the latter are bound by the terms
thereof.9
Art. 1306 of the Civil Code states:
“Art. 1306. The contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided
they are not contrary to law, morals, good customs, public order, or public
policy.”
“Contracts which are the private laws of the contracting parties,
should be fulfilled according to the literal sense of their stipulations, if
their terms are clear and leave no room for doubt as to the intention of
the contracting parties, for contracts are obligatory, no matter what their
form may be, whenever the essential requisites for their validity are
present.” (Philippine American General Insurance Co., Inc. vs. Mutuc, 61
SCRA 22)
The trial court therefore correctly adjudged that Antonio Obedencio is
entitled to recover the possession of the residential lot pursuant to the
agreement of February 2, 1964.
Petitioner submits under the second assigned error that the cause of
action if any of respondent Obedencio had prescribed after the lapse of
four years from the date of execution of the document of February 2,
1964. It is argued that the remedy of plaintiff, now respondent, was to
ask for re-barter or re-exchange of the properties subject of the agreement
which could be exercised only within four years from the date of the
contract under Art. 1606 of the Civil Code.
_____________
8 Ibid., pp. 148-149
9 Iñigo vs. National Abaca & Other Fibers Corp., 95 Phil. 875; Ramos
vs. Central Bank of the Phil. 41 SCRA 565; Rodrigo Enriquez et al. vs.
Socorro A. Ramos, L-23616, September 30, 1976, 73 SCRA 116.
315
VOL. 79, SEPTEMBER 30, 1977 315
Baluran vs. Navarro
The submission of petitioner is untenable. Art. 1606 of the Civil Code
refers to conventional redemption which petitioner would want to apply
to the present situation. However, as We stated above, the agreement of
the parties of February 2, 1964, is not one of barter, exchange or even sale
with right to repurchase, but is one of or akin the other is the use or
material possession or enjoyment of each other’s real property.
Usufruct may be constituted by the parties for any period of time and
under such conditions as they may deem convenient and beneficial
subject to the provisions of the Civil Code, Book II, Title VI
on Usufruct. The manner of terminating or extinguishing the right of
usufruct is primarily determined by the stipulations of the parties which
in this case now before Us is the happening of the event agreed upon.
Necessarily, the plaintiff or respondent Obedencio could not demand for
the recovery of possession of the residential lot in question, not until he
acquired that right from his mother, Natividad Obedencio, and which he
did acquire when his mother donated to him the residential lot on
October 4, 1974. Even if We were to go along with petitioner in his
argument that the fulfillment of the condition cannot be left to an
indefinite, uncertain period, nonetheless, in the case at bar, the
respondent, in whose favor the resolutory condition was constituted, took
immediate steps to terminate the right of petitioner herein to the use of
the lot. Obedencio’s present complaint was filed in May of 1975, barely
several months after the property was donated to him.
One last point raised by petitioner is his alleged right to recover
damages under the agreement of February 2, 1964. In the absence of
evidence, considering that the parties agreed to submit the case for
decision on a stipulation of facts, We have no basis for awarding damages
to petitioner.
However, We apply Art. 579 of the Civil Code and hold that petitioner
will not forfeit the improvement he built on the lot but may remove the
same without causing damage to the property.
“Art. 579. The usufructuary may make on the property held in usufruct
such useful improvements or expenses for mere pleasure as he may deem
proper, provided he does not alter its form or substance; but he shall have
no right to be indemnified therefor. He may, however, removed such
improvements, should it be possible to do so without damage to the
property.” (Italics supplied)
316
316 SUPREME COURT REPORTS
ANNOTATED
Baluran vs. Navarro
Finally, We cannot close this case without touching on the unirrigated
riceland which admittedly is in the possession of Natividad Obedencio.
In view of our ruling that the “barter agreement” of February 2. 1964,
did not transfer the ownership of the respective properties mentioned
therein, it follows that petitioner Baluran remains the owner of the
unirrigated riceland and is now entitled to its possession. With the
71
Usufruct
happening of the resolutory condition provided for in the agreement, the
right of usufruct of the parties is extinguished and each is entitled to a
return of his property. It is true that Natividad Obedencio who is now in
possession of the property and who has been made a party to this case
cannot be ordered in this proceeding to surrender the riceland. But
inasmuch as reciprocal rights and obligations have arisen between the
parties to the so-called “barter agreement”, We hold that the parties
and/or their successors-in-interest are duty bound to effect a
simultaneous transfer of the respective properties if substantial justice is
to be effected.
WHEREFORE, judgment is hereby rendered: 1) declaring the
petitioner Avelino Baluran and respondent Antonio Obedencio the
respective owners of the unirrigated riceland and residential lot
mentioned in the “Barter Agreement” of February 2, 1964; 2) ordering
Avelino Baluran to vacate the residential lot and remove the
improvements built by him thereon, provided, however, that he shall not
be compelled to do so unless the unirrigated riceland shall have been
restored to his possession either on volition of the party concerned or
through judicial proceedings which he may institute for the purpose.
Without pronouncement as to costs.
So Ordered.
Teehankee (Chairman), Makasiar, Martin, Fernandez and Guerre
ro, JJ., concur.
Notes.—Where respondent executed an affidavit naming the
petitioner the sole owner of the property by permitting her to register the
same in her name not only for purposes of the real estate tax, but, also, in
the language of said affidavit “at ano mang hakbang na kinakailangang
tungkol sa lupang ito” constitutes
317
VOL. 79, SEPTEMBER 30, 1977 317
Baluran vs. Navarro
ownership. (San Buenaventura vs. Court of Appeals, 22 SCRA 462).
The possession of property by the widow of the deceased she being the
residuary legatee is in the concept of ownership. (Castro vs. Court of
Appeals, 27 SCRA 1076).
Under Section 2, Rule 12 of the Rules of Court, it is permissible for a
person claiming ownership over properties preliminary attached or levied
upon in execution not only to file a 3rd-party claim with the sheriff, but
also to intervene in the action to ask that the writ of attachment or levy
be quashed. (Zulueta vs. Muñoz, 17 SCRA 972).
A contract of sale of personal property does not serve to transfer
ownership where the vendee took possession of the subject matter thereof
by stealing the same while it was in the custody of the vendor’s agent.
(Aznar vs. Yapdiangco, 13 SCRA 486).
There is accretion among the usufructuaries who are constituted at
the same time when one of them dies before the end of the usufruct.
(Policarpio vs. Salamat, 16 SCRA 154).
That the testator meant his widow to have no more than usufructuary
rights in the properties bequeathed to her is evident by the expression
used by the testator, “uso y posesion mientras viva,” in which the first
half of the phrase “uso y posesion” reinforces the second “mientras viva.”
(Vda. de Villanueva vs. Juicio, L-15737, Feb. 28, 1962).
Where a usufruct was created on the land and the building
constructed thereon, the usufruct is not deemed extinguished by the
destruction of the building, for under the law usufruct is extiguished only
by the total loss of the thing subject of the encumbrance. Hence, where
the usufruct is for life, it is but fair that the usufructurary continue to
enjoy use of the land and the usufructuary enjoy the use of the new
building that may be constructed on the land. (Albar vs. Carangdang, 57
O. G. 6418).
——o0o——
318
© Copyright 2019 Central Book Supply, Inc. All rights
[No. 40958. August 11, 1934]
Intestate estate of the deceased Antonio Escobar. THE BANK OF THE
PHILIPPINE ISLANDS, administrator. ESTATE OF THE DECEASED
LUCIANA DE LOS SANTOS, represented by the executor JOSE
SANTOS, claimant and appellee, vs. MARIA LUCIANO, claimant and
appellant.
1. 1.PARENT AND CHILD; CONTINUOUS POSSESSION OF THE
STATUS OF NATURAL CHILD.—The continuous possession of
the status of a
329
VOL. 60, AUGUST 11, 1934 3
29
Estate of De los Santos vs. Luciano
1. natural child, justified by direct acts of its parents and their
family under the legislation prior to the Civil Gode, constitutes
tacit recognition of paternity (Law 11 of Toro).
72
Usufruct
1. 2.ID.; ID.; CHILD LEGITIMATED BY SUBSEQUENT
MARRIAGE.—A child, who has enjoyed the continuous
possession of the status of a natural child, justified by direct acts
of its parents and their family both before and after their
marriage which was celebrated under the prior legislation, is
considered as legitimated by subsequent marriage (Law I, Title
XIII, Partida IV).
1. 3.ID. ; ID. ; ID.—The legitimate daughter of a daughter
legitimated by subsequent marriage, now deceased, is entitled to
inherit from a brother of her mother who is a legitimate son of
the same parents who legitimated her mother by subsequent
marriage, and who died after the Civil Code took effect.
1. 4.ID.; ID.; ID.; MEANING OP THE WORD "LEGITIMATED"—
The word "legitimated" employed in Section III, Chapter IV of
Book Three of the Civil Code refers to children legitimated by
royal concession, and not to those legitimated by subsequent
marriage.
APPEAL from an order of the Court of First Instance of Manila. Rovira,
J.
The facts are stated in the opinion of the court.
Ramon Diokno for appellant.
Reyes & Reyes and Jose Rivera, Yap for appellee.
VILLA-REAL, J.:
This is an appeal taken by the claimant Maria Luciano from the order of
the Court of First Instance of Manila, the dispositive part of which reads
as follows:
"Wherefore, the court declares that the only heir of the deceased
Antonio Escobar was his wife Luciana de los Santos, now deceased, whom
her heirs succeeded and whose testamentary proceedings are likewise
pending in this court, as above stated, and that neither Maria Luciano
nor Petrona Esguerra is entitled to participate in the estate of the
deceased Antonio Escobar.
"After this judgment becomes final, the entire estate of the deceased
Antonio Escobar shall, by operation of law, pass to the testamentary
estate of the deceased Luciana de los Santos. Let a copy of this resolution
be attached to
330
330 PHILIPPINE REPORTS ANNOTATED
Estate of De los Santos vs. Luciano
the record of the testamentary proceedings of the deceased Luciana de los
Santos, civil case No. 43599. So ordered."
In support of her appeal, the appellant assigns the following sole
alleged error as committed by the court a quo in its order to wit:
"The lower court erred in not recognizing and declaring Maria Luciano
as the sole legal heir of the deceased Antonio Escobar and therefore
entitled to the entire intestate estate of the latter."
The following facts proven at the trial, some by stipulation of the
parties and others by a preponderance of the evidence, are necessary and
pertinent to the resolution of the questions raised in this appeal, to wit:
On January 1, 1837, a girl four days old, alleged to be a natural
daughter of Leon Escobar and Josefa Esguerra, was baptized in the
Ermita church and given the name of Tomasa Escobar (Exhibit 1-Maria
Luciano).
Leon Escobar and Josefa Esguerra were married on August 2, 1838
(Exhibit 1), and subsequently had legitimate children named Antonio and
Fortunato Escobar. With said spouses and their two legitimate children
lived Tomasa, Guia and Nicolas Escobar. All of them called said spouses
"tatay" (father) and "nanay" (mother), respectively. Tomasa was called by
the other children "manang" (a term accorded in certain regions to the
elder sister). Tomasa Escobar grew up and lived under the care of the
spouses Leon and Josefa Escobar until she married. Said spouses
supported her, treated and presented her as their daughter, and she was
publicly known as such. When Tomasa Escobar became a widow, she
went back to live with said spouses, together with her only daughter, the
herein claimant-appellant Maria Luciano who was born on December 17,
1864 (Exhibit 4). Leon Escobar built a house for Tomasa Escobar and her
daughter and the two lived there. Leon Escobar visited them in said
house almost every day and sent his sons Antonio and Fortunato to keep
them company at night. Upon Tomasa Escobar's death,
331
VOL. 60, AUGUST 11, 1934 331
Estate of De los Santos vs. Luciano
Leon Escobar took said Maria Luciano into his home until she married
and was taken by her husband to the province. Leon Escobar died on
February 12, 1887 (Exhibit 2-Luciana de los Santos). When Fortunato
Escobar became ill, his brother Antonio Escobar asked Maria Luciano to
come to Manila to nurse him, sending her money for passage. Upon
Fortunato Escobar's death, Antonio Escobar took Maria Luciano into his
home where she lived until Antonio's death.
The claimant-appellant Maria Luciano claims to be the legitimate
niece of the deceased Antonio Escobar, alleging that she is the legitimate
daughter of Tomasa Escobar, a legitimated sister of said deceased
73
Usufruct
Aijtonio Escobar by the subsequent marriage of their parents, and
therefore the only heir to the estate of her said uricle.
First of all, it is necessary to determine whether or not Tomasa
Escobar was a natural daughter of the spouses Leon Escobar and Josefa
Esguerra, legitimated by subsequent marriage of the latter.
We have seen that Tomasa Escobar was born on December 29, 1836,
and her alleged parents Leon Escobar and Josefa Esguerra were married
on August 2, 1838, that is under the prior legislation which is Law I, Title
XIII; Partida IV. Her status as a legitimated daughter should therefore
be determined by said law which reads as follows:
"Law I, Title XIII, Partida IV.—Moreover, the children which a man
has by a woman whom he keeps as a concubine will be legitimate, if he
marries her afterwards; for although children of this kind are not
legitimate when they are born, marriage has such force that, as soon as
the father and mother are married, the children become for that reason,
legitimate. This same rule applies where a man has a child by his female
slave and afterwards marries her; for marriage has such extraordinary
power that, as soon as this is done, the mother becomes free, and the
children legitimate, for this reason."
332
332 PHILIPPINE REPORTS ANNOTATED
Estate of De los Santos vs. Luciano
It is a well-established doctrine, both in Spain and in the Philippines,
interpreting Law 11 of Toro, that a child is considered natural when at
the time of its conception or birth its parents could have married without
dispensation and when the father has expressly or tacitly acknowledged
it. (Mijares vs. Nery, 3 Phil., 195; Llorente vs. Rodriguez, 3 Phil.,
697; Capistrano vs. Estate of Gabino, 8 Phil., 135; De Gala vs. De Gala, 42
Phil., 771; Larena and Larena vs, Rubio, 43 Phil.,
1017; Donado vs. Menendez Donado, 55 Phil., 861.)
The fact that before and after their marriage the spouses Leon.
Escobar and Josefa Esguerra had Tomasa Escobar with them and their
legitimate children; the fact that they supported her, took care of her, and
treated and presented her to society as their daughter, and the fact that
they built a house for her and her daughter, all show that said spouses
Leon Escobar and Josefa Esguerra acknowledged her as their daughter.
Pursuant to the provisions of Law 11 of Toro, cited above, such
acknowledgment, in addition to the freedom of her parents to marry
without dispensation at the time of her conception or birth, gave Tomasa
Escobar the status of a natural child of Leon Escobar and Josefa
Esguerra (Requejo t's. Rabalo, 34 Phil., 14), and according to Law I, Title
XIII, Partida IV, quoted above, the subsequent marriage of the latter
legitimated her. (Cosio vs. Pili, 10 Phil., 72; Requejo vs. Rabalo, supra.)
The question now arises whether or not the claimantappellant Maria
Luciano, as legitimate daughter, born under the prior legislation, of
Tomasa Escobar, a child legitimated by subsequent marriage, is entitled
to inherit from the intestate estate of a brother of her mother who is a
legitimate son of said Tomasa Escobar's parents, and who died on July
21, 1932, under the present law.
The twelfth transitory provision of the Civil Code reads as follows:
"12. Rights to the inheritance of a person who may have died, with or
without a will, before this Code was in force,
333
VOL. 60, AUGUST 11, 1934 333
Estate of De los Santvs vs. Luciano
shall be governed by the prior legislation. The inheritance of those who
died after that time, with or without a will, shall be allotted and divided
in accordance with this Code, but in harmony, in so far as the latter
permits it, with the testamentary dispositions. Therefore the legitimes,
betterments, and legacies shall be respected; but their amounts shall be
reduced when it is not possible in any other manner to give to each
participant in the inheritance the share pertaining to him, according to
this Code."
According to the above quoted transitory provision, inasmuch as
Antonio Escobar died after the Civil Code took effect, his inheritance
should be allotted and divided in accordance with said Code.
Article 953 of the Civil Code provides that should children of brothers
or sisters exist, the surviving spouse shall, concurrently with said
children, be entitled to receive tfce part of the inheritance in usufruct
assigned him or her in article 837, that is, one-half of the estate in
usufruct. Whetf Antonio Escobar died intestate on July 21, 1932, his
niece, the herein claimant-appellant Maria Luciano, daughter of his
sister legitimated by subsequent marriage of their parents, was entitled
to inherit the full ownership of onehalf of his estate and the naked
ownership of the other half, the usufruct of wftich belonged to the
surviving spouse. However, the usufructuary right of the widow Luciana
de los Santos was extinguished upon her death which took place on
December 27, 1932 (article 513 of the Civil Code), thereby consolidating
the naked ownership with the usufruct of the other half in the herein
claimant-appellant Maria Luciano.
The court a quo, in rejecting the claim of the claimantappellant Maria
Luciano to the estate of her uncle Antonio Escobar, based its opinion on
article 943 of the Civil Code which provides that "a natural or legitimated
child has no right to succeed ab intestate the legitimate children and
relatives of the father or mother who has acknowledged
334
334 PHILIPPINE REPORTS ANNOTATED
74
Usufruct
Estate of De los Santos vs. Luciano
it; nor shall such children or relatives so inherit from the natural or
legitimated child," interpreting the word "legitimated" to mean a child
legitimated by royal concession as well as one legitimated by subsequent
marriage. Such interpretation could not have been the intention of the
legislator, inasmuch as article 122 of said Code considers a child
legitimated by subsequent marriage to be in parity with a legitimate child
and grants the former the same rights as those of the latter, while article
127 of the same Code grants a child legitimated by royal concession only
those rights conferred upon acknowledged natural children by article 134.
If children legitimated by subsequent marriage have the same rights as
legitimate children, and those legitimated by royal concession only have
the same rights as acknowledged natural children, the word "legitimated"
employed in article 943 et seq. of Section III, Chapter IV of Book Three of
the Civil Code, alternately with the word "natural", with reference to the
hereditary portion to which.the child of one class or another is entitled,
refers only to a child legitimated by royal concession and not to one
legitimated by subsequent marriage. Therefore, the provisions of the
above cited article 943 of the Civil Code are not applicable to the herein
claimant-appellant Maria Luciano, and the provisions of article 953 of the
same Code are the ones applicable to her.
In view of the foregoing considerations, we are of the opinion and so
hold: (1) That the continuous possession of the status of a natural child,
justified by direct acts of its parents and their family under the
legislation prior to the Civil Code, constitutes tacit recognition of
paternity (Law 11 of Toro); (2) that a child, who has enjoyed the
continuous possession of the status of natural child, justified by direct
acts of its parents and their family both before and after their marriage
which was celebrated under the prior legislation, is considered as
legitimated by subsequent marriage (Law I, Title XIII, Partida IV); (3)
that
335
VOL. 60, AUGUST 11, 1934 335
Raymundo Transportation Co. vs. Luneta, Motor Co.
the legitimate daughter of a daughter legitimated by subsequent
marriage, now deceased, is entitled to inherit from a brother of her
mother who is a legitimate son of the same parents who legitimated her
mother by subsequent marriage, and who died after the Civil Code took
effect; and (4) that the word "legitimated" employed in Section III,
Chapter IV of Book Three of the Civil Code, refers to children legitimated
by royal concession and not to those legitimated by subsequent marriage.
Wherefore, the order appealed from is reversed and the claimant-
appellant Maria Luciano is declared to be the sole heir to the intestate
estate of Antonio Escobar, with the costs against the appellee. So ordered.
Malcolm, Imperial, Butte, and Goddard, JJ., concur.
Order reversed.
________________
© Copyright 2019 Central Book Supply, Inc. All rights reserved
354 SUPREME COURT REPORTS
ANNOTATED
Palad vs. Governor of Quezon Province
No. L-24302. August 18, 1972.
MIGUEL PALAD, ET AL., plaintiffs-appellants, VICTORIA QUEA-NO,
ET AL., intervenors-appellees, vs. THE G OVERNOR OF QUEZON
PROVINCE and THE MUNICIPALITY OF TA-YABAS,QUEZON,
defendants-appellees.
Remedial law; Judgment; Case at bar, law of the case ap-plies.—A
prior decision of the Supreme Court which has long become final
respecting the nature cf the trust created by the last will and testament
of the deceased will not be subsequently disturbed it being already the
law of the case.
Civil law; Property; Usufruct; The 30-year limitation on usufruct
under the Old Spanish Civil Code does not apply to trusts.—Article 515 of
the Old Spanish Civil Code prohibiting the creation of a usufruct for more
than 30 years in favor of any town, province or association, does not apply
to the instant case; because what was constituted by the last will and
testament of the late Luis Palad is a trust, not a usufruct, as held by the
Supreme Court in Government vs. Abadilla, et al., 46 Phil. 642.
Same; Trust; Succession; Devise of income of land for public benefit
for indefinite period is valid.—The devise of the income of real properties
for the benefit of a public educational institution, although without
limitation as to period, is valid. It does not violate the rule against trusts
in perpetuities provided for in Article 785 of the Spanish Civil Code.
Same; Same; Same; Devise of income of land, not a violation of the
20-year limit on inalienability.—Article 870 of the New Civil Code, which
regards as void any disposition of the testator declaring all or part of the
estate inalienable for more than 20 years, is not violated by the trust
constituted by the late Luis Palad; because the will of the testator does
not inter-dict the alienation of the parcels devised. The will merely directs
that the income of said two parcels be utilized for the establishment,
maintenance and operation of the high school.
Same; Same; Same; New Civil Code provision against in-alienability
of land devised, not retroactive.—Assuming that the trust created by the
deceased falls within the prohibition of Article 870, the same cannot be
75
Usufruct
given retroactive effect, the testa-tor having died long before the
effectivity of the New Civil Code,
Words and phrases; Meaning of “to establish.”—To establish means
“to settle or fix firmly; x x x place on a permanent
355
VOL. 46, AUGUST 18, 1972 3 Palad vs. Governor of Quezon Province
55
Palad vs. Governor of Quezon
Province
footing”; or “to originate and secure the permanent existence of, to
found, to institute, to create and regulate, as of a colony, estate or other
institution or to place upon a secure foundation.” Thus to “establish a
company for any business means complete and permanent provision for
carrying on that business, and putting a company in operation may well
include its continued as well as its first or original operation x x x.”
APPEAL from a decision of the Court of First Instance of Quezon.
Arguelles, J .
The facts are stated in the opinion of the Court.
Jose L. Desvarro, for plaintiffs-appellants.
Milberto B. Zurbano for intervenors-appellees.
Assistant Provincial Fiscal Ramon M. Yugente for defendants-
appellees.
M AKASIAR, J .:
Plaintiffs-appellants appealed on January 15, 1965 from the decision
dated November 28, 1964 of the Court pf First Instance of Quezon,
dismissing their complaint as well as the complaint in intervention,
In their complaint dated April 20, 1958 against the governor of
Quezon province and the municipality of Tayabas, plaintiffs-appellants
Miguel Palad, Fe Palad, Victoria Queano, Jose Palomera, Concepcion
Palomera, Edgardo Obciana, Galo Nosce, Celso Zafranco and Ernesto
Zafranco alleged that they are the remaining immediate heirs and/or
successors-in-interest of the deceased Luis Palad, they being the
grandchildren of Policarpio Palad and Victor Palad, both deceased
brothers of the late Luis Palad; that the defendant provincial governor is
the trustee and/or administrator and the defendant municipality of
Tayabas the beneficiary of Lots Nos. 3464 and 3469 respectively covered
by O.C.T. No. 6448 and O.C.T. No. 6656 situated in Barrio Colongcolong
(now Talawtalaw), Lucena, Quezon; that the purpose of the trusteeship of
the aforesaid lots as constituted by the last will and. testament of the
.deceased Luis £alad dated January 25,1892 and duly protocolized on
July 27, 1897, was to erect or establish a high school in the town
356
356 SUPREME COURT REPORTS
ANNOTATED
of Tayabas out of the income of the aforesaid two lots for the benefit of the
said town of Tayabas; that the said trust was duly fulfilled upon the
complete establishment in or about 1932 of a high school now known as
“Luis Palad High School” in the town of Tayabas financed with the
income of said lots and is actually self-supporting, that the town of
Tayabas has been enjoying the income of the said lots as beneficiary for
the last 54 years since November 9, 1904 up to the present time (when
complaint was filed), while the defendant provincial governor continues to
be the trustee and/or administrator of the two lots in violation of Article
605 of the Civil Code; that the pertinent facts are well-established in the
decision of the Supreme Court on December 10, 1924 in the case of “The
Government of the Philippine Islands vs. Anastacia Abadilla, et
al.,”;1 that the aforesaid lots have a net annual income of P7,000; and that
since the establishment of the Luis Palad High School in 1932 or since
November, 1904 in accordance with Article 605 of the Civil Code, the
plaintiffs were already entitled to the reversion of the two lots in their
favor and to the dissolution and/or termination of the trusteeship; and
accordingly prayed for judgment (1) directing the defendant provincial
governor to submit an accounting of the fruits or income of the two lots
from 1932, and to turn over the funds under his trusteeship to the
plaintiffs, (2) terminating or dissolving the trusteeship, (3) ordering the
reversion of the lots to the plaintiffs, (4) directing the governor to
reconvey the same to the plaintiffs, (5) ordering tha register of deeds of
Quezon province to cancel O.C.T. Nos. 6448 and 6656 and to issue the
transfer certificates of title in their favor, and (6) sentencing the
defendants to pay the costs.
The answer dated June 11, 1958 filed by the provincial fiscal for and
in behalf of the defendants, alleges that they have no knowledge or
information sufficient to form a belief as to the truth of plaintiffs’ claim
that they are the immediate heirs and successors-in-interest of the
deceased Luis Palad, denies the rest of the allegations in the complaint,
and interposes as special defenses the fact that the
_________________
1 Vol. 46, Phil. 642.
357
VOL. 46, AUGUST 18, 1972 357
76
Usufruct
Palad vs. Governor of Quezon Province
two parcels of land were ordinary unconditional devise of realties in trust
contained in the last will and testament of the late Luis Palad for the
establishment and maintenance of a secondary school for the continued
benefit and welfare of the inhabitants of the municipality of Tayabas;
that Article 605 of the new Civil Code (on usufruct) does not apply to the
case at bar; that to give effect to the above-mentioned testamentary
grant, the Philippine Legislature enacted Acts Nos. 3232, 3462 and 3757
creating the Luis Palad High School to be established and maintained
with funds coming from said two parcels of land, which institution is still
existing and being maintained for the benefit of the inhabitants of the
said town; that the testator intended the said testamentary grant or
devise of land for the establishment and maintenance of a high school to
be permanent and not subject to any resolutory or other condition; that
the ownership of the two parcels of land had been irrevocably vested in
the province of Quezon as trustee with the municipality of Tayabas
as cestui que trustent; that the plaintiffs as alleged heirs of the late Luis
Palad are bereft of any interest in said lots; and that the defendants are
conscientiously devoting the funds from the said two parcels for the
establishment and maintenance of the said high school in accordance
with the will of the testator and they have not enriched themselves or
benefited therefrom; that the province of Quezon had to appropriate
funds for the maintenance of the said high school when the income from
the disputed lands became insufficient; that the said high school is not
entirely self-supporting; that the alleged average annual net income
(P7,000.00) of the two parcels of land is exorbitant and unfounded; that
the claims or demands of the plaintiffs had been released or had
prescribed; and that the plaintiffs are in estoppel, aside from a counter-
claim of P5,000.00 representing damages suffered by reason of the
groundless and malicious suit; and accordingly prayed for the dismissal of
the complaint and for the confirmation of the valid claim of the defendant
governor as trustee and the municipality of Tayabas as cestui que
trustent over the two parcels of land in the concept of a permanent
testamentary grant for the establishment and
358
358 SUPREME COURT REPORTS
ANNOTATED
Palad vs. Governor of Quezon Province
perpetual maintenance and operation of the Luis Palad High School.
The plaintiffs filed their answer to the counterclaim dated June 28,
1958 averring, among others, that the defendants being political
institutions authorized by law to employ the services of government
counsel receiving salary from the government, have not suffered and
could not suffer damages.
In a petition dated July 22, 1950, the plaintiffs prayed for the
exclusion from the complaint as party plaintiffs the names of Victoria
Queano, Jose Palomera, Concepcion Palomera, Edgardo Obciana, Celso
Zafranco and Ernesto Zafranco on the ground that the testator Luis Palad
died without ascendants or descendants but survived by his brothers
Policarpio, Victor and Leopoldo; that Leopoldo died without issue while
Victor died earlier than the testator Luis Palad; that the persons sought
to be excluded from the complaint are the grandchildren of Victor Palad
who lost whatever successional right he had over the lots in question to
Policarpio Palad, the only brother who survived the testator Luis Palad,
by right of accretion.
In an order dated July 25, 1958, the Court granted the aforesaid
petition for exclusion; but subsequently the coplaintiffs, whose names
were deleted from the complaint, filed on August 29, 1958 a motion for
intervention claiming that they are likewise heirs and successors-in-
interest of the deceased Luis Palad and his nieces Segunda and Emilia,
who are children of Victor Palad. Plaintiffs Miguel Palad, Fe Palad and
Galo Nosce filed their answer dated Sept. 4, 1958 to the motion for
intervention.
Upon motion of the plaintiffs dated December 12, 1962, for judgment
on the pleadings, the trial court rendered on December 28, 1964 the
appealed decision.
In a decision rendered on December 10, 1924, the Supreme Court held
that the said testamentary disposition in the holographic will of the late
Luis Palad dated January 25, 1892 created a trust for the establishment
and maintenance of a secondary school to be financed with the income of
359
VOL. 46, AUGUST 18, 1972 359
Palad vs. Governor of Quezon Province
the two lots aforesaid for the benefit of the inhabitants of the town of
Tayabas, thus:
“It is a well-known rule that testamentary dispositions must be liberally
construed so as to give effect to the intention of the testator as revealed
by the will itself. Applying this rule of construction it seems evident that
by the clause in question the testator proposed to create a trust for the
benefit of a secondary school to be established in the town of Tayabas,
naming as trustee the ayuntamiento of the town or if there be
no ayuntamiento, then the civil governor of the Province of Tayabas.
“x x x. There can therefore be but very little doubt that the governor of
the Province of Tayabas, as the successor of the civil governor of the
province under the Spanish regime, may act as trustee in the present
case.
77
Usufruct
“In regard to private trusts it is not always necessary that the cestui
que trust should be named, or even be in esse at the time the trust is
created in his favor, xxx.
“xxx xxx xxx
“But counsel argues that assuming all this to be true the collateral
heirs of the deceased would nevertheless be entitled to the income of the
land until the cestui que trust is actually in esse. We do not think so. If
the trustee holds the legal title and the devise is valid, the natural heirs
of the deceased have no remaining interest in the land except their right
to the reversion in the event the devise for some reason should fail, an
event which has not as yet taken place. From a reading of the
testamentary clause under discussion it seems quite evident that the
intention of the testator was to have the income of the property
accumulate for the benefit of the proposed school until the same should be
established.”2
Implementing the trust thus created, the Philippine Legislature enacted
Act No. 3232 approved on November 27, 1925, which established the Luis
Palad Rural High School as an agricultural high school under the
direction, supervision and control of the Director of Education, the
expenses for the establishment and maintenance of which shall be paid
out of the funds left by the late Luis Palad and any other funds which
may be donated by the Government or any of its dependencies or any
other persons. The Direc-
__________________
Gov’t of the Phil. Islands vs. Abadilla, Dec. 10, 1924, 46 Phil. 642,
2
646, 647, 649.
360
360 SUPREME COURT REPORTS
ANNOTATED
Palad vs. Governor of Quezon Province
tor of Education is authorized to receive from the provincial governor as
trustee of the estate of Luis Palad the sums necessary for the proper
operation, construction and upkeep of the permanent buildings of the
School. Said Act No. 3232 was amended by Act No. 3462 approved on
Decem-ber 7, 1928 to the effect that the funds for the school shall be
disbursed subject to the approval by a Board composed of the Director of
Education, the governor of Quezon province and the municipal president
of the town of Taya-bas and that the Director of Education is authorized
to receive from the provincial governor as trustee sums necessary for
the proper operation, the construction and upkeep of the permanent
buildings of the school as well as for the acquisition of land whereon to
erect such buildings. Act No. 3757 approved on November 26, 1930
further amended the aforesaid two laws by converting the said
agricultural school into a regular high school to be known as the Luis
Palad High School.
Appellants claimed that the trial court erred in (1) hold-ing that the
Supreme Court ruled in the case of Government vs. Abadilla 3 that the
trust was a permanent one created for the benefit of the Luis Palad High
School and Is a perpetual charge upon the land devised, (2) in not
declaring the termination of the usufruct of the trust estate as provided
in Art. 515 of the Spanish Civil Code, and (3) In not ordering the
dissolution of this trusteeship under Art. 870 of the New Civil Code.
As to the nature of the trust created by the last will and testament of
the late Luis Palad, the law of the case Is the decision in Government vs.
Abadilla, et al., supra, that “the testator proposed to create a trust for the
benefit of a secondary school to be established in the town of Tayabas,
naming as trustee xxx the civil governor of the province of Tayabas (now
Quezon) x x x”4 and that “if the trustee holds the legal title and the devise
is valid, the natural heirs of the deceased have no remaining interest in
the land except their right to the reversion in the event the
______________
3 46 Phil. 642.
4 p. 647.
361
VOL. 46, AUGUST 18, 1972 361
Palad vs. Governor of Quezon Province
devise for some reason should fail, an event which has not as yet taken
place. From a reading of the testamentary clause under discussion it
seems quite evident that the intention of the testator was to have the
income of the property accumulate for the benefit of the proposed school
until the same should be established.”5
Article 515 of the Old Spanish Civil Code prohibiting the creation of a
usufruct for more than thirty (30) years in favor of any town, province or
association, does not apply to the instant case; because what was
constituted by the last will and testament of the late Luis Palad is a
trust, not a usufruct, as held by the Supreme Court in Government vs.
Abadilla, et al., supra.
The pretension of appellants that the trust violates the rule against
trusts in perpetuities citing Thompson on Wills,6 as well as Art. 785 of the
Spanish Civil Code7 providing that dispositions imposing perpetual
prohibitions upon alienation shall be inoperative 8 was squarely
78
Usufruct
considered and refuted by the Supreme Court in said Abadilla case, thus:
“As the law of trusts has been much more frequently applied in England
and in the United States than it has in Spain, we may draw freely upon
American precedents in determining the effect of the testamentary trust
here under consideration, especially so as the trusts known to American
and English equity jurisprudence are derived from the fidei commissa of
the Roman law and are based entirely upon Civil Law
principles,”9 adding that the testamentary trust is in harmony with Art.
788 of the Spanish Civil Code regarding the obligation of the heir to make
periodic investments of specified sums10, and finally stating that:
_____________
p. 649.
5 having died long before the effectivity of the New Civil Code. 13
3rd ed. p. 647, Page on Wills (Lifetime ed. p. 543); and Vol. 41, Am.
6 Appellants seem to cling to the statement in the decision
Jur., pp. 50, 53-54.
7 Now Article 867, New Civil Code.
8 Barretto vs. Tuason, 50 Phil. 888; Severino vs. Severino, 44 Phil.
343.
9 pp. 646-647.
10 p. 648.
362
362 SUPREME COURT REPORTS
ANNOTATED
Palad vs. Governor of Quezon Province
“x x x unless the devise contravenes some other provision of the Code it
must be upheld.
“We have been unable to find any such provision. There is no violation
of any rule against perpetuities: the devise does not prohibit the
alienation of the land devised. It does not violate article 670 of the Code:
the making of the will and the continuance or quantity of the estate of the
heir are not left in the discretion of a third party. The devisee is not
uncertain and the devise is therefore not repugnant to article 750 of the
Civil Code. The provincial governor can hardly be regarded as a public
establishment within the meaning of article 748 and may therefore
receive the inheritance without the previous approval of the
Government.”11
Article 870 of the New Civil Code, which regards as void any disposition
of the testator declaring all or part of the estate inalienable for more than
20 years, is not violated by the trust constituted by the late Luis Palad;
because the will of the testator does not interdict the alienation of the
parcels devised. The will merely directs that the income of said two
parcels be utilized for the establishment, maintenance and operation of
the high school.
Said Article 870 was designed “to give more impetus to the
socialization of the ownership of property and to prevent the perpetuation
of large holdings which give rise to agrarian troubles.” 12 The trust herein
involved covers only two lots, which have not been shown to be a large
land-holding. And the income derived therefrom is being devoted to a
public and social purpose—the education of the youth of the land. The use
of said parcels therefore is in a sense socialized. There is no hint in the
record that the trust has spawned agrarian conflicts.
And even if the trust herein involved falls within the prohibition of the
said Article 870, the same cannot be given retroactive effect, the testator
_______________
11pp. 648-649, italics supplied.
12Report of the Code Commission, p. 111; Vol. III, Padilla, Civil Code
Annotated, 1966 Ed., p. 237.
13 Articles 2252, 2253, 2258 and 2263, NCC.
363
VOL. 46, AUGUST 18, 1972 363
Palad vs. Governor of Quezon Province
in the Abadilla case that: “From a reading of the testamentary clause
under discussion it seems quite evident that the intention of the testator
was to have the income or the property accumulate for the benefit of the
proposed school until the same should be established.”14
They argue that upon the establishment of the school in 1932, the
trust ceased, as the object or purpose thereof had been accomplished.
Appellants’ position accords a very restrictive meaning to the term
“established” as employed in the aforequoted portion of the decision. The
word “established” should not be limited to the initial construction of the
high school, which alone will not serve the purpose of the testamentary
disposition of the testator, if the maintenance and operation of the school
are excluded from its scope. To give full effect to the intention of the
testator, the said portion of the decision should be read together with the
preceding statement therein that “it seems evident that by the clause in
question the testator proposed to create a trust for the benefit of a
secondary school to be established in the town of Tayabas, x x x.” 15 The
benefit that could be derived from a secondary school cannot be enjoyed
by the residents of the town of Tayabas if the school is not in operation or
functioning. It can only function and operate if the needed funds are
provided therefor. This the testator realized only too well and therefore
79
Usufruct
willed that the income from the two lots—Lots Nos. 3464 and 3469—
should be utilized for the maintenance and upkeep of the school including
the reconstruction, repairs, or expansion of the physical plants and other
facilities as well as hiring of faculty members and administrative staff
and personnel of the high school as may be compelled by increase in
enrollment and the requirements of efficient instruction.
To establish means “to settle or fix firmly; x x x place on a permanent
footing”16; or “to originate and secure the
_______________
p. 649, italics supplied.
14
Italics supplied.
15
16 Bouvier’s Law Dictionary, 3rd ed., p. 861; Bouvier’s Law Dictionary,
3rd ed., p. 1075.
364
364 SUPREME COURT REPORTS
ANNOTATED
Palad vs. Governor of Quezon Province
permanent existence of, to found, to institute, to create and regulate, as of
a colony, estate or other institution or to place upon a secure
foundation.17 Thus to “establish a company for any business means
complete and permanent provision for carrying on that business, and
putting a company in operation may well include its continued as well as
its first or original operation x x x.”18
The high school edifice and its equipment, it left to deteriorate until
they are completely destroyed, would not have any permanent existence,
if they are not repaired or reconstructed or not properly maintained. As
We ruled in the Abadilla case,19 the trust ceases only if the devise fails—if
the maintenance of the high school is abandoned and its operation
stopped. Since the school continues to operate and is being maintained,
with the income from th e two parcels of land subject of the trust, and
donations from the government and other sources, the devise has not yet
failed. It should be emphasized that the income alone of the two lots does
not suffice to support the school. Under Acts Nos. 3232 and 3462, funds
donated by the government, its dependencies and other persons
contribute to the establishment, maintenance and upkeep of the
institution.
WHEREFORE, the appealed judgment is hereby affirmed, and the
appeal is hereby dismissed with costs against petitioners-appellants. So
ordered.
Concepcion, C.J., Reyes,
J.B.L., Makalintal, Zaldivar, Castro, Fernando, Teehankee, Barredo, Anto
nio and Esguerra, JJ., concur.
Judgment affirmed.
Notes.—Prohibition against inalienability of devised property.—
Under Article 870 of the New Civil Code, the dispositions of the testator
declaring all or part of the estate inalienable for more than twenty years
are void. This
_________________
17 Words and Phrases, Vol. XV, 1950 ed., pp. 249, 250, 255, 256, 258.
18 Words and Phrases, Vol. XV, p. 253.
19 Supra.
365
VOL. 46, AUGUST 18, 1972 365
Sarmiento vs. Salud
provision is designed to carry out the spirit of socialization of the
ownership of property, and to prevent the perpetuation of large
landholdings which give rise to agrarian unrest. Comments of the Code
Commission.
——————
© Copyright 2019 Central Book Supply, Inc. All rights reserve
160 PHILIPPINE REPORTS
ANNOTATED
Lopez vs. Constantino
[No. 48882. March 17, 1943]
FELICIDAD LOPEZ, petitioner-appellee, vs. MARCIANA CON-
STANTINO, oppositor-appellant.
1.PENSION; LIFE PENSION FROM RENTALS OF BUILDING ERECTED UPON A
PARCEL OF LAND IS NOT EXTINGUISHED BY DESTRUCTION OF
BUILDING.—Appellant sold to her daughter, the appellee, a parcel of
land with all the buildings and improvements thereon, subject to the
condition that the vendor shall receive from the vendee by way of life
pension one half of the rents from Nos. 1215, 1217 and the ground
floor of Nos. 1219 and 1221 Juan Luna. Without appellee's fault, the
buildings above mentioned were totally destroyed by fire. Held: That
appellee's obligation had not terminated upon the destruction of the
buildings out of the rents from which said pension was payable. When
both land and building belong to the same owner, as in this case, the
rents on the building constitute an earning of the capital invested in
the acquisition of both land and building. There can be a land without
a building, but there can be no building without land. The land, being
80
Usufruct
an indispensable part of the rented premises, cannot be considered as
having no rental value whatsoever. Since appellant's participation in
the rents of the leased premises by way of life pension was part of the
consideration of the sale, it cannot be deemed extinguished so long as
she lives and so long as the land exists, because that land may be
rented to anyone who may desire to erect a building thereon.
2.ID.; ID.—This is not an action by appellant to compel appellee to fulfil
the said condition of the sale by paying her as a pension one half of
the rents of the premises in question. As long as said premises earn no
rents, appellant claims nothing because her right depends upon the
existence of the rents. The nonexistence of the rents because of lack of
any tenant on the premises cannot produce the extinguishment of
appellant's right. The destruction of the building did not make the
fulfilment of the condition of the sale forever impossible, inasmuch as
a part of the subject of the sale, the land, still exists and may yet be
rented.
3.ID. ; ID. ; RIGHT OF PENSIONER AS CO-USUFRUCTUARY OF BUILDING.—But
even granting that the obligation of the appellee to pay to the
appellant during the latter's lifetime one half of the rents of the
building in question or of certain portions thereof is an incumbrance
on the building alone, such obligation may properly be considered as
constituting the appellant a co-usufructuary of said building. Article
469 of the Civil Code provides that usufruct may be created on the
whole or a part of the fruits161
VOL. 74, MARCH 17, 1943 161
Lopez vs. Constantino
of a thing, in favor of one or more persons, simultaneously or
successively, and in any case from or to a certain day, conditionally or
unconditionally. And article 517 of the same Code pertinently provides
that if the usufruct be created upon the building only and the latter
should be destroyed, the usufructuary shall be entitled to enjoy the
use of the land and materials. It is clear, therefore, that from
whatever aspect the case is viewed, the conclusion is inescapable that
appellee's obligation towards appellant under the contract above
mentioned has not been extinguished.
APPEAL from an order of the Court of First Instance of Manila. Diaz,. J.
The facts are stated in the opinion of the Court.
Simeon R. Roxas for appellant.
Manuel V. Roxas for appellee.
OZAETA, J.:
In January, 1936, appellant sold to her daughter, the appellee, a
parcel of land with all the buildings and improvements thereon situated
at Nos. 1215, 1217, 1219, and 1221 Juan Luna, Tondo, Manila, in
consideration of the sum of P4,000. In civil case No. 49536 of the Court of
First Instance of Manila, which was instituted by the present appellant
against the present appellee in order that the sale be either rescinded or
declared subject to the condition presently to be mentioned, final
judgment was rendered in which the court found that the purchase price
of the house was far below its assessed or market value and that the sale
was subject to the condition that the vendor shall receive from the vendee
by way of life pension one half of the rents from Nos. 1215, 1217 and the
ground floor of Nos. 1219 and 1221 Juan Luna. By virtue of that judg-
ment said condition was annotated on the back of the certificate of title.
On May 3, 1941, without appellee's fault, the building or buildings
above mentioned were totally destroyed by fire. Appellee and appellant,
however, collected P5,000 and P1,000, respectively, on the insurance of
their respective interests.162
162 PHILIPPINE REPORTS
ANNOTATED
Lopez vs. Constantino
After the destruction of the building appellee sought by motion in the
land registration case to cancel the annotation on the certificate of title of
the condition of the sale above mentioned, on the theory that her
obligation to pay appellant a life pension had terminated upon the
destruction of the building out of the rents from which said pension was
payable. The Fourth Branch of the Court of First Instance of Manila
granted the motion over the opposition of the appellant and ordered the
cancelation of the annotation and the issuance of a new certificate of title
in favor of the appellee without such annotation.
Appellant contends (a) that her right to receive a life pension as a
condition of the sale affected not only the building but also the lot on
which it was erected and, hence, such right was not extinguished upon
the loss of the building; and (b) that the proceeds of the fire insurance
policy which appellee collected should be ordered invested in the
construction of another building.
The trial court believed that the life pension was an incumbrance on
the building alone, and held that said building having been destroyed
without appellee's fault, and there remaining nothing but the lot, "which
in Manila constitutes a liability when it has no building," the life pension
could no longer subsist.
It may indeed seem at first blush that the rents out of which the
pension was payable were earned by or paid for the building only,
independently of the lot on which it was erected; but further reflection
will show that such impression is wrong. When both land and building
81
Usufruct
belong to the same owner, as in this case, the rents on the building con-
stitute an earning of the capital invested in the acquisition of both land
and building. There can be a land without a building, but there can be no
building without land. The land, being an indispensable part of the
rented premises, cannot be considered as having no rental value
whatsoever. Since appellant's participation in the rents of the leased
premises by way of life pension was part of the consideration of the sale,
it cannot be deemed extinguished so long163
VOL. 74, MARCH 17, 1943 163
Lopez vs. Constantino
as she lives and so long as the land exists, because that land may be
rented to anyone who may desire to erect a building thereon. As a matter
of fact, counsel for the appellee stated in open court during the oral
argument that the present motion to cancel the annotation on his client's
title was occasioned by the desire of the appellee to lease the lot in
question to a company which intended to establish a gasoline station
thereon but which did not want to enter into the contract of lease unless
the incumbrance or annotation on appellee's title be first canceled. That,
only goes to show that the land itself has a rental value. Hence we think
it is erroneous to hold, as the trial court did, that the condition of the sale
above mentioned attached only to the building and not to the land also,
both land and building being the subject of the sale.
This is not an action by appellant to compel appellee to fulfil the said
condition of the sale by paying her as a pension one half of the rents of
the premises in question. As long as said premises earn no rents,
appellant claims nothing because her right depends upon the existence of
the rents. The nonexistence of the rents because of lack of any tenant on
the premises cannot produce the extinguishment of appellant's right. The
destruction of the building did not make the fulfilment of the condition of
the sale forever impossible, inasmuch as a part of the subject of the sale,
the land, still exists and may yet be rented.
But even granting that the obligation of the appellee to pay to the
appellant during the latter's lifetime one half of the rents of the building
in question or of certain portions thereof is an incumbrance on the
building alone, such obligation may properly be considered as
constituting the appellant a co-usufructuary of said building. Article 469
of the Civil Code provides that usufruct may be created on the whole or a
part of the fruits of a thing, in favor of one or more persons,
simultaneously or successively, and in any case from or to a certain day,
conditionally or unconditionally. Article 517 reads as follows:164
164 PHILIPPINE REPORTS
ANNOTATED
Lopez vs. Constantino
"Art. 517.—If the usufruct is created on an estate of which a building
forms part, and the latter should be destroyed in any manner whatsoever,
the usufructuary shall be entitled to enjoy the use of the land and
materials.
"The same rule shall be applied if the usufruct be created upon the
building only and the latter should be destroyed. But, in such case, if the
owner desires to construct another building he shall be entitled to occupy
the ground and to make use of the materials, being obliged to pay the
usufructuary during the continuance of the usufruct the interest upon a
sum equivalent to the value of the ground and of the materials."
It is clear, therefore, that from whatever aspect the case is viewed, the
conclusion is inescapable that appellee's obligation towards appellant
under the contract above mentioned has not been extinguished.
We cannot consider here appellant's contention that the P5,000
collected by appellee from the insurance on the building should be
invested in the construction of another building in lieu of the one
destroyed by fire so that one half of the rents thereon may be subjected to
the payment of appellant's life pension. That matter is entirely beyond
the scope of the present proceedings under section 112 of Act No. 496, and
can only be determined in an appropriate action. (Fidelity and Surety
Co. vs. Ansaldo and Quintos de Ansaldo, 37 Off. Gaz., 1164.)
The order appealed from is reversed and appellee's petition is denied,
without any finding as to costs. So ordered.
Yulo, C. J., Moran, Paras, and Bocobo, J J., concur.
Order reversed; petition denied.
© Copyright 2019 Central Book Supply, Inc. All rights reserved.
[No. L-13361. December 29, 1959]
ROSARIO GREY VDA. DE ALBAR and JOSE M. GREY,
petitioners, vs. JOSEFA FABIE DE CARANGDANG, respondent.
1. 1.USUFRUCT; RENTALS ON LAND AND BUILDING; EFFECT
OF DESTRUCTION OF BUILDING.—A life usufruct
constituted on the rentals of the "fincas situadas" located at a
certain place includes the rentals both on the building and the
land on which it is erected, because the building can not exist
without the land. Hence, the usufruct is not extinguished by the
destruction of the building, for under the law usufruct is
extinguished only by the total loss of the thing subject of the
encumbrance.
82
Usufruct
1. 2.ID.; ID.; ID.; WAR DAMAGE PAYMENT; USUFRUCTUARY
ENTITLED TO INTEREST FOR LIFE.—Where a building over
which a life usufruct was constituted in favor of one person and
the naked
856
8 PHILIPPINE REPORTS
56 ANNOTATED
Vda. de Albar, et al. vs. Carandang
1. ownership was vested in another, was destroyed during the war,
any war damage payment received by the naked owner should
also be subject to usufruct for life if such payment has not been
used in the construction of a new building. Consequently, the
usufructuary should be paid 6% interest from the time the war
damage payment was actually received until his death.
1. 3.ID.; ID.; WHEN REAL ESTATE TAXES ARE PAYABLE BY
USUFRUCTUARY.—A usufructuary who is the only recipient of
all the benefits of the property subject of the usufruct, and who
has bound himself to pay the real estate taxes on the property in
a formal agreement approved by the court, should pay such
taxes.
PETITION for review by certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
José W. Diokno for petitioners.
Ambrosio Padilla, Ciriaco López, Jr., and Santiago P. Blanco for
respondent.
BAUTISTA ANGELO, J.:
Doña Rosario Fabie y Grey was the owner of a lot situated in the City of
Manila with a building and improvements thereon erected at 950-956
Ongpin as evidenced by Original Certificate of Title No. 5030, and by a
will left by her upon her death which was duly probated she devised the
naked ownership of the whole property to Rosario Grey Vda. de Albar, et
al. but its usufruct to Josefa Fabie for life.
The pertinent provision of the will reads as follows: "Lego a mi a
ahijada menor de edad, Maria Josefa de la Paz Fabie, en usufructo
vitalicio las rentas de las fincas * * * en la calle Ongpin, Numeros 950 al
956 del Distrito de Santa Cruz, Manila, * * * y prohibo enajene,
hipoteque, permuta o transfiera de algun modo mientras que ella sea
menor de edad." Said property was registered in the name of Rosario
Grey Vda. de Albar, et al. as naked owners and the right of Josefa Fabie
as life usufructuary was expressly noted on the new title. Pursuant to the
857
VOL. 106, DECEMBER 29, 1959 857
Vda. de Albar, et al. vs. Carandang
9th clause of the will, an encumbrance was likewise noted on the title
prohibiting the usufructuary from selling, mortgaging or transferring her
right of usufruct during her minority.
During liberation, as a consequence of the fire that gutted the
buildings in many portions of Manila, the building on the Ongpin lot was
burned, leaving only the walls and other improvements that were not
destroyed by the fire.
One Au Pit, a Chinaman, offered to lease the property for a period of
five years at a monthly rental of P500.00, at the same time agreeing to
construct on the lot a new building worth P30,000.00 provided the naked
owners as well as the usufructuary sign the agreement of lease. As the
usufructuary maintains that she has the exclusive right to cede the
property by lease and to receive the full rental value by virtue of her right
of usufruct while on the other hand the naked owners maintain that the
right of usuf ruct was extinguished when the building was destroyed, the
right of the usufructuary being limited to the legal interest on the value
of the lot and the materials, in order that the agreement of lease may be
effected, the parties agreed on a temporary compromise whereby the
naked owners would receive P100.00, or 20% of the monthly rental of
P500.00 and the usufructuary the balance of 80% or P400.00 of said
monthly rental. It was likewise stipulated in the agreement that the title
to the building to be constructed would accrue to the land upon its
completion as an integral part of the lot covered by the transfer certificate
of title issued in the name of the naked owners but subject to the right of
usufruct of Josefa Fabie. The parties expressly reserved the right to
litigate their respective claims after the termination of the contract of
lease to determine which of said claims was legally correct.
By reason of the destruction of the building on the Ongpin property,
the United States War Damage Commission approved the claim that was
presented for the damage caused to the property in the amount of
P8,574.00
858
858 PHILIPPINE REPORTS
ANNOTATED
Vda. de Albar, et al. vs. Carandang
83
Usufruct
which was paid to and received by the naked owners. In the meantime,
the usufructuary paid the real estate taxes due on the property at Ongpin
for the years 1945 to 1952 in the total amount of P1,989.27, as well as the
real estate taxes for the years 1953 and 1954 in the annual sum of
P295.80.
On October 2, 1952, Rosario Grey Vda. de Albar, et al. commenced the
present action to settle the dispute and conflicting views entertained by
the parties in line with their agreement and prayed that judgment be
rendered declaring that the usufruct in favor of Josefa Fabie is now only
limited to receiving the legal interest on the value of the land, and that
her right to receive any rental under the contract entered into between
the parties has already ceased.
On August 10, 1953, the trial-court rendered judgment the dispositive
part of which reads:
"EN VIRTUD DE TODO Lo CUAL, el Juzgado promulga decision a favor
de la demandada usufructuaria, declarando:
1. (a)Que su usufructo vitalicio continua sobre la finca en Ongpin
con derecho exclusivo de percibir durante su vida la totalidad de
sus rentas, sin que los demandantes tengan derecho de
inmiscuirse en la administración de dicha finca;
2. (b)Con derecho de percibir el 6% de la cantidad de P8,574.00
percibidos como indemnización de guerra desde Enero 11, 1950;
3. (c)Al reembolso de la suma de P1 ,989.27 pagados o abonados por
la demandada como pagos del amillaramiento desde la fecha de
la Contestación, Octubre 22, 1953;
4. (d)Mas la suma de P2,000.00 como daños y perjuicios en forma de
honorarios de abogado y gastos de litigio.
5. (e)Con las costas a cargo de los demandantes."
On appeal by plaintiff s, the Court of Appeals modified the decision as
follows:
"Wherefore, we hereby affirm the decision appealed from in so far as it
holds that appellee's right of life usufruct subsists and is in full force and
effect upon the Ongpin lot and the building now existing thereon, and
that she is entitled to receive from appellants the legal interest or 6%
interest per annum of the amount of P3,272.00 from the time it was
actually received from the Philippine War Damage Commission for the
whole period of the
859
VOL. 106, DECEMBER 29, 1959 859
Vda. de Albar, et al vs. Carandang
usufruct, and appellants are hereby required to give sufficient security for
the payment of such interest, and we hereby reverse said decision,
declaring that reimbursement to appellee of the sum of P1,987.27 paid by
her for real estate taxes is deffered until the termination of the usufruct,
and that she is not entitled to any amount for attorney's fees. Without
pronouncement regarding costs."
Plaintiffs interposed the present petition for review.
The main issue to be determined hinges on the interpretation of that
portion of the will which devises to Josefa Fabie all the rentals of the
property situated in Ongpin and Sto. Cristo Streets, City of Manila. The
pertinent provision of the will reads: "Lego a mi ahijada menor de edad
Maria Josefa de la Paz Fabie, en usufructo vitalicio las rentas de las
fincas situadas en la calle Santo Cristo * * * y en la calle Ongpin,
Numeros 950 al 956 del Distrito de Santa Cruz, Manila." Petitioners
contend that this provision of the will should be interpreted as
constituting only a life usufruct on the rentals of the buildings erected on
the lands and that once these buildings are destroyed the usufruct is
extinguished. Respondent, on the other hand, contends that that
provision should be interpreted as constituting a life usufruct both on the
buildings and the lands because the former cannot be separated from the
latter.
In Lopez vs. Constantino, 74 Phil., 160, we said:
"It may indeed seem at first blush that the rents out of which the pension
was payable were earned by or paid for the building only, independently
of the lot on which it was erected; but further reflection will show that
such impression is wrong. When both land and building belong to the
same owner, as in this case, the rents on the building constitute an
earning of the capital invested in the acquisition of both land and
building. There can be a land without a building, but there can be no
building without land. The land, being an indispensable part of the rented
premises cannot be considered as having no rental value
whatsoever." (Italics supplied)
In another part of the decision, this Court said: "Since appellant's
participation in the rents of the leased premises by way of life pension
was part of the consideration of
860
860 PHILIPPINE REPORTS
ANNOTATED
Vda. de Albar, et al. vs. Carandang
the sale, it cannot be deemed extinguished so long as she lives and so long
as the land exists, because that land may be rented to anyone who may
desire to errect a building thereon." (Italics supplied)
84
Usufruct
From the above, it is clear that when the deceased constituted the life
usufruct on the rentals of the "fincas situadas" in Ongpin and Sto. Cristo
streets, she meant to impose the encumbrance both on the building and
the land on which it is erected for indeed the building cannot exist
without the land. And as this Court well said, "The land, being an
indispensable part of the rented premises cannot be considered as having
no rental value whatsoever." Moreover, in the Spanish language, the term
"fincas" has a broad scope; it includes not only building but land as well.
(Diccionario Ingles-Español, por Martines Amador) Since only the
building was destroyed and the usufruct is constituted not only on the
building but on the land as well, then the usufruct is not deemed
extinguished by the destruction of the building for under the law usufruct
is extinguished only by the total loss of the thing subject of the
encumbrance (Article 603, old Civil Code).
In our opinion, this case comes under Article 517 of the same Code
which provides: "If the usufruct is constituted on immovable property of
which a building forms part, and the latter should be destroyed in any
manner whatsoever, the usufructuary shall have a right to make use of
the land and materials." This is a temporary measure calculated to
maintain the usufruct alive until the very thing that has been destroyed
be reconstructed or replaced. The reason is obvious: since the usufruct
has not been extinguished by the destruction of the building and the
usufruct is for life as in this case, it is but fair that the usufructuary
continue to enjoy the use of the land and the materials that may have
been left by the fire or to the use of the new building that may be
constructed on the land. To hold otherwise would be to affirm that the
usufruct has been extinguished.
861
VOL. 106, DECEMBER 29, 1959 861
Vda. de Albar, et al. vs. Carandang
The question that now arises is: Who is called upon to undertake the new
construction, and at whose cost? Of course, this is addressed to the
wisdom and discretion of the usufructuary who, to all intents and
purposes is deemed as the administrator of the property. This has been
clarified in the case of Fabie vs. Gutierrez David, 75 Phil., 536, which was
litigated between the same parties and wherein the scope of the same
provision of the will has been the subject of interpretation. The following
is what this Court said:
"Construing said judgment in the light of the ninth clause of the will of
the deceased Rosario Fabie y Grey, which was quoted in the decision and
by which Josefa Fabie was made the usufructuary during her lifetime of
the income of the property in question, we find that the said usufructuary
has the right to administer the property in question. All the acts of
administration—to collect the rents for herself, and to conserve the
property by making all necessary repair and paying all the taxes, special
assessments, and insurance premiums thereon—were by said judgment
vested in the usufructuary. The pretension of the respondent Juan Grey
that he is the administrator of the property with the right to choose the
tenants and to dictate the conditions of the lease is contrary to both the
letter and spirit of the said clause of the will, the stipulation of the
parties, and the judgment of the court. He cannot manage or administer
the property after all the acts of management or administration have
been vested by the court, with his consent, in the usufructuary."
In the instant case, however, a happy compromise was reached by the
parties in view of the offer of one Chinaman to lease the land for five
years and to construct thereon a building worth P30,000.00 upon the
condition that upon its completion the building would become an integral
part of the land on which it is erected. This means that its naked
ownership should belong to petitioners and its beneficial ownership to
respondent. This is a happy medium which fits into the purpose
contemplated in Article 517 above referred to: that the usufruct should
continue on the land and the new improvement that may be constructed
thereon.
862
862 PHILIPPINE REPORTS
ANNOTATED
Vda. de Albar, et al. vs. Carandang
We therefore hold that the Court of Appeals did not err in finding that
appellee's right of usufruct subsists and is in full force and effect upon the
Ongpin lot and the building existing thereon, affirming the decision of the
trial court.
Petitioners' contention that the Court of Appeals erred in ruling that
the damages paid by the War Damage Commission to said petitioners
was intended to be an indemnity for the destruction of the building in
question and in ordering them to pay respondent 6% interest per annum
on the amount of the damage paid is also untenable, for it cannot be
denied that a war damage payment is intended to replace part of the
capital invested in the building destroyed or to assuage somewhat the
material loss of its owner. It cannot be maintained that war damage
payments are intended to be a mere gesture of appreciation of the people
of the United States of America towards our people for it is a well-known
fact that countless of our countrymen who suffered in the last war or
whose kin-folks lost their lives did not receive any war damage payment
because they have no damaged property that could be indemnified. The
ruling that 6% interest per annum of such war damage payment should
be paid to respondent from the time it was actually received to the end of
the life of the usufruct should, in my opinion, be modified in the sense
85
Usufruct
that that obligation should only be valid up to the date the new building
was constructed by the Chinaman who leased the property upon the
theory that the amount of damage paid by the War Damage Commission
which was intended to replace the old building has in turn been replaced
by the new. However, the majority is of the opinion that the same should
also be subject to usufruct for life because it has not been used in the
construction of the new building, although they suggested the alternative
that the naked owners may turn over the money to the usufructuary so
that she may use it during her
863
VOL. 106, DECEMBER 29, 1959 863
Vda. de Albar, et al. vs. Carandang
lifetime subject to its return to them after her death if they desire to be
relieved of this encumbrance.
We find, however, merit in the contention that the real estate taxes
paid by respondent in her capacity as usufructuary for several years
previous to the present litigation should be paid by her, as she did,
instead of by petitioners not only because she is the only recipient of all
the benefits of the property but because she bound herself to pay such
taxes in a formal agreement approved by the court in Civil Case No. 1659
of the Court of First Instance of Manila (Fabie vs. Gutierrez
David, supra). In that case, which involved the same parties and the
same properties subject of usufruct, the parties submitted an amicable
agreement which was approved by the court wherein the usufructuary,
herein respondent, bound herself to pay all the real estate taxes,, special.
assessment and insurance premiums, and make all the necessary repairs
on each of the properties covered by the usufruct and in accordance with
said agreement, respondent paid all the taxes for the years 1945 to 1954.
In said agreement, it was also stipulated that the same "shall be in effect
during the term of the usufruct and shall be binding on the successors
and assigns of each of the parties." There is therefore no valid reason why
petitioners should now be ordered to reimburse respondent for all the real
taxes she had paid on the property. In this respect, the decision of the
Court of Appeals should be modified.
Wherefore, with the modification that petitioners should not be made
to reimburse the real estate taxes paid by the respondent for the years
abovementioned, the decision appealed from is affirmed in all other
respects, without pronouncement as to costs.
Labrador, Endencia, Barrera, and Gutiérrez David, JJ., concur.
MONTEMAYOR, J., concurring and dissenting:
I concur in the learned opinion of the majority, penned by Mr. Justice
Bautista Angelo, with the exception of that
864
864 PHILIPPINE REPORTS
ANNOTATED
Vda. de Albar, et al. vs. Carandang
portion thereof on page 10, which holds that the payment to the
usufructuary of the 6% interest per annum of the war damage payment
should end on the date of the construction of the new building by the
Chinaman who leased the property, from which ruling I dissent.
It will be noticed that both the trial court and the Court of Appeals
were of the opinion that said payment of interest should continue during
the lifetime of the usufruct. I agree to said opinion. The reason is obvious.
The war damage payment is the equivalent of the building destroyed.
Since the usufructuary had a right to the use or the fruits of the building,
she therefore had the right to the interest on the war damage payment
during her lifetime. In my opinion, the construction of the new building
does not relieve the owners of the land who received the war damage
payment from continuing the payment of interest. Had said owners of the
land used the war damage payment to construct the building, then they
would be free from paying interest because the rent of the new building
would correspond to the interest on the war damage payment. But the
fact is the new building was not constructed by the owners of the land,
but by the Chinese lessee.
The majority opinion states that the usufructuary would then be
receiving the interest on the war damage payment and also the rent of
the new building—a sort of double benefit, which is said to be unfair.
That is one view. The other view is that at the end of the usufruct, the
owners of the land or their heirs shall have received not only equivalent
or value of the old building destroyed, in the form of the war damage
payment but also the new building constructed absolutely at no cost or
expense to them—also a double benefit, which might also be regarded as
unfair following the point of view of the majority opinion. So, in this
respect of double benefit, both parties stand
865
VOL. 106, DECEMBER 29, 1959 865
Vda. de Albar, et al. vs. Carandang
on the same footing. Viewed thus, there is nothing unfair in the
arrangement.
Furthermore, we should not lose sight of the fact that the
usufructuary, as the majority opinion well states has a right to the use
and the fruits not only of the improvements, such as buildings on the
land, but of the land itself. Consequently, anything built on the land
would be subject to the usufruct, and the fruits thereof, such as rents,
would go to the usufructuary. This naturally includes the interest on the
86
Usufruct
war damage payment for the old building destroyed during the war,
which payment is the equivalent of said building. Had the owners of the
land used the amount of said payment to construct another building on
the land, or should they have used the sum to add another story or
extension of the building constructed thereon by the Chinese lessee, there
would surely be no question that any rent therefrom would belong to the
usufructuary, because then it could be regarded as improvement on the
land, which, as already said, is the equivalent or a reproduction of said
old building. Just because the owners of the land kept said war damage
payment for their own use did not relieve them of the obligation of paying
the interest on the same to the usufructuary, because otherwise, they
would be having not only the naked ownership of the equivalent of said
building, but also its fruits.
The foregoing are some of the reasons for my dissent.
Parás, C. J., Bengzon, and Concepción, JJ., concur.
REYES, J. B. L., J.:
I concur in the opinion of Justice Montemayor, specially because the
usufructuary receives only a part of the rent of the new building.
Decision affirmed with modification.
866
866 PHILIPPINE REPORTS
ANNOTATED
Halili vs. Aldea
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154 SUPREME COURT REPORTS
ANNOTATED
Policarpio, et al. vs. Salamat, et al.
No. L-21809. January 31, 1966.
GIL P. POLICARPIO, ET AL., plaintiffs and appellees, vs. JOSE V.
SALAMAT, ET AL., defendants. VICENTE ASUNCION, ET AL.,
defendants and appellants.
Usufruct; Death of one of the usufructuaries before end of usufruct
results in accretion among usufructuaries; Exception.—There is accretion
among the usufructuaries who are constituted at the same time when one
of them dies before the end of the usufruct. The only exception is if the
usufruct is constituted in a last will and testament and the testator
makes a contrary provision. In the instant case, there is none. On the
contrary, the testatrix constituted the usufruct in favor of the children of
her three cousins with the particular injunction that they are the only
ones to enjoy the same as long as they live, from which it can be implied
that, should any of them die, the share of the latter shall accrue to the
surviving ones. These provisions of the will are clear. They do not admit
of any other interpretation.
APPEAL from a judgment of the Court of First Instance of Bulacan.
The facts are stated in the opinion of the Court.
Tansinsin & Tansinsin for the defendants and appellants.
Eugenio Balabat for the plaintiffs and appellees.
155
VOL. 16, JANUARY 31, 1966 155
Policarpio, et al. vs. Salamat, et al.
BAUTISTA ANGELO, J.:
In a duly probated last will and testament of one Damasa Crisostomo, she
gave the naked ownership of a fishpond owned by her to her sister
Teodorica de la Cruz while its usufruct to the children of her cousins
Antonio Perez, Patricia Vicente and Canuto Lorenzo. The fishpond is
situated at a barrio of Hagonoy, Bulacan.
The children of Antonio Perez, Patricia Vicente and Canuto Lorenzo
turned out to be fourteen, namely: Maria, Pio, Fructuosa, Graciano,
Vicente, Victoria, Teodora, and Juan, all surnamed Perez, Apolonio
Lorenzo, Bonifacio Lorenzo, Vicente Asuncion, Francisco Lorenzo, Leoncio
Perez and Servillano Perez. On the other hand, Teodorica de la Cruz, the
naked owner, bequeathed in her will all her rights to the fishpond to Jose
V. Salamat.
The fourteen usufructuaries leased the fishpond first to one Gil P.
Policarpio who used to give them proportionately the usufruct
corresponding to them. During the term of the lease, however, three of
the usufructuaries died, namely, Francisco Lorenzo, Leoncio M. Perez
and Servillano Perez, and so, upon their death, both the naked owner and
the remaining usufructuaries claimed the shares corresponding to the
deceased usufructuaries in the amount of P10,714.26. Because of these
conflicting claims, the lessee withheld said amount.
Subsequently, on May 31, 1962, the surviving usufructuaries leased
the fishpond to one Batas Riego de Dios who, after executing the contract
of lease, came to know of the existing conflicting claims, and not knowing
to whom of the claimants the shares of the deceased usufructuaries
should be paid, said lessee was also constrained to withhold the
corresponding part of the usufruct of the property. So on November 15,
1962, the two lessees commenced the present action for interpleader
against both the naked owner and surviving usufructuaries to compel
them to interplead and litigate their conflicting claims.
87
Usufruct
Defendant Jose V. Salamat avers as special defense that he is the
successor-in-interest of Teodorica de la Cruz and as such he is entitled to
the shares corresponding to the three deceased usufructuaries inasmuch
as the usu-
156
156 SUPREME COURT REPORTS
ANNOTATED
Policarpio, et al. vs. Salamat, et al.
fruct in their favor was automatically extinguished by death and became
merged with the naked owner.
The surviving usufructuaries, on the other hand, adhere to the theory
that since the usufructuaries were instituted simultaneously by the late
Damasa Crisostomo, the death of the three usufructuaries did not
extinguish the usufruct, hence, the surviving usufructuaries are entitled
to receive the shares corresponding to the deceased usufructuaries, the
usufruct to continue until the death of the last usufructuary.
When the case was called for hearing, the parties agreed to submit the
case for decision upon the submission of their respective memoranda
considering that the issue involved was purely legal in nature, and on
March 29, 1963, the trial court rendered decision the dispositive part of
which reads as follows:
“Wherefore, judgment is hereby rendered declaring defendant Jose V.
Salamat entitled to the sum of P10,714.25 representing the shares of the
three deceased usufructuaries in the lease rental due from plaintiff Gil
Policarpio, ordering the latter to deliver to said defendant the aforesaid
amount; and likewise declaring said defendant Jose V. Salamat entitled
to share with the eleven usufructuaries in the proceeds of the lease
contract executed by them with plaintiff Batas Riego de Dios, ordering
the latter to deliver to him such amount as would be equivalent to the
shares of the three deceased usufructuaries, with the parties bearing
their own costs and expenses of litigation.”
The surviving usufructuaries took the present appeal.
The important issue to be determined is whether the eleven surviving
usufructuaries of the fishpond in question are the ones entitled to the
fruits that would have corresponded to the three deceased usufructuaries
or the naked owner Jose V. Salamat.
Appellants argue that it is the surviving usufructuaries who are
entitled to receive the shares of the deceased by virtue of Article 611 of
the Civil Code which provides “A usufruct constituted in favor of several
persons living at the time of its constitution shall not be extinguished
until the death of the last survivor.” On the other hand, appellee contends
that the most a usufruct can endure if constituted in favor of a natural
person is the lifetime
157
VOL. 16, JANUARY 31, 1966 157
Policarpio, et al. vs. Salamat, et al.
of the usufructuary, because a usufruct is extinguished by the death of
the usufructuary unless a contrary intention clearly appears (Article 603,
Civil Code). Hence, appellee argues, when the three usufructuaries died,
their usufructuary rights were extinguished and whatever rights they
had to the fruits reverted to the naked owner.
If the theory of appellee in the sense that the death of the three
usufructuaries has the effect of consolidating their rights with that of the
naked owner were correct, Article 611 of the Civil Code would be
superfluous, because Article 603 already provides that the death of the
usufructuary extinguishes the usufruct unless the contrary appears.
Furthermore, said theory would cause a partial extinction of the usufruct,
contrary to the provisions of Article 611 which expressly provides that the
usufruct shall not be extinguished until the death of the last survivor.
The theory of appellee cannot, therefore, be entertained.
The well-known Spanish commentators on the counterpart of Article
611 we have copied above which implicitly provides that the share of a
usufructuary who dies in the meantime inures to the benefit of the
surviving usufructuaries, also uphold the view we here express. Thus, the
following is their comment on the matter:
“Al comentar el articulo 469 (now Art. 564) hablamos, entre formas de
constitución del usufructo, del disfrute simultáneo y sucesivo. Ninguna
duda cabe, puesto que el derecho de acrecer es aplicable a los
usufructuarios, segun el Art. 987 (now Art. 1023), sobre la no extinción
del usufructo simultáneo, hasta la muerte de la última persona que
sobreviva. x x x
“x x x Al referirse x x x el articulo 521 (now Art. 611) al usufructo
constituido en provecho de varias personas vivas al tiempo de su
constitución, parece referirse al usufructo simultáneo. Sin embargo, es
indudable que se refiere tambien al sucesivo, puesto que en esta especie
de usufructo el segundo usufructuario no entra en el disfrute, salvo
expresión en contrario, hasta la muerte del primero, y es claro que al
morir el último llamado, se extingue el usufructo, que es precisamente lo
que ordena el presente articulo.” (Manresa, Comentarios al Codigo Civil
Espanol, 1931, Tomo IV, par. 486).
“x x x refiriendonos al caso de muerte natural, ha de tenerse presente
que si son muchos los llamados el usufructo simultáneamente, muerto
uno, su porcian acrece a los demas, a no ser
158
158 SUPREME COURT REPORTS
ANNOTATED
88
Usufruct

Policarpio, et al. vs. Salamat, et al. and Batas Riego de Dios are hereby ordered to pay to them the money
que el testador exprese lo contrario, ó se infiriera asi del titulo en que se withheld by them respectively representing the shares of the deceased
constituye el usufructo, para lo cual puede verse la doctrina de la ley 33, usufructuaries. No costs.
tit. I, lib. VII del Digesto, que habla del derecho de acrecer en el Chief Justice Bengzon and Justices Concepcion,
usufructo, y el tit. IV del mismo libro, en que se proponen algunos casos J.B.L. Reyes, Dizon, Regala, Makalintal,
de excepcion.—El usufructo constituido en provecho de varias personas J.P. Bengzon and Zaldivar concur. Mr. Justice Barrera took no part.
vivas al tiempo de su constitución, no extinguirá hasta la muerte de la
Decision reversed.
última que sobreviviere. Cod. Civ. art. 521.” (Del Viso, Lecciones
Elementales de Derecho Civil, sexta edicion, Tomo I, p. 86.)
______________
“Si a varios usufructuarios se les lega la totalidad de una herencia; o
una misma parte de ella, se da el derecho de acrecer cuando una de ellos
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muere despues del testador, sobreviviendo otro y otros?—Como dice la obra
anotado, el Digesto admitió, según un texto de Paulo, la solución
afirmativa, y Pothier reprodujo dicha doctrina.
“La jurisprudencia del Tribunal Supremo español ha admitido y
sancionado tambien en la sentencia de 29 de marzo de 1905, aunque no
por aplicación del derecho de acrecer, y si por aplicacion de la voluntad
presunta del testador, que habiendose legado el usufructo vitalicio del
remanente du sus bienes, por partes iguales, a dos hermanas, debe
entenderse que ellas, o cualquiera de las dos que sobreviviere a la otra,
habia de disfrutar dicho usufructo, no constituyendo la separación de
partes sino una prevision del testador, para el arreglo del usufructo total
durante la vida de las dos usufructuarios.” (Colin and Capitant, Curso
Elemental del Derecho Civil, 1957, Tomo VIII, pp. 605-606)

It, therefore, appears that the Spanish commentators on the subject are
unanimous that there is accretion among usufructuaries who are
constituted at the same time when one of them dies before the end of the
usufruct. The only exception is if the usufruct is constituted in a last will
and testament and the testator makes a contrary provision. Here there is
none. On the contrary, the testatrix constituted the usufruct in favor of
the children of her three cousins with the particular injunction that they
are the only ones to enjoy the same as long as they live, from which it can
be implied that, should any of them die, the share of the latter shall
accrue to the surviving ones. These provisions of the will are clear. They
do not admit of any other interpretation.
Wherefore, the decision appealed from is reversed. The eleven
surviving usufructuaries are hereby declared to be entitled to the shares
of the three deceased usufructuaries and, hence, as a corollary, appellees
Gil P. Policarpio
159
VOL. 16, JANUARY 31, 1966 159
Malabon Restaurant, et al. vs. Department
of Labor, et al.
89