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SGTBSGSG77888
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
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* 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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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 Certiorari1 under Rule 45 seeking to reverse
and set aside the January 14, 2004 Decision2 of the Court of Appeals (CA)
in CA-G.R. CV No. 60659, which affirmed the November 3, 1997 Decision 3 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
_______________
1
Rollo, pp. 13-48.
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.
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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.
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
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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.
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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 Complaint 16 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 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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Department of Education, Division of Albay vs.
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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. 8926 27 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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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.
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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
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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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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.
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tioner then filed a Motion for Reconsideration37of 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 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.
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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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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 vulnerable to a suit by an interested or affected party. It has shed off its
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.
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Department of Education, Division of Albay vs.
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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 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
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,
_______________
43 Rollo, pp. 25-26.
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.
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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
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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
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45 Records, p. 213.
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Department of Education, Division of Albay vs.
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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
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.
7
Usufruct

47 Felix Gochan and Sons Realty Corporation v. Heirs of Baba, G.R. No. 3, 1997 Decision against the Municipality of Daraga has no substantial and
138945, August 19, 2003, 409 SCRA 306, 315; citing Santos v. Santos, G.R. material effect upon the DECS’ appeal.
No. 133895, October 2, 2001, 366 SCRA 395, 405-406. The only remaining issue left is whether laches can inure to the benefit of
48 Id. 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
217 supervision and control of DECS up to 1993 when Civil Case No. 8715 was
VOL. 524, JUNE 8, 2007 217 filed by respondent Oñate.
We rule in the affirmative.
Department of Education, Division of Albay vs.
Laches has set in
Oñate
A brief scrutiny of the records does show tell-tale signs of laches. The first
demand; each case is to be determined according to its particular
element is undisputed: the then Bagumbayan Elementary School of Daraga
circumstances.”49
was constructed in 1940 on a portion of disputed Lot 6849, specifically Lot
Issue of laches not barred by adverse judgment against Daraga, Albay No. 6849-A containing 13,072 square meters under TCT No. T-83946.
It is unfortunate that defendant Municipality of Daraga, Albay lost its appeal Moreover, Mrs. Toribia Milleza,50 a retired government employee and
in CA-G.R. CV No. 60659 before the CA for its failure to pay the required resident of Bagumbayan, Daraga since 1955 pertinently testified, thus:
docket fees within the reglementary period. As a result, a Partial Entry of
Q: How long have you been residing in this place,
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 Bagumbayan, Daraga, Albay?
in favor of respondent Celso Oñate, became final and executory as against A: Maybe I stayed there in 1955 until the present.51
defendant Municipality of Daraga, Albay. xxxx
As an off-shoot, with respect to the Municipality of Daraga, the Deed of
Q: Now, can you further recall the kind of building
Donation in favor of petitioner DECS was annulled——respondent Oñate
was declared owner in fee simple of the disputed lots and entitled to that was constructed in this property?
possession but was required to pay PhP 50,000 to the Daraga Municipal A: Seva type, building.
Government and the costs of suit. By reason of the finality of the Decision Q: At present how many buildings were
against the Municipality of Daraga, Tax Declaration Nos. 04-006-00068, 332,
constructed in this property?
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 A: Plenty of school buildings.
on its co-defendant, petitioner DECS? _______________
Generally, it has no impact on the appeal of DECS unless the decision
50 Supra note 32.
affects its defenses. In this petition, DECS no longer questions the
51 Id., at p. 4.
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 219
the defense of laches. The final directive for Municipality of Daraga to return VOL. 524, JUNE 8, 2007 219
possession of the land has no significance Department of Education, Division of Albay vs.
_______________
Oñate
49 G.R. No. 103959, August 21, 1997, 278 SCRA 98, 112. Q: Now, how many buildings were first
constructed in [sic] this property?
218 A: In 1955 only one, the Seva type, then
218 SUPREME COURT REPORTS ANNOTATED there was constructed five (5) Marcos
Department of Education, Division of Albay vs. Type buildings during the Marcos time.52
Oñate The devotion of Lot No. 6849-A to education started in 1940 and continued
on DECS’ appeal since precisely, it is DECS’ position that it should retain up to December 21, 1988 when said lot was donated to the DECS. From
possession of the land. From these considerations, the final RTC November then on, DECS built various buildings and introduced improvements on said
8
Usufruct
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, 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
_______________
9
Usufruct
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
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.
10
Usufruct
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.
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 all
other respects.
No costs.
SO ORDERED.
Quisumbing (Chairperson), Carpio, Carpio-Morales and Tinga, JJ.,
concur.
Petition granted, judgment affirmed with modifications.
Notes.—When the State gives its consent to be sued, it does not thereby
necessarily consent to an unrestrained execution against it. (Republic vs.
National Labor Relations Commission, 263 SCRA 290 [1996])
An unincorporated government agency such as the Department of Public
Works and Highways (DPWH) is without any separate juridical personality of
its own and hence enjoys immunity from suit. (Republic vs. Nolasco, 457
SCRA 400 [2005])
11
Usufruct
——o0o——
September 17, 2008. G.R. No. 177667.*
CLEODIA U. FRANCISCO and CEAMANTHA U. FRANCISCO, represented
by their grandmother DRA. MAIDA G. URIARTE as their Attorney-in-Fact,
petitioners, vs. SPOUSES JORGE C. GONZALES and PURIFICACION W.
GONZALES, respondents.
Judgments; Execution; The power of the court in executing judgments
extends only to properties unquestionably belonging to the judgment debtor
alone.—The Court finds that it was grave error for the RTC to proceed with
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, in the present case to those belonging to
Michele and Matrai. One man’s 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 6 of the family. By no stretch of one’s imagination can it be concluded that said
17, 2008 39
Francisco vs. Gonzales
courts or by the husband, or when the wife gives moderate donations
for charity.—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 courts or by the husband; or when the wife gives moderate
donations for charity. Failure to establish any of these circumstances means
that the conjugal asset may not be bound to answer for the wife’s personal
obligation. Considering that the foregoing circumstances are evidently not
present in this case as the liability incurred by Michele arose from a judgment
rendered in an unlawful detainer case against her and her partner Matrai.
Judgments; Execution; While the trial courts 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.—
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. 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 of any person under
execution except that of the judgment debtor.
Civil Law; Obligations; Conjugal Partnerships; In BA Finance
Corporation v. Court of Appeals (161 SCRA 608 [1988]), 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.—It
should be noted that the judgment debt for which the subject property was
being made to640
6 SUPREME COURT
40 REPORTS ANNOTATED
Francisco vs. Gonzales
answer was incurred by Michele and her partner, Matrai. Respondents
allege that the lease of the property in Lanka Drive redounded to the benefit
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, 161 SCRA 608 (1988), the Court ruled that
the petitioner cannot enforce the obligation contracted by Augusto Yulo
12
Usufruct
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)
Same; Same; Same; 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.—Similarly in this case,
Michele, who was then already living separately from Cleodualdo, rented the
house in Lanka Drive for her and Matrai’s own benefit. In fact, when they
entered into the lease agreement, Michele and Matrai purported themselves
to be husband and wife. 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, 453
SCRA 283 (2005), 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 persuade641
VOL. 565, SEPTEMBER 6
17, 2008 41
Francisco vs. Gonzales
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. 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
13
Usufruct
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, 643
2008
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 Execution7 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
On April 30, 2007, the CA dismissed the petition, the dispositive portion of
which reads:
“WHEREFORE, premises considered, the Petition is hereby DISMISSED.
The Order(s), dated June 4, 2003 and July 31, 2003, of the Regional Trial
Court of Muntinlupa City, Br. 256, in Civil Case No. 01-201, STAND. Costs
against the Petitioners.
_______________
3 Rollo, p. 60.
4 Id., at p. 61.
5 Id., at pp. 62-65.
6 Id., at pp. 66-67.
7 Id., at pp. 69-71.
8 Id., at pp. 79-80.
9 Id., at p. 81.
10 Id., at pp. 504-505.
11 Id., at p. 513.
644
644 SUPREME COURT REPORTS
ANNOTATED
Francisco vs. Gonzales
SO ORDERED.”12
Hence, herein petition. As prayed for, the Court issued a temporary
restraining order on July 11, 2007, enjoining respondents, the RTC, the
Register of Deeds, and the Sheriff from implementing or enforcing the RTC
Order dated July 8, 2005, canceling TCT No. 167907 and Order dated
February 13, 2006, issuing a writ of possession, until further orders from the
Court.13
Petitioners argue that: (1) they are the rightful owners of the property as
the Partial Decision issued by the RTC of Makati in Civil Case No. 93-2289
had already become final; (2) their parents already waived in their favor their
rights over the property; (3) the adjudged obligation of Michele in the
ejectment case did not redound to the benefit of the family; (4) Michele’s
obligation is a joint obligation between her and Matrai, not joint and
solidary.14
The Court finds that it was grave error for the RTC to proceed with 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 those belonging to
Michele and Matrai. One man’s goods shall not be sold for another man’s
debts.16
To begin with, the RTC should not have ignored that TCT No. 167907 is
in the name of “Cleodualdo M. Francisco, married to Michele U. Francisco.”
On its face, the title shows that the registered owner of the property is not
Matrai and Michele but Cleodualdo, married to Michele. This describes the
_______________
12 Rollo, p. 44.
13 Id., at p. 557.
14 Id., at pp. 16-24.
15 Go v. Yamane, G.R. No. 160762, May 3, 2006, 489 SCRA 107, 124.
16 Yao v. Perello, 460 Phil. 658, 662; 414 SCRA 474, 477 (2003).
645
VOL. 565, SEPTEMBER 17, 645
2008
Francisco vs. Gonzales
civil status of Cleodualdo at the time the property was acquired.17
14
Usufruct
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 such,
their property relations are governed by the Civil Code on conjugal
partnership of gains.
The CA acknowledged that ownership of the subject property is 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 and redounded to
the benefit of the family, and hence, the property may be held answerable for
it.19
The Court does not agree.
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
courts or by the husband; or when the wife gives moderate donations for
charity. Failure to establish any of these circumstances means that the
conjugal asset may not be bound to answer for the wife’s personal
obligation.20 Considering that the foregoing circumstances are evidently not
present in this case as the liability incurred by Michele arose from a judgment
rendered in an unlawful detainer case against her and her partner Matrai.
_______________
646
646 SUPREME COURT REPORTS
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, 647
2008
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
15
Usufruct
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
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, 649
2008
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.
16
Usufruct
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 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
8 REPORTS 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.
17
Usufruct
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 for
reconsideration. The appellate court reversed the Decision3 of Branch 87 of
the
_______________
1
Under Rule 45 of the 1997 Rules on Civil Procedure.
2
Penned by Justice Bennie Adefuin-Dela Cruz, with Associate 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-
_______________
4 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
18
Usufruct

22 SUPREME COURT REPORTS The NHA filed a motion for reconsideration, which was denied by the
appellate court on 25 June 2001.
ANNOTATED
Hence, this petition.
National Housing Authority vs. Court of
The Issues
Appeals The following issues are considered by this Court for resolution:
On 8 March 1994, the trial court dismissed BGC’s complaint for injunction. WHETHER THE PETITION IS NOW MOOT BECAUSE OF THE
Thus: DEMOLITION OF THE STRUCTURES OF BGC; and
“Premises considered, the complaint praying to enjoin the National Housing WHETHER THE PREMISES LEASED BY BGC FROM MSBF IS WITHIN
Authority from carrying out the demolition of the plaintiff’s structure, THE SEVEN-HECTARE AREA THAT PROCLAMATION NO. 1670
improvements and facilities in the premises in question is hereby GRANTED TO MSBF BY WAY OF USUFRUCT.
DISMISSED, but the suggestion for the Court to rule that Memorandum
Order 127 has repealed Proclamation No. 1670 is DENIED. No costs. The Ruling of the Court
SO ORDERED.”5 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
The NHA demolished BGC’s facilities soon thereafter. usufructuary rights.
The Appellate Court’s Ruling Whether the Petition is Moot because of the
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 Demolition of BGC’s Facilities
trial court that Proclamation No. 1670 granted MSBF the right to determine BGC claims that the issue is now moot due to NHA’s demolition of BGC’s
the location of the seven-hectare area covered by its usufructuary rights. facilities after the trial court dismissed BGC’s complaint for injunction. BGC
However, the appellate court ruled that MSBF did in fact assert this right by argues that there is nothing more to enjoin and that there are no longer any
conducting two surveys and erecting its main structures in the area of its rights left for adjudication.
choice. We disagree.
On 30 March 2001, the appellate court reversed the trial court’s ruling. BGC may have lost interest in this case due to the demolition of its
Thus: premises, but its co-plaintiff, MSBF, has not. The issue for resolution has a
“WHEREFORE, premises considered, the Decision dated March 8, 1994 of direct effect on MSBF’s usufructu-
the Regional Trial Court of Quezon City, Branch 87, is hereby REVERSED _______________
and SET ASIDE. The National Housing Authority is enjoined from 6
demolishing the structures, facilities and improvements of the plaintiff- Ibid., p. 31.
appellant Bulacan Garden Corporation at its leased premises located in
24
Quezon City which premises were covered by Proclamation No. 1670, during
the existence of the contract of lease it (Bulacan Garden) had entered with 24 SUPREME COURT REPORTS
the plaintiff-appellant Manila Seedling Bank Foundation, Inc. ANNOTATED
No costs. National Housing Authority vs. Court of
_______________ Appeals
ary rights. There is yet the central question of the exact location of the seven-
5 Rollo, p. 43. 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
23 future disputes and to put this 20-year litigation to rest.
VOL. 456, APRIL 13, 2005 23 On the Location of the Seven-Hectare Area Granted by
National Housing Authority vs. Court of Proclamation No. 1670 to MSBF as Usufructuary
Appeals 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
SO ORDERED.”6
for exception,8 this Court will
_______________
19
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
_______________
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
20
Usufruct
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.
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.
21
Usufruct
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.
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——
22
Usufruct
© 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, 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.)
23
Usufruct
"'* * * 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
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
24
Usufruct
_______________
© 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.
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
25
Usufruct
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 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
26
Usufruct
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.
89
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
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—
27
Usufruct
“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.”
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
28
Usufruct
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 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
_______________
2 Banahaw, Inc. vs. Dejarme, 55 Phil. 338; Song Fo & Co. vs. 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
29
Usufruct
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)
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.
30
Usufruct

2. (2)That said usufructuary was entitled only to the reasonable rental fees and expenses of litigation, other than judicial costs, cannot be
value of the land occupied by the building aforementioned. recovered, except:”
3. (3)That such rental value not having been liquidated until the xxxxx xxxxx xxxxx
judgment under appeal was rendered, Antonio and Mercedes Cui “(1) In any other case where the court deems it just and equitable that
were not in default prior thereto, and the deed of sale was, attorney’s fees and expenses of litigation should be recovered.
therefore, not subject to rescission. “In all cases, the attorney’s fees and expenses of litigation must be
4. (4)That, as found by the court below, the reasonable rental value of reasonable.”
the land occupied by the defendants’ building totalled P100,088.80 “ART. 2210. Interest may, in the discretion of the court, be allowed upon
up to the time the usufructuary died and the usufruct terminated. damages awarded for breach of contract.”
5. (5)That pursuant to Articles 2208 (No. 11), 2210 and 2213 of the Civil “ART. 2213. Interest cannot be recovered upon unliquidated claims or
Code,5 the trial court had discretion to damages, except when the demand can be established with reasonable
certainty.”
_______________
100
5 “ART. 2208. In the absence of stipulation, attorney’s
100 SUPREME COURT REPORTS
99 ANNOTATED
VOL. 38, MARCH 27, 1971 99 Philippine Marine Officers’ Guild vs.
Gaboya vs. Cui Compañia Maritima
22, 1962, 49 O.G. 45; Villanueva vs. Yulo, L-12985, Dec. 29, 1959). And
1. equitably award legal interest upon said sum of P100,088.-80, as where time is not of the essence of the agreement, a slight delay on the part
well as P5,000.00 attorney’s fees, considering that defendants Cui of one party in the performance of his obligation is not a sufficient ground for
have enjoyed the said rental value of the land during all those the rescission of the agreement (Biando vs. Embestro, L-11919, July 27,
years. 1959).
See also Universal Food Corporation vs. Court of Appeals, L-29155, May
WHEREFORE, finding no reversible error in the appealed decision, the same 13, 1970, 33 SCRA 1.
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, Barredo,
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 © Copyright 2019 Central Book Supply, Inc. All rights reserved.
interest on the investment of the owner, because the investments have been [No. L-123. December 12, 1945]
made voluntarily by the latter (II Tolentino, Commentaries and Jurisprudence JOSEFA FABIA, petitioner, vs. JOSE GUTIERREZ DAVID, Judge of First
on the Civil Code of the Philippines, 289, citing 4 Manresa 491-492). Instance of Manila, NGO Boo Soo and JUAN GREY, respondents.
(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 1. 1.ACTIONS: UNLAWFUL DETAINER; WHAT DETERMINES
of the parties (Gregorio Araneta, Inc. vs. Tuason de Paterno, L-2886, Aug. WHETHER MUNICIPAL COURT OR COURT OF FlRST
_______________ INSTANCE HAS ORIGINAL JURISDICTION.—In determining
31
Usufruct
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 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,
32
Usufruct
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 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.
* * * * * * * principally as a store and secondarily for living quarters; that he was renting it
"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, Dominga, Pasay; that defendant was duly
notified on March 24 and April 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
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 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
33
Usufruct
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 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.)
34
Usufruct
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.
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
35
Usufruct

jurisdiction of said court, and that therefore Judges Dizon and Gutierrez set aside and that court is directed to try and decide the said case on the
David of the Court of First Instance erred in holding otherwise and in merits: with the costs hereof against the respondent Ngo Soo.
quashing the case upon appeal 548
2. The next question to determine is the propriety of the remedy availed 548 PHILIPPINE REPORTS
of by the petitioner in this Court. Judging from the allegations and the prayer
ANNOTATED
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 De Leon Vda. de Lontok vs. Padua
the appeal on the merits. Under section 3 of Rule 67, when any tribunal Moran, C. J., Parás, Jaranilla, Feria, De
unlawfully neglects the performance of an act which the law specifically Joya, Pablo, Perfecto, Bengzon, and Briones, JJ., concur.
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 HILADO, J., concurring:
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 I concur on the sole ground that, in my opinion, the amended complaint,
unlawful detainer, the law specifically requires him to hear and decide that dated July 12, 1945, filed by plaintiff in the Municipal Court of Manila,
case on the merits, and his refusal to do so would constitute an unlawful expressly alleges an agreement between her and defendant Ngo Boo Soo
neglect in the performance of that duty within regarding the leasing of the premises in question, and that said amended
547 complaint contains further allegations which, together with the allegations of
VOL. 75, DECEMBER 12, 1945 547 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
Fabie vs. Gutierrez David unlawful detainer. Of course, this is only said in view of the allegations of the
section 3 of Rule 67. Taking into consideration that the law requires that an amended complaint, without prejudice to the evidence which the parties may
unlawful detainer case be promptly decided (sections 5 and 8, Rule 72), it is adduce at the trial in the merits, in view of which the court will judge whether
evident that an appeal from the order of dismissal would not be a speedy and or not, in point of fact, the case is one of unlawful detainer.
adequate remedy; and under the authority of Cecilio vs. Belmonte (48 Phil., Orders set aside; case remanded for further proceedings.
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

36
Usufruct
© Copyright 2019 Central Book Supply, Inc. All rights reserved.
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: 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, 5
2006 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
37
Usufruct
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 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.
38
Usufruct
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
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:
39
Usufruct
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, 20006 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 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
40
Usufruct
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
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
41
Usufruct
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 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.
42
Usufruct

Given the foregoing perspective, respondents will have to be ordered to ——o0o——

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
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])
43
Usufruct

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.
© Copyright 2019 Central Book Supply, Inc. All rights reserved. Same; Same; Same; Same; Same; An action for partition is at once an
April 30, 2008. .R. No. 105608.* action for declaration of co-ownership and for segregation and conveyance of
TIRSO D. MONTEROSO, petitioner, vs. COURT OF APPEALS, SOLEDAD a determinate portion of the properties.—The fact that Tirso and the other
MONTEROSO-CAGAMPANG, REYGULA MONTEROSO-BAYAN, compulsory heirs of Don Fabian were excluded from the possession of their
PERFECTO L. CAGAMPANG, SR., SOFIA PENDEJITO VDA. DE legitime and the enjoyment of the fruits thereof does not per se argue against
MONTEROSO, FLORENDA MONTEROSO, ALBERTO MONTEROSO, the existence of a co-ownership. While Tirso may not have expressly
HEIRS OF FABIAN MONTEROSO, JR., REYNATO MONTEROSO, RUBY pleaded the theory of co-ownership, his demand from, and act of initiating
MONTEROSO, MARLENE MONTEROSO-POSPOS, ADELITA Civil Case No. 1332 against, the Cagampang spouses for his share
MONTEROSO-BERENGUEL, and HENRIETO MONTEROSO, respondents. necessarily implies that he was asserting his right as co-owner or co-heir of
April 30, 2008. G.R. No. 113199.* the properties unjustly withheld by the Cagampang spouses through the
SOFIA PENDEJITO VDA. DE MONTEROSO, SOLEDAD MONTEROSO- instrumentality of simulated deeds of sale covering some of the hereditary
CAGAMPANG, PERFECTO L. CAGAMPANG, SR., REYGULA properties. By asserting his right as a compulsory heir, Tirso has effectively
MONTEROSO-BAYAN, FLORENDA MONTEROSO, ALBERTO brought into the open the reality that the Cagampang spouses were holding
MONTEROSO, RUBY MONTEROSO, MARLENE MONTEROSO-POSPOS, some of the subject properties in trust and that he is a co-owner of all of them
HENRIETO MONTEROSO, ADELITA MONTEROSO-BERENGUEL, and to the extent of his legal share or legitime thereon. Consequently, we are one
REYNATO MONTEROSO, petitioners, vs. COURT OF APPEALS and with the trial and appellate courts that partition is the proper remedy for
TIRSO D. MONTEROSO, respondents. 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-
Civil Law; Property; Co-Ownership; Partition; Prescription; The right to ownership and for segregation and conveyance of a determinate portion of
seek partition is imprescriptible and cannot be barred by laches; The only the properties involved.
exception to the imprescriptibility of an action for partition against a co-owner Same; Same; Same; Same; Same; As a matter of law, acquisitive
is when a co-owner repudiates the co-ownership.—What the appellate court prescription does not apply nor set in against compulsory heirs insofar as
tried to convey is clear and simple: partition is the proper remedy available to their pro indiviso share or legitime is concerned, unless said heirs repudiate
Tirso who is a co-owner of the subject properties by virtue of his being a their share.—Being a compulsory heir of Don Fabian, Tirso has the right to
compulsory heir, like siblings Soledad, Reygula, and Benjamin, of Don compel partition of the properties comprising the intestate estate of Don
Fabian. The right to seek partition is imprescriptible and cannot be barred by Fabian as a measure to get his hereditary share. His right as an heir to a
laches. Consequently, acquisitive prescription or laches does not lie in favor share of the inheritance covers all the properties comprising the intestate
of the Cagampang spouses and against Tirso, the general rule being that estate of Don Fabian at the moment of his death, i.e., on October 26, 1948.
prescription does not run against a co-owner or co-heir. The only exception Before partition and eventual distribution of Don Fabian’s intestate estate,68
to the imprescriptibility of an action for
_______________ 6 SUPREME COURT
8 REPORTS ANNOTATED
* SECOND DIVISION.
Office of the Court Administrator
67 vs. Pardo
a regime of co-ownership among the compulsory heirs existed over the
VOL. 553, APRIL 30, 2008 6 undivided estate of Don Fabian. Being a co-owner of that intestate estate,
7 Tirso’s right over a share thereof is imprescriptible. As a matter of law,
acquisitive prescription does not apply nor set in against compulsory heirs
Office of the Court Administrator
insofar as their pro indiviso share or legitime is concerned, unless said heirs
vs. Pardo repudiate their share. Contrary to petitioners’ stance, reconveyance is not the
partition against a co-owner is when a co-owner repudiates the co- proper remedy available to Tirso. Be it remembered in this regard that Tirso
ownership. Thus, the appellate court ruled that by invoking extinctive
44
Usufruct
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.
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 Doldol Monteroso passed away.
9 A little over a year later, Don Fabian contracted a second marriage with
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 Decision 2 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, four from
each union.
In 1906, Don Fabian married Soledad Doldol. Out of this marriage were
born Soledad, Reygula, Benjamin, and Tirso. On April 8, 1927, Soledad
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 one-half of Parcel
F-5, while the intestate estate of Soledad D. Monteroso comprised the whole
of Parcel F-4 and one-half of Parcel F-5. The intestate estate of Soledad D.
45
Usufruct

Monteroso was partitioned and distributed to her four children in equal Jose Bayan
shares. Melecia Taña
Subsequently, a Mocion5 (Motion) was filed for the delivery to Soledad D. Florenda M.
Monteroso’s four children, her legal heirs, their respective shares in her Reynato M.
intestate estate, as adjudicated Alberto M.
_______________ Fabian M., Jr.
(+ 1970)
3 Exhibit “A-9,” exhibits folder, p. 16. Caridad C.
4 Exhibit “A-8,” id., at pp. 11-15. Ruby M.
5 Exhibit “A-10,” id., at p. 17. Marlene M.
Adelita M.
71 Henrieto M.
VOL. 553, APRIL 30, 2008 71 Lucien M.
Mario M.
Office of the Court Administrator vs.
Reynante M.
Pardo Elvira M.
among them under the duly CFI-approved Project of Partition. Cristina M.
In the meantime, the children of Don Fabian from his first marriage Mansueto
married accordingly: The eldest, Soledad to Atty. Perfecto Cagampang, Sr.; Pospos
Reygula to Jose Bayan; Benjamin to Mauricia Nakila; and Tirso to Melecia Francis
Taña. Benjamin died on February 1, 1947 leaving behind four children with Berenguel
wife Nakila, namely: Ruby, Marlene, Adelita, and Henrieto. A year and a half 73
later, or on October 26, 1948, Don Fabian also passed away.
VOL. 553, APRIL 30, 2008 73
Before and shortly after Don Fabian’s demise, conveyances involving
certain of parcels thus mentioned were purportedly made. Office of the Court Administrator vs.
The following is an illustration of the lineal relation of the parties or the Pardo
family tree of the direct descendants of Don Fabian from his two This brings us to the objects of the squabble: the conjugal patrimonies of
marriages:72 Don Fabian from his two successive marriages.
72 SUPREME COURT REPORTS During the lifetime of Don Fabian, the following properties were
ANNOTATED acquired, viz.:
PARCEL F-ONE
Office of the Court Administrator vs. A parcel of coconut plantation on sitio Pandanon, Cabadbaran, Agusan
Pardo described as follows: North by the property of Telesforo Ago and Gregorio
Soledad Doldol Cupay; East by Miguel Y Climaco Cabonce, Isidro Maamo and Buenaventura
(+ 04/08/27) Sandigan and Pandanon River, and West by Gregorio Axamin, Alex Fores
Fabian Monteroso, Sr. and Ventura Sandigan with a superficial extension of 10 has. 62 ares and 42
(+ 10/26/48) centares.
Sofia Pendejito PARCEL F-TWO
Soledad M. A parcel of coconut land situated on sitio Pandanon, Cabadbaran,
Reygula M. Agusan, with a superficial extension of 6 hectares, 50 ares bearing Tax No.
Tirso M. 14801 of the Municipality of Cabadbaran, Agusan, x x x.
Benjamin M. PARCEL F-THREE
(+ 02/01/47) A parcel of coconut land under Tax No. 17167 situated on sitio
Mauricia Calibunan, Cabadbaran, Agusan with superficial extension of 8 hectares and
Nakila 34 centares x x x.
Perfecto PARCEL F-FOUR
Cagampang, Sr.
46
Usufruct
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.
Pardo
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
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.
47
Usufruct
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.
Pardo
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.)
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
48
Usufruct
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.
Pardo
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,
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
49
Usufruct
West – Pandanon River and Peregrino Aznar;81
VOL. 553, APRIL 30, 2008 81
Office of the Court Administrator vs.
Pardo
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 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
Office of the Court Administrator vs.
Pardo
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.)
50
Usufruct
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
ANNOTATED
Office of the Court Administrator vs.
Pardo
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
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
VOL. 553, APRIL 30, 2008 85
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Pardo
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.
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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 sale11 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 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:
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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.
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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. 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
_______________
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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finality Tirso D. Monteroso’s motion for reconsideration filed on July 29, 1992.
On August 31, 1992, an Entry of Judgment18 was issued.
In net effect, the March 31, 1992 CA Decision in CA-G.R. CV No. 15805
is final and executory as to Tirso D. Monteroso, and the Court need not pass
upon the issues he raised in his petition under G.R. No. 105608, albeit we
shall take stock of his Comment19 and Memorandum20 in G.R. No. 113199.
The Issues
Petitioners in G.R. No. 113199 raise the following issues for our
consideration:
Whether the finding that the Deeds of Sale (Exhibits “C”, “D” and “E”)
were not supported by valuable consideration and sham, fictitious and
simulated is supported by the evidence. “1.
Whether the finding or conclusion that petitioners Spouses Atty. Perfecto
and Soledad Cagampang did not dispute the finding of the trial Court that the
Deeds of Sale in question are sham, fictitious and simulated is supported by
evidence. 2.
Whether the [CA] committed reversible error in concluding that, “By
invoking the benefits of prescription in their favor, the Cagampang spouses
are deemed to have admitted the existence of a co-ownership.” 3.
Whether the [CA] committed reversible error in upholding partition as the
proper remedy of private respondent Tirso Monteroso to recover the
properties sold by Fabian Monteroso, Sr. to Soledad D. Monteroso de
Cagampang when co-ownership is not pleaded as theory in the Complaint.
4.
Whether the [CA] committed reversible error in holding that the cause of
action of private respondent Tirso Monteroso is not barred by extinctive
prescription and laches. 5.
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18 Id., at p. 498.
19 Rollo (G.R. No. 113199), pp. 202-267.
20 Id., at pp. 311-425.
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Whether the [CA] committed reversible error in granting reliefs not 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 nullification of
the donation in favor of petitioner Reygula Bayan when x x x Tirso Monteroso
and the petitioners herein who are signatories to the Deed of Donation did
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not question or ask for the nullification of the donation in favor of Reygula
Bayan. 6.
Whether the [CA] committed reversible error in ordering the partition of
parcels S-1, S-2, S-3 and S-4 which are admitted in the Complaint to be in
the exclusive, adverse possession of petitioners Sofia vda. de Monteroso,
Florenda, Alberto and Reynato and the Heirs of Fabian Monteroso, Jr. since
the death of Fabian Monteroso, Sr. in 1948, appropriating the harvests unto
themselves, to the exclusion of plaintiff (private respondent Tirso Monteroso)
who was deprived of his share continuously up to the present.” 7.21
The Court’s Ruling
After a circumspect consideration of the arguments earnestly pressed by
the parties and in the light of the practically parallel findings of the RTC and
CA, we find the petition under G.R. No. 113199 to be devoid of merit.
It is a rule of long standing that:
“[T]he jurisdiction of the Court in cases brought before it from the Court of
Appeals via Rule 45 of the Rules of Court is limited to reviewing errors of law.
Findings of fact of the latter are conclusive, except in the following instances:
(1) when the findings are grounded entirely on speculation, surmises, or
conjectures; (2) when the inference made is manifestly mistaken, absurd, or
impossible; (3) when there is grave abuse of discretion; (4) when the
judgment is based on a misapprehension of facts; (5) when the findings of
fact are conflicting; (6) when in making its findings the Court of Appeals went
beyond the issues of the case, or its findings are contrary to the admissions
of both the appellant and the appellee; (7) when the findings are contrary to
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 as in the
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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,
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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 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 appellate
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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-
_______________
23 Rollo (G.R. No. 113199), p. 140.
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Usufruct
Pardo
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 Code24 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 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
58
Usufruct
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.)
_______________
27 Balo v. Court of Appeals, G.R. No. 129704, September 30, 2005, 471
SCRA 227, 239.
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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-
_______________
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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104 SUPREME COURT REPORTS
ANNOTATED
Office of the Court Administrator vs.
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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.
_______________
32Real actions over immovables prescribe after thirty years. 1141. Art.
59
Usufruct
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.
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VOL. 553, APRIL 30, 2008 105
Office of the Court Administrator vs.
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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
ANNOTATED
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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VOL. 553, APRIL 30, 2008 107
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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
60
Usufruct
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 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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Office of the Court Administrator vs.
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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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VOL. 553, APRIL 30, 2008 109
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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, 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
61
Usufruct
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
_______________
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 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
62
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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
ANNOTATED
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.
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.
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© 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
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* FIRST DIVISION.
310
3 SUPREME COURT
10 REPORTS 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 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
64
Usufruct
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 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.)
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Usufruct
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”
______________
4 Shell Co. of the Philippines Ltd. vs. Firemen’s Insurance Co. of 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 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.
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8 Ibid., pp. 148-149
66
Usufruct
9Iñigo 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 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 Guerrero,
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
67
Usufruct
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 3 330
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).
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
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:
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Usufruct
"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 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
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Usufruct
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
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
70
Usufruct
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 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 of Tayabas out of the income of the aforesaid two lots for the benefit of the
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
Palad vs. Governor of Quezon Province
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
71
Usufruct
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
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
72
Usufruct
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.
“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-
__________________
2 Gov’t of the Phil. Islands vs. Abadilla, Dec. 10, 1924, 46 Phil. 642, 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. Abadilla3 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
73
Usufruct
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 inoperative8 was squarely 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:
_____________
5 p. 649.
6 3rd ed. p. 647, Page on Wills (Lifetime ed. p. 543); and Vol. 41, Am.
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 having
died long before the effectivity of the New Civil Code.13
Appellants seem to cling to the statement in the decision
_______________
11 pp. 648-649, italics supplied.
12 Report 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 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
74
Usufruct
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
_______________
14 p. 649, italics supplied.
15 Italics supplied.
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, Antonio
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 CONSTANTINO, 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 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.
75
Usufruct
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 judgment 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 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. 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
76
Usufruct
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 anno-
tation 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.
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.
77
Usufruct
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
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."
78
Usufruct
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)
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:
79
Usufruct
"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 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
80
Usufruct
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 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
© Copyright 2019 Central Book Supply, Inc. All rights reserved.
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.
81
Usufruct
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.
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-
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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
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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.
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Usufruct
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
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158 SUPREME COURT REPORTS
ANNOTATED
Policarpio, et al. vs. Salamat, et al.
que el testador exprese lo contrario, ó se infiriera asi del titulo en que se
constituye el usufructo, para lo cual puede verse la doctrina de la ley 33, tit. I,
lib. VII del Digesto, que habla del derecho de acrecer en el usufructo, y el tit.
IV del mismo libro, en que se proponen algunos casos de excepcion.—El
usufructo constituido en provecho de varias personas vivas al tiempo de su
constitución, no extinguirá hasta la muerte de la 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 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.
and Batas Riego de Dios are hereby ordered to pay to them the money
withheld by them respectively representing the shares of the deceased
usufructuaries. No costs.
Chief Justice Bengzon and Justices Concepcion,
J.B.L. Reyes, Dizon, Regala, Makalintal,
J.P. Bengzon and Zaldivar concur. Mr. Justice Barrera took no part.
Decision reversed.
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