1

G.R. No. 130316 January 24, 2007

ERNESTO V. YU and ELSIE O. YU, Petitioners,
vs.
BALTAZAR PACLEB,
1
Respondent.
D E C I S I O N
CORONA, J.:
The present petition filed under Rule 45 of the Rules of Court originated from an action for forcible entry and damages filed by petitioners Ernesto and Elsie Yu against respondent Baltazar
Pacleb.
The antecedent facts follow.
Sometime in September 1992, Ruperto Javier allegedly offered to sell Lot No. 6853-D to petitioners for P75 per sq.m.lawphil.net The lot was approximately 18,000 square meters and was located in
Barangay Langkaan, Dasmarias, Cavite. Javier supposedly purchased the lot from one Rebecca del Rosario who, in turn, acquired it from respondent and his wife. The title of the property
(Transfer Certificate of Title [TCT] No. T-118375), however, remained in the names of respondent and his wife. The instruments in support of the series of alleged sales were not registered.
On September 11, 1992, petitioners accepted the offer and gave Javier P200,000 as downpayment for the lot. Javier then delivered his supposed muniments of title to petitioners. After the execution
of a contract to sell, he formally turned over the property to petiti oners.
At the time of the turn-over, a portion of the lot was occupied by Ramon C. Pacleb, respondents son, and his wife as tenants. On September 12, 1992, Ramon and his wife allegedly surrendered
possession of their portion to petitioners. Later on, petitioners appointed Ramon as their trustee over the subject lot.
Aside from taking possession of the property, petitioners also caused the annotation on TCT No. T-118375 of a decision rendered in their favor in Civil Case No. 741-93.
2
This decision attained
finality on April 19, 1995.
Petitioners alleged that they exercised ownership rights as well as enjoyed open, public and peaceful possession over the property from September 12, 1992 until the early part of September 1995.
During this time, respondent was in the United States.
Upon respondents return to the Philippines in May 1995, he allegedly entered the property by means of force, threat, intimidation, strategy and stealth thereby ousting petitioners and their
trustee, Ramon.
Despite repeated demands, respondent, asserting his rights as registered owner of the property, refused to vacate the premises and surrender its possession to petitioners.
Petitioners filed an action for forcible entry
3
in the Municipal Trial Court (MTC) of Dasmarias, Cavite on November 23, 1995. Respondent filed an answer with compulsory counterclaim dated
December 8, 1995. After the issues were joined, the MTC required the submission of the parties position papers at a preliminary conference on March 11, 1996. Respondent failed to comply.
On June 17, 1996, the MTC ruled:
WHEREFORE, in view of the foregoing, the [respondent] and other persons claiming right under him are hereby ordered to surrender physical possession of Lot No. 6853-D in favor of the
[petitioners] and to pay the sum of TWENTY-FIVE THOUSAND (P25,000.00) PESOS as attorneys fees.
SO ORDERED.
4

On appeal,
5
the Regional Trial Court (RTC) of Imus, Cavite rendered a decision affirming the MTC decision in toto.
6

2

Respondent elevated his case to the Court of Appeals (CA)
7
which rendered the assailed decision on March 18, 1997:
WHEREFORE, the Petition is GRANTED; the Decision dated October 25, 1996 of the [RTC] of Imus, Cavite in Civil Case No. 052-96 and the Decision of the [MTC] of Dasmarias, Cavite in
Civil Case No. 182 are SET ASIDE; and Civil Case No. 182 for Forcible Entry and Damages is hereby ordered DISMISSED. No pronouncement as to costs.
SO ORDERED.
8

In a resolution dated August 20, 1997, the CA denied petitioners motion for reconsideration for lack of merit.
Before us now come petitioners who claim that the appellate court erred in finding that respondent had prior physical possession of the subject property.lawphil.net
"In an action for forcible entry, the plaintiff must prove that he was in prior possession of the land or building and that he was deprived thereof by means of force, intimidation, threat, strategy or
stealth."
9
The plaintiff, however, cannot prevail where it appears that, as between himself and the defendant, the latter had possession antedating his own.
10
We are generally precluded in a Rule 45
petition from reviewing factual evidence tracing the events prior to the first act of spoliation.
11
However, the conflicting factual findings of the MTC and RTC on one hand, and the CA on the
other, require us to make an exception.
We overrule petitioners contentions.
The Civil Code states that possession is the holding of a thing or the enjoyment of a right.
12
In the grammatical sense, to possess means to have, to actually and physically occupy a thing, with or
without right.
13
"Possession always includes the idea of occupation x x x. It is not necessary that the person in possession should himself be the occupant. The occupancy can be held by another in
his name."
14
Without occupancy, there is no possession.
15

Two things are paramount in possession.
16
First, there must be occupancy, apprehension or taking. Second, there must be intent to possess (animus possidendi).
17

Here, petitioners failed to establish that they had prior physical possession to justify a ruling in their favor in the complaint for forcible entry against respondent.
In the decision in Civil Case No. 741-93 (a case for specific performance and damages against Javier, the alleged vendor of the lot in question) upon which petitioners based their right to possess in
the first place, the trial court categorically stated:
The [petitioners were never placed] in possession of the subject property on which [was] planned to be [site of] a piggery, nor [were they] given a clearance or certification from the
Municipal Agrarian Reform Officer.
18
(emphasis ours)
The claim that the lot was turned over to petitioners in 1992 was self-serving in the face of this factual finding. On the other hand, the tax declarations and receipts in the name of respondent in
1994 and 1995 established the possession of respondent.
19
The payment of real estate tax is one of the most persuasive and positive indications showing the will of a person to possess in concepto de
dueo or with claim of ownership.
20

"[P]ossession in the eyes of the law does not mean that a man has to have his feet on every square meter of the ground before he is deemed in possession."
21
In this case, Ramon, as respondents
son, was named caretaker when respondent left for the United States in 1983.
22
Due to the eventual loss of trust and confidence in Ramon, however, respondent transferred the administration of
the land to his other son, Oscar, in January 1995 until his return in May 1995.
23
In other words, the subject land was in the possession of the respondents sons during the contested period.
Petitioners cite an alleged document (Kusangloob na Pagsasauli ng Lupang Sakahan at Pagpapahayag ng Pagtalikod sa Karapatan) dated March 10, 1995 executed by them and Ramon to prove a turn
over of possession. They also seek to prove their exercise of rights over the land through alleged frequent visits and the designation of Ramon as their own trustee as declared in a joint affidavit
attached to their position paper filed with the MTC. These instruments, however, fail to convince us of petitioners actual occupancy of the subject land. First, petitioners themselves acknowledged
that Ramon and his wife occupied part of the land as tenants of respondent. Second, Ramon, a mere tenant, had no authority to sign such document dated March 10, 1995 waiving all rights to the
land. Third, there was no clear proof in the records of the appointment of Ramon as petitioners trustee save their self-serving statements to this effect. Finally, at the time the Kusangloob na
Pagsasauli document was executed, the caretaker of the land was no longer Ramon but Oscar.
24

3

Most important, the title of the land in question (TCT No. T-118375) remained in the name of respondent.
25
"As the registered owner, petitioner had a right to the possession of the property,
which is one of the attributes of ownership."
26
The Civil Code states:
Art. 538. Possession as a fact cannot be recognized at the same time in two different personalities except in the cases of co-possession. Should a question arise regarding the fact of possession, the
present possessor shall be preferred; if there are two possessors, the one longer in possession; if the dates of the possession are the same, the one who presents a title; and if all these conditions are
equal, the thing shall be placed in judicial deposit pending determination of its possession or ownership through proper proceedings.
In view of the evidence establishing respondents continuing possession of the subject property, petitioners allegation that respondent deprived them of actual possession by means of force,
intimidation and threat was clearly untenable. In Gaza v. Lim, we held that:
Where a dispute over possession arises between two persons, the person first having actual possession is the one who is entitled to maintain the action granted by law; otherwise, a mere usurper
without any right whatever, might enter upon the property of another and, by allowing himself to be ordered off, could acquire the right to maintain the action of forcible entry and detainer,
however momentary his intrusion might have been.
27

WHEREFORE, the petition is hereby DENIED. The decision of the Court of Appeals dated March 18, 1997 in CA-G.R. SP No. 42604 is AFFIRMED.
Costs against petitioners.
SO ORDERED.
PEOPLE OF THE PHILIPPINES, appellee, vs. AMADEO TIRA and CONNIE TIRA, appellants.
D E C I S I O N
CALLEJO, SR., J.:
This is an appeal of the Decision
[1]
of the Regional Trial Court of Pangasinan, Branch 46, finding appellants Amadeo Tira and Connie Tira guilty beyond reasonable doubt of violating
Section 16, in relation to Section 20, Article III of Republic Act No. 6425, known as the Dangerous Drugs Act of 1972, as amended by Rep. Act No. 7659, sentencing each of them to suffer the
penalty of reclusion perpetua and ordering each of them to pay a fine of P1,000.000.
[2]

The Indictment
The appellants Amadeo Tira and Connie Tira were charged in an Information which reads:
That on or about March 9, 1998, in the Municipality of Urdaneta, province of Pangasinan and within the jurisdiction of this Honorable Court, the above-named accused, conspiring together, did
then and there willfully, unlawfully and feloniously have in their possession, control and custody the following:
- Three (3) (sic) sachets of shabu
- Six (6) pieces opened sachets of shabu residue
- One (1) brick of dried marijuana leaves
weighing 721 grams
- Six disposable lighter
- One (1) roll Aluminum Foil
- Several empty plastics (tea bag)
- Cash money amounting to P12,536.00 in
different denominations believed to be proceeds
4

of the contraband.
without first securing the necessary permit/license to possess the same.
CONTRARY to SEC. 8 in relation to Sec. 20 of RA 6425, as amended.
[3]

The Case for the Prosecution
[4]

In the evening of February 24, 1998, SPO3 Asidelio Manibog received a verbal instruction from the Chief of Police Superintendent Wilson R. Victorio to conduct surveillance operations on
the house of Amadeo Tira and Connie Tira at Perez Extension Street because of reported rampant drug activities in the said area. Manibog formed a team composed of SPO1 Renato Cresencia,
PO3 Reynaldo Javonilla, Jr. and PO3 Efren Abad de Vera to conduct the ordered surveillance.
At around 8:00 p.m., the group, clad in civilian clothes, arrived at Perez Extension Street. As they stationed themselves in the periphery of a store, they observed that more than twenty
persons had gone in and out of the Tira residence. They confronted one of them, and asked what was going on inside the house. The person revealed that Amadeo Tira sold shabu, and that he was
a regular customer. The group went closer to the house and started planning their next move. They wanted to pose as buyers, but hesitated, for fear of being identified as PNP members. Instead,
they stayed there up to 12:00 midnight and continued observing the place. Convinced that illegal activities were going on in the house, the policemen returned to the station and reported to
P/Supt. Wilson R. Victorio. After hearing their report, P/Supt. Victorio instructed his men to make an affidavit of surveillance preliminary to an application for a search warrant.
[5]

On March 6, 1998, SPO3 Asidelio Manibog, PO3 Efren Abad de Vera, SPO1 Renato Cresencia and PO2 Reynaldo Soliven Javonilla, Jr. executed an Affidavit of Surveillance, alleging, inter
alia, that they were members of the Drug Enforcement Unit of Urdaneta, Pangasinan, and that in the evening of February 24, 1998, they confirmed reports of illegal drug-related activities in the
house of the spouses Amadeo and Connie Tira.
[6]
On March 6, 1998
[7]
Police Chief Inspector Danilo Bumatay Datu filed an Application for a Search Warrant in the Municipal Trial Court of
Urdaneta, Pangasinan, attaching thereto the affidavit of surveillance executed by his men and a sketch of the place to be searched.
[8]

Satisfied with the testimonies of SPO3 Manibog, PO3 de Vera, SPO1 Cresencia and PO2 Javonilla, Jr., Judge Aurora A. Gayapa issued a search warrant commanding the applicants to make
an immediate search of the Tira residence at anytime of the day or night, particularly the first room on the right side, and the two rooms located at Perez south, and forthwith seize and take
possession of the following items:
1. Poor Mans Cocaine known as Shabu;
2. Drug-Usage Paraphernalia; and
3. Weighing scale.
[9]

P/Sr. Inspector Ludivico Bravo, and as head of the team, with SPO3 Cariaga, PO3 Concepcion, Cario, Galima, Villaroya, Andaya, SPO1 Mario Tajon, SPO1 Asterio Dismaya, SPO1 Renato
Cresencia, and PO3 Reynaldo Javonillo were directed to implement the search warrant.
[10]
They responded and brought Barangay Kagawad Mario Conwi to witness the search.
[11]
At 2:35
p.m. on March 9, 1998, the team proceeded to the Tira residence. The men found Ernesto Tira, the father of Amadeo, at the porch of the house. They introduced themselves and told Ernesto that
they had a warrant authorizing them to search the premises. Ernesto led them inside. The policemen found the newly awakened Amadeo inside the first room
[12]
of the house.
[13]
With Barangay
Kagawad Conwi and Amadeo Tira, the policemen proceeded to search the first room to the right (an inner room) and found the following under the bed where Amadeo slept:
[14]

1. 9 pcs. suspected methamphetamine hydrochloride placed in heat-sealed transparent plastic sachets
2. roll aluminum foil
3. several empty plastic transparent
4. used and unused aluminum foil
[15]

5. disposable lighters
6. 1 sachet of shabu confiscated from Nelson Tira
[16]

They also found cash money amounting to P12,536 inside a shoulder bag placed on top of the television, in the following denominations:
1 pc. -P1,000.00 bill
4 pcs. - 500.00 bill
52 pcs. - 100.00 bill
36 pcs. - 50.00 bill
5

100 pcs. - 20.00 bill
53 pcs. - 10.00 bill
1 pc. - 5.00 bill
1 pc. - 1.00 coin
[17]

The policemen listed the foregoing items they found in the house. Amadeos picture was taken while he was signing the said certification.
[18]
Ernesto (Amadeos father), also witnessed the
certification.
A joint affidavit of arrest was, thereafter, executed by SPO3 Asidelio Manibog, SPO1 Mario C. Tajon, SPO1 Asterio T. Dismaya, SPO1 Renato M. Cresencia and PO3 Reynaldo S. Javonilla,
Jr. for the apprehension of Amadeo Tira and Nelson Tira who were brought to the police station for custodial investigation. The articles seized were turned over to the PNP Crime Laboratory,
Urdaneta Sub-Office, for examination.
[19]
In turn, a laboratory examination request was made to the Chief of the Philippine National Police Service-1, Sub-Office, Urdaneta, Pangasinan for the
following:
a. Three (3) sachets of suspected methamphetamine hydrochloride approximately 0.5 grams;
b. Six (6) opened sachets of suspected methamphetamine hydrochloride (SHABU) residue;
c. Twenty-four (4) pieces of dried marijuana leaves sachet; and
d. One (1) heat-sealed plastic sachet of suspected methamphetamine hydrochloride confiscated from the possession of Nelson Tira.
[20]

On March 10, 1998, P/Supt. Wilson R. Victorio executed a Compliance/Return of Search Warrant.
[21]

On March 17, 1998, the PNP Crime Laboratory Group in Physical Science Report No. DT-057-98 reported that the test conducted by Police Superintendent/Chemist Theresa Ann
Bugayong-Cid,
[22]
yielded positive for methamphetamine hydrochloride (shabu) and marijuana. The report contained the following findings:
A1 to A3, B1 to B6, E POSITIVE to the test for methamphetamine hydrochloride (shabu), a regulated drug.
C and D1 to D4 POSITIVE to the test for marijuana, a prohibited drug.
CONCLUSION:
Specimens A1 to A3, B1 to B6 and E contain methamphetamine hydrochloride (Shabu) and specimens C and D1 to D24 contain marijuana.
[23]

A criminal complaint was filed by P/Supt. Wilson R. Victorio against Amadeo Tira and Connie Tira on March 10, 1998 for violation of Rep. Act No. 6425, as amended.
[24]
After finding
probable cause, Assistant Provincial Prosecutor Rufino A. Moreno filed an Information against the Tira Spouses for illegal possession of shabu and marijuana, in violation of Section 8, in relation
to Section 20 of Rep. Act No. 6425.
[25]
A warrant of arrest was issued against Connie Tira on May 13, 1998. However, when the policemen tried to serve the said warrant, she could not be found
in the given address.
[26]
She was arrested only on October 6, 1998.
[27]

During the trial, the court conducted an ocular inspection of the Tira residence.
[28]

The Case for Accused Amadeo Tira
[29]

Amadeo Tira denied the charge. He testified that he was a furniture delivery boy
[30]
who owned a one-storey bungalow house with two bedrooms and one masters bedroom. There was also
another room which was divided into an outer and inner room; the latter room had no windows or ventilation. The house stood twenty meters away from Perez Extension Street in Urdaneta,
Pangasinan, and could be reached only by foot.
[31]
He leased the room located at the western portion to his nephew Chris Tira
[32]
and the latters live-in-partner Gemma Lim for four hundred
pesos a month.
[33]
Chris and Gemma were engaged in the buying and selling of bananas. He denied that there were young men coming in and out of his house.
[34]

In the afternoon of March 6, 1998, he was in his house sleeping when the policemen barged into his house. He heard a commotion and went out of the room to see what it was all about, and
saw police officers Cresencia, Javonilla and Bergonia, searching the room of his nephew, Chris Tira. He told them to stop searching so that he could contact his father, Ernesto, who in turn, would
call the barangay captain. The policemen continued with their search. He was then pulled inside the room and the policemen showed him the items they allegedly found.
[35]

Barangay Kagawad Mario Conwi testified that on March 9, 1998, while he was at Calle Perez, Urdaneta, Pangasinan, Capt. Ludivico Bravo asked to be accompanied to the Tira
residence. Capt. Bravo was with at least ten other policemen. As they parked the car at Calle Perez, the policemen saw a man running towards the direction of the ricefields. Kagawad Conwi and
6

some of the policemen chased the man, who turned out to be Nelson Tira. One of the policemen pointed to a sachet of shabu which fell to the ground near Nelson. The policemen arrested him and
proceeded to the house of Amadeo Tira to serve the warrant.
[36]
When they reached the house, the other policemen were waiting. He saw Amadeo and Connie Tira sitting by the door of the house
in the sala. Thereafter, he and the policemen started the search.
[37]
They searched the first room located at the right side (if facing south),
[38]
and found marijuana, shabu, money and some
paraphernalia.
[39]
An inventory of the items seized was made afterwards, which was signed by Capt. Bravo and Ernesto Tira.
[40]

Alfonso Gallardo, Amadeos neighbor, testified that he was the one who constructed the Tira residence and that the house initially had two rooms. The first room was rented out, while the
second room was occupied by the Spouses Amadeo and Connie Tira.
[41]
Subsequently, a divider was placed inside the first room.
[42]
He also testified that his house was only three (3) meters away
from that of the Tiras, and that only a toilet separated their houses.
[43]
He denied that there were many people going in and out of the Tira residence.
[44]

The Ruling of the Trial Court
The trial court rendered judgment on September 24, 1998, finding Amadeo Tira guilty beyond reasonable doubt of illegal possession of 807.3 grams of marijuana and 1.001 gram of
shabu. The decretal portion of its decision is herein quoted:
WHEREFORE, JUDGMENT is hereby rendered CONVICTING beyond reasonable doubt accused AMADEO TIRA for Illegal Possession of Marijuana weighing 807.3 grams and shabu
weighing 1.001 gram penalized under Article III, Sections 16 and 20, of Republic Act 6425, known as [the] Dangerous Drugs Act of 1972, as amended by Republic Act 7659. The Court sentences
Amadeo Tira to suffer the penalty of Reclusion Perpetua and a fine of P1,000,000.00.
The amount of P12,536.00 is hereby forfeited in favor of the government which forms part of the fine; the marijuana weighing 807.3 grams and shabu weighing 1.001 gram are hereby forfeited in
favor of the government; the disposable lighter and the aluminum foil are likewise forfeited in favor of the government.
The Branch Clerk of Court of this Court is hereby ordered to prepare the mittimus.
The Warden, Bureau of Jail Management and Penology (BJMP) is hereby ordered to transmit the person of Amadeo Tira to the National Bilibid Prison with proper escort within fifteen (15) days
upon receipt of this Order.
[45]

The trial court upheld the validity of Search Warrant No. 3 issued by Judge Aurora Gayapa. It found Amadeos defense, that the room where the items were seized was rented out to the
couple Cris Tira and Gemma Lim, unsubstantiated. It held that Amadeo, as owner of the house, had control over the room as well as the things found therein and that the inner room was a secret
and practical place to keep marijuana, shabu and related paraphernalia.
[46]

Amadeo appealed the decision.
[47]

The Case Against Connie Tira
After her arrest, Connie filed a motion to quash search warrant,
[48]
alleging that the police officers who applied for the said warrant did not have any personal knowledge of the reported
illegal activities. She contended that the same was issued in violation of Section 4, Rule 126 of the Rules of Court, as the judge issued the search warrant without conducting searching questions
and answers, and without attaching the records of the proceedings. Moreover, the search warrant issued was in the nature of a general warrant, to justify the fishing expedition conducted on the
premises.
On October 26, 1998, the presiding judge ordered Judge Aurora A. Gayapa to forward the stenographic notes of the applicant and the witnesses.
[49]
Connie was arraigned onNovember 9,
1998, pending the resolution of the motion. She pleaded not guilty to the charge of illegal possession of shabu and marijuana.
[50]
The trial court thereafter issued an Order on November 11, 1998,
denying the motion to quash.
[51]
It did not give credence to the allegations of Connie Tira, and found that Judge Gayapa issued the search warrant after conducting searching questions, and in
consideration of the affidavit of witness Enrique Milad.
Connie testified that she was engaged in the business of buying and selling of fruits, while her husband was employed at the Glasshouse Trading. One of the rooms in their house was
occupied by their three boarders, two male persons and one female.
7

In the afternoon of March 9, 1998, she and her husband Amadeo were in their house, while their boarders were in their respective rooms. At 2:30 p.m., she was in the kitchen taking care of
her one-year-old child. She had other three children, aged eight, four, and three, respectively, who were watching television. Her husband Amadeo was sleeping in one of the rooms. Suddenly, five
policemen barged into their house and searched all the rooms. The policemen found and seized articles in the room occupied by one of their boarders. They arrested Amadeo, and her brother-in-
law, Nelson Tira, and brought them to the police station. The boarders, however, were not arrested.
Joy Fernandez, a neighbor of the Tiras, lived approximately ten meters away from the latter. Since they had no television, she frequently went to her neighbors house to watch certain
programs. In the afternoon of March 9, 1998, she was at the Tira residence watching Mirasol, while Connie was in the kitchen nursing her baby. Suddenly, about five or ten persons ran inside
the house and handcuffed Amadeo Tira.
[52]

The Ruling of the Trial Court
The trial court found Connie Tira guilty beyond reasonable doubt of illegal possession of 807.3 grams of marijuana and 1.001 gram of shabu. The dispositive portion of the decision reads:
WHEREFORE, JUDGMENT is hereby rendered CONVICTING beyond reasonable doubt accused CONNIE TIRA for Illegal Possession of Marijuana weighing 807.3 grams and shabu weighing
1.001 gram penalized under Article III, Section 16 and 20, of Republic Act 6425, known as [the] Dangerous Drugs Act of 1972, as amended by Republic Act 7659, the Court sentences Connie Tira
to suffer the penalty of Reclusion Perpetua and a fine of P1,000,000.00.
The amount of P12,536.00 is hereby forfeited in favor of the government which forms part of the fine; the marijuana weighing 807.3 grams and shabu weighing 1.001 gram are hereby forfeited in
favor of the government; the disposable lighter and the aluminum foil are, likewise, forfeited in favor of the government.
The Warden, Bureau of Jail Management and Penology (BJMP) is hereby ordered to transmit the person of Connie Tira to the National Bilibid Prisons with proper escort within fifteen (15) days
upon receipt of his Order.
[53]

The trial court did not believe that Connie Tira had no knowledge, control and possession of the shabu and marijuana found in the first or inner room of their house. It stressed that Connie
and Amadeo Tira jointly controlled and possessed the shabu and marijuana that the policemen found therein. It ratiocinated that it was unusual for a wife not to know the existence of prohibited
drugs in the conjugal abode. Thus, as husband and wife, the accused conspired and confederated with each other in keeping custody of the said prohibited articles.
[54]
The court also held that
Connie Tiras flight from their house after the search was an indication of her guilt. Connie, likewise, appealed the decision.
[55]

The Present Appeal
In their brief, the appellants Amadeo and Connie Tira assigned the following errors committed by the trial court:
I
THE TRIAL COURT ERRED IN CONVICTING ACCUSED-APPELLANTS DESPITE FAILURE ON THE PART OF THE PROSECUTION TO PROVE THEIR GUILT BEYOND
REASONABLE DOUBT.
II
THE TRIAL COURT ERRED IN NOT HOLDING THAT THE SEARCH WAS ILLEGALLY MADE.
III
8

ASSUMING THAT ACCUSED-APPELLANT AMADEO TIRA IS GUILTY AS CHARGED, THE TRIAL COURT ERRED IN HOLDING THAT THERE WAS A CONSPIRACY
BETWEEN HIM AND HIS WIFE CONNIE TIRA.
[56]

The Court shall resolve the assigned errors simultaneously as they are interrelated.
The appellants contend that the search conducted by the policemen in the room occupied by Chris and Gemma Lim, where the articles and substances were found by the policemen, was made
in their absence. Thus, the search was made in violation of Section 7, Rule 126 of the Rules of Criminal Procedure, which provides:
SEC. 7. Search of house, room, or premise, to be made in presence of two witnesses. No search of house, room, or any other premise shall be made except in the presence of the lawful occupant thereof or
any member of his family or in the absence of the latter, in the presence of two witnesses of sufficient age and discretion residing in the same locality.
The appellants posit that the articles and substances found by the policemen in their house are inadmissible in evidence, being the fruits of a poisonous tree. Hence, they contend, they should
have been acquitted of the crime charged. The appellants further assert that the prosecution failed to prove that they owned the prohibited drugs, and that the same were in their possession and
control when found by the policemen. They insist that it cannot be presumed that they were in control and possession of the said substances/articles simply because they owned the house where
the same were found, considering that the room was occupied by Chris Tira and his live-in partner, Gemma Lim.
The appellant Connie Tira avers that she never fled from their house after the policemen had conducted the search. Neither was she arrested by the policemen when they arrested her
husband.
The appeals have no merit.
Contrary to the appellants claim, appellant Amadeo Tira was present when the policemen searched the inner room of the house. The articles and substances were found under the bed on
which the appellant Amadeo Tira slept. The policemen did not find the said articles and substances in any other room in the house:
Q So when you reached the house of Amadeo Tira at the Tiras compound, you saw the father and you told him you are implementing the Search Warrant and your group was
allowed to enter and you are allowed to search in the presence of Amadeo Tira?
A Yes, Sir.
PROS. DUMLAO
Q In the course of your search, what did you find?
WITNESS:
A We found out suspected marijuana leaves, Sir.
Q Where, in what particular place did you find?
A Under the bed inside the room of Amadeo Tira, Sir
Q What else did you find aside from marijuana leaves?
A We also find suspected sachet of shabu, Sir.
Q What else?
A Lighter, Sir.
COURT:
Q If that shabu will be shown to you, could you identify the same?
WITNESS:
A Yes, Sir.
Q About the marijuana leaves, if shown to you could you identify the same?
9

A Yes, Sir.
PROS. DUMLAO:
Q What else did you find out aside from the marijuana leaves, shabu and lighter?

A I have here the list, Sir.
One (1) brick of marijuana
24 pcs. tea bag of marijuana
9 pcs. sachets of suspected shabu
6 disposable lighters
1 roll of aluminum foil
several empty plastic; several used
and unused aluminum foil
one (1) sachet of shabu confiscated from Nelson Tira; and
P12,536.00 cash in different denominations proceeds of the contrand (sic).
COURT:
Q Where did you find the money?

A Near the marijuana at the bag, Sir.
Q About the money, could you still identify if shown to you?
A Yes, Sir.
Q When you found shabu, lighter, marijuana, and money, what did you do?
A We marked them, Sir.
Q All of the items?
A Only the marijuana, Sir.
Q What mark did you place?
A My signature, Sir.
[57]


PROS. TOMBOC:

Q And when you were allowed to enter the house, did you notice who was present?
A I noticed the presence of Connie Tira, Sir.
Q When you said Connie Tira, is she the same Connie Tira the accused in this case?
A Yes, Sir, she was taking care of the baby.
Q Who else?
A We also noticed the presence of Amadeo Tira, Sir.
10

Q What was he doing there?
A He was newly awake, Sir.
Q Upon entering the house, what did you do?
A We entered and searched the first room, Sir.
Q What did you find out?
A Shabu and Marijuana and paraphernalia, Sir.
Q Are you one of those who entered the house?
A Yes, Sir.
Q Can you mention to the Honorable Court those items that you searched in the house of Connie Tira and Amadeo Tira?
A As per in (sic) our records, we found three (3) sachets containing suspected Methamphetamine Hydrochloride Shabu residue; one (1) brick of suspected dried marijuana leaves
weighing more or less 750 grams; twenty-four (24) tea bags containing dried marijuana leaves; six (6) disposable lighter; one (1) roll aluminum foil; several empty plastics (tea
bag); several used and unused aluminum foil; and cash money amounting to P12,536.00 in different denominations believe[d] to be proceeds of the contraband, Sir.
Q You said you recovered one (1) brick of marijuana leaves, showing to you a (sic) one (1) brick suspected to be marijuana leaves, is this the one you are referring to?
A Yes, Sir, this is the one.
[58]

Appellant Amadeo Tira was not the only witness to the search; Kagawad Mario Conwi and Ernesto Tira, Amadeos father, were also present. Ernesto Tira even led the policemen inside the
house. This is evidenced not only by the testimony of Kagawad Conwi, but also by the certification signed by the appellant himself, along with Kagawad Conwi and Ernesto Tira.
[59]

The trial court rejected the testimony of appellant Amadeo Tira that the inner room searched by the policemen was occupied by Chris Tira and his girlfriend Gemma Lim with the following
encompassing disquisition:
The defense contention that a couple from Baguio City first occupied the first room, the Court is not persuaded because they did not present said businessmen from Baguio City who were
engaged in vegetable business. Secondly, the same room was rented by Chris Tira and Gemma Lim. Chris Tira and Gemma Lim, engaged in banana business, were not presented in Court. If it
were true that Chris Tira and Gemma Lim were the supposed lessees of the room, they should have been apprehended by the searching party on March 9, 1998, at about 2:30 p.m. There was no
proof showing that Chris Tira and Gemma Lim ever occupied the room, like personal belongings of Chris Tira and Gemma Lim. The defense did not even show proof showing that Chris Tira
reside in the first room, like clothings, toothbrush, soap, shoes and other accessories which make them the residents or occupants of the room. There were no kitchen plates, spoons, powder, or
soap evidencing that the said room was occupied by Chris Tira and Gemma Lim. Amadeo Tira contended that Chris Tira and Gemma Lim are engaged in banana business. There are no banana
stored in the room at the time of the search and both of them were out of the room at the time of the search. And why did not Amadeo Tira supply the police officers of the personal identities and
address where they could find Chris Tira and Gemma Lim at the time of the search. If they were banana dealers, they must be selling their banana in the market and they could have pointed them
in the market.
[60]

We are in full accord with the trial court. It bears stressing that the trial court conducted an ocular inspection of the house of the appellants, and thus, had first hand knowledge of the layout
of the house. Besides, the testimony of the appellant Amadeo Tira, that the inner room was occupied by Chris Tira and Gemma Lim who were not there when the search was conducted, is belied
by the testimony of the appellant Connie Tira that the room was occupied by two male and one female boarders who were in the room when the policemen searched it. Thus:
Q You said that while taking care of your baby, several policemen barged [sic] your house?

A Yes, Sir.
Q And they proceeded to your room where your husband was sleeping at that time?
A Yes, Sir.
Q And it is in that room where your husband was sleeping and where those articles were taken?
11

A No, Sir.
Q Where are (sic) those things came (sic) from?
A At the room where my boarders occupied, Sir.
Q So, at that time where were those boarders?
A They were inside their room, Sir.
Q How many of them?
A Two (2) male persons and one woman, Sir.
Q And do you know their whereabout[s], Madam Witness?
A No more, Sir.
Q When did they leave, Madam Witness?
A At that time, they left the house, Sir.
Q They were not investigated by the police?
A No, Sir.
[61]

We agree with the finding of the trial court that the only occupants of the house when the policemen conducted their search were the appellants and their young children, and that the
appellants had no boarders therein.
Before the accused may be convicted of violating Section 8 of Republic Act No. 6425, as amended by Rep. Act No. 7659, the prosecution is burdened to prove beyond reasonable doubt the
essential elements of the crime, viz: (1) the actual possession of an item or object which is identified to be a prohibited drug; (2) such possession is not authorized by law; and, (3) the accused freely
or consciously possessed the said drug.
[62]

The essential elements of the crime of possession of regulated drugs are the following: (a) the accused is found in possession of a regulated drug; (b) the person is not authorized by law or by
duly constituted authorities; and, (c) the accused has knowledge that the said drug is a regulated drug. This crime is mala prohibita, and, as such, criminal intent is not an essential
element. However, the prosecution must prove that the accused had the intent to possess (animus posidendi) the drugs. Possession, under the law, includes not only actual possession, but also
constructive possession. Actual possession exists when the drug is in the immediate physical possession or control of the accused.
[63]
On the other hand, constructive possession exists when the
drug is under the dominion and control of the accused or when he has the right to exercise dominion and control over the place where it is found.
[64]
Exclusive possession or control is not
necessary.
[65]
The accused cannot avoid conviction if his right to exercise control and dominion over the place where the contraband is located, is shared with another.
[66]

Thus, conviction need not be predicated upon exclusive possession, and a showing of non-exclusive possession would not exonerate the accused.
[67]
Such fact of possession may be proved by
direct or circumstantial evidence and any reasonable inference drawn therefrom. However, the prosecution must prove that the accused had knowledge of the existence and presence of the drug in
the place under his control and dominion and the character of the drug.
[68]
Since knowledge by the accused of the existence and character of the drugs in the place where he exercises dominion and
control is an internal act, the same may be presumed from the fact that the dangerous drug is in the house or place over which the accused has control or dominion, or within such premises in the
absence of any satisfactory explanation.
[69]

In this case, the prohibited and regulated drugs were found under the bed in the inner room of the house of the appellants where they also resided. The appellants had actual and exclusive
possession and control and dominion over the house, including the room where the drugs were found by the policemen. The appellant Connie Tira cannot escape criminal liability for the crime
charged simply and merely on her barefaced testimony that she was a plain housewife, had no involvement in the criminal actuations of her husband, and had no knowledge of the existence of the
drugs in the inner room of the house. She had full access to the room, including the space under the bed. She failed to adduce any credible evidence that she was prohibited by her husband, the
appellant Amadeo Tira, from entering the room, cleaning it, or even sleeping on the bed. We agree with the findings and disquisition of the trial court, viz:
The Court is not persuaded that Connie Tira has no knowledge, control and possession of the shabu and marijuana (Exhibits M, N, O and P) found in their room. Connie Tira and Amadeo
Tira jointly control and possess the shabu (Exhibits M and N) and marijuana (Exhibits O and P) found in the room of their house. It is unusual for a wife not to know the existence in their
conjugal abode, the questioned shabu and marijuana. The husband and wife (Amadeo and Connie) conspired and confederated with each other the keeping and custody of said prohibited
articles. Both of them are deemed in possession of said articles in violation of R.A. 6425, Section 8, in relation to Section 20.
12

The Crimes Committed by the Appellants
The trial court convicted the appellants of violating Section 16, in relation to Section 20, of Rep. Act No. 6425, as amended. The Office of the Solicitor General (OSG) asserts that the
appellants should be convicted of violating Section 8 of Rep. Act No. 6425, as amended. We do not agree with the trial court and the OSG. We find and so hold that the appellants are guilty of
two separate crimes: (a) possession of regulated drugs under Section 16, in relation to Section 20, of Rep. Act No. 6425, as amended, for their possession of methamphetamine hydrochloride, a
regulated drug; and, (b) violation of Section 8, in relation to Section 20 of the law, for their possession of marijuana, a prohibited drug. Although only one Information was filed against the
appellants, nevertheless, they could be tried and convicted for the crimes alleged therein and proved by the prosecution. In this case, the appellants were charged for violation of possession of
marijuana and shabu in one Information which reads:
That on or about March 9, 1998, in the Municipality of Urdaneta, province of Pangasinan, and within the jurisdiction of this Honorable Court, the above-named accused, conspiring together, did
then and there willfully, unlawfully and feloniously have in their possession, control and custody the following:
- Three (3) pieces (sic) sachets of shabu
- Six (6) pieces opened sachets of shabu residue
- One (1) brick of dried marijuana leaves weighing 721 grams
- Twenty-four (24) tea bags of dried marijuana leaves weighing 86.3 grams
- Six [6] disposable lighter
- One (1) roll Aluminum foil
- Several empty plastics (tea bag)
- Cash money amounting to P12,536.00 in different denominations believed to be proceeds of the contraband.
without first securing the necessary permit/license to posses[s] the same.
CONTRARY TO SEC. 8, in relation to Sec. 20 of R.A. 6425, as amended.
[70]

The Information is defective because it charges two crimes. The appellants should have filed a motion to quash the Information under Section 3, Rule 117 of the Revised Rules of Court before
their arraignment. They failed to do so. Hence, under Rule 120, Section 3 of the said rule, the appellants may be convicted of the crimes charged. The said Rule provides:
SEC. 3. Judgment for two or more offenses. - When two or more offenses are charged in a single complaint or information but the accused fails to object to it before trial, the court may convict him of
as many offenses as are charged and proved, and impose on him the penalty for each offense, setting out separately the findings of fact and law in each offense.
The Proper Penalties On the Appellants
The crime of violation of Section 8, Article II of Rep. Act No. 6425, as amended, for illegal possession of 807.3 grams of marijuana, a prohibited drug, is punishable by reclusion perpetua to
death. Considering that there are no qualifying circumstances, the appellants are sentenced to suffer the penalty of reclusion perpetua, conformably to Article 63 of the Revised Penal Code and are
ordered to pay a fine of P500,000.00.
Under Section 16, Article III of Rep. Act No. 6425, as amended, the imposable penalty of possession of a regulated drug, less than 200 grams, in this case, shabu, is prision
correccional to reclusion perpetua. Based on the quantity of the regulated drug subject of the offense, the imposable penalty shall be as follows:
QUANTITY IMPOSABLE PENALTY
Less than one (1) gram to 49.25 grams prision correccional
49.26 grams to 98.50 grams prision mayor
98.51 grams to 147.75 grams reclusion temporal
147.76 grams to 199 grams reclusion perpetua
13

Considering that the regulated drug found in the possession of the appellants is only 1.001 grams, the imposable penalty for the crime is prision correccional. Applying the Indeterminate
Sentence Law, the appellants are sentenced to suffer an indeterminate penalty of from four (4) months and one (1) day of arresto mayor in its medium period as minimum, to three (3) years of prision
correccional in its medium period as maximum, for violation of Section 16 of Rep. Act No. 6425, as amended.
IN LIGHT OF ALL THE FOREGOING, appellants Amadeo and Connie Tira are found GUILTY beyond reasonable doubt of violating Section 8, Article II of Rep. Act No. 6425, as
amended, and are hereby sentenced to suffer the penalty of reclusion perpetua, and ORDERED to pay a fine of P1,000,000.00. The said appellants are, likewise, found GUILTY beyond reasonable
doubt of violating Section 16, Article III of Rep. Act No. 6425, as amended, and are sentenced to suffer an indeterminate penalty of from Four (4) Months and One (1) Day of arresto mayor in its
medium period as minimum, to Three (3) years of prision correccional, in its medium period, as maximum.
No costs.
SO ORDERED.
RODOLFO SANTOS, Petitioner,
vs.
RONALD C. MANALILI as Heir or Representative of Deceased Defendants NOLI BELEN C. MANALILI and REYNALDO MANALILI & BOARD OF LIQUIDATORS, Respondents.
D E C I S I O N
GARCIA, J.:
Thru this petition for review on certiorari, petitioner Rodolfo Santos seeks the reversal of the Decision
1
dated July 24, 2002 of the Court of Appeals (CA) in CA-G.R. CV No. 46890, affirming the
September 20, 1993 decision of the Regional Trial Court at Davao City, Branch 14, which dismissed petitioners complaint for Reconveyance, Damages, Attorneys Fees and/or Annulment of
Title against the herein public and private respondents.
At the core of the controversy is a 4,608 square-meter parcel of land which originally formed part of the "Furukawa Plantation" owned by a Japanese national and situated in the District of Toril,
Davao City. After the war, the land was turned over to the Philippine government and administered by the National Abaca and Other Fibers Corporation, and thereafter by the respondent Board of
Liquidators (BOL).
On August 6, 1970, Reynaldo Manalili, predecessor-in-interest of respondent Ronald C. Manalili, filed with the BOL an application to purchase the subject property, attaching therewith his
Occupants Affidavit. The application was favorably acted upon and on March 27, 1972, the BOL required Manalili to pay the downpayment of 10% of the purchase price or P1,865.28. Thereafter,
Manalili declared the land for taxation purposes.
On March 25, 1981, after the lapse of nine (9) years and even as the BOL had already issued a Certification of Full Payment endorsing the approval of the sale of the land in question to applicant
Reynaldo Manalili, herein petitioner Rodolfo Santos wrote an undated letter to the BOL protesting Manalilis application. On account thereof, Land Examiner Ildefonso S. Carrillo issued a
Memorandum addressed to the BOL Senior Executive Assistant, recommending a formal investigation.
On October 7, 1981, the BOLs Alien Property Unit came out with a report that petitioner "was not actually occupying the lot and that he only hired certain Abalahin and Lumaad to plant bananas
and coconut trees and maintain a vegetable garden thereon presumably to establish a bona-fide occupancy over the lot", and accordingly recommended the dismissal of petitioners protest and the
approval of the sale to Manalili.
Meanwhile, Manalili, thru counsel, made known to the barrio captain of the place of petitioners illegal entry into the premises.
On December 16, 1981, following Manalilis compliance with other requirements, the BOL issued to him the corresponding Deed of Absolute Sale which was duly approved by the Office of the
President on December 21, 1981. And, on January 6, 1982, upon request of the BOL, the Register of Deeds, Davao City, issued TCT 86414 covering the land in question in the name of Manalili.
On April 26, 1982, petitioner filed the aforementioned complaint for Reconveyance, Damages, Attorneys Fees and/or Annulment of Title against the BOL and the Manalilis.
14

Initially, the trial court dismissed the complaint on grounds of lack of jurisdiction and non-exhaustion of administrative remedies. However, on petitioners appeal to the then Intermediate
Appellate Court (IAC), the latter reversed the trial courts order of dismissal and remanded the case to it for trial. Upon further elevation, this Court affirmed the IAC.
After the remand and trial of the case, the trial court rendered its September 20, 1993 decision in favor of the Manalilis. Dispositively, the decision reads:
IN VIEW OF THE FOREGOING, judgment is hereby rendered against the plaintiff [petitioner], dismissing his Complaint and ordering him to immediately vacate the land in question which is
covered by T.C.T. No. T-86414, deliver the possession thereof to the private defendants, as substituted, pay the private defendants TWENTY THOUSAND PESOS (P20,000.00) as damages and
another amount of TEN THOUSAND PESOS (P10,000.00) as attorneys fees and the costs of suit.
2

Therefrom, petitioner went on appeal to the Court of Appeals (CA), thereat docketed as CA-G.R. CV No. 46890 .
In the herein challenged Decision
3
dated July 24, 2002, the appellate court dismissed petitioners appeal and affirmed the appealed decision of the trial court, thus:
WHEREFORE, upon the premises, then (sic) instant appeal is DISMISSED and the Decision appealed from isAFFIRMED.
SO ORDERED.
In time, petitioner moved for a reconsideration but his motion was denied by the appellate court in its resolution of March 3, 2003.
4

Hence, petitioners present recourse, faulting the appellate court, as follows:
I
THE COURT A QUO ERRED IN UPHOLDING THAT RESPONDENT MANALILI HAS THE BETTER RIGHT OF POSSESSION OVER THE LOT IN QUESTION.
II
THE COURT A QUO ERRED IN DECLARING THAT THE SALE OF THE LOT TO THE RESPONDENT WAS NOT FRAUDULENT AND THAT THE PETITIONERS PROTEST
WAS DULY INVESTIGATED.
We DENY.
In its assailed decision of July 24, 2002, supra, the Court of Appeals upheld the findings of the chief of the Alien Property Unit, BOL, that petitioners protest was unfounded and was only meant to
disturb the sale of the subject land to respondent Manalili. To the appellate court, the BOLs findings were duly supported by evidence, as in fact the sale of the land to Manalili was approved by no
less than the Office of the President.
Presently, petitioner submits that he has clearly established a better right of possession over the subject property. Per his testimony and those of his two (2) witnesses, namely Ernesto Abalahin
and Corenelio Mundan, petitioner belabored to show that the land in dispute was originally occupied by one Col. Agsalud in 1956 up to 1959, the latter being given preference as a guerilla veteran.
Later, Col. Agsalud transferred his rights in favor of one Ernesto Abalahin who continuously occupied the land and from whom petitioner acquired the property sometime in February 1969, after
which he himself introduced various improvements thereon and continuously occupied the same up to the present.
Petitioner insists that sometime in 1981, he came to learn that the land was surreptitiously applied for and was already awarded by BOL to Manalili, whereupon he immediately filed a protest
which triggered an investigation by a BOL land examiner who submitted a report dated September 1981 to the effect that he (petitioner) is the actual occupant thereof and introduced considerable
improvements thereon, as against respondent Manalili who was never in possession, occupation and cultivation of the same.
We are not persuaded.
15

The two (2) courts below, in unanimously upholding the validity of the sale of the land in question to the Manalilis, likewise affirmed the BOLs finding that the Manalilis had a better right of
possession thereto. Preponderant evidence of respondent have sufficiently established that as early as 1970, Reynaldo Manalili, respondents predecessor-in-interest, had already filed an Affidavit of
Occupancy with the BOL, the government agency tasked to administer it; that the Manalilis administered the land before they left for Manila in 1972; that after they moved to Manila they
appointed an administrator to oversee the land and the improvements and crops they have planted thereon, such as bananas and coconut trees; and that the Manalilis have been paying the real
estate taxes for the subject land even before the sale thereof to them.
The circumstance that after the sale, the Manalilis resided in Manila and Pangasinan is of no moment. As it is, possession may be exercised in ones own name or in that of another.
5
It is not
necessary that the owner or holder of the thing exercise personally the rights of possession. Rights of possession may be exercised through agents.
6

In contrast, petitioners claim of having bought the land from a certain Ernesto Abalahin who, in turn, bought it from one Col. Agsalud, allegedly a guerrilla veteran who occupied the lot from
1956 to 1959, is without basis. For one, no proof has been presented by petitioner as to the alleged title of Col. Agsalud or the transfer of any rights from the latter to Ernesto Abalahin, petitioners
alleged immediate transferor. For another, the supposed Deed of Absolute Sale between petitioner and Ernesto Abalahin does not even sufficiently identify the lot which was the subject of the sale.
Worse, that same deed is not notarized and is unregistered. A sale of a piece of land appearing in a private deed cannot be considered binding on third persons if it is not embodied in a public
instrument and recorded in the Registry of Deeds.
7
Verily, it was only in 1981 that Abalahin entered the subject land without permission, and that in 1982, petitioner, together with Abalahin and
one Lumaad, illegally cut trees on the land, thereby prompting the Manalilis to report their unlawful entry to the local barrio captain.
True, there is petitioners claim that the BOLs sale of the land to Reynaldo Manalili was fraudulent. Basic it is in the law of evidence, however, that mere assertion of an alleged fact is not enough.
It behooves petitioner to substantiate his claim by credible evidence, of which there is none, more so, because the law
8
presumes BOL to have acted regularly in recommending the sale of the
disputed land to Manalili and the Office of the President, in approving the sale.
As it is, petitioners evidence do not support his allegation of fraud. It is a matter of record that petitioners protest, filed nine (9) years after Reynaldo Manalili filed his application with attached
occupants affidavit, and after the BOL had already issued a Certification of Final Payment in Manalilis favor, was duly investigated by the BOL, after which it recommended the sale of the land to
Manalili, which recommendation was formally acted upon by the Office of the President which ultimately approved the Deed of Sale for Manalili. It is well-settled that fraud must be established by
clear and convincing evidence.
9
Petitioner failed in this venture.
To cap it all, it is a settled rule in this jurisdiction that factual findings of an administrative agency deserve utmost respect, more so, when, as here, they are supported by substantial
evidence, albeit such evidence may not be overwhelming or merely preponderant. By reason of their special knowledge and expertise on matters falling under their jurisdiction, administrative
agencies are in a better position to pass judgment thereon, and their findings of fact relative thereto are generally accorded great respect, if not finality, by the courts.
10
It is not the task of this
Court to weigh once more the evidence submitted before administrative bodies and to substitute its own for that of the latter.
In fine, we rule and so hold that no reversible error was committed by the Court of Appeals in affirming the decision of the trial court upholding the validity of the sale of the disputed property to
the Manalilis.
WHEREFORE, the petition is DENIED and the assailed Decision of the Court of Appeals AFFIRMED.
Costs against petitioner.
SO ORDERED.
GUADALUPE S. REYES, petitioner,
vs.
COURT OF APPEALS and JUANITA L. RAYMUNDO, respondents.

BELLOSILLO, J.:
16

Petitioner Guadalupe S. Reyes sold to respondent Juanita L. Raymundo on 21 June 1967 one-half (1/2) of a 300 square meter lot located at No. 4-F Calderon St., Project 4, Quezon City,
denominated as Lot 8-B, for P10,000.00. Consequently, a new title, TCT No. 119205, was issued for the whole lot in the name of original owner Guadalupe S. Reyes and vendee Juanita L.
Raymundo in equal shares.1wphi1.nt
Thereafter respondent was granted a P17,000.00 loan by the Government Service Insurance System (GSIS), where she was employed as records processor, with her one-half (1/2) share of the
property as collateral. On 24 September 1969 petitioner sold her remaining interest in the property to respondent for P15,000.00 as evidenced by a deed of absolute sale, Exh. "E,"
1
and TCT No.
149036 was issued in the name of respondent in lieu of TCT No. 119205.
Since 1967 the house standing on the property subject of the second sale was being leased by the spouses Mario Palacios and Zenaida Palacios from petitioner. In December 1984 petitioner
allegedly refused to receive the rentals thus prompting the Palacios spouses to file on 13 March 1985 a petition for consignation before the Metropolitan Trial Court of Quezon City. Later, the
parties entered into a compromise agreement principally stating that the Palacios spouses would pay to petitioner the accrued rentals and that the leased period would be extended to 24 November
1986. On 28 May 1985 the compromise agreement was approved and judgment was rendered in accordance therewith.
It appears however that the Palacios spouses were subsequently ejected from the premises but managed somehow to return. When a contempt case was filed by petitioner against her lessees,
respondent intervened and claimed ownership of the entire 300 square meter property as well as the existence of a lease contract between her and the Palacios spouses supposedly dated 17
March 1987 but retroactive to 1 January 1987. On 12 August 1987 the trial court dismissed the case and from then on, the Palacioses paid rentals to respondent.
On 23 August 1987 petitioner filed a complaint against respondent before the Regional Trial Court of Quezon City for cancellation of TCT No. 149036 and reconveyance with damages. Petitioner
alleged that the sale of 24 September 1969 was simulated since she was merely constrained to execute the deed without any material consideration pursuant to an agreement with respondent that
they would construct an apartment on the property through the proceeds of an additional loan respondent would secure from the GSIS with the entire 300 square meter property as collateral.
But should the loan fail to materialize, respondent would reconvey the property subject of the second sale to petitioner. After petitioner learned that the loan was disapproved she repeatedly asked
respondent for reconveyance but to no avail. Their true agreement was embodied in a private writing dated 10 January 1970.
2

The trial court found that the second deed of sale was indeed simulated as it held that since the date of its execution respondent allowed petitioner to exercise ownership over the property by
collecting rentals from the lessees until December 1986. It was only in 1987 when respondent intervened in the contempt case that she asserted ownership thereof. Likewise, the trial court
sustained petitioner's claim that she was only prevailed upon to transfer the title to the whole lot to respondent in order to obtain a loan from the GSIS which, after all, did not materialize. Thus, on
29 May 1992 the trial court cancelled and declared null and void TCT No. 149036 as well as the second deed of sale. It ordered respondent to reconvey subject property to petitioner and to pay
P25,000.00 as actual and exemplary damages, P10,000.00 as attorney's fees, and to pay the costs.
3

Respondent Court of Appeals however held otherwise. It ruled that as between a notarized deed of sale earlier executed and the agreement of 10 January 1970 contained in a private writing, the
former prevailed. It also found that petitioner's cause of action had prescribed since the complaint should have been filed either within ten (10) years from 1969 as an action to recover title to real
property, or within ten (10) years from 1970 as an action based on a written contract. The appellate court further found that petitioner's cause of action was barred by laches having allowed
respondent to stay in possession of the lot in question for eighteen (18) years after the execution of the second deed of sale. On 19 July 1996 the Court of Appeals set aside the ruling of the trial
court and dismissed petitioner's complaint.
4
On 22 October 1996 it denied the motion to reconsider its decision.
5

Petitioner posits that it was only in 1987 when respondent intervened in the contempt case alleging to be the owner and lessor did her cause of action accrue; hence, her complaint filed on 23
August 1987 has not yet prescribed. Petitioner asserts that the 10 January 1970 agreement is more credible and probable than the second deed of sale because such document contains their real
intention.
In Heirs of Jose Olviga v. Court of Appeals
6
we restated the rule that an action for reconveyance of a parcel of land based on implied or constructive trust prescribes in ten (10) years, the point of
reference being the date of registration of the deed or the date of the issuance of the certificate of title over the property. However, we emphasized that this rule applies only when the plaintiff or
the person enforcing the trust is not in possession of the property since if a person claiming to be the owner thereof is in actual possession of the property the right to seek reconveyance, which in effect seeks to
quiet title to the property, does not prescribe. The reason is that the one who is in actual possession of a piece of land claiming to be the owner thereof may wait until his possession is disturbed or his
title is attacked before taking steps to vindicate his right. His undisturbed possession gives him a continuing right to seek the aid of a court of equity to ascertain and determine the nature of the
adverse claim of a third party and its effect on his own title, which right can be claimed only by one who is in possession.
Actual possession of land consists in the manifestation of acts of dominion over it of such a nature as those a party would naturally exercise over his own property.
7
It is not necessary that the
owner of a parcel of land should himself occupy the property as someone in his name may perform the act. In other words, the owner of real estate has possession, either when he himself is
physically in occupation of the property, or when another person who recognizes his rights as owner is in such occupancy.
8
This declaration is conformably with Art. 524 of the Civil Code
providing that possession may be exercised in one's own name or in the name another.
17

An example of actual possession of real property by an owner through another is a lease agreement whereby the lessor transfers merely the temporary use and enjoyment of the thing leased.
9
The
Palacios spouses have been the lessees of petitioner since 1967 occupying the house erected on the property subject of the second sale. Petitioner was in actual possession of the property through
the Palacioses and remained so even after the execution of the second deed of sale. It was only in 1987 when respondent asserted ownership over the property and showed a lease contract
between her and the Palacioses dated 17 March 1987 but effective 1 January 1987 that petitioner's possession was disturbed. Consequently, the action for reconveyance filed on 23 August 1987
based on circumstances obtaining herein and contrary to the finding of respondent court has not prescribed. To be accurate, the action does not prescribe. Under Art. 1144, par. (1), of the Civil
Code, an action upon a written contract must be brought within ten (10) years from the time the right of action accrues. And so respondent court also relied on this provision in ruling that
petitioner's cause of action had prescribed. This is error. What is applicable is Art. 1410 of the same Code which explicitly states that the action or defense for the declaration of the inexistence of a
contract, such as the second deed of sale, does not prescribe.
Respondent court declared petitioner guilty of laches anchored on the finding that for eighteen (18) years after the execution of the contract, respondent was in possession of the lot in question. But
this finding is utterly unsupported by the evidence. On the contrary, the Palacioses alleged in their petition for consignation filed 13 March 1985 that they were "renting the apartment of the
respondent (petitioner herein) located at No. 4-F Calderon Street, Project 4, Quezon City, since 1967 up to the present."
10
Even respondent herself admitted in her lease contract of 17 March 1987
with the Palacios spouses that "the LESSEES have been staying in the premises since 1967 under a previous lease contract with Guadalupe S. Reyes which, however, already expired."
11
Having
thus corrected the finding of respondent court, our concern now is to determine whether laches should be appreciated against petitioner. The essence of laches is the failure or neglect for an
unreasonable and unexplained length of time to do that which, by exercising due diligence, could or should have been done earlier; it is the negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it.
12

To be sure, there is no absolute rule as to what constitutes staleness of demand; each case is to be determined according to its particular circumstances. The question of laches is addressed to the
sound discretion of the court and since laches is an equitable doctrine, its application is controlled by equitable considerations. It cannot be applied to defeat justice or to perpetrate fraud. In the
case under consideration, it would be the height of injustice and inequity to apply laches against petitioner and vest ownership over a valuable piece of real property in favor of respondent by virtue
of an absolutely simulated deed of sale never intended to convey any right over the subject property. It is the better rule that courts, under the principle of equity, be not guided or bound strictly by
the doctrine of laches when to do so, manifest wrong of injustice would result.
Suntay v. Court of Appeals
13
and Santiago v. Court of Appeals
14
are binding precedents. In Suntay, Federico Suntay applied as a miller-contractor with the then National Rice and Corn Corporation but
his application was disapproved due to several unpaid loans. He then told his nephew Rafael to apply instead. To obtain an approval, Rafael prepared a notarized absolute deed of sale whereby
Federico, for and in consideration of P20,000.00, conveyed to Rafael a parcel of land with all its existing structures. Federico's title to the property was thereafter cancelled and another one issued
to Rafael. Subsequently, Federico requested Rafael to reconvey to him the property for he intended to use it as collateral. Rafael however refused to do so, clinging to the deed of sale in his favor.
We upheld the claim of Federico as we found that the deed of sale was absolutely simulated and therefore void. We observed that
Indeed the most protuberant index of simulation is the complete absence of an attempt in any manner on the part of the late Rafael to assert his rights of ownership over the
land and rice mill in question. After the sale, he should have entered the land and occupied the premises thereof. He did not even attempt to. If he stood as owner, he would have
collected rentals from Federico for the use and occupation of the land and its improvements. All that the late Rafael had was a title in his name. . . .
. . . . The fact that, notwithstanding the title transfer, Federico remained in actual possession, cultivation and occupation of the disputed lot from the time the deed of sale was
executed until the present, is a circumstance which is unmistakably added proof of the fictitiousness of the said transfer, the same being contrary to the principle of ownership.
In Santiago, Paula Arcega executed a deed of absolute sale of her parcel of land in favor of Josefina Arcega and spouses Regalado Santiago and Rosita Palabyab for P20,000.00. A new title was
issued in the name of the vendees cancelling that of Paula. Later, a four (4) bedroom house was built on the property. The master's bedroom, with toilet and bath, was occupied by Paula until her
death despite the execution of the deed of sale. The three (3) other bedrooms, smaller than the master's bedroom, were occupied by the vendees. Then, an heir of Paula filed an action seeking to
declare the nullity of the deed of sale on the ground of absence of consideration and that it was merely designed as an accommodation for the purpose of obtaining a loan from the Social Security
System. Guided by Suntay, we annulled the deed of sale and the title of the vendees and ordered reconveyance of the property. We ratiocinated that
. . . . while petitioners were able to occupy the property in question, they were relegated to a small bedroom without bath and toilet, while Paula Arcega remained virtually in
full possession of the completed house and lot using the big master's bedroom with bath and toilet up to the time of her death on April 10, 1985. If, indeed, the transaction
entered into by the petitioners and the late Paula Arcega on July 8, 1971 was a veritable deed of absolute sale, as it was purported to be, then Mrs. Arcega had no business
whatsoever remaining in the property and, worse, to still occupy the big master's bedroom with all its amenities until her death . . . . Definitely, any legitimate vendee of real
property who paid for the property with good money will not accede to an arrangement whereby the vendor continues occupying the most favored room in the house while he
or she, as the new owner, endures the disgrace and absurdity of having to sleep in a small bedroom without bath and toilet as if he or she is a guest or a tenant in the house. In
any case, if petitioners really stood as legitimate owners of the property, they would have collected rentals from Paula Arcega for the use and occupation of the master's bedroom
as she would then be a mere lessee of the property in question. However, not a single piece of evidence was presented to show that this was the case. All told, the failure of
18

petitioners to take exclusive possession of the property allegedly sold to them, or in the alternative, to collect rentals from the alleged vendee Paula Arcega, is contrary to the
principle of ownership and a clear badge of simulation that renders the whole transaction void and without force and effect . . . .
15

Squarely with Suntay and Santiago, petitioner remained in actual possession of subject property through the Palacioses even after the execution of the second deed of sale in 1969. The lessees paid
rentals to petitioner since 1967. We note likewise that petitioner was the defendant in the consignation case. Respondent disdained to explain that she allowed petitioner to collect the rentals
because she "did not mind" the nominal amount involved.
We are unconvinced simply because the supposed "unmindfulness" involved, not a short period, but a span of seventeen (17) years, or from 1969 up to 1986. Besides, it defies logic and borders
more on absurdity that respondent bought the disputed property only to allow petitioner to continue exercising dominion over it by leasing it to the Palacioses at the same time benefiting
therefrom in the form of rentals collected. The only change effected by the purported second deed of sale was the transfer of title to respondent. Respondent's "generosity" is too good to be true, in
a manner of speaking. Rather, we agree with the trial court that the second deed of sale was simulated. Petitioner was constrained to transfer title over the property to respondent to enable the
latter to mortgage it to the GSIS, the proceeds of which would be used to construct an apartment on the property.
True it is that as between a public document and a private document, the former prevails. But Santiago went further. We said therein that although the notarization of the deed of sale in question
vests in its favor the presumption of regularity, it is not the intention or the function of the notary public to validate and make binding an instrument that did not intend to have any binding legal
effect upon the parties thereto. The intention of the parties still is and always will be the primary consideration in determining the true nature of a contract which in the present case was contained
in the agreement of 10 January 1970.
Then, too, a comparison between respondent's signature on the 10 January 1970 agreement, on one hand, and her signatures on the application for the reconstitution of TCT No. 149036
16
and the
lease contract between her and the Palacios spouses,
17
on the other hand, discloses a striking similarity. No amount of denial by respondent will render ineffectual the 10 January 1970 agreement.
Moreover, the fact that respondent was able to secure a title in her name did not operate to vest ownership upon her of the property. Santiago cannot be any less unequivocal
. . . . That act has never been recognized as a mode of acquiring ownership. As a matter of fact, even the original registration of immovable property does not vest title thereto.
The Torrens system does not create or vest title. It only confirms and records title already existing and vested. It does not protect a usurper from the true owner. It cannot be a
shield for the commission of fraud. It does not permit one to enrich himself at the expense of another. Where one does not have any rightful claim over a real property, the
Torrens system of registration can confirm or record nothing.
18

WHEREFORE, the petition is GRANTED. The Decision of respondent Court of Appeals of 19 July 1996 ordering the dismissal of the complaint of petitioner Guadalupe S. Reyes and the
Resolution of 22 October 1996 denying reconsideration are SET ASIDE. The Decision of the Regional Trial Court of Quezon City, Branch 106, of 29 May 1992 cancelling and declaring null and
void TCT No. 149036, as well as the second deed of sale dated 24 September 1969 between petitioner and private respondent Juanita L. Raymundo ordering the latter to reconvey the property
subject of the second deed of sale to petitioner, and further ordering private respondent to pay petitioner P25,000.00 as actual and exemplary damages, P10,000.00 as attorney's fees, and to pay the
costs, is REINSTATED and ADOPTED as the Decision in this case.1wphi1.nt
SO ORDERED.
BUKIDNON DOCTORS HOSPITAL, G.R. No. 161882
INC.,
Petitioner,
Present:

DAVIDE, JR., C.J.,
(Chairperson),
- versus - QUISUMBING,
SANTIAGO,
CARPIO, and
AZCUNA, JJ.


METROPOLITAN BANK & TRUST CO., Promulgated:
19

Respondent.
July 8, 2005

X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X

DECISION


DAVIDE, JR., C.J.:

At issue in this petition for review on certiorari is whether a writ of possession is the proper remedy for evicting a mortgagor who became a lessee of the mortgaged properties after the
mortgagee has consolidated ownership over the properties and was issued new certificates of title.

The facts are as follows:

Sometime in 1995, petitioner Bukidnon Doctors Hospital, Inc., obtained a loan of P25 million from respondent Metropolitan Bank and Trust Company to be used for the construction of its
hospital. To secure this loan, the petitioner mortgaged six parcels of land located in Valencia, Bukidnon, covered by TCT Nos. T-52197, T-52198, T-52199, T-52200, T-52201, and T-52202 and
registered in the name of Dr. Rene Sison and Rory P. Roque, President and Administrator, respectively, of the petitioner. Upon petitioners default in the payment of the loan, the mortgage was
extrajudicially foreclosed and the mortgaged lots were sold in a public auction to respondent bank, being the sole and highest bidder. The petitioner failed to redeem the properties within the
period of redemption. Forthwith, the respondent consolidated its ownership over the properties and was issued new certificates of title on 1 October 2001.
[1]


Earlier, in a letter received by the respondent on 7 July 2001, the petitioner expressed its desire to continue staying in the subject premises so that the operation of the hospital erected
thereon would not be disrupted. For that purpose, the petitioner proposed to pay rent in the amount of P100,000 per month for a period of, but not limited to, three years.
[2]
On 17 December
2001, the respondent agreed to lease the properties but subject to the following terms: (1) the monthly rental would be P200,000 with a one month advance rental and a deposit equivalent to three
months rental; (2) the effectivity of the lease contract would be from June 2001; and (3) the contract would be subject to review every six months.
[3]
The terms finally agreed upon by the parties,
as culled from respondents letter to the petitioner of 30 May 2002, were (1) a monthly rental of P150,000, and (2) the effectivity of the lease contract in November 2001.
[4]


In its letter of 16 July 2003, or approximately a year and eight months after the agreed effectivity date of the lease contract, the respondent asked the petitioner to vacate the leased premises
within fifteen days. The petitioner refused, invoking the subsisting lease agreement.

On 21 August 2003, the respondent filed with the Regional Trial Court (RTC) of Malaybalay City, Bukidnon, an Ex Parte Motion for a Writ of Possession. The case was docketed as
Misc. Case No. 735-03 and raffled to Branch 9 of that court.

On 17 November 2003, the trial court issued an order granting respondents ex parte motion for a writ of possession. The pertinent portion of the order reads as follows:

Since all the requirements or requisites for the issuance are present in this case, the court finds that it has no choice or other alternative but to issue the same, the duty of
the Court being ministerial in character. The respondent can ventilate all its defenses in a separate case that the respondent may file for that purpose.
. . .

20

After the expiration of the period of redemption, a writ of possession can be demanded by a purchaser of the foreclosed property as a matter of right. Even during the
period of redemption, possession can be demanded provided a bond is posted in accordance with Section 7, Act No. 3135 (Vda. De Zaballero vs. CA, 229 SCRA 810).
[5]



Its motion for reconsideration having been denied by the trial court in the Order of 23 January 2004,
[6]
the petitioner filed on 29 January 2004 (the day it received the denial order) a Notice
of Appeal stating that it was appealing to the Court of Appeals on both questions of fact and law.
[7]
Earlier, or on 27 November 2003, the petitioner filed with the trial court an action for specific
performance, injunction, and damages, docketed as Civil Case No. 3312-03.
[8]
Also, on 30 January 2004, the petitioner filed a petition for rehabilitation before the RTC of Cagayan de Oro City,
Branch 18, docketed as Spec. Pro. Case No. 2004-019.

On 11 February 2004, before its Notice of Appeal could be acted upon by the trial court, the petitioner filed a Manifestation and Motion stating that due to the nature of the appeal that it
intended to file, it was withdrawing the Notice of Appeal.
[9]
Two days thereafter, or on 13 February 2004, which was the last day within which to appeal the 29 January 2004 Order, it filed with us
a motion for extension of thirty days from the expiration of the reglementary period to file a petition for review on certiorari or until 14 March 2004. We granted this motion for extension in our
Resolution of 3 March 2004. Then, on 4 March 2004, the petitioner instituted the instant petition for review on certiorari under Rule 45, in relation to Section 2(c) of Rule 41, of the Rules of Court,
raising a single issue for our consideration, to wit:

WHETHER [OR] NOT THE COURT A QUO CORRECTLY RULED THAT RESPONDENT, A FORMER MORTGAGEE-BUYER, WAS STILL ENTITLED TO A
WRIT OF POSSESSION AS A MATTER OF RIGHT AS PROVIDED UNDER ACT 3135, AS AMENDED, DESPITE A LEASE AGREEMENT BETWEEN ITSELF
AND THE FORMER MORTGAGOR-SELLER EXECUTED AFTER RESPONDENT BECAME THE ABSOLUTE OWNER OF THE FORECLOSED
PROPERTIES.
[10]



In its Comment,
[11]
the respondent asserts that the petitioner is guilty of forum-shopping for having gone to four different courts for the same relief. Besides, by filing an
ordinary appeal under Rule 41 of the Rules of Court, the petitioner had already waived its right to file a petition for review oncertiorari under Rule 45, since the two modes of appeal are
mutually exclusive and governed by different rules. Pursuant to the principle of hierarchy of courts, the petitioner should have first filed the instant petition with the Court of Appeals,
which has concurrent jurisdiction with the Supreme Court to resolve cases involving only questions of law. As to the main issue, the respondent argues that as a purchaser in a valid
extrajudicial foreclosure sale under Act No. 3135 and as the absolute owner of the subject parcels of land, it was entitled as a matter of right to the issuance of a writ of possession. The
subsequent agreement to stay between the parties did not negate respondents right to take possession of the subject properties through a writ of possession. In any event, the agreement
to stay on the subject properties was deemed to be on a month-to-month basis, since the period therefor was not fixed.

The petitioner rebuts, in its Reply, respondents arguments, contending that it did not shop for a favorable forum, since the three cases where it is either a defendant/oppositor or
plaintiff/petitioner do not involve the same subject matter, causes of action, and parties. Contrary to the claim of the respondent, it immediately withdrew by proper motion its notice of appeal in
the trial court after realizing that the proper remedy was a petition for review oncertiorari under Rule 45 of the Rules of Court, not a petition for review under Rule 42. Rule 42 is not applicable to
the case at bar because it is the Supreme Court that has jurisdiction over the petition as it involves a pure question of law pursuant to Section 2(c) of Rule 41 and Section 1 of Rule 45 of the Rules of
Court. Lastly, the trial court clearly erred in granting respondents ex parte motion for a writ of possession because of the existence of a lease agreement between the parties, which was executed
after the respondent consolidated its title to the subject properties.

In our Resolution of 2 August 2004, we gave due course to the petition and resolved to decide the case based on the pleadings already filed.
[12]


21

On 17 December 2004, the respondent filed a Manifestation and Motion to Dismiss Petition.
[13]
It brings to our attention petitioners letter dated 3 November 2004 informing it that the
petitioner had decided to close its hospital operations and to turn over the premises to the respondent on 30 November 2004 in view of the expiration of the lease agreement. According to the
respondent, petitioners express and unequivocal recognition of the expiration of the alleged lease agreement and its act of turning over the possession of the subject property to the respondent had
rendered the instant petition moot and academic. The petitioner countered that the legal issue of whether a writ of possession may be issued despite the existence of a lease agreement must be
resolved by this Court, since this issue may again arise as banks continue to foreclose, seek possession and/or lease out the foreclosed premises to previous mortgagors.

Indeed, because of petitioners act of surrendering the possession of the subject properties owing to the expiration of the lease agreement, the instant petition praying (1) for the reversal
of the order for the issuance of a writ of possession and (2) for full possession by the petitioner of the subject properties was rendered moot and academic. Nonetheless, for the guidance of the bench
and the bar, we shall proceed to resolve the important issue of whether a writ of possession will lie to recover the material possession of previously mortgaged properties that have been leased to
the mortgagor after the mortgagee consolidated its ownership over the properties.

However, we shall first take up the procedural issues raised by the respondent.

We are not convinced that the petitioner is guilty of forum- shopping.

Forum-shopping is an act of a party against whom an adverse judgment or order has been rendered in one forum of seeking and possibly getting a favorable opinion in another forum,
other than by appeal or special civil action for certiorari. It may also be the institution of two or more actions or proceedings grounded on the same cause on the supposition that one or the other
court would make a favorable disposition. The elements are as follows: (1) identity of parties, or at least such parties as would represent the same interest in both actions; (2) identity of rights
asserted and relief prayed for, the relief being founded on the same facts; and (3) identity of the two preceding particulars such that any judgment in the other action, regardless of which party is
successful, will amount to res judicata in the action under consideration.
[14]


Before filing on 4 March 2004 the petition in this case, the petitioner had filed two other cases, namely, (1) an Action for Specific Performance, Injunction, and Damages with the RTC of
Malaybalay City, docketed as Civil Case No. 3312-03 and (2) a Petition for Corporate Rehabilitation with the RTC of Cagayan de Oro City, docketed therein as S.P. Case No. 2004-019. However,
these two cases involve causes of action different from the one at bar. In Civil Case No. 3312-03, the petitioner sought the enforcement of the lease contract between it and the respondent, with
prayer for damages for the latters breach of its contractual obligation. In S.P. Case No. 2004-019, the petitioner prayed for rehabilitation pursuant to the Interim Rules on Corporation
Rehabilitation.

Upon the other hand, in this case, the ex parte motion for a writ of possession was filed at the instance of the respondent. When the motion was granted, the petitioner filed a notice of
appeal to the Court of Appeals, which it later withdrew. Thereafter, it appealed to us via Rule 45 of the Rules of Court questioning the propriety of the issuance of a writ of possession for the
purpose of evicting the petitioner despite the lease agreement subsequently entered into by the parties after the expiration of the redemption period. As can be clearly seen, the two cases and the
appeal filed by the petitioner involved different causes of action. Thus, the petitioner cannot be said to have engaged in forum-shopping.

Neither can the petitioner be deemed to have waived its right to file this petition. Realizing that the remaining issue was a pure question of law, it withdrew its Notice of Appeal stating
that it was appealing the 28 January 2002 Order on both questions of law and fact. Section 9 of Rule 41 of the Rules of Court provides that prior to the transmittal of the original record, the court
may allow withdrawal of the appeal.

22

Nothing in the Rules prevents a party from filing a petition under Rule 45 of the Rules of Court after seasonably withdrawing the Notice of Appeal as long as it is done within the
reglementary period and the issue involved is purely one of law. In this case it was before the lapse of the reglementary period to appeal that the petitioner withdrew its Notice of Appeal to the
Court of Appeals and filed with us a motion for extension of time to file a petition under Rule 45 of the Rules of Court. And the petition was filed within the extended period we granted, raising
only one question of law.

Nor is there a violation of the doctrine of hierarchy of courts. Section 2(c), Rule 41 of the Rules of Court categorically provides that in all cases where only questions of law are raised, the
appeal from a decision or order of the Regional Trial Court shall be to the Supreme Court by petition for review oncertiorari in accordance with Rule 45. Section 2(c) of Rule 41 of the Rules of
Court reads:

SEC. 2. Modes of appeal.

(a) Ordinary appeal. The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of its original jurisdiction shall be taken by
filing a notice of appeal with the court which rendered the judgment or final order appealed from and serving a copy thereof upon the adverse party. No record on appeal shall
be required except in special proceedings and other cases of multiple or separate appeals where the law or these Rules so require. In such cases, the record on appeal shall be
filed and served in like manner.

(b) Petition for review. The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of its appellate jurisdiction shall be by petition
for review in accordance with Rule 42.

(c) Appeal by certiorari. In all cases where only questions of law are raised or involved, the appeal shall be to the Supreme Court by petition for review on certiorari in
accordance with Rule 45.


Section 1 of Rule 45 provides:

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 oncertiorari. The petition
shall raise only questions of law which must be distinctly set forth.


A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts; or when the issue does not call for an examination of
the probative value of the evidence presented, the truth or falsehood of facts being admitted. A question of fact exists when the doubt or difference arises as to the truth or falsehood of facts or
when the query invites calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific surrounding circumstances, as well as their
relation to each other and to the whole, and the probability of the situation.
[15]


As earlier stated, the only issue raised in this petition is whether [or] not the court a quo correctly ruled that respondent, a former mortgagee-buyer, was still entitled to a writ of
possession as a matter of right as provided under act 3135, as amended, despite a lease agreement between itself and the former mortgagor-seller executed after respondent became the absolute
owner of the foreclosed properties.

This question is undoubtedly one of law. The existence of a lease agreement between the parties, which is a question of fact, ceased to be an issue in view of the admission thereof by both
the petitioner and the respondent.
[16]
Thus, with only a question of law raised in this petition, direct resort to this Court is proper.

23

In sum, the petition at bar is not tainted with any of the procedural errors attributed to it by the respondent.

We shall now consider the issue of the propriety of the issuance of a writ of possession in favor of the respondent.

The law
[17]
and jurisprudence
[18]
are clear that in extrajudicial foreclosure proceedings, an order for a writ of possession issues as a matter of course, upon proper motion, after the expiration
of the redemption period without the mortgagor exercising the right of redemption, or even during the redemption period provided a bond is posted to indemnify the debtor in case the foreclosure
sale is shown to have been conducted without complying with the requirements of the law or without the debtor violating the mortgage contract.
[19]
The rationale for the ministerial issuance of a
writ of possession is to put the foreclosure buyer in possession of the property sold without delay, since the right to possession is founded on ownership of the property.
[20]


However, in the instant case, a writ of possession was not the correct remedy for the purpose of ousting the petitioner from the subject premises. It must be noted that possession is the
holding of a thing or the enjoyment of a right.
[21]
It is acquired by the material occupation of a thing or the exercise of a right, or by the fact that a thing or right is subject to the action of ones
will, or by the proper acts and legal formalities established for acquiring such right.
[22]
By material occupation of a thing, it is not necessary that the person in possession should be the occupant of
the property; the occupancy can be held by another in his name.
[23]
Thus Articles 524 and 525 of the Civil Code provide:

Art. 524. Possession may be exercised in ones own name or in that of another.

Art. 525. The possession of things or rights may be had in one of two concepts: either in the concept of owner, or in that of the holder of the thing or right to keep or
enjoy it, the ownership pertaining to another person.

In other words, an owner of a real estate has possession, either when he himself is physically occupying the property, or when another person who recognizes his rights as owner is
occupying it.

In the case at bar, it is not disputed that after the foreclosure of the property in question and the issuance of new certificates of title in favor of the respondent, the petitioner and the
respondent entered into a contract of lease of the subject properties. This new contractual relation presupposed that the petitioner recognized that possession of the properties had been legally
placed in the hands of the respondent, and that the latter had taken such possession but delivered it to the former as lessee of the property. By paying the monthly rentals, the petitioner also
recognized the superior right of the respondent to the possession of the property as owner thereof. And by accepting the monthly rentals, the respondent enjoyed the fruits of its possession over
the subject property.
[24]
Clearly, the respondent is in material possession of the subject premises. Thus, the trial courts issuance of a writ of possession is not only superfluous, but improper under
the law. Moreover, as a lessee, the petitioner was a legitimate possessor of the subject properties under Article 525 of the Civil Code. Thus, it could not be deprived of its lawful possession by a
mere ex parte motion for a writ of possession.

Apropos to this case is Banco de Oro Savings and Mortgage Bank v. Court of Appeals.
[25]
There, the spouses Nery were not able to redeem the property they mortgaged to the bank; hence,
the latter was able to consolidate the title to the property in its name. The Nerys requested the bank for more time to repurchase the subject property, obligating themselves to pay monthly
rentals or reasonable compensation for the continued occupation of the premises on the ground that they had leased portions of the building to tenants. Since neither the Nerys nor their tenants
vacated the subject premises nor paid reasonable compensation for the use thereof, the bank instituted three separate ejectment suits against them before the Metropolitan Trial Court of
24

Paraaque. The Nerys argued that the proper remedy that should have been taken by the bank as mortgagee was to obtain a writ of possession and not an action for ejectment. We rejected Nerys argument and
ruled that it was proper for the bank to sue for ejectment. Thus:

The Nerys forget, however, that they had asked the Bank for a grace period within which to repurchase the mortgaged property and to be allowed to pay monthly
rentals or reasonable compensation for the use of the premises. In fact, they did pay rentals for several months. Their continued stay in the property was thereby converted to
one by tolerance or permission. A person who occupies the land of another at the latters tolerance or permission, without any contract between them, is necessarily bound by
an implied promise that he will vacate upon demand, failing which, a summary action for ejectment is proper against him (Dakudao v. Consolacion, L-54573, 24 June 1983, 112
SCRA 877). The Nerys refused to vacate upon demand, the last of which was made by letter, dated 25 July 1984, as found by the Trial Court, and not 9 September 1983 as the
Nerys allege. An ejectment suit, therefore, was proper, with the legally prescribed period to institute the same having been complied with.

Significantly, too, with the consolidation of title in the Bank, it had become the owner of the subject premises. As such, it could bring an action for ejectment to obtain possession and
occupation. Thus, Section 1, Rule 70 provides an action for unlawful detainer may be brought by a landlord, vendor, vendee, or other person against whom the possession of any land or building
is unlawfully withheld after the expiration or termination of the right to hold possession xxx.

It is indeed, correct that in ordinary extra-judicial foreclosure cases, the mortgagees remedy is to apply for a Writ of Possession. As already intimated, however, the stay of the Nerys in the
premises had been converted to one by permission with a corresponding commitment to pay rentals. An implied lease was thereby treated between the parties. Where the question relates to the
relation between landlord and tenant, the nature of the lease premises involved, the reasonableness of the rentals demanded, the right or lack of right of the tenant to continue occupying the
premises against the will of the landlord, the applicability of the rental law, etc., a case for ejectment is proper. (Commander Realty, Inc., vs. Court of Appeals, L-77227, 9 May 1988, 161
SCRA 264). Notably, too, there were other tenants in the premises who were not privy to the foreclosure proceedings but had to be rejected as well. (emphasis ours)
[26]



In a nutshell, where a lease agreement, whether express or implied, is subsequently entered into by the mortgagor and the mortgagee after the expiration of the redemption period and the
consolidation of title in the name of the latter, a case for ejectment or unlawful detainer, not a motion for a writ of possession, is the proper remedy in order to evict from the questioned premises a
mortgagor-turned-lessee. The rationale for this rule is that a new relationship between the parties has been created. What applies is no longer the law on extrajudicial foreclosure, but the law on
lease. And when an issue arises, as in the case at bar, regarding the right of the lessee to continue occupying the leased premises, the rights of the parties must be heard and resolved in a case for
ejectment or unlawful detainer under Rule 70 of the Rules of Court.

WHEREFORE, the petition is hereby GRANTED. The Orders of the Regional Trial Court of Malaybalay City, Bukidnon, Branch 9, in Misc. Case. No. 735-03 dated 17 November
2003 and 23 January 2004, are hereby REVERSED and SET ASIDE.

No pronouncement as to costs.

SO ORDERED.


PHILIPPINE NATIONAL BANK, petitioner, vs. GENEROSO DE JESUS, represented by his Attorney-in-Fact, CHRISTIAN DE JESUS,respondent.
D E C I S I O N
VITUG, J.:
Petitioner Philippine National Bank disputes the decision handed down by the Court of Appeals promulgated on 23 March 2001 in CA-G.R. CV No. 56001, entitled Generoso De Jesus,
represented by his Attorney-in-Fact, Christian De Jesus, versus Philippine National Bank. The assailed decision has affirmed the judgment rendered by the Regional Trial Court, Branch 44, of
25

Mamburao, Occidental Mindoro, declaring respondent Generoso de Jesus as being the true and lawful owner of the 124-square-meter portion of the land covered by Transfer Certificate of Title
(TCT) No. T-17197 and ordering petitioner bank to vacate the premises, to deliver possession thereof to respondent, and to remove the improvement thereon.
It would appear that on 10 June 1995, respondent filed a complaint against petitioner before the Regional Trial Court of Occidental Mindoro for recovery of ownership and possession, with
damages, over the questioned property. In his complaint, respondent stated that he had acquired a parcel of land situated in Mamburao, Occidental Mindoro, with an area of 1,144 square meters
covered by TCT No. T-17197, and that on 26 March 1993, he had caused a verification survey of the property and discovered that the northern portion of the lot was being encroached upon by a
building of petitioner to the extent of 124 square meters. Despite two letters of demand sent by respondent, petitioner failed and refused to vacate the area.
Petitioner, in its answer, asserted that when it acquired the lot and the building sometime in 1981 from then Mayor Bienvenido Ignacio, the encroachment already was in existence and to
remedy the situation, Mayor Ignacio offered to sell the area in question (which then also belonged to Ignacio) to petitioner at P100.00 per square meter which offer the latter claimed to have
accepted. The sale, however, did not materialize when, without the knowledge and consent of petitioner, Mayor Ignacio later mortgaged the lot to the Development Bank of the Philippines.
The trial court decided the case in favor of respondent declaring him to be the rightful owner of the disputed 124-square-meter portion of the lot and ordering petitioner to surrender
possession of the property to respondent and to cause, at its expense, the removal of any improvement thereon.
The Court of Appeals, on appeal, sustained the trial court but it ordered to be deleted the award to respondent of attorneys fees, as well as moral and exemplary damages, and litigation
expenses.
Petitioner went to this Court, via a petition for review, after the appellate court had denied the banks motion for reconsideration, here now contending that -
1. THE COURT OF APPEALS GRAVELY ERRED IN LAW IN ADJUDGING PNB A BUILDER IN BAD FAITH OVER THE ENCROACHED PROPERTY IN QUESTION;
2. THE COURT OF APPEALS GRAVELY ERRED IN LAW IN NOT APPLYING IN FAVOR OF PNB THE PROVISION OF ARTICLE 448 OF THE CIVIL CODE AND THE RULING
IN TECNOGAS PHILIPPINES MANUFACTURING CORP. VS. COURT OF APPEALS, G.R. No. 108894, February 10, 1997, 268 SCRA 7.
[1]

The Regional Trial Court and the Court of Appeals have both rejected the idea that petitioner can be considered a builder in good faith. In the context that such term is used in particular
reference to Article 448, et seq., of the Civil Code, a builder in good faith is one who, not being the owner of the land, builds on that land believing himself to be its owner and unaware of any defect
in his title or mode of acquisition.
The various provisions of the Civil Code, pertinent to the subject, read:
Article 448. The owner of the land on which anything has been built, sown, or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of
the indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter
cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such a case, he shall pay reasonable rent, if the owner of the land does not choose to
appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof.
Article 449. He who builds, plants, or sows in bad faith on the land of another, loses what is built, planted or sown without right to indemnity.
Article 450. The owner of the land on which anything has been built, planted or sown in bad faith may demand the demolition of the work, or that the planting or sowing be removed, in order to
replace things in their former condition at the expense of the person who built, planted or sowed; or he may compel the builder or planter to pay the price of the land, and the sower the proper
rent.
A builder in good faith can, under the foregoing provisions, compel the landowner to make a choice between appropriating the building by paying the proper indemnity or obliging the
builder to pay the price of the land. The choice belongs to the owner of the land, a rule that accords with the principle of accession, i.e., that the accessory follows the principal and not the other
way around.
[2]
Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. He much choose one. He cannot, for instance, compel the owner of the building to instead
remove it from the land.
[3]
In order, however, that the builder can invoke that accruing benefit and enjoy his corresponding right to demand that a choice be made by the landowner, he should be
able to prove good faith on his part.
Good faith, here understood, is an intangible and abstract quality with no technical meaning or statutory definition, and it encompasses, among other things, an honest belief, the absence of
malice and the absence of design to defraud or to seek an unconscionable advantage. An individuals personal good faith is a concept of his own mind and, therefore, may not conclusively be
determined by his protestations alone. It implies honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry.
[4]
The essence of good faith lies
in an honest belief in the validity of ones right, ignorance of a superior claim, and absence of intention to overreach another.
[5]
Applied to possession, one is considered in good faith if he is not
aware that there exists in his title or mode of acquisition any flaw which invalidates it.
[6]

26

Given the findings of both the trial court and the appellate court, it should be evident enough that petitioner would fall much too short from its claim of good faith. Evidently, petitioner was
quite aware, and indeed advised, prior to its acquisition of the land and building from Ignacio that a part of the building sold to it stood on the land not covered by the land conveyed to it.
Equally significant is the fact that the building, constructed on the land by Ignacio, has in actuality been part of the property transferred to petitioner. Article 448, of the Civil Code refers to
a piece of land whose ownership is claimed by two or more parties, one of whom has built some works (or sown or planted something) and not to a case where the owner of the land is the
builder, sower, or planter who then later loses ownership of the land by sale or otherwise for, elsewise stated, where the true owner himself is the builder of works on his own land,
the issue of good faith or bad faith is entirely irrelevant.
[7]

In fine, petitioner is not in a valid position to invoke the provisions of Article 448 of the Civil Code. The Court commiserates with petitioner in its present predicament; upon the other hand,
respondent, too, is entitled to his rights under the law, particularly after having long been deprived of the enjoyment of his property. Nevertheless, the Court expresses hope that the parties will
still be able to come up with an arrangement that can be mutually suitable and acceptable to them.
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 56001 is AFFIRMED. No costs.
SO ORDERED.
Spouses ISMAEL and TERESITA MACASAET, petitioners, vs. Spouses VICENTE and ROSARIO MACASAET, respondents.
D E C I S I O N
PANGANIBAN, J.:
The present case involves a dispute between parents and children. The children were invited by the parents to occupy the latters two lots, out of parental love and a desire to foster family
solidarity. Unfortunately, an unresolved conflict terminated this situation. Out of pique, the parents asked them to vacate the premises. Thus, the children lost their right to remain on the
property. They have the right, however, to be indemnified for the useful improvements that they constructed thereon in good faith and with the consent of the parents. In short, Article 448 of the
Civil Code applies.
The Case
Before us is a Petition for Review
[1]
under Rule 45 of the Rules of Court, assailing the March 22, 2002 Decision
[2]
and the June 26, 2002 Resolution
[3]
of the Court of Appeals (CA) in CA-GR
SP Nos. 56205 & 56467. The challenged Decision disposed as follows:
WHEREFORE, the assailed Decision is AFFIRMED with the following MODIFICATIONS:
1. Vicente and Rosario should reimburse Ismael and Teresita one-half of the value of the useful improvements introduced in the premises prior to demand, which is equivalent
to P475,000.00. In case the former refuse to reimburse the said amount, the latter may remove the improvements, even though the land may suffer damage thereby. They shall not,
however, cause any more impairment upon the property leased than is necessary.
2. The award of attorneys fees is DELETED.
3. The records of these consolidated cases are REMANDED to the Court of origin for further proceedings to determine the option to be taken by Vicente and Rosario and to
implement the same with dispatch.
[4]

The assailed Resolution denied petitioners Motion for Reconsideration.
The Facts
27

Petitioners Ismael and Teresita
[5]
Macasaet and Respondents Vicente and Rosario Macasaet are first-degree relatives. Ismael is the son of respondents, and Teresita is his wife.
[6]

On December 10, 1997, the parents filed with the Municipal Trial Court in Cities (MTCC) of Lipa City an ejectment suit against the children.
[7]
Respondents alleged that they were the
owners of two (2) parcels of land covered by Transfer Certificate of Title (TCT) Nos. T-78521 and T-103141, situated at Banay-banay, Lipa City; that by way of a verbal lease agreement, Ismael
and Teresita occupied these lots in March 1992 and used them as their residence and the situs of their construction business; and that despite repeated demands, petitioners failed to pay the agreed
rental of P500 per week.
[8]

Ismael and Teresita denied the existence of any verbal lease agreement. They claimed that respondents had invited them to construct their residence and business on the subject lots in order
that they could all live near one other, employ Marivic (the sister of Ismael), and help in resolving the problems of the family.
[9]
They added that it was the policy of respondents to allot the land
they owned as an advance grant of inheritance in favor of their children. Thus, they contended that the lot covered by TCT No. T-103141 had been allotted to Ismael as advance inheritance. On
the other hand, the lot covered by TCT No. T-78521 was allegedly given to petitioners as payment for construction materials used in the renovation of respondents house.
[10]

The MTCC
[11]
ruled in favor of respondents and ordered petitioners to vacate the premises. It opined that Ismael and Teresita had occupied the lots, not by virtue of a verbal lease
agreement, but by tolerance of Vicente and Rosario.
[12]
As their stay was by mere tolerance, petitioners were necessarily bound by an implied promise to vacate the lots upon demand.
[13]
The
MTCC dismissed their contention that one lot had been allotted as an advance inheritance, on the ground that successional rights were inchoate. Moreover, it disbelieved petitioners allegation
that the other parcel had been given as payment for construction materials.
[14]

On appeal, the regional trial court
[15]
(RTC) upheld the findings of the MTCC. However, the RTC allowed respondents to appropriate the building and other improvements introduced by
petitioners, after payment of the indemnity provided for by Article 448 in relation to Articles 546 and 548 of the Civil Code.
[16]
It added that respondents could oblige petitioners to purchase the
land, unless its value was considerably more than the building. In the latter situation, petitioners should pay rent if respondents would not choose to appropriate the building.
[17]

Upon denial of their individual Motions for Reconsideration, the parties filed with the CA separate Petitions for Review, which were later consolidated.
[18]

Ruling of the Court of Appeals
The CA sustained the finding of the two lower courts that Ismael and Teresita had been occupying the subject lots only by the tolerance of Vicente and Rosario.
[19]
Thus, possession of the
subject lots by petitioners became illegal upon their receipt of respondents letter to vacate it.
[20]

Citing Calubayan v. Pascual,
[21]
the CA further ruled that petitioners status was analogous to that of a lessee or a tenant whose term of lease had expired, but whose occupancy continued by
tolerance of the owner.
[22]
Consequently, in ascertaining the right of petitioners to be reimbursed for the improvements they had introduced on respondents properties,
[23]
the appellate court
applied the Civil Codes provisions on lease. The CA modified the RTC Decision by declaring that Article 448 of the Civil Code was inapplicable. The CA opined that under Article 1678 of the
same Code, Ismael and Teresita had the right to be reimbursed for one half of the value of the improvements made.
[24]

Not satisfied with the CAs ruling, petitioners brought this recourse to this Court.
[25]

The Issues
Petitioners raise the following issues for our consideration:
1. a) Whether or not Section 17[,] Rule 70 of the Rules of Court on Judgment should apply in the rendition of the decision in this case;
b) Whether or not the Complaint should have been dismissed;
c) Whether or not damages including attorneys fees should have been awarded to herein petitioners;
2. a) Whether or not the rule on appearance of parties during the Pretrial should apply on appearance of parties during Preliminary Conference in an unlawful detainer suit;
28

b) Whether or not the case of Philippine Pryce Assurance Corporation vs. Court of Appeals (230 SCRA 164) is applicable to appearance of parties in an unlawful detainer suit;
3. Whether or not Article 1678 of the Civil Code should apply to the case on the matters of improvements, or is it Article 447 of the Civil Code in relation to the Article 453 and 454 thereof that
should apply, if ever to apply the Civil Code;
4. Whether or not the [D]ecision of the Court of Appeals is supported by evidence, appropriate laws, rules and jurisprudence;
5. Whether or not Assisting Judge Norberto Mercado of the MTCC Lipa City should be held accountable in rendering the MTCC [D]ecision;
6. Whether or not Atty. Glenn Mendoza and Atty. Andrew Linatoc of the same [l]aw office should be held accountable for pursuing the [e]jectment case[.]
[26]

The Courts Ruling
The Petition is partly meritorious.
First Issue:
Ejectment
Who is entitled to the physical or material possession of the premises? At the outset, we stress that this is the main issue in ejectment proceedings.
[27]
In the present case, petitioners failed to
justify their right to retain possession of the subject lots, which respondents own. Since possession is one of the attributes of ownership,
[28]
respondents clearly are entitled to physical or material
possession.
Allegations of the Complaint
Petitioners allege that they cannot be ejected from the lots, because respondents based their Complaint regarding the nonpayment of rentals on a verbal lease agreement, which the latter
failed to prove.
[29]
Petitioners contend that the lower courts erred in using another ground (tolerance of possession) to eject them.
In actions for unlawful detainer, possession that was originally lawful becomes unlawful upon the expiration or termination of the defendants right to possess, arising from an express or
implied contract.
[30]
In other words, the plaintiffs cause of action comes from the expiration or termination of the defendants right to continue possession.
[31]
The case resulting therefrom must be
filed within one year from the date of the last demand.
To show a cause of action in an unlawful detainer, an allegation that the defendant is illegally withholding possession from the plaintiff is sufficient. The complaint may lie even if it does not
employ the terminology of the law, provided the said pleading is couched in a language adequately stating that the withholding of possession or the refusal to vacate has become unlawful.
[32]
It is
equally settled that the jurisdiction of the court, as well as the nature of the action, is determined from the averments of the complaint.
[33]

In the present case, the Complaint alleged that despite demands, petitioners refused to pay the accrued rentals and [to] vacate the leased premises.
[34]
It prayed that judgment be rendered
[o]rdering [petitioners] and all those claiming rights under them to vacate the properties x x x and remove the structures x x x constructed thereon.
[35]
Effectively then, respondents averred
that petitioners original lawful occupation of the subject lots had become unlawful.
The MTCC found sufficient cause to eject petitioners. While it disbelieved the existence of a verbal lease agreement, it nevertheless concluded that petitioners occupation of the subject lots
was by mere tolerance of respondents. Basing its conclusion on the fact that the parties were close relatives, the MTCC ruled thus:
29

x x x [T]he parties herein are first degree relatives. Because of this relationship, this Court takes judicial notice of the love, care, concern and protection imbued upon the parents towards their
[children], i.e., in the instant case, the love, care, concern and protection of the [respondents] to the [petitioners]. With this in mind, this Court is inclined to believe the position of the
[petitioners] that there was no such verbal lease agreement between the parties herein that took place in 1992. x x x.
From the allegations of the [petitioners], this Court is convinced that their stay and occupancy of the subject premises was by mere tolerance of the [respondents], and not by virtue of a verbal
lease agreement between them.
[36]

Having found a cause of action for unlawful detainer, the MTCC (as well as the RTC and the CA) did not err in ordering the ejectment of petitioners as prayed for by respondents. There was
no violation of Section 17 of Rule 70
[37]
of the Rules of Court. As earlier explained, unlawful detainer was sufficiently alleged in the Complaint and duly proven during the trial. Significantly, the
issue of whether there was enough ground to eject petitioners was raised during the preliminary conference.
[38]

Not Merely Tolerated
Possession
Petitioners dispute the lower courts finding that they occupied the subject lots on the basis of mere tolerance. They argue that their occupation was not under such condition, since
respondents had invited, offered and persuaded them to use those properties.
[39]

This Court has consistently held that those who occupy the land of another at the latters tolerance or permission, without any contract between them, are necessarily bound by an implied
promise that the occupants will vacate the property upon demand.
[40]
A summary action for ejectment is the proper remedy to enforce this implied obligation.
[41]
The unlawful deprivation or
withholding of possession is to be counted from the date of the demand to vacate.
[42]

Toleration is defined as the act or practice of permitting or enduring something not wholly approved of.
[43]
Sarona v. Villegas
[44]
described what tolerated acts means, in this language:
Professor Arturo M. Tolentino states that acts merely tolerated are those which by reason of neighborliness or familiarity, the owner of property allows his neighbor or another person to do on
the property; they are generally those particular services or benefits which ones property can give to another without material injury or prejudice to the owner, who permits them out of friendship
or courtesy. x x x. And, Tolentino continues, even though this is continued for a long time, no right will be acquired by prescription. x x x. Further expounding on the concept, Tolentino writes:
There is tacit consent of the possessor to the acts which are merely tolerated. Thus, not every case of knowledge and silence on the part of the possessor can be considered mere tolerance. By virtue of
tolerance that is considered as an authorization, permission or license, acts of possession are realized or performed. The question reduces itself to the existence or non-existence of the
permission.
[45]

We hold that the facts of the present case rule out the finding of possession by mere tolerance. Petitioners were able to establish that respondents had invited them to occupy the subject lots
in order that they could all live near one other and help in resolving family problems.
[46]
By occupying those lots, petitioners demonstrated their acceptance of the invitation. Hence, there was a
meeting of minds, and an agreement regarding possession of the lots impliedly arose between the parties.
The occupancy of the subject lots by petitioners was not merely something not wholly approved of by respondents. Neither did it arise from what Tolentino refers to as neighborliness or
familiarity. In point of fact, their possession was upon the invitation of and with the complete approval of respondents, who desired that their children would occupy the premises. It arose from
familial love and a desire for family solidarity, which are basic Filipino traits.
Right to Use the Lots Terminated
That Ismael and Teresita had a right to occupy the lots is therefore clear. The issue is the duration of possession. In the absence of a stipulation on this point, Article 1197 of the Civil Code
allows the courts to fix the duration or the period.
Article 1197. If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a period was intended, the courts may fix the duration thereof.
The courts shall also fix the duration of the period when it depends upon the will of the debtor.
30

In every case the courts shall determine such period as may under the circumstances have been probably contemplated by the parties. Once fixed by the courts, the period cannot be changed by
them.
Article 1197, however, applies to a situation in which the parties intended a period. Such qualification cannot be inferred from the facts of the present case.
To repeat, when Vicente and Rosario invited their children to use the lots, they did so out of parental love and a desire for solidarity expected from Filipino parents. No period was intended
by the parties. Their mere failure to fix the duration of their agreement does not necessarily justify or authorize the courts to do so.
[47]

Based on respondents reasons for gratuitously allowing petitioners to use the lots, it can be safely concluded that the agreement subsisted as long as the parents and the children mutually
benefited from the arrangement. Effectively, there is a resolutory condition in such an agreement.
[48]
Thus, when a change in the condition existing between the parties occurs -- like a change of
ownership, necessity, death of either party or unresolved conflict or animosity -- the agreement may be deemed terminated. Having been based on parental love, the agreement would end upon the
dissipation of the affection.
When persistent conflict and animosity overtook the love and solidarity between the parents and the children, the purpose of the agreement ceased.
[49]
Thus, petitioners no longer had any
cause for continued possession of the lots. Their right to use the properties became untenable. It ceased upon their receipt of the notice to vacate. And because they refused to heed the demand,
ejectment was the proper remedy against them. Their possession, which was originally lawful, became unlawful when the reason therefor -- love and solidarity -- ceased to exist between them.
No Right to Retain
Possession
Petitioners have not given this Court adequate reasons to reverse the lower courts dismissal of their contention that Lots T-78521 and T-103141, respectively, were allegedly allotted to
them as part of their inheritance and given in consideration for past debts.
The right of petitioners to inherit from their parents is merely inchoate and is vested only upon the latters demise. Indisputably, rights of succession are transmitted only from the moment
of death of the decedent.
[50]
Assuming that there was an allotment of inheritance, ownership nonetheless remained with respondents. Moreover, an intention to confer title to certain persons in
the future is not inconsistent with the owners taking back possession in the meantime for any reason deemed sufficient.
[51]
Other than their self-serving testimonies and their affidavits, petitioners
offered no credible evidence to support their outlandish claim of inheritance allocation.
We also agree with the lower courts that petitioners failed to prove the allegation that, through a dation in payment, Lot T-78521 had been transferred to the latter as payment for
respondents debts.
[52]
The evidence presented by petitioners related only to the alleged indebtedness of the parents arising from the latters purported purchases and advances.
[53]
There was no
sufficient proof that respondents had entered into a contract of dation to settle the alleged debt. Petitioners even stated that there was a disagreement in the accounting of the purported debt,
[54]
a
fact that disproves a meeting of the minds with the parents.
Petitioners also admitted that a portion of the alleged debt is the subject matter of a collection case against respondents (Civil Case No. 0594-96).
[55]
Thus, the formers allegation that the
indebtedness has been paid through a dation cannot be given credence, inconsistent as it is with their action to recover the same debt.
Despite their protestations, petitioners recognized the right of the parents to recover the premises when they admitted in their Position Paper filed with the MTCC that respondents had a
title to the lots.
The [respondents] want to get their property because the title is theirs, the [petitioners] do not object but what is due the [petitioners] including the reparation for the tarnish of their dignity
and honor must be given the [petitioners] for the benefits of their children before the premises will be turned over.
[56]

As a rule, the right of ownership carries with it the right of possession.
Second Issue:
Appearance at the Preliminary Conference
31

Section 8 of Rule 70 of the Rules of Court requires the appearance of the plaintiff and the defendant during the preliminary conference. On the basis of this provision, petitioners claim that
the MTCC should have dismissed the case upon the failure of respondents to attend the conference. However, petitioners do not dispute that an attorney-in-fact with a written authorization from
respondents appeared during the preliminary conference.
[57]
The issue then is whether the rules on ejectment allow a representative to substitute for a partys personal appearance.
Unless inconsistent with Rule 70, the provisions of Rule 18 on pretrial applies to the preliminary conference.
[58]
Under Section 4 of this Rule, the nonappearance of a party may be excused by
the showing of a valid cause; or by the appearance of a representative, who has been fully authorized in writing to enter into an amicable settlement, to submit to alternative modes of dispute
resolution, and to enter into stipulations or admissions of facts and of documents.
[59]

Section 4 of Rule 18 may supplement Section 8 of Rule 70. Thus, the spirit behind the exception to personal appearance under the rules on pretrial is applicable to the preliminary
conference. If there are valid reasons or if a representative has a special authority, a partys appearance may be waived. As petitioners are challenging only the applicability of the rules on pretrial
to the rule on preliminary conference, the written authorization from respondents can indeed be readily considered as a special authorization.
Third Issue:
Rights of a Builder in Good Faith
As applied to the present case, accession refers to the right of the owner to everything that is incorporated or attached to the property.
[60]
Accession industrial -- building, planting and sowing
on an immovable -- is governed by Articles 445 to 456 of the Civil Code.
Articles 447 and 1678 of the
Civil Code Inapplicable
To buttress their claim of reimbursement for the improvements introduced on the property, petitioners cite Article 447.
[61]
They allege that the CA erred in applying Article 1678, since they
had no lease agreement with respondents.
We clarify. Article 447 is not applicable, because it relates to the rules that apply when the owner of the property uses the materials of another. It does not refer to the instance when a
possessor builds on the property of another, which is the factual milieu here.
In view of the unique factual setting of the instant case, the contention of petitioners regarding the inapplicability of Article 1678 deserves attention. The CA applied the provisions on lease,
because it found their possession by mere tolerance comparable with that of a lessee, per the pronouncement in Calubayan v. Pascual,
[62]
from which we quote:
x x x. It has been held that a person who occupies the land of another at the latters tolerance or permission, without any contract between them, is necessarily bound by an implied promise that
he will vacate upon demand, failing which a summary action for ejectment is the proper remedy against them. The status of defendant is analogous to that of a lessee or tenant whose term of lease
has expired but whose occupancy continued by tolerance of the owner. In such a case, the unlawful deprivation or withholding of possession is to be counted from the date of the demand to
vacate.
[63]
(Emphasis in the original.)
As explained earlier, Ismael and Teresitas possession of the two lots was not by mere tolerance, a circumstance that negates the applicability of Calubayan.
Article 448 Applicable
On the other hand, when a person builds in good faith on the land of another, the applicable provision is Article 448, which reads:
[64]

Article 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of
the indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter
32

cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to
appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof.
This Court has ruled that this provision covers only cases in which the builders, sowers or planters believe themselves to be owners of the land or, at least, to have a claim of title
thereto.
[65]
It does not apply when the interest is merely that of a holder, such as a mere tenant, agent or usufructuary.
[66]
From these pronouncements, good faith is identified by the belief that the
land is owned; or that -- by some title -- one has the right to build, plant, or sow thereon.
[67]

However, in some special cases, this Court has used Article 448 by recognizing good faith beyond this limited definition. Thus, in Del Campo v. Abesia,
[68]
this provision was applied to one
whose house -- despite having been built at the time he was still co-owner -- overlapped with the land of another.
[69]
This article was also applied to cases wherein a builder had constructed
improvements with the consent of the owner. The Court ruled that the law deemed the builder to be in good faith.
[70]
In Sarmiento v. Agana,
[71]
the builders were found to be in good faith despite
their reliance on the consent of another, whom they had mistakenly believed to be the owner of the land.
[72]

Based on the aforecited special cases, Article 448 applies to the present factual milieu. The established facts of this case show that respondents fully consented to the improvements
introduced by petitioners. In fact, because the children occupied the lots upon their invitation, the parents certainly knew and approved of the construction of the improvements introduced
thereon.
[73]
Thus, petitioners may be deemed to have been in good faith when they built the structures on those lots.
The instant case is factually similar to Javier v. Javier.
[74]
In that case, this Court deemed the son to be in good faith for building the improvement (the house) with the knowledge and
consent of his father, to whom belonged the land upon which it was built. Thus, Article 448
[75]
was applied.
Rule on Useful Expenses
The structures built by petitioners were useful improvements, because they augmented the value or income of the bare lots.
[76]
Thus, the indemnity to be paid by respondents under Article
448 is provided for by Article 546, which we quote:
Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the option of refunding the
amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof.
Consequently, respondents have the right to appropriate -- as their own -- the building and other improvements on the subject lots, but only after (1) refunding the expenses of petitioners or
(2) paying the increase in value acquired by the properties by reason thereof. They have the option to oblige petitioners to pay the price of the land, unless its value is considerably more than that
of the structures -- in which case, petitioners shall pay reasonable rent.
In accordance with Depra v. Dumlao,
[77]
this case must be remanded to the trial court to determine matters necessary for the proper application of Article 448 in relation to Article 546. Such
matters include the option that respondents would take and the amount of indemnity that they would pay, should they decide to appropriate the improvements on the lots. We disagree with the
CAs computation of useful expenses, which were based only on petitioners bare allegations in their Answer.
[78]

Ruling on Improvement Justified
While, ordinarily, the jurisdiction of the MTCC on ejectment proceedings is limited to the issue of physical or material possession of the property in question, this Court finds it necessary to
abbreviate the issue on the improvements in relation to Article 448. First, the determination of the parties right to those improvements is intimately connected with the MTCC proceedings in the
light of the ejectment of petitioners. Second, there is no dispute that while they constructed the improvements, respondents owned the land. Third, both parties raised no objection when the RTC
and the CA ruled accordingly on this matter.
Equitable considerations compel us to settle this point immediately, pro hoc vice, to avoid needless delay. Both parties have already been heard on this issue; to dillydally or equivocate would
not serve the cause of substantial justice.
33

Other Issues Raised
Given the foregoing rulings, it is no longer necessary to address petitioners allegation that the MTCC judge and respondents lawyers should be respectively held personally accountable for
the Decision and for filing the case.
[79]
The insinuation of petitioners that the lawyers manipulated the issuance of a false barangay certification is unavailing.
[80]
Their contention that respondents
did not attend the barangay conciliation proceedings was based solely on hearsay, which has little or no probative value.
[81]

WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are AFFIRMED with the following MODIFICATIONS:
1. The portion requiring Spouses Vicente and Rosario Macasaet to reimburse one half of the value of the useful improvements, amounting to P475,000, and the right of Spouses Ismael and
Rosita Macasaet to remove those improvements (if the former refuses to reimburse) is DELETED.
2. The case is REMANDED to the court of origin for further proceedings to determine the facts essential to the proper application of Articles 448 and 546 of the Civil Code, specifically to
the following matters:
a. Spouses Vicente and Rosario Macasaets option to appropriate -- as their own -- the improvements on the lots, after paying the indemnity, as provided under Article 546 in relation to Article
448 of the Civil Code; or in requiring Spouses Ismael and Rosita Macasaet to pay for the value of the lots, unless it is considerably more than that of the improvements, in which case petitioners
shall pay reasonable rent based upon the terms provided under the Civil Code
b. The value of the useful expenses incurred by Spouses Ismael and Rosita Macasaet in the construction of the improvements on the lots
c. The increase in value acquired by the lots by reason of the useful improvements
d. Spouses Vicente and Rosario Macasaets choice of type of indemnity to be paid (whether b or c)
e. Whether the value of the lots is considerably more than that of the improvements built thereon
No pronouncement as to costs.
SO ORDERED.





















34

MARIA CARLOS, represented by G.R. No. 164823
TERESITA CARLOS VICTORIA,
Petitioner, Present:

Puno, J.
Chairman,
Austria-Martinez,
- versus - Callejo, Sr.,
Tinga, and
Chico-Nazario, JJ.

Promulgated:
REPUBLIC OF THE PHILIPPINES,
Respondent. August 31, 2005

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x


DECISION


Puno, J.:


This is a petition for review on certiorari to annul the decision of the Court of Appeals in CA-G.R. CV No. 76824 entitled Re: Application for Land Registration of a Parcel of Land in
Taguig, Metro Manila, Maria Carlos represented by Teresita Carlos Victoria, Applicant-Appellee vs. Republic of the Philippines through the Office of the Solicitor General, Oppositor-Appellant.

On December 19, 2001, petitioner Maria Carlos, represented by her daughter, Teresita Carlos Victoria, filed an application for registration and confirmation of title over a parcel of land with
an area of 3,975 square meters located at Pusawan, Ususan, Taguig, Metro Manila, covered by Plan Psu-244418. Petitioner alleged, among others, that she is the owner of said parcel of land
which she openly, exclusively and notoriously possessed and occupied since July 12, 1945 or earlier under abona fide claim of ownership; that there is no mortgage or encumbrance affecting said
property, nor is it part of any military or naval reservation; that the property is being used for industrial purposes; and that there are no tenants or lessees on the property. Petitioner further
claimed that she has been in possession of the subject land in the concept of an owner; that her possession has been peaceful, public, uninterrupted and continuous since 1948 or earlier; and tacking
her possession with that of her predecessors-in-interest, petitioner has been in possession of the land for more than 50 years.
[1]

The Republic of the Philippines, represented by the Director of Lands, filed an opposition to petitioners application.
[2]

During the initial hearing, however, only petitioner and her counsel appeared. They presented documentary evidence to prove the jurisdictional
35

requirements.
[3]

Petitioner later presented testimonial evidence consisting of the testimonies of her neighbors, Sergio Cruz and Daniel Castillo, and Teresita Carlos Victoria herself.
[4]

Sergio Cruz, 83 years old, a native of Ususan, Taguig, and neighbor of Maria Carlos, testified that the property subject of the application was previously owned and possessed by Jose Carlos.
He planted it with palay and sold the harvest. Everyone in the community knew him as the owner of said parcel of land. He also paid the taxes thereon. After the death of Jose Carlos in 1948, his
daughter, Maria Carlos, inherited the property and immediately took possession thereof. Her possession was peaceful, open, public, continuous, uninterrupted, notorious, adverse and in the concept
of an owner. When Maria Carlos died, her heirs took over the property.
[5]

Cruzs testimony was corroborated by Daniel Castillo, 76 years old, Barangay Captain of Ususan, Taguig.
[6]

Teresita Carlos Victoria stated on the witness stand that her mother, Maria Carlos, was in possession of the subject property until she passed away on January 6, 2001. Upon the demise of
Maria Carlos, Victoria took possession of the property with the consent of her brothers and sisters. She characterized Maria Carloss possession as peaceful, open, public, continuous, adverse,
notorious and in the concept of an owner. She has never been disturbed in her possession; the whole community recognized her as the owner of the land; she declared the land for tax purposes; and
she paid the taxes thereon. In addition, Victoria informed the court that the heirs of Maria Carlos have not yet instituted a settlement of her estate. However, they have agreed to undertake the
titling of the property and promised to deliver the certificate of title to Ususan Development Corporation which bought the property from Maria Carlos. Victoria admitted that her mother had
sold the land to Ususan Development Corporation in 1996 but failed to deliver the title. Hence, the heirs of Maria Carlos made a commitment to the corporation to deliver the certificate of title so
that they could collect the unpaid balance of the purchase price.
[7]

Petitioner also presented in court the concerned officers of the Department of Environment and Natural Resources (DENR) to establish that the land in question is alienable and disposable.
Elvira R. Reynaldo, Records Officer, DENR Lands Management Bureau, appeared to certify that their office has no record of any kind of public land application/land patent covering the
parcel of land situated at
36

Ususan, Taguig, Rizal, identified/described in Plan Psu-244418.
[8]

Ulysses Sigaton, Land Management Inspector, DENR National Capital Region, stated that he conducted an ocular inspection of the subject property and found that it is within the
alienable and disposable area under Project No. 27-B, LC Map No. 2623, certified by the Bureau of Forest Development on January 4, 1968. He also noted that the land is being used for industrial
purposes. It had several warehouses, four big water tanks and is enclosed by a fence.
[9]

The trial court granted the application in its decision dated October 24, 2002. It held:
After considering the applicants evidence ex-parte which is based on factual and meritorious grounds, and considering that the applicant acquired the property under
registration through inheritance from her father, Jose Carlos, and considering further that her possession thereof, tacked with that of her predecessor-in-interest, is open,
continuous, exclusive, notorious and undisturbed, under claim of ownership since time immemorial up to the present time; and considering further that the subject parcel of land
is part of the disposable and alienable land (Tsn, July 3, 2002, p.6) and considering further that the realty taxes due thereon have been religiously paid (Exhs. HH, II, JJ,
and JJ-1), and considering finally that the subject parcel of land belong[s] to the applicant and that she possess[es] a perfect title thereto which may be confirmed and
registered in her name under the (P)roperty Registration Decree (P.D. 1529), the herein application is hereby GRANTED.
[10]


On appeal, the Court of Appeals reversed and set aside the decision of the trial court. It noted that:
In the instant case, the applicant at the time she filed her application for registration of title was no longer in possession and occupation of the land in question since on
October 16, 1996, the applicants mother and predecessor-in-interest sold the subject land to Ususan Development Corporation. This was admitted by witness Teresita Carlos
Victoria x x x

Clearly, as early as 1996, possession and occupation of the land in question pertains not to the applicant but to Ususan Development Corporation, thus it can be said that
the applicant has no registrable title over the land in question.
[11]


Hence, this petition.
We affirm the findings of the appellate court.
Applicants for confirmation of imperfect title must prove the following: (a) that the land forms part of the disposable and alienable agricultural lands of the public domain; and (b) that they
have been in open, continuous, exclusive, and notorious possession and occupation of the same under a bona fide claim of ownership either since time immemorial or since June 12, 1945.
[12]

As found by the Court of Appeals, petitioner has met the first requirement but not the second.
The Court held in Republic vs. Alconaba
[13]
that the applicant must show that he is in actual possession of the property at the time of the application, thus:
The law speaks of possession and occupation. Since these words are separated by the conjunction []and[], the clear intention of the law is not to make one synonymous
with the other. Possession is broader than occupation because it includes constructive possession. When, therefore, the law adds the word occupation, it seeks to delimit the all-
encompassing effect of constructive possession. Taken together with the words open, continuous, exclusive and notorious, the word occupation serves to highlight the fact that
for an applicant to qualify, his possession must not be a mere fiction. Actual possession of a land consists in the manifestation of acts of dominion over it of such a nature as a
party would naturally exercise over his own property.

It is clear in the case at bar that the applicant, Maria Carlos, no longer had possession of the property at the time of the application for the issuance of a certificate of title. The application was
filed in court on December 19, 2001. Teresita Carlos Victoria, the daughter of Maria Carlos, admitted during the hearing that her mother had sold the property to Ususan Development
Corporation in 1996. They also presented as evidence the deed of absolute sale executed by and between Maria Carlos and Ususan Development Corporation on October 16, 1996.
[14]
The
document states, among others:
xxx

4. That the VENDOR, by this Deed hereby transfer(s) possession of the property to the VENDEE.
[15]


This contradicts petitioners claim that she was in possession of the property at the time that she applied for confirmation of title.
Nonetheless, even if it were true that it was petitioner who had actual possession of the land at that time, such possession was no longer in the concept of an owner. Possession may be had in
one of two ways: possession in the concept of an owner and possession of a holder. A possessor in the concept of an owner may be the owner himself or one who claims to be so. On the other
hand, one who possesses as a mere holder acknowledges in another a superior right which he believes to be ownership, whether his belief be right or wrong.
[16]
Petitioner herein acknowledges the
37

sale of the property to Ususan Development Corporation in 1996 and in fact promised to deliver the certificate of title to the corporation upon its obtention. Hence, it cannot be said that her
possession since 1996 was under a bona fideclaim of ownership. Under the law, only he who possesses the property under a bona fide claim of ownership is entitled to confirmation of title.
We therefore find that the Court of Appeals did not err in denying the issuance of a certificate of title to petitioner.
IN VIEW WHEREOF, the petition is DENIED.
SO ORDERED.

FERMIN Z. CARAM, JR., petitioner,
vs.
CLARO L. LAURETA, respondent.
FERNANDEZ, J.:
This is a petition for certiorari to review the decision of the Court of Appeals promulgated on January 29, 1968 in CA-G. R. NO. 35721-R entitled "Claro L. Laureta, plaintiff-appellee versus
Marcos Mata, Codidi Mata and Fermin Caram, Jr., defendants- appellants; Tampino (Mansaca), et al. Intervenors-appellants," affirming the decision of the Court of First Instance of Davao in Civil
Case No. 3083.
1

On June 25, 1959, Claro L. Laureta filed in the Court of First Instance of Davao an action for nullity, recovery of ownership and/or reconveyance with damages and attorney's fees against Marcos
Mata, Codidi Mata, Fermin Z. Caram, Jr. and the Register of Deeds of Davao City.
2

On June 10, 1945, Marcos Mata conveyed a large tract of agricultural land covered by Original Certificate of Title No. 3019 in favor of Claro Laureta, plaintiff, the respondent herein. The deed of
absolute sale in favor of the plaintiff was not registered because it was not acknowledged before a notary public or any other authorized officer. At the time the sale was executed, there was no
authorized officer before whom the sale could be acknowledged inasmuch as the civil government in Tagum, Davao was not as yet organized. However, the defendant Marcos Mata delivered to
Laureta the peaceful and lawful possession of the premises of the land together with the pertinent papers thereof such as the Owner's Duplicate Original Certificate of Title No. 3019, sketch plan,
tax declaration, tax receipts and other papers related thereto.
3
Since June 10, 1945, the plaintiff Laureta had been and is stin in continuous, adverse and notorious occupation of said land, without
being molested, disturbed or stopped by any of the defendants or their representatives. In fact, Laureta had been paying realty taxes due thereon and had introduced improvements worth not less
than P20,000.00 at the time of the filing of the complaint.
4

On May 5, 1947, the same land covered by Original Certificate of Title No. 3019 was sold by Marcos Mata to defendant Fermin Z. Caram, Jr., petitioner herein. The deed of sale in favor of Caram
was acknowledged before Atty. Abelardo Aportadera. On May 22, 1947, Marcos Mata, through Attys. Abelardo Aportadera and Gumercindo Arcilla, filed with the Court of First Instance of Davao
a petition for the issuance of a new Owner's Duplicate of Original Certificate of Title No. 3019, alleging as ground therefor the loss of said title in the evacuation place of defendant Marcos Mata in
Magugpo, Tagum, Davao. On June 5, 1947, the Court of First Instance of Davao issued an order directing the Register of Deeds of Davao to issue a new Owner's Duplicate Certificate of Title No.
3019 in favor of Marcos Mata and declaring the lost title as null and void. On December 9, 1947, the second sale between Marcos Mata and Fermin Caram, Jr. was registered with the Register of
Deeds. On the same date, Transfer Certificate of Title No. 140 was issued in favor of Fermin Caram Jr.
5

On August 29, 1959, the defendants Marcos Mata and Codidi Mata filed their answer with counterclaim admitting the existence of a private absolute deed of sale of his only property in favor of
Claro L. Laureta but alleging that he signed the same as he was subjected to duress, threat and intimidation for the plaintiff was the commanding officer of the 10th division USFIP operating in the
unoccupied areas of Northern Davao with its headquarters at Project No. 7 (Km. 60, Davao Agusan Highways), in the Municipality of Tagum, Province of Davao; that Laureta's words and requests
were laws; that although the defendant Mata did not like to sell his property or sign the document without even understanding the same, he was ordered to accept P650.00 Mindanao Emergency
notes; and that due to his fear of harm or danger that will happen to him or to his family, if he refused he had no other alternative but to sign the document.
6

The defendants Marcos Mata and Codidi Mata also admit the existence of a record in the Registry of Deeds regarding a document allegedly signed by him in favor of his co-defendant Fermin
Caram, Jr. but denies that he ever signed the document for he knew before hand that he had signed a deed of sale in favor of the plaintiff and that the plaintiff was in possession of the certificate of
title; that if ever his thumb mark appeared in the document purportedly alienating the property to Fermin Caram, did his consent was obtained through fraud and misrepresentation for the
defendant Mata is illiterate and ignorant and did not know what he was signing; and that he did not receive a consideration for the said sale.
7

38

The defendant Fermin Caram Jr. filed his answer on October 23, 1959 alleging that he has no knowledge or information about the previous encumbrances, transactions, and alienations in favor of
plaintiff until the filing of the complaints.
8

The trial court rendered a decision dated February 29, 1964, the dispositive portion of which reads:
9

1. Declaring that the deed of sale, Exhibit A, executed by Marcos Mata in favor of Claro L. Laureta stands and prevails over the deed of sale, Exhibit F, in favor of Fermin
Caram, Jr.;
2. Declaring as null and void the deed of sale Exhibit F, in favor of Fermin Caram, Jr.;
3. Directing Marcos Mata to acknowledge the deed of sale, Exhibit A, in favor of Claro L. Laureta;
4. Directing Claro L. Laureta to secure the approval of the Secretary of Agriculture and Natural Resources on the deed, Exhibit A, after Marcos Mata shall have acknowledged
the same before a notary public;
5. Directing Claro L. Laureta to surrender to the Register of Deeds for the City and Province of Davao the Owner's Duplicate of Original Certificate of Title No. 3019 and the
latter to cancel the same;
6. Ordering the Register of Deeds for the City and Province of Davao to cancel Transfer Certificate of Title No. T-140 in the name of Fermin Caram, Jr.;
7. Directing the Register of Deeds for the City and Province of Davao to issue a title in favor of Claro L. Laureta, Filipino, resident of Quezon City, upon presentation of the
deed executed by Marcos Mata in his favor, Exhibit A, duly acknowledged by him and approved by the Secretary of Agriculture and Natural Resources, and
8. Dismissing the counterclaim and cross claim of Marcos Mata and Codidi Mata, the counterclaim of Caram, Jr., the answer in intervention, counterclaim and cross-claim of the
Mansacas.
The Court makes no pronouncement as to costs.
SO ORDERED.
The defendants appealed from the judgment to the Court of Appeals.
10
The appeal was docketed as CA-G.R. NO. 35721- R.
The Court of Appeals promulgated its decision on January 29, 1968 affirming the judgment of the trial court.
In his brief, the petitioner assigns the following errors:
11

I
THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT IRESPE AND APORTADERA WERE ATTORNEYS-IN-FACT OF PETITIONER
CARAM FOR THE PURPOSE OF BUYING THE PROPERTY IN QUESTION.
II
THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT THE EVIDENCE ADDUCED IN THE TRIAL COURT CONSTITUTE LEGAL
EVIDENCE OF FRAUD ON THE PART OF IRESPE AND APORTADERA AT TRIBUTABLE TO PETITIONER.
39

III
THE RESPONDENT COURT OF APPEALS COMMITTED GRAVE ERROR OF LAW IN HOLDING THAT KNOWLEDGE OF IRESPE AND APORTADERA OF A
PRIOR UNREGISTERED SALE OF A TITLED PROPERTY ATTRIBUTABLE TO PETITIONER AND EQUIVALENT IN LAW OF REGISTRATION OF SAID
SALE.
IV
THE RESPONDENT COURT OF APPEALS ERRED IN NOT HOLDING THAT AN ACTION FOR RECONVEYANCE ON THE GROUND OF FRAUD PRESCRIBES
WITHIN FOUR (4) YEARS.
The petitioner assails the finding of the trial court that the second sale of the property was made through his representatives, Pedro Irespe and Atty. Abelardo Aportadera. He argues that Pedro
Irespe was acting merely as a broker or intermediary with the specific task and duty to pay Marcos Mata the sum of P1,000.00 for the latter's property and to see to it that the requisite deed of sale
covering the purchase was properly executed by Marcos Mata; that the Identity of the property to be bought and the price of the purchase had already been agreed upon by the parties; and that the
other alleged representative, Atty. Aportadera, merely acted as a notary public in the execution of the deed of sale.
The contention of the petitioner has no merit. The facts of record show that Mata, the vendor, and Caram, the second vendee had never met. During the trial, Marcos Mata testified that he knows
Atty. Aportadera but did not know Caram.
12
Thus, the sale of the property could have only been through Caram's representatives, Irespe and Aportadera. The petitioner, in his answer, admitted
that Atty. Aportadera acted as his notary public and attorney-in-fact at the same time in the purchase of the property.
13

The petitioner contends that he cannot be considered to have acted in bad faith because there is no direct proof showing that Irespe and Aportadera, his alleged agents, had knowledge of the first
sale to Laureta. This contention is also without merit.
The Court of Appeals, in affirming the decision of the trial court, said:
14

The trial court, in holding that appellant Caram. Jr. was not a purchaser in good faith, at the time he bought the same property from appellant Mata, on May 5, 1947, entirely
discredited the testimony of Aportadera. Thus it stated in its decision:
The testimony of Atty. Aportadera quoted elsewhere in this decision is hollow. There is every reason to believe that Irespe and he had known of the sale of the property in
question to Laureta on the day Mata and Irespe, accompanied by Leaning Mansaca, went to the office of Atty. Aportadera for the sale of the same property to Caram, Jr.,
represented by Irespe as attorney-in-fact. Ining Mansaca was with the two Irespe and Mata to engage the services 6f Atty. Aportadera in the annulment of the sale of his
land to Laureta. When Leaning Mansaca narrated to Atty. Aportadera the circumstances under which his property had been sold to Laureta, he must have included in the
narration the sale of the land of Mata, for the two properties had been sold on the same occassion and under the same circumstances. Even as early as immediately after
liberation, Irespe, who was the witness in most of the cases filed by Atty. Aportadera in his capacity as Provincial Fiscal of Davao against Laureta, must have known of the
purchases of lands made by Laureta when he was regimental commander, one of which was the sale made by Mata. It was not a mere coincidence that Irespe was made
guardian ad litem of Leaning Mansaca, at the suggestion of Atty. Aportadera and attorney-in-fact of Caram, Jr.
The Court cannot help being convinced that Irespe, attorney-in-fact of Caram, Jr. had knowledge of the prior existing transaction, Exhibit A, between Mata and Laureta over
the land, subject matter of this litigation, when the deed, Exhibit F, was executed by Mata in favor of Caram, Jr. And this knowledge has the effect of registration as to Caram,
Jr. RA pp. 123-124)
We agree with His Honor's conclusion on this particular point, on two grounds the first, the same concerns matters affecting the credibility of a witness of which the findings
of the trial court command great weight, and second, the same is borne out by the testimony of Atty. Aportadera himself. (t.s.n., pp. 187-190, 213-215, Restauro).
Even if Irespe and Aportadera did not have actual knowledge of the first sale, still their actions have not satisfied the requirement of good faith. Bad faith is not based solely on the fact that a
vendee had knowledge of the defect or lack of title of his vendor. In the case of Leung Yee vs. F. L. Strong Machinery Co. and Williamson, this Court held:
15

40

One who purchases real estate with knowledge of a defect or lack of title in his vendor can not claim that he has acquired title thereto in good faith, as against the true owner of
the land or of an interest therein, and the same rule must be applied to one who has knowledge of facts which should have put him upon such inquiry and investigation as might
be necessary to acquaint him with the defects in the title of his vendor.
In the instant case, Irespe and Aportadera had knowledge of circumstances which ought to have put them an inquiry. Both of them knew that Mata's certificate of title together with other papers
pertaining to the land was taken by soldiers under the command of Col. Claro L. Laureta.
16
Added to this is the fact that at the time of the second sale Laureta was already in possession of the land.
Irespe and Aportadera should have investigated the nature of Laureta's possession. If they failed to exercise the ordinary care expected of a buyer of real estate they must suffer the consequences.
The rule of caveat emptor requires the purchaser to be aware of the supposed title of the vendor and one who buys without checking the vendor's title takes all the risks and losses consequent to
such failure.
17

The principle that a person dealing with the owner of the registered land is not bound to go behind the certificate and inquire into transactions the existence of which is not there
intimated
18
should not apply in this case. It was of common knowledge that at the time the soldiers of Laureta took the documents from Mata, the civil government of Tagum was not yet
established and that there were no officials to ratify contracts of sale and make them registerable. Obviously, Aportadera and Irespe knew that even if Mata previously had sold t he Disputed such
sale could not have been registered.
There is no doubt then that Irespe and Aportadera, acting as agents of Caram, purchased the property of Mata in bad faith. Applying the principle of agency, Caram as principal, should also be
deemed to have acted in bad faith.
Article 1544 of the New Civil Code provides that:
Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good
faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recordered it in the Registry of Property.
Should there be no inscription, the ownership shag pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the
oldest title, provided there is good faith. (1473)
Since Caram was a registrant in bad faith, the situation is as if there was no registration at all.
19

The question to be determined now is, who was first in possession in good faith? A possessor in good faith is one who is not aware that there exists in his title or mode of acquisition any flaw which
invalidates it.
20
Laureta was first in possession of the property. He is also a possessor in good faith. It is true that Mata had alleged that the deed of sale in favor of Laureta was procured by
force.
21
Such defect, however, was cured when, after the lapse of four years from the time the intimidation ceased, Marcos Mata lost both his rights to file an action for annulment or to set up
nullity of the contract as a defense in an action to enforce the same.
Anent the fourth error assigned, the petitioner contends that the second deed of sale, Exhibit "F", is a voidable contract. Being a voidable contract, the action for annulment of the same on the
ground of fraud must be brought within four (4) years from the discovery of the fraud. In the case at bar, Laureta is deemed to have discovered that the land in question has been sold to Caram to
his prejudice on December 9, 1947, when the Deed of Sale, Exhibit "F" was recorded and entered in the Original Certificate of Title by the Register of Deeds and a new Certificate of Title No. 140
was issued in the name of Caram. Therefore, when the present case was filed on June 29, 1959, plaintiff's cause of action had long prescribed.
The petitioner's conclusion that the second deed of sale, "Exhibit F", is a voidable contract is not correct. I n order that fraud can be a ground for the annulment of a contract, it must be employed
prior to or simultaneous to the, consent or creation of the contract. The fraud or dolo causante must be that which determines or is the essential cause of the contract. Dolo causante as a ground for
the annulment of contract is specifically described in Article 1338 of the New Civil Code of the Philippines as "insidious words or machinations of one of the contracting parties" which induced the
other to enter into a contract, and "without them, he would not have agreed to".
The second deed of sale in favor of Caram is not a voidable contract. No evidence whatsoever was shown that through insidious words or machinations, the representatives of Caram, Irespe and
Aportadera had induced Mata to enter into the contract.
41

Since the second deed of sale is not a voidable contract, Article 1391, Civil Code of the Philippines which provides that the action for annulment shall be brought within four (4) years from the time
of the discovery of fraud does not apply. Moreover, Laureta has been in continuous possession of the land since he bought it in June 1945.
A more important reason why Laureta's action could not have prescribed is that the second contract of sale, having been registered in bad faith, is null and void. Article 1410 of the Civil Code of the
Philippines provides that any action or defense for the declaration of the inexistence of a contract does not prescribe.
In a Memorandum of Authorities
22
submitted to this Court on March 13, 1978, the petitioner insists that the action of Laureta against Caram has prescribed because the second contract of sale is
not void under Article 1409
23
of the Civil Code of the Philippines which enumerates the kinds of contracts which are considered void. Moreover, Article 1544 of the New Civil Code of the
Philippines does not declare void a second sale of immovable registered in bad faith.
The fact that the second contract is not considered void under Article 1409 and that Article 1544 does not declare void a deed of sale registered in bad faith does not mean that said contract is not
void. Article 1544 specifically provides who shall be the owner in case of a double sale of an immovable property. To give full effect to this provision, the status of the two contracts must be
declared valid so that one vendee may contract must be declared void to cut off all rights which may arise from said contract. Otherwise, Article 1544 win be meaningless.
The first sale in favor of Laureta prevails over the sale in favor of Caram.
WHEREFORE, the petition is hereby denied and the decision of the Court of Appeals sought to be reviewed is affirmed, without pronouncement as to costs.
SO ORDERED.
THE HEIRS OF CLARO L. LAURETA, petitioners,
vs.
HON. INTERMEDIATE APPELLATE COURT, MARCOS MATA and CODICI MATA, respondents.
REGALADO, J.:
This is a petition to review on appeal by certiorari the decision
1
of the then Intermediate Appellate Court in AC-G.R. CV No. 02943, entitled "Marcos Mata and Codidi Mata vs. Heirs of Claro L.
Laureta," promulgated on April 30, 1985, which affirmed in toto the judgment rendered by the Regional Trial Court, Branch I, in Tagum, Davao in Civil Case No. 1071 thereof, as well as the
resolution of respondent court denying petitioners' motion for reconsideration.
Petitioners, who are all heirs of the late Claro L. Laureta, have been substituted in this case for their father who died during the litigation of the case in the lower court. They are Luna Vda. de
Laureta, and Lourdes, Joseph, Eduardo, Veronica, Esteban, Enrico, Luis, Romulo and Bernardina, all surnamed Laureta. Private respondents Marcos Mata and Codici Mata are spouses, and when
Marcos Mata passed away during the pendency of the case in the court below, he was likewise substituted by his heirs, Codici Mata and their children, namely, Celestino, Leoncia, Engracio, Agolio,
Pio, Marcelo, Meliton, Ricardo, Pagakan Caring and Tamping.
2

We adopt the factual findings made by this Court in an earlier case which was docketed as G.R. No. L-28740, entitled "Fermin Z. Caram, Jr. vs. Claro L. Laureta"
3
and which have a direct bearing
on the present case, as follows:
On June 10, 1945, Marcos Mata conveyed a large tract of agricultural land covered by Original Certificate of Title No. 3019 in favor of Claro Laureta, plaintiff, the respondent
herein. The deed of sale in favor of the plaintiff was not registered because it was not acknowledged before a notary public or any other authorized officer. At the time the sale
was executed, there was no authorized officer before whom the sale could be acknowledged inasmuch as the civil government in Tagum, Davao was not as yet organized.
However, the defendant Marcos Mata delivered to Laureta the peaceful and lawful possession of the premises of the land together with the pertinent papers thereof such as the
Owner's Duplicate (of) Original Certificate of Title No. 3019, sketch plan, tax declaration, tax receipts and other papers related thereto. Since June 10, 1945, the plaintiff Laureta
had been and is still in continuous, adverse and notorious occupation of said land, without being molested, disturbed or stopped by any of the defendants or their representatives.
In fact, Laureta had been paying realty taxes due thereon and had introduced improvements worth not less than P20,000.00 at the time of the filing of the complaint.
On May 5, 1947, the same land covered by Original Certificate of Title No. 3019 was sold by Marcos Mata to defendant Fermin Z. Caram, Jr., petitioner herein. The deed of sale
in favor of Caram was acknowledged before Atty. Abelardo Aportadera. On May 22, 1947, Marcos Mata, through Attys. Abelardo Aportadera and Gumercindo Arcilla, filed
42

with the Court of First Instance of Davao a petition for the issuance of a new Owner's Duplicate of Original Certificate of Title No. 3019, alleging as ground therefor the loss of
said title in the evacuation place of defendant Marcos Mata in Magugpo Tagum, Davao. On June 5 1947, the Court of First Instance of Davao issued an order directing the
Register of Deeds of Davao to issue a new Owner's Duplicate Certificate of Title No. 3019 in favor of Marcos Mata and declaring the lost title as null and void. On December 9,
1947, the second sale between Marcos Mata and Fermin Caram, Jr. was registered with the Register of Deeds. On the same date, Transfer Certificate of Title No. 140 was
issued in favor of Fermin Caram, Jr.
Said decision goes on to state that on June 25, 1959, Claro Laureta filed in the then Court of First Instance of Davao an action for nullity, recovery of ownership and/or reconveyance with damages
against the spouses Marcos Mata and Codici Mata, Fermin Z. Caram, Jr. and the Register of Deeds of Davao City, which was docketed as Civil Case No. 3083 thereof.
4
After due hearing, the trial
court rendered a decision on February 29, 1964, the decretal portion of which passes judgment:
1. Declaring that the deed of sale, Exhibit A, executed by Marcos Mata in favor of Claro L. Laureta stands and prevails over the deed of sale, Exhibit F, in favor of Fermin Caram, Jr.;
2. Declaring as null and void the deed of sale, Exhibit F, in favor of Fermin Caram, Jr.;
3. Directing Marcos Mata to acknowledge the deed of sale, Exhibit A, in favor of Claro L. Laureta;
4. Directing Claro L. Laureta to secure the approval of the Secretary of Agriculture and Natural Resources on the deed, Exhibit A, after Marcos Mata shall have acknowledged
the same before a notary public;
5. Directing Claro L. Laureta to surrender to the Register of Deeds for the City and Province of Davao the Owner's Duplicate of Original Certificate of Title No. 3019 and the
latter to cancel the same;
6. Ordering the Register of Deeds for the City and Province of Davao to cancel Transfer Certificate of Title No. T-140 in the name of Fermin Caram, Jr.;
7. Directing the Register of Deeds for the City and Province of Davao to issue a title in favor of Claro L. Laureta, Filipino, resident of Quezon City, upon presentation of the
deed executed by Marcos Mata in his favor, Exhibit A, duly acknowledged by him and approved by the Secretary of Agriculture and Natural Resources; and
8. Dismissing the counterclaim and cross-claim of Marcos Mata and Codici Mata, the counterclaim of Caram, Jr., the answer in intervention, counterclaim and cross-claim of the
Mansacas.
The Court makes no pronouncement as to costs.
SO ORDERED.
5
(Emphasis supplied.)
A joint appeal was taken by the Mata spouses and Caram, Jr. to the Court of Appeals where it was docketed as CA-G.R. No. 35721-R. On January 29, 1968, the Court of Appeals promulgated its
judgment affirming in full the decision of the Court of First Instance of Davao in Civil Case No. 3083.
6

From this decision of the Court of Appeals, two separate petitions were filed before this Court, that is, G.R. No. L-29147, which is the petition filed by the Mata spouses against Laureta and which
was denied for lack of merit on June 20, 1968; and G.R. No. L-28740, entitled "Fermin Caram, Jr. vs. Claro L. Laureta," hereinbefore mentioned, which was given due course. The resolution
denying the petition of the Mata spouses in G.R. No. L-29147 became final and executory on July 26, 1968 when entry of judgment was made.
7
On the other hand, on February 24, 1981 this Court
promulgated its decision on the merits in G.R. No. L-28740 dismissing the petition of Caram, Jr., and affirming the decision of the respondent court.
After judgment in the latter case became final and executory on February 12, 1982 and was duly entered,
8
herein petitioners moved for the execution of said judgment on May 10, 1982.
An alias writ of execution was issued on February 2, 1983. Upon orders
9
of the lower court in Civil Case No. 3083, the branch clerk of court executed the required new deed of sale in favor of Claro
Laureta which was acknowledged by the court's officer-in-charge on August 23, 1983. On February 21, 1984, the deed of absolute sale was duly approved by the Minister of Natural
Resources.
10
Finally on May 9, 1985, Transfer Certificate of Title No. T-46346 was issued in the name of Claro L. Laureta.
11

43

In the meantime, the Mata spouses had filed on February 23, 1979 an action for recovery of ownership and possession of said land with the former Court of First Instance, Branch I, in Tagum,
Davao, entitled "Marcos Mata, et al. vs. Heirs of Claro L. Laureta; Fermin Caram, Jr., Intervenor," docketed therein as Civil Case No. 1071.
12
Private respondents' action was predicated on the fact
that the deed of sale executed by Marcos Mata over his parcel of land covered by Original Certificate of Title No. 3019 in favor of Claro L. Laureta in June, 1945 is null and void and/or
unenforceable because the same had not been approved by the Secretary of Agriculture and Natural Resources as required by law and as directed by the Court of First Instance of Davao in its
decision of February 29, 1964 in Civil Case No. 3083, and that said decision could no longer be enforced for having prescribed.
On April 20, 1983, the trial court rendered its decision in said Civil Case No. 1071, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered: (1) declaring that the decision in Civil Case No. 3083 in favor of Claro L. Laureta has become stale and unenforceable due to
prescription; (2) returning the ownership of the land in question to the plaintiffs who are the forced heirs of the deceased homesteader, Marcos Mata; and (3) ordering that
defendants and their privies, as well as Fermin Z. Caram, Jr. and his privies, to vacate and surrender the possession of the property to plaintiffs.
13

On appeal, as earlier stated, respondent court affirmed the said decision in toto, hence, this petition.
The determinative issue in this case is whether or not petitioners could still validly execute, enforce and/or comply with the judgment rendered by the Court of First Instance of Davao on
February 29, 1964 in Civil Case No. 3083 at the time private respondents filed Civil Case No. 1071 against the petitioners on February 23, 1979.
We rule in the affirmative.
Petitioners contend that private respondents' aforesaid action for recovery of possession was prematurely filed by private respondents without waiting for the decision in G.R. No. L-28740 which
petitioners allege constitutes the final disposition of Civil Case No. 3083, contrary to private respondents' averment that the judgment in Civil Case No. 3083 became final and executory upon the
entry of judgment in G.R. No. L-29147 which denied the petition of the Mata spouses.
The submission of private respondents is basically premised on Section 6, Rule 39 of the Rules of Court, in conjunction with Article 1144 of the Civil Code, to wit:
Sec. 6. Execution by motion or by independent action. A judgment may be executed on motion within five (5) years from the date of its entry or from the date it becomes final and
executory. After the lapse of such time, and before it is barred by the statute of limitations, a judgment may be enforced by action.
Art. 1144. The following actions must be brought within ten years from the time the right of action accrues:
xxx xxx xxx
(3) Upon a judgment.
Private respondents maintain that since the abovecited provisions of law categorically provide, as the case may be, for a five-year and ten-year prescriptive period for the enforceability of a
judgment, and considering further that petitioners moved for the execution of the decision rendered in Civil Case No. 3083 only after the expiration of ten years reckoned from July 26, 1968, said
judgment ceased to be a valid subject of execution.
Both the trial court and respondent court adopted private respondents' theory that the ten-year statutory limitation commenced from the date of entry of judgment in G.R. No. L-29147, that is,
from July 26, 1968. In rejecting petitioners contention that the decision sought to be enforced became final only on February 24, 1981, when Caram's petition in G.R. No. L-28740 was dismissed by
this Court, respondent court quoted the theory of the trial court, as follows:
It should be noted, in this connection, that nowhere in the dispositive portion of the decision was Fermin Z. Caram, Jr. required to do any positive act for its implementation.
Only Marcos Mata, the Register of Deeds and Claro L. Laureta himself were directed to perform the specific acts therein mentioned for purposes of execution. There was,
therefore, no legal obstacle to execute the judgment in favor of Laureta, upon its finality against Marcos and Codici Mata on July 26, 1968, because from that time on, but within
the period prescribed by law, the matters adjudicated in his favor with finality could already be accomplished, even without the participation of Caram, who could still get back
ownership of the property from Laureta, in the event that he will prevail over the latter in their pending case before the Supreme Court, which however, he eventually lost.
14

44

We believe and hold otherwise.
While it is true that separate petitions for certiorari were filed by the Mata spouses (G.R. No. L-29147) and Fermin Caram, Jr. (G.R. No. L-28740) from the decision of the respondent court in CA-
G.R. No. 35721-R, a cursory perusal of the pertinent allegations raised in G.R. Nos. L-29147 and L-28740 will show that the interests of Mata and Caram are so intimately interwoven and
dependent on each other that whatever may be the outcome of either or both cases would necessarily affect the ownership rights of herein petitioners. It is also readily apparent that in their
aforesaid respective petitions with this Court, both the Mata's and Caram elevated the entire decision of respondent court in CA-G.R. No. 35721-R for appellate review, without, as correctly
observed by herein petitioners, referring to or appealing from only a particular portion of said decision. This is necessarily so since the said judgment of the respondent court did not involve either
several or separate judgments,
15
but was one complete integrated judgment, against all the appellants and their claims therein, which could not be the subject of separate executory processes.
That the appeals of the Matas and Caram from the decision of the Court of Appeals in CA-G.R. No. 35721-R, and the action of this Court thereon, involved said decision in its entirety is readily
confirmable from and evident right in the opening statement of this Court in G.R. No. L-28740 declaring as for lows:
This is a petition for certiorari to review the decision of the Court of Appeals promulgated on January 29, 1968 in CA-G.R. No. 35721-R entitled "Claro L. Laureta, plaintiff-
appellee versus Marcos Mata, Codici Mata and Fermin Caram, Jr., defendants-appellants; Tampino" (Mansaca), et al., Intervenors-appellants,' affirming the decision of the Court of
First Instance of Davao in Civil Case No. 3083.
and the decretal portion of which states that "the decision of the Court of Appeals sought to be reviewed is affirmed, . . .
Of further import is the inescapable fact that the Court, in its decision in the above quoted case, referred specifically to and relied on the first sale made in favor of Claro Laureta in ruling against
the legality of the subsequent sale to Fermin Caram, Jr. Precisely, the validity of Caram's title depends largely on whether he had knowledge, actual or constructive, of the prior sale to Laureta.
Hence, whatever would be the decision of the Court in G.R. No. L-28740 (which eventually turned out to be a reaffirmance of the judgment of the trial court in Civil Case No. 3083) would
necessarily have a direct bearing on the judgment of said trial court declaring that the sale to Laureta prevails over that made to Caram, as well as its mandates therein for the cancellation of the
title of Caram and the issuance of another one in the name of Laureta. It is thus patently erroneous to assume that the trial court's decision in Civil Case No. 3083 consists of distinct and separate
rulings for each of the defendants, which could be capable of partial execution, just because separate appeals were ultimately taken by said defendants when said decision a quo was affirmed by
respondent court.
The irresistible conclusion, therefore, is that a partial execution of the judgment in Civil Case No. 3083 prior to the final determination of Caram's petition in G.R. No. L-28740 would be a
proscribed legal absurdity. Such partial execution, if allowed, would indubitably entail the cancellation of Caram's title and would unquestionably have been legally premature and impermissible at
that time since the validity thereof still had to be resolved by this Court. Consequently, the ten-year period for the execution of said judgment commenced to run only on February 12, 1982 when
the decision denying Caram's petition became final and executory, and the execution on motion of petitioners in 1983 in Civil Case No. 3083 was not time-barred.
WHEREFORE, the judgment appealed from is hereby REVERSED and SET ASIDE and Civil Case No. 1071 of the Regional Trial Court of Davao is hereby DISMISSED.
SO ORDERED.






45

ERMINDA F. FLORENTINO,
Petitioner,





- versus -





SUPERVALUE, INC.,
Respondent.

G.R. No. 172384

Present:
YNARES-SANTIAGO,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.



Promulgated:


September 12, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x


D E C I S I O N


CHICO-NAZARIO, J.:


Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, filed by petitioner Erminda F. Florentino, seeking to reverse and set aside the
Decision,
[1]
dated 10 October 2003 and the Resolution,
[2]
dated 19 April 2006 of the Court of Appeals in CA-G.R. CV No. 73853. The appellate court, in its assailed Decision and Resolution,
modified the Decision dated 30 April 2001 of the Regional Trial Court (RTC) of Makati, Branch 57, in Civil Case No. 00-1015, finding the respondent Supervalue, Inc., liable for the sum
of P192,000.00, representing the security deposits made by the petitioner upon the commencement of their Contract of Lease. The dispositive portion of the assailed appellate courts Decision thus
reads:

WHEREFORE, premises considered, the appeal is PARTLY GRANTED. The April 30, 2001 Decision of the Regional Trial Court of Makati, Branch 57 is therefore
MODIFIED to wit: (a) the portion ordering the [herein respondent] to pay the amount of P192,000.00 representing the security deposits and P50,000.00 as attorneys fees in
favor of the [herein petitioner] as well as giving [respondent] the option to reimburse [petitioner] of the value of the improvements introduced by the [petitioner] on the
leased [premises] should [respondent] choose to appropriate itself or require the [petitioner] to remove the improvements, is hereby REVERSED and SET ASIDE; and (b)
the portion ordering the return to [petitioner] the properties seized by [respondent] after the former settled her obligation with the latter is however MAINTAINED.
[3]



The factual and procedural antecedents of the instant petition are as follows:

Petitioner is doing business under the business name Empanada Royale, a sole proprietorship engaged in the retail of empanada with outlets in different malls and business
establishments within Metro Manila.
[4]


Respondent, on the other hand, is a domestic corporation engaged in the business of leasing stalls and commercial store spaces located inside SM Malls found all throughout the
country.
[5]


On 8 March 1999, petitioner and respondent executed three Contracts of Lease containing similar terms and conditions over the cart-type stalls at SM NorthEdsa and SM Southmall and a
store space at SM Megamall. The term of each contract is for a period of four months and may be renewed upon agreement of the parties.
[6]


Upon the expiration of the original Contracts of Lease, the parties agreed to renew the same by extending their terms until 31 March 2000.
[7]

46


Before the expiration of said Contracts of Lease, or on 4 February 2000, petitioner received two letters from the respondent, both dated 14 January 2000, transmitted through facsimile
transmissions.
[8]


In the first letter, petitioner was charged with violating Section 8 of the Contracts of Lease by not opening on 16 December 1999 and 26 December 1999.
[9]


Respondent also charged petitioner with selling a new variety of empanada called mini-embutido and of increasing the price of her merchandise from P20.00 to P22.00, without the prior
approval of the respondent.
[10]


Respondent observed that petitioner was frequently closing earlier than the usual mall hours, either because of non-delivery or delay in the delivery of stocks to her outlets, again in
violation of the terms of the contract. A stern warning was thus given to petitioner to refrain from committing similar infractions in the future in order to avoid the termination of the lease
contract.
[11]


In the second letter, respondent informed the petitioner that it will no longer renew the Contracts of Lease for the three outlets, upon their expiration on 31 March 2000.
[12]


In a letter-reply dated 11 February 2000, petitioner explained that the mini-embutido is not a new variety of empanada but had similar fillings, taste and ingredients as those of
pork empanada; only, its size was reduced in order to make it more affordable to the buyers.
[13]


Such explanation notwithstanding, respondent still refused to renew its Contracts of Lease with the petitioner. To the contrary, respondent took possession of the store space in
SM Megamall and confiscated the equipment and personal belongings of the petitioner found therein after the expiration of the lease contract.
[14]


In a letter dated 8 May 2000, petitioner demanded that the respondent release the equipment and personal belongings it seized from the SM Megamall store space and return the security
deposits, in the sum of P192,000.00, turned over by the petitioner upon signing of the Contracts of Lease. On 15 June 2000, petitioner sent respondent another letter reiterating her previous
demands, but the latter failed or refused to comply therewith.
[15]


On 17 August 2000, an action for Specific Performance, Sum of Money and Damages was filed by the petitioner against the respondent before the RTC ofMakati, Branch 57.
[16]


In her Complaint docketed as Civil Case No. 00-1015, petitioner alleged that the respondent made verbal representations that the Contracts of Lease will be renewed from time to time
and, through the said representations, the petitioner was induced to introduce improvements upon the store space at SM Megamall in the sum of P200,000.00, only to find out a year later that the
respondent will no longer renew her lease contracts for all three outlets.
[17]


In addition, petitioner alleged that the respondent, without justifiable cause and without previous demand, refused to return the security deposits in the amount ofP192,000.00.
[18]


Further, petitioner claimed that the respondent seized her equipment and personal belongings found inside the store space in SM Megamall after the lease contract for the said outlet expired
and despite repeated written demands from the petitioner, respondent continuously refused to return the seized items.
[19]


Petitioner thus prayed for the award of actual damages in the sum of P472,000.00, representing the sum of security deposits, cost of improvements and the value of the personal properties
seized. Petitioner also asked for the award of P300,000.00 as moral damages; P50,000.00 as exemplary damages; and P80,000.00 as attorneys fees and expenses of litigation.
[20]


For its part, respondent countered that petitioner committed several violations of the terms of their Contracts of Lease by not opening from 16 December 1999 to 26 December 1999, and by
introducing a new variety of empanada without the prior consent of the respondent, as mandated by the provision of Section 2 of the Contract of Lease. Respondent also alleged that petitioner
infringed the lease contract by frequently closing earlier than the agreed closing hours. Respondent finally averred that petitioner is liable for the amount P106,474.09, representing the penalty for
selling a new variety of empanada, electricity and water bills, and rental adjustment, among other charges incidental to the lease agreements. Respondent claimed that the seizure of petitioners
personal belongings and equipment was in the exercise of its retaining lien, considering that the petitioner failed to settle the said obligations up to the time the complaint was filed.
[21]


Considering that petitioner already committed several breaches of contract, the respondent thus opted not to renew its Contracts of Lease with her anymore. The security deposits were made
in order to ensure faithful compliance with the terms of their lease agreements; and since petitioner committed several infractions thereof, respondent was justified in forfeiting the security deposits
in the latters favor.

On 30 April 2001, the RTC rendered a Judgment
[22]
in favor of the petitioner and found that the physical takeover by the respondent of the leased premises and the seizure of petitioners
equipment and personal belongings without prior notice were illegal. The decretal part of the RTC Judgment reads:

47

WHEREFORE, premises duly considered, judgment is hereby rendered ordering the [herein respondent] to pay [herein petitioner] the amount
of P192,000.00 representing the security deposits made by the [petitioner] and P50,000.00 as and for attorneys fees.

The [respondent] is likewise ordered to return to the [petitioner] the various properties seized by the former after settling her account with the [respondent].

Lastly, the [respondent] may choose either to reimburse the [petitioner] one half (1/2) of the value of the improvements introduced by the plaintiff at
SM Megamall should [respondent] choose to appropriate the improvements to itself or require the [petitioner] to remove the improvements, even though the principal thing
may suffer damage thereby. [Petitioner] shall not, however, cause anymore impairment upon the said leased premises than is necessary.

The other damages claimed by the plaintiff are denied for lack of merit.


Aggrieved, the respondent appealed the adverse RTC Judgment to the Court of Appeals.

In a Decision
[23]
dated 10 October 2003, the Court of Appeals modified the RTC Judgment and found that the respondent was justified in forfeiting the security deposits and was not liable to
reimburse the petitioner for the value of the improvements introduced in the leased premises and to pay for attorneys fees. In modifying the findings of the lower court, the appellate court
declared that in view of the breaches of contract committed by the petitioner, the respondent is justified in forfeiting the security deposits. Moreover, since the petitioner did not obtain the consent
of the respondent before she introduced improvements on the SM Megamall store space, the respondent has therefore no obligation to reimburse the petitioner for the amount expended in
connection with the said improvements.
[24]
The Court of Appeals, however, maintained the order of the trial court for respondent to return to petitioner her properties after she has settled her
obligations to the respondent. The appellate court denied petitioners Motion for Reconsideration in a Resolution
[25]
dated 19 April 2006.

Hence, this instant Petition for Review on Certiorari
[26]
filed by the petitioner assailing the Court of Appeals Decision. For the resolution of this Court are the following issues:


I. Whether or not the respondent is liable to return the security deposits to the petitions.

II. Whether or not the respondent is liable to reimburse the petitioner for the sum of the improvements she introduced in the leased premises.

III. Whether or not the respondent is liable for attorneys fees.
[27]


The appellate court, in finding that the respondent is authorized to forfeit the security deposits, relied on the provisions of Sections 5 and 18 of the Contract of Lease, to wit:

Section 5. DEPOSIT. The LESSEE shall make a cash deposit in the sum of SIXTY THOUSAND PESOS (P60,000.00) equivalent to three (3) months rent as
security for the full and faithful performance to each and every term, provision, covenant and condition of this lease and not as a pre-payment of rent. If at any time
during the term of this lease the rent is increased[,] the LESSEE on demand shall make an additional deposit equal to the increase in rent. The LESSOR shall not be required
to keep the deposit separate from its general funds and the deposit shall not be entitled to interest. The deposit shall remain intact during the entire term and shall not be
applied as payment for any monetary obligations of the LESSEE under this contract. If the LESSEE shall faithfully perform every provision of this lease[,] the deposit shall be
refunded to the LESSEE upon the expiration of this Lease and upon satisfaction of all monetary obligation to the LESSOR.

x x x x

Section 18. TERMINATION. Any breach, non-performance or non-observance of the terms and conditions herein provided shall constitute default which
shall be sufficient ground to terminate this lease, its extension or renewal. In which event, the LESSOR shall demand that LESSEE immediately vacate the premises,
and LESSOR shall forfeit in its favor the deposit tendered without prejudice to any such other appropriate action as may be legally authorized.
[28]


Since it was already established by the trial court that the petitioner was guilty of committing several breaches of contract, the Court of Appeals decreed that she cannot therefore
rightfully demand the return of the security deposits for the same are deemed forfeited by reason of evident contractual violations.

It is undisputed that the above-quoted provision found in all Contracts of Lease is in the nature of a penal clause to ensure petitioners faithful compliance with the terms and conditions of the
said contracts.

48

A penal clause is an accessory undertaking to assume greater liability in case of breach. It is attached to an obligation in order to insure performance and has a double function: (1) to provide
for liquidated damages, and (2) to strengthen the coercive force of the obligation by the threat of greater responsibility in the event of breach.
[29]
The obligor would then be bound to pay the
stipulated indemnity without the necessity of proof of the existence and the measure of damages caused by the breach.
[30]
Article 1226 of the Civil Code states:

Art. 1226. In obligations with a penal clause, the penalty shall substitute the indemnity for damages and the payment of interests in case of noncompliance, if there is
no stipulation to the contrary. Nevertheless, damages shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the obligation.

The penalty may be enforced only when it is demandable in accordance with the provisions of this Code.

As a general rule, courts are not at liberty to ignore the freedoms of the parties to agree on such terms and conditions as they see fit as long as they are not contrary to law, morals, good
customs, public order or public policy. Nevertheless, courts may equitably reduce a stipulated penalty in the contracts in two instances: (1) if the principal obligation has been partly or irregularly
complied with; and (2) even if there has been no compliance if the penalty is iniquitous or unconscionable in accordance with Article 1229 of the Civil Code which clearly provides:


Art. 1229. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there has
been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable.
[31]


In ascertaining whether the penalty is unconscionable or not, this court set out the following standard in Ligutan v. Court of Appeals,
[32]
to wit:

The question of whether a penalty is reasonable or iniquitous can be partly subjective and partly objective. Its resolution would depend on such factor as, but not
necessarily confined to, the type, extent and purpose of the penalty, the nature of the obligation, the mode of breach and its consequences, the supervening realities, the standing
and relationship of the parties, and the like, the application of which, by and large, is addressed to the sound discretion of the court. xxx.


In the instant case, the forfeiture of the entire amount of the security deposits in the sum of P192,000.00 was excessive and unconscionable considering that the gravity of the breaches
committed by the petitioner is not of such degree that the respondent was unduly prejudiced thereby. It is but equitable therefore to reduce the penalty of the petitioner to 50% of the total amount
of security deposits.

It is in the exercise of its sound discretion that this court tempered the penalty for the breaches committed by the petitioner to 50% of the amount of the security deposits. The forfeiture
of the entire sum of P192,000.00 is clearly a usurious and iniquitous penalty for the transgressions committed by the petitioner. The respondent is therefore under the obligation to return the 50%
of P192,000.00 to the petitioner.

Turning now to the liability of the respondent to reimburse the petitioner for one-half of the expenses incurred for the improvements on the leased store space at SM Megamall, the following
provision in the Contracts of Lease will enlighten us in resolving this issue:

Section 11. ALTERATIONS, ADDITIONS, IMPROVEMENTS, ETC. The LESSEE shall not make any alterations, additions, or improvements without the prior
written consent of LESSOR; and all alterations, additions or improvements made on the leased premises, except movable or fixtures put in at LESSEEs expense and which are
removable, without defacing the buildings or damaging its floorings, shall become LESSORs property without compensation/reimbursement but the LESSOR reserves the
right to require the removal of the said alterations, additions or improvements upon expiration of the lease.


The foregoing provision in the Contract of Lease mandates that before the petitioner can introduce any improvement on the leased premises, she should first obtain respondents consent. In
the case at bar, it was not shown that petitioner previously secured the consent of the respondent before she made the improvements on the leased space in SM Megamall. It was not even alleged
by the petitioner that she obtained such consent or she at least attempted to secure the same. On the other hand, the petitioner asserted that respondent allegedly misrepresented to her that it
would renew the terms of the contracts from time to time after their expirations, and that the petitioner was so induced thereby that she expended the sum of P200,000.00 for the improvement of
the store space leased.

This argument was squarely addressed by this court in Fernandez v. Court of Appeals,
[33]
thus:

The Court ruled that the stipulation of the parties in their lease contract to be renewable at the option of both parties stresses that the faculty to renew was given not to the
lessee alone nor to the lessor by himself but to the two simultaneously; hence, both must agree to renew if a new contract is to come about.

49

Petitioners contention that respondents had verbally agreed to extend the lease indefinitely is inadmissible to qualify the terms of the written contract under the
parole evidence rule, and unenforceable under the statute of frauds.
[34]



Moreover, it is consonant with human experience that lessees, before occupying the leased premises, especially store spaces located inside malls and big commercial establishments, would
renovate the place and introduce improvements thereon according to the needs and nature of their business and in harmony with their trademark designs as part of their marketing ploy to attract
customers. Certainly, no inducement or misrepresentation from the lessor is necessary for this purpose, for it is not only a matter of necessity that a lessee should re-design its place of business but
a business strategy as well.

In ruling that the respondent is liable to reimburse petitioner one half of the amount of improvements made on the leased store space should it choose to appropriate the same, the RTC relied
on the provision of Article 1678 of the Civil Code which provides:
Art. 1678. If the lessee makes, in good faith, useful improvements which are suitable to the use for which the lease is intended, without altering the form or substance
of the property leased, the lessor upon the termination of the lease shall pay the lessee one-half of the value of the improvements at that time. Should the lessor refuse to
reimburse said amount, the lessee may remove the improvements, even though the principal thing may suffer damage thereby. He shall not, however, cause any more
impairment upon the property leased than is necessary.

While it is true that under the above-quoted provision of the Civil Code, the lessor is under the obligation to pay the lessee one-half of the value of the improvements made should
the lessor choose to appropriate the improvements, Article 1678 however should be read together with Article 448 and Article 546 of the same statute, which provide:

Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or
planting, after payment of the indemnity provided for in articles 546 and 548, or to 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.

x x x x

Art. 546. Necessary expenses shall be refunded to every possessor; but only possessor in good faith may retain the thing until he has been reimbursed therefor.

Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the
option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof.

Thus, to be entitled to reimbursement for improvements introduced on the property, the petitioner must be considered a builder in good faith. Further, Articles 448 and 546 of the Civil
Code, which allow full reimbursement of useful improvements and retention of the premises until reimbursement is made, apply only to a possessor in good faith, i.e., one who builds on land with
the belief that he is the owner thereof. A builder in good faith is one who is unaware of any flaw in his title to the land at the time he builds on it.
[35]
In this case, the petitioner cannot claim that
she was not aware of any flaw in her title or was under the belief that she is the owner of the subject premises for it is a settled fact that she is merely a lessee thereof.

In Geminiano v. Court of Appeals,
[36]
this Court was emphatic in declaring that lessees are not possessors or builders in good faith, thus:

Being mere lessees, the private respondents knew that their occupation of the premises would continue only for the life of the lease. Plainly, they cannot
be considered as possessors nor builders in good faith.

In a plethora of cases, this Court has held that Article 448 of the Civil Code, in relation to Article 546 of the same Code, which allows full reimbursement of useful
improvements and retention of the premises until reimbursement is made, applies only to a possessor in good faith, i.e., one who builds on land with the belief that he is the
owner thereof. It does not apply where one's only interest is that of a lessee under a rental contract; otherwise, it would always be in the power of the tenant to
"improve" his landlord out of his property.

Since petitioners interest in the store space is merely that of the lessee under the lease contract, she cannot therefore be considered a builder in good faith. Consequently, respondent may
appropriate the improvements introduced on the leased premises without any obligation to reimburse the petitioner for the sum expended.

Anent the claim for attorneys fees, we resolve to likewise deny the award of the same. Attorneys fees may be awarded when a party is compelled to litigate or to incur expenses to protect its
interest by reason of unjustified act of the other.
[37]


50

In the instant petition, it was not shown that the respondent unjustifiably refused to grant the demands of the petitioner so as to compel the latter to initiate legal action to enforce her
right. As we have found herein, there is basis for respondents refusal to return to petitioner the security deposits and to reimburse the costs of the improvements in the leased premises. The
award of attorneys fees is therefore not proper in the instant case.

WHEREFORE, premises considered, the instant Petition is PARTLY GRANTED. The Court of Appeals Decision dated 10 October 2003 in CA-G.R. CV No. 73853 is
hereby AFFIRMED with the MODIFICATION that the respondent may forfeit only 50% of the total amount of the security deposits in the sum ofP192,000.00, and must return the remaining
50% to the petitioner. No costs.

SO ORDERED.

RAMON L. ORTIZ, Plaintiff-Appellant, v. ASUNCION FUENTEBELLA ET AL., Defendants-Appellees.

Leoncio Imperial for Appellant.

Lucan Paredes for Appellees.

SYLLABUS
1. EJECTMENT; DECLARATION OF NULLITY OF TITLE. Declaration of nullity of a title does not imply that it was acquired in bad faith.

2. ID.; ID.; POSSESSION IN BAD FAITH. Possession acquired after having knowledge of certain facts that put in doubt the title of the assignees must be regarded as in bad faith.


D E C I S I O N


ARELLANO, C.J. :


There has been inscribed in the property registry of the Province of Ambos Camarines, since August 6, 1892, a possessory information regarding a parcel of pasture land in the place called Tagas
in the municipality of San Jose of said province; in area 27 hectares and 90 centares; bounded on the north by the rivulet Dacuilan and Calauit, on the south by the San Miguel River, on the east by
the sea, and on the west by the lands of Mariano Pelayo, Maria Pagueo, and Gaspar Codillo. The authenticity of this possessory information is not and never has been questioned.

The person securing this possessory information was Don Ramon Ortiz, a resident of the said town of San Jose, who, according to the contents of the information, "proved before the justice of the
peace of that town the possession he had held of said land for fifteen years previously, when he had acquired it by cultivating it himself, without securing any written title;" and it was approved by
order of July 2, 1892.

On March 10, 1909, Marcelina Ortiz, daughter of the said Don Ramon Ortiz, addressed to Asuncion Fuentebella the following letter:jgc:chanrobles.com.ph

"I have been informed that you are thinking of setting out coco palms on the lands that our parents possess in the place called Tagas, of this municipality, used as a pasture for our cattle, within the
boundaries formed on the north by the rivulet Rangas Sadang, on the east by the beach, on the south by the San Miguel River that flows into the Sabang Bunga, and on the west by the lands of
Gaspar Codillo and others. if this be true, I request that you desist from your others. If this be true, I request that you desist from your purpose."cralaw virtua1aw library

Asuncion Fuentebella answered the foregoing letter on the 19th of the same month and year in the following words:jgc:chanrobles.com.ph

"Regarding my idea of setting out coco palms, you are misinformed; I am not thinking of setting out coco palms, as you state, on lands belonging to your parents."cralaw virtua1aw library

Under date of December 29 of the same year 1909, Asuncion Fuentebella appears in a public document as the vendee of all the land included in that inscribed information the vendors being the
brother and sister Juan and Sotera Cano, who in said document state nothing more than the following:jgc:chanrobles.com.ph

"This land has been quietly and peacefully possessed by our late parents for thirty years prior to this date." Thirty years preceeding this date, which is December 29, 1909, are the years that have
elapsed since 1879.

51

In view of this attitude of Asuncion Fuentebella, Ramon Ortiz filed the present complaint, wherein he asks for restitution of the possession of said parcel of land and P200 as damages.

Asuncion Fuentebella cited Juan and Sotera Cano in defense of the title. She answered the complaint on August 21, 1911, and said that she had been in possession of the said land for more than two
years and that she had set out thereon over 5,000 coco palms and built a house, wherefore she prayed that either the complaint be dismissed, or that the plaintiff pay her P8,000 Philippine currency
for the coco palms set out and the house built. The vendors, Cano and his sister, substantiated their possession from the time of inheriting the property from their parents to the time of the sale;
and subsidiarily, should this defense fail, they alleged prescription in favor of the defendant Fuentebella.

After examining both the oral and documentary evidence the Court of First Instance of Ambos Camarines absolved the defendant from the complaint with the costs against the plaintiff, who
appealed from the judgment.

Asuncion Fuentebella cannot make her personal possession prevail over the possession inscribed in the property registry in favor of Ramon Ortiz, it having lasted only two years before she filed
her answer to the complaint. Primarily and personally the defendant has no derived from Juan and Sotera Cano.

With reference to Juan and Sotera Canos possession, the trial courts conclusions are: That these Cano defendants have not really and materially possessed a great part of the land; that Felipe
Cano, the father of these defendants, had a house built on the tract, and probably exercised acts of possession over the land in the immediate neighborhood of the house and its vicinity by setting
out fruit trees on a part thereof and now claims to have exercised such acts of possession over the whole of the land in question, which was only planted in breadfruits and coco palms around his
house (B. of E. 15); that said land was not utilized during this time, except for what said heirs of Felipe Cano had there, consisting in some plantations of coco palms. (Ibid., 13.)

As for the law on this pint, the court reached the two following conclusions:jgc:chanrobles.com.ph

"2. That Felipe Cano was in possession of part of the land during his lifetime and that after his death this possession passed to his children, two of whom are Juan and Sotera Cano.

"3. That Juan and Sotera Cano in the year 1908 sold this land to the defendant Asuncion Fuentebella, who then took possession thereof and has held it to date. At the time of this transfer to the
defendant Fuentebella, Juan Cano and Sotera were possession of the land as heirs of their father Felipe Cano; but the heirs of Felipe Cano have not joined with those herein cited to defend the title,
Juan Cano and Sotera Cano, in this sale nor have they appeared as parties and this court holds that their rights were not transferred by their brother and sister Juan and Sotera Cano to the
defendant Asuncion Fuentebella." (B. of E., 16.)

From this it appears that neither Felipe Cano his lifetime nor his children after his death possessed in the place called Tagas more space than occupied by their house and their small plantations of
breadfruit and coco palms around it, that is to say, merely a portion for the tract of 27 hectares in question, not all of it; and that, consequently, they could not sell to Fuentebella more than the
space occupied by the house and some small plantations of breadfruit and coco palms, and of this small part only their hereditary portions, not those which on that hypotheses should pertain to
their coheirs.

Reviewing the evidence, we find the following facts:chanrob1es virtual 1aw library

Sotera Cano and Juan Cano stated that they had other brothers living, Bernabe and Potenciano Cano, an also some nephews, the children of other brothers now deceased; and , according to Juan
Cano, the vendee Fuentebella was acquainted with this fact.

Juan Pea, witness for the defendant, a man of 68 years of age and brother-in-law of Felipe Cano, stated that the latter had his house in Tagas "a little outside the land in question, although his
plantation of breadfruit trees was within the land in question" (p. 36); that he had nothing but a house and that it had been destroyed; that Felipe Cano had been dead for over thirty years, for the
witness was then only a boy, "a child still," according to his own words; that after Felipe Cano had died and the house had been destroyed, his widow did not rebuild it, but that his heirs "went to
live on the other side of the Mitil Creek, whither they changed their residence" (pp. 41 and 42); and the person who went to live in the place they left was Cipriano Compuesto, who built his house
there; that Don Ramon Ortiz had carabaos and cattle there from the time of the Spanish Government; and that on the land in question there are coco palms that were planted by Cipriano
Compuesto beside his house.

This testimony on a witness for the defendant, a resident of the place where the land in question is located, is of the greatest importance, since it amounts to confirmation of what already, on page
7, the plaintiff had testified, to wit, that in the year 1882 Cipriano Compuesto, with his consent, had set out coco palms in the place where his cattle pen (the plaintiffs) was constructed that is, in
the place where, from what the witness Juan Pea says, Felipe Canos destroyed house had been; and that the plaintiff had allowed Cipriano Compuesto to set out those coco palms on condition that
if he did not remain on the land he would have to sell them, as indeed happened, those coco palms set out by Compuesto now belonging to the plaintiff. Already, on page 6, areas of the land in
question, as appears in the information inscribed in the registry, was the land of Maria Pagueo, which passed to Cipriano Compuesto so that in the plan Exhibit B of the plaintiff, Cipriano
Compuesto appears as the owner of the land that adjoins it on the west; and if, as the witness Juan Pea states, Cipriano Compuesto built his house in the very same place where Felipe Cano had
his, little outside the land in question, and that his plantation of breadfruits was on the land in question, and Compuesto also set out his coco palms on the said land with the plaintiffs permission,
the consequence is that Felipe Canos house represents nothing else than Cipriano Compuestos and the breadfruit tree of Felipe Cano nothing else than Cipriano Compuestos coco palms that is
to say, that both houses were "a little outside the place in question" and that merely the plantation of breadfruit trees of the one and of coco palms of the other were those on the land in question,
52

Compuestos planting of coco palms, which later passed to the plaintiff, being by permission of the latter.

So the following findings of fact are to be regarded as established upon the foregoing evidence: (1) That Felipe Cano, the predecessor in interest of the Cano defendants, did not have his house on
the land in question, but a little outside of it, and that on it he had only his plantation of coco palms; (2) that this house was built on the same place that later came to be Maria Pagueos land,
conterminous on the west with the land in question, according to the possessory information; (3) that this same land of Maria Pagueo became Cipriano Compuestos, and it appears in the plan
(Exhibit B), made in 1892, as conterminous on the west with the land in question, and of the latter Cipriano occupied only the place planted in coco palms.

Hence, if Felipe Canos house had not been destroyed and his heirs had not moved their residence to the other side of the Mitil Creek and had remained in the same place in 1892, third land would
have appeared as conterminous on the west with land in question, instead of Maria Pagueos in the possessory information and instead of Cipriano Compuestos in the plan Exhibit B.

Consequently, in 1892, the date of the possessory information, they were not the possessors of the land in question but only perhaps possessors of a tract of land conterminous with it on the west.
But they could not have continued even to be the possessors in 1892 of this adjoining land on the west, because, according to the testimony of their own witness, Juan Pea, when their father
Felipe Cano died, they changed their residence to the other side of the Mitil Creek, and their fathers death, according to the same witness, occurred when even he was young; hence it is not
hazardous to conclude that in 1870 he was no longer alive, and that in 1882 either Maria Pagueo or surely Cipriano Compuesto was on the adjoining land. At all events it has been very
convincingly proved that neither in 1892 nor in 1882 nor in 1870 nor at any time did Felipe Cano and his children possess the land that is the subject matter of the present litigation, and that at the
death of Felipe Cano and after the house located a little outside of the disputed land had been destroyed his heirs did not continue to live there but moved their residence to the other side of the
Mitil Creek.

Sotera Cano testifies that outside this disputed land, toward the west at some 600 or 800 brazas from its boundary, they had a coco-palm grove and there they had their house, beside which they
also had the plantations which they had inherited from their father Felipe Cano, this being the only house they had in that place, and in which they were living at the time of their fathers death;
that she was acquainted with the three persons, among them Maria Pagueo, whose lands were conterminous on the west with the disputed land, all three of which persons had their plantations.
"These plantations," she adds, "are between our plantations" (p. 57). And Juan Cano says that when their father died they built the house located in the coco-palm grove; that coming from these
coco palms where they were living to the visita (of barrio there is on the land) one had to cross a creek called Mitil and that "according to his belief the disputed land is the coco-palm grove where
their house located beside the plantations toward the west of the visita (p. 68).

This belief or, as now shown, errors of Juan Cano is the cause of all the other errors that have given rise to this suit.

To offset the possession attested by the registered possessory information it has not been proven in any way that either at the date of its inscription in 1892 or in 1882 or in 1879 could Felipe Cano
or his children Juan and Sotera Cano have been in possession of the disputed land; and if the complaint was dismissed it was solely on the basis of the incorrect hypothesis that "at the time when
the plaintiff obtained this title of possessory information, Felipe Cano, father of the persons herein cited to defend the title, Juan and Sotera Cano, or they themselves if he was dead, were in
possession of said land or a part thereof." (B. of E., 15.) It has been clearly demonstrated that in 1879 Felipe Cano was already dead and that at his death and after the destruction of his house built
on the border of the disputed land his children changed their residence and went to live on the other side of the Mitil creek, some 600 or 700 brazas from those borders, with plantations between,
or with plantations between, or with plantations between of the three persons named in the possessory information as adjoining on the west, among these Maria Pagueo.

The authenticity an efficacy of the possessory information having been proven by means of its inscription in the registry, an not impugned, restitution must be ordered of the possession claimed by
the plaintiff, and also of the land in question , with costs against the defendants. Consequently, the judgment appealed from, in so far as it dismisses the complaint, must be reversed.

With reference to the counterclaim set up by the defendant Asuncion Fuentebella, only the following facts have been proved:chanrob1es virtual 1aw library

That the defendant has been in possession of the land claimed in the complaint for only about two years from the date of the answer thereto, since August 21, 1911, that is, since some time before
August 21, 1909;

That from the document she has presented in evidence she does not appear to have purchased the land claimed in the complaint until December 29, 1909, after she had already been warned by the
plaintiffs daughter in March of that year not to set out coco palms on said land as it belonged to the latters father;

That, if what the defendant and her witness Sotera Cano state is true, the sale was closed in 1908, but the document had not been drawn up until the price agreed upon had been paid;

That, according to the testimony of Juan Cano, the defendant purchased the land from Juan Cano and Sotera Cano, knowing perfectly that there were other coheirs, that is, their two brothers and
various nephews whose number was not definitely stated;

That Juan Pea, witness for the defendant, states that Ramon Ortiz has had cattle and carabaos since the time of the Spanish Government, while it has been seen that, according to this same
witness, Felipe Cano had land in Tagas, not the land in question, but a little outside that land; and his children, not the same land their father had occupied, for this was later Cipriano Compuestos,
but some coco-palm groves distant 600 or 800 brazas to the west of the disputed land, whither they had moved their residence, it thus very clearly appearing in this suit that all this litigation has
53

been maintained on a false basis, which is the belief of the defendant Juan Cano that the land now in question is exactly this coco-palm grove where his house is located beside the plantations to the
west of the visita, or for the settlement formed on the land of Ramon Ortiz.

These facts being admitted, the defendants called support the title have been unable to justify the sale they made of the land in question to Asuncion Fuentebella.

Did Asuncion Fuentebella posses the land in good faith? That is the point to be determined in the counterclaim.

It has not been proved that the defendant Asuncion Fuentebella has acted in pursuance of some evil plan in conjunction with her witness Irineo Peas, who along with his father had from childhood
been and after the latters death continued to be the herdsman of the plaintiffs cattle on the land in question and was dismissed by the latter on account of his disloyalty and bad conduct. Now it
appears that he is the principal laborer of the defendant in setting out coco palms.

However, it be, we do not regard as decisive the evidence presented to prove that the defendants possession was in bad faith. The nullity of the greater part of her title is not sufficient argument to
prove that she knew of the defect in her mode of acquisition of a tract of land as belonging to Juan and Sotera Cano, when it is now demonstrated in this case that neither Sotera, nor Juan Cano, nor
even their father Felipe Cano, had at any time possessed it, but another tract in the neighborhood, possession whereof might easily have caused error on the part of the purchaser. Defendants bad
faith began after the warning given in a letter by the plaintiffs daughter in March, 1909, for after having received it she then had ground to doubt that Sotera and Juan Cano could transfer any title
of possession in the following December.

"Possession acquired in good faith does not lose this character, except in the case and from the moment that the possessor is aware that he possesses the thing illegally." Civil Code, art. 435.)

The trial court has declared that it encountered a good deal of difficulty in deciding whether the coco palms had been set out before or after the receipt of the said letter, but it believes that, in view
of the evidence, a large portion of the land, but not the whole, was already so planted; that the house was under construction but unfinished; and that "there is no other evidence in the case
regarding the value of said house or the value of the coco palms, except what has been stated by the defendant." (B. of E., 14.) Everything done on the land, expenditures, outlay, improvements,
from the moment when the letter was received bears the stamp of having been carried out when the possessor was not unaware that she was improperly in possession of the land. In the light of this
holding must be determined all the questions that arise concerning the effects of the defendants possession and the rights she is entitled to under the provisions of the Civil Code with respect to
the house and the coco palms that have led to her counterclaim, once it has been ordered in this decision that possession of the land be restored to the plaintiff.

The judgment is reversed in so far ad it absolves the defendants from the complaint be restored to the plaintiff.

Let possession of the land described in the second paragraph of the complaint be restored to the plaintiff, with the costs in first instance against the defendants, and without special finding with
respect to those of this instance.

Let the case be returned to the lower court so that it may fix exactly the time when the construction and planting were carried out and determine and declare the rights and obligations of each of
the litigating parties, after weighing the evidence already adduced and what may be newly taken, in so far as pertinent.







54

IGNACIO WONG, petitioner,
vs.
HON. LUCAS D. CARPIO, as Presiding Judge, Court of First Instance of Davao del Sur, Branch V and MANUEL MERCADO, respondents.
BIDIN, J.:p
This is a petition for review on certiorari, certified to this Court by the Court of Appeals as it involves purely question of law, seeking the annulment of the September 29, 1978 decision of the then
Court of First Instance ** of Davao del Sur, Branch V, in Civil Case No. 1258 which reversed the February 20, 1978 decision of the Municipal Court of Sta. Maria, *** Davao del Sur in an action
for Forcible Entry (Civil Case No. 13) ordering the dismissal of the complaint as well as the counterclaim.
The undisputed facts of this case, as found by both the trial court and the then Court of First Instance of Davao del Sur, are as follows:
On the basis of the admission of parties in their respective pleadings, the oral testimonies of all witnesses for both plaintiff and defendants and the documentary evidence offered
and admitted this Court finds that plaintiff Manuel Mercado acquired his rights to possess the land in litigation, particularly lot 3 (LRC) Pcs-295, (situated at Colonga, Sta.
Maria, Davao del Sur) and which is particularly described and embraced in Transfer Certificate of title No. (T-4244) T-972 from William Giger by virtue of a deed of sale with
right to repurchase which was executed in 1972 for a consideration of P3,500.00 (testimony of plaintiff, T.S.N., p. 3, hearing of January 7, 1977). Then, in 1973, William Giger
again asked an additional amount of P2,500.00 from plaintiff and so he required William Giger to sign a new deed of Pacto de Retro Sale (Exhibit "A") on November 5,1973 at
Davao City before Notary Public Gregorio C. Batiller (T.S.N., p. 5, hearing of January 7, 1977). In 1972, plaintiff began harvesting only the coconut fruits and he paid the taxes
on the land (Exhibits B to E) for Mr. Giger. He went periodically to the land to make copra but he never placed any person on the land in litigation to watch it. Neither did he
reside on the land as he is a businessman and storekeeper by occupation and resides at Lower Sta. Maria, Davao del Sur while the land in litigation is at Colongan, Sta. Maria.
Neither did he put any sign or hut to show that he is in actual possession (p. 8, T.S.N., p. 7, hearing of January 14, 1978). He knew defendants' laborers were in the land in suit as
early as August, 1976 and that they have a hut there but he did not do anything to stop them. Instead plaintiff was happy that there were people and a hut on the land in suit (p.
14, T.S.N., hearing of January 14, 1978).
Before July, 1976, defendant Ignacio Wong went to the land in litigation to find out if there were other people residing there or claiming it besides the owner and he found none.
So, in July, 1976, defendant Ignacio Wong bought the parcel of land in litigation from William Giger and his wife Cecilia Valenzuela (Exhibit 5). After the execution of Exhibit
5, defendant Ignacio Wong asked for the delivery of the title to him and so he has in his possession TCT No. (T-4244) T-974 (Exhibit 6) in the name of William Giger. Mr.
Wong declared the land in suit for taxation purposes in his name (Exhibit 7). He tried to register the pacto de retro sale with the Register of Deeds by paying the registration fee
(Exhibit 8) but due to some technicalities, the pacto de retro sale could not be registered. The defendant Wong placed laborers on the land in suit, built a small farm house after
making some clearings and fenced the boundaries. He also placed signboards (T.S.N., pp. 14-15, hearing of September 15, 1977). On September 27, 1976, plaintiff Manuel
Mercado again went to the land in suit to make copras. That was the time the matter was brought to the attention of the police of Sta. Maria, Davao del Sur and the incident
entered in the police blotter (Exhibit 11). Then on November 18, 1976, defendant Wong ordered the hooking of the coconuts from the land in litigation and nobody disturbed
him. But on November 29, 1976, defendant received a copy of plaintiff's complaint for forcible entry with summons to answer which is the case now before the Court. During the
pendency of this instant complaint for forcible entry, spouses William Giger and Cecilia Valenzuela filed a case for reformation of instrument with the Court of First Instance of
Digos, Davao del Sur against plaintiff Mercado (Exhibit 4). The case pertains to Exhibit "A" of plaintiff. (pp. 1-3, CA Decision, pp. 82-84, Rollo).
On the basis of the aforestated undisputed facts, the Municipal Court of Sta. Maria, Davao del Sur in its February 20, 1978 Decision found that herein petitioner (defendant Ignacio Wong) had
prior, actual and continuous physical possession of the disputed property and dismissed both the complaint and the counter-claim.
On appeal, the then Court of First Instance of Davao del Sur, in its September 29, 1978 Decision drew a completely different conclusion from the same set of facts and ruled in favor of herein
private respondent (plaintiff Manuel Mercado). The decretal portion of the said decision, reads:
WHEREFORE, the Court finds the plaintiff to have taken possession of the property earlier in point of time and defendant is an intruder and must, as he is hereby ordered to
return, the possession of the land in question for the plaintiff, paying a monthly rental of P400.00 from August, 1976, till the property is returned with costs against the
defendant. Judgment is reversed.
Petitioner filed the instant petition with the Court of Appeals. But the Court of Appeals, in its March 1, 1979 Resolution **** found that the only issue is a pure question of law the correctness
of the conclusion drawn from the undisputed facts and certified the case to this Court.
55

In its April 4, 1979 Resolution, the Second Division of this Court docketed the case in this Court and considered it submitted for decision.
Petitioner alleged two (2) errors committed by respondent judge, to wit:
A) THE CONCLUSION DRAWN BY RESPONDENT JUDGE THAT PETITIONER IS AN INTRUDER IS WITHOUT FACTUAL AND LEGAL BASIS FOR PURPOSES OF A
FORCIBLE ENTRY.
B) THE CONCLUSION DRAWN BY RESPONDENT JUDGE THAT PETITIONER MUST PAY A MONTHLY RENTAL OF P400.00 FROM AUGUST, 1976 TILL THE PROPERTY IS
RETURNED HAS NO LEGAL AND FACTUAL BASIS.
The petition is without merit.
Petitioner, in claiming that the private respondent has not established prior possession, argues that private respondent's periodic visit to the lot to gather coconuts may have been consented to
and allowed or tolerated by the owner thereof for the purposes of paying an obligation that may be due to the person gathering said nuts and that a person who enters a property to gather coconut
fruits and convert the same to copras may only be a hired laborer who enters the premises every harvest season to comply with the contract of labor with the true owner of the property.
The argument is untenable.
It should be stressed that "possession is acquired by the material occupation of a thing or the exercise of a right, or by the fact that it is subject to the action of our will, or by the proper acts and
legal formalities for acquiring such right." (Art. 531, Civil Code; Rizal Cement Co., Inc. vs. Villareal, 135 SCRA 15 [1985]); and that the execution of a sale thru a public instrument shall be
equivalent to the delivery of the thing, unless there is stipulation to the contrary . . . . If, however, notwithstanding the execution of the instrument, the purchaser cannot have the enjoyment and
material tenancy of the thing and make use of it herself, because such tenancy and enjoyment are opposed by another, then delivery has not been effected. (Paras, Civil Code of the Philippines, Vol.
II, 1989 Ed., p. 400).
Applying the above pronouncements on the instant case, it is clear that possession passed from vendor William Giger to private respondent Manuel Mercado by virtue of the first sale a retro
(Exhibit A), and accordingly, the later sale a retro (Exhibit 5) in favor of petitioner failed to pass the possession of the property because there is an impediment the possession exercised by
private respondent. Possession as a fact cannot be recognized at the same time in two different personalities except in the cases of co-possession. Should a question arise regarding the fact of
possession, the present possessor shall be preferred; if there are two possessions, the one longer in possession, if the dates of possession are the same, the one who presents a title; and if these
conditions are equal, the thing shall be placed in judicial deposit pending determination of its possession or ownership through proper proceedings (Art. 538, Civil Code).
As to petitioner's query that "Is the entry of petitioner to the property characterized by force, intimidation, threat, strategy, or stealth in order to show that private respondent has had possession
so that the case is within the jurisdiction of the inferior court?" (p. 15, Petition; p. 16, Rollo). The same is answered in the affirmative.
The act of entering the property and excluding the lawful possessor therefrom necessarily implies the exertion of force over the property, and this is all that is necessary. Under the rule, entering
upon the premises by strategy or stealth is equally as obnoxious as entering by force. The foundation of the action is really the forcible exclusion of the original possessor by a person who has
entered without right. The words "by force, intimidation, threat, strategy, or stealth" include every situation or condition under which one person can wrongfully enter upon real property and
exclude another who has had prior possession therefrom. If a trespasser enters upon land in open daylight, under the very eyes of person already clothed with lawful possession, but without the
consent of the latter, and there plants himself and excludes such prior possessor from the property, the action of forcible entry and detainer can unquestionably be maintained, even though no force
is used by the trespasser other than such as is necessarily implied from the mere acts of planting himself on the ground and excluding the other party. (Tolentino, Civil Code of the Philippines, Vol.
II, 1983 Ed., pp. 243-244; Drilon vs. Gaurana, 149 SCRA 342 [1987]).
Anent the award of rentals in favor of private respondent, the same is in order. Petitioner's argument that there is no legal or factual basis for the payment of monthly rentals because bad faith on
the part of petitioner was never proved deserves no merit.
It should be noted that possession acquired in good faith does not lose this character except in the case and from the moment facts exist which show that the possessor is not unaware that he
possesses the thing improperly or wrongfully. (Art. 528, Civil Code).
56

Possession in good faith ceases from the moment defects in the title are made known to the possessors, by extraneous evidence or by suit for recovery of the property by the true owner. Whatever
may be the cause or the fact from which it can be deduced that the possessor has knowledge of the defects of his title or mode of acquisition, it must be considered sufficient to show bad faith.
(Tolentino, Civil Code of the Philippines, Vol. II, p. 226). Such interruption takes place upon service of summons (Manotok Realty vs. Judge Tecson, 164 SCRA 587 [1988] citing Mindanao
Academy, Inc. v. Yap (13 SCRA 190 [1965]). In the latter case, this Court held:
. . . Although the bad faith of one party neutralizes that of the other and hence as between themselves their rights would be as if both of them had acted in good faith at the time
of the transaction, this legal fiction of Yap's good faith ceased when the complaint against him was filed, and consequently the court's declaration of liability for the rents
thereafter is correct and proper. A possessor in good faith is entitled to the fruits only so long as his possession is not legally interrupted, and such interruption takes place upon
service of judicial summons (Arts. 544 and 1123, Civil Code).
A perusal of the records of the case shows that petitioner received private respondent's complaint for forcible entry with summons on November 29, 1976 (Rollo, p. 46). His good faith therefore
ceased on November 29,1976. Accordingly, the computation of the payment of monthly rental should start from December, 1976, instead of August, 1976.
WHEREFORE, with the modification that the computation of the monthly rental should start from December, 1976 instead of August, 1976, the September 29, 1978 decision of respondent judge
is Affirmed in all other respects, with costs against petitioner.
SO ORDERED.
PAULO BALLESTEROS, Petitioner,
vs.
ROLANDO ABION, Respondent.
D E C I S I O N
CORONA, J.:
Before us is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the July 15, 1999 decision
1
of the Court of Appeals (CA) in CA-G.R. SP No. 46065 which affirmed the
decision of the Regional Trial Court (RTC) of Iriga City, Branch 37, in Civil Case No. 2917.
The property subject of this petition is a two-door, three-story commercial building and the 229 sq.m. parcel of land on which it stands. The property was originally owned by Ruperto Ensano, as
evidenced by TCT No. 6178. Ownership was subsequently transferred to the Development Bank of the Philippines (DBP) which, in turn, sold the property to Dr. Rodolfo Vargas in a deed of
absolute sale dated March 30, 1988. Despite these transfers of ownership, however, the property was registered in the names of DBP and Dr. Vargas (TCT Nos. 941 and 942, respectively) only on
February 21, 1996.
Meanwhile, on March 14, 1991, petitioner entered into a contract of lease for one door of the building with Ronald Vargas, son of Dr. Vargas, who represented himself as the absolute owner of the
property. Under the agreement (which was not registered in the Register of Deeds), the lease was to run until April 1, 1996.
On September 27, 1995, Dr. Vargas sold the property to respondent. This was evidenced by a deed of absolute sale of even date. TCT No. 949 in the name of the respondent was subsequently
issued on April 10, 1996.
In the meantime, on October 30, 1995, petitioner entered into a new contract of lease with Ronald Vargas who again misrepresented himself as the absolute owner of the property. This new
agreement extended the term of the original contract of lease between the parties and included the remaining door of the building in its coverage. It was to be effective for a period of five years
from November 1, 1995, or until November 1, 2000.
Since respondent had not yet taken possession of the building, petitioner immediately occupied the additional door upon the execution of the new contract of lease. He made advance payments for
the rent of the two doors until June 1997. He also sought to register the new contract of lease with the Register of Deeds of Iriga City. However, the contract was entered only in the primary book
because it could not be registered for several reasons: (a) the requisite tax had not been paid (b) the contract lacked a documentary stamp and (c) the tax declaration of the property was not in the
name of the lessor.
2

57

On April 30, 1996, petitioner received respondents April 25, 1996 letter demanding that he vacate the property and surrender its possession. On June 20, 1996, petitioner received another letter
from respondents counsel reiterating the demand for him to vacate the property. All this notwithstanding, petitioner refused to vacate the premises.
On September 4, 1996, respondent filed a complaint for unlawful detainer with damages against petitioner in the Municipal Trial Court in Cities (MTCC) of Iriga City, Branch 2. It was, however,
dismissed for failure to state a cause of action.
On appeal, the RTC of Iriga City, Branch 37, reversed the decision of the MTCC and ordered petitioner to vacate the property and surrender its possession to respondent. Petitioner was also
ordered to pay respondent P50,000 as attorneys fees and P7,000 per month as rental for the property from September 1995 until petitioner vacated the premises. Petitioner moved for a
reconsideration of the RTC decision but the motion was denied.
On respondents motion, the RTC issued a writ of execution dated December 1, 1997.
3
It was received on December 3, 1997 by petitioners wife. Petitioner filed an urgent motion for time to vacate
the premises
4
and a supplemental motion for time to vacate the property,
5
praying for thirty days from December 5, 1997 (the deadline given by the sheriff for petitioner to leave the premises)
within which to vacate the property. On December 9, 1997, the RTC denied petitioners motion and directed the sheriff to immediately effect the restitution and delivery of the property to
respondent.
The sheriff filed a manifestation with motion dated December 9, 1997
6
praying that the use of force to implement the writ of execution be allowed in order to open the premises and deliver its
possession to respondent. On the other hand, petitioner moved for a reconsideration of the December 9, 1997 order of the RTC as well as for the suspension of the implementation of the writ of
execution.
Acting on the sheriffs manifestation with motion and the petitioners motion for reconsideration and/or suspension of the implementation of the writ of execution, the RTC, in an order dated
December 11, 1997, denied petitioners motion and allowed the sheriff to execute the writ pursuant to paragraph (c) of Rule 39, Section 10 of the Rules of Court.
As authorized by the trial court, the sheriff forced open the main entrance of the building and delivered possession of the property to respondent on December 15, 1997.
7

Petitioner filed a petition for review with the CA. It was docketed as CA-G.R. SP No. 46065. On July 15, 1999, the CA affirmed the RTC decision with modification. The CA ruled that petitioners
right of possession to the property was only by virtue of the second lease contract dated October 30, 1995 between petitioner and Ronald Vargas. It was clear, however, that Ronald Vargas was not
the owner of the property and therefore had no right to lease it out. Petitioner himself admitted respondents ownership of the property. Neither was there any evidence that Ronald Vargas had
been authorized by respondent or even by Dr. Vargas himself to transact the second lease on their behalf.
The CA held that petitioners possession of the property from the date of purchase by respondent was merely by tolerance. Such possession became unlawful from the time respondent made a
demand on petitioner to vacate it.
The CA further ruled that petitioner could not pretend ignorance of the ownership of the property when he entered into the second lease agreement. The property was registered with the Register
of Deeds and such registration constituted notice to the whole world.
However, the CA reduced the award of attorneys fees from P50,000 to P20,000 for lack of factual basis. The CA also took the stipulation in petitioners lease agreement into consideration and
reduced the rent from P7,000 toP5,000 per month, and only for the period covering July 1 to December 15, 1997.
Petitioner moved for a reconsideration of the CA decision but it was denied in a resolution dated May 25, 2000.
Hence, this petition, which raises the following issues:
1. whether or not respondent could legally eject petitioner or terminate the lease;
2. whether or not respondent was able to establish a cause of action;
3. whether or not the trial court (MTCC of Iriga City, Br. 2) had jurisdiction to try the case;
58

4. whether or not, as ruled by the [CA], there was pretended ignorance by petitioner of the ownership of the property;
5. whether or not the [CAs] award of attorneys fees was justified;
6. whether or not the implementation of the writ of execution dated December 1, 1997 on December 15, 1997 was valid;
7. whether or not respondent and the sheriffs who implemented on December 15, 1997 the writ of execution dated December 1, 1997 (as reiterated by the RTCs order of December 11,
1997) should be held in contempt of court [and]
8. whether or not the [RTC had] the jurisdiction to issue a writ for the implementation of the [CAs] decision when the case was originally filed with the [MTCC].
8

Propriety of the Ejectment
Petitioner contends that respondent could not have legally ejected him from the premises or terminated the lease. He claims that the two lease contracts he entered into with Ronald Vargas were
valid and that contracts validly entered into by a predecessor-in-interest should be respected by, and be binding upon, his successor-in-interest. According to petitioner, he was not unlawfully
detaining the property because the action was commenced by respondent while the second lease contract was still in force. He insists that his good faith and honest belief that he was transacting
with the true owner should be considered in favor of the validity of the lease contracts entered into by him.
Petitioner also invokes our ruling in Garcia v. Court of Appeals
9
that the owners successor-in-interest must respect an existing contract of lease. Any attempt to eject the lessee within the period of
lease constitutes a breach of contract.
Petitioner further asserts that the second lease contract was "registered" with the Register of Deeds of Iriga City, hence respondent had notice thereof and was bound to respect it. We disagree.
The first premise of petitioners argument, that both lease agreements were valid, is erroneous. As correctly observed by the RTC and the CA, Ronald Vargas was not the owner of the property
and had no authority to let it.
Although the lessor need not be the owner of the property being leased,
10
he should have a right (e.g., either as a usufructuary or a lessee) or at least an authority (e.g., as an agent of the owner,
usufructuary, or lessee) to lease it out. Here, Ronald Vargas had neither the right nor the authority to grant petitioner the lease of the property.
Dr. Vargas is deemed to have ratified the first lease because he never objected to it and in fact allowed petitioner to occupy the property for five years despite his knowledge of his son Ronalds
misdeed. Thus, we consider the first lease valid. But the same cannot be said of the second lease. Under the principle of relativity of contracts, the sale of the property by Dr. Vargas to respondent
bound Ronald Vargas as an heir of the seller. Neither did respondent authorize him to enter into a new lease contract with petitioner. Thus, Ronald Vargas could not have validly executed the
second lease agreement upon which petitioner now bases his right to the continued possession of the property.
The river cannot rise higher than its source. Where the purported lessor is bereft of any right or authority to lease out the property, then his supposed lessee does not acquire any right to the
possession or enjoyment of the property.
Suffice it to say that the second lease contract was legally inexistent for lack of an object certain. Under Arts. 1318 and 1409 (3) of the Civil Code, contracts the cause or object of which did not
exist at the time of the transaction are inexistent and void ab initio.
Petitioners claim of good faith is of no moment. The good faith of a party in entering into a contract is immaterial in determining whether it is valid or not. Good faith, not being an essential
element of a contract, has no bearing on its validity. No amount of good faith can validate an agreement which is otherwise void. A contract which the law denounces as void is necessarily no
contract at all and no effort or act of the parties to create one can bring about a change in its legal status.
11

Any presumption of good faith on the part of petitioner disappeared after he learned from the Register of Deeds that the property was already registered in the name of another person. Possession
in good faith ceases from the moment defects in the title are made known to the possessor by extraneous evidence or by a suit for recovery of the property by the true owner.
12
Every possessor in
good faith becomes a possessor in bad faith from the moment he becomes aware that what he believed to be true is not so.
13

59

When petitioner presented the second lease contract to the Register of Deeds a day after its execution, his attention was called to the fact that the "lessor" (Ronald Vargas) whom he believed to be
the owner of the property had no authority to lease it out. From that moment, his possession ceased to be in good faith.1avvphil.net
Petitioners reliance on our ruling in the Garcia case is misplaced. Garcia involved the lease of a residential unit and was governed by a special law, "An Act Regulating Rentals of Dwelling Units or
of Land on which Anothers Dwelling is Located and for Other Purposes" (BP 25). In this case, the property involved is a commercial building, not a residential unit. The Garcia case is therefore
inapplicable.
Assuming arguendo that Garcia is applicable, petitioners argument would still be untenable. We held in Garciathat, while a successor-in-interest would be in breach of contract if he were to eject a
lessee of his predecessor-in-interest during the existence of the lease, "where the lease has expired, there is no more contract to breach." Since the lease between petitioner and Ronald Vargas had
expired on April 1, 1996, there was no existing lease contract that could have been breached when respondent made a demand on petitioner to vacate the property on April 30, 1996.
Registration of the Lease Contract
Petitioners third argument is likewise without merit. Whether the second lease contract was registered or not was immaterial since it was void. Registration does not legitimize a void contract.
Moreover, assuming for the sake of argument that the second contract could be registered, the primary entrythereof did not produce the effect of registration. Petitioner presented the second lease
contract to the Register of Deeds of Iriga City for registration on October 31, 1995, or a day after its execution. The contract was, however, merely entered in the primary book. It was not
registered because it lacked certain requisites.
It is well settled that for the registration of voluntary instruments (e.g., deed of sale or contract of lease), it is necessary not only to register the deed, instrument of assignment, mortgage or lease in
the entry book of the register of deeds but also for the Register of Deeds to annotate a memorandum thereof on the owners duplicate certificate and its original.
14
In voluntary registration, if the
owners duplicate certificate is not surrendered and presented or if no payment of registration fees is made within fifteen days, entry in the day book will not convey or affect the land sold,
mortgaged or leased.
15

Entry alone produces the effect of registration, whether the transaction entered is voluntary or involuntary, so long as the registrant has complied with all that is required of him for purposes of
entry and annotation, and nothing more remains to be done but a duty incumbent solely on the Register of Deeds.
16
Here, petitioner admits that the second lease contract was refused registration
by the Register of Deeds for his failure to comply with certain conditions for registration. And since petitioner failed to comply with all the requisites for entry and annotation, the entry in the
primary book did not ripen into registration.
Curiously, petitioner uses "registered" (that is, the word registered in quotation marks) to describe his act of presenting the lease contract to the register of deeds. This shows that petitioner
himself doubted whether he had actually fulfilled the requirements for the registration of the lease.
Petitioner also anchors his arguments against the ejectment on the second contract of lease which was inexistent and void ab initio. But even assuming that it was valid, it already lapsed on
November 1, 2000, in which case the question of the propriety of petitioners ejectment would now be moot.1avvphil.net
Sufficiency of the Allegations in the Complaint to Confer Jurisdiction on the MTCC and to Establish a Cause of Action
Petitioner asserts that the MTCC had no jurisdiction to try the case because the complaint did not allege that he was withholding possession of the property beyond the expiration of the lease
period and that, in violation of Rule 70, Section 2 of the Rules of Court, respondent failed to establish a cause of action by omitting to allege that demand to vacate was made for failure to pay the
rent or comply with the conditions of the contract. We disagree.
What determine the nature of the action as well as the court which has jurisdiction over the case are the allegations in the complaint.
17
In Hilario v. Court of Appeals,
18
we ruled:
The settled rule is that a complaint for unlawful detainer is sufficient if it contains the allegation that the withholding of possession or the refusal to vacate is unlawful, without necessarily
employing the terminology of the law. The complaint must aver facts showing that the inferior court has jurisdiction to try the case, such as how defendants possession started or continued. Thus,
the allegation in a complaint that the "plaintiff verbally asked the defendants to remove their houses on the lot of the former but the latter refused and still refuse to do so without just and lawful
grounds" was held to be more than sufficient compliance with the jurisdictional requirements. (citations omitted)
60

The complaint filed with the MTCC alleged that petitioner had been holding the property by virtue of an expired lease contract with the son of respondents predecessor-in-interest and that,
despite demands made by respondent for him to vacate the property, petitioner had "unjustifiably refused to heed [respondents] demand and continuously and unlawfully occup[ied] and
possess[ed] [respondents] property."
19
Nothing could be clearer to confer jurisdiction on the MTCC and to establish a cause of action.
While possession by tolerance is lawful, such possession becomes illegal from the moment a demand to vacate is made by the owner and the possessor refuses to comply with such demand.
20
A
person who occupies the land of another with the latters tolerance or permission, without any contract between them, is necessarily bound by an implied promise that he will vacate upon demand,
failing which a summary action for ejectment is the proper remedy against him.
21

The CA correctly ruled that petitioners possession from the time the property was sold to respondent was merely by tolerance. His lawful possession was interrupted when respondent demanded
that he vacate the property. His refusal to comply with the demand made his continued possession unlawful, giving respondent the right to institute an action for unlawful detainer.1avvphil.net
Furthermore, it is also worthy to note that, in his motion for reconsideration of the RTC decision, petitioner explicitly prayed that the "MTCC decision be affirmed." Since he actively participated
in the proceedings before the MTCC and in fact later sought the affirmation of its decision, he in effect recognized its jurisdiction and he should now be estopped from questioning the jurisdiction
of that court. In other words, petitioner cannot now assail the jurisdiction of the MTCC after voluntarily submitting himself to its proceedings.
22
We have held that "while lack of jurisdiction may
be assailed at any stage, a partys active participation in the proceedings before a court without jurisdiction will estop such party from assailing such lack of jurisdiction."
23

Correctness of the Award of Attorneys Fees
Petitioner argues that the award of attorneys fees was improper because it was touched upon only in the dispositive portion of the RTC decision, hence, the CA should not have merely reduced the
award of attorneys fees but should have deleted it entirely. We agree.
The award of attorneys fees is the exception, not the general rule. It is not sound public policy to place a penalty on the right to litigate; nor should attorneys fees be awarded every time a party
wins a lawsuit.
24
It is necessary for the court to make express findings of facts and law that would bring the case within the exception and justify the grant of such award.
25

The CA correctly noted that the decisions of both the MTCC and the RTC do not state any factual basis for an award of attorneys fees. In particular, the award of attorneys fees was mentioned
only in the dispositive portion of the RTC decision. Nonetheless, instead of deleting the award of attorneys fees, the CA merely reduced the amount thereof from P50,000 to P20,000 on the ground
that attorneys fees may be awarded "if the court deems it just and equitable."
Article 2208 (11) of the Civil Code allows the recovery of counsels fees:
where the court deems it just and equitable that attorneys fees and expenses of litigation should be recovered.
However, the conclusion must be borne out by findings of facts and law.
26
The exercise of judicial discretion in the award of attorneys fees under Article 2208 (11) of the Civil Code demands a
factual, legal or equitable justification. Without such justification, the award is a conclusion without a premise, its basis being improperly left to speculation and conjecture.
27

The matter of attorneys fees cannot be dealt with only in the dispositive portion of the decision. The text of the decision must state the reason behind the award of attorneys fees.
28
Otherwise, its
award is totally unjustified.
Propriety of the Issuance and Service of the Writ of Execution
Petitioner alleges that the writ of execution was implemented in violation of the Rules of Court because it was implemented after only one working day from his receipt of a copy of the order dated
December 11, 1997 (denying his motion for reconsideration and/or suspension of the implementation of the writ of execution) instead of threeworking days as provided in Rule 39, Section 10 (c) of
the Rules of Court. According to him, since the implementation of the writ was not in accordance with the Rules of Court, the sheriffs should have been cited in contempt by the CA.
Petitioners error was that he counted the three days from receipt of denial of his motion for reconsideration and/or suspension of the implementation of the writ on December 12, 1997. He should
have counted it from receipt by his wife of the copy of the writ of execution on December 3, 1997.
61

Under Rule 39, Section 10 (c) of the Rules of Court,
29
the
writ of execution is carried out by giving the defendant notice of such writ and making a demand that the latter vacate the property within three working days from such notice. Hence, the three-
day period of implementation of the writ of execution should be reckoned from the date petitioner was notified of the writ, that is, from December 3, 1997, the date his wife received the notice or
writ.
The December 9, 1997 manifestation and motion filed by the sheriff and the December 16, 1997 sheriffs report state that the sheriff served a copy of the writ on the wife of the petitioner on
December 3, 1997. Receipt of a copy of the writ by petitioners wife in their office constituted constructive personal service on petitioner.
30
Thus, the sheriff could have lawfully ejected petitioner
from the property as early as December 8, 1997, the third workingday from notice of the writ of execution to petitioner.
Besides, in his December 4, 1997 urgent motion for time to vacate the premises, petitioner admitted that a writ had been issued by the RTC and a copy thereof received by his wife. And in his
December 8, 1997 supplemental motion for time to vacate the property, petitioner alleged that the writ of execution issued by the trial court on December 1, 1997 "[gave] the sheriff 30 days from
[petitioners] receipt of the writ within which to implement the same." These incidents indubitably show that petitioner had notice of the issuance of the writ of execution within a sufficient period
before the writ was actually implemented on December 15, 1997. There was substantial compliance with the requirement of service or notice when petitioner acquired knowledge of the writ of
execution.
31

Since the writ of execution was properly issued, served and implemented, there was no basis to hold the sheriffs in contempt.
Correctness of the RTCs July 4, 2000 Order
Petitioner also questions the July 4, 2000 order of the RTC directing the issuance of a writ to enforce the petitioners civil liability as determined by the CA. Petitioner insists that it is either the
MTCC where the case was originally filed or the CA itself which should have issued the writ.
This particular issue was never brought to the attention of the CA. Moreover, a diligent search of the entire records of this case failed to yield a copy of the alleged July 4, 2000 order. Except for
the bare allegations of petitioner, there is therefore no way to determine the nature and import of the challenged order.
WHEREFORE, the petition is hereby DENIED. The July 15, 1999 decision of the Court of Appeals in CA-G.R. SP No. 46065 is AFFIRMED with the MODIFICATION that the award of
attorneys fees is deleted.
Costs against petitioner.
SO ORDERED.






62

MARCIAL KASILAG, petitioner,
vs.
RAFAELA RODRIGUEZ, URBANO ROQUE, SEVERO MAPILISAN and IGNACIO DEL ROSARIO, respondents.
IMPERIAL, J.:
This is an appeal taken by the defendant-petitioner from the decision of the Court of Appeals which modified that rendered by the court of First Instance of Bataan in civil case No. 1504 of said
court and held: that the contract Exhibit "1" is entirely null and void and without effect; that the plaintiffs-respondents, then appellants, are the owners of the disputed land, with its improvements,
in common ownership with their brother Gavino Rodriguez, hence, they are entitled to the possession thereof; that the defendant-petitioner should yield possession of the land in their favor, with
all the improvements thereon and free from any lien; that the plaintiffs-respondents jointly and severally pay to the defendant-petitioner the sum of P1,000 with interest at 6 percent per annum
from the date of the decision; and absolved the plaintiffs-respondents from the cross-complaint relative to the value of the improvements claimed by the defendant-petitioner. The appealed decision
also ordered the registrar of deeds of Bataan to cancel certificate of title No. 325, in the name of the deceased Emiliana Ambrosio and to issue in lieu thereof another certificate of title in favor of the
plaintiffs-respondents and their brother Gavino Rodriguez, as undivided owners in equal parts, free of all liens and incumbrances except those expressly provided by law, without special
pronouncement as to the costs.
The respondents, children and heirs of the deceased Emiliana Ambrosio, commenced the aforesaid civil case to the end that they recover from the petitioner the possession of the land and its
improvements granted by way of homestead to Emiliana Ambrosio under patent No. 16074 issued on January 11, 1931, with certificate of title No. 325 issued by the registrar of deeds of Bataan on
June 27, 1931 in her favor, under section 122 of Act No. 496, which land was surveyed and identified in the cadastre of the municipality of Limay, Province of Bataan, as lot No. 285; that the
petitioner pay to them the sum of P650 being the approximate value of the fruits which he received from the land; that the petitioner sign all the necessary documents to transfer the land and its
possession to the respondents; that he petitioner be restrained, during the pendency of the case, from conveying or encumbering the land and its improvements; that the registrar of deeds of Bataan
cancel certificate of title No. 325 and issue in lieu thereof another in favor of the respondents, and that the petitioner pay the costs of suit.
The petitioner denied in his answer all the material allegations of the complaint and by way of special defense alleged that he was in possession of the land and that he was receiving the fruits
thereof by virtue of a mortgage contract, entered into between him and the deceased Emiliana Ambrosio on May 16, 1932, which was duly ratified by a notary public; and in counterclaim asked
that the respondents pay him the sum of P1,000 with 12 per cent interest per annum which the deceased owed him and that, should the respondents be declared to have a better right to the
possession of the land, that they be sentenced to pay him the sum of P5,000 as value of all the improvements which he introduced upon the land.lawphil.net
On May 16, 1932 Emiliana Ambrosio, in life, and the petitioner executed the following public deed:
"This agreement, made and entered into this 16th day of May, 1932, by and between Emiliana Ambrosio, Filipino, of legal age, widow and resident of Limay, Bataan, P.L., hereinafter called the
party of the first part, and Marcial Kasilag, Filipino, of legal age, married to Asuncion Roces, and resident at 312 Perdigon Street, Manila, P.L., hereinafter called party of the second part.
WITNESSETH: That the parties hereto hereby covenant and agree to and with each other as follows:
ARTICLE I. That the party of the first part is the absolute registered owner of a parcel of land in the barrio of Alngan, municipality of Limay, Province of Bataan, her title thereto being
evidenced by homestead certificate of title No. 325 issued by the Bureau of Lands on June 11, 1931, said land being lot No. 285 of the Limay Cadastre, General Land Registration Office
Cadastral Record No. 1054, bounded and described as follows:
Beginning at point marked 1 on plan E-57394, N. 84 32' W. 614.82 m. from B.B.M. No. 3, thence N. 66 35' E. 307.15 m. to point "2"; S. 5 07' W. to point "5"; S.6 10' E. 104.26 m. to point "4"; S.
82 17' W. to point "5"; S. 28 53' W. 72.26 m. to point "6"; N. 71 09' W. to point "7"; N. 1 42' E. 173.72 m. to point 1, point of beginning, "Containing an area of 6.7540 hectares. "Points 1,2,6 and
7, B.L.; points 3,4 and 5, stakes; points 4, 5 and 6 on bank of Alangan River. "Bounded on the North, by property claimed by Maria Ambrosio; on the East, by Road; on the South, by Alangan River
and property claimed by Maxima de la Cruz; and on the West, by property claimed by Jose del Rosario. "Bearing true. Declination 0 51' E. "Surveyed under authority of sections 12-22, Act No.
2874 and in accordance with existing regulations of the Bureau of Lands, by Mamerto Jacinto, public land surveyor, on July 8, 1927 and approved on February 25, 1931.
ARTICLE II. That the improvements on the above described land consist of the following:
Four (4) mango trees, fruit bearing: one hundred ten (110) hills of bamboo trees; one (1) tamarind and six (6) boga trees.
63

ARTICLE III. That the assessed value of the land is P940 and the assessed value of the improvements is P860, as evidenced by tax declaration No. 3531 of the municipality of Limay,
Bataan.
ARTICLE IV. That for and in consideration of the sum of one thousand pesos (P1,000) Philippine currency, paid by the party of second part to the party of the first part, receipt whereof
is hereby acknowledged, the party of the first part hereby encumbers and hypothecates, by way of mortgage, only the improvements described in Articles II and III hereof, of which
improvements the party of the first part is the absolute owner.
ARTICLE V. That the condition of said mortgage is such that if the party of the first part shall well and truly pay, or cause to paid to the party of the second part, his heirs, assigns, or
executors, on or before the 16th day of November, 1936, or four and one-half (4) years after date of the execution of this instrument, the aforesaid sum of one thousand pesos (P1,000)
with interest at 12 per cent per annum, then said mortgage shall be and become null and void; otherwise the same shall be and shall remain in full force and effect, and subject to
foreclosure in the manner and form provided by law for the amount due thereunder, with costs and also attorney's fees in the event of such foreclosure.lawphil.net
ARTICLE VI. That the party of the first part shall pay all taxes and assessments which are or may become due on the above described land and improvements during the term of this
agreement.
ARTICLE VII. That within thirty (30) days after date of execution of this agreement, the party of the first part shall file a motion before the Court of First Instance at Balanga, Bataan, P.
I., requesting cancellation of Homestead Certificate of Title No. 325 referred to in Article I hereof and the issuance, in lieu thereof, of a certificate of title under the provisions of Land
Registration Act No. 496, as amended by Act 3901.
ARTICLE III. It if further agreed that if upon the expiration of the period of time (4) years stipulated in this mortgage, the mortgagor should fail to redeem this mortgage, she would
execute a deed of absolute sale of the property herein described for the same amount as this mortgage, including all unpaid interests at the rate of 12 per cent per annum, in favor of the
mortgagee.
ARTICLE IX. That in the event the contemplated motion under Article VII hereof is not approved by the Court, the foregoing contract of sale shall automatically become null and void,
and the mortgage stipulated under Article IV and V shall remain in full force and effect.
In testimony whereof, the parties hereto have hereunto set their hands the day and year first herein before written.
(Sgd.) MARCIAL KASILAG
(Sgd.) EMILIANA AMBROSIO
Signed in the presence of:
(Sgd.) ILLEGIBLE
(Sgd.) GAVINO RODRIGUEZ.

PHILIPPINE ISLANDS } ss.
BALANGA, BATAAN } ss.
Before me this day personally appeared Emiliana Ambrosio without cedula by reason of her sex, to me known and known to me to be the person who signed the foregoing instrument, and
acknowledged to me that she executed the same as her free and voluntary act and deed.
64

I hereby certify that this instrument consists of three (3) pages including this page of the acknowledgment and that each page thereof is signed by the parties to the instrument and the
witnesses in their presence and in the presence of each other, and that the land treated in this instrument consists of only one parcel.
In witness whereof I have hereunto set my hand and affixed my notarial seal, this 16th day of May, 1932.
(Sgd.) NICOLAS NAVARRO
Notary Public
My commission expires December 31, 1933.


Doc. No. 178
Page 36 of my register
Book No. IV
One year after the execution of the aforequoted deed, that is, in 1933, it came to pass that Emiliana Ambrosio was unable to pay the stipulated interests as well as the tax on the land and its
improvements. For this reason, she and the petitioner entered into another verbal contract whereby she conveyed to the latter the possession of the land on condition that the latter would not
collect the interest on the loan, would attend to the payment of the land tax, would benefit by the fruits of the land, and would introduce improvements thereon. By virtue of this verbal contract,
the petitioner entered upon the possession of the land, gathered the products thereof, did not collect the interest on the loan, introduced improvements upon the land valued at P5,000, according to
him and on May 22, 1934 the tax declaration was transferred in his name and on March 6, 1936 the assessed value of the land was increased from P1,020 to P2,180.
After an analysis of the conditions of Exhibit "1" the Court of Appeals came to the conclusion and so held that the contract entered into by and between the parties, set out in the said public deed,
was one of absolute purchase and sale of the land and its improvements. And upon this ruling it held null and void and without legal effect the entire Exhibit 1 as well as the subsequent verbal
contract entered into between the parties, ordering, however, the respondents to pay to the petitioner, jointly and severally, the loan of P1,000 with legal interest at 6 per cent per annum from the
date of the decision. In this first assignment of error the petitioner contends that the Court of Appeals violated the law in holding that Exhibit 1 is an absolute deed of sale of the land and its
improvements and that it is void and without any legal effect.
The cardinal rule in the interpretation of contracts is to the effect that the intention of the contracting parties should always prevail because their will has the force of law between them. Article
1281 of the Civil Code consecrates this rule and provides, that if the terms of a contract are clear and leave no doubt as to the intention of the contracting parties, the literal sense of its stipulations
shall be followed; and if the words appear to be contrary to the evident intention of the contracting parties, the intention shall prevail. The contract set out in Exhibit 1 should be interpreted in
accordance with these rules. As the terms thereof are clear and leave no room for doubt, it should be interpreted according to the literal meaning of its clauses. The words used by the contracting
parties in Exhibit 1 clearly show that they intended to enter into the principal contract of loan in the amount of P1,000, with interest at 12 per cent per annum, and into the accessory contract of
mortgage of the improvements on the land acquired as homestead, the parties having moreover, agreed upon the pacts and conditions stated in the deed. In other words, the parties entered into a
contract of mortgage of the improvements on the land acquired as homestead, to secure the payment of the indebtedness for P1,000 and the stipulated interest thereon. In clause V the parties
stipulated that Emiliana Ambrosio was to pay, within four and a half years, or until November 16, 1936, the debt with interest thereon, in which event the mortgage would not have any effect; in
clause VI the parties agreed that the tax on the land and its improvements, during the existence of the mortgage, should be paid by the owner of the land; in clause VII it was covenanted that
within thirty days from the date of the contract, the owner of the land would file a motion in the Court of First Instance of Bataan asking that certificate of title No. 325 be cancelled and that in lieu
thereof another be issued under the provisions of the Land Registration Act No. 496, as amended by Act No. 3901; in clause VIII the parties agreed that should Emiliana Ambrosio fail to redeem
the mortgage within the stipulated period of four years and a half, she would execute an absolute deed of sale of the land in favor of the mortgagee, the petitioner, for the same amount of the loan of
P1,000 including unpaid interest; and in clause IX it was stipulated that in case the motion to be presented under clause VII should be disapproved by the Court of First Instance of Bataan, the
contract of sale would automatically become void and the mortgage would subsist in all its force.
Another fundamental rule in the interpretation of contracts, not less important than those indicated, is to the effect that the terms, clauses and conditions contrary to law, morals and public order
should be separated from the valid and legal contract and when such separation can be made because they are independent of the valid contract which expresses the will of the contracting parties.
Manresa, commenting on article 1255 of the Civil Code and stating the rule of separation just mentioned, gives his views as follows:
65

On the supposition that the various pacts, clauses or conditions are valid, no difficulty is presented; but should they be void, the question is as to what extent they may produce the nullity
of the principal obligation. Under the view that such features of the obligation are added to it and do not go to its essence, a criterion based upon the stability of juridical relations should
tend to consider the nullity as confined to the clause or pact suffering therefrom, except in case where the latter, by an established connection or by manifest intention of the parties, is
inseparable from the principal obligation, and is a condition, juridically speaking, of that the nullity of which it would also occasion. (Manresa, Commentaries on the Civil Code, Volume 8,
p. 575.)
The same view prevails in the Anglo-American law, as condensed in the following words:
Where an agreement founded on a legal consideration contains several promises, or a promise to do several things, and a part only of the things to be done are illegal, the promises which
can be separated, or the promise, so far as it can be separated, from the illegality, may be valid. The rule is that a lawful promise made for a lawful consideration is not invalid merely
because an unlawful promise was made at the same time and for the same consideration, and this rule applies, although the invalidity is due to violation of a statutory provision, unless the
statute expressly or by necessary implication declares the entire contract void. . . . (13 C. J., par. 470, p. 512; New York Cent. etc. R. Co. v. Gray, 239 U.S., 583; 60 Law ed., 451; U.S. v.
Mora, 97 U.S., 413, 24 Law. ed., 1017; U.S. v. Hodson, 10 Wall, 395; 19 Law ed. 937; Gelpcke v. Dubuque, 1 Wall. 175, 17 Law ed., 520; U.S. v. Bradly, 10 Pet. 343, 9 Law. ed., 448;
Borland v. Prindle, 144 Fed 713; Western Union Tel. Co. v. Kansas Pac. R. Co., 4 Fed., 284; Northern Pac. R. Co. v. U.S., 15 Ct. Cl., 428.)
Addressing ourselves now to the contract entered into by the parties, set out in Exhibit 1, we stated that the principal contract is that of loan and the accessory that of mortgage of the
improvements upon the land acquired as a homestead. There is no question that the first of these contract is valid as it is not against the law. The second, or the mortgage of the improvements, is
expressly authorized by section 116 of Act No. 2874, as amended by section 23 of Act No. 3517, reading:
SEC. 116. Except in favor of the Government or any of its branches, units or institutions, or legally constituted banking corporations, lands acquired under the free patent or homestead
provisions shall not be subject to encumbrance or alienation from the date of the approval of the application and for a term of five years from and after the date of issuance of the patent or
grant, nor shall they become liable to the satisfaction of any debt contracted prior to the expiration of said period; but the improvements or crops on the land may be mortgaged or
pledged to qualified persons, associations, or corporations.
It will be recalled that by clause VIII of Exhibit 1 the parties agreed that should Emiliana Ambrosio fail to redeem the mortgage within the stipulated period of four and a half years, by paying the
loan together with interest, she would execute in favor of the petitioner an absolute deed of sale of the land for P1,000, including the interest stipulated and owing. The stipulation was verbally
modified by the same parties after the expiration of one year, in the sense that the petitioner would take possession of the land and would benefit by the fruits thereof on condition that he would
condone the payment of interest upon the loan and he would attend to the payment of the land tax. These pacts made by the parties independently were calculated to alter the mortgage a contract
clearly entered into, converting the latter into a contract of antichresis. (Article 1881 of the Civil Code.) The contract of antichresis, being a real encumbrance burdening the land, is illegal and void
because it is legal and valid.
The foregoing considerations bring us to the conclusion that the first assignment of error is well-founded and that error was committed in holding that the contract entered into between the
parties was one of absolute sale of the land and its improvements and that Exhibit 1 is null and void. In the second assignment of error the petitioner contends that the Court of Appeals erred in
holding that he is guilty of violating the Public Land Act because he entered into the contract, Exhibit 1. The assigned error is vague and not specific. If it attempts to show that the said document
is valid in its entirety, it is not well-founded because we have already said that certain pacts thereof are illegal because they are prohibited by section 116 of Act No. 2874, as amended.
In the third assignment of error the petitioner insists that his testimony, as to the verbal agreement entered into between him and Emiliana Ambrosio, should have been accepted by the Court of
Appeals; and in the fourth and last assignment of error the same petitioner contends that the Court of Appeals erred in holding that he acted in bad faith in taking possession of the land and in
taking advantage of the fruits thereof, resulting in the denial of his right to be reimbursed for the value of the improvements introduced by him.
We have seen that subsequent to the execution of the contract, Exhibit 1, the parties entered into another verbal contract whereby the petitioner was authorized to take possession of the land, to
receive the fruits thereof and to introduce improvements thereon, provided that he would renounce the payment of stipulated interest and he would assume payment of the land tax. The possession
by the petitioner and his receipt of the fruits of the land, considered as integral elements of the contract of antichresis, are illegal and void agreements because, as already stated, the contract of
antichresis is a lien and such is expressly prohibited by section 116 of Act No. 2874, as amended. The Court of Appeals held that the petitioner acted in bad faith in taking possession of the land
because he knew that the contract he made with Emiliana Ambrosio was an absolute deed of sale and, further, that the latter could not sell the land because it is prohibited by section 116. The Civil
Code does not expressly define what is meant by bad faith, but section 433 provides that "Every person who is unaware of any flaw in his title, or in the manner of its acquisition, by which it is
invalidated, shall be deemed a possessor in good faith"; and provides further, that "Possessors aware of such flaw are deemed possessors in bad faith". Article 1950 of the same Code, covered by
Chapter II relative to prescription of ownership and other real rights, provides, in turn, that "Good faith on the part of the possessor consists in his belief that the person from whom he received the
thing was the owner of the same, and could transmit the title thereto." We do not have before us a case of prescription of ownership, hence, the last article is not squarely in point. In resume, it may
be stated that a person is deemed a possessor in bad faith when he knows that there is a flaw in his title or in the manner of its acquisition, by which it is invalidated.
66

Borrowing the language of Article 433, the question to be answered is whether the petitioner should be deemed a possessor in good faith because he was unaware of any flaw in his title or in the
manner of its acquisition by which it is invalidated. It will be noted that ignorance of the flaw is the keynote of the rule. From the facts found established by the Court of Appeals we can neither
deduce nor presume that the petitioner was aware of a flaw in his title or in the manner of its acquisition, aside from the prohibition contained in section 116. This being the case, the question is
whether good faith may be premised upon ignorance of the laws. Manresa, commenting on article 434 in connection with the preceding article, sustains the affirmative. He says:
"We do not believe that in real life there are not many cases of good faith founded upon an error of law. When the acquisition appears in a public document, the capacity of the parties has already
been passed upon by competent authority, and even established by appeals taken from final judgments and administrative remedies against the qualification of registrars, and the possibility of error
is remote under such circumstances; but, unfortunately, private documents and even verbal agreements far exceed public documents in number, and while no one should be ignorant of the law, the
truth is that even we who are called upon to know and apply it fall into error not infrequently. However, a clear, manifest, and truly unexcusable ignorance is one thing, to which undoubtedly
refers article 2, and another and different thing is possible and excusable error arising from complex legal principles and from the interpretation of conflicting doctrines.
But even ignorance of the law may be based upon an error of fact, or better still, ignorance of a fact is possible as to the capacity to transmit and as to the intervention of certain persons,
compliance with certain formalities and appreciation of certain acts, and an error of law is possible in the interpretation of doubtful doctrines. (Manresa, Commentaries on the Spanish
Civil Code. Volume IV, pp. 100, 101 and 102.)
According to this author, gross and inexcusable ignorance of law may not be the basis of good faith, but possible, excusable ignorance may be such basis. It is a fact that the petitioner is not
conversant with the laws because he is not a lawyer. In accepting the mortgage of the improvements he proceeded on the well-grounded belief that he was not violating the prohibition regarding
the alienation of the land. In taking possession thereof and in consenting to receive its fruits, he did not know, as clearly as a jurist does, that the possession and enjoyment of the fruits are
attributes of the contract of antichresis and that the latter, as a lien, was prohibited by section 116. These considerations again bring us to the conclusion that, as to the petitioner, his ignorance of
the provisions of section 116 is excusable and may, therefore, be the basis of his good faith. We do not give much importance to the change of the tax declaration, which consisted in making the
petitioner appear as the owner of the land, because such an act may only be considered as a sequel to the change of possession and enjoyment of the fruits by the petitioner, to about which we have
stated that the petitioner's ignorance of the law is possible and excusable. We, therefore, hold that the petitioner acted in good faith in taking possession of the land and enjoying its fruits.
The petitioner being a possessor in good faith within the meaning of article 433 of the Civil Code and having introduced the improvements upon the land as such, the provisions of article 361 of the
same Code are applicable; wherefore, the respondents are entitled to have the improvements and plants upon indemnifying the petitioner the value thereof which we fix at P3,000, as appraised by
the trial court; or the respondents may elect to compel the petitioner to have the land by paying its market value to be fixed by the court of origin.
The respondents also prayed in their complaint that the petitioner be compelled to pay them the sum of P650, being the approximate value of the fruits obtained by the petitioner from the land.
The Court of Appeals affirmed the judgment of the trial court denying the claim or indemnity for damages, being of the same opinion as the trial court that the respondents may elect to compel the
petitioner to have the land. The Court of Appeals affirmed the judgment of the trial court that the respondents have not established such damages. Under the verbal contract between the petitioner
and the deceased Emiliana Ambrosio, during the latter's lifetime, the former would take possession of the land and would receive the fruits of the mortgaged improvements on condition that he
would no longer collect the stipulated interest and that he would attend to the payment of the land tax. This agreement, at bottom, is tantamount to the stipulation that the petitioner should apply
the value of the fruits of the land to the payment of stipulated interest on the loan of P1,000 which is, in turn, another of the elements characterizing the contract of antichresis under article 1881 of
the Civil Code. It was not possible for the parties to stipulate further that the value of the fruits be also applied to the payment of the capital, because the truth was that nothing remained after
paying the interest at 12% per annum. This interest, at the rate fixed, amounted to P120 per annum, whereas the market value of the fruits obtainable from the land hardly reached said amount in
view of the fact that the assessed value of said improvements was, according to the decision, P860. To this should be added the fact that, under the verbal agreement, from the value of the fruits had
to be taken a certain amount to pay the annual land tax. We mention these data here to show that the petitioner is also not bound to render an accounting of the value of the fruits of the mortgaged
improvements for the reason stated that said value hardly covers the interest earned by the secured indebtednes.
For all the foregoing considerations, the appealed decision is reversed, and we hereby adjudge: (1) that the contract of mortgage of the improvements, set out in Exhibit 1, is valid and binding; (2)
that the contract of antichresis agreed upon verbally by the parties is a real incumbrance which burdens the land and, as such, is a null and without effect; (3) that the petitioner is a possessor in
good faith; (4) that the respondents may elect to have the improvements introduced by the petitioner by paying the latter the value thereof, P3,000, or to compel the petitioner to buy and have the
land where the improvements or plants are found, by paying them its market value to be filed by the court of origin, upon hearing the parties; (5) that the respondents have a right to the possession
of the land and to enjoy the mortgaged improvements; and (6) that the respondents may redeem the mortgage of the improvements by paying to the petitioner within three months the amount of
P1,000, without interest, as that stipulated is set off by the value of the fruits of the mortgaged improvements which petitioner received, and in default thereof the petitioner may ask for the public
sale of said improvements for the purpose of applying the proceeds thereof to the payment of his said credit. Without special pronouncement as to the costs in all instances. So ordered.

67

RICARDO L. MANOTOC, JR., petitioner,
vs.
THE COURT OF APPEALS, HONS. SERAFIN E. CAMILON and RICARDO L. PRONOVE, JR., as Judges of the Court of First Instance of Rizal, Pasig branches, THE PEOPLE OF
THE PHILIPPINES, the SECURITIES & EXCHANGE COMISSION, HON. EDMUNDO M. REYES, as Commissioner of Immigration, and the Chief of the Aviation Security
Command (AVSECOM), respondents.

FERNAN, J.:
The issue posed for resolution in this petition for review may be stated thus: Does a person facing a criminal indictment and provisionally released on bail have an unrestricted right to travel?
Petitioner Ricardo L. Manotoc, Jr., is one of the two principal stockholders of Trans-Insular Management, Inc. and the Manotoc Securities, Inc., a stock brokerage house. Having transferred the
management of the latter into the hands of professional men, he holds no officer-position in said business, but acts as president of the former corporation.
Following the "run" on stock brokerages caused by stock broker Santamaria's flight from this jurisdiction, petitioner, who was then in the United States, came home, and together with his co-
stockholders, filed a petition with the Securities and Exchange Commission for the appointment of a management committee, not only for Manotoc Securities, Inc., but likewise for Trans-Insular
Management, Inc. The petition relative to the Manotoc Securities, Inc., docketed as SEC Case No. 001826, entitled, "In the Matter of the Appointment of a Management Committee for Manotoc
Securities, Inc., Teodoro Kalaw, Jr., Ricardo Manotoc, Jr., Petitioners", was granted and a management committee was organized and appointed.
Pending disposition of SEC Case No. 001826, the Securities and Exchange Commission requested the then Commissioner of Immigration, Edmundo Reyes, not to clear petitioner for departure and
a memorandum to this effect was issued by the Commissioner on February 4, 1980 to the Chief of the Immigration Regulation Division.
When a Torrens title submitted to and accepted by Manotoc Securities, Inc. was suspected to be a fake, six of its clients filed six separate criminal complaints against petitioner and one Raul
Leveriza, Jr., as president and vice-president, respectively, of Manotoc Securities, Inc. In due course, corresponding criminal charges for estafa were filed by the investigating fiscal before the then
Court of First Instance of Rizal, docketed as Criminal Cases Nos. 45399 and 45400, assigned to respondent Judge Camilon, and Criminal Cases Nos. 45542 to 45545, raffled off to Judge Pronove.
In all cases, petitioner has been admitted to bail in the total amount of P105,000.00, with FGU Instance Corporation as surety.
On March 1, 1982, petitioner filed before each of the trial courts a motion entitled, "motion for permission to leave the country," stating as ground therefor his desire to go to the United States,
"relative to his business transactions and opportunities."
1
The prosecution opposed said motion and after due hearing, both trial judges denied the same. The order of Judge Camilon dated March
9, 1982, reads:
Accused Ricardo Manotoc Jr. desires to leave for the United States on the all embracing ground that his trip is ... relative to his business transactions and opportunities.
The Court sees no urgency from this statement. No matter of any magnitude is discerned to warrant judicial imprimatur on the proposed trip.
In view thereof, permission to leave the country is denied Ricardo Manotoc, Jr. now or in the future until these two (2) cases are terminated .
2

On the other hand, the order of Judge Pronove dated March 26, 1982, reads in part:
6.-Finally, there is also merit in the prosecution's contention that if the Court would allow the accused to leave the Philippines the surety companies that filed the bail bonds in
his behalf might claim that they could no longer be held liable in their undertakings because it was the Court which allowed the accused to go outside the territorial jurisdiction
of the Philippine Court, should the accused fail or decide not to return.
WHEREFORE, the motion of the accused is DENIED.
3

68

It appears that petitioner likewise wrote the Immigration Commissioner a letter requesting the recall or withdrawal of the latter's memorandum dated February 4, 1980, but said request was also
denied in a letter dated May 27, 1982.
Petitioner thus filed a petition for certiorari and mandamus before the then Court of Appeals
4
seeking to annul the orders dated March 9 and 26, 1982, of Judges Camilon and Pronove,
respectively, as well as the communication-request of the Securities and Exchange Commission, denying his leave to travel abroad. He likewise prayed for the issuance of the appropriate writ
commanding the Immigration Commissioner and the Chief of the Aviation Security Command (AVSECOM) to clear him for departure.
On October 5, 1982, the appellate court rendered a decision
5
dismissing the petition for lack of merit.
Dissatisfied with the appellate court's ruling, petitioner filed the instant petition for review on certiorari. Pending resolution of the petition to which we gave due course on April 14,
1983
6
petitioner filed on August 15, 1984 a motion for leave to go abroad pendente lite.
7
In his motion, petitioner stated that his presence in Louisiana, U.S.A. is needed in connection "with the
obtention of foreign investment in Manotoc Securities, Inc."
8
He attached the letter dated August 9, 1984 of the chief executive officer of the Exploration Company of Louisiana, Inc., Mr. Marsden
W. Miller
9
requesting his presence in the United States to "meet the people and companies who would be involved in its investments." Petitioner, likewise manifested that on August 1, 1984,
Criminal Cases Nos. 4933 to 4936 of the Regional Trial Court of Makati (formerly Nos. 45542-45545) had been dismissed as to him "on motion of the prosecution on the ground that after
verification of the records of the Securities and Exchange Commission ... (he) was not in any way connected with the Manotoc Securities, Inc. as of the date of the commission of the offenses
imputed to him."
10
Criminal Cases Nos. 45399 and 45400 of the Regional Trial Court of Makati, however, remained pending as Judge Camilon, when notified of the dismissal of the other cases
against petitioner, instead of dismissing the cases before him, ordered merely the informations amended so as to delete the allegation that petitioner was president and to substitute that he was
"controlling/majority stockholder,''
11
of Manotoc Securities, Inc. On September 20, 1984, the Court in a resolution en banc denied petitioner's motion for leave to go abroadpendente lite.
12

Petitioner contends that having been admitted to bail as a matter of right, neither the courts which granted him bail nor the Securities and Exchange Commission which has no jurisdiction over his
liberty, could prevent him from exercising his constitutional right to travel.
Petitioner's contention is untenable.
A court has the power to prohibit a person admitted to bail from leaving the Philippines. This is a necessary consequence of the nature and function of a bail bond.
Rule 114, Section 1 of the Rules of Court defines bail as the security required and given for the release of a person who is in the custody of the law, that he will appear before any court in which his
appearance may be required as stipulated in the bail bond or recognizance.
Its object is to relieve the accused of imprisonment and the state of the burden of keeping him, pending the trial, and at the same time, to put the accused as much under the
power of the court as if he were in custody of the proper officer, and to secure the appearance of the accused so as to answer the call of the court and do what the law may require
of him.
13

The condition imposed upon petitioner to make himself available at all times whenever the court requires his presence operates as a valid restriction on his right to travel. As we have held in
People vs. Uy Tuising, 61 Phil. 404 (1935).
... the result of the obligation assumed by appellee (surety) to hold the accused amenable at all times to the orders and processes of the lower court, was to prohibit said accused
from leaving the jurisdiction of the Philippines, because, otherwise, said orders and processes will be nugatory, and inasmuch as the jurisdiction of the courts from which they
issued does not extend beyond that of the Philippines they would have no binding force outside of said jurisdiction.
Indeed, if the accused were allowed to leave the Philippines without sufficient reason, he may be placed beyond the reach of the courts.
The effect of a recognizance or bail bond, when fully executed or filed of record, and the prisoner released thereunder, is to transfer the custody of the accused from the public
officials who have him in their charge to keepers of his own selection. Such custody has been regarded merely as a continuation of the original imprisonment. The sureties
become invested with full authority over the person of the principal and have the right to prevent the principal from leaving the state.
14

69

If the sureties have the right to prevent the principal from leaving the state, more so then has the court from which the sureties merely derive such right, and whose jurisdiction over the person of
the principal remains unaffected despite the grant of bail to the latter. In fact, this inherent right of the court is recognized by petitioner himself, notwithstanding his allegation that he is at total
liberty to leave the country, for he would not have filed the motion for permission to leave the country in the first place, if it were otherwise.
To support his contention, petitioner places reliance upon the then Court of Appeals' ruling in People vs. Shepherd (C.A.-G.R. No. 23505-R, February 13, 1980) particularly citing the following
passage:
... The law obliges the bondsmen to produce the person of the appellants at the pleasure of the Court. ... The law does not limit such undertaking of the bondsmen as demandable
only when the appellants are in the territorial confines of the Philippines and not demandable if the appellants are out of the country. Liberty, the most important consequence of
bail, albeit provisional, is indivisible. If granted at all, liberty operates as fully within as without the boundaries of the granting state. This principle perhaps accounts for the
absence of any law or jurisprudence expressly declaring that liberty under bail does not transcend the territorial boundaries of the country.
The faith reposed by petitioner on the above-quoted opinion of the appellate court is misplaced. The rather broad and generalized statement suffers from a serious fallacy; for while there is, indeed,
neither law nor jurisprudence expressly declaring that liberty under bail does not transcend the territorial boundaries of the country, it is not for the reason suggested by the appellate court.
Also, petitioner's case is not on all fours with the Shepherd case. In the latter case, the accused was able to show the urgent necessity for her travel abroad, the duration thereof and the conforme of
her sureties to the proposed travel thereby satisfying the court that she would comply with the conditions of her bail bond. in contrast, petitioner in this case has not satisfactorily shown any of the
above. As aptly observed by the Solicitor General in his comment:
A perusal of petitioner's 'Motion for Permission to Leave the Country' will show that it is solely predicated on petitioner's wish to travel to the United States where he will,
allegedly attend to some business transactions and search for business opportunities. From the tenor and import of petitioner's motion, no urgent or compelling reason can be
discerned to justify the grant of judicial imprimatur thereto. Petitioner has not sufficiently shown that there is absolute necessity for him to travel abroad. Petitioner's motion
bears no indication that the alleged business transactions could not be undertaken by any other person in his behalf. Neither is there any hint that petitioner's absence from the
United States would absolutely preclude him from taking advantage of business opportunities therein, nor is there any showing that petitioner's non-presence in the United
States would cause him irreparable damage or prejudice.
15

Petitioner has not specified the duration of the proposed travel or shown that his surety has agreed to it. Petitioner merely alleges that his surety has agreed to his plans as he had posted cash
indemnities. The court cannot allow the accused to leave the country without the assent of the surety because in accepting a bail bond or recognizance, the government impliedly agrees "that it will
not take any proceedings with the principal that will increase the risks of the sureties or affect their remedies against him. Under this rule, the surety on a bail bond or recognizance may be
discharged by a stipulation inconsistent with the conditions thereof, which is made without his assent. This result has been reached as to a stipulation or agreement to postpone the trial until after
the final disposition of other cases, or to permit the principal to leave the state or country."
16
Thus, although the order of March 26, 1982 issued by Judge Pronove has been rendered moot and
academic by the dismissal as to petitioner of the criminal cases pending before said judge, We see the rationale behind said order.
As petitioner has failed to satisfy the trial courts and the appellate court of the urgency of his travel, the duration thereof, as well as the consent of his surety to the proposed travel, We find no
abuse of judicial discretion in their having denied petitioner's motion for permission to leave the country, in much the same way, albeit with contrary results, that We found no reversible error to
have been committed by the appellate court in allowing Shepherd to leave the country after it had satisfied itself that she would comply with the conditions of her bail bond.
The constitutional right to travel being invoked by petitioner is not an absolute right. Section 5, Article IV of the 1973 Constitution states:
The liberty of abode and of travel shall not be impaired except upon lawful order of the court, or when necessary in the interest of national security, public safety or public
health.
To our mind, the order of the trial court releasing petitioner on bail constitutes such lawful order as contemplated by the above-quoted constitutional provision.
Finding the decision of the appellate court to be in accordance with law and jurisprudence, the Court finds that no gainful purpose will be served in discussing the other issues raised by petitioner.
WHEREFORE, the petition for review is hereby dismissed, with costs against petitioner.