G.R. No.

L-50264 October 21, 1991

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.
Rodolfo B. Quiachon for petitioner.
Jose M. Ilagan for private respondent.

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.
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 copossession. 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).
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.

G.R. No. 137944

April 6, 2000
FERNANDA MENDOZA CEQUEA and RUPERTA MENDOZA LIRIO, petitioners,
vs.
HONORATA MENDOZA BOLANTE, respondent.

PANGANIBAN, J.:
Tax receipts and declarations are prima facie proofs of ownership or possession of the
property for which such taxes have been paid. Coupled with proof of actual possession
of the property, they may become the basis of a claim for ownership. By acquisitive
prescription, possession in the concept of owner public, adverse, peaceful and
uninterrupted may be converted to ownership. On the other hand, mere possession
and occupation of land cannot ripen into ownership.
The Case
Before us is a Petition for Review on Certiorari of the March 19, 1999 Decision 1 of the
Court of Appeals 2 (CA) in CA-GR CV No. 43423. The assailed Decision disposed as
follows: 3
WHEREFORE, for all the foregoing, the decision of the trial court appealed from is
REVERSED and SET ASIDE. In lieu thereof, judgment is hereby rendered declaring . . .
Honorata Mendoza Bolante the rightful owner and possessor of the parcel of land which
is the subject of this appeal.
The Facts
The Petition herein refers to a parcel of land situated in Barangay Bangad, Binangonan,
Province of Rizal, having an area of 1,728 square meters and covered by Tax
Declaration No. 26-0027. The undisputed antecedents of this case are narrated by the
Court of Appeals as follows: 4
The facts not disputed revealed that prior to 1954, the land was originally declared for
taxation purposes in the name of Sinforoso Mendoza, father of [respondent] and married
to Eduarda Apiado. Sinforoso died in 1930. [Petitioners] were the daughters of Margarito
Mendoza. On the basis of an affidavit, the tax declaration in the name of Sinforoso
Mendoza of the contested lot was cancelled and subsequently declared in the name of
Margarito Mendoza. Margarito and Sinforoso are brothers. [Respondent] is the present
occupant of the land. Earlier, on October 15, 1975, [respondent] and Miguel Mendoza,
another brother of [petitioners], during the cadastral survey had a dispute on [the]
ownership of the land.1wphi1.nt
During the pre-trial conference, parties stipulated the following facts:
1) The land subject of the case was formerly declared for taxation purposes in the name
of Sinforoso Mendoza prior to 1954 but is now declared in the name of Margarito
Mendoza.

2) The parties agree[d] as to the identity of the land subject of instant case.
3) [Petitioners] are the daughters of Margarito Mendoza while the [respondent] is the
only daughter of Sinforoso Mendoza.
4) Margarito Mendoza and Sinforoso Mendoza [were] brothers, now deceased.
5) During the cadastral survey of the property on October 15, 1979 there was already a
dispute between Honorata M. Bolante and Miguel Mendoza, brother of [petitioners].
6) [Respondent was] occupying the property in question.
The only issue involved [was] who [was] the lawful owner and possessor of the land
subject of the case.
After trial, the court a quo rendered its judgment in favor of [petitioners], the dispositive
portion of which reads as follows:
Wherefore, in view of the foregoing considerations, judgment is hereby rendered for the
[petitioners] and against the [respondent]:
1. Declaring that the parcel of land situated in Bangad, Binangonan, Rizal covered by tax
declaration no. 26-0027 in the name of Margarito Mendoza belong to his heirs, the
[petitioners] herein;
2. Ordering [respondent] to vacate the property subject of the case and deliver
possession thereof to the heirs of Margarito Mendoza.
3. Ordering the [respondent] to indemnify the [petitioners] in the sum of P10,000.00, as
actual damages.
4. Ordering the [respondent] to pay the costs.
Ruling of the Court of Appeals
The Court of Appeals reversed the trial court because the genuineness and the due
execution of the affidavit allegedly signed by the respondent and her mother had not
been sufficiently established. The notary public or anyone else who had witnessed the
execution of the affidavit was not presented. No expert testimony or competent witness
ever attested to the genuineness of the questioned signatures.
The CA further ruled that the affidavit was insufficient to overcome the denial of
respondent and her mother. The former testified that the latter, never having attended
school, could neither read nor write. Respondent also said that she had never been
called "Leonor," which was how she was referred to in the affidavit.
Moreover, the appellate court held that the probative value of petitioners' tax receipts
and declarations paled in comparison with respondent's proof of ownership of the
disputed parcel. Actual, physical, exclusive and continuous possession by respondent

since 1985 indeed gave her a better title under Article 538 of the Civil Code.
Hence, this Petition. 5
Issues
Insisting that they are the rightful owners of the disputed land, the petitioners allege that
the CA committed these reversible errors: 6
1. . . . [I]n not considering the affidavit as an exception to the general rule that an affidavit
is classified as hearsay evidence, unless the affiant is placed on the witness stand;
2. . . . [I]n holding that respondent has been in actual and physical possession, coupled
with . . . exclusive and continuous possession of the land since 1985, which are
evidence of the best kind of circumstance proving the claim of the title of ownership and
enjoys the presumption of preferred possessor.
The Court's Ruling
The Petition has no merit.
First Issue:
Admissibility of the Affidavit
Petitioners dispute the CA's ruling that the affidavit was not the best evidence of their
father's ownership of the disputed land, because the "affiant was not placed on the
witness stand." They contend that it was unnecessary to present a witness to establish
the authenticity of the affidavit because it was a declaration against respondent's interest
and was an ancient document. As a declaration against interest, it was an exception to
the hearsay rule. As a necessary and trustworthy document, it was admissible in
evidence. And because it was executed on March 24, 1953, it was a self-authenticating
ancient document.
We quote below the pertinent portion of the appellate court's ruling: 7
While it is true that the affidavit was signed and subscribed before a notary public, the
general rule is that affidavits are classified as hearsay evidence, unless affiants are
placed on the witness stand (People's Bank and Trust Company vs. Leonidas, 207
SCRA 164). Affidavits are not considered the best evidence, if affiants are available as
witnesses (Vallarta vs. Court of Appeals, 163 SCRA 587). The due execution of the
affidavit was not sufficiently established. The notary public or others who saw that the
document was signed or at least [could] confirm its recitals [were] not presented. There
was no expert testimony or competent witness who attested to the genuineness of the
questioned signatures. Worse, [respondent] denied the genuineness of her signature
and that of her mother . . . [Respondent] testified that her mother was an illiterate and as
far as she knew her mother could not write because she had not attended school (p. 7,
ibid). Her testimony was corroborated by Ma. Sales Bolante Basa, who said the
[respondent's] mother was illiterate.

The petitioners allegations are untenable. Before a private document offered as

authentic can be received in evidence, its due execution and authenticity must be proved
first. 8 And before a document is admitted as an exception to the hearsay rule under the
Dead Man's Statute, the offeror must show (a) that the declarant is dead, insane or
unable to testify; (b) that the declaration concerns a fact cognizable by the declarant; (c)
that at the time the declaration was made, he was aware that the same was contrary to
his interest; and (d) that circumstances render improbable the existence of any motive to
falsify. 9
In this case, one of the affiants happens to be the respondent, who is still alive and who
testified that the signature in the affidavit was not hers. A declaration against interest is
not admissible if the declarant is available to testify as a witness. 10 Such declarant
should be confronted with the statement against interest as a prior inconsistent
statement.
The affidavit cannot be considered an ancient document either. An ancient document is
one that is (1) more than 30 years old, (2) found in the proper custody, and (3)
unblemished by any alteration or by any circumstance of suspicion. 11 It must on its face
appear to be genuine. The petitioners herein failed, however, to explain how the
purported signature of Eduarda Apiado could have been affixed to the subject affidavit if,
according to the witness, she was an illiterate woman who never had any formal
schooling. This circumstance casts suspicion on its authenticity.
Not all notarized documents are exempted from the rule on authentication. Thus, an
affidavit does not automatically become a public document just because it contains a
notarial jurat. Furthermore, the affidavit in question does not state how the ownership of
the subject land was transferred from Sinforoso Mendoza to Margarito Mendoza. By
itself, an affidavit is not a mode of acquiring ownership.
Second Issue:
Preference of Possession
The CA ruled that the respondent was the preferred possessor under Article 538 of the
Civil Code because she was in notorious, actual, exclusive and continuous possession
of the land since 1985. Petitioners dispute this ruling. They contend that she came into
possession through force and violence, contrary to Article 536 of the Civil Code.
We concede that despite their dispossession in 1985, the petitioners did not lose legal
possession because possession cannot be acquired through force or violence. 12 To all
intents and purposes, a possessor, even if physically ousted, is still deemed the legal
possessor.13 Indeed, anyone who can prove prior possession, regardless of its character,
may recover such possession. 14
However, possession by the petitioners does not prevail over that of the
respondent.1wphi1 Possession by the former before 1985 was not exclusive, as the
latter also acquired it before 1985. The records show that the petitioners' father and
brother, as well as the respondent and her mother were simultaneously in adverse
possession of the land.

Before 1985, the subject land was occupied and cultivated by the respondent's father
(Sinforoso), who was the brother of petitioners' father (Margarito), as evidenced by Tax
Declaration No. 26425. 15 When Sinforoso died in 1930, Margarito took possession of the
land and cultivated it with his son Miguel. At the same time, respondent and her mother
continued residing on the lot.
When respondent came of age in 1948, she paid realty taxes for the years 1932-1948. 16
Margarito declared the lot for taxation in his name in 1953 17 and paid its realty taxes
beginning 1952. 18 When he died, Miguel continued cultivating the land. As found by the
CA, the respondent and her mother were living on the land, which was being tilled by
Miguel until 1985 when he was physically ousted by the respondent. 19
Based on Article 538 of the Civil Code, the respondent is the preferred possessor
because, benefiting from her father's tax declaration of the subject lot since 1926, she
has been in possession thereof for a longer period. On the other hand, petitioners' father
acquired joint possession only in 1952.
Third Issue:
Possession of Better Right
Finally, the petitioners challenge the CA ruling that "actual and physical coupled with the
exclusive and continuous possession [by respondent] of the land since 1985" proved her
ownership of the disputed land. The respondent argues that she was legally presumed to
possess the subject land with a just title since she possessed it in the concept of owner.
Under Article 541 of the Code, she could not be obliged to show or prove such title.
The respondent's contention is untenable. The presumption in Article 541 of the Civil
Code is merely disputable; it prevails until the contrary is proven. 20 That is, one who is
disturbed in one's possession shall, under this provision, be restored thereto by the
means established by law. 21 Article 538 settles only the question of possession, and
possession is different from ownership. Ownership in this case should be established in
one of the ways provided by law.
To settle the issue of ownership, we need to determine who between the claimants has
proven acquisitive prescription. 22
Ownership of immovable property is acquired by ordinary prescription through
possession for ten years.23 Being the sole heir of her father, respondent showed through
his tax receipt that she had been in possession of the land for more than ten years since
1932. When her father died in 1930, she continued to reside there with her mother.
When she got married, she and her husband engaged in kaingin inside the disputed lot
for their livelihood. 24
Respondent's possession was not disturbed until 1953 when the petitioners' father
claimed the land. But by then, her possession, which was in the concept of owner
public, peaceful, and uninterrupted 25 had already ripened into ownership.
Furthermore she herself, after her father's demise, declared and paid realty taxes for the
disputed land. Tax receipts and declarations of ownership for taxation, when coupled
with proof of actual possession of the property, can be the basis of a claim for ownership

through prescription. 26
In contrast, the petitioners, despite thirty-two years of farming the subject land, did not
acquire ownership. It is settled that ownership cannot be acquired by mere occupation. 27
Unless coupled with the element of hostility toward the true owner, 28 occupation and
use, however long, will not confer title by prescription or adverse possession. Moreover,
the petitioners cannot claim that their possession was public, peaceful and
uninterrupted. Although their father and brother arguably acquired ownership through
extraordinary prescription because of their adverse possession for thirty-two years
(1953-1985), 29 this supposed ownership cannot extend to the entire disputed lot, but
must be limited to the portion that they actually farmed.
We cannot sustain the petitioners' contention that their ownership of the disputed land
was established before the trial court through the series of tax declarations and receipts
issued in the name of Margarito Mendoza. Such documents prove that the holder has a
claim of title over the property. Aside from manifesting a sincere desire to obtain title
thereto, they announce the holder's adverse claim against the state and other interested
parties. 30
However, tax declarations and receipts are not conclusive evidence of ownership. 31 At
most, they constitute mere prima facie proof of ownership or possession of the property
for which taxes have been paid. 32 In the absence of actual public and adverse
possession, the declaration of the land for tax purposes does not prove ownership. 33 In
sum, the petitioners' claim of ownership of the whole parcel has no legal
basis.1wphi1.nt
WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution
AFFIRMED. Costs against petitioners.
G.R. No. 80294 March 23, 1990
CATHOLIC VICAR APOSTOLIC OF THE MOUNTAIN PROVINCE, petitioner,
vs.
COURT OF APPEALS, HEIRS OF EGMIDIO OCTAVIANO and JUAN VALDEZ,
respondents.
Valdez, Ereso, Polido & Associates for petitioner. Sabino Padilla, Jr. collaborating
counsel for petitioner. Jaime G. de Leon for the Heirs of E. Octaviano. Fernando P.
Cabato for the Heirs of Juan Valdez.

GANCAYCO, J.:
Before the Court are a motion for reconsideration and a supplemental motion for
reconsideration filed by petitioner relating to the decision of the Court dated September
21, 1988. The comment and opposition thereto have been filed by the private
respondents and a reply was filed by petitioner.

Petitioner argues that the findings of facts of the Court of Appeals in CA-G.R. No. 38830R are: (1) contrary to the law; (2) contrary to the findings of the trial court; (3) contrary to
the findings of the Court of Appeals in CA-G.R. No. 08890-R; (4) contrary to the
admissions of the parties; and (5) based on a clear misapprehension of historical and
ecclesiastical facts made of judicial notice, which are well within the exceptions
consistently adhered to by this Court as in Republic vs. Court of Appeals. 1
The Court finds no merit in this contention. The said decision of the Court of Appeals
dated May 4, 1977 in CA-G.R. No. 38830-R was already elevated to this Court by
petitioner through a petition for review in G.R. No. L-46832 entitled Catholic Vicar
Apostolic of the Mountain Province vs. Court of Appeals and Heirs of Egmidio
Octaviano, while the heirs of Juan Valdez and Pacita Valdez also filed a petition for
review of the same decision in this Court docketed as G.R. No. L-46872 entitled Heirs of
Juan Valdez and Pacita Valdez vs. CA, et al. In a minute resolution dated January 13,
1978, this Court denied both petitions for lack of merit.
It is in paid petition for review wherein the petitioner should have questioned the findings
of facts of the appellate court in CA-G.R. No. 38830-R but since said petition had been
denied outright, the aforestated decision of the appellate court which has long become
final and executory, is res judicata as between the parties and the findings of facts
therein are conclusive. Thus, the factual findings in said final judgment cannot be
reviewed anew in the present proceedings.
The relevant question that should now be asked is, considering the aforestated decision
of the appellate court and guided by the findings of facts therein, who is entitled to the
possession of the lots in question? Who owns these lots?
CA-G.R. No. 38830-R was a land registration case where petitioner and private
respondents were asking for confirmation of their alleged imperfect titles to the lots in
question under Section 49 (b) of the Public Land Act. 2
In the said decision, the appellate court found that the petitioner was not entitled to
confirmation of its imperfect title to Lots 2 and 3. In separate motions for reconsideration
filed by private respondents Heirs of Octaviano and Heirs of Juan Valdez relating to the
same decision, they also asked that said two lots be registered in their names. On
August 12, 1977, the Court of Appeals denied both motions. Effectively, therefore, in the
said decision the appellate court ruled that neither the petitioner nor the private
respondents are entitled to the confirmation of imperfect title over said two lots. That is
now res judicata.
What is the nature of these two lots? Pursuant to the said decision in CA-G.R. No.
38830-R, the two lots in question remained part of the public lands. This is the only
logical conclusion when the appellate court found that neither the petitioner nor private
respondents are entitled to confirmation of imperfect title over said lots.
Hence, the Court finds the contention of petitioner to be well taken in that the trial court
and the appellate court have no lawful basis in ordering petitioner to return and
surrender possession of said lots to private respondents. Said property being a public
land its disposition is subject to the provision of the Public Land Act, as amended. 3

The present actions that were instituted in the Regional Trial Court by private
respondents are actions for recovery of possession (accion publiciana) and not for
recovery of ownership (accion reivindicatoria).
In the aforestated decision of the appellate court in CA-G.R. No. 38830-R, the following
are among the findings of facts:
9th. The totality of foregoing together with evidence of oppositors must convince this
Court that as to lots 2 and 3, it was oppositors who were possessors under bona fide
claim of ownership thru their predecessors since around 1906; and that appellee came
in only in the concept of a borrower in commodatum, but that appellee took it upon itself
to claim and repudiate the trust sometime in 1951, and since from that time at least,
possession of oppositors had been interrupted, neither can they claim registration under
Sec. 48, par. b of the Public Land Law, Com. Act 141, as amended by R.A. 1942; this
must be the final result, and there would be no more need to rule on the errors
impugning the personality of appellee to secure registration; 4
From the foregoing, it appears that the petitioner was in possession of the said property
as borrower in commodatum from private respondents since 1906 but in 1951 petitioner
repudiated the trust when it declared the property for tax purposes under its name.
When it filed its application for registration of the said property in 1962, petitioner had
been in adverse possession of the same for at least 11 years. Article 555 of the Civil
Code provides as follows:
Art. 555. A possessor may lose his possession:
(1) By the abandonment of the thing;
(2) By an assignment made to another either by onerous or gratuitous title;
(3) By the destruction or total loss of the thing or because it goes out of commerce;
(4) By the possession of another, subject to the provisions of Article 537, if the new
possession has lasted longer than one year. But the real right of possession is not lost
till after the lapse of ten years. (460a) (Emphasis supplied.)
From the foregoing provision of the law, particularly paragraph 4 thereof, it is clear that
the real right of possession of private respondents over the property was lost or no
longer exists after the lapse of 10 years that petitioner had been in adverse possession
thereof. Thus, the action for recover of possession of said property filed by private
respondents against petitioner must fail.
The Court, therefore, finds that the trial court and the Court of Appeals erred in declaring
the private respondents to be entitled to the possession thereof. Much less can they
pretend to be owners thereof. Said lots are part of the public domain.
WHEREFORE, the motion for reconsideration is GRANTED and the decision of this
Court dated September 21, 1988 is hereby set aside and another judgment is hereby
rendered reversing and setting aside the decision of the appellate court in CA-G.R. Nos.

05148-49 dated August 31, 1987 and dismissing the complaints for recovery of
possession, without pronouncement as to costs.
SO ORDERED.

G.R. No. L-28721

October 5, 1928

MARTIN MENDOZA and NATALIO ENRIQUEZ, plaintiffs-appellees,

vs.
MANUEL DE GUZMAN, defendant-appellant.
MAX B. SOLIS, intervenor-appellant.
Juan S. Rustia for appellants.
Godofredo Reyes for appellees.

MALCOLM, J.:
This case calls for the application of articles 361, 435, and 454 of the Civil Code to the
proven facts.
On November 6, 1916, Leandra Solis and her husband Bernardo Solis brought an action
in the Court of First Instance of Tayabas against Martin Mendoza for the recovery of a
certain piece of land. Judgment was rendered in that case absolving Mendoza from the
complaint, and this judgment was subsequently affirmed by the Supreme Court. 1 When
the case was remanded to the court of origin, the trial judge issued an order requiring
the provincial sheriff immediately to dissolve the preliminary writ of injunction and to put
Mendoza in the possession of the land. By virtue of this order, Mendoza was in fact put
in possession of the property.
In the cadastral proceedings of the municipality of Sariaya, Tayabas, the piece of land
above-mentioned was identified as lot No. 687. In the decision rendered in the cadastral
case, this lot was adjudicated in favor of Martin Mendoza and Natalio Enriquez in equal
parts pro indiviso subject to the right of retention on the part of Manuel de Guzman until
he shall have been indemnified for the improvements existing on the land. By virtue of
this judgment, De Guzman presented a motion requesting the issuance of a writ of
possession for lot No. 687 in his favor which was granted on June 25, 1924. From the
time Leandra Solis and Bernardo Solis, as well as Manuel de Guzman who was working
on the land, were ejected therefrom, Martin Mendoza possessed it until June 25, 1924,
when de Guzman obtained the writ of possession above- mentioned. Since then De
Guzman has had dominion over the land.
Being unable to come to an agreement as to the amount which should be allowed for the
improvements made on the land, Martin Mendoza and Natalio Enriquez began an action
requesting the court to (a) fix the value of the necessary and useful expenses incurred
by Manuel de Guzman in introducing the improvements; (b) require the defendant to
render an accounting of the fruits received by him and order that the value of the fruits
be applied to the payment of the necessary and useful expenses; and (c) decree the
restitution of the possession to the plaintiffs. To the complaint, the defendant filed an
answer in the form of a general denial with special defenses and appended a counterclaim and crosscomplaint, in which a total of P6,000 was asked. During the pendency of
the case, Bernardo Solis, or Max. B. Solis, one of the persons who was ejected from the
land, asked leave to intervene, alleging, among other things, that De Guzman, in
consideration of the sum of P5,000, had transferred all his rights in the improvements

and in the lot to him with the exception of two hundred coconut trees. This petition was
granted by the trial court.
When the case was called for trial, the parties entered into the follwing stipulation:
1. That the plaintiffs are the owners and proprietors of the land described in the second
paragraph of the complaint.
2. That a decree of registration has been issued on said land in the terms set forth in
paragraph 3 of the complaint.
3. That the defendant Manuel de Guzman is the one who has been in possession and
enjoyment of the land from June 25, 1924, up to the present time by virtue of a writ of
possession obtained by him from the Court of Land Registration.
4. That the defendant has made improvements on said land be planting coconut trees
thereon.
5. That the plaintiff Martin Mendoza is the one who has been in possession and
enjoyment of said property and its improvements since December 16, 1916, by virtue of
a writ of possession in civil case No. 356 until said pssession was transferred to the
defendant Manuel de Guzman.
6. That from March 20, 1920, the plaintiff Natalio Enriquez has been in possession and
enjoyment of a portion of the land, the subject matter of the complaint herein, by virtue of
a deed of sale executed in his favor by Attorney Agustin Alvarez, who, in turn, acquired it
from the other plaintiff Martin Mendoza, until June 25, 1924.
The parties desire to submit, as they do submit, under this stipulation of facts the
following questions:
(a) The amount of the indemnity to be paid to the defendant for the improvements made
by him on said lot and the basis upon which said amount shall be fixed.
(b) Whether or not the defendant is obliged to render an account of the fruits received by
him from June 25, 1924, until the improvements are delivered after same have been
paid for. 1awph!l.net
(c) Whether the value of said fruits and products received by the defendant shall be
applied to the indemnity to which he is entitled, or whether said defendant is obliged to
deliver to the plaintiffs the remainder in case of excess.
(d) Whether or not the defendant has the right to be paid by the plaintiffs in whole or in
part for the value of the fruits received by Martin Mendoza and Natalio Enriquez from the
respective dates that they were in possession and enjoyment of the land until June 25,
1924.
The parties at the same time that they submit to the court for decision the questions
presented in the above stipulation reserve to themselves, whatever said decision may

be, the right to present later their evidence in support of their respective views with
respect to the amount of the indemnity.
After the preliminary questions have been decided, the parties request that
commissioners be appointed to receive said evidence with respect to the amount of the
indemnity in accordance with the views of both parties.
The trial court resolved the questions presented by holding (1) that in accordance with
the provisions of articles 435 and 454 in relation with article 361 of the Civil Code, the
value of the "indemnization" to be paid to the defendant should be fixed according to the
necessary and useful expenses incurred by him in introducing "las plantaciones en
cuestion"; (2) that the plaintiffs as the owner of the property have the right to make their
own "las plantaciones hechas por el demandado" upon payment in the form indicated in
No. 1, the defendant having the right to retain the land until the expenditures have been
refunded; (3) that the defendant is obliged to render a detail and just account of the fruits
and other profits received by him from the property for their due application; and (4) that
the value of the fruits received by the defendant should first be applied to the payment of
the "indemnizacion," and in that it exceeds the value of the "indemnizacion," the excess
shall be returned to the plaintiffs. With respect to the last question as to whether or not
the plaintiffs are obliged to return to the defendant the value of the fruits received by
them before the defendant took possession of the land, the trial court abstained from
making any pronouncement for the reason that the circumstances under which the
plaintiffs acquired possession and the defendant again acquired it were not before him,
the parties needing to submit their evidence with respect to this point.
At the trial which followed and at the instance of the parties, two commissioners were
appinted with instructions to inspect the land and to count the number of coconut trees
planted thereon, determining the number of fruit-bearing trees and those that are not
fruit-bearing as well as the condition of the same. After trial, Judge of First Instance
Gloria rendered judgment declaring (a) that the defendant Manuel de Guzman and the
intervenor Bernardo Solis have the right to collect from the plaintiffs Martin Mendoza and
Natalio Enriquez the sum of P2,046 as compensation for the necessary and useful
expenditures in the proportion of 20 per cent for Manuel de Guzman and 80 per cent for
Bernardo Solis; and (b) that Manuel de Guzman and Bernardo Solis are obliged to pay
to the plaintiffs the sum of P666.93 per annum from June 25, 1924, one-fifth of this
amount to be paid by Manuel de Guzman and the other four-fifths by Bernardo Solis. As
on the date when this judgment was rendered, that is on September 23, 1927, the
amount that the plaintiffs were required to pay to the defendant and intervenor exceeded
the amount that the latter were to pay the former, the defendant and intervenor were
ordered to deliver the land and its improvement as soon as the plaintiffs have paid the
difference, without special pronouncement as to costs.
The appeal of the defendant and intervenor is based on fourteen assigned errors relating
to both questions of fact and of law. The question of fact mainly concerns the amount to
be paid as "indemnizacion" in the form of necessary and useful expenditures incurred by
the defendant. The question of law mainly concerns the interpretation of articles 361,
453, and 454 of the Civil Code. Counsel for the appellants has presented a learned brief
divided into three chapters. Counsel for the appellees has countered with an equally
helpful brief in which the fourteen assigned errors are reduced for purposes of
arguments to four fundamental questions. It would not be profitable and it is not

necessary to follow opposing counsel into all of their refinements of fact and law.
As to the facts, the findings of the trial judge should be given effect. An examination of
the evidence shows that these findings are fully substantiated. Our only doubt has been
as to the just value for each coconut tree now found on the land. However, everything
considered, we have at last determined that we would not be justified in changing the
value per tree of P2 as fixed in the trial court. With respect to the fruits received by the
defendant while the land was in his possession, the finding in the trial court is correct.
With the facts as above indicated, little time need be taken to discuss the points of law.
Article 361 of the Civil Code in the original Spanish text uses the word "indemnizacion."
However one may speculate as to the true meaning of the term "indemnizacion" whether
correctly translated as "compensation" or "indemnity," the amount of the "indemnizacion"
is the amount of the expenditures mentioned in articles 453 and 454 of the Civil Code,
which in the present case is the amount of the necessary and useful expenditures
incurred by the defendant. Necessary expenses have been variously described by the
Spanish commentators as those made for the preservation of the thing (4 Manresa's
Comentarios al Codigo Civil, p. 258); as those without which the thing would deteriorate
or be lost (Scaevola's Comentarios al Codigo Civil, p.408); as those that augment the
income of the things upon which they are expanded (4 Manresa's Comentarios al
Codigo Civil, p. 261; 8 Scaevola's Comentarios al Codigo Civil, p. 416). Among the
necessary expenditures are those incurred for cultivation, production, upkeep, etc. (4
Manresa's Comentarios al Codigo Civil, p. 257). Here the plaintiffs have chosen to take
the improvements introduced on the land and are disposed to pay the amount of the
necessary and useful expenses incurred by the defendant. Inasmuch as the retentionist,
who is not exactly a posessor in good faith with in the meaning of the law, seeks to be
reimbursed for the necessary and useful expenditures, it is only just that he should
account to the owners of the estate for any rents, fruits, or crops he has gathered from it.
In brief, therefore, and with special reference to the decision appealed from, the errors
assigned on appeal, and the argument of counsel as addressed to the decision in the
lower court and the assignment of errors, we may say that we are content to make the
findings of fact and law of Judge Gloria in the lower court the findings of fact and law in
the appellate court.
Based on the foregoing considerations, the judgment appealed from will be affirmed,
with the costs of this instance against the appellants.
Avancena, C.J., Johnson, Street, Ostrand, Romualdez and Villa-Real, JJ., concur.

G.R. No. L-16736 December 22, 1921

EVARISTA ROBLES and her husband ENRIQUE MARTIN, plaintiffs-appellees,
vs.
LIZARRAGA HERMANOS, defendants-appellant.
-------------------------------------G.R. No. L-16661 December 22, 1921
SOCIEDAD LIZARRAGA HERMANOS, plaintiff-appellee,
vs.
EVARISTA ROBLES DE MARTIN and ENRIQUE MARTIN, defendants-appellants.
-------------------------------------G.R. No. L-16662 December 22, 1921
EVARISTA ROBLES and her husband ENRIQUE MARTIN, plaintiff-appellants,
vs.
LIZARRAGA HERMANOS and THE REGISTER OF DEEDS OF ILOILO, defendantsappellees.
Fisher & DeWitt and Francisco Lavides for appellants. (Case No. 16736.)
A. P. Seva for appellees.
A. P. Seva for appellants. (Case No. 16661.)
Fisher and DeWitt and Francisco Lavides for appellee.
A. P. Seva for appellants. (Case No. 16662.)
Fisher and DeWitt and Francisco Lavides for appellees.

ROMUALDEZ, J.:
Owing to the character of the facts in the three above entitled cases and the intimate
connection existing between them, they were, by agreement of the parties, tried together
in the court below, and on appeal this court was requested to try them at the same time,
which was done, and these three cases are jointly adjudged in the present decision.
The following facts are undisputed:
Anastasia de la Rama died on the 17th of October, 1916, leaving six children, to wit,
Magdalena, Jose, Evarista, Zacarias, Felix, and Purificacion, surnamed Robles, and
some properties, among which is house No. 4 on Iznart Street in the city of Iloilo,
concerning which a controversy arose which developed into the three cases now under
consideration.
The children and heirs of Anastasia de la Rama entered into partnership with Lizarraga
Hermanos in liquidation and settlement of their accounts, by virtue of which the

competent court awarded to said partnership the properties left by the deceased,
including the aforesaid house No. 4 on Iznart Street.
Evarista Robles, one of the aforesaid heirs, since before the death of her mother
Anastasia de la Rama, has been with her husband occupying the aforesaid house No. 4
on Iznart Street, at the beginning, by permission of her mother, later on by the consent of
her coheirs, and lastly by agreement with the partnership, Lizarraga Hermanos, to whom
it had been awarded, having made some improvements on the house, the value of which
is fixed at four thousand five hundred pesos (P4,500), and paying to said partnership
forty pesos (P40) monthly as rent of the upper story.
On March 18, 1918, Lizarraga Hermanos notified Evarista Robles (Exhibit J) that
beginning April next the rent of the upper story of the house would be raised to sixty
pesos (P60) a month, and that, if she did not agree to the new rate of rent, she might
vacate the house. Evarista Robles refused to pay such a new rate of rent and to vacate
the house, and Lizarraga Hermanos brought suit against her for ejectment. Evarista
Robles sued Lizarraga Hermanos afterwards to recover the value of the improvements,
and demanded, in another action, that said value be noted on the certificate of title as an
encumbrance.1awphil.net
Evarista Robles contends that the understanding with Lizarraga Hermanos by virtue of
which she continued to occupy the house and made the improvements, was a contract
whereby it was agreed to sell her the said building on Iznart Street, the deed of sale to
be executed as soon as the title deeds of the property were transferred to the name of
said partnership; that by virtue of this contract she remained in the occupation of the
building and made the improvements; that, as one of the stipulations in the contract of
sale of the estate, Evarista Robles assumed the liability of an encumbrance of fourteen
thousand pesos (P14,000)on the estate and another one in favor of the Agricultural Bank
and its successor, the National Bank, paying the interest thereon as well as the land tax
and the premiums of the five insurance, all of which payments were made through the
same firm of Lizarraga Hermanos who, as a result of the liquidation of accounts, held
funds in their possession belonging to Exhibit A, B, C, F, H, and I. It should here be noted
that Evarista Robles does not seek the execution of the proper instrument of evidence
this contract of sale, nor the performance thereof. She only claims the cost of the
improvements made at her expense and that this be recorded in the corresponding
certificate of title.
While the firm of Lizarraga Hermanos does not question that fact that said improvements
have been made and that their value amounts to four thousand five hundred pesos
(P4,500), it denies, however, having entered into any agreement with Evarista Robles for
the sale of the building in question. In deciding the case No. 16736 of this court, the
court a quo found such a verbal contract of sale to have been proven not only by Exhibit
A, which leads to such a conclusion, but by the oral evidence, which, in its opinion, had a
preponderance in favor thereof, and by the corroborative evidence consisting in the fact
of Lizarraga Hermanos having executed the deed of sale of the warehouse mentioned in
the said Exhibit A. This firm questions the right of Evarista Robles to the improvements
under consideration.
The fundamental questions upon which hinges the controversy in these three cases are:
First, whether Evarista Robles is the owner of the aforesaid improvements and has the

right to demand payment of their value (case No. 16736); second, whether she has any
right to retain the building until the said value is paid to her (case No. 16661); and third,
whether a note for the four thousand five hundred pesos (P4,500), the value of the
above-mentioned improvements, as an encumbrance on this estate (case No. 16662),
should be made on the title deeds thereof.
Regarding the controversy in the case No. 16736, attention is called to article 453 of the
Civil Code which reads:
Necessary expenditures shall be refunded to every possessor, but only the possessor in
good faith may retain the thing until they are repaid to him.
Useful expenditures shall be paid the possessor in good faith with the same right to
retention, the person who has defeated him in his possession having the opinion of
refunding the amount of such expenditures or paying him the increase in value which the
thing has acquired by reason thereof.
This provision of law is in force and applies to personal as well as real property.
The expenditures incurred in these improvements were not necessary inasmuch as
without them the house would have continued to stand just as before, but were useful,
inasmuch as with them the house better serves the purpose for which it was intended,
being used as a residence, and the improvements consisting of the addition of a dining
room, kitchen, closet, and bathroom in the lower and upper stories of the house, and a
stable, suitable as a coach house and dwelling, it is beyond doubt that such
improvements are useful to the building. One of the chiefs of the firm of Lizarraga
Hermanos, on the occasion of a luncheon in the house, on noting the improvements,
could not refrain from expressing that such improvements added much to the value of
the building (folio 25, stenographic notes).
Now then, was Evarista Robles a possessor in good faith when she made those
improvements? Article 434 provides that "good faith is always presumed and the burden
of proving bad faith on the part of the possessor rests upon the person alleging it."
Lizarraga Hermanos did not allege, nor prove in the first instance the bad faith
characterizing Evarista Robles' possession, who, as shown in the records and heretofore
stated, began to occupy the house by permission of the former owner, her mother
Anastasia de la Rama, and continued later in the occupation by the consent of her
coheirs, and afterwards by considering herself the future owner of the building by virtue
of the contract with the present owner, Lizarraga Hermanos. The evidence shows that
said improvements were begun about the end of December, 1916, after the agreement
with Lizarraga Hermanos for the sale thereof to Evarista Robles. (Folios 23, 24, 25,
stenographic notes.)
We find that in the court below the presumption of good faith in favor of Evarista Robles'
possession at the time she made the improvements on the property was neither
disputed nor discussed, but on the contrary, there is positive evidence sufficient to
support the conclusion that when she made the improvements on the aforesaid building
she was possessing it in good faith.
If the improvements are useful and Evarista Robles' possession was in good faith, the

conclusion set out in article 453 of the Civil Code, supra, is inevitable; Evarista Robles is
the owner of such improvements, and entitled to reimbursement therefor, and to retain
the building until the same is made.
One of the proofs establishing the fact that Evarista Robles' possession was in good
faith is found in Exhibit A, which textually is as follows:
Value of house For }Evarista
Value of Warehouse
Evarista pays them in this way
Balance in h/f owning from L. Hnos
Legacy to Evarista
Legacy to J. Robles
Legacy to Ambrosio
Credit Agricultural Bank
Paid by Zacarias
Cash balance carried forward

P16,500.00

P1,424.35
500.00
500.00
100.00
14,000.00
16,524.35
24.35

Liquidation

16,500.00
Severiano Lizarraga acknowledged having drawn this document and admitted it to be in
his own hand-writing (folios 6-8, transcript of stenographic notes taken in case No.
16661 at the trial held December 6, 1919). Taking into consideration the explanation he
gives of the contents of this exhibit, there is the inevitable conclusion which is obviously
inferred from the phrases "Value of house of warehouse For Evarista P16,500
Evarista pays them in this way," that Evarista Robles was to become the owner of the
house (which is the one question) and the warehouse for sixteen thousand five hundred
pesos (P16,500), which sum she was to pay by assuming the liability of all the amounts
enumerated in the said memorandum all the way through.
But the admissibility of this document as evidence is disputed by reference to section
335, case No. 5, of the Code of Civil Procedure, which in the English text, which is
clearer on this point, reads:
SEC. 335. Agreements invalid unless made in writing. In the following cases an
agreement hereafter made shall be unenforceable (Emphasis ours) by action unless the
same, or some note or memorandum thereof, be in writing, and subscribed by the party
charged, or by his agent; evidence, therefore, of the agreement cannot be received
without the writing, or secondary evidence of its contents:
No. 5. An agreement for . . . the sale of real property, etc.
It should be noted, first of all, that this rule of evidence does not go to the extent of
rendering invalid any verbal contract for the sale of real property (Conlu vs. Araneta and
Guanko, 15 Phil., 387), but declares inadmissible any evidence of such a contract other
than the document itself of the sale or some memorandum signed by the party charged,
in so far as the object of the action instituted is to enforce performance of said contract
of sale. But we are not dealing with that phase in any of the cases now before us. This
document was introduced only to reinforce the proofs relative to the good faith

characterizing the possession of Evarista Robles when she made the improvements in
question, to the effect that if she made then, it was because she entertained the wellfounded, may certain belief that she was making them on a building that was to become
her property by virtue of the verbal contract of sale.
In the action wherein Evarista Robles and her husband ask that they be adjudged
owners of these improvements and that their value be paid to them, Lizarraga Hermanos
filed a general denied and a counterclaim and cross-complaint for nineteen thousand
pesos (P19,000) as compensation for damages alleged to have been sustained by them
on account of their inability to sell the house and the warehouse, due to the fact that the
buyer imposed the condition that the house should be vacated, which the plaintiffs
refused to do.
It is a fact that the value of the improvements in question has not as yet been paid by
Lizarraga Hermanos. Wherefore, if Evarista Robles and her husband are entitled to
retain the building until the value of such improvements is paid them, Lizarraga
Hermanos have not yet any right to oust them from the building, nor, therefore, to be
indemnified for any damages caused by the refusal of the plaintiffs found on their
legitimate rights.
In regard to the ejectment sought in the case No. 16661, the suit was brought by
Lizarraga Hermanos in the justice of the peace court of Iloilo on May 6, 1918, based on
the failure of Evarista Robles and her husband to pay the rent of the upper story of the
house in question for the month of April of that year, amounting to sixty pesos (P60), and
on the refusal of said spouses to quit the building. These spouses in their answer alleged
as special defense that they had never been the tenants of Lizarraga Hermanos until
November, 1917, when they became so "under the special circumstances" under which
the plaintiff partnership sold the building, whereon they later made, with the latter's
consent, improvements amounting to four thousand five hundred pesos (P4,500), setting
out the other stipulations and conditions hereinabove stated, which were incorporated
into the contract of sale, and prayed, under their counterclaim, that Lizarraga Hermanos
be sentenced to pay the sum of four thousand five hundred pesos (P4,500), the value of
the improvements referred to, and under their cross-complaint, that said partnership be
ordered to pay then thousand pesos (P10,000) as compensation for damages alleged to
have been sustained by the aforesaid spouses due to the aforesaid partnership's act,
praying lastly, in view of the questions raised, that the case be regarded not as one of
unlawful detainer, but for the recovery of title to real property, and that the court of the
justice of the peace abstain from taking cognizance thereof for want of jurisdiction.
The case having been appealed to the Court of First Instance, these allegations were
reproduced.
In the Court of First Instance Lizarraga Hermanos demurred to this counterclaim and
cross-complaint, and the demurrer was sustained by the court in its decision on the
merits of the case, whereby the defendants are sentenced to return to Lizarraga
Hermanos the possession of the building, to pay the rents thereof due from April, 1918,
until they vacate the house, at the rate of sixty pesos (P60) per month, and the costs.
From this judgment Evarista Robles and her husband have appealed, assigning as
errors of the court a quo in finding the Lizarraga Hermanos were entitled to bring action

for unlawful detainer, and ordering them to return the possession of the building.
If Evarista Robles and her husband were mere lessees of this building, the plaintiff's
action for unlawful detainer is obvious and must prosper. But, were Evarista Robles and
her husband mere lessees?
As above stated, we hold that there existed a contract of sale of this building executed
by Lizarraga Hermanos in favor of Evarista Robles about November, 1916, the
performance of which is not, however, sought to be enforced, nor would it be
enforceable if the evidence offered in the action instituted for the purpose be not the
document itself of the sale, or a memorandum thereof, signed by the party bound by the
contract and required in the action to fulfill it, and objection be made to said evidence, as
was done here.
The possession of these spouses was in no way begun by virtue of any lease whatever,
since it is not disputed, and is a proven fact, that they came to occupy the building by
permission of the mother of Evarista Robles. Upon said mother's death, the continued to
occupy the property by the consent of the coheirs. After the assignment of the property
of Lizarraga Hermanos was concluded, but before the title deeds were transferred to the
name of this partnership, an agreement was made for the sale of the building to Evarista
Robles and her husband, the latter agreeing in the meantime to pay to Lizarraga
Hermanos a certain sum per month forty pesos (P40) by way of compensation for
the occupation of the building until the execution of the deed of sale in favor of the
occupants.
Considering abstractly the naked fact that these spouses occupied the house by paying
a certain sum for its occupation, it would seem that this is indeed a case of lease. But
such was not the contract. It was simply the sense of justice of the parties that led them
to make the stipulation that, while the conveyance of the building was being carried into
effect in due form, the future owners should pay a certain sum for its possession. This
peculiar situation continued for all the time in which the said spouses made and
completed the improvements in question until Lizarraga Hermanos changed their
resolution to sell the building to Evarista Robles and her husband. But then all the
improvements in question had already been made, and when these spouses were
requested to vacate the building, they answered and gave it to understand, that they
would do so as soon as the value of the improvements was paid to them. Up to that time
they were not lessees strictly speaking. Did they become so afterwards? Neither; for
since that moment they have been as are at present, in possession of the building by
virtue of the right that they had, and do have, to retain it until the value of the
improvements is paid to them. And it was after these spouses had manifested their
intention not to leave the building until they were reimbursed for the improvements made
thereon that this action for unlawful detainer was instituted.
Before these improvements were made, or before these spouses demanded payment of
their value, that is, while the possession was partly based on the stipulation with color of
lease, an action for unlawful detainer might have, in a sense, been justifiable, though not
entirely maintainable, owing to the fact that such possession was based primarily on the
well-founded belief of the occupants that they were to become the owners of the house
in their possession, that the monthly payment being a provisional arrangement, an
incidental and peremptory stipulation, while the solemn formalities of the conveyance

were being complied with.

But after the improvements had been made and Lizarraga Hermanos had manifested
their resolution to rescind the contract of sale and not to pay for them, then the
possession of the aforesaid spouses lost all color of lease, and turns out to be
possession based only upon the latter's right to retain the building. And these were all
the attending circumstances of said possession when the action for unlawful detainer
was commenced.
We are, therefore, of opinion, and so hold, that Lizarraga Hermanos were not, and are
not, entitled to maintain any action for unlawful detainer so long as they do not pay the
value of the improvements in question.
We will now take up the case No. 16662 wherein Evarista Robles and her husband ask
that these improvements be noted on the proper certificate of title as an encumbrance.
These spouses pray in their complaint for the cancellation of the said certificate of title,
which is the transfer certificate No. 526, a substitute of the original No. 32 of the office of
the register of deeds of Iloilo.
If the object of these spouses is, as it cannot be otherwise, to have such an
encumbrance noted, the cancellation is not necessary, and, of course, not justifiable. At
any rate, the fraud alleged in this last action to have been committed precisely to secure
such a transfer certificate cannot be held proven.
But it having been decided that these spouses are entitled to demand payment of the
value of the improvements and to retain the building until such value is paid them, it only
remains for us to determine whether this right of retention has the character of a real
right to be regarded as one of the encumbrances referred to in section 70 and the
following sections of the Land Registration Act.
It being a burden on the building to the extent of being inseparably attached to the
possession thereof, this right of retention must necessarily be a real one. If so, as we
regard, and find, it to be, it is but just that such an encumbrance should be noted on the
transfer certificate No. 526 issued by the register of deeds of Iloilo in favor of Lizarraga
Hermanos, or on any substitute thereof.
As a consequence of all the foregoing, we affirm the judgments appealed from in the
three cases in so far as they are in harmony with the conclusions herein set out, and
reverse them in so far as they are in conflict therewith, and it is hereby adjudged and
decreed:
First. That Lizarraga Hermanos pay to the spouses Evarista Robles and Enrique Martin
the sum of four thousand five hundred pesos (P4,500), the value of the improvements
referred to in these cases, with right on the part of said spouses to retain the building in
question until the payment hereby ordered is made.
Second. That said spouses Evarista Robles and Enrique Martin vacate the aforesaid
building immediately after the receipt, or the legal tender, of the payment hereby
decreed.

Third. That the said spouses Evarista Robles and Enrique Martin pay to Lizarraga
Hermanos a compensation for the occupation of the building at the rate of forty pesos
(P40) a month, beginning with the month of April, 1918, until they vacate the aforesaid
building as it is ordered herein.
Fourth. That upon payment of his lawful fees, the register of deeds note said right of
retention on the back of the transfer certificate No. 526 issued in favor of Lizarraga
Hermanos, or of any other certificate standing in lieu thereof, concerning the said
building, which note will remain in force until the payment of the aforesaid improvements
is made as above ordered. Without pronouncement as to the costs in this instance, so
ordered.
Araullo, C.J., Malcolm, Avancea, Villamor, Ostrand and Johns, JJ., concur.

G.R. No. L-54526 August 25, 1986

METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, petitioner,
vs.
THE COURT OF APPEALS and THE CITY OF DAGUPAN, respondents.
Miguel T. Caguioa, Ireneo B. Orlino and Manuel D. Victorio for respondent City of
Dagupan.

FERIA, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals which
affirmed the decision of the then Court of First Instance of Pangasinan. The lower court
had declared respondent City of Dagupan the lawful owner of the Dagupan Waterworks
System and held that the National Waterworks and Sewerage Authority, now petitioner
Metropolitan Waterworks and Sewerage System, was a possessor in bad faith and
hence not entitled to indemnity for the useful improvements it had introduced.
Before proceeding further, it may be necessary to invite attention to the common error of
joining the court (be it a Regional Trial Court, the Intermediate Appellate Court, or the
Sandiganbayan) as a party respondent in an appeal by certiorari to this Court under
Rule 45 of the Rules of Court. The only parties in an appeal by certiorari are the
appellant as petitioner and the appellee as respondent. (Cf. Elks Club vs. Rovira, 80
Phil. 272) The court which rendered the judgment appealed from is not a party in said
appeal. It is in the special civil action of certiorari under Section 5 of Rule 65 of the Rules
of Court where the court or judge is required to be joined as party defendant or
respondent. The joinder of the Intermediate Appellate Court or the Sandiganbayan as
party respondent in an appeal by certiorari is necessary in cases where the petitionerappellant claims that said court acted without or in excess of its jurisdiction or with grave
abuse of discretion. An example of this is a case where the petitioner-appellant claims
that the Intermediate Appellate Court or the Sandiganbayan acted with grave abuse of
discretion in making its findings of fact, thus justifying the review by this court of said
findings of fact. (See the exceptions to the rule of conclusiveness of the findings of fact
of the Intermediate Appellate Court or the Sandiganbayan in the case of Sacay vs.
Sandiganbayan, G.R. Nos. 66497-98, July 10, 1986.) In such a case, the petition for
review on certiorari under Rule 45 of the Rules of Court is at the same time a petition for
certiorari under Rule 65, and the joinder of the Intermediate Appellate Court or the
Sandiganbayan becomes necessary. (Cf. Lianga Lumber Company vs. Lianga Timber
Co., Inc., March 31, 1977, 76 SCRA 197).
The City of Dagupan (hereinafter referred to as the CITY) filed a complaint against the
former National Waterworks and Sewerage Authority (hereinafter referred to as the
NAWASA), now the Metropolitan Waterworks and Sewerage System (hereinafter
referred to as MWSS), for recovery of the ownership and possession of the Dagupan
Waterworks System. NAWASA interposed as one of its special defenses R.A. 1383
which vested upon it the ownership, possession and control of all waterworks systems
throughout the Philippines and as one of its counterclaims the reimbursement of the
expenses it had incurred for necessary and useful improvements amounting to

P255,000.00. Judgment was rendered by the trial court in favor of the CITY on the basis
of a stipulation of facts. The trial court found NAWASA to be a possessor in bad faith and
hence not entitled to the reimbursement claimed by it. NAWASA appealed to the then
Court of Appeals and argued in its lone assignment of error that the CITY should have
been held liable for the amortization of the balance of the loan secured by NAWASA for
the improvement of the Dagupan Waterworks System. The appellate court affirmed the
judgment of the trial court and ruled as follows:
However, as already found above, these useful expenses were made in utter bad faith
for they were instituted after the complaint was filed and after numerous Supreme Court
decisions were promulgated declaring unconstitutional the taking by NAWASA of the
patrimonial waterworks systems of cities, municipalities and provinces without just
compensation.
Under Article 546 of the New Civil Code cited by the appellant, it is clear that a builder or
a possessor in bad faith is not entitled to indemnity for any useful improvement on the
premises. (Santos vs. Mojica, L-25450, Jan. 31, 1969). In fact, he is not entitled to any
right regarding the useful expenses (II Paras (1971) 387). He shall not have any right
whatsoever. Consequently, the owner shall be entitled to all of the useful improvements
without any obligation on his part (Jurado, Civil Law Reviewer (1974) 223).
Petitioner-Appellant MWSS, successor-in-interest of the NAWASA, appealed to this
Court raising the sole issue of whether or not it has the right to remove all the useful
improvements introduced by NAWASA to the Dagupan Waterworks System,
notwithstanding the fact that NAWASA was found to be a possessor in bad faith. In
support of its claim for removal of said useful improvements, MWSS argues that the
pertinent laws on the subject, particularly Articles 546, 547 and 549 of the Civil Code of
the Philippines, do not definitely settle the question of whether a possessor in bad faith
has the right to remove useful improvements. To bolster its claim MWSS further cites the
decisions in the cases of Mindanao Academy, Inc. vs. Yap (13 SCRA 190) and Carbonell
vs. Court of Appeals (69 SCRA 99).
The CITY in its brief questions the raising of the issue of the removal of useful
improvements for the first time in this Court, inasmuch as it was not raised in the trial
court, much less assigned as an error before the then Court of Appeals. The CITY
further argues that petitioner, as a possessor in bad faith, has absolutely no right to the
useful improvements; that the rulings in the cases cited by petitioner are not applicable
to the case at bar; that even assuming that petitioner has the right to remove the useful
improvements, such improvements were not actually identified, and hence a rehearing
would be required which is improper at this stage of the proceedings; and finally, that
such improvements, even if they could be identified, could not be separated without
causing substantial injury or damage to the Dagupan Waterworks System.
The procedural objection of the CITY is technically correct. NAWASA should have
alleged its additional counterclaim in the alternative-for the reimbursement of the
expenses it had incurred for necessary and useful improvements or for the removal of all
the useful improvements it had introduced.
Petitioner, however, argues that although such issue of removal was never pleaded as a
counterclaim nevertheless it was joined with the implied consent of the CITY, because

the latter never filed a counter-manifestation or objection to petitioner's manifestation

wherein it stated that the improvements were separable from the system, and quotes the
first part of Sec. 5 of Rule 10 of the Rules of Court to support its contention. Said
provision reads as follows:
SEC. 5. Amendment to conform to or authorize presentation of evidence.-When issues
not raised by the pleadings are tried by express or implied consent of the parties, they
shall be treated in all respects, as if they had been raised in the pleadings. Such
amendment of the pleadings as may be necessary to cause them to conform to the
evidence and to raise these issues may be made upon motion of any party at any time,
even after judgment; but failure so to amend does not affect the result of the trial of these
issues. ...
This argument is untenable because the above-quoted provision is premised on the fact
that evidence had been introduced on an issue not raised by the pleadings without any
objection thereto being raised by the adverse party. In the case at bar, no evidence
whatsoever had been introduced by petitioner on the issue of removability of the
improvements and the case was decided on a stipulation of facts. Consequently, the
pleadings could not be deemed amended to conform to the evidence.
However, We shall overlook this procedural defect and rule on the main issue raised in
this appeal, to wit: Does a possessor in bad faith have the right to remove useful
improvements? The answer is clearly in the negative. Recognized authorities on the
subject are agreed on this point. *
Article 449 of the Civil Code of the Philippines provides that "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." As a builder in bad faith, NAWASA lost whatever useful improvements it
had made without right to indemnity (Santos vs. Mojica, Jan. 31, 1969, 26 SCRA 703).
Moreover, under Article 546 of said code, only a possessor in good faith shall be
refunded for useful expenses with the right of retention until reimbursed; and under
Article 547 thereof, only a possessor in good faith may remove useful improvements if
this can be done without damage to the principal thing and if the person who recovers
the possession does not exercise the option of reimbursing the useful expenses. The
right given a possessor in bad faith is to remove improvements applies only to
improvements for pure luxury or mere pleasure, provided the thing suffers no injury
thereby and the lawful possessor does not prefer to retain them by paying the value they
have at the time he enters into possession (Article 549, Id.).
The decision in the case of Mindanao Academy, Inc. vs. Yap (13 SCRA 190) cited by
petitioner does not support its stand. On the contrary, this Court ruled in said case that "if
the defendant constructed a new building, as he alleges, he cannot recover its value
because the construction was done after the filing of the action for annulment, thus
rendering him a builder in bad faith who is denied by law any right of reimbursement."
What this Court allowed appellant Yap to remove were the equipment, books, furniture
and fixtures brought in by him, because they were outside of the scope of the judgment
and may be retained by him.
Neither may the decision in the case of Carbonell vs. Court of Appeals (69 SCRA 99),

also cited by petitioner, be invoked to modify the clear provisions of the Civil Code of the
Philippines that a possessor in bad faith is not entitled to reimbursement of useful
expenses or to removal of useful improvements.
In said case, both the trial court and the Court of Appeals found that respondents
Infantes were possessors in good faith. On appeal, the First Division of this Court
reversed the decision of the Court of Appeals and declared petitioner Carbonell to have
the superior right to the land in question. On the question of whether or not respondents
Infantes were possessors in good faith four Members ruled that they were not, but as a
matter of equity allowed them to remove the useful improvements they had introduced
on the land. Justice Teehankee (now Chief Justice) concurred on the same premise as
the dissenting opinion of Justice Munoz Palma that both the conflicting buyers of the real
property in question, namely petitioner Carbonell as the first buyer and respondents
Infantes as the second buyer, may be deemed purchasers in good faith at the respective
dates of their purchase. Justice Munoz Palma dissented on the ground that since both
purchasers were undoubtedly in good faith, respondents Infantes' prior registration of the
sale in good faith entitled them to the ownership of the land. Inasmuch as only four
Members concurred in ruling that respondents Infantes were possessors in bad faith and
two Members ruled that they were possessors in good faith said decision does not
establish a precedent. Moreover, the equitable consideration present in said case are
not present in the case at bar.
WHEREFORE, the decision of the appellate court is affirmed with costs against
petitioner.
SO ORDERED.

G.R. No. 80298

April 26, 1990

EDCA PUBLISHING & DISTRIBUTING CORP., petitioner,

vs.
THE SPOUSES LEONOR and GERARDO SANTOS, doing business under the name
and style of "SANTOS BOOKSTORE," and THE COURT OF APPEALS, respondents.
Emiliano S. Samson, R. Balderrama-Samson, Mary Anne B. Samson for petitioner.
Cendana Santos, Delmundo & Cendana for private respondents.
CRUZ, J.:
The case before us calls for the interpretation of Article 559 of the Civil Code and raises
the particular question of when a person may be deemed to have been "unlawfully
deprived" of movable property in the hands of another. The article runs in full as follows:
Art. 559. The possession of movable property acquired in good faith is equivalent to a
title. Nevertheless, one who has lost any movable or has been unlawfully deprived
thereof, may recover it from the person in possession of the same.
If the possessor of a movable lost or of which the owner has been unlawfully deprived
has acquired it in good faith at a public sale, the owner cannot obtain its return without
reimbursing the price paid therefor.
The movable property in this case consists of books, which were bought from the
petitioner by an impostor who sold it to the private respondents. Ownership of the books
was recognized in the private respondents by the Municipal Trial Court, 1 which was
sustained by the Regional Trial Court, 2 which was in turn sustained by the Court of
Appeals. 3 The petitioner asks us to declare that all these courts have erred and should
be reversed.
This case arose when on October 5, 1981, a person identifying himself as Professor
Jose Cruz placed an order by telephone with the petitioner company for 406 books,
payable on delivery. 4 EDCA prepared the corresponding invoice and delivered the
books as ordered, for which Cruz issued a personal check covering the purchase price
of P8,995.65. 5 On October 7, 1981, Cruz sold 120 of the books to private respondent
Leonor Santos who, after verifying the seller's ownership from the invoice he showed
her, paid him P1,700.00. 6
Meanwhile, EDCA having become suspicious over a second order placed by Cruz even
before clearing of his first check, made inquiries with the De la Salle College where he
had claimed to be a dean and was informed that there was no such person in its employ.
Further verification revealed that Cruz had no more account or deposit with the
Philippine Amanah Bank, against which he had drawn the payment check. 7 EDCA then
went to the police, which set a trap and arrested Cruz on October 7, 1981. Investigation
disclosed his real name as Tomas de la Pea and his sale of 120 of the books he had
ordered from EDCA to the private respondents. 8
On the night of the same date, EDCA sought the assistance of the police in Precinct 5 at

the UN Avenue, which forced their way into the store of the private respondents and
threatened Leonor Santos with prosecution for buying stolen property. They seized the
120 books without warrant, loading them in a van belonging to EDCA, and thereafter
turned them over to the petitioner. 9
Protesting this high-handed action, the private respondents sued for recovery of the
books after demand for their return was rejected by EDCA. A writ of preliminary
attachment was issued and the petitioner, after initial refusal, finally surrendered the
books to the private respondents. 10 As previously stated, the petitioner was
successively rebuffed in the three courts below and now hopes to secure relief from us.
To begin with, the Court expresses its disapproval of the arbitrary action of the petitioner
in taking the law into its own hands and forcibly recovering the disputed books from the
private respondents. The circumstance that it did so with the assistance of the police,
which should have been the first to uphold legal and peaceful processes, has
compounded the wrong even more deplorably. Questions like the one at bar are decided
not by policemen but by judges and with the use not of brute force but of lawful writs.
Now to the merits
It is the contention of the petitioner that the private respondents have not established
their ownership of the disputed books because they have not even produced a receipt to
prove they had bought the stock. This is unacceptable. Precisely, the first sentence of
Article 559 provides that "the possession of movable property acquired in good faith is
equivalent to a title," thus dispensing with further proof.
The argument that the private respondents did not acquire the books in good faith has
been dismissed by the lower courts, and we agree. Leonor Santos first ascertained the
ownership of the books from the EDCA invoice showing that they had been sold to Cruz,
who said he was selling them for a discount because he was in financial need. Private
respondents are in the business of buying and selling books and often deal with hard-up
sellers who urgently have to part with their books at reduced prices. To Leonor Santos,
Cruz must have been only one of the many such sellers she was accustomed to dealing
with. It is hardly bad faith for any one in the business of buying and selling books to buy
them at a discount and resell them for a profit.
But the real issue here is whether the petitioner has been unlawfully deprived of the
books because the check issued by the impostor in payment therefor was dishonored.
In its extended memorandum, EDCA cites numerous cases holding that the owner who
has been unlawfully deprived of personal property is entitled to its recovery except only
where the property was purchased at a public sale, in which event its return is subject to
reimbursement of the purchase price. The petitioner is begging the question. It is putting
the cart before the horse. Unlike in the cases invoked, it has yet to be established in the
case at bar that EDCA has been unlawfully deprived of the books.
The petitioner argues that it was, because the impostor acquired no title to the books
that he could have validly transferred to the private respondents. Its reason is that as the
payment check bounced for lack of funds, there was a failure of consideration that
nullified the contract of sale between it and Cruz.

The contract of sale is consensual and is perfected once agreement is reached between
the parties on the subject matter and the consideration. According to the Civil Code:
Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds
upon the thing which is the object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to the
provisions of the law governing the form of contracts.
xxx

xxx

xxx

Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon the
actual or constructive delivery thereof.
Art. 1478. The parties may stipulate that ownership in the thing shall not pass to the
purchaser until he has fully paid the price.
It is clear from the above provisions, particularly the last one quoted, that ownership in
the thing sold shall not pass to the buyer until full payment of the purchase only if there
is a stipulation to that effect. Otherwise, the rule is that such ownership shall pass from
the vendor to the vendee upon the actual or constructive delivery of the thing sold even if
the purchase price has not yet been paid.
Non-payment only creates a right to demand payment or to rescind the contract, or to
criminal prosecution in the case of bouncing checks. But absent the stipulation above
noted, delivery of the thing sold will effectively transfer ownership to the buyer who can
in turn transfer it to another.
In Asiatic Commercial Corporation v. Ang,11 the plaintiff sold some cosmetics to
Francisco Ang, who in turn sold them to Tan Sit Bin. Asiatic not having been paid by Ang,
it sued for the recovery of the articles from Tan, who claimed he had validly bought them
from Ang, paying for the same in cash. Finding that there was no conspiracy between
Tan and Ang to deceive Asiatic the Court of Appeals declared:
Yet the defendant invoked Article 464 12 of the Civil Code providing, among other things
that "one who has been unlawfully deprived of personal property may recover it from any
person possessing it." We do not believe that the plaintiff has been unlawfully deprived
of the cartons of Gloco Tonic within the scope of this legal provision. It has voluntarily
parted with them pursuant to a contract of purchase and sale. The circumstance that the
price was not subsequently paid did not render illegal a transaction which was valid and
legal at the beginning.
In Tagatac v. Jimenez,13 the plaintiff sold her car to Feist, who sold it to Sanchez, who
sold it to Jimenez. When the payment check issued to Tagatac by Feist was dishonored,
the plaintiff sued to recover the vehicle from Jimenez on the ground that she had been
unlawfully deprived of it by reason of Feist's deception. In ruling for Jimenez, the Court of
Appeals held:
The point of inquiry is whether plaintiff-appellant Trinidad C. Tagatac has been unlawfully

deprived of her car. At first blush, it would seem that she was unlawfully deprived thereof,
considering that she was induced to part with it by reason of the chicanery practiced on
her by Warner L. Feist. Certainly, swindling, like robbery, is an illegal method of
deprivation of property. In a manner of speaking, plaintiff-appellant was "illegally
deprived" of her car, for the way by which Warner L. Feist induced her to part with it is
illegal and is punished by law. But does this "unlawful deprivation" come within the scope
of Article 559 of the New Civil Code?
xxx

xxx

xxx

. . . The fraud and deceit practiced by Warner L. Feist earmarks this sale as a voidable
contract (Article 1390 N.C.C.). Being a voidable contract, it is susceptible of either
ratification or annulment. If the contract is ratified, the action to annul it is extinguished
(Article 1392, N.C.C.) and the contract is cleansed from all its defects (Article 1396,
N.C.C.); if the contract is annulled, the contracting parties are restored to their respective
situations before the contract and mutual restitution follows as a consequence (Article
1398, N.C.C.).
However, as long as no action is taken by the party entitled, either that of annulment or
of ratification, the contract of sale remains valid and binding. When plaintiff-appellant
Trinidad C. Tagatac delivered the car to Feist by virtue of said voidable contract of sale,
the title to the car passed to Feist. Of course, the title that Feist acquired was defective
and voidable. Nevertheless, at the time he sold the car to Felix Sanchez, his title thereto
had not been avoided and he therefore conferred a good title on the latter, provided he
bought the car in good faith, for value and without notice of the defect in Feist's title
(Article 1506, N.C.C.). There being no proof on record that Felix Sanchez acted in bad
faith, it is safe to assume that he acted in good faith.
The above rulings are sound doctrine and reflect our own interpretation of Article 559 as
applied to the case before us.
Actual delivery of the books having been made, Cruz acquired ownership over the books
which he could then validly transfer to the private respondents. The fact that he had not
yet paid for them to EDCA was a matter between him and EDCA and did not impair the
title acquired by the private respondents to the books.
One may well imagine the adverse consequences if the phrase "unlawfully deprived"
were to be interpreted in the manner suggested by the petitioner. A person relying on the
seller's title who buys a movable property from him would have to surrender it to another
person claiming to be the original owner who had not yet been paid the purchase price
therefor. The buyer in the second sale would be left holding the bag, so to speak, and
would be compelled to return the thing bought by him in good faith without even the right
to reimbursement of the amount he had paid for it.
It bears repeating that in the case before us, Leonor Santos took care to ascertain first
that the books belonged to Cruz before she agreed to purchase them. The EDCA invoice
Cruz showed her assured her that the books had been paid for on delivery. By contrast,
EDCA was less than cautious in fact, too trusting in dealing with the impostor.
Although it had never transacted with him before, it readily delivered the books he had
ordered (by telephone) and as readily accepted his personal check in payment. It did not

verify his identity although it was easy enough to do this. It did not wait to clear the check
of this unknown drawer. Worse, it indicated in the sales invoice issued to him, by the
printed terms thereon, that the books had been paid for on delivery, thereby vesting
ownership in the buyer.
Surely, the private respondent did not have to go beyond that invoice to satisfy herself
that the books being offered for sale by Cruz belonged to him; yet she did. Although the
title of Cruz was presumed under Article 559 by his mere possession of the books, these
being movable property, Leonor Santos nevertheless demanded more proof before
deciding to buy them.
It would certainly be unfair now to make the private respondents bear the prejudice
sustained by EDCA as a result of its own negligence.1wphi1 We cannot see the justice
in transferring EDCA's loss to the Santoses who had acted in good faith, and with proper
care, when they bought the books from Cruz.
While we sympathize with the petitioner for its plight, it is clear that its remedy is not
against the private respondents but against Tomas de la Pea, who has apparently
caused all this trouble. The private respondents have themselves been unduly
inconvenienced, and for merely transacting a customary deal not really unusual in their
kind of business. It is they and not EDCA who have a right to complain.
WHEREFORE, the challenged decision is AFFIRMED and the petition is DENIED, with
costs against the petitioner.

G.R. No. L-20264 January 30, 1971

CONSUELO S. DE GARCIA and ANASTACIO GARCIA, petitioners,
vs.
HON. COURT OF APPEALS, ANGELINA D. GUEVARA and JUAN B. GUEVARA,
respondents.
Deogracias T. Reyes and Jose M. Luison for petitioners.
Tolentino and Garcia and D.R. Cruz for private respondents.

FERNANDO, J.:
This petition for certiorari to review a decision of respondent Court of Appeals was given
due course because it was therein vigorously asserted that legal questions of gravity and
of moment, there being allegations of an unwarranted departure from and a patent
misreading of applicable and controlling decisions, called for determination by this
Tribunal. The brief for petitioners-spouses, however, failed to substantiate such imputed
failings of respondent Court. The performance did not live up to the promise. On the
basis of the facts as duly found by respondent Court, which we are not at liberty to
disregard, and the governing legal provisions, there is no basis for reversal. We affirm.
The nature of the case presented before the lower court by private respondent Angelina
D. Guevara, assisted by her spouse, Juan B. Guevara, as plaintiffs, was noted in the
decision of respondent Court of Appeals thus: "Plaintiff seeks recovery of `one (1) lady's
diamond ring 18 cts. white gold mounting, with one (1) 2.05 cts. diamond-solitaire, and
four (4) brills 0.10 cts. total weight' which she bought on October 27, 1947 from R.
Rebullida, Inc."1 Then came a summary of now respondent Guevara of her evidence:
"Plaintiff's evidence tends to show that around October 11, 1953 plaintiff while talking to
Consuelo S. de Garcia, owner of La Bulakea restaurant recognized her ring in the
finger of Mrs. Garcia and inquired where she bought it, which the defendant answered
from her comadre. Plaintiff explained that that ring was stolen from her house in
February, 1952. Defendant handed the ring to plaintiff and it fitted her finger. Two or
three days later, at the request of plaintiff, plaintiff, her husband Lt. Col. Juan Guevara,
Lt. Cementina of Pasay PD, defendant and her attorney proceeded to the store of Mr.
Rebullida to whom they showed the ring in question. Mr. Rebullida a examined the ring
with the aid of high power lens and after consulting the stock card thereon, concluded
that it was the very ring that plaintiff bought from him in 1947. The ring was returned to
defendant who despite a written request therefor failed to deliver the ring to plaintiff.
Hence, this case. Later on when the sheriff tried to serve the writ of seizure (replevin),
defendant refused to deliver the ring which had been examined by Mr. Rebullida,
claiming it was lost."2
How the defendant, Consuelo S. de Garcia, the present petitioner before us, along with
her husband Anastacio Garcia, sought to meet plaintiff's claim was narrated thus: "On
the other hand, defendant denied having made any admission before plaintiff or Mr.
Rebullida or the sheriff. Her evidence tends to show that the ring (Exhibit 1) was
purchased by her from Mrs. Miranda who got it from Miss Angelita Hinahon who in turn

got it from the owner, Aling Petring, who was boarding in her house; that the ring she
bought could be similar to, but not the same ring plaintiff purchased from Mr. Rebullida
which was stolen; that according to a pawn-shop owner the big diamond on Exhibit 1
was before the trial never dismantled. When dismantled, defendant's diamond was found
to weigh 2.57 cts."3
Plaintiff lost in the lower court. She elevated the matter to respondent Court of Appeals
with the judgment of the lower court being reversed. It is this decision now under review.
These are the facts as found by respondent Court of Appeals: "That the ring brought by
the parties for examination by Rafael Rebullida on December 14, 1953 was the same
ring purchased by plaintiff from R. Rebullida, Inc. on October 27, 1947 and stolen in
February, 1952 has been abundantly established by plaintiff's evidence. Before plaintiff
lost the ring, she had been wearing it for six years and became familiar with it. Thus,
when she saw the missing ring in the finger of defendant, she readily and definitely
identified it. Her identification was confirmed by Mr. Rafael Rebullida, whose candid
testimony is entitled to great weight, with his 30 years experience behind him in the
jewelry business and being a disinterested witness since both parties are his customers.
Indeed, defendant made no comment when in her presence Rebullida after examining
the ring and stock card told plaintiff that that was her ring, nor did she answer plaintiff's
letter of demand, ... asserting ownership. Further confirmation may be found in the extrajudicial admissions, contained in defendant's original and first amended answers ..."4
These further facts likewise appeal therein: "The foregoing proof is not counter-balanced
by the denial on the part of defendant or the presentation of the ring, Exhibit I, which has
a diamond-solitaire 2.57 cts., or much heavier than the lost diamond weighing 2.05 cts.
only. It is noteworthy that defendant gave a rather dubious source of her ring. Aling
Petring from whom the ring supposedly came turned out to be a mysterious and
ephemeral figure. Miss Hinahon did not even know her true and full name, nor her
forwarding address. She appeared from nowhere, boarded three months in the house of
Miss Hinahon long enough to sell her diamond ring, disappearing from the scene a week
thereafter. Indeed, the case was terminated without any hearing on the third-party and
fourth-party complaints, which would have shown up the falsity of defendant's theory.
Moreover, Mrs. Baldomera Miranda, third-party defendant, who tried to corroborate
defendant on the latter's alleged attempt to exchange the ring defendant bought through
her, is [belied] by her judicial admission in her Answer that appellee `suggested that she
would make alterations to the mounting and structural design of the ring to hide the true
identity and appearance of the original one' (Cunanan vs. Amparo, 45 O.G. 3796).
Finally, defendant is refuted by her own extra-judicial admissions ... although made by
defendant's counsel. For an attorney who acts as counsel of record and is permitted to
act such, has the authority to manage the cause, and this includes the authority to make
admission for the purpose of the litigation... Her proffered explanation that her counsel
misunderstood her is puerile because the liability to error as to the identity of the vendor
and the exchange of the ring with another ring of the same value, was rather remote."5
It is in the light of the above facts as well as the finding that the discrepancy as to the
weight between the diamond-solitaire in Exhibit I and the lost diamond was due to
defendant having "substituted a diamond-solitaire of plaintiff with a heavier stone" that
the decision was rendered, respondent Court reversing the lower court and ordering
defendant, now petitioner Consuelo S. de Garcia, to return plaintiff's ring or fact value of

P1,000.00 and costs, as well as to pay plaintiff P1,000.00 as attorney's fee and
P1,000.00 as exemplary damages. Hence this appeal.
To repeat, there is no occasion to reverse respondent Court. It correctly applied the law
to the facts as found.
1. The controlling provision is Article 559 of the Civil Code. It reads thus: "The
possession of movable property acquired in good faith is equivalent to a title.
Nevertheless, one who has lost any movable or has been unlawfully deprived thereof
may recover it from the person in possession of the same. If the possessor of a movable
lost of which the owner has been unlawfully deprived, has acquired it in good faith at a
public sale, the owner cannot obtain its return without reimbursing the price paid
therefor." Respondent Angelina D. Guevara, having been unlawfully deprived of the
diamond ring in question, was entitled to recover it from petitioner Consuelo S. de Garcia
who was found in possession of the same. The only exception the law allows is when
there is acquisition in good faith of the possessor at a public sale, in which case the
owner cannot obtain its return without reimbursing the price. As authoritative interpreted
in Cruz v. Pahati, 6 the right of the owner cannot be defeated even by proof that there
was good faith by the acquisition by the possessor. There is a reiteration of this principle
in Aznar v. Yapdiangco.7 Thus: "Suffice it to say in this regard that the right of the owner
to recover personal property acquired in good faith by another, is based on his being
dispossessed without his consent. The common law principle that where one of two
innocent persons must suffer by a fraud perpetrated by the another, the law imposes the
loss upon the party who, by his misplaced confidence, has enabled the fraud to be
committed, cannot be applied in a case which is covered by an express provision of the
new Civil Code, specifically Article 559. Between a common law principle and statutory
provision, the latter must prevail in this jurisdiction."8
2. It is thus immediately apparent that there is no merit to the contention raised in the
first assigned error that her possession in good faith, equivalent to title, sufficed to defeat
respondent Guevara's claim. As the above cases demonstrate, even on that assumption
the owner can recover the same once she can show illegal deprivation. Respondent
Court of Appeals was so convinced from the evidence submitted that the owner of the
ring in litigation is such respondent. That is a factual determination to which we must pay
heed. Instead of proving any alleged departure from legal norms by respondent Court,
petitioner would stress Article 541 of the Civil Code, which provides: 'A possessor in the
concept of owner has in his favor the legal presumption that he possesses with a just
title and he cannot be obliged to show or prove it." She would accord to it a greater legal
significance than that to which under the controlling doctrines it is entitled.lwph1.t
The brief for respondents did clearly point out why petitioner's assertion is lacking in
support not only from the cases but even from commentators. Thus: "Actually, even
under the first clause, possession in good faith does not really amount to title, for the
reason that Art. 1132 of the Code provides for a period of acquisitive prescription for
movables through `uninterrupted possession for four years in good faith' (Art. 1955 of the
old Spanish Code, which provided a period of three years), so that many Spanish
writers, including Manresa, Sanchez Roman, Scaevola, De Buen, and Ramos, assert
that under Art. 464 of the Spanish Code (Art. 559 of the New Civil Code), the title of the
possessor is not that of ownership, but is merely a presumptive title sufficient to serve as
a basis of acquisitive prescription (II Tolentino, Civil Code of the Phil. p. 258: IV Manresa,
Derecho Civil Espaol, 6th Ed., p. 380). And it is for the very reason that the title

established by the first clause of Art. 559 is only a presumptive title sufficient to serve as
a basis for acquisitive prescription, that the clause immediately following provides that
`one who has lost any movable or has been unlawfully deprived thereof, may recover it
from the person in possession of the same.' As stated by the Honorable Justice Jose B.
L. Reyes of this Court in Sotto vs. Enage (C.A.), 43 Off. Gaz. 5075, Dec. 1947: `Article
559 in fact assumes that possessor is as yet not the owner; for it is obvious that where
the possessor has come to acquire indefeasible title by, let us say, adverse possession
for the necessary period, no proof of loss or illegal deprivation could avail the former
owner of the chattel. He would no longer be entitled to recover it under any condition.' "9
The second assigned error is centered on the alleged failure to prove the identity of the
diamond ring. Clearly the question raised is one of the fact. What the Court of Appeals
found is conclusive. Again, petitioner could not demonstrate that in reaching such a
conclusion the Court of Appeals acted in an arbitrary manner. As made mention of in the
brief for respondents two disinterested witnesses, Mr. Rafael Rebullida as well as Lt. Col.
Reynaldo Cementina of the Pasay City Police Department, both of whom could not be
accused of being biased in favor of respondent Angelina D. Guevara, did testify as to the
identity of the ring.
The third assigned error of petitioners would find fault with respondent Court relying "on
the weakness of the title or evidence" of petitioner Consuelo S. de Garcia. It is true, in
the decision under review, mention was made of petitioner Consuelo S. de Garcia
making no comment when in her presence Rebullida, after examining the ring the stock
card, told respondent Angelina L. Guevara that that was her ring, nor did petitioner
answer a letter of the latter asserting ownership. It was likewise stated in such decision
that there were extra-judicial admissions in the original and first amended answers of
petitioner. In the appraisal of her testimony, respondent Court likewise spoke of her
giving a rather dubious source of her ring, the person from whom she allegedly bought it
turning out "to be a mysterious and ephemeral figure." As a matter of fact, as set forth a
few pages back, respondent Court did enumerate the flaws in the version given by
petitioner. From the weakness of the testimony offered which, as thus made clear,
petitioner, did not even seek to refute, she would raise the legal question that respondent
Court relied on the "weakness of [her] title or evidence" rather than on the proof justifying
respondent Angelina D. Guevara's claim of ownership. Petitioner here would ignore the
finding of fact of respondent Court that such ownership on her part "has been abundantly
established" by her evidence. Again here, in essence, the question raised is one of fact,
and there is no justification for us to reverse respondent Court.
The legal question raised in the fourth assignment of error is that the matter of the
substitution of the diamond on the ring was a question raised for the first time on appeal
as it was never put in issue by the pleadings nor the subject of reception of evidence by
both parties and not touched upon in the decision of the lower court. Why no such
question could be raised in the pleadings of respondent Angelina D. Guevara was
clarified by the fact that the substitution came after it was brought for examination to Mr.
Rebullida. After the knowledge of such substitution was gained, however, the issue was
raised at the trial according to the said respondent resulting in that portion of the
decision where the lower court reached a negative conclusion. As a result, in the motion
for reconsideration, one of the points raised as to such decision being contrary to the
evidence is the finding that there was no substitution. It is not necessary to state that
respondent Court, exercising its appellate power reversed the lower court. What was

held by it is controlling. What is clear is that there is no factual basis for the legal
arguments on which the fourth assigned error is predicated.
What is said takes care of the fifth assigned error that respondent Court was mistaken in
its finding that there was such a substitution. Again petitioner would have us pass on a
question of credibility which is left to respondent Court of Appeals. The sixth assigned
error would complain against the reversal of the lower court judgment as well as
petitioner Consuelo S. de Garcia being made to pay respondent Angelina D. Guevara
exemplary damages, attorney's fees and costs. The reversal is called for in the light of
the appraisal of the evidence of record as meticulously weighed by respondent Court. As
to the attorney's fees and exemplary damages, this is what respondent Court said in the
decision under review: "Likewise, plaintiff is entitled to recover reasonable attorney's
fees in the sum of P1,000, it being just and equitable under the circumstances, and
another P1,000 as exemplary damages for the public good to discourage litigants from
resorting to fraudulent devices to frustrate the ends of justice, as defendant herein tried
to substitute the ring, Exhibit 1, for plaintiff's ring." 10 Considering the circumstances, the
cursory discussion of the sixth assigned error on the matter by petitioner fails to
demonstrate that respondent Court's actuation is blemished by legal defects.
WHEREFORE, the decision of respondent Court of Appeals of August 6, 1962 is hereby
affirmed. With costs.

G.R. No. L-30817 September 29, 1972

DOMINADOR DIZON, doing business under the firm name "Pawnshop of
Dominador Dizon", petitioner,
vs.
LOURDES G. SUNTAY, respondent.
Andres T. Velarde for petitioner.
Rafael G. Suntay for respondent.

FERNANDO, J.:p
In essence there is nothing novel in this petition for review of a decision of the Court of
Appeals affirming a lower court judgment sustaining the right of an owner of a diamond
ring, respondent Lourdes G. Suntay, as against the claim of petitioner Dominador Dizon,
who owns and operates a pawnshop. The diamond ring was turned over to a certain
Clarita R. Sison, for sale on commission, along with other pieces of jewelry of
respondent Suntay. It was then pledged to petitioner. Since what was done was violative
of the terms of the agency, there was an attempt on her part to recover possession
thereof from petitioner, who refused. She had to file an action then for its recovery. She
was successful, as noted above, both in the lower court and thereafter in the Court of
Appeals. She prevailed as she had in her favor the protection accorded by Article 559 of
the
Civil
Code. 1 The matter was then elevated to us by petitioner. Ordinarily, our discretion would
have been exercised against giving due course to such petition for review. The vigorous
plea however, grounded on estoppel, by his counsel, Atty. Andres T. Velarde, persuaded
us to act otherwise. After a careful perusal of the respective contentions of the parties,
we fail to perceive any sufficient justification for a departure from the literal language of
the applicable codal provision as uniformly interpreted by this Court in a number of
decisions. The invocation of estoppel is therefore unavailing. We affirm.
The statement of the case as well as the controlling facts may be found in the Court of
Appeals decision penned by Justice Perez. Thus: "Plaintiff is the owner of a three-carat
diamond ring valued at P5,500.00. On June 13, 1962, the plaintiff and Clarita R. Sison
entered into a transaction wherein the plaintiff's ring was delivered to Clarita R. Sison for
sale on commission. Upon receiving the ring, Clarita R. Sison executed and delivered to
the plaintiff the receipt ... . The plaintiff had already previously known Clarita R. Sison as
the latter is a close friend of the plaintiff's cousin and they had frequently met each other
at the place of the plaintiff's said cousin. In fact, about one year before their transaction
of June 13, 1962 took place, Clarita R. Sison received a piece of jewelry from the plaintiff
to be sold for P500.00, and when it was sold, Clarita R. Sison gave the price to the
plaintiff. After the lapse of a considerable time without Clarita R. Sison having returned to
the plaintiff the latter's ring, the plaintiff made demands on Clarita R. Sison for the return
of her ring but the latter could not comply with the demands because, without the
knowledge of the plaintiff, on June 15, 1962 or three days after the ring above-mentioned
was received by Clarita R. Sison from the plaintiff, said ring was pledged by Melia Sison,
niece of the husband of Clarita R. Sison, evidently in connivance with the latter, with the

defendant's pawnshop for P2,600.00 ... ." 2 Then came this portion of the decision under
review: "Since the plaintiff insistently demanded from Clarita R. Sison the return of her
ring, the latter finally delivered to the former the pawnshop ticket ... which is the receipt
of the pledge with the defendant's pawnshop of the plaintiff's ring. When the plaintiff
found out that Clarita R. Sison pledged, she took steps to file a case of estafa against
the latter with the fiscal's office. Subsequently thereafter, the plaintiff, through her lawyer,
wrote a letter ... dated September 22, 1962, to the defendant asking for the delivery to
the plaintiff of her ring pledged with defendant's pawnshop under pawnshop receipt
serial-B No. 65606, dated June 15, 1962 ... . Since the defendant refused to return the
ring, the plaintiff filed the present action with the Court of First Instance of Manila for the
recovery of said ring, with P500.00 as attorney's fees and costs. The plaintiff asked for
the provisional remedy of replevin by the delivery of the ring to her, upon her filing the
requisite bond, pending the final determination of the action. The lower court issued the
writ of replevin prayed for by plaintiff and the latter was able to take possession of the
ring during the pendency of the action upon her filing the requisite bond." 3 It was then
noted that the lower court rendered judgment declaring that plaintiff, now respondent
Suntay, had the right to the possession of the ring in question. Petitioner Dizon, as
defendant, sought to have the judgment reversed by the Court of Appeals. It did him no
good. The decision of May 19, 1969, now on review, affirmed the decision of the lower
court.
In the light of the facts as thus found by the Court of Appeals, well-nigh conclusive on
use, with the applicable law being what it is, this petition for review cannot prosper. To
repeat, the decision of the Court of Appeals stands.
1. There is a fairly recent restatement of the force and effect of the governing codal norm
in De Gracia v. Court of Appeals. 4 Thus: "The controlling provision is Article 559 of the
Civil Code. It reads thus: 'The possession of movable property acquired in good faith is
equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully
deprived thereof may recover it from the person in possession of the same. If the
possessor of a movable lost of which the owner has been unlawfully deprived, has
acquired it in good faith at a public sale, the owner cannot obtain its return without
reimbursing the price paid therefor.' Respondent Angelina D. Guevara, having been
unlawfully deprived of the diamond ring in question, was entitled to recover it from
petitioner Consuelo S. de Garcia who was found in possession of the same. The only
exception the law allows is when there is acquisition in good faith of the possessor at a
public sale, in which case the owner cannot obtain its return without reimbursing the
price. As authoritatively interpreted in Cruz v. Pahati, the right of the owner cannot be
defeated even by proof that there was good faith in the acquisition by the possessor.
There is a reiteration of this principle in Aznar v. Yapdiangco. Thus: 'Suffice it to say in
this regard that the right of the owner to recover personal property acquired in good faith
by another, is based on his being dispossessed without his consent. The common law
principle that were one of two innocent persons must suffer by a fraud perpetrated by
another, the law imposes the loss upon the party who, by his misplaced confidence, has
enabled the fraud to be committed, cannot be applied in a case which is covered by an
express provision of the new Civil Code, specifically Article 559. Between a common law
principle and a statutory provision, the latter must prevail in this jurisdiction." " 5
2. It must have been a recognition of the compulsion exerted by the above authoritative
precedents that must have caused petitioner to invoke the principle of estoppel. There is

clearly a misapprehension. Such a contention is devoid of any persuasive force.

Estoppel as known to the Rules of Court 6 and prior to that to the Court of Civil
Procedure, 7 has its roots in equity. Good faith is its basis. 8 It is a response to the
demands of moral right and natural justice. 9 For estoppel to exist though, it is
indispensable that there be a declaration, act or omission by the party who is sought to
be bound. Nor is this all. It is equally a requisite that he, who would claim the benefits of
such a principle, must have altered his position, having been so intentionally and
deliberately led to comport himself thus, by what was declared or what was done or
failed to be done. If thereafter a litigation arises, the former would not be allowed to
disown such act, declaration or omission. The principle comes into full play. It may
successfully be relied upon. A court is to see to it then that there is no turning back on
one's word or a repudiation of one's act. So it has been from our earliest decisions. As
Justice Mapa pointed out in the first case, a 1905 decision, Rodriguez v. Martinez, 10 a
party should not be permitted "to go against his own acts to the prejudice of [another].
Such a holding would be contrary to the most rudimentary principles of justice and law."
11
He is not, in the language of Justice Torres, in Irlanda v. Pitargue, 12 promulgated in
1912, "allowed to gainsay [his] own acts or deny rights which [he had] previously
recognized." 13 Some of the later cases are to the effect that an unqualified and
unconditional acceptance of an agreement forecloses a claim for interest not therein
provided. 14 Equally so the circumstance that about a month after the date of the
conveyance, one of the parties informed the other of his being a minor, according to
Chief Justice Paras, "is of no moment, because [the former's] previous
misrepresentation had already estopped him from disavowing the contract. 15 It is easily
understandable why, under the circumstances disclosed, estoppel is a frail reed to hang
on to. There was clearly the absence of an act or omission, as a result of which a
position had been assumed by petitioner, who if such elements were not lacking, could
not thereafter in law be prejudiced by his belief in what had been misrepresented to him.
16
As was put by Justice Labrador, "a person claimed to be estopped must have
knowledge of the fact that his voluntary acts would deprive him of some rights because
said voluntary acts are inconsistent with said rights." 17 To recapitulate, there is this
pronouncement not so long ago, from the pen of Justice Makalintal, who reaffirmed that
estoppel "has its origin in equity and, being based on moral right and natural justice,
finds applicability wherever and whenever the special circumstances of a case so
demand." 18
How then can petitioner in all seriousness assert that his appeal finds support in the
doctrine of estoppel? Neither the promptings of equity nor the mandates of moral right
and natural justice come to his rescue. He is engaged in a business where presumably
ordinary prudence would manifest itself to ascertain whether or not an individual who is
offering a jewelry by way of a pledge is entitled to do so. If no such care be taken,
perhaps because of the difficulty of resisting opportunity for profit, he should be the last
to complain if thereafter the right of the true owner of such jewelry should be recognized.
The law for this sound reason accords the latter protection. So it has always been since
Varela
v.
Finnick, 19 a 1907 decision. According to Justice Torres: "In the present case not only has
the ownership and the origin of the jewels misappropriated been unquestionably proven
but also that the accused, acting fraudulently and in bad faith, disposed of them and
pledged them contrary to agreement, with no right of ownership, and to the prejudice of
the injured party, who was thereby illegally deprived of said jewels; therefore, in

accordance with the provisions of article 464, the owner has an absolute right to recover
the jewels from the possession of whosoever holds them, ... ." 20 There have been many
other decisions to the same effect since then. At least nine may be cited. 21 Nor could
any other outcome be expected, considering the civil code provisions both in the former
Spanish legislation 22 and in the present Code. 23 Petitioner ought to have been on his
guard before accepting the pledge in question. Evidently there was no such precaution
availed of. He therefore, has only himself to blame for the fix he is now in. It would be to
stretch the concept of estoppel to the breaking point if his contention were to prevail.
Moreover, there should have been a realization on his part that courts are not likely to be
impressed with a cry of distress emanating from one who is in a business authorized to
impose a higher rate of interest precisely due to the greater risk assumed by him. A
predicament of this nature then does not suffice to call for less than undeviating
adherence to the literal terms of a codal provision. Moreover, while the activity he is
engaged in is no doubt legal, it is not to be lost sight of that it thrives on taking
advantage of the necessities precisely of that element of our population whose lives are
blighted by extreme poverty. From whatever angle the question is viewed then, estoppel
certainly cannot be justly invoked.
WHEREFORE, the decision of the Court of Appeals of May 19, 1969 is affirmed, with
costs against petitioner.
Concepcion, C.J., Zaldivar, Makasiar, Antonio and Esguerra, JJ., concur.
Makalintal and Barredo, JJ., took no part.
Castro, J., reserves his vote.

Separate Opinions

TEEHANKEE, J., concurring:

I concur in the main opinion of Mr. Justice Fernando, tracing and confirming the long
settled and uniform jurisprudence since 1905 based on the express statutory provision of
article 559 of our Civil Code (formerly article 464 of the old Civil Code) that the owner
"who has lost any movable or has been unlawfully deprived thereof may recover it from
the person in possession of the same," the only exception expressly provided in the
codal article being that "if the possessor of a movable lost of which the owner has been
unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot
obtain its return without reimbursing the price paid therefor." 1
Senator Tolentino's submittal in his commentaries on the Civil Code "that the better view

is to consider 'unlawfully deprived' as limited to unlawful taking, such as theft or robbery,

and should not include disposition through abuse of confidence. Thus, if the owner has
entrusted personal property to a bailee, such as for transportation, pledge, loan or
deposit, without transmitting ownership, and the latter alienates it to a third person who
acquires it in good faith, the owner cannot recover it from such third person, "is, as he
himself admits, based on the express provision of the French Code which allows the true
owner of personal property to recover it from the possessor in good faith without
reimbursement only "if it has been stolen from him." He concedes likewise that "our
Code, following the Spanish code, uses broader language than that used in the French
code" since our Code provides that the owner who has been "unlawfully deprived" of
personal property may recover it from the possessor without reimbursement, with the
sole exception where the possessor acquired the article in good faith at a public sale. 2
He thus concedes finally that "(T)here are writers who believe that the phrase 'unlawfully
deprived' in our Code does not have the same meaning as stolen in the French code;
that it is used in the general sense, and is not used in the specific sense of deprivation
by robbery or theft. Under this view, it extends to all cases where there has been no valid
transmission of ownership, including the case where the proprietor has entrusted the
thing to a borrower, depositary, or lessee who has sold the same. It is believed that the
owner in such case is undoubtedly unlawfully deprived of his property, and may recover
the same from a possessor in good faith" (citing De Buen: 2-II Colin & Capitant 1008; 1
Bonet
234) 3 and cites the long unbroken line of decisions of the Court of Appeals and of this
Court upholding the import of the broader language of the codal article in question.
Indeed, if our legislature had intended to narrow the scope of the term "unlawfully
deprived" to "stolen" as advocated by Tolentino, it certainly would have adopted and
used such a narrower term rather than the broad language of article 464 of the old
Spanish Civil Code with its long-established and accepted meaning in accordance with
our jurisprudence.
Petitioner's contentions at bar had long been disposed of in the Court's 1911 decision of
Arenas vs. Raymundo, 4 per Mr. Justice Florentino Torres, reiterating the doctrine of the
earlier cases and holding that
Even supposing that the defendant Raymundo had acted in good faith in accepting the
pledge of the jewelry in litigation, even then he would not be entitled to retain it until the
owner thereof reimburse him for the amount loaned to the embezzler, since the said
owner of the jewelry, the plaintiff, did not make any contract with the pledgee, that would
obligate him to pay the amount loaned to Perello, and the trial record does not disclose
any evidence, even circumstantial, that the plaintiff Arenas consented to or had
knowledge of the pledging of her jewelry in the pawnshop of the defendant.
For this reason, and because Concepcion Perello was not the legitimate owner of the
jewelry which she pledged to the defendant Raymundo, for a certain sum that she
received from the latter as a loan, the contract of pledge entered into by both, is of
course, null and void, and, consequently the jewelry so pawned can not serve as
security for the payment of the sum loaned, nor can the latter be collected out of the
value of the said jewelry.

Article 1857 of the Civil Code prescribes as one of the essential requisites of the
contracts of pledge and of mortgage, that the thing pledged or mortgaged must belong to
the person who pledges or mortgages it. This essential requisite for the contract of
pledge between Perello and the defendant being absent as the former was not the
owner of the jewelry given in pledge, the contract is as devoid of value and force as if it
had not been made, and as it was executed with marked violation of an express
provision of the law, it can not confer upon the defendant any rights in the pledged
jewelry, nor impose any obligation toward him on the part of the owner thereof, since the
latter was deprived of her possession by means of the illegal pledging of the said jewelry,
a criminal act.
Between the supposed good faith of the defendant Raymundo and the undisputed good
faith of the plaintiff Arenas, the owner of the jewelry, neither law nor justice permit that
the latter, after being the victim of embezzlement, should have to choose one of the two
extremes of a dilemma, both of which, without legal ground or reason, are injurious and
prejudicial to her interests and rights, that is, she must either lose her jewelry or pay a
large sum received by the embezzler as a loan from the defendant, when the plaintiff
Arenas is not related to the latter by any legal or contractual bond out of which legal
obligations arise.
xxx xxx xxx
The business of pawnshops, in exchange for the high and onerous interest which
constitutes its enormous profits, is always exposed to the contingency of receiving in
pledge or security for the loans, jewels and other articles that have been robbed, stolen,
or embezzled from their legitimate owners; and as the owner of the pawnshop accepts
the pledging of jewelry from the first bearer who offers the same and asks for money on
it, without assuring himself whether such bearer is or is not the owner thereof, he can
not, by such procedure, expect from the law better and more preferential protection than
the owner of the jewels or other articles, who was deprived thereof by means of a crime
and is entitled to be excused by the courts.
Antonio Matute, the owner of another pawnshop, being convinced that he was wrong,
refrained from appealing from the judgment wherein he was sentenced to return, without
redemption, to the plaintiffs, another jewel of great value which had been pledged to him
by the same Perello. He undoubtedly had in mind some of the previous decisions of this
court, one of which was against himself.
By the same token, the contention that the owner may recover the lost article of which
he has been unlawfully deprived without reimbursement of the sum received by the
embezzler from the pawnshop only after a criminal conviction of the embezzler, is to add
a requirement that is not in the codal article and to unduly prejudice the victim of
embezzlement, as pointed out by the Court in Arenas, supra.
The civil action that the owner must resort to for the recovery of his personal property of
which he has been unlawfully deprived as against the possessor (where the latter
refuses to honor the claim, presumably on same valid doubts as to the genuineness of
the claim) gives the possessor every adequate protection and opportunity to contest the
owner's claim of recovery. The owner must therein establish by competent evidence his
lawful claim, and show to the court's satisfaction his lawful ownership of the article

claimed and that he had been unlawfully deprived thereof.

I therefore find no reason to set aside the long settled interpretation given by our
jurisprudence to article 559 (formerly article 464) of our Civil Code in accordance with its
clear and unambiguous language, as reaffirmed in the case at bar.

Separate Opinions
TEEHANKEE, J., concurring:
I concur in the main opinion of Mr. Justice Fernando, tracing and confirming the long
settled and uniform jurisprudence since 1905 based on the express statutory provision of
article 559 of our Civil Code (formerly article 464 of the old Civil Code) that the owner
"who has lost any movable or has been unlawfully deprived thereof may recover it from
the person in possession of the same," the only exception expressly provided in the
codal article being that "if the possessor of a movable lost of which the owner has been
unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot
obtain its return without reimbursing the price paid therefor." 1
Senator Tolentino's submittal in his commentaries on the Civil Code "that the better view
is to consider 'unlawfully deprived' as limited to unlawful taking, such as theft or robbery,
and should not include disposition through abuse of confidence. Thus, if the owner has
entrusted personal property to a bailee, such as for transportation, pledge, loan or
deposit, without transmitting ownership, and the latter alienates it to a third person who
acquires it in good faith, the owner cannot recover it from such third person, "is, as he
himself admits, based on the express provision of the French Code which allows the true
owner of personal property to recover it from the possessor in good faith without
reimbursement only "if it has been stolen from him." He concedes likewise that "our
Code, following the Spanish code, uses broader language than that used in the French
code" since our Code provides that the owner who has been "unlawfully deprived" of
personal property may recover it from the possessor without reimbursement, with the
sole exception where the possessor acquired the article in good faith at a public sale. 2
He thus concedes finally that "(T)here are writers who believe that the phrase 'unlawfully
deprived' in our Code does not have the same meaning as stolen in the French code;
that it is used in the general sense, and is not used in the specific sense of deprivation
by robbery or theft. Under this view, it extends to all cases where there has been no valid
transmission of ownership, including the case where the proprietor has entrusted the
thing to a borrower, depositary, or lessee who has sold the same. It is believed that the
owner in such case is undoubtedly unlawfully deprived of his property, and may recover
the same from a possessor in good faith" (citing De Buen: 2-II Colin & Capitant 1008; 1
Bonet
234) 3 and cites the long unbroken line of decisions of the Court of Appeals and of this
Court upholding the import of the broader language of the codal article in question.
Indeed, if our legislature had intended to narrow the scope of the term "unlawfully

deprived" to "stolen" as advocated by Tolentino, it certainly would have adopted and

used such a narrower term rather than the broad language of article 464 of the old
Spanish Civil Code with its long-established and accepted meaning in accordance with
our jurisprudence.
Petitioner's contentions at bar had long been disposed of in the Court's 1911 decision of
Arenas vs. Raymundo, 4 per Mr. Justice Florentino Torres, reiterating the doctrine of the
earlier cases and holding that
Even supposing that the defendant Raymundo had acted in good faith in accepting the
pledge of the jewelry in litigation, even then he would not be entitled to retain it until the
owner thereof reimburse him for the amount loaned to the embezzler, since the said
owner of the jewelry, the plaintiff, did not make any contract with the pledgee, that would
obligate him to pay the amount loaned to Perello, and the trial record does not disclose
any evidence, even circumstantial, that the plaintiff Arenas consented to or had
knowledge of the pledging of her jewelry in the pawnshop of the defendant.
For this reason, and because Concepcion Perello was not the legitimate owner of the
jewelry which she pledged to the defendant Raymundo, for a certain sum that she
received from the latter as a loan, the contract of pledge entered into by both, is of
course, null and void, and, consequently the jewelry so pawned can not serve as
security for the payment of the sum loaned, nor can the latter be collected out of the
value of the said jewelry.
Article 1857 of the Civil Code prescribes as one of the essential requisites of the
contracts of pledge and of mortgage, that the thing pledged or mortgaged must belong to
the person who pledges or mortgages it. This essential requisite for the contract of
pledge between Perello and the defendant being absent as the former was not the
owner of the jewelry given in pledge, the contract is as devoid of value and force as if it
had not been made, and as it was executed with marked violation of an express
provision of the law, it can not confer upon the defendant any rights in the pledged
jewelry, nor impose any obligation toward him on the part of the owner thereof, since the
latter was deprived of her possession by means of the illegal pledging of the said jewelry,
a criminal act.
Between the supposed good faith of the defendant Raymundo and the undisputed good
faith of the plaintiff Arenas, the owner of the jewelry, neither law nor justice permit that
the latter, after being the victim of embezzlement, should have to choose one of the two
extremes of a dilemma, both of which, without legal ground or reason, are injurious and
prejudicial to her interests and rights, that is, she must either lose her jewelry or pay a
large sum received by the embezzler as a loan from the defendant, when the plaintiff
Arenas is not related to the latter by any legal or contractual bond out of which legal
obligations arise.
xxx xxx xxx
The business of pawnshops, in exchange for the high and onerous interest which
constitutes its enormous profits, is always exposed to the contingency of receiving in
pledge or security for the loans, jewels and other articles that have been robbed, stolen,
or embezzled from their legitimate owners; and as the owner of the pawnshop accepts

the pledging of jewelry from the first bearer who offers the same and asks for money on
it, without assuring himself whether such bearer is or is not the owner thereof, he can
not, by such procedure, expect from the law better and more preferential protection than
the owner of the jewels or other articles, who was deprived thereof by means of a crime
and is entitled to be excused by the courts.
Antonio Matute, the owner of another pawnshop, being convinced that he was wrong,
refrained from appealing from the judgment wherein he was sentenced to return, without
redemption, to the plaintiffs, another jewel of great value which had been pledged to him
by the same Perello. He undoubtedly had in mind some of the previous decisions of this
court, one of which was against himself.
By the same token, the contention that the owner may recover the lost article of which
he has been unlawfully deprived without reimbursement of the sum received by the
embezzler from the pawnshop only after a criminal conviction of the embezzler, is to add
a requirement that is not in the codal article and to unduly prejudice the victim of
embezzlement, as pointed out by the Court in Arenas, supra.
The civil action that the owner must resort to for the recovery of his personal property of
which he has been unlawfully deprived as against the possessor (where the latter
refuses to honor the claim, presumably on same valid doubts as to the genuineness of
the claim) gives the possessor every adequate protection and opportunity to contest the
owner's claim of recovery. The owner must therein establish by competent evidence his
lawful claim, and show to the court's satisfaction his lawful ownership of the article
claimed and that he had been unlawfully deprived thereof.
I therefore find no reason to set aside the long settled interpretation given by our
jurisprudence to article 559 (formerly article 464) of our Civil Code in accordance with its
clear and unambiguous language, as reaffirmed in the case at bar.