ESTATE OF EDWARD MILLER G.R. No. 159810 590, also for 100 units, in the name of Grimm.
590, also for 100 units, in the name of Grimm. Per records, the Club issued MC No. 590 to
GRIMM, represented by RAMON J.
QUISUMBING and RANDY GLEAVE Present:
LAWYER, as Judicial
Administrators, PUNO, J., Chairman,
Petitioners, SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
- versus - GARCIA, JJ.
Promulgated:
October 9, 2006
ESTATE OF CHARLES PARSONS and
PATRICK C. PARSONS, G-P AND COMPANY
and MANILA GOLF & COUNTRY CLUB,
INC.,
Respondents.
x------------------------------------------------------------------------------------x
DECISION
GARCIA, J.:
Because legal and situational ambiguities often lead to disagreements even between or amongst the most
agreeable of persons, it behooves all concerned to put their financial affairs and proprietary interests in
order before they depart for the great beyond. Leaving legal loose ends hanging or allowing clouds to
remain on property titles when one can do something about them before the proverbial thief in the night
suddenly comes calling only opens the door to bruising legal fights and similar distracting
inconveniences. So it was here.
In this petition for review under Rule 45 of the Rules of Court, the Estate of Edward Miller Grimm,
represented by its judicial administrators, assails and seeks to set aside the Decision [1] dated September
8, 2003 of the Court of Appeals (CA) in CA-G.R. CV No. 69990, reversing an earlier decision of the
Regional Trial Court (RTC) of Makati City in its Civil Case No. 92-2452.
At the core of the controversy is a stock certificate of the Manila Golf & Country Club, Inc.
(MGCC or the Club, for short) covered by Membership Certificate (MC) No. 1088 for 100
units, the playing rights over which the Rizal Commercial Banking Corporation (RCBC), the
court-appointed receiver, had, in the meantime, leased out. The Club issued MC No. 1088 to
replace MC No. 590. Asserting clashing ownership claims over MC No.1088, albeit recorded
in the name of Charles Parsons (Parsons, hereinafter) are petitioner Estate of Edward Miller
Grimm and respondent G-P and Company (G-P & Co., hereinafter).
Parsons and Edward Miller Grimm (Grimm), together with Conrado Y. Simon (Simon),
formed in 1952 a partnership for the stated purpose of engaging in the import/export and real
estate business. Per SEC Certificate #3305, [2] the partnership was registered under the name G
- P and Company.
Before September 1964, Parsons and Grimm each owned proprietary membership share in
MGCC,[3] as evidenced by MC No. 374 for 100 units in the name of Parsons, and MC No.
Grimm on May 25, 1960.[4]
After Grimms demise on November 27, 1977, Parsons and Simon continued with the
partnership under the same name, G P and Company, as reflected in Articles of Partnership
dated December 14, 1977.[5] The articles of the partnership would later undergo another
amendment to admit Parsons son, Patrick, in the partnership. [6] After Parsons died on May 12,
1988, Amended Articles of Partnership of G-P and Company was executed on September 23,
1988 by and among Parsons heirs, namely, Patrick, Michael, Peter and Jose, all surnamed
Parsons, albeit the amendment appeared to have been registered with the SEC only on March
18, 1993. [7]
The herein legal dispute started when brothers Patrick and Jose, both surnamed Parsons,
responding to a letter[8] from the Estate of Grimm, rejected the existence of a trust arrangement
between their father and Grimm involving MC No. 1088. Thus spurned, the Estate of Grimm
filed on August 31, 1992 before the RTC of Makati City, a suit for recovery of MC No. 1088
with damages against the Estate of Parsons, Patrick Parsons and MGCC. In its complaint,
[9]
docketed as Civil Case No. 92-2452 and eventually raffled to Branch 135 of the court, the
Estate of Grimm, represented by its judicial administrator, Ramon J. Quisumbing, alleged,
among other things, the following:
1. That on September 7, 1964, Grimm transferred MC No. 590 in trust to
Parsons; on the same day, MGCC cancelled MC No. 590 and
issued MC No. 1088 in the name of Parsons;
2. That in separate letters dated February 28, 1968 addressed to MGCC,
both Grimm and Parsons stated that the transfer of MC No. 590
was temporary. Enclosed in that Parsons letter was MC No.
1088 which he was turning over for safekeeping to the Club,
thru E.C. Von Kauffmann and Romeo Alhambra, then MGCC
honorary secretary and assistant manager, respectively;
3. That on June 9, 1978, or after Mr. Kauffman death and Mr. Alhambras
resignation, MGCC turned over the possession of MC No. 1088
to Parsons;
4. That in 1977, Grimm died; after a protracted proceedings, his estate was
finally settled in 1988, the year Parsons also died;
5. That Patrick and Jose Parsons had, when reminded of the trust
arrangement between their late father and Grimm, denied the
existence of a trust over the Club share and refused to return the
same; and
6. That MGCC had refused, despite demands, to cancel MC No. 1088 and
issue a new certificate in the name of the Estate of Grimm.
Attached to the complaint were the demand letters and other communications which, to the
Estate of Grimm, document the Grimm-Parsons trust arrangement.
In his Answer with counterclaim,[10] Patrick Parsons averred that his father was, with respect to
MC No. 1088, a mere trustee of the true owner thereof, G-P & Co., and alleged, by way of
1
affirmative defense, that the claim set forth in the complaint is unenforceable, barred inter
alia by the dead mans statute, prescription or had been waived or abandoned. 5. Ordering the dismissal of the complaint-in-intervention and the
supplemental counterclaim of intervenor G - P AND COMPANY.
Herein respondent G-P & Co., echoing Patrick Parsons allegation respecting the ownership of
MC No. 1088, moved to intervene and to implead Far East Bank & Trust Co. (FEBTC), as SO ORDERED. (Words in bracket added.)
transfer agent of MGCC, as defendant-in-intervention. Attached to its motion was In gist, the trial court predicated its ruling on the postulate that the temporary transfer of
its COMPLAINT In Intervention[11] therein alleging (a) that on September 1, 1964, Parsons Grimms original share in MGCC - covered by MC No. 590 whence MC No. 1088 descended
executed a Letter of Trust, infra, in which he acknowledged the beneficial ownership of G-P & to Parsons, created a trust relationship between the two.
Co. over MC No. 374 and MC No.1088; (b) that Parsons, as required by the partnership,
endorsed both certificates in blank; and (c) that G-P & Co. carried said certificates amongst its Therefrom, only herein respondents G-P & Co., Patrick Parsons and the Parsons Estate
assets in its books of accounts and financial statements and paid the monthly dues of both appealed to the CA, albeit MGCC would, in its brief, reiterate its readiness to issue the
certificates to the Club when its membership privileges were not temporarily assigned to corresponding replacement certificate to whosoever is finally adjudged owner of MC No.
others. In the same complaint-in-intervention, G-P & Co. cited certain tax incidents as reasons 1088.
why the transfer of MC No. 374 and MC No. 1088 from Parsons to the intervenor-partnership
cannot as yet be accomplished. On September 8, 2003, in CA-G.R.CV No. 69990, the appellate court rendered its
herein assailed Decision,[13] disposing as follows:
After the usual reply and answer to counterclaims had been filed, the Estate of Grimm filed an
amended complaint to include Randy Gleave Lawyer, the other judicial co-administrator, as WHEREFORE, the Decision of the lower court dated May 29, 2000 is
representative of the Estate. On April 28, 1993, the trial court admitted the amended hereby REVERSED and SET ASIDE, and another one rendered:
complaint.
1. Dismissing the complaint filed by Estate
After a lengthy trial, the trial court rendered its May 29, 2000 judgment[12] finding for the of Edward Miller Grimm for lack of merit;
Estate of Grimm, as plaintiff a quo, disposing as follows:
2. Ordering Manila Golf and Country Club,
1. Ordering defendants ESTATE OF CHARLES PARSONS and PATRICK Inc., and defendant-in-intervention Far East
C. PARSONS: Bank & Trust Company, as transfer agent, to
immediately effect the reconveyance of
1.1 to turn over [MC] No. 1088 to plaintiff [MC] No. 1088 to Intervenor-appellant G-P
ESTATE OF EDWARD MILLER GRIMM; and Company;

1.2 jointly and severally to pay damages to 3. Ordering Rizal Commercial Banking
plaintiff ESTATE in the amount of Corporation, as receiver, to immediately turn
P400,000.00 per annum from September 8, over to intervenor-appellant G-P and
1989 to November 12, 1998, with legal Company all income derived from the lease
interest thereon from the date of this of the playing rights of said Membership
Decision until fully paid; Certificate, less receivers fees;

1.3 Jointly and severally, to pay plaintiff 4. Ordering [the] Estate of Edward Miller
ESTATE attorneys fees in the amount of Grimm to pay appellants the amount of
P1,000,000.00 and the costs; P800,000.00 as attorneys fees;

2. Ordering defendant [MGCC] and defendant-in-intervention [FEBTC] to 5. Ordering Estate of Edward Miller Grimm
cancel [MC] No. 1088 and to issue a new Membership Certificate in lieu to pay appellants the costs of suit.
thereof in the name of plaintiff ESTATE .
SO ORDERED. (Words in bracket added.)
3. Ordering Receiver RIZAL COMMERCIAL BANKING Hence, this petition for review on the lone submission that the CA erred in finding that
CORPORATION to turn over to plaintiff ESTATE all income derived respondent G-P & Co. is the beneficial owner of MC No. 1088.
from the lease of the playing rights of [MC] No. 1088, less Receivers fees
and charges. In their comment to the petition, the respondents urge the outright dismissal thereof on the
ground that it raises only purely factual and evidentiary issues which are beyond the office of
4. Ordering the dismissal of the counterclaim of the defendants [Parsons]; an appeal by certiorari. As argued further, the factual findings of the CA are conclusive on the
and parties.

2
It should be made clear right off that respondent Patrick Parsons, in his individual capacity,
and the Estate of Parsons (collectively, the Parsons) are not claiming beneficial ownership
over MC No. 1088. The same goes for respondent MGCC which went to state on record that
[T]he ownership of [MC] No. 1088 (previously No. 590) does not belong to the Club and it
does not stand to gain from the determination of its real owner. [14]
We GRANT the petition.
The respondents formulation of the grounds for the dismissal of the instant petition is a
statement of the general rule. A resolution of the petition would doubtless entail a review of
the facts and evidentiary matters against which the appealed decision is cast, a procedure
which is ordinarily outside the province of the Court and the office of a certiorari review under
Rule 45 of the Rules of Court. For, the rule of long standing is that the Court will not set aside
the factual determinations of the CA lightly nor will it embark in the evaluation of evidence
adduced during trial. This rule, however, admits of several exceptions. Among these are when
the factual conclusions of the CA are manifestly erroneous; are contrary to those of the trial
court; when the judgment of the CA is based on misapprehension of facts or overlooked
certain relevant facts not disputed by the parties which, if properly considered, would justify a
different conclusion.[15] Decidedly, this case falls within the recognized exceptions to the rule
on the finality of factual findings or conclusions of the CA.
The principal issue tendered in this case turns on who between petitioner Estate of Grimm and
respondent G.P. & Co. beneficially owns MC No. 1088. Corollary thereto - owing to the
presentation by respondents of a LETTER OF TRUST that Parsons allegedly executed in favor
of G-P and Company with respect to MC No. 1088 - is the question of whether or not the
transfer of MC No. 590 effected on September 7, 1964 by Grimm in favor of Parsons resulted,
as the petitioner would have it, in the formation of a trust relation between the two. Thus
formed, the trust relationship would preclude the trustee from disposing of the trust property,
save when repudiation of the trust had effectively supervened.
The trial court found the September 7, 1964 Grimm- to- Parsons certificate transfer to be only
temporary and without valuable consideration to accommodate a third person and thus
adjudged Grimm to be the real owner of MC No. 590, as later replaced by MC No. 1088.
According to the trial court, such transfer created a trust, with Parsons, as trustee, and Grimm,
as the beneficial owner of the share thus transferred, adding that Parsons, as mere trustee, is
without right to transfer the replacement certificate to G-P & Co.
On the other hand, the CA, while eschewing the alternative affirmative defenses interposed
below by respondents, nonetheless ruled for respondent GP & Co. Citing Article 1448 of the
Civil Code,[16] the appellate court held that respondent GP & Co. pertains the beneficial
ownership of MC No. 1088, an implied trust in its favor having been created when MC No.
590 and MC No. 374 were acquired for and placed in the names of Grimm and Parsons,
respectively, albeit the partnership paid for the price therefor. To the appellate court, the fact
that these certificates were carried, as of December 31, 1974, November 27,
1977 and December 31, 1978 in the books[17] of G-P & Co. as investment assets only proves
one thing: the company paid the acquisition costs for the membership certificates. If Grimm
was the real owner of said share, he should have, according to the appellate court, objected to
its inclusion in the partnership assets during his lifetime. Completing its ratiocination, the CA
wrote:
xxx. A trust, which derives its strength from the confidence one reposes on
another especially between the partners and the company, does not lose
that character simply because of what appears in a legal document. The
transfer therefore of Grimms [MC] No. 590 on September 7, 1964 in favor
of Charles Parsons resulted merely in the change of the person of trustee
but not of the beneficial owner, the G-P and Company.
The CAs ruling does not commend itself for acceptance. As it were, the assailed decision
started on the wrong foot and thus had to limp all along to arrive at a strained and erroneous
conclusion. We shall explain.
A party in whose favor a legal presumption exists may rely on and invoke such legal
presumption to establish a fact in issue. He need not introduce evidence to prove that fact. For,
a presumption is prima facie proof of the fact presumed and to the party against whom it
operates rests the burden of overthrowing by substantial and credible evidence the
presumption.[18] Under the law on evidence, it is presumed that there was sufficient
consideration for a contract.[19]
Inasmuch as Grimms name appeared on MC No. 590 as registered owner thereof, he is
deemed to have paid sufficient consideration for it. The onus of proving otherwise would fall
on respondents G-P & Co. and/or the Parsons. Without so much of an explanation, however,
the CA minimized the value of MC No. 590 as arguably the best evidence of ownership.
Corollarily, the appellate court devalued the rule on legal presumption and faulted petitioner
Estate of Grimm for not presenting evidence to prove that Grimm paid for his original
acquisition of MC No. 590. Wrote the CA:
Contrary to the findings of the lower court, [petitioner] failed to establish
[its] right over the said shares. xxx Not a single evidence of proof of
payment for the said shares was ever presented by the [petitioner] to
establish ownership. (Words in bracket added.)[20]
Ironically, while the CA held it against the petitioner for failing to adduce proof of payment by
Grimm for his MC No. 590, it nonetheless proceeded to declare respondent G-P & Co. to be
the beneficial owner of said certificate even if it, too, had not presented proof for such
payment. Respondent G-P & Co., in its complaint-in-intervention (should have been answer-
in-intervention), did not allege paying for MC No. 590. Surely, payment cannot be validly
deduced, as the CA did, from the bare fact of such membership certificate being listed in the
books of respondent G -P & Co. as partnership investment assets. For one, the self-serving
book entries in question are, as correctly dismissed by the trial court, not evidentiary of
ownership. Else, anyone can lay a claim, or worse, acquire ownership over a share of stock by
the simple expedience of listing, without more, the same in the partnership or corporate books.
The sheer absurdity of the notion need no belaboring.
For another, what appears or what respondent company uniformly entered as
investments are: Manila Golf & Country Club, Inc. 2 shares. No reference was made
whatsoever in the books or financial statements about MC No. 590, (MC. No. 1088) and MC.
No. 374. In the absence of the number reference or other similar identifying details, the CAs
categorical conclusion that one of the 2 shares referred to is MC No. 1088 is at best
speculative. This observation becomes all the more valid given that Michael Parsons had in his
name two (2) Club share certificates. Exhibit X-4, a September 21, 1964 letter from Parsons to
Mr. Kaufmann made specific reference to Michaels shares:
3
Under the circumstance, please disregard the previous letter which Michael wrote in
connection with the shares in his name .
In the case of the two shares in the name of Michael, please leave the two in his
name . . . .
As matter now stands, in summary, I shall retain my shares in my name and continue
playing under such shares; Michael will retain two shares assigning one to
Mr. Stoner; and Pete Grimm will assign his playing rights to Mr. Daikichi
Yoshida.[21]
And for a significant third, respondent G-P & Co. is not the same G-P & Co. that Parsons,
Grimm and Simon organized in 1952, the former being an entity that came into existence only
on September 23, 1988. It is thus well-nigh impossible for respondent company to have
participated in a transaction that occurred years before it acquired juridical personality. In the
concrete, it is not physically possible for respondent G-P & Co. to have paid the price for the
purchase of Grimms MC No. 590, the same having been acquired in 1960 or some 28 years
before the respondent company was established by the execution of the Articles of Partnership
on September 23, 1988. The trial court depicted the incongruity of the situation in the
following fashion:
Intervenor [respondent G-P & Co.] is not the same partnership originally
formed by Grimm, Parsons and Simon. When Grimm died on November
27, 1977, the original partnership was dissolved. The death of a partner
causes dissolution of a partnership [Article 1829, Civil Code]. A new
partnership was formed with Parsons and Simon as partners. Besides this
new partnership formed after the death of Grimm, there were five (5)
others formed [Exhibit DD, EE, FF, GG, HH and II] carrying the name, G-
P and Company. [22] (Words in bracket in the original)
Independent of the cited Article 1829 of the Civil Code on the matter of partnership
dissolution, however, it bears to state that Parsons and Simon executed on December 13, 1977
a joint affidavit[23] wherein they declared the dissolution of the original 3-man G-P & Co.,
owing to the death of Grimm. The registration on December 14, 1977 of a new Articles of
Partnership of G-P & Co. followed the execution by Parsons and Simon of said affidavit. [24]
It may be, as respondents rationalize, that the succeeding G-P & Co. partnerships merely
continued with the business started by the original G-P & Co. [25] This element of continuity,
assuming to be true, does not, however, detract from the fact that the partnerships of the same
name formed after Grimms demise are entities altogether different and with personalities
distinct from the original partnership.
This brings us to the next issue of whether or not the transfer to Parsons of MC No. 590, as
replaced by MC No. 1088, partook of the nature of a trust transaction.
Trust is the legal relationship between one having an equitable ownership in property and
another person owning the legal title to such property, the equitable ownership of the former
entitling him to the performance of certain duties and the exercise of certain powers by the
latter.[26] Trust relations between parties may be express, as when the trust is created by the
intention of the trustor.[27] An express trust is created by the direct and positive acts of the
parties, by some writing or deed or by words evidencing an intention to create a trust; the use
of the word trust is not required or essential to its constitution, it being sufficient that a trust is
clearly intended.[28] Implied trust comes into existence by operation of law, either through
implication of an intention to create a trust as a matter of law or through the imposition of the
trust irrespective of, and even contrary to any such intention. [29]
Judging from their documented acts immediately before and subsequent to the actual transfer
on September 7, 1964 of MC No. 590, Parsons, as transferee, and Grimm, as
transferor, indubitably contemplated a trust arrangement. Consider:
There can be no quibbling, owing to the letter exchanges between the Club, in particular its
Honorary Secretary E. C. Von Kauffman, and Parsons, that the reason Grimm transferred
his MC No. 590 to Parsons was because of the latters wish to accommodate one Daikichi
Yoshida. Earlier, Parsons recommended to Club management the approval of
Mr. Yoshidas Application For Waiting List Eligible To [Club] Proprietary Membership. [30] In a
letter of August 10, 1964[31] to the MGCCs Board of Directors, Parsons endorsed the
application of Yoshida as Club member. While the Clubs response does not appear in its files,
it is quite apparent that Parsons addressed a letter to Kauffman requesting that Yoshida be
taken in as a Company assignee. In his reply-letter [32] of August 29, 1964, Kauffman explained
why he cannot, under Club rules, favorably act on Parsons specific request, but suggested a
viable solution, as follows:
Reference to your letter dated August 25th, there is a hitch of assigning the
playing rights to Mr. Daikichi Yoshida, as a company assignee.
xxx xxx xxx
The only solution that I see is that you transfer Pete Grimms 100 units to
your name and leave the other 100 units in your name, then you may
assign the playing rights of one of the certificates for 100 units to Mr.
Yoshida. Mr. Yoshida was approved by the Board but not as a Company
assignee. (Emphasis added.)
Parsons response to Kauffmans August 29, 1964 letter partly reads as follows:
Thank you for your letter of the 29th .
Under the circumstances, please disregard the previous letter which I
wrote with reference to Pete Grimms and my shares .
xxx xxx xxx
As matter now stands, in summary, I shall retain in my name and continue
playing under such shares . And Pete Grimm will assign his playing rights
to Mr. Daikichi Yoshida.
The conclusion easily deductible from the foregoing exchanges is that, given existing Club
restrictions, the simplest way to accommodate and qualify Yoshida for Club membership was
for Grimm to transfer his 100-unit share to Parsons who will then assign the playing rights of
that share to Yoshida.[33] The RTC aptly described the relevant factual situation, viz.:
With these exchanges between Parsons and Kauffman , it is apparent that
since the shares held by Parsons and Grimm are individual shares and not
company shares, their shares may not be assigned . The proposal of
Parsons that Pete Grimm will assign his playing rights to Yoshida was
rejected by Kauffman in his letter dated September 5, 1964 [Exhibit X-5 /
27] that Pete Grimms assignment to him (Yoshida) cannot be made as the
rules are that only members who holds (sic) 200 units may assign 100
units to an individual. A letter of the same date [Exhibit X-6 / 28] was sent
4
 by Kauffman to Mr. Yoshida informing him of his election to the Club
apologizing for the delay . Kauffman wrote further Mr. Charles Parsons
has made arrangement for to play (sic) as assignee of extra membership
which he now holds.
The election of Yoshida as assignee of a proprietary member and the
resignation of Grimm were approved by the Clubs Board on August 27,
1964. Kauffman and Parsons were still discussing the ways Mr Yoshida
can be accommodated as of September 5, 1964, but the resignation of
Grimm and election of Yoshida was already approved more than a week
before. [34] (Words in bracket in the original; Underscoring added.)
Even on the above factual perspective alone, it is not difficult to characterize, as did the trial
court, the certificate transfer from Grimm to Parsons, as temporary, there being no evidence
whatsoever that the transfer was for value. Such transfer was doubtless meant only to
accommodate Yoshida whose stay in the country was obviously temporary. As it
were, Yoshidas application[35] for Club membership juxtaposed with the August 10,
1964endorsement- letter[36] of Parsons, yielded the information that he (Yoshida) is the
manager of the Manila Liaison Office of Mitsubishi Shoji Kaisha desiring to acquire Company
membership in the name of his employer Mitsubishi to enable future representatives to avail
themselves of Club facilities. Since Club membership did not seem possible at the time,
Yoshida had to come in as an assignee of a proprietary member.
Other compelling evidence attest to the temporary nature of the transfer in question. The trial
court cited two in its Decision. Wrote that court:
Even a witness for the (respondents) intervenor and the Parsons, Celso
Jamias, Chief Accountant of G-P and Company, confirmed that the
transfer of the share to Parsons was temporary. In a letter [Exhibit 7-GG]
dated 10 August 1991 addressed to Atty. Patricia Cecilia B. Bisda, counsel
for G-P and Company, Jamais wrote:
. . . please be informed that the accommodation for Mr. Yoshida to
have playing rights has not bearing on the ownership of
the share. The share of Grimm (EMG) was transferred to
Mr. Charles Parsons (CP) to accommodate Mr. Yoshida
due to Manila Golf club requirements.
Atty. Patricia Cecilia B. Bisda echoed the view of Jamias, in a letter
[Exhibit Y] dated 30 August 1991 addressed to (the) then General
Manager of the Club: She wrote:
Also, we would like to clarify . That the accommodation
of Mr. Yoshida to enjoy the playing rights has no bearing
to the ownership of the shares. The share of Edward
Grimm was transferred to Charles Parsons to
accommodate D. Yoshida due to club requirements.[37]
Any lingering doubt, however, as to the temporary nature of the Grimm-to-Parsons transfer
should, in our view, be put to rest by what MGCC records-file contained and the testimony of
its former records custodian, Romeo Alhambra. In his affidavit of May 12, 1989, [38] Alhambra
stated that [A]ccording to Club records, the transfer of [MC] # 580 was only temporary, and
that Mr. Grimm was and, according to club records, is in fact the owner of [MC] # 1088 and
that after the transfer, Mr. Charles Parsons endorsed the share certificate and turned it over to
Kauffmann for safekeeping. Forming parts of the same records were letters both
dated February 28, 1968the day the share certificate transfer was effected separately
submitted by Grimm and Parsons, to inform MGCC of the temporary nature of the transfer. In
his letter, Grimm stated that MC No. 1088 is still my property and I wish it recorded as such in
the Clubs file.[39] Parsons letter[40] was just as simple as it was revealing, thus:
Reference to the transfer of [MC] #590 in the name of Mr. E.M. Grimm to
my name, for which I now have the new Certification No. 1088 , please be
advised that this transfer was made on a temporary basis and that said new
certificate is still the property of Mr. E.M. Grimm and I enclose the
certificate duly endorsed by me for safekeeping.
At bottom then, documented events immediately before and after the February 28, 1968 share
certificate conveyance in question veritably confirm the trust arrangement Parsons had or
intended to have with Grimm and vice versa, vis--vis MC No. 1088. If, as herein respondent
G-P & Co. posits at every turn, Parsons was its trustee, then the latters act of endorsing MC
No. 1088 in blank and then delivering the same to the Club for safekeeping instead of directly
to the G-P & Co. was without sense.
The trial court correctly described the relationship that was formed between Grimm and
Parsons, and the consequence of such relationship, as follows:
Since the transfer of Grimms share to Parsons was temporary, a trust was
created with Parsons as the trustee, and Grimm, the beneficial owner of
the share. The duties of trustees have been said, in general terms, to be: to
protect and preserve the trust property, and to see to it that it is employed
solely for the benefit of the cestui que trust. xxx Parsons as a mere trustee,
it is not within his rights to transfer the share to G-P and Company (sic).
The Court has, to be sure, considered the Letter of Trust[41] dated September 1, 1964 largely
because, in respondents own words, it provides the answer to the question of who the real
owner of MC #1088 is.[42] In the Letter he purportedly signed, Parsons declared holding MC
No. 374 and MC No. 1088 as NOMINEE IN TRUST for and in behalf of G-P AND COMPANY
or its nominee. This piece of document is not, however, a winning card for the respondents.
The trial court mentioned two compelling reasons why not, both reasons bearing on the due
execution and genuineness of the document. Wrote the court:
This LETTER OF TRUST was purportedly signed by Parsons on September
1, 1964. But the transfer of [MC] No. 590 was recorded (and MC No. 1088
issued) only on September 7, 1964 in the Clubs Proprietary Membership
Card No. 144 [Exhibit 8]. With the testimony of Celso B. Jamias, a long time
employee of G-P and Company, the doubt as to the genuineness of the
signature of Parsons on the LETTER OF TRUST was brought to light.
Jamias was cross-examined on the signatures of Parsons on several
documents including the signature of the LETTER OF TRUST:
Q: How about the signature appearing on Exhibit CC-1 ?
A: This is Charles Parsons, sir.
5

Q:- You are familiar with the signature?
A: Yes, sir.
Q: - Im showing you Exhibit I which is a letter of trust dated September 1,
1964, comparing those signatures which you identified above the printed
name C. Parsons there are, two signatures, the signatures you identified
earlier and the one appearing on the letter of trust are similar in the sense
that the s of Parsons is elevated and it slopes down, is that correct?
xxx xxx xxx
A:- Based on how I see, this doesnt seem to be the signature of Parsons, it
looks like but it is not, sir. [TSN, May 4, 1999, pp 5-6]. (Words in
parenthesis added.)
And lest it be overlooked, Parsons had previously acknowledged Grimm to be the owner of
MC No. 1088, after his earlier repeated declarations that the transfer of the replaced MC No.
580 was temporary. Parsons was thus in contextually in estoppel to deny, thru the Letter of
Trust aforementioned, hypothetically assuming its authenticity, Grimms ownership of the
replacement certificate.
Summing up, the Court finds the evidence adduced and admitted by the trial court more than
adequately supporting a conclusion that MC No. 1088 was issued to and held by Parsons as
the trustee thereof of Grimm or his estate. The fact that respondent G-P & Co. may have paid,
starting 1992, as evidence discloses, the membership fees due on MC No. 1088 does not make
Grimm less of a beneficial owner. Such payment, needless to stress, is not a mode of acquiring
ownership.
Parenthetically, the CA is observed to have said that in the settlement of the estate of Parsons,
MC No. 1088 was not included in the list of stocks owned by him. And from this
inconsequential event, the appellate court would conclude that the estate administrator
recognized Parsons to be a mere trustee of such certificate. While the decision does quite say
so, the implication is that Parsons was the trustee of G -P & Co.
We cannot agree with this non-sequitur approach which, at bottom, clearly tends to lower the
evidentiary bar for respondents. Needless to stress, it is not for the CA and all courts for that
matter to compensate for a burden of proof not discharged or a quantum of evidence not met.
The Court cannot, for two reasons, also lend cogency to the CAs observation that the heirs of
Grimm may have had waived, abandoned or denounced their rights to the trust property when,
for P100,000.00, they executed a Deed of Acknowledgment of Satisfaction of Partnership
Interests.[43] Firstly, the deed, as a quitclaim instrument, did not mention any share certificate at
all, which is only logical since MC No. 1088 was not a partnership asset in the first place.
Secondly, the intention to waive a known right must be clear and unequivocal. In this case, the
intent to renounce beneficial ownership of MC No. 1088 cannot reasonably be drawn from the
tenor of the quitclaim document. For perspective, what the heirs of Grimm stated in the Deed
of Acknowledgment is that the amount of P100,000.00 they received represents the total
liquidation and complete settlement of the entire partnership interests pertaining to the late
Edward Miller Grimm as partner in G-P AND COMPANY. If, to borrow from Thompson v.
Court of Appeals,[44] we apply the standard norm on how a waiver must be
formulated, then clearly the general terms of the aforementioned deed merely indicate a
clearance from general accountability, not specifically an abandonment of ownership of the
disputed share. For:
xxx. Settled is the rule that a waiver to be valid and effective must, in the
first place, be couched in clear and unequivocal terms which leave no
doubt as to the intention of a party to give up a right or benefit which
legally pertains to him. xxx Awaiver may not be attributed to a person
when the terms thereof do not explicitly and clearly evidence an intent to
abandon a right vested in such person. If we apply the standard rule that
waiver must be cast in clear and unequivocal terms, then clearly the
general terms of the cited release and quitclaim indicates merely a
clearance from general accountability, not specifically a waiver of
Amchams beneficial ownership of the disputed shares.[45]
In all, the facts and circumstances attendant militate against the CAs finding pointing to G-P &
Co. as the beneficial owner of MC No. 1088. What the evidence adduced instead proved
beyond cavil is that Grimm or his estate is such owner. We therefore reverse.
WHEREFORE, the herein assailed decision of the Court of Appeals
is REVERSED and SET ASIDE, and the Decision of
the Regional Trial Court of Makati City in Civil Case No. 92-2452 is REINSTATED.
Costs against the respondents.
SO ORDERED.
FREDERICK GARFIELD WAITE, Plaintiff-Appellee, v. JAMES J.
PETERSON, ET AL., Defendants-Appellants.
Hartigan, Rohde & Gutierrez, for Appellants.
Frederick Garfield Waite, in his own behalf.
SYLLABUS
1. WRONGFUL TAKING OF PROPERTY; SALE OR TRANSFER; ACTION BY
THE TRANSFEREE. When the property of one person is unlawfully taken
by another, the former has a right of action against the latter for the
recovery of the property or for damages for the taking or retention, and he
is entitled to his choice of these two remedies. This is also a right which
may be transferred by the sale or assignment of the property, and the
transferee can maintain either action against the wrongdoer.
2. ID.; ID.; ID.; RESPONSIBILITY OF THE SHERIFF. When, however, the
owner seeks to make the sheriff responsible for such wrongful act he
must, in order to preserve his right against the sheriff, comply with the
provisions of section 451 of the Code of Civil Procedure.
6

3. LEVY UPON PROPERTY; RESPONSIBILITY OF THE CREDITOR. If a
sheriff levies upon property at the instance of a creditor and is indemnified
by the latter, the creditor is thenceforward liable for the acts of the sheriff
with respect to the property.
DECISION
WILLARD, J. :
The appellant (Kwong We Shing) has not caused the proof in this case to
be brought here. The only question therefore is whether the facts admitted
in the pleadings and those found by the court below in its decision sustain
the judgment appealed from. That court found among other things as
follows:jgc:chanrobles.com.ph
"From the evidence presented at the trial, the court finds that on
December 8, 1905, one Henry Manheim delivered to L.K. Tiao Eng a
diamond ring one consignment for 800 pesos, to be returned, if not sold,
in sixty days; that on the 22d day of January, 1906, while the ring was in
the possession of L.K. Tiao Eng, the defendant, as sheriff of Manila, levied
upon the said ring; that on the 23d day of January, 1906, the
aforementioned Henry Manheim, for value received, assigned all his right
to and interest in said ring to the said plaintiff herein; that on the 25th day
of January, 1906, the plaintiff made demand upon the sheriff of Manila,
who had made the levy, as before said, for the said ring, and alleged the
value thereof to be 800 pesos; that the sheriff was indemnified by the
judgment creditor, in whose favor the levy had been made, as provided by
law, and retained possession of the ring and sold the same at public sale;
that the said Henry Manheim has never been paid for the said ring, in
accordance with the terms of the contract hereinbefore mentioned or any
part thereof; that at the time of the levy by the sheriff upon the said ring,
as before stated, the said Henry Manheim was the owner of and entitled to
possession of the said ring; that while the ring was in the possession of
the sheriff the said Henry Manheim transferred his ownership and right to
possession of said ring to plaintiff herein and that the plaintiff thereupon
became the owner and entitled to possession of said ring."cralaw
virtua1aw library
Judgment was rendered against both of the defendants for the return of
the ring, and, if that could not be had, for the sum of 725 pesos, with
interest, and costs.
I. The appellant claims that by the terms of section 451 of the Code of
Civil Procedure this action can not be maintained by the plaintiff because
he was not the owner of the ring at the time the levy was made. In other
words, as we understand it, his claim is that no action for the value of the
property taken can be maintained except by the person who was the
owner thereof at the time it was seized by the sheriff. We do not think that
this contention can be sustained. Said section 451 is as
follows:jgc:chanrobles.com.ph
"Claims by third persons to property levied on. Property levied on can
be claimed by a third person as his property, by a written claim, verified
by the oath of such claimant, setting out his title thereto, his right to
possession thereof, stating the ground of such title, and served upon the
governor, or his deputy, or officer making the levy. The officer in such
case is not bound to keep the property, unless the plaintiff, or the person
in whose favor the writ of execution runs, on demand, indemnify the
officer against such claim by an obligation, signed by the plaintiff, with
good and sufficient surety, and no claim to such property shall be valid
against the officer, or shall be received or be notice of any rights against
him, unless made as herein provided; but nothing herein contained shall
prevent such third person from vindicating his claim to the property by any
proper action."cralaw virtua1aw library
The vice in the argument of the appellant consist in the fact that he
assumes that section 451 is the only law which gives the plaintiff a right of
action against the sheriff, and that if he is not included within that section,
he can not maintain any action. This is manifestly erroneous. So far from
being the origin of any rights on the part of the owner of property
wrongfully taken by the sheriff, it is rather a limitation upon his rights
previously existing. If property of a person is taken by the sheriff upon an
execution against another person, the sheriff is liable thereof in the
absence of statute, as any private person would be. When ones property
is wrongfully taken by another, the former has a right of action against the
person who interfered with his property, whether for the recovery of the
property itself or for damages for its taking, and he has his choice of these
remedies. If section 451 did not exist, by the general principles of the law
the sheriff would always be responsible for wrongfully taking the property
of another. For the purpose of limiting the responsibility of the sheriff in
such cases, and to provided that some notice should be given to him of
the claims of third persons, this section requires such third persons to
make such claims in writing, so that the sheriff, after the notice is given to
him, can decide for himself whether he will proceed with the levy or
abandon the property.
The right of action given by the general principles of law to the person
whose property has wrongfully been taken from him, either to recover
damages or the possession of the property, is a right which can be
transferred by him, and his transferee can maintain either one of these
actions against the wrongdoer. On this first claim of the appellant, then,
the only question is whether this section 451 has taken away from the
assignee of the owner his right to maintain an action to recover the value
7
of the property.
An examination of the section will show that there is no distinct
statements therein, that the claim can only be made by a person who was
the owner of the property at the time the levy was made. As the section is
written, we do not think that it should be so construed. Such a
construction would, in case of the involuntary transfer of rights, deprive
the transferee of actions which might be absolutely necessary to him for
the protection of his interest. If we so construed the section, we should
have the levy his executor or administrator would have no right to make a
claim against the sheriff for the return of the property and would be
deprived of an action against the sheriff for the recovery of damages for
such wrongful taking. The same rule would have to be made if an order in
bankruptcy was passed against the owner of the property the day after the
levy. We do not think that the section requires any such construction.
II. It is further claimed by the appellant that in no event should judgment
have been entered against him that is to say, against Kwong We Shing.
It will be noticed that the court found that the sheriff was indemnified by
the judgment creditor. This statement is sufficient to make the judgment
creditor liable for the acts of the sheriff. In the case of Lovejoy v. Murray
(3 Wall. U.S., 1) the court said, at page 9:jgc:chanrobles.com.ph
"The demand for indemnity, and the giving of it by the defendants,
proceeded upon the supposition that the sheriff would without it go no
further in that direction, but would give up the property to the claimant,
the present plaintiff, and make his peace on the best terms he could. By
the present statute of Iowa he had a right to do this, if the plaintiff in
attachment refused to assume the hazard of indemnifying him. And if
there were no such statute, he had a right to deliver the property to the
claimant, and risk a suit by the plaintiff in attachment rather than a
contest with a rightful claimant of the goods.
"The giving of the bond by the present defendants must, therefore, be
held equivalent to a personal interference in the course of the proceeding,
by directing or requesting of the defendants in attachment. In doing this
they assumed the direction and control of the sheriffs future action, so far
as it might constitute a trespass, and they became to that extent the
principals, and he their agent in the transaction. This made them
responsible for the continuance of the wrongful possession and for the sale
and conversion of the goods; in other words, for all the real damages
which plaintiff sustained."cralaw virtua1aw library
The judgment of the court below is affirmed, with the costs of this instance
against the appellant, Kwong We Shing. So ordered.
DEPARTMENT OF EDUCATION, G.R. No. 161758
DIVISION OF ALBAY
represented by its SCHOOLS Present:
DIVISION SUPERINTENDENT,
Petitioner, QUISUMBING, J., Chairperson,
CARPIO,
CARPIO MORALES,
- versus - TINGA, and
VELASCO, JR., JJ.
Promulgated:
CELSO OATE,
Respondent. June 8, 2007
x-----------------------------------------------------------------------------------------x
DECISION
VELASCO, JR., J.:
A little neglect may lead to great prejudice.
The Case
This is a Petition for Review on Certiorari [1] under Rule 45 seeking to reverse and set
aside the January 14, 2004 Decision[2] of the Court of Appeals (CA) in CA-G.R. CV No.
60659, which affirmed the November 3, 1997 Decision [3] of the Legaspi City Regional Trial
Court (RTC), Branch I, declaring as null and void the December 21, 1998 Deed of
Donation[4] executed by the Municipality of Daraga, Albay in favor of petitioner, and
directing the latter to return to respondent Celso Oate the possession of the portion of land
occupied by the school site of the Daraga North Central Elementary School.
The Facts
Spouses Claro Oate and Gregoria Los Baos owned Lot No. 6849 (disputed lot) with
an area of around 27,907 square meters registered under the Torrens System of land
registration under Original Certificate of Title (OCT) No. 2563. Claro Oate had three children,
namely: Antonio, Rafael, and Francisco, all surnamed Oate. Respondent Celso Oate is the
grandson of Claro Oate, being the son of Francisco Oate.
In 1940, Bagumbayan Elementary School of Daraga was constructed on a portion of
the disputed lot. The school was eventually renamed Daraga North Central Elementary
School. The Municipality of Daraga leveled the area while petitioner Department of Education
Culture and Sports (DECS; now Department of Education [DepEd]) developed and built
various school buildings and facilities on the disputed lot.
Sometime in 1991, respondent filed a reconstitution proceeding of OCT No. 2563
which was granted by the Legaspi City RTC, Branch V after due notice, publication, and
hearing. Consequently, OCT No. RO-18971[5] was issued in the name of spouses Claro Oate
and Gregoria Los Baos.
On August 26, 1991, a Deed of Extrajudicial Settlement of Estate and Cession was
executed by respondent and his three (3) sisters, namely: Melba O. Napil, Cielo O. Lardizabal,
and Maria Visia O. Maldo, who waived their successional rights in favor of respondent Celso
Oate. Asserting that the disputed lot was inherited by his father, Francisco Oate, from the
latters father, Claro Oate, by virtue of a prior partition among the three (3) sons of Claro Oate
8
and Gregoria Los Baos, respondent in turn claimed ownership of said lot through the deed of
extrajudicial settlement.
Meanwhile, the issue of whether respondents father, Francisco Oate, truly acquired
the disputed lot through a prior partition among Claro Oates three (3) children had been passed
upon in another case, Civil Case No. 8724 for Partition, Reconveyance and Damages filed by
the heirs of Rafael Oate before the Legaspi City RTC, Branch IX. [6] In said case, respondent
Celso Oate, the defendant, prevailed and the case was dismissed by the trial court.
Thereafter, respondent caused Lot No. 6849 to be subdivided into five (5) lots, all
under his name, except Lot No. 6849-B which is under the name of Mariano M.
Lim. On October 26, 1992, the subdivided lots were issued Transfer Certificate of Titles
(TCTs): (1) Lot No. 6849-A (13,072 square meters) under TCT No. T-83946; [7] (2) Lot No.
6849-B (3,100 square meters) under TCT No. T-84049; [8] (3) Lot No. 6849-C (10,000 square
meters) under TCT No. T-83948;[9] (4) Lot No. 6849-D (1,127 square meters) under TCT No.
T-83949;[10] and (5) Lot No. 6849-E (608 square meters) under TCT No. T-83950.[11]
On December 15, 1992, through his counsel, respondent sent a letter to petitioner
apprising it about the facts and circumstances affecting the elementary school and its
occupancy of Lot No. 6849-A with an area of 13,072 square meters. Respondent proposed to
petitioner DECS that it purchase Lot No. 6849-A at the Fair Market Value (FMV) of PhP 400
per square meter and also requested for reasonable rentals from 1960. [12] The records show that
then DECS Director IV Jovencio Revil subsequently referred the matter to the DECS Division
Superintendent Rizalina D. Saquido for investigation. [13]
On February 24, 1993, through his counsel, respondent likewise wrote to Engr.
Orlando Roces, District Engineer, Albay Engineering District about the on-going construction
projects in the school.[14] Engr. Roces then informed respondents counsel that petitioner DECS
is the owner of the school site having acquired the disputed lot by virtue of a Deed of
Donation executed by the Municipality of Daraga, Albay in favor of petitioner.[15]
Consequently, on March 18, 1993, respondent instituted a documentary exhibits of Tax Declaration No. 30235 issued in the name of the late Claro Oate,
Complaint[16] for Annulment of Donation and/or Quieting of Title with Recovery of
Possession of Lot No. 6849 located at Barrio Bagumbayan, Daraga, Albay before the Legaspi
City RTC, docketed as Civil Case No. 8715, against petitioner DECS, Division of Albay,
represented by the Division Superintendent of Schools, Mrs. Rizalina D. Saquido; and the
Municipality of Daraga, Albay, represented by the Municipal Mayor, Honorable Cicero
Triunfante.
In its April 28, 1993 Answer,[17] the Municipality of Daraga, Albay, through Mayor
Cicero Triunfante, denied respondents ownership of the disputed lot as it alleged that
sometime in 1940, the Municipality bought said lot from Claro Oate, respondents grandfather,
and since then it had continually occupied said lot openly and publicly in the concept of an
owner until 1988 when the Municipality donated the school site to petitioner DECS; thus
asserting that it could also claim ownership also through adverse possession. Moreover, it
claimed that the disputed lot had been declared in the name of defendant municipality in the
Municipal Assessors Office under Tax Declaration No. 31954 from 1940 until 1988 for
purposes of exemption from real estate taxes. Further, defendant Municipality contended that
respondent was guilty of laches and was estopped from assailing ownership over the disputed
lot.
Similarly, petitioners April 29, 1993 Answer [18] reiterated in essence the defenses
raised by the Municipality of Daraga, Albay and further contended that respondent had no
cause of action because it acquired ownership over the disputed lot by virtue of a Deed of
Donation executed on December 21, 1988 in its favor; and that respondents claim was vague
as it was derived from a void Deed of Extrajudicial Settlement of Estate and Cession disposing
of the disputed lot which was already sold to the Municipality of Daraga, Albay in
1940. Petitioner likewise assailed the issuance of a reconstituted OCT over Lot 6849 when the
lower court granted respondents petition for reconstitution without notifying petitioner.
During the ensuing trial where both parties presented documentary and testimonial
evidence, respondent testified that he came to know of the disputed lot in 1973 when he was
23 years old; that he took possession of the said lot in the same year; that he came to know that
the elementary school occupied a portion of the said lot only in 1991; and that it was only in
1992 that he came to know of the Deed of Donation executed by the Municipality of Daraga,
Albay.[19] Also, Felicito Armenta, a tenant cultivating a portion of disputed Lot 6849, testified
that respondent indeed owned said lot and the share of the crops cultivated were paid to
respondent.[20]
However, after respondent testified, defendants in said case filed a Joint Motion to
Dismiss[21] on the ground that respondents suit was against the State which was prohibited
without the latters consent. Respondent countered with his Opposition to Joint Motion to
Dismiss.[22] Subsequently, the trial court denied the Joint Motion to Dismiss, ruling that the
State had given implied consent by entering into a contract. [23]
Aside from the reconstituted OCT No. RO-18971, respondent presented the TCTs
covering the five (5) portions of the partitioned Lot 6849, Tax Declaration No. 04-006-
00681[24] issued for said lot, and the April 20, 1992 Certification [25] from the Office of the
Treasurer of the Municipality of Daraga, Albay attesting to respondents payment of realty
taxes for Lot 6849 from 1980 to 1990.
After respondent rested his case, the defense presented and marked their
which was cancelled in 1938; Tax Declaration 31954, [26] which cancelled Tax Declaration No.
30235, in the name of Municipality of Daraga with the annotation of Ex-Officio Deputy
Assessor Natalio Grageda attesting to the purchase by the Municipality under Municipal
Voucher No. 69, August 1940 accounts and the issuance of TCT No. 4812 in favor of the
Municipality; Tax Declaration No. 8926 [27] in the name of the Municipality which cancelled
Tax Declaration No. 31954; and the subsequent Tax Declaration Nos. 22184, [28] 332,[29] and 04-
006-00068.[30]
The defense presented the testimony of Mr. Jose Adra, [31] the Principal of Daraga
North Central Elementary School, who testified on the Municipalitys donation of disputed Lot
6849 to petitioner and the improvements on said lot amounting to more than PhP 11 million;
and Mrs. Toribia Milleza, [32] a retired government employee and resident of Bagumbayan,
Daraga, Albay since 1955, who testified on the Municipalitys continuous and adverse
possession of the disputed lot since 1940.
As mentioned earlier, Civil Case No. 8724 for Partition, Reconveyance and
Damages was instituted by the heirs of Rafael Oate in Legaspi City RTC, Branch IX against
Spouses Celso Oate and Allem Vellez, involving the same disputed lot. Petitioner and co-
defendant Municipality of Daraga, Albay were about to file a complaint for intervention in
9
said case, but it was overtaken by the resolution of the case on August 14, 1995 with the trial
court dismissing the complaint.
The Ruling of the RTC
On November 3, 1997, the trial court rendered a Decision in favor of respondent
Celso Oate. The dispositive portion declared, thus:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of the plaintiff and against the defendants:
1. Declaring the Deed of Donation executed by the
Municipality of Daraga, Albay in favor of the defendant
Department of Education Culture and Sports through the
Albay Schools Division as null and void;
2. Declaring the plaintiff as the owner in fee simple of Lots
Nos. 6849-A, 6849-C, 6849-D and 6849-E which are
registered in his name;
3. Commanding the defendants to return the possession of the
portion of the land occupied by the school site to the herein
plaintiff Celso Oate;
4. Ordering the plaintiff for reason of equity, to pay the
defendant Municipality of Daraga, Albay the amount of
Fifty Thousand (50,000.00) Pesos pursuant to Article 479
of the New Civil Code of the Philippines;
5. The defendant Department of Education Culture and
Sports being a builder in good faith, the provisions of
Article 448 of the New Civil Code of the Philippines shall
be observed by the parties; and
6. Ordering the defendants to pay the costs of the suit. No
attorneys fees is hereby adjudged in favor of plaintiffs
counsel.
SO ORDERED.[33]
The trial court ratiocinated that it was clear that subject Lot 6849 was originally
registered under the Torrens System in the name of Spouses Claro Oate and Gregoria Los
Baos as evidenced by OCT No. RO-18971.The right of respondent Celso Oate over the
disputed lot had not been proven otherwise or overturned in Civil Case No. 8724, and this was
bolstered by the Deed of Extrajudicial Settlement of Estate and Cession, where respondents
sister waived their successional rights in his favor. Thus, the trial court ruled in favor of
respondents title. Besides, it further ruled that defendants could not assail the registered title of
respondent in a collateral proceeding.
While the Municipality of Daraga, Albay anchored its prior ownership over the
disputed lot by virtue of a sale in 1940 and mentioned TCT No. 4812 supposedly issued in its
name, it however failed to submit any deed of conveyance in its favor, as well as a copy of the
alleged TCT No. 4812. Hence, the trial court held that its claim over disputed Lot 6849 was
based solely on adverse prescription which could not prevail over respondents registered title.
The trial court concluded that given these factual and evidentiary proofs, petitioner
had no right to occupy Lot 6849-A, and the Deed of Donation executed by
the Municipality of Daraga, Albay in favor of petitioner must be nullified. Finally, the trial
court awarded PhP 50,000 to the Municipality of Daraga, Albay for the cost of landfill and
ordered that Article 448[34] of the New Civil Code be followed by the parties as petitioner was
a builder in good faith.
The Ruling of the Court of Appeals
Aggrieved, petitioner DECS and Municipality of Daraga, Albay filed their
respective Notices of Appeal [35] assailing the trial courts Decision before the CA. However,
on June 17, 1998, the appellate court declared the appeals of both petitioners abandoned and
dismissed for their failure to pay the required docket fees within the reglementary period.
[36]
Petitioner then filed a Motion for Reconsideration [37] of the said June 17, 1998Resolution
and its appeal was subsequently reinstated. [38] The Municipality of Daraga, Albay, however,
totally lost its appeal due to inaction, and the appellate court correspondingly issued a Partial
Entry of Judgment on July 9, 1998.[39]
Moreover, the appellate court held that there was no jurisdictional defect in the
reconstitution proceeding being one in rem, and in the issuance of OCT No. RO-18971 based
on the destroyed or lost OCT No. 2563, even if no notice was sent to petitioner. Thus, the CA
ruled that respondents claim of ownership over Lot 6849-A occupied by the school is
conclusive for being soundly predicated on TCT No. T-83946 which cancelled the
reconstituted OCT No. RO-18971. Furthermore, it reiterated the trial courts holding that
petitioner is precluded from attacking collaterally respondents title over the disputed lot in this
proceeding.
The CA emphasized that petitioners failure to present TCT No. 4812allegedly issued
in the name of the Municipality of Daraga, Albay in 1940 in lieu of OCT No. 2563 and the
Deed of Conveyance executed by the original owner, Claro Oate, in favor of the
Municipalitywas fatal to the defense. It reasoned that all the more had their claim of ownership
become doubtful when defendants-appellants [sic] failed to explain from their pleadings and
the evidence submitted before Us their failure to present the two documents. [40] The appellate
court concluded that given these facts, no title in the name of the Municipality ever existed
and thus it could not have validly donated the subject property to petitioner.
Anent the issue of the applicability of Amigable v. Cuenca,[41] the CA affirmed the
doctrine enunciated in said case that to uphold the States immunity from suit would subvert
the ends of justice. In fine, the appellate court pointed out the inconvenience and impossibility
of restoring possession of Lot 6849-A to respondent considering the substantial improvements
built on said lot by the government which amounted to almost PhP 12 million; and that the
only relief available was for the government to pay just compensation in favor of respondent
computed on the basis of the value of the property at the time of the governments taking of the
land.
10
 Through its assailed Decision,[42] the CA dismissed petitioners appeal for lack of suit against the former, nonetheless, considering our resolution of the main issue below, this
merit and affirmed the trial courts decision in toto. It reasoned that laches does not apply, its issue is deemed mooted. Besides, at this point, we deem it best to lift such procedural
application rests on the sound discretion of the court, and where the court believes that its technicality in order to finally resolve the long litigation this case has undergone. Moreover,
application would result in manifest wrong or injustice, it is constrained not to be guided even if we give due course to said issue, we will arrive at the same ruling.
strictly by said doctrine. Besides, it opined that laches could not defeat the rights of a
registered owner. The Republic of the Philippines need not be impleaded as a party-defendant in Civil
Case No. 8715 considering that it impliedly gave its approval to the involvement of petitioner
The Issues DECS in the Deed of Donation. In a situation involving a contract between a government
department and a third party, the Republic of the Philippines need not be impleaded as a party
Hence, we have the instant petition where petitioner raises the following assignment to a suit resulting from said contract as it is assumed that the authority granted to such
of errors: department to enter into such contract carries with it the full responsibility and authority to sue
and be sued in its name.
I
THE COURT OF APPEALS ERRED IN AFFIRMING THE
TRIAL COURTS FINDING THAT RESPONDENTS CAUSE
OF ACTION TO RECOVER POSSESSION OF THE Main Issue: Equitable Remedy of Laches
SUBJECT PROPERTY IS NOT YET BARRED BY LACHES.
Petitioner strongly asserts that the Municipality of Daraga, Albay had continuous,
II open, and adverse possession in the concept of an owner over the disputed lot since 1940
THE COURT OF APPEALS ERRED IN ACCORDING GREAT until December 21, 1988 or for about 48 years. Significantly, it maintains that Tax Declaration
WEIGHT ON RESPONDENTS RECONSTITUTED No. 31954 covering the disputed lot in the name of the Municipality of Daraga, Albay contains
ORIGINAL CERTIFICATE OF TITLE (OCT) NO. 2563 an annotation certifying that said lot was under voucher No. 69, August, 1940 accounts. The
COVERING SUBJECT PROPERTY. corresponding Transfer Title No. 4812 has been issued by the Register of Deeds Office of
Albay on August 3, 1940.[45]
III
When petitioner received the lot as donation from the Municipality on December 21,
THE COURT OF APPEALS ERRED IN RULING THAT 1988, it possessed the subject lot also in the concept of an owner and continued to introduce
PETITIONER MAY BE SUED IN VIOLATION OF THE improvements on the lot.Consequently, when respondent instituted the instant case in 1993,
STATES IMMUNITY FROM SUIT. petitioner and its predecessor-in-interest Municipality of Daraga, Albay had possessed the
subject lot for a combined period of about fifty two (52) years.
IV
THE COURT OF APPEALS ERRED IN RULING THAT Petitioner strongly avers that Claro Oate, the original owner of subject lot, sold it to
PETITIONER MAY BE SUED INDEPENDENTLY OF THE the Municipality. At the very least it asserts that said Claro Oate allowed the Municipality to
REPUBLIC OF THE PHILIPPINES.[43] enter, possess, and enjoy the lot without protest. In fact, Claro Oate neither protested nor
questioned the cancellation of his Tax Declaration No. 30235 covering the disputed lot and its
substitution by Tax Declaration No. 31954 in the name of the Municipality on account of his
Petitioner basically raises two issuesthe application of laches and the non-suability sale of the lot to the latter. In the same vein, when Claro Oate and his spouse died, their
of the State. children Antonio, Rafael, and Francisco who succeeded them also did not take any steps to
question the ownership and possession by the Municipality of the disputed lot until they died
The threshold issue is whether petitioner DECS can be sued in Civil Case No. 8715 on June 8, 1990, June 12, 1991, and October 22, 1957, respectively.
without its consent. A supplementary issue is whether petitioner DECS can be sued
independently of the Republic of the Philippines. Petitioner maintains that significantly, respondent and his siblings succeeding their
We rule that petitioner DECS can be sued without its permission as a result of its father Francisco as the alleged owners, from his death on October 22, 1957also did not take
being privy to the Deed of Donation executed by the Municipality of Daraga, Albay over the any action to recover the questioned lot from 1957 until 1993 when the instant suit was
disputed property. When it voluntarily gave its consent to the donation, any dispute that may commenced. Petitioner avers that if they were really the owners of said lot, they would not
arise from it would necessarily bring petitioner DECS down to the level of an ordinary citizen have waited 52 long years to institute the suit assuming they have a cause of action against the
of the State vulnerable to a suit by an interested or affected party. It has shed off its mantle of Municipality or petitioner. Thus, petitioner submits that the equitable principle of laches has
immunity and relinquished and forfeited its armor of non-suability of the State. [44] indubitably set in to bar respondents action to recover possession of, and title to, the disputed
lot.
The auxiliary issue of non-joinder of the Republic of the Philippines is likewise
resolved in the negative. While it is true that petitioner is an unincorporated government Laches and its elements
agency, and as such technically requires the Republic of the Philippines to be impleaded in any

11
 Indeed, it is settled that rights and actions can be lost by delay and by the effect of
delay as the equitable defense of laches does not concern itself with the character of the
defendants title, but only with plaintiffs long inaction or inexcusable neglect to bar the latters
action as it would be inequitable and unjust to the defendant.
Laches is defined as the failure or neglect, for an unreasonable and unexplained
length of time, to do that whichby the exercise of due diligencecould or should have been done
earlier.[46] Verily, laches serves to deprive a party guilty of it to any judicial remedies. Its
elements are: (1) conduct on the part of the defendant, or of one under whom the defendant
claims, giving rise to the situation which the complaint seeks a remedy; (2) delay in asserting
the complainant's rights, the complainant having had knowledge or notice of the defendant's
conduct as having been afforded an opportunity to institute a suit; (3) lack of knowledge or
notice on the part of the defendant that the complainant would assert the right in which the
defendant bases the suit; and (4) injury or prejudice to the defendant in the event relief is
accorded to the complainant, or the suit is not held barred. [47]
In Felix Gochan and Sons Realty Corporation, we held that [t]hough laches applies
even to imprescriptible actions, its elements must be proved positively. Laches is
evidentiary in nature which could not be established by mere allegations in the pleadings and
can not be resolved in a motion to dismiss (emphases supplied). [48] In the same vein, we
explained in Santiago v. Court of Appeals that there is no absolute rule as to what constitutes
laches or staleness of demand; each case is to be determined according to its particular
circumstances.[49]
Issue of laches not barred by adverse judgment
against Daraga, Albay
It is unfortunate that defendant Municipality of Daraga, Albay lost its appeal in CA-G.R. CV
No. 60659 before the CA for its failure to pay the required docket fees within the reglementary
period. As a result, a Partial Entry of Judgment was made on July 9, 1998 and consequently,
the dispositions in the November 3, 1997 Decision, rendered by the Legaspi City RTC, Branch
I in favor of respondent Celso Oate, became final and executory as against defendant
Municipality of Daraga, Albay.
As an off-shoot, with respect to the Municipality of Daraga, the Deed of Donation in
favor of petitioner DECS was annulledrespondent Oate was declared owner in fee simple of
the disputed lots and entitled to possession but was required to pay PhP 50,000 to the Daraga
Municipal Government and the costs of suit. By reason of the finality of the Decision against
the Municipality of Daraga, Tax Declaration Nos. 04-006-00068, 332, 22184, 31954, and 8926
are all cancelled and annulled (if not yet cancelled).
What are the effects of the final judgment against Municipality of Daraga on its co-defendant,
petitioner DECS?
Generally, it has no impact on the appeal of DECS unless the decision affects its defenses. In
this petition, DECS no longer questions the declaration of nullity of the Deed of Donation over
the disputed lot and hence can be considered as a final resolution of the issue. Likewise, it
does not challenge the ownership of Oate of the disputed lots, but merely relied on the defense
of laches. The final directive for Municipality of Daraga to return possession of the land has
no significance on DECS appeal since precisely, it is DECS position that it should retain
possession of the land. From these considerations, the final RTC November 3, 1997 Decision
against the Municipality of Daraga has no substantial and material effect upon the DECS
appeal.
The only remaining issue left is whether laches can inure to the benefit of petitioner
DECS considering the fact that Lot No. 6849-A was devoted to public education when the
elementary school was built in 1940 under the supervision and control of DECS up to 1993
when Civil Case No. 8715 was filed by respondent Oate.
We rule in the affirmative.
Laches has set in
A brief scrutiny of the records does show tell-tale signs of laches. The first element
is undisputed: the then Bagumbayan Elementary School of Daraga was constructed in 1940 on
a portion of disputed Lot 6849, specifically Lot No. 6849-A containing 13,072 square meters
under TCT No. T-83946. Moreover, Mrs. Toribia Milleza, [50] a retired government employee
and resident of Bagumbayan, Daraga since 1955 pertinently testified, thus:
Q: How long have you been residing in this place,
Bagumbayan, Daraga, Albay?
A: Maybe I stayed there in 1955 until the present.[51]
xxxx
Q: Now, can you further recall the kind of building that
was constructed in this property?
A: Seva type, building.
Q: At present how many buildings were constructed in
this property?
A: Plenty of school buildings.
Q: Now, how many buildings were first constructed in [sic]
this property?
A: In 1955 only one, the Seva type, then there was constructed
five (5) Marcos Type buildings during the Marcos time.[52]
The devotion of Lot No. 6849-A to education started in 1940 and continued up to
December 21, 1988 when said lot was donated to the DECS. From then on, DECS built
various buildings and introduced improvements on said lot. Lot No. 6849-A was continuously
used for public education until March 18, 1993 when respondent Oate filed Civil Case No.
8715 and thereafter up to the present.
Thus, for a total period of more than fifty-two (52) years, Lot No. 6849-A was
exclusively and completely utilized by DECS for public education. This fact was not
successfully challenged nor refuted by respondent.
The second element of laches was likewise proven. No evidence was presented to
show that respondent or his predecessors-in-interest ever took any action, administrative or
judicial, nor either party questioned or protested the Municipalitys adverse occupation of a
portion of Lot 6849. As petitioner had demonstrated laches by persuasive and credible
evidence, it is incumbent upon respondent to show that his predecessors-in-interest indeed
protected their rights of ownership over the lot. Thus, as early as 1940, when the first Seva
12
type school building was constructed over a portion of the disputed lot, now Lot 6849-A,
respondent must prove that his predecessors-in-interest indeed undertook activities to contest
the occupation of the portion of the lot by the Municipality and subsequently by petitioner
DECS. Unfortunately, respondent failed to substantiate such defense of ownership and
possession of the lot and even skirted this issue.
Respondent testified that he came to know of Lot 6849 only in 1973 when he was 23
years old.[53] He asserted that he took possession of said lot in the same year when his two (2)
uncles, the brothers of his late father, passed on to him the disputed lot as his fathers share of
the inheritance from the late Claro Oate and Gregoria Los Baos (his grandparents). However,
it is interesting to note that he testified that he only came to know in 1991 that the elementary
school was built on a portion of Lot 6849, now Lot 6849-A. These assertions are
irreconcilable. Common experience tells us that one who owns a property and takes possession
of it cannot fail to discover and know that an existing elementary school was built and
standing on the lot from the time that the owner starts possessing a property.
Nonetheless, even granting that respondent indeed only came to know of such
encroachment or occupation in 1991, his rights cannot be better than that of his predecessors-
in-interest, that is, Claro Oate and his uncles, Antonio and Rafael, who died in 1990 and 1991,
respectively. Since respondents right over the lot originated from his predecessors-in-interest,
then he cannot have better rights over Lot No. 6849-A than the latter. The spring cannot rise
higher than its source. Besides, respondent has not proffered any explanation why his
predecessors-in-interest did not protest and challenge the Municipalitys occupancy over a
portion of their lot. Verily, with the span of around 52 years afforded respondent and his
predecessors-in-interest, their inaction and delay in protecting their rights were certainly
excessive and unjustified.
In the third element, the records clearly bear out the fact that petitioner DECS did
not know nor anticipate that their possession and occupancy of a portion of Lot 6849 would
later be questioned. In fact, petitioner built additional school buildings and facilities on the
school site amounting to more than PhP 11 million. Mr. Jose Adra, School Principal of
the Daraga North Central Elementary School, testified on the donation of the disputed lot to
petitioner and the cost of the improvements on it. [54] After more than forty-eight (48) years of
unquestioned, peaceful, and uninterrupted possession by petitioner DECS, it had no
knowledge nor reason to believe that respondent would assert any right over the lot after the
lapse of such long occupation coupled with a tax declaration in the name of the Daraga
Municipality.
Finally, the last element is likewise proven by the antecedent facts that clearly show
grave prejudice to the government, in general, and to petitioner, in particular, if the instant
action is not barred without even considering the cost of the construction of the school
buildings and facilities and the deleterious effect on the school children and affected school
teachers and personnel if Lot No. 6849-A would be returned to respondent.
Verily, the application of laches is addressed to the sound discretion of the court as
its application is controlled by equitable considerations. In the instant case, with the foregoing
considerations, we are constrained from giving approbation to the trial and appellate courts
ruling that the application of the principle of laches would subvert the ends of justice. Indeed,
it is unjust for the State and the affected citizenry to suffer after respondent and his
predecessors-in-interest had slept on their rights for 52 years.
Also, the inaction of respondent Oate and his predecessors-in-interest for over 50
years has reduced their right to regain possession of Lot 6849-A to a stale demand.
Laches holds over the actual area possessed and occupied by petitioner
We, however, make the clear distinction that laches applies in favor of petitioner
only as regards Lot 6849-A which is actually possessed and occupied by it. Laches does not
apply to Lot Nos. 6849-B, 6849-C, 6849-D, and 6849-E. These portions were never occupied
by the Municipality and petitioner. Agricultural tenant Felicito Armenta testified that his
father, Antonio Armenta, started cultivating portions of Lot 6849 way back in the 1940s and
that he took over the tenancy in 1960 when his father stopped tilling the land. Besides, if the
Municipality indeed owned Lot 6849 by virtue of a purchase, it is likewise guilty of laches in
not protecting or contesting the cultivation by Oates agricultural tenants of said portions
of Lot 6849.
Transfer Certificates of Title on portions of Lot 6849 valid
Petitioner contends that the reconstitution of OCT No. 2563covering subject lot in
1991 or 52 years after the Municipality owned said lotdoes not in any way affect the latters
preferential and superior right over the disputed lot. In the same vein, it maintains that it is
inconsequential that petitioner and the Municipality failed to present as evidence the deed of
conveyance in favor of the Municipality, as well as TCT No. 4812 as a registered land owner
may lose the right to recover possession of a registered property by reason of laches. Petitioner
concludes that the long delayed reconstitution of OCT No. 2563 by respondent was a mere
afterthought and intended to camouflage his and his predecessors unreasonably long inaction
which indicates an awareness that they have no valid claim whatsoever over disputed Lot
6849.
We disagree.
It must be noted that a reconstitution proceeding is one in rem and is thus binding to
the whole world. While it is true that laches has set in so far as it pertains to the portion of Lot
6849, specifically Lot 6849-A where the Municipality and petitioner DECS had constructed
the existing school, such does not hold true for the totality of Lot 6849 as explained
above. Indeed, the reconstitution proceeding being one in rem, the consequent issuance of
OCT No. RO-18971 in lieu of the lost or destroyed OCT No. 2563 is valid.
Anent the issue of non-notification, we agree with the observation of the courts a
quo that even granting arguendo that petitioner was not notified about the reconstitution
proceeding, such deficiency is not jurisdictional as to nullify and prevail over the final
disposition of the trial court in a proceeding in rem.
More so, while petitioner strongly asserts that the certification in Tax Declaration
No. 31954 attesting to the payment of the disputed lot under Municipal Voucher No. 69 and
the issuance of TCT No. 4812, which was never disputed nor controverted by respondent,
should have been given evidentiary weight by the trial and appellate courts as the
presumptions of regularity and validity of such official act have not been overcome, such
documents cannot defeat the registered title of respondent.
Between a clear showing of ownership evidenced by a registered title and a
certification in a tax declaration, albeit done in an official capacity, the former holds as the
13
latter is only persuasive evidence. Indeed, tax declarations in land cases per se do not
constitute ownership without other substantial pieces of evidence.
The records do not show and petitioner has not given any cogent explanation why
the Deed of Conveyance in favor of the Municipality of Daraga, Albay and TCT No. 4812
were not presented. With clear and affirmative defenses set up by petitioner
and Municipality of Daraga, Albay, it is incumbent for them to present these documents.
Therefore, the unmistakable inference is that there was indeed no sale and conveyance by
Claro Oate of Lot 6849 in favor of the Municipality. Consequently, the TCTs cancelling OCT
No. RO-18971 covering Lot Nos. 6849-A, 6849-B, 6849-C, 6849-D, and 6849-E were
likewise validly issued.
Thus, notwithstanding valid titles over the portions of Lot 6849, respondent Oate
cannot now take possession over Lot No. 6849-A for reason of laches. In the recent case of De
Vera-Cruz v. Miguel, we reiterated the principle we have consistently applied in laches:
The law[55] provides that no title to registered land in derogation
of that of the registered owner can be acquired by prescription or adverse
possession. Nonetheless, while it is true that a Torrens Title is indefeasible
and imprescriptible, the registered landowner may lose his right to recover
the possession of his registered property by reason of laches.[56]
Thus, with our resolution of the principal issue of applicability of the equitable
remedy of laches, the issue of suability of the State has been mooted.
A final word. Considering our foregoing disquisition and upon grounds of equity, a
modification of the final decision prevailing between respondent Oate and
the Municipality of Daraga, Albay is in order. It would be grossly iniquitous for respondent
Oate to pay PhP 50,000 to the Municipality of Daraga, Albay considering that he is not
entitled to recover the possession and usufruct of Lot No. 6849-A.
WHEREFORE, the instant petition is GRANTED and the January 14, 2004
Decision of the CA in CA-G.R. CV No. 60659 affirming the November 3, 1997 Decision of
the Legaspi City RTC is AFFIRMED with the following MODIFICATIONS:
1) Declaring the DepEd (formerly DECS), Division of Albay to have the rights of
possession and usufruct over Lot 6849-A with an area of 13,072 square meters under TCT No.
T-83946 of the Registry of Deeds of Albay, as a result of laches on the part of respondent
Celso Oate and his predecessors-in-interest. Respondent Celso Oate, his heirs, assigns, and
successors-in-interest are prohibited from selling, mortgaging, or encumbering Lot 6849-A
while the said lot is still being used and occupied by petitioner DECS. However, the rights of
possession and usufruct will be restored to respondent the moment petitioner DECS no longer
needs the said lot. The Registry of Deeds of Albay is ordered to annotate the aforementioned
restrictions and conditions at the back of TCT No. T-83946-A in the name of respondent Celso
Oate. Item No. 2 of the November 3, 1997 Decision of the Legaspi City RTC is modified
accordingly;
2) Declaring Celso Oate as the true and legal owner in fee simple of the following
lots:
a. Lot 6849-C with an area of 10,000 square meters under TCT
No. T-83948 of the Registry of Deeds of Albay;
b. Lot 6849-D with an area of 1,127 square meters under TCT
No. T-83949 of the Registry of Deeds of Albay; and
c. Lot 6849-E with an area of 608 square meters under TCT
No. T-83950 of the Registry of Deeds of Albay.
3) Declaring Mariano M. Lim as true and legal owner of Lot 6849-B with an area of
3,100 square meters under TCT No. T-84049 of the Registry of Deeds of Albay;
4) Ordering petitioner DECS and all other persons claiming under said department
to return the possession of Lots 6849-C, 6849-D, and 6849-E to respondent Celso Oate and
Lot 6849-B to Mariano M. Lim; and
5) Deleting Item No. 4 of the November 3, 1997 Decision of the Legaspi City RTC,
which ordered respondent Celso Oate to pay Fifty Thousand Pesos (PhP 50,000) to defendant
Municipality of Daraga, Albay.
The November 3, 1997 Decision of the Legaspi City RTC is AFFIRMED in all
other respects.
No costs.
SO ORDERED.
METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, petitioner, vs. ACT
THEATER, INC., respondent.
DECISION
CALLEJO, SR., J.:
Before the Court is a petition for review on certiorari filed by the Metropolitan
Waterworks and Sewerage System (MWSS), seeking to reverse and set aside the
Decision[1] dated January 31, 2001 of the Court of Appeals in CA-G.R. CV No. 58581,
which affirmed the civil aspect of the Decision[2] dated May 5, 1997 of the Regional
Trial Court of Quezon City, Branch 77, directing the petitioner MWSS to pay the
respondent Act Theater, Inc. damages and attorneys fees.
The present case stemmed from the consolidated cases of Criminal Case No.
Q-89-2412 entitled People of the Philippines v. Rodolfo Tabian, et al., for violation of
Presidential Decree (P.D.) No. 401, as amended by Batas Pambansa Blg. 876, and
Civil Case No. Q-88-768 entitled Act Theater, Inc. v. Metropolitan Waterworks and
Sewerage System. The two cases were jointly tried in the court a quo as they arose
from the same factual circumstances, to wit:
On September 22, 1988, four employees of the respondent Act Theater, Inc.,
namely, Rodolfo Tabian, Armando Aguilar, Arnel Concha and Modesto Ruales, were
apprehended by members of the Quezon City police force for allegedly tampering a
water meter in violation of P.D. No. 401, as amended by B.P. Blg. 876. The
respondents employees were subsequently criminally charged (Criminal Case No. Q-
14
89-2412) before the court a quo. On account of the incident, the respondents water
service connection was cut off. Consequently, the respondent filed a complaint for
injunction with damages (Civil Case No. Q-88-768) against the petitioner MWSS.
In the civil case, the respondent alleged in its complaint filed with the court a
quo that the petitioner acted arbitrarily, whimsically and capriciously, in cutting off the
respondents water service connection without prior notice. Due to lack of water, the
health and sanitation, not only of the respondents patrons but in the surrounding
premises as well, were adversely affected. The respondent prayed that the petitioner
be directed to pay damages.
After due trial, the court a quo rendered its decision, the dispositive portion of
which reads:
In Criminal Case No. Q-89-2412
WHEREFORE, for failure of the prosecution to prove the guilt of the accused beyond
reasonable doubt, the four (4) above-named Accused are hereby ACQUITTED of the crime
charged.[3]
In Civil Case No. Q-88-768
...
1. Ordering defendant MWSS to pay plaintiff actual or compensatory damages in
the amount of P25,000.00; and to return the sum of P200,000.00 deposited
by the plaintiff for the restoration of its water services after its
disconnection on September 23, 1988;
2. Defendants counterclaim for undercollection of P530,759.96 is dismissed for
lack of merit;
3. Ordering defendant MWSS to pay costs of suit;
4. Ordering defendant MWSS to pay plaintiff the amount of P5,000.00 as
attorneys fees;
5. Making the mandatory injunction earlier issued to plaintiff Act Theater, Inc.
permanent.
SO ORDERED.[4]
Aggrieved, the petitioner appealed the civil aspect of the aforesaid decision to
the CA. The appellate court, however, dismissed the appeal. According to the CA, the
court a quo correctly found that the petitioners act of cutting off the respondents water
service connection without prior notice was arbitrary, injurious and prejudicial to the
latter justifying the award of damages under Article 19 of the Civil Code.
Undaunted, the petitioner now comes to this Court alleging as follows:
I
WHETHER OR NOT THE HONORABLE COURT OF APPEAL[S] VALIDLY AFFIRMED
THE DECISION OF THE REGIONAL TRIAL COURT IN RESOLVING THE
PETITIONERS APPEAL;
II
WHETHER OR NOT THE HONORABLE COURT OF APPEALS VALIDLY UPHELD THE
AWARD OF ATTORNEYS FEES;
III
WHETHER OR NOT THE HONORABLE COURT OF APPEAL[S] CORRECTLY
APPLIED THE PROVISION OF ARTICLE 19 OF THE NEW CIVIL CODE WITHOUT
CONSIDERING THE APPLICABLE PROVISION OF ARTICLE 429 OF THE SAME
CODE.[5]
Preliminarily, the petitioner harps on the fact that, in quoting the decretal portion
of the court a quos decision, the CA erroneously typed P500,000 as the attorneys
fees awarded in favor of the respondent when the same should only be P5,000. In
any case, according to the petitioner, whether the amount is P500,000 or P5,000, the
award of attorneys fees is improper considering that there was no discussion or
statement in the body of the assailed decision justifying such award. The petitioner
insists that in cutting off the respondents water service connection, the petitioner
merely exercised its proprietary right under Article 429 of the Civil Code.
The petition is devoid of merit.
Article 429 of the Civil Code, relied upon by the petitioner in justifying its act of
disconnecting the water supply of the respondent without prior notice, reads:
Art. 429. The owner or lawful possessor of a thing has the right to exclude any person from
the enjoyment and disposal thereof. For this purpose, he may use such force as may be
reasonable to repel or prevent an actual or threatened unlawful physical invasion or usurpation
of his property.
A right is a power, privilege, or immunity guaranteed under a constitution, statute
or decisional law, or recognized as a result of long usage,[6] constitutive of a legally
enforceable claim of one person against the other.[7]
Concededly, the petitioner, as the owner of the utility providing water supply to
certain consumers including the respondent, had the right to exclude any person from
the enjoyment and disposal thereof. However, the exercise of rights is not without
limitations. Having the right should not be confused with the manner by which such
right is to be exercised.[8]
Article 19 of the Civil Code precisely sets the norms for the exercise of ones
rights:
15
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties,
act with justice, give everyone his due, and observe honesty and good faith.
When a right is exercised in a manner which discards these norms resulting in
damage to another, a legal wrong is committed for which actor can be held
accountable.[9] In this case, the petitioner failed to act with justice and give the
respondent what is due to it when the petitioner unceremoniously cut off the
respondents water service connection. As correctly found by the appellate court:
While it is true that MWSS had sent a notice of investigation to plaintiff-appellee prior to the
disconnection of the latters water services, this was done only a few hours before the actual
disconnection. Upon receipt of the notice and in order to ascertain the matter, Act sent its
assistant manager Teodulo Gumalid, Jr. to the MWSS office but he was treated badly on the
flimsy excuse that he had no authority to represent Act. Acts water services were cut at
midnight of the day following the apprehension of the employees. Clearly, the plaintiff-
appellee was denied due process when it was deprived of the water services. As a consequence
thereof, Act had to contract another source to provide water for a number of days. Plaintiff-
appellee was also compelled to deposit with MWSS the sum of P200,000.00 for the restoration
of their water services.[10]
There is, thus, no reason to deviate from the uniform findings and conclusion of
the court a quo and the appellate court that the petitioners act was arbitrary, injurious
and prejudicial to the respondent, justifying the award of damages under Article 19 of
the Civil Code.
Finally, the amount of P500,000 as attorneys fees in that portion of the assailed
decision which quoted the fallo of the court a quos decision was obviously a
typographical error. As attorneys fees, the court a quo awarded the amount of P5,000
only. It was this amount, as well as actual and compensatory damages of P25,000
and the reimbursement of P200,000 deposited by the respondent for the restoration
of its water supply, that the CA affirmed, as it expressly stated in its dispositive portion
that finding no cogent reason to reverse the appealed Decision which is in conformity
with the law and evidence, the same is hereby AFFIRMED.[11]
The award of P5,000 as attorneys fees is reasonable and warranted. Attorneys
fees may be awarded when a party is compelled to litigate or incur expenses to
protect his interest by reason of an unjustified act of the other party.[12]
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals
dated January 31, 2001 in CA-G.R. CV No. 58581 is AFFIRMED in toto.
SO ORDERED.
PHILIPPINE NATIONAL BANK, petitioner, vs. THE COURT OF APPEALS and
ERNESTO AUSTRIA and LORETO Q. QUINTANA, respondents.
DECISION
YNARES-SANTIAGO, J.:
Before us is a petition for review under Rule 45 of the Rules of Court, seeking a
reversal of the Court of Appeals resolution in CA-G.R. SP No. 48660 dated August
25, 1998, which affirmed the order of the Regional Trial Court of Makati, Branch 60 in
LRC Case No. M-2635.
Sometime during the late 70s, the spouses Godofredo and Wilma Monsod
obtained a loan in the amount of P120,000.00 from petitioner Philippine National
Bank (PNB). To secure their loan, the Monsods mortgaged to PNB a parcel of land
covered by TCT No. S-84843, located within the Monte Villa de Monsod Subdivision
in Paraaque, Rizal.
Due to Monsods failure to pay their loan obligation, PNB extrajudicially
foreclosed the mortgage. At the auction sale of the subject real property, PNB was
declared the highest bidder. On December 21, 1981, a certificate of sale was issued
in favor of PNB, and was registered on July 11, 1984.[1]
Upon expiration of the redemption period on July 12, 1985, ownership of the
property was consolidated in PNB. Thereafter, TCT No. S-84843 was cancelled and
TCT No. 99480 was issued in PNBs name.[2]
On June 23, 1992, PNB filed an Ex-Parte Petition for the Issuance of Writ of
Possession with Branch 60 of the Regional Trial Court of Makati City, docketed as
LRC Case No. M-2635. Pursuant to the provisions of Act No. 3135, as amended, the
trial court conducted an ex parte hearing. PNBs representative testified that the
foreclosed property is occupied by one Ernesto Austria. According to PNB,
Mr. Austria was invited by the bank to a conference to discuss the ownership of the
foreclosed lot, however, he did not honor the banks invitation.[3]
On August 28, 1992, the trial court granted PNBs petition and a writ of
possession was issued on October 26, 1992.[4]
On December 11, 1992, respondents Ernesto and Loreto Quintana Austria filed
a Motion for Intervention and to Recall and/or Stop the Enforcement of the Writ of
Possession. The Austrias alleged that they are the actual occupants of the subject lot,
which they purportedly bought from the Monsods as early as 1974. They claimed that
the foreclosed property was enclosed within a concrete fence and formed part of their
family compound. PNB allegedly knew of this fact even before it granted the loan to
the Monsods, because the banks credit investigators were advised of the same when
they inspected the property in the summer of 1976. Consequently,
the Austrias maintained that the issuance of the possessory writ ex parte was
improper, since it will deprive them of their property without due process.[5]
Due to the Austrias refusal to vacate the premises, the sheriff failed to enforce
the challenged writ.
On July 27, 1993, on motion of PNB, the trial court issued an alias writ of
possession. Again, the writ was not implemented.[6]
On September 17, 1993, the sheriff sought to enforce the first alias writ of
possession for the second time. The Austrias filed a Second Motion for Intervention
seeking to restrain the enforcement of the writ of possession issued on October 26,
1992.[7] PNB then filed an Urgent Ex-Parte Motion for Issuance of Break Open
Order[8] and, subsequently, an Opposition to the Austrias Second Motion for
Intervention.[9]
On January 31, 1994, the trial court denied the Austrias second motion and
granted PNBs Motion for Issuance of Break Open Order. The trial court ruled that the
16
Austrias can no longer be permitted to intervene in the case during said stage of the
proceedings and that the remedy of the Austrias was to file an ordinary civil action to
assert their claim of ownership over the property.[10]
In the meantime, the first alias writ of possession lapsed. PNB thus filed an Ex-
Parte Motion for Issuance of Second Alias Writ of Possession, [11] and on November
29, 1994, a second alias writ was issued.[12]
Unfazed, the Austrias filed an Omnibus Motion on January 25, 1995, seeking a
recall of the second alias writ and a reconsideration of the trial courts order denying
their motion to intervene.[13] Meanwhile, the second alias writ had likewise expired.
PNB filed a Manifestation and Motion for Issuance of Third Alias Writ of
Possession, which the trial court granted anew in an order dated October 10, 1995.[14]
However, on December 12, 1995, the Austrias again filed a motion to set aside
the trial courts order dated October 10, 1995 and to recall the third alias writ.[15]
Consequent to the filing of this fourth motion, the sheriff again failed to
implement the third alias writ, which also lapsed. Thus, on February 15, 1996, PNB
filed another Motion for Issuance of a Fourth Alias Writ, [16] which was granted
on March 26, 1996.
The trial court, after hearing the Austrias fourth motion, issued an order
on October 4, 1996, denying the same, on the ground that the issuance of a
possessory writ for a property sold at public auction pursuant to an extra-judicial
foreclosure proceeding was a ministerial duty on its part. The Austrias failed to
establish any legal ground for recalling the writs, even as they claimed a superior right
to the subject property.[17]
On February 19, 1997, the fourth alias writ was issued by the trial court. The writ
was partially implemented with the posting of PNB security guards within the
premises of the foreclosed lot.[18]
On April 17, 1997, the Austrias, for the fifth time, filed a motion to stop the
enforcement of the fourth alias writ and to set aside all prior writs issued by the trial
court.[19]
In the meantime, the Austrias filed before the Regional Trial Court of Paraaque,
an action for cancellation of PNBs title to the property, docketed as Civil Case No. 97-
0184.[20]
On October 28, 1997, the trial court denied the Austrias fifth motion but ruled
that: any writ of possession that may be issued in this case, is declared
unenforceable against the MOVANTS ERNESTO AUSTRIA and the HEIRS OF
LORETO AUSTRIA, until the Court declares otherwise.[21]
PNB filed a motion for reconsideration, which was denied on May 20, 1998.[22] A
petition for certiorari under Rule 65 of the Rules of Court was filed by PNB before the
Court of Appeals. However, the Court of Appeals dismissed the petition, stating:
There is no prima facie showing of grave abuse of discretion on the part of respondent Judge
in issuing his assailed Order which the Court finds to be in accord with law, the pertinent rules
and jurisprudence cited therein.
Hence, PNB filed the instant petition, contending that:
I
THE COURT OF APPEALS COMMITTED A SERIOUS ERROR BY SIMPLY ADOPTING
THE FINDINGS OF THE TRIAL COURT THAT WRIT OF POSSESSION CANNOT BE
ENFORCED AGAINST RESPONDENT AUSTRIA. SAID FINDINGS ARE UNPROVEN
AND UNSUPPORTED BY EVIDENCE.
II
THE COURT OF APPEALS COMMITTED SERIOUS MISAPPREHENSION OF FACTS
IN:
A) SUPPORTING THE JURISPRUDENCE CITED BY THE TRIAL COURT IN
THE OCTOBER 28, 1997 ORDER. THE RULINGS DO NOT JUSTIFY THE NON-
ENFORCEMENT OF THE WRIT OF POSSESSION AGAINST RESPONDENTS.
RESPONDENTS WERE GIVEN THE OPPORTUNITY TO BE HEARD BUT NO
EVIDENCE WAS PRESENTED TO SUPPORT THEIR CLAIM;
B) NOT GIVING DUE CONSIDERATION TO THE FACT THAT PNB HAS THE LEGAL
RIGHT TO POSSESS THE PROPERTY AS ITS REGISTERED OWNER;
C) LOSING SIGHT OF THE FACT THAT THE TRIAL COURT BELATEDLY ISSUED THE
OCTOBER 28, 1997 ORDER DIRECTING THAT THE WRIT OF POSSESSION CANNOT
BE ENFORCED AGAINST THE RESPONDENTS. THE TRIAL COURT HAD EARLIER
ISSUED FOUR (4) POSSESSORY WRITS ALL OF WHICH WERE DIRECTED AGAINST
RESPONDENTS AUSTRIA & QUINTANA.[23]
The basic issue to be resolved in this case is whether or not an ex-parte writ of
possession issued pursuant to Act No. 3135, as amended, can be enforced against a
third person who is in actual possession of the foreclosed property and who is not in
privity with the debtor/ mortgagor.[24]
Petitioner PNB maintains that the trial courts order was based on the unproven
allegation that respondents had purchased the property from the Monsods before the
latter mortgaged it to PNB. According to petitioner PNB, respondents did not adduce
any proof to support their claim of ownership, even as they were repeatedly given the
opportunity to do so during the hearings on the numerous motions filed by
respondents themselves.
Petitioner PNB also submits that since it is the registered owner of the property,
it is entitled to a writ of possession as a matter of right. The bank insists that it could
rely on the title of the registered land which does not have any annotation of
respondents supposed rights.
Petitioner PNB likewise avers that the trial court could not now belatedly refuse
to enforce the writ of possession against respondents. The trial court had already
issued a total of four possessory writs directing the ouster of all occupants of the lot,
including respondents herein.
17
 On the other hand, respondents assert that the trial court correctly held that the
writ of possession can only be implemented against the debtor/mortgagor and his
successors-in-interest. Since respondents acquired their rights as owners of the
property by virtue of a sale made to them by the Monsods prior to the banks
mortgage lien, respondents can not be dispossessed therefrom without due notice
and hearing, through the simple expedient of an ex-partepossessory writ.
We agree with respondents. Under applicable laws and jurisprudence, they can
not be ejected from the property by means of an ex-parte writ of possession.
The operative provision under Act No. 3135, as amended,[25] is Section 6, which
states:
Sec. 6. Redemption. In all cases in which an extrajudicial sale is made under the special power
hereinbefore referred to, the debtor, his successors in interest or any person having a lien on
the property subsequent to the mortgage or deed of trust under which the property is sold, may
redeem the same at any time within the term of one year from and after the date of the sale;
and such redemption shall be governed by the provisions of section four hundred and sixty-
four to four hundred and sixty-six, inclusive, of the Code of Civil Procedure, in so far as these
are not inconsistent with the provisions of this Act. (Italics ours)
Despite the evolutionary development of our procedural laws throughout the
years, the pertinent rule in the Code of Civil Procedure [26] remains practically
unchanged. Particularly, Rule 39, Section 33, second paragraph, which relates to the
right of possession of a purchaser of property in an extrajudicial foreclosure sale:
Sec. 33. x x x
Upon the expiration of the right of redemption, the purchaser or redemptioner shall be
substituted to and acquire all the rights, title, interest and claim of the judgment obligor to the
property at the time of levy. The possession of the property shall be given to the purchaser or
last redemptioner by the same officer unless a third party is actually holding the property
adversely to the judgment obligor. (Italics ours)
[27]
Thus, in Barican v. Intermediate Appellate Court, we held that the obligation of
a court to issue an ex-parte writ of possession in favor of the purchaser in an
extrajudicial foreclosure sale ceases to be ministerial once it appears that there is a
third party in possession of the property who is claiming a right adverse to that of the
debtor/mortgagor. The same principle was inversely applied in a more recent case,
[28]
where we ruled that a writ of possession may be issued in an extrajudicial
foreclosure of real estate mortgage, only if the debtor is in possession and no third
party had intervened. Although the factual nuances of this case may slightly differ
from the aforecited cases, the availingcircumstances are undeniably similar a party in
possession of the foreclosed property is asserting a right adverse to the
debtor/mortgagor and is a stranger to the foreclosure proceedings in which the ex-
parte writ of possession was applied for.
It should be stressed that the foregoing doctrinal pronouncements are not
without support in substantive law. Notably, the Civil Code protects the actual
possessor of a property, to wit:
Art. 433. Actual possession under claim of ownership raises a disputable presumption of
ownership. The true owner must resort to judicial process for the recovery of the property.
Under the aforequoted provision, one who claims to be the owner of a property
possessed by another must bring the appropriate judicial action for its physical
recovery. The term judicial process could mean no less than an ejectment suit or
reinvindicatory action, in which the ownership claims of the contending parties may be
properly heard and adjudicated.
An ex-parte petition for issuance of a possessory writ under Section 7 of Act No.
3135 is not, strictly speaking, a judicial process as contemplated above. Even if the
same may be considered a judicial proceeding for the enforcement of ones right of
possession as purchaser in a foreclosure sale, it is not an ordinary suit filed in court,
by which one party sues another for the enforcement or protection of a right, or the
prevention or redress of a wrong.[29]
It should be emphasized that an ex-parte petition for issuance of a writ of
possession is a non-litigious proceeding authorized in an extrajudicial foreclosure of
mortgage pursuant to Act 3135, as amended. Unlike a judicial foreclosure of real
estate mortgage under Rule 68 of the Rules of Court, any property brought within the
ambit of the act is foreclosed by the filing of a petition, not with any court of justice,
but with the office of the sheriff of the province where the sale is to be made.[30]
As such, a third person in possession of an extrajudicially foreclosed realty, who
claims a right superior to that of the original mortgagor, will have no opportunity to be
heard on his claim in a proceeding of this nature. It stands to reason, therefore, that
such third person may not be dispossessed on the strength of a mere ex-
parte possessory writ, since to do so would be tantamount to his summary ejectment,
in violation of the basic tenets of due process.
Besides, as earlier stressed, Article 433 of the Civil Code, cited above, requires
nothing less than an action for ejectment to be brought even by the true owner. After
all, the actual possessor of a property enjoys a legal presumption of just title in his
favor,[31] which must be overcome by the party claiming otherwise.
In the case at bar, petitioner PNB admitted that as early as 1990, it was aware
that the subject lot was occupied by the Austrias. Yet, instead of bringing an action in
court for the ejectment of respondents, it chose to simply file an ex-parte petition for a
writ of possession pursuant to its alleged right as purchaser in the extra-judicial
foreclosure sale. We cannot sanction this procedural shortcut. To enforce the writ
against an unwitting third party possessor, who took no part in the foreclosure
proceedings, would be tantamount to the taking of real property without the benefit of
proper judicial intervention.
Consequently, it was not a ministerial duty of the trial court under Act No. 3135
to issue a writ of possession for the ouster of respondents from the lot subject of this
instant case. The trial court was without authority to grant the ex-parte writ, since
petitioner PNBs right of possession under said Act could be rightfully recognized only
against the Monsods and the latters successors-in-interest, but not against
respondents who assert a right adverse to the Monsods.Hence, the trial court cannot
be precluded from correcting itself by refusing to enforce the writs it had previously
issued. Its lack of authority to direct issuance of the writs against respondents
assured that its earlier orders would never attain finality in the first place.
18
 In the same vein, respondents are not obliged to prove their ownership of the
foreclosed lot in the ex-parte proceedings conducted below. The trial court has no
jurisdiction to determine who between the parties is entitled to ownership and
possession of the foreclosed lot.
Likewise, registration of the lot in petitioner PNBs name does not automatically
entitle the latter to possession thereof. As discussed earlier, petitioner PNB must
resort to the appropriate judicial process for recovery of the property and cannot
simply invoke its title in an ex-parte proceeding to justify the ouster of respondents.
WHEREFORE, the instant petition is DENIED and the resolution of the Court of
Appeals in CA G.R. SP No. 48660 is AFFIRMED.
SO ORDERED.
FELIPE CALUB and RICARDO VALENCIA, DEPARTMENT of ENVIRONMENT and
NATURAL RESOURCES (DENR), CATBALOGAN, SAMAR, petitioners,
vs. COURT OF APPEALS, MANUELA T. BABALCON, and CONSTANCIO
ABUGANDA, respondents.
DECISION
QUISUMBING, J.:
For review is the decision.[1] dated May 27, 1994, of the Court of Appeals in CA-G.R.
SP No. 29191, denying the petition filed by herein petitioners for certiorari, prohibition
and mandamus, in order to annul the Order dated May 27, 1992, by the Regional Trial
Court of Catbalogan, Samar. Said Order had denied petitioners (a) Motion to Dismiss
the replevin case filed by herein private respondents, as well as (b) petitioners Motion
for Reconsideration of the Order of said trial court dated April 24, 1992, granting an
application for a Writ of replevin..[2] h Y
The pertinent facts of the case, borne by the records, are as follows:
On January 28, 1992, the Forest Protection and Law Enforcement Team of the
Community Environment and Natural Resources Office (CENRO) of the DENR
apprehended two (2) motor vehicles, described as follows:
"1. Motor Vehicle with Plate No. HAK-733 loaded with one thousand
and twenty six (1,026) board feet of illegally sourced lumber valued
at P8,544.75, being driven by one Pio Gabon and owned by [a
certain] Jose Vargas.
2. Motor Vehicle with Plate No. FCN-143 loaded with one thousand
two hundred twenty four and ninety seven (1,224.97) board feet of
illegally-sourced lumber valued at P9,187.27, being driven by one
Constancio Abuganda and owned by [a certain] Manuela Babalcon.
".[3]
Constancio Abuganda and Pio Gabon, the drivers of the vehicles, failed to present
proper documents and/or licenses. Thus, the apprehending team seized and
impounded the vehicles and its load of lumber at the DENR-PENR (Department of
Environment and Natural Resources-Provincial Environment and Natural Resources)
Office in Catbalogan..[4] Seizure receipts were issued but the drivers refused to accept
the receipts..[5] Felipe Calub, Provincial Environment and Natural Resources Officer,
then filed before the Provincial Prosecutors Office in Samar, a criminal complaint
against Abuganda, in Criminal Case No. 3795, for violation of Section 68 [78),
Presidential Decree 705 as amended by Executive Order 277, otherwise known as
the Revised Forestry Code.[6] Mis sc
On January 31, 1992, the impounded vehicles were forcibly taken by Gabon and
Abuganda from the custody of the DENR, prompting DENR Officer Calub this time to
file a criminal complaint for grave coercion against Gabon and Abuganda. The
complaint was, however, dismissed by the Public Prosecutor..[7]
On February 11, 1992, one of the two vehicles, with plate number FCN 143, was
again apprehended by a composite team of DENR-CENR in Catbalogan and
Philippine Army elements of the 802nd Infantry Brigade at Barangay Buray, Paranas,
Samar. It was again loaded with forest products with an equivalent volume of
1,005.47 board feet, valued at P10,054.70. Calub duly filed a criminal complaint
against Constancio Abuganda, a certain Abegonia, and several John Does, in
Criminal Case No. 3625, for violation of Section 68 [78], Presidential Decree 705 as
amended by Executive Order 277, otherwise known as the Revised Forestry Code..[8]
In Criminal Cases Nos. 3795 and 3625, however, Abegonia and Abuganda were
acquitted on the ground of reasonable doubt. But note the trial court ordered that a
copy of the decision be furnished the Secretary of Justice, in order that the necessary
criminal action may be filed against Noe Pagarao and all other persons responsible
for violation of the Revised Forestry Code. For it appeared that it was Pagarao who
chartered the subject vehicle and ordered that cut timber be loaded on it..[9]
Subsequently, herein private respondents Manuela Babalcon, the vehicle owner, and
Constancio Abuganda, the driver, filed a complaint for the recovery of possession of
the two (2) impounded vehicles with an application for replevin against herein
petitioners before the RTC of Catbalogan. The trial court granted the application for
replevin and issued the corresponding writ in an Order dated April 24, 1992..
[10]
Petitioners filed a motion to dismiss which was denied by the trial court.[11]
Thus, on June 15, 1992, petitioners filed with the Supreme Court the present Petition
for Certiorari, Prohibition and Mandamus with application for Preliminary Injunction
and/or a Temporary Restraining Order. The Court issued a TRO, enjoining respondent
RTC judge from conducting further proceedings in the civil case for replevin; and
enjoining private respondents from taking or attempting to take the motor vehicles
and forest products seized from the custody of the petitioners. The Court further
instructed the petitioners to see to it that the motor vehicles and other forest products
seized are kept in a secured place and protected from deterioration, said property
being in custodia legis and subject to the direct order of the Supreme Court..[12] In a
Resolution issued on September 28, 1992, the Court referred said petition to
respondent appellate court for appropriate disposition..[13]
19
On May 27, 1994, the Court of Appeals denied said petition for lack of merit. It ruled
that the mere seizure of a motor vehicle pursuant to the authority granted by Section
68 [78] of P.D. No. 705 as amended by E.O. No. 277 does not automatically place
said conveyance in custodia legis. According to the appellate court, such authority of
the Department Head of the DENR or his duly authorized representative to order the
confiscation and disposition of illegally obtained forest products and the conveyance
used for that purpose is not absolute and unqualified. It is subject to pertinent laws,
regulations, or policies on that matter, added the appellate court. The DENR
Administrative Order No. 59, series of 1990, is one such regulation, the appellate
court said. For it prescribes the guidelines in the confiscation, forfeiture and
disposition of conveyances used in the commission of offenses penalized under
Section 68 [78] of P.D. No. 705 as amended by E.O. No. 277..[14]
Additionally, respondent Court of Appeals noted that the petitioners failed to observe
the procedure outlined in DENR Administrative Order No. 59, series of 1990. They
were unable to submit a report of the seizure to the DENR Secretary, to give a written
notice to the owner of the vehicle, and to render a report of their findings and
recommendations to the Secretary. Moreover, petitioners failure to comply with the
procedure laid down by DENR Administrative Order No. 59, series of 1990, was
confirmed by the admission of petitioners counsel that no confiscation order has been
issued prior to the seizure of the vehicle and the filing of the replevin suit. Therefore,
in failing to follow such procedure, according to the appellate court, the subject
vehicles could not be considered in custodia legis..[15]
Respondent Court of Appeals also found no merit in petitioners claim that private
respondents complaint for replevin is a suit against the State. Accordingly, petitioners
could not shield themselves under the principle of state immunity as the property
sought to be recovered in the instant suit had not yet been lawfully adjudged forfeited
in favor of the government. Moreover, according to respondent appellate court, there
could be no pecuniary liability nor loss of property that could ensue against the
government. It reasoned that a suit against a public officer who acted illegally or
beyond the scope of his authority could not be considered a suit against the State;
and that a public officer might be sued for illegally seizing or withholding the
possession of the property of another..[16]
Respondent court brushed aside other grounds raised by petitioners based on the
claim that the subject vehicles were validly seized and held in custody because they
were contradicted by its own findings..[17] Their petition was found without merit.[18] Rtc
spped
Now, before us, the petitioners assign the following errors:.[19]
(1) THE COURT OF APPEALS ERRED IN HOLDING THAT MERE
SEIZURE OF A CONVEYANCE PURSUANT TO SECTION 68-A
[78-A] OF P.D. NO. 705 AS AMENDED BY EXECUTIVE ORDER
277 DOES NOT PLACE SAID CONVEYANCE IN CUSTODIA
LEGIS;
(2) THE COURT OF APPEALS ERRED IN NOT HOLDING THAT
THE OPERATIVE ACT GIVING RISE FOR THE SUBJECT
CONVEYANCE TO BE IN CUSTODIA LEGIS IS ITS LAWFUL
SEIZURE BY THE DENR PURSUANT TO SECTION 68-A [78-A]
OF P.D. NO. 705, AS AMENDED BY E.O. NO. 277; AND
(3) THE COURT OF APPEALS ERRED IN HOLDING THAT THE
COMPLAINT FOR REPLEVIN AGAINST THE PETITIONERS IS
NOT A SUIT AGAINST THE STATE.
In brief, the pertinent issues for our consideration are:
(1) Whether or not the DENR-seized motor vehicle, with plate number FCN 143, is
in custodia legis.
(2) Whether or not the complaint for the recovery of possession of impounded
vehicles, with an application for replevin, is a suit against the State.
We will now resolve both issues.
The Revised Forestry Code authorizes the DENR to seize all conveyances used in
the commission of an offense in violation of Section 78. Section 78 states:
Sec. 78. Cutting, Gathering, and or Collecting Timber, or Other
Forest Products without License. Any person who shall cut, gather,
collect, remove timber or other forest products from any forestland,
or timber from alienable or disposable public land, or from private
land, without any authority, or possess timber or other forest
products without the legal documents as required under existing
forest laws and regulations, shall be punished with the penalties
imposed under Articles 309 and 310 of the Revised Penal Codeslx
mis
The Court shall further order the confiscation in favor of the
government of the timber or any forest products cut, gathered,
collected, removed, or possessed, as well as the machinery,
equipment, implements and tools illegally used in the area where
the timber or forest products are found.
This provision makes mere possession of timber or other forest products without the
accompanying legal documents unlawful and punishable with the penalties imposed
for the crime of theft, as prescribed in Articles 309-310 of the Revised Penal Code. In
the present case, the subject vehicles were loaded with forest products at the time of
the seizure. But admittedly no permit evidencing authority to possess and transport
said load of forest products was duly presented. These products, in turn, were
deemed illegally sourced. Thus there was a prima facie violation of Section 68 [78] of
the Revised Forestry Code, although as found by the trial court, the persons
responsible for said violation were not the ones charged by the public prosecutor.
20
The corresponding authority of the DENR to seize all conveyances used in the
commission of an offense in violation of Section 78 of the Revised Forestry Code is
pursuant to Sections 78-A and 89 of the same Code. They read as follows: Sc
Sec. 78-A. Administrative Authority of the Department Head or His
Duly Authorized Representative to Order Confiscation. -- In all
cases of violation of this Code or other forest laws, rules and
regulations, the Department Head or his duly authorized
representative, may order the confiscation of any forest products
illegally cut, gathered, removed, or possessed or abandoned, and
all conveyances used either by land, water or air in the commission
of the offense and to dispose of the same in accordance with
pertinent laws, regulations or policies on the matter.
Sec. 89. Arrest; Institution of criminal actions. -- A forest officer or
employee of the Bureau [Department] or any personnel of the
Philippine Constabulary/Philippine National Police shall arrest even
without warrant any person who has committed or is committing in
his presence any of the offenses defined in this Chapter. He shall
also seize and confiscate, in favor of the Government, the tools and
equipment used in committing the offense... [Emphasis supplied.]
Note that DENR Administrative Order No. 59, series of 1990, implements Sections
78-A and 89 of the Forestry Code, as follows:
Sec. 2. Conveyances Subject to Confiscation and Forfeiture. -- All
conveyances used in the transport of any forest product obtained or
gathered illegally whether or not covered with transport documents,
found spurious or irregular in accordance with Sec. 68-A [78-A] of
P.D. No. 705, shall be confiscated in favor of the government or
disposed of in accordance with pertinent laws, regulations or
policies on the matter.
Sec. 4. Who are Authorized to Seize Conveyance. -- The Secretary
or his duly authorized representative such as the forest officers
and/or natural resources officers, or deputized officers of the DENR
are authorized to seizesaid conveyances subject to policies and
guidelines pertinent thereto. Deputized military personnel and
officials of other agencies apprehending illegal logs and other forest
products and their conveyances shall notify the nearest DENR field
offices, and turn over said forest products and conveyances for
proper action and disposition. In case where the apprehension is
made by DENR field officer, the conveyance shall be deposited with
the nearest CENRO/PENRO/RED Office as the case may be, for
safekeeping wherever it is most convenient and secured.
[Emphasis supplied.]
Upon apprehension of the illegally-cut timber while being transported without
pertinent documents that could evidence title to or right to possession of said timber,
a warrantless seizure of the involved vehicles and their load was allowed under
Section 78 and 89 of the Revised Forestry Code. Slxs c
Note further that petitioners failure to observe the procedure outlined in DENR
Administrative Order No. 59, series of 1990 was justifiably explained. Petitioners did
not submit a report of the seizure to the Secretary nor give a written notice to the
owner of the vehicle because on the 3rd day following the seizure, Gabon and
Abuganda, drivers of the seized vehicles, forcibly took the impounded vehicles from
the custody of the DENR. Then again, when one of the motor vehicles was
apprehended and impounded for the second time, the petitioners, again were not able
to report the seizure to the DENR Secretary nor give a written notice to the owner of
the vehicle because private respondents immediately went to court and applied for a
writ of replevin. The seizure of the vehicles and their load was done upon their
apprehension for a violation of the Revised Forestry Code. It would be absurd to
require a confiscation order or notice and hearing before said seizure could be
effected under the circumstances.
Since there was a violation of the Revised Forestry Code and the seizure was in
accordance with law, in our view the subject vehicles were validly deemed in custodia
legis. It could not be subject to an action for replevin. For it is property lawfully taken
by virtue of legal process and considered in the custody of the law, and not
otherwise..[20]
In Mamanteo, et. al. v. Deputy Sheriff Magumun, A.M. No. P-98-1264, promulgated on
July 28, 1999, the case involves property to be seized by a Deputy Sheriff in a
replevin suit. But said property were already impounded by the DENR due to violation
of forestry laws and, in fact, already forfeited in favor of the government by order of
the DENR. We said that such property was deemed in custodia legis. The sheriff
could not insist on seizing the property already subject of a prior warrant of seizure.
The appropriate action should be for the sheriff to inform the trial court of the situation
by way of partial Sheriffs Return, and wait for the judges instructions on the proper
procedure to be observed.
Note that property that is validly deposited in custodia legis cannot be the subject of a
replevin suit. In Mamanteo v. Deputy Sheriff Magumun, we elucidated further:
". . . the writ of replevin has been repeatedly used by unscrupulous
plaintiffs to retrieve their chattel earlier taken for violation of the
Tariff and Customs Code, tax assessment, attachment or
execution. Officers of the court, from the presiding judge to the
sheriff, are implored to be vigilant in their execution of the law
otherwise, as in this case, valid seizure and forfeiture proceedings
could easily be undermined by the simple devise of a writ of
replevin...".[21] Scslx
On the second issue, is the complaint for the recovery of possession of the two
impounded vehicles, with an application for replevin, a suit against the State?
21
Well established is the doctrine that the State may not be sued without its consent..
[22]
And a suit against a public officer for his official acts is, in effect, a suit against the
State if its purpose is to hold the State ultimately liable..[23] However, the protection
afforded to public officers by this doctrine generally applies only to activities within the
scope of their authority in good faith and without willfulness, malice or corruption.[24] In
the present case, the acts for which the petitioners are being called to account were
performed by them in the discharge of their official duties. The acts in question are
clearly official in nature.[25] In implementing and enforcing Sections 78-A and 89 of the
Forestry Code through the seizure carried out, petitioners were performing their
duties and functions as officers of the DENR, and did so within the limits of their
authority. There was no malice nor bad faith on their part. Hence, a suit against the
petitioners who represent the DENR is a suit against the State. It cannot prosper
without the States consent.
Given the circumstances in this case, we need not pursue the Office of the Solicitor
Generals line for the defense of petitioners concerning exhaustion of administrative
remedies. We ought only to recall that exhaustion must be raised at the earliest time
possible, even before filing the answer to the complaint or pleading asserting a claim,
by a motion to dismiss..[26] If not invoked at the proper time, this ground for dismissal
could be deemed waived and the court could take cognizance of the case and try it.
[27]
Mesm
ACCORDINGLY, the Petition is GRANTED, and the assailed Decision of the Court of
Appeals in CA-G.R. SP No. 29191 is SET ASIDE. Consequently, the Order issued by
the Regional Trial Court of Catbalogan, dated May 27, 1992, and the Writ of replevin
issued in the Order dated April 24, 1992, are ANNULLED. The Sheriff of the Regional
Trial Court of Catbalogan, Branch 29, is directed to take possession of the subject
motor vehicle, with plate number FCN 143, for delivery to the custody of and
appropriate disposition by petitioners. Let a copy of this decision be provided the
Honorable Secretary of Justice for his appropriate action, against any and all persons
responsible for the abovecited violation of the Revised Forestry Code.
Costs against private respondents.
SO ORDERED.
G.R. No. 169596 March 28, 2007
SUPERLINES TRANSPORTATION COMPANY, INC., Petitioner,
vs.
PHILIPPINE NATIONAL CONSTRUCTION COMPANY and PEDRO
BALUBAL, Respondents
DECISION
CARPIO MORALES, J.:
Assailed via petition for review is the Court of Appeals Decision1 dated September 6,
2005 dismissing for lack of merit the appeal of petitioner Superlines Transportation
Company, Inc. (petitioner), docketed as CA-G.R. CV No. 61144.
Petitioner is a corporation engaged in the business of providing public transportation.
On December 13, 1990, one of its buses, while traveling north and approaching the
Alabang northbound exit lane, swerved and crashed into the radio room of
respondent Philippine National Construction Company (PNCC).
The incident was initially investigated by respondent PNCCs toll way patrol, Sofronio
Salvanera, and respondent Pedro Balubal (Balubal), then head of traffic control and
security department of the South Luzon tollway.2 The bus3was thereafter turned over
to the Alabang Traffic Bureau for it to conduct its own investigation of the incident.
Because of lack of adequate space, the bus was, on request of traffic investigator
Pat. Cesar Lopera (Lopera), towed by the PNCC patrol to its compound where it was
stored.4
Subsequently, petitioner made several requests for PNCC to release the bus, but
respondent Balubal denied the same, despite petitioners undertaking to repair the
damaged radio room. Respondent Balubal instead demanded the sum of 40,000.00,
or a collateral with the same value, representing respondent PNCCs estimate of the
cost of reconstruction of the damaged radio room. By petitioners estimate, however,
the damage amounted to 10,000.00 only.5
Petitioner thus filed a complaint for recovery of personal property (replevin) with
damages6 against respondents PNCC and Balubal with the Regional Trial Court of
Gumaca, Quezon, praying as follows:
xxxx
2. after trial on the issues, judgment be rendered
a) adjudging that plaintiff has the right to the possession of subject personal
property and awarding the material possession of said property to plaintiff as
the sole and absolute owner thereof;
b) ordering defendants jointly and severally to pay the plaintiff the following:
(1) the sum of P500,000.00 representing unrealized income as of
the date of the filing of the instant complaint and, thereafter, the
sum of P7,500.00 daily until subject passenger bus shall have been
delivered to and in actual material possession of plaintiff;
(2) the sum of P100,000.00 as and for attorneys fees;
(3) the sum of P20,000.00 as litis expenses; and
22
 (4) the cost of suit.7
In view of its inability to put up the bond for the issuance of a writ of replevin,
petitioner opted to forego the same and just wait for the courts final judgment.
In respondents Answer8 to the complaint, they claimed that they merely towed the
bus to the PNCC compound for safekeeping pursuant to an order from the police
authorities; that respondent Balubal did not release the bus to petitioner in the
absence of an order from the police authorities; that petitioner, in claiming the bus,
failed to present the certificate of registration and official receipt of payment to
establish ownership thereof; and that the bus subject of the complaint was not the
same bus involved in the December 13, 1990 accident.
By way of Counterclaim, respondents prayed for the award of 40,326.54 in actual
damages, 50,000.00 in exemplary damages, and 130,000.00 in attorneys fees admissions of both the appellant and the appellee; (7) when the findings are contrary
and litigation expenses.
By Decision of December 9, 1997, the trial court dismissed petitioners complaint. On
respondents Counterclaim, it ordered petitioner to pay respondent PNCC the amount
of 40,320.00 representing actual damages to the radio room.
Petitioner appealed to the Court of Appeals9 which held that the storage of the bus for
safekeeping purposes partakes of the nature of a deposit, hence, custody or authority
over it remained with Lopera who ordered its safekeeping; and that Lopera acted as
respondent PNCCs agent, hence, absent any instruction from him, respondent
PNCC may not release the bus.
The appellate court thus concluded that the case should have been brought against
the police authorities instead of respondents.
Hence, the present petition for review.
The petition is impressed with merit.
Before proceeding to the substantive issues raised in the petition, the Court resolves
to dispose first the procedural issues raised by respondents in their Comment.10
Respondents contend that the petition raises only questions of fact and suffers from a
procedural defect in that it failed to include "such material portions of the record as
would support the petition" as required under Section 4, Rule 4511 of the Rules of
Court, hence, it should be dismissed outright.
Contrary to respondents contention, the petition raises questions of law foremost of
which is whether the owner of a personal property may initiate an action for replevin
against a depositary and recover damages for illegal distraint.
In any event, while it is settled that this Court is not a trier of facts and does not, as a
rule, undertake a re-examination of the evidence presented by the parties, a number
of exceptions have nevertheless been recognized by the Court. These exceptions are
enumerated in Insular Life Assurance Company, Ltd. v. Court of Appeals:12
It is a settled rule that in the exercise of the Supreme Courts power of review, the
Court is not a trier of facts and does not normally undertake the re-examination of the
evidence presented by the contending parties during the trial of the case considering
that the findings of facts of the CA are conclusive and binding on the Court. However,
the Court had recognized several exceptions to this rule, to wit: (1) when the findings
are grounded entirely on speculation, surmises or conjectures; (2) when the inference
made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of
discretion; (4) when the judgment is based on a misapprehension of facts; (5) when
the findings of facts are conflicting; (6) when in making its findings the Court of
Appeals went beyond the issues of the case, or its findings are contrary to the
to the trial court; (8) when the findings are conclusions without citation of specific
evidence on which they are based; (9) when the facts set forth in the petition as well
as in the petitioners main and reply briefs are not disputed by the respondent; (10)
when the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record; and (11) when the Court of Appeals
manifestly overlooked certain relevant facts not disputed by the parties, which, if
properly considered, would justify a different conclusion. x x x (Italics in original;
underscoring supplied; citations omitted)
As will be discussed below, number 11 of the foregoing enumeration applies in the
present case.
Respecting the second procedural issue, as a rule, the failure of a petitioner to
comply with any of the requirements under Section 4, Rule 45 of the Rules of Court
regarding the contents of and the documents which should accompany the petition
constitutes sufficient ground for its dismissal.13
In the exercise of its equity jurisdiction, however, procedural lapses may be
disregarded so that a case may be resolved on its merits. As held in Durban
Apartments Corporation v. Catacutan:14
It is well to remember that this Court, in not a few cases, has consistently held that
cases shall be determined on the merits, after full opportunity to all parties for
ventilation of their causes and defense, rather than on technicality or some procedural
imperfections. In so doing, the ends of justice would be better served. The dismissal
of cases purely on technical grounds is frowned upon and the rules of procedure
ought not be applied in a very rigid, technical sense, for they are adopted to help
secure, not override, substantial justice, and thereby defeat their very ends. Indeed,
rules of procedure are mere tools designed to expedite the resolution of cases and
other matters pending in court. A strict and rigid application of the rules that would
result in technicalities that tend to frustrate rather than promote justice must be
avoided.
x x x x (Emphasis supplied; citations omitted)
23
The facts and circumstances attendant to the case dictate that, in the interest of
substantial justice, this Court resolves it on the merits.
On to the substantive issues. Tillson v. Court of Appeals15 discusses the term replevin
as follows:
The term replevin is popularly understood as "the return to or recovery by a person of
goods or chattels claimed to be wrongfully taken or detained upon the persons giving
security to try the matter in court and return the goods if defeated in the action;" "the
writ by or the common-law action in which goods and chattels are replevied," i.e.,
taken or gotten back by a writ for replevin;" and to replevy, means to recover
possession by an action of replevin; to take possession of goods or chattels under a
replevin order. Bouviers Law Dictionary defines replevin as "a form of action which
lies to regain the possession of personal chattels which have been taken from the
plaintiff unlawfully x x x, (or as) the writ by virtue of which the sheriff proceeds at once
to take possession of the property therein described and transfer it to the plaintiff
upon his giving pledges which are satisfactory to the sheriff to prove his title, or return
the chattels taken if he fail so to do; the same authority states that the term, "to
replevy" means " to re-deliver goods which have been distrained to the original
possessor of them, on his giving pledges in an action of replevin." The term therefore
may refer either to the action itself, for the recovery of personality, or the provisional
remedy traditionally associated with it, by which possession of the property may be
obtain[ed] by the plaintiff and retained during the pendency of the action. (Emphasis
and underscoring supplied; citations omitted)
In a complaint for replevin, the claimant must convincingly show that he is either the
owner or clearly entitled to the possession of the object sought to be recovered,16 and
that the defendant, who is in actual or legal possession thereof, wrongfully detains the
same.17
Petitioners ownership of the bus being admitted by respondents,18 consideration of
whether respondents have been wrongfully detaining it is in order.
Following the conduct of an investigation of the accident, the bus was towed by
respondents on the request of Lopera.19 It was thus not distrained or taken for a tax
assessment or a fine pursuant to law, or seized under a writ of execution or
preliminary attachment, or otherwise placed under custodia legis.
In upholding the dismissal of petitioners complaint, the Court of Appeals held that
while "there is no law authorizing the impounding of a vehicle involved in an accident
by the police authorities, x x x neither is there a law making the impounding of
vehicles involved in accidents illegal." It added that "the Supreme Court is of the view
that there is yet no clear-cut policy or rule on the matter."20 The appellate court is
mistaken.
The Constitution grants the right against unreasonable seizures. Thus, Section 2,
Article III provides:
The right of the people to be secure in their persons, houses, papers, and
effects against unreasonable searches and seizures of whatever nature and for any
purpose shall be inviolable, and no search warrant or warrant of arrest shall issue
except upon probable cause to be determined personally by the judge after
examination under oath or affirmation of the complainant and the witnesses he may
produce, and particularly describing the place to be searched and the persons or
things to be seized. (Underscoring supplied)
The seizure and impounding of petitioners bus, on Loperas request, were
unquestionably violative of "the right to be let alone" by the authorities as guaranteed
by the Constitution.21
The Court of Appeals reliance on Victory Liner, Inc. v. Bellosillo 22 to justify the
impounding of vehicles involved in accidents by police authorities is misplaced. The
Victory Liner case was an administrative case against a trial court judge. This Court
explicitly declined to rule on the legality of such an order:
In the same vein, this administrative case is not the right forum to determine the issue
of the legality of respondents order requiring VLI to post a cash bond for the release
of its impounded vehicle. VLI should have raised that issue in the proper courts and
not directly to us, and much less by way of an administrative case. x x x
xxxx
To allow VLI to raise that issue before us and obtain a ruling thereon directly from us
through an administrative case would be to countenance a disregard of the
established rules of procedure and of the hierarchy of courts. VLI would thus be able
to evade compliance with the requirements inherent in the filing of a property petition,
including the payment of docket fees. Hence, we shall shun from passing upon that
issue in this case.23 (Underscoring supplied)
This Courts statement in Victory Liner on the lack of a "clear-cut policy" refers to the
practice, rightly or wrongly, of trial court judges of issuing orders for the impounding of
vehicles involved in accidents. It has no application to the instant case which involves
the seizure and distraint implemented by respondents upon a verbal order by Lopera
without the benefit or color of legality afforded by a court process, writ or order.
That a year after the incident the driver of the bus was criminally charged for reckless
imprudence resulting to damage to property in which the bus could possibly be held
as evidence does not affect the outcome of this case.24As explained in Bagalihog v.
Fernandez:25
It is true that property held as evidence in a criminal case cannot be replevied. But the
rule applies only where the property is lawfully held, that is, seized in accordance with
the rule against warrantless searches and seizures or its accepted exceptions.
Property subject of litigation is not by that fact alone in custodia legis. As the Court
said in Tamisin v. Odejar, 26 "A thing is in custodia legis when it is shown that it has
been and is subjected to the official custody of a judicial executive officer in
pursuance of his execution of a legal writ." Only when property is lawfully taken by
24
virtue of legal process is it considered in the custody of the law, and not otherwise.
(Emphasis and underscoring supplied; italics in the original; citations omitted)
Petitioners prayer for recovery of possession of the bus is, in light of the foregoing
discussion, thus in order.
As for petitioners claim for damages, the Court finds that it cannot pass upon the
same without impleading Lopera and any other police officer responsible for ordering
the seizure and distraint of the bus. The police authorities, through Lopera, having
turned over the bus to respondents for safekeeping, a contract of deposit27 was
perfected between them and respondents.
For review in the instant Petition1 is the Decision2 rendered on March 19,
2009 and Resolution3 issued on May 5, 2009 by the Court of Appeals (CA)
in CAG.R. SP No. 03489. The CA granted the Petition for Review4 filed by
Mr. and Mrs. Felix Emboy, Jr. (Felix) and Marilou EmboyDelantar
(Marilou) (respondents), seeking to reverse the decisions of the Regional
Trial Court (RTC), Branch 12,5 and Municipal Trial Court in Cities (MTCC),
Branch 3,6 of Cebu City, rendered on February 26, 2008 in Civil
Case No. CEB33328,7 and on September 25, 2006 in Civil Case
No. R49832, respectively. The RTC affirmed the MTCC in upholding the
claims of Carmencita Suarez (Carmencita) in her complaint for unlawful
detainer instituted against the respondents.

Petitioners failure to implead indispensable parties is not, of course, fatal to its cause Antecedents
of action, misjoinder or non-joinder of parties not being a ground for its
dismissal.28 Domingo v. Scheer29 elucidates: At the center of the dispute is a 222square meter parcel of land,
designated as Lot No. 1907A2 (subject lot) of the subdivision plan
However, the non-joinder of indispensable parties is not a ground for the dismissal of Psd165686, situated in Barangay Duljo, Cebu City, and covered by
an action. Parties may be added by order of the court on motion of the party or on its Transfer Certificate of Title (TCT) No. T174880 issued in the name of
own initiative at any stage of the action and/or such times as are just. If the Carmencita on February 9, 2005. The subject lot used to be a part of Lot
petitioner/plaintiff refuses to implead an indispensable party despite the order of the No. 1907A,8 which was partitioned in the following manner among the
court, the latter may dismiss the complaint/petition for the petitioner/plaintiffs failure to heirs of Spouses Carlos Padilla (Carlos) and Asuncion Pacres (Asuncion): 9
comply therefor. The remedy is to implead the non-party claimed to be indispensable.
(Emphasis and underscoring supplied; citations omitted) Lot No. TCT No. Heirs
1907A1 T54359 Spouses Rogelio and Praxedes Padilla
For petitioner to pursue its claim for damages then, it or the trial court motu proprio 1907A2 T54360 Heirs of Vicente Padilla (Vicente),
may implead as defendants the indispensable parties Lopera and any other namely: (1) Azucena Padilla, married
responsible police officers. to Felly Carrera; (2) Remedios Padilla
(Remedios), married to Oscar Dimay;
WHEREFORE, the assailed Court of Appeals Decision is REVERSED and SET (3) Veronica Padilla (Veronica);10 and
ASIDE. (4) Moreno Padilla (Moreno), married
to Teresita Curso (Teresita)
The prayer of petitioner, Superlines Transportation Company, Inc., for recovery of 1907A3 T54361 Cresencio Padilla
possession of personal property is GRANTED. 1907A4 T54362 Fructousa Baricuatro
1907A5 T54363 Claudia PadillaEmboy (Claudia)
The records of the case are REMANDED to the court of origin, the Regional Trial
Court, Branch 62, Gumaca, Quezon, which is DIRECTED to REINSTATE petitioners
complaint to its docket if petitioner is still interested to pursue its claim for damages A house, which is occupied by respondents Felix and Marilou, stands in the
and to act in accordance with the foregoing pronouncement of the Court.
subject lot. The respondents claim that their mother, Claudia, had
occupied the subject lot during her lifetime and it was earmarked to
SO ORDERED. become her share in Lot No. 1907A. They had thereafter stayed in the
subject lot for decades after inheriting the same from Claudia, who had in
CARMENCITA SUAREZ, Petitioner, v. MR. AND MRS. FELIX E. EMBOY, turn succeeded her own parents, Carlos and Asuncion. 11
JR. AND MARILOU P. EMBOYDELANTAR, Respondents.
In 2004, respondents Felix and Marilou were asked by their cousins, who
DECISION are the Heirs of Vicente, to vacate the subject lot and to transfer to Lot
No. 1907A5, a landlocked portion sans a right of way. They refused to
comply insisting that Claudias inheritance pertained to Lot No. 1907A
REYES, J.: 2.12

25

Not long after, the respondents received from Carmencitas counsel, Atty.
Jufelenito R. Pareja (Atty. Pareja), a demand letter, dated February 23,
2004, requiring them to vacate the subject lot. They were informed that
Carmencita had already purchased on February 12, 2004 the subject lot
from the formers relatives. However, the respondents did not heed the
demand. Instead, they examined the records pertaining to the subject lot
and uncovered possible anomalies, i.e., forged signatures and alterations,
in the execution of a series of deeds of partition relative to Lot No. 1907
A. On August 13, 2004, they filed before the RTC of Cebu City a
complaint13 for nullification of the partition and for the issuance of new
TCTs covering the heirs respective portions of Lot No. 1907A. 14
On December 8, 2004, Carmencita filed before the MTCC and against the
respondents a complaint for unlawful detainer, the origin of the instant
petition. She alleged that she bought the subject lot from Remedios,
Moreno, Veronica and Dionesia,15 the registered owners thereof and the
persons who allowed the respondents to occupy the same by mere
tolerance. As their successorininterest, she claimed her entitlement to
possession of the subject lot and the right to demand from the
respondents to vacate the same.16
The MTCC upheld Carmencitas claims in its decision rendered on
September 25, 2006. The respondents were ordered to vacate the subject
lot and remove at their expense all the improvements they had built
thereon. They were likewise made solidarily liable to pay Carmencita Php
20,000.00 as attorneys fees.17
In the Decision dated February 26, 2008, the RTC affirmed in its entirety
the MTCC ruling.18
The respondents challenged the MTCC and RTC judgments through a
Petition for Review19 filed before the CA.
The respondents argued that they have been occupying the subject lot in
the concept of owners for several decades. Carmencita, on the other
hand, was a buyer in bad faith for having purchased the property despite
the notice of lis pendens clearly annotated on the subject lots title. Even
her complaint for unlawful detainer was filed on December 8, 2004
subsequent to the respondents institution on August 13, 2004 of a petition
for nullification of the partition. Citing Sarmiento v. CA,20the respondents
emphasized that even if one is the owner of the property, the possession
thereof cannot be wrested from another who had been in the physical or
material possession of the same for more than one year by resorting to a
summary action of ejectment.21 The respondents also invoked the
doctrine enunciated in Amagan v. Marayag22 that the pendency of another
action anchored on the issue of ownership justifies the suspension of an
ejectment suit involving the same real property. The foregoing is
especially true in the case at bar where the issue of possession is so
interwoven with that of ownership. Besides, the resolution of the question
of ownership would necessarily result in the disposition of the issue of
possession.
The respondents also stressed that the deed of sale dated April 1, 2004,
which was attached to the complaint for unlawful detainer, bore telltale
signs of being spurious. First, Atty. Parejas demand letter sent to the
respondents instead referred to a deed of sale dated February 12,
2004. Secondly, Teresita, who now lives in Luzon and has been estranged
from Moreno since the 1980s, was a signatory in the deed of sale. Thirdly,
a certain Veronida Padilla, a fictitious person, also signed the deed of sale
as among the vendors, but she, too, was impleaded as a codefendant in
the ejectment suit. Fourthly, the deed was only registered the following
year after its supposed execution.
The respondents insisted that the Heirs of Vicente, who had allegedly sold
the subject lot to Carmencita, had never physically occupied the same.
Hence, there was no basis at all for Carmencitas claim that the
respondents possession of the subject lot was by mere tolerance of the
alleged owners.
The respondents also presented before the CA a newly discovered
evidence, which they found in an old wooden chest in their ancestral
home. A duly notarized document captioned as an Agreement, 23 dated
February 23, 1957, showed that Vicente and his spouse, Dionesia, had
waived their hereditary rights to Lot No. 1907A. The document stated
that Vicente obtained a loan from the Philippine National Bank using Lot
No. 1907A as a collateral. The loan was paid by Carlos and Asuncion and
the waiver must have been executed in order to be fair to Vicentes
siblings. Prescinding from the above, the Heirs of Vicente no longer had
ownership rights over the subject lot to convey to Carmencita.
The respondents also averred that Carmencitas complaint lacked a cause
of action. The certification to file an action was issued by the officials
of Barangay Duljo in the name of James Tan Suarez, Carmencitas brother,
who had no real rights or interests over the subject lot. Further, while
Carmencita based her claim over the subject lot by virtue of a deed of sale
executed on April 1, 2004, no demand to vacate was made upon the
respondents after that date. The absence of such demand rendered the
complaint fatally defective, as the date of its service should be the
reckoning point of the oneyear period within which the suit can be filed.
In support of the respondents prayer for the issuance of injunctive reliefs,
they argued that their loss would be irreparable. Moreover, the resolution
of the respondents petition for nullification of the partition of Lot No.
1907A, in which Carmencita was likewise impleaded as a defendant,
would be rendered useless in the event that the latters complaint for
unlawful detainer would be granted and the formers ancestral house
demolished.
26
 The Ruling of the CA
On March 19, 2009, the CA rendered the herein assailed Decision
reversing the disquisitions of the courts a quo and dismissing Carmencitas
complaint for unlawful detainer. The CA
explained:chanRoblesvirtualLawlibrary
Section 1, Rule 70 of the Rules of Court provides:
Section 1. Who may institute proceedings, and when.Subject to the
provisions of the next succeeding section, a person deprived of the
possession of any land or building by force, intimidation, threat, strategy,
or stealth, or a lessor, vendor, vendee, or other person against whom the
possession of any land or building is unlawfully withheld after the
expiration or termination of the right to hold possession, by virtue of any
contract, express or implied, or the legal representatives or assigns of any
such lessor, vendor, vendee, or other person, may, at any time within one
(1) year after such unlawful deprivation or withholding of possession, bring
an action in the proper Municipal Trial Court against the person or persons
unlawfully withholding or depriving of possession, or any person or
persons claiming under them, for the restitution of such possession,
together with damages and costs.
The distinction between forcible entry and unlawful detainer was lucidly
explained in Sarmiento vs. Court of Appeals,:
Forcible entry and unlawful detainer cases are two distinct actions defined
in Section 1, Rule 70 of the Rules of Court. [In] forcible entry, one is
deprived of physical possession of land or building by means of force,
intimidation, threat, strategy, or stealth. In unlawful detainer, one
unlawfully withholds possession thereof after the expiration or termination
of his right to hold possession under any contract, express or implied. In
forcible entry, the possession is illegal from the beginning and the basic
inquiry centers on who has the prior possession de facto. In unlawful
detainer, the possession was originally lawful but became unlawful by the
expiration or termination of the right to possess, hence the issue of rightful
possession is decisive for, in such action, the defendant is in actual
possession and the plaintiffs cause of action is the termination of the
defendants right to continue in possession.
What determines the cause of action is the nature of defendants entry into
the land. If the entry is illegal, then the action which may be filed against
the intruder within one (1) year therefrom is forcible entry. If, on the
other hand, the entry is legal but the possession thereafter became illegal,
the case is one of unlawful detainer which must be filed within one (1)
year from the date of the last demand.
A close perusal of [Carmencitas] complaint a quo reveals that the action
was neither one of forcible entry nor unlawful detainer but essentially
involved an issue of ownership which must be resolved in an accion
reivindicatoria. It did not characterize [the respondents] alleged entry
into the land: whether the same was legal or illegal. It did not state how
[the respondents] entered the land and constructed a house thereon. It
was also silent on whether [the respondents] possession became legal
before [Carmencita] demanded from them to vacate the land. The
complaint merely averred that their relatives previously owned the lot [the
respondents] were occupying and that after [Carmencita] purchased it[,]
she, as its new owner, demanded [for the respondents] to vacate the
land. Moreover, it is undisputed that [the respondents] and their
ancestors have been occupying the land for several decades already.
There was no averment as to how or when [Carmencitas] predecessors
tolerated [the respondents] possession of the land. Consequently, there
was no contract to speak of, whether express or implied, between [the
respondents], on one hand, and [Carmencita] or her predecessors, on the
other, as would qualify [the respondents] possession of the land as a case
of unlawful detainer. Neither was it alleged that [the respondents] took
possession of the land through force, intimidation, threat, strategy or
stealth to make out a case of forcible entry. In any event, [Carmencita]
cannot legally assert that [the respondents] possession of the land was by
mere tolerance. This is because [Carmencitas] predecessorsininterest
did not yet own the property when [Claudia] took possession thereof.
Take note that [Carmencitas] predecessorsininterest merely stepped
into the shoes of their parents who were also coheirs of [Claudia].
Finally, to categorize a cause of action as one constitutive of unlawful
detainer, plaintiffs supposed acts of tolerance must have been present
from the start of the possession which he later seek[s] to recover. This is
clearly wanting in the case at bar.
Indeed, when the complaint fails to aver facts constitutive of forcible entry
or unlawful detainer, as where it does not state how entry was effected or
how and when dispossession started, as in the case at bar, the remedy
should either be an accion publiciana or an accion reivindicatoria in the
proper RTC. If [Carmencita] is truly the owner of the subject property and
she was unlawfully deprived of the real right of possession or ownership
thereof, she should present her claim before the RTC in an
accion publiciana or an accion reivindicatoria, and not before the municipal
trial court in a summary proceeding of unlawful detainer or forcible entry.
Munoz vs. Court of Appeals enunciated:
For even if he is the owner, possession of the property cannot be wrested
from another who had been in possession thereof for more than twelve
(12) years through a summary action for ejectment. Although
admittedly[,] petitioner may validly claim ownership based on the
muniments of title it presented, such evidence does not responsibly
address the issue of prior actual possession raised in a forcible entry
case. It must be stated that regardless of actual condition of the title to
the property, the party in peaceable quiet possession shall not be turned
out by a strong hand, violence or terror. Thus, a party who can prove
prior possession can recover such possession even against the owner
himself. Whatever may be the character of his prior possession, if he has
in his favor priority in time, he has the security that entitles him to remain
27
on the property until he is lawfully ejected by a person having a better
right by accion publiciana or accion reivindicatoria.24 (Citations omitted and
underscoring supplied)
In Carmencitas Motion for Reconsideration25 filed before the CA, she
alleged that the case of Sarmientocited by the respondents is not
applicable to the present controversy since it involves a boundary dispute,
which is properly the subject of an accion reivindicatoria and over which
the MTCC has no jurisdiction. She claimed that Rivera v. Rivera26 finds
more relevance in the case at bar. In Rivera, the contending parties were
each others relatives and the Court ruled that in an unlawful detainer
case, prior physical possession by the complainant is not necessary. 27
Instead, what is required is a better right of possession. Further, the
MTCC cannot be divested of jurisdiction just because the defendants assert
ownership over the disputed property.
In the herein assailed Resolution dated May 5, 2009, the CA denied
Carmencitas Motion for Reconsideration.
In essence, the instant petition presents the following issues:
I
Whether or not Carmencitas complaint against the respondents had
sufficiently alleged and proven a cause of action for unlawful detainer.
II
Whether or not the pendency of the respondents petition for nullification
of partition of Lot No. 1907A and for the issuance of new certificates of
title can abate Carmencitas ejectment suit.
Carmencitas Allegations
In support of the petition, Carmencita reiterates that she purchased the
subject lot from the Heirs of Vicente, who were then the registered owners
thereof. At the time of the sale, respondents Felix and Marilou were
occupying the subject lot. Thus, Atty. Pareja, in Carmencitas behalf,
demanded that they vacate the property. The respondents refusal to
comply with the demand turned them into deforciants unlawfully
withholding the possession of the subject lot from Carmencita, the new
owner, whose recourse was to file a complaint for unlawful detainer.
Further, Carmencita insists that a certificate of title shall not be subject to
a collateral attack28 and the issue of ownership cannot be resolved in an
action for unlawful detainer. A pending suit involving the question of
ownership of a piece of real property will not abate an ejectment complaint
as the two are not based on the same cause of action and are seeking
different reliefs.29
Additionally, Carmencita invokes the doctrine in Eastern Shipping Lines,
Inc. v. CA30 that the registered owner of a property is entitled to its
possession. In Arcal v. CA,31 the Court also explained that the occupation
of a property not by its registered owner but by others depends on the
formers tolerance, and the occupants are bound by an implied promise to
vacate upon demand, failing at which, a suit for ejectment would be
proper.32
The Respondents Arguments
In their Comment33 to the instant petition, the respondents stress that
Carmencitas complaint for unlawful detainer was fundamentally
inadequate. There was practically no specific averment as to when and
how possession by tolerance of the respondents began. In the complaint,
Carmencita made a general claim that the respondents possessed the
property by mere tolerance with the understanding that they would
voluntarily vacate the premises and remove their house(s) thereon upon
demand by the owners.34 In Spouses Valdez, Jr. v. CA,35 the Court ruled
that the failure of the complainants to allege key jurisdictional facts
constitutive of unlawful detainer is fatal and deprives the MTCC of
jurisdiction over the action.
In their rejoinder,36 the respondents likewise argue that the issues of
possession and ownership are inseparably linked in the case at bar.
Carmencitas complaint for ejectment was based solely on her spurious
title, which is already the subject of the respondents petition for
nullification of partition of Lot No. 1907A.
Our Disquisition
The instant petition lacks merit.
Carmencita had not amply alleged
and proven that all the requisites for
unlawful detainer are present in the
case at bar.
Without a doubt, the registered owner of real property is entitled to its
possession. However, the owner cannot simply wrest possession thereof
from whoever is in actual occupation of the property. To recover
possession, he must resort to the proper judicial remedy and, once he
chooses what action to file, he is required to satisfy the conditions
necessary for such action to prosper.37
In Spouses Valdez, Jr.,38 the Court is instructive anent the three kinds of
actions available to recover possession of real property,
viz:chanRoblesvirtualLawlibrary
28
(a) accion interdictal; (b) accion publiciana; and (c) accion reivindicatoria.
Accion interdictal comprises two distinct causes of action, namely, forcible
entry (detentacion) and unlawful detainer (desahuico) [sic]. In forcible
entry, one is deprived of physical possession of real property by means of
force, intimidation, strategy, threats, or stealth whereas in unlawful
detainer, one illegally withholds possession after the expiration or
termination of his right to hold possession under any contract, express or
implied. The two are distinguished from each other in that in forcible
entry, the possession of the defendant is illegal from the beginning, and
that the issue is which party has prior de facto possession while in
unlawful detainer, possession of the defendant is originally legal but
became illegal due to the expiration or termination of the right to possess.
The jurisdiction of these two actions, which are summary in nature, lies in
the proper municipal trial court or metropolitan trial court. Both actions
must be brought within one year from the date of actual entry on the land,
in case of forcible entry, and from the date of last demand, in case of
unlawful detainer. The issue in said cases is the right to physical
possession.
Accion publiciana is the plenary action to recover the right of possession
which should be brought in the proper regional trial court when
dispossession has lasted for more than one year. It is an ordinary civil
proceeding to determine the better right of possession of realty
independently of title. In other words, if at the time of the filing of the
complaint more than one year had elapsed since defendant had turned
plaintiff out of possession or defendants possession had become illegal,
the action will be, not one of the forcible entry or illegal detainer, but
an accion publiciana. On the other hand, accion reivindicatoria is an action
to recover ownership also brought in the proper regional trial court in an
ordinary civil proceeding.39 (Citations omitted)
In a complaint for unlawful detainer, the following key jurisdictional facts
must be alleged and sufficiently established:chanRoblesvirtualLawlibrary
(1) initially, possession of property by the defendant was by contract with
or by tolerance of the plaintiff;
(2) eventually, such possession became illegal upon notice by plaintiff to
defendant of the termination of the latters right of possession;
(3) thereafter, the defendant remained in possession of the property and
deprived the plaintiff of the enjoyment thereof; and
(4) within one year from the last demand on defendant to vacate the
property, the plaintiff instituted the complaint for ejectment. 40
In the case at bar, the first requisite mentioned above is markedly absent.
Carmencita failed to clearly allege and prove how and when the
respondents entered the subject lot and constructed a house upon
it.41 Carmencita was likewise conspicuously silent about the details on who
specifically permitted the respondents to occupy the lot, and how and
when such tolerance came about.42 Instead, Carmencita cavalierly
formulated a legal conclusion, sans factual substantiation, that (a) the
respondents initial occupation of the subject lot was lawful by virtue of
tolerance by the registered owners, and (b) the respondents became
deforciants unlawfully withholding the subject lots possession after
Carmencita, as purchaser and new registered owner, had demanded for
the former to vacate the property.43 It is worth noting that the absence of
the first requisite assumes even more importance in the light of the
respondents claim that for decades, they have been occupying the subject
lot as owners thereof.
Again, this Court stresses that to give the court jurisdiction to effect the
ejectment of an occupant or deforciant on the land, it is necessary that the
complaint must sufficiently show such a statement of facts as to bring the
party clearly within the class of cases for which the statutes provide a
remedy, without resort to parol testimony, as these proceedings are
summary in nature. In short, the jurisdictional facts must appear on the
face of the complaint. When the complaint fails to aver facts constitutive
of forcible entry or unlawful detainer, as where it does not state how entry
was effected or how and when dispossession started, the remedy should
either be an accion publiciana or accion reivindicatoria.44
As an exception to the general rule, the respondents petition for
nullification of the partition of Lot No. 1907A can abate
Carmencitas suit for unlawful detainer.
In Amagan, the Court is emphatic that:chanRoblesvirtualLawlibrary
As a general rule, therefore, a pending civil action involving ownership of
the same property does not justify the suspension of ejectment
proceedings. The underlying reasons for the above ruling were that the
actions in the Regional Trial Court did not involve physical or de
facto possession, and, on not a few occasions, that the case in the
Regional Trial Court was merely a ploy to delay disposition of the
ejectment proceeding, or that the issues presented in the former could
quite as easily be set up as defenses in the ejectment action and there
resolved.
Only in rare instances is suspension allowed to await the outcome of the
pending civil action. One such exception is Vda. de Legaspi v. Avendao,
wherein the Court declared:chanRoblesvirtualLawlibrary
x x x. Where the action, therefore, is one of illegal detainer, as
distinguished from one of forcible entry, and the right of the plaintiff to
recover the premises is seriously placed in issue in a proper judicial
proceeding, it is more equitable and just and less productive of confusion
and disturbance of physical possession, with all its concomitant
29
inconvenience and expenses. For the Court in which the issue of legal
possession, whether involving ownership or not, is brought to restrain,
should a petition for preliminary injunction be filed with it, the effects of
any order or decision in the unlawful detainer case in order to await the
final judgment in the more substantive case involving legal possession or
ownership. It is only where there has been forcible entry that as a matter
of public policy the right to physical possession should be immediately set
at rest in favor of the prior possession regardless of the fact that the other
party might ultimately be found to have superior claim to the premises
involved, thereby to discourage any attempt to recover possession thru
force, strategy or stealth and without resorting to the courts.
xxxx
Indisputably, the execution of the MCTC Decision would have resulted in
the demolition of the house subject of the ejectment suit; thus, by parity
of reasoning, considerations of equity require the suspension of the
ejectment proceedings. We note that, like Vda. de Legaspi, the
respondents suit is one of unlawful detainer and not of forcible entry. And
most certainly, the ejectment of petitioners would mean a demolition of
their house, a matter that is likely to create the confusion, disturbance,
inconveniences and expenses mentioned in the said exceptional case.
Necessarily, the affirmance of the MCTC Decision would cause the
respondent to go through the whole gamut of enforcing it by physically
removing the petitioners from the premises they claim to have been
occupying since 1937. (Respondent is claiming ownership only of the land,
not of the house.) Needlessly, the litigants as well as the courts will be
wasting much time and effort by proceeding at a stage wherein the
outcome is at best temporary, but the result of enforcement is permanent,
unjust and probably irreparable.
We should stress that respondents claim to physical possession is based
not on an expired or a violated contract of lease, but allegedly on mere
tolerance. Without in any way prejudging the proceedings for the
quieting of title, we deem it judicious under the present exceptional
circumstances to suspend the ejectment case. 45 (Citations omitted)
The Court then quoted with favor the following portion of the Decision
dated July 8, 1997, penned by Associate Justice Artemio G. Tuquero in
CAG.R. No. 43611SP, from which the Amagan case
sprang:chanRoblesvirtualLawlibrary
ONE. Private respondent Teodorico T. Marayag anchors his action for
unlawful detainer on the theory that petitioners possession of the property
in question was by mere tolerance. However, in answer to his demand
letter dated April 13, 1996 x x x, petitioners categorically denied having
any agreement with him, verbal or written, asserting that they are owners
of the premises we are occupying at 108 J.P. Rizal Street, San Vicente,
Silang, Cavite. In other words, it is not merely physical possession but
ownership as well that is involved in this case.[]
TWO. In fact, to protect their rights to the premises in question,
petitioners filed an action for reconveyance, quieting of title and damages
against private respondents, docketed as Civil Case No. TG1682 of the
Regional Trial Court, Branch 18, Tagaytay City. The issue of ownership is
squarely raised in this action. Undoubtedly, the resolution of this issue will
be determinative of who is entitled to the possession of the premises in
question.[]
THREE. The immediate execution of the judgment in the unlawful
detainer case will include the removal of the petitioners house [from] the
lot in question.[]
To the mind of the Court it is injudicious, nay inequitable, to allow
demolition of petitioners house prior to the determination of the question
of ownership [of] the lot on which it stands.46 (Citation omitted)
We find the doctrines enunciated in Amagan squarely applicable to the
instant petition for reasons discussed hereunder.
Carmencitas complaint for unlawful detainer is anchored upon the
proposition that the respondents have been in possession of the subject lot
by mere tolerance of the owners. The respondents, on the other hand,
raise the defense of ownership of the subject lot and point to the pendency
of Civil Case No. CEB30548, a petition for nullification of the
partition of Lot No. 1907A, in which Carmencita and the Heirs of Vicente
were impleaded as parties. Further, should Carmencitas complaint be
granted, the respondents house, which has been standing in the subject
lot for decades, would be subject to demolition. The foregoing
circumstances, thus, justify the exclusion of the instant petition from the
purview of the general rule.
All told, we find no reversible error committed by the CA in dismissing
Carmencitas complaint for unlawful detainer. As discussed above, the
jurisdictional requirement of possession by mere tolerance of the owners
had not been amply alleged and proven. Moreover, circumstances exist
which justify the abatement of the ejectment proceedings. Carmencita
can ventilate her ownership claims in an action more suited for the
purpose. The respondents, on other hand, need not be exposed to the risk
of having their house demolished pending the resolution of their petition
for nullification of the partition of Lot No. 1907A, where ownership over
the subject lot is likewise presented as an issue.
IN VIEW OF THE FOREGOING, the instant petition is DENIED. The
Decision rendered on March 19, 2009 and Resolution issued on May 5,
30
2009 by the Court of Appeals in CAG.R. SP No. 03489 are AFFIRMED.
SO ORDERED.
REPUBLIC OF THE PHILIPPINES and NATIONAL
POWER CORPORATION, both represented by the
PRIVATIZATION MANAGEMENT OFFICE,
Petitioners,
- versus -
SUNVAR REALTY DEVELOPMENT
CORPORATION, Respondent.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
SERENO, J.:
This is a Rule 45 Petition questioning the Decision of the Regional Trial Court
(RTC) of Makati City, which ordered the dismissal of the Complaint for unlawful detainer
filed by petitioners herein with the Metropolitan Trial Court.
Petitioners Republic of the Philippines (Republic) and National Power Corporation
(NPC) are registered co-owners of several parcels of land located along Pasong Tamo
Extension and Vito Cruz in Makati City, and covered by four Transfer Certificates of Title
(TCTs).[1] The main subject matter of the instant Petition is one of these four parcels of land
covered by TCT No. 458365, with an area of approximately 22,294 square meters (hereinafter,
the subject property). Eighty percent (80%) of the subject property is owned by petitioner
Republic, while the remaining twenty percent (20%) belongs to petitioner NPC. [2] Petitioners
are being represented in this case by the Privatization Management Office (PMO), which is the
agency tasked with the administration and disposal of government assets. [3] Meanwhile,
respondent Sunvar Realty Development Corporation (Sunvar) occupied the subject property
by virtue of sublease agreements, which had in the meantime expired.
The factual antecedents of the case are straightforward. On 26 December 1977,
[4]
petitioners leased the four parcels of land, including the subject property, to the Technology
Resource Center Foundation, Inc., (TRCFI) for a period of 25 years beginning 01 January
1978 and ending on 31 December 2002.[5] Under the Contract of Lease (the main lease
contract), petitioners granted TRCFI the right to sublease any portion of the four parcels of
land.[6]
Exercising its right, TRCFI consequently subleased a majority of the subject
property to respondent Sunvar through several sublease agreements (the sublease agreements).
[7]
Although these agreements commenced on different dates, all of them contained common
provisions on the terms of the sublease and were altogether set to expire on 31 December
2002, the expiration date of TRCFIs main lease contract with petitioners, but subject to
renewal at the option of respondent:[8]
The term of the sublease shall be for an initial period of
[variable] years and [variable] months commencing on [variable],
renewable for another twenty-five (25) years at SUNVARs exclusive
option.[9]
According to petitioners, in all the sublease agreements, respondent Sunvar agreed
G.R. No. 194880 to return or surrender the subleased land, without any delay whatsoever upon the termination
or expiration of the sublease contract or any renewal or extension thereof. [10]
Present: During the period of its sublease, respondent Sunvar introduced useful
improvements, consisting of several commercial buildings, and leased out the spaces therein.
[11]
CARPIO, J., Chairperson, It also profitably utilized the other open spaces on the subject property as parking areas for
BRION, customers and guests.[12]
PEREZ, In 1987, following a reorganization of the government, TRCFI was dissolved. In its
SERENO, and stead, the Philippine Development Alternatives Foundation (PDAF) was created, assuming the
REYES, JJ. functions previously performed by TRCFI.[13]
On 26 April 2002, less than a year before the expiration of the main lease contract
and the sublease agreements, respondent Sunvar wrote to PDAF as successor of TRCFI.
Respondent expressed its desire to exercise the option to renew the sublease over the subject
Promulgated: property and proposed an increased rental rate and a renewal period of another 25 years. [14] On
even date, it also wrote to the Office of the President, Department of Environment and Natural
June 20, 2012 Resources and petitioner NPC. The letters expressed the same desire to renew the lease over
the subject property under the new rental rate and renewal period. [15]
On 10 May 2002, PDAF informed respondent that the notice of renewal of the lease
had already been sent to petitioners, but that it had yet to receive a response. [16] It further
explained that the proposal of respondent for the renewal of the sublease could not yet be
acted upon, and neither could the proposed rental payments be accepted. [17] Respondent
acknowledged receipt of the letter and requested PDAF to apprise the former of any specific
actions undertaken with respect to the said lease arrangement over the subject property. [18]
On 03 June 2002, six months before the main contract of lease was to expire,
petitioner NPC through Atty. Rainer B. Butalid, Vice-President and General Counsel notified
PDAF of the formers decision not to renew the contract of lease. [19] In turn, PDAF notified
respondent of NPCs decision.[20]
On the other hand, petitioner Republic through then Senior Deputy Executive
Secretary Waldo Q. Flores likewise notified PDAF of the formers decision not to renew the
lease contract.[21] The Republic reasoned that the parties had earlier agreed to shorten the
corporate life of PDAF and to transfer the latters assets to the former for the purpose of selling
them to raise funds.[22] On 25 June 2002, PDAF duly informed respondent Sunvar of petitioner
Republics decision not to renew the lease and quoted the Memorandum of Senior Deputy
Executive Secretary Flores.[23]
On 31 December 2002, the main lease contract with PDAF, as well as its sublease
agreements with respondent Sunvar, all expired. Hence, petitioners recovered from PDAF all
the rights over the subject property and the three other parcels of land. Thereafter, petitioner
Republic transferred the subject property to the PMO for disposition. Nevertheless, respondent
Sunvar continued to occupy the property.
On 22 February 2008, or six years after the main lease contract expired, petitioner
Republic, through the Office of the Solicitor General (OSG), advised respondent Sunvar to
completely vacate the subject property within thirty (30) days. [24] The latter duly received the
Notice from the OSG through registered mail, [25] but failed to vacate and remained on the
property.[26]
On 03 February 2009, respondent Sunvar received from respondent OSG a final
notice to vacate within 15 days. [27] When the period lapsed, respondent Sunvar again refused to
vacate the property and continued to occupy it.
31
 On 02 April 2009, the PMO issued an Inspection and Appraisal Report to determine
the fair rental value of the subject property and petitioners lost income a loss arising from the
refusal of respondent Sunvar to vacate the property after the expiration of the main lease
contract and sublease agreements. [28] Using the market comparison approach, the PMO
determined that the fair rental value of the subject property was 10,364,000 per month, and
that respondent Sunvar owed petitioners a total of 630,123,700 from 01 January 2002 to 31
March 2009.[29]
On 23 July 2009, petitioners filed the Complaint dated 26 May 2009 for unlawful
detainer with the Metropolitan Trial Court (MeTC) of Makati City. Petitioners prayed that
respondent Sunvar be ordered to vacate the subject property and to pay damages for the illegal
use and lost income owing to them:
WHEREFORE, PREMISES CONSIDERED, it is most
respectfully prayed that after proper proceedings, judgment be
rendered:
1. Ordering defendant SUNVAR REALTY DEVELOPMENT
CORPORATION and all persons, natural and juridical, claiming rights
under it, to vacate the subject property and peacefully surrender the
same, with the useful improvements therein, to the plaintiffs or to their
authorized representative; and
2. Ordering defendant SUNVAR REALTY DEVELOPMENT
CORPORATION to pay plaintiffs damages in the amount of SIX
HUNDRED THIRTY MILLION ONE HUNDRED TWENTY THREE
THOUSAND SEVEN HUNDRED PESOS (630,123,700.00) for the
illegal and unauthorized use and occupation of the subject property
from January 1, 2003 to March 31, 2009, and the amount of TEN
MILLION THREE HUNDRED SIXTY-FOUR THOUSAND PESOS
(10,364,000.00) per month from April 1, 2008 until the subject
property, together with its improvements, are completely vacated and
peacefully surrendered to the plaintiffs or to their authorized
representative.[30]
Respondent Sunvar moved to dismiss the Complaint and argued that the allegations
of petitioners in the Complaint did not constitute an action for unlawful detainer, since no
privity of contract existed between them. [31] In the alternative, it also argued that petitioners
cause of action was more properly an accion publiciana, which fell within the jurisdiction of
the RTC, and not the MeTC, considering that the petitioners supposed dispossession of the
subject property by respondent had already lasted for more than one year.
In its Order dated 16 September 2009, the MeTC denied the Motion to Dismiss and
directed respondent Sunvar to file an answer to petitioners Complaint. [32] The lower court
likewise denied the Motion for Reconsideration [33] filed by respondent.[34] Respondent later on
filed its Answer[35] to the Complaint.[36]
Despite the filing of its Answer in the summary proceedings for ejectment,
respondent Sunvar filed a Rule 65 Petition for Certiorari with the RTC of Makati City to assail
the denial by the MeTC of respondents Motion to Dismiss. [37]
In answer to the Rule 65 Petition of respondent, petitioners placed in issue the
jurisdiction of the RTC and reasoned that the Rules on Summary Procedure expressly
prohibited the filing of a petition for certiorariagainst the interlocutory orders of the MeTC.
[38]
Hence, they prayed for the outright dismissal of the certiorari Petition of respondent
Sunvar.
The RTC denied the motion for dismissal and ruled that extraordinary circumstances
called for an exception to the general rule on summary proceedings. [39] Petitioners filed a
Motion for Reconsideration,[40] which was subsequently denied by the RTC. [41] Hence, the
hearing on the certiorari Petition of respondent proceeded, and the parties filed their
respective Memoranda.[42]
In the assailed Order dated 01 December 2010, which discussed the merits of
the certiorari Petition, the RTC granted the Rule 65 Petition and directed the MeTC to dismiss
the Complaint for unlawful detainer for lack of jurisdiction. [43] The RTC reasoned that the one-
year period for the filing of an unlawful detainer case was reckoned from the expiration of the
main lease contract and the sublease agreements on 31 December 2002. Petitioners should
have then filed an accion publiciana with the RTC in 2009, instead of an unlawful detainer
suit.
Hence, the instant Rule 45 Petition filed by petitioners. [44]
I
Petitioners Resort to a Rule 45 Petition
Before the Court proceeds with the legal questions in this case, there are procedural
issues that merit preliminary attention.
Respondent Sunvar argued that petitioners resort to a Rule 45 Petition for Review on
Certiorari before this Court is an improper mode of review of the assailed RTC Decision.
Allegedly, petitioners should have availed themselves of a Rule 65 Petition instead, since the
RTC Decision was an order of dismissal of the Complaint, from which no appeal can be taken
except by a certiorari petition.
The Court is unconvinced of the arguments of respondent Sunvar and holds that the
resort by petitioners to the present Rule 45 Petition is perfectly within the bounds of our
procedural rules.
As respondent Sunvar explained, no appeal may be taken from an order of the RTC
dismissing an action without prejudice,[45] but the aggrieved party may file a certiorari petition
under Rule 65.[46] Nevertheless, the Rules do not prohibit any of the parties from filing a Rule
45 Petition with this Court, in case only questions of law are raised or involved.[47] This
latter situation was one that petitioners found themselves in when they filed the instant Petition
to raise only questions of law.
In Republic v. Malabanan,[48] the Court clarified the three modes of appeal from
decisions of the RTC, to wit: (1) by ordinary appeal or appeal by writ of error under Rule 41,
whereby judgment was rendered in a civil or criminal action by the RTC in the exercise of its
original jurisdiction; (2) by a petition for review under Rule 42, whereby judgment was
rendered by the RTC in the exercise of its appellate jurisdiction; and (3) by a petition for
review on certiorari before the Supreme Court under Rule 45. The first mode of appeal is
taken to the [Court of Appeals] on questions of fact or mixed questions of fact and law. The
second mode of appeal is brought to the CA on questions of fact, of law, or mixed questions of
fact and law. The third mode of appeal is elevated to the Supreme Court only on
questions of law.[49] (Emphasis supplied.)
There is a question of law when the issue does not call for an examination of the
probative value of the evidence presented or of the truth or falsehood of the facts being
admitted, and the doubt concerns the correct application of law and jurisprudence on the
matter.[50] The resolution of the issue must rest solely on what the law provides on the given set
of circumstances.[51]
In the instant case, petitioners raise only questions of law with respect to the
jurisdiction of the RTC to entertain a certiorari petition filed against the interlocutory order of
the MeTC in an unlawful detainer suit. At issue in the present case is the correct application of
the Rules on Summary Procedure; or, more specifically, whether the RTC violated the Rules
when it took cognizance and granted the certiorari petition against the denial by the MeTC of
the Motion to Dismiss filed by respondent Sunvar. This is clearly a question of law that
32
involves the proper interpretation of the Rules on Summary Procedure. Therefore, the instant
Rule 45 Petition has been properly lodged with this Court.
II
Propriety of a Rule 65 Petition in Summary Proceedings
Proceeding now to determine that very question of law, the Court finds that it was
erroneous for the RTC to have taken cognizance of the Rule 65 Petition of respondent Sunvar,
since the Rules on Summary Procedure expressly prohibit this relief for unfavorable
interlocutory orders of the MeTC. Consequently, the assailed RTC Decision is annulled.
Under the Rules on Summary Procedure, a certiorari petition under Rule 65 against
an interlocutory order issued by the court in a summary proceeding is a prohibited pleading.
[52]
The prohibition is plain enough, and its further exposition is unnecessary verbiage. [53] The
RTC should have dismissed outright respondent Sunvars Rule 65 Petition, considering that it
is a prohibited pleading. Petitioners have already alerted the RTC of this legal bar and
immediately prayed for the dismissal of the certiorari Petition.[54] Yet, the RTC not only
refused to dismiss the certiorari Petition,[55] but even proceeded to hear the Rule 65 Petition on
the merits.
Respondent Sunvars reliance on Bayog v. Natino[56] and Go v. Court of Appeals[57] to
justify a certiorari review by the RTC owing to extraordinary circumstances is misplaced. In
both cases, there were peculiar and specific circumstances that justified the filing of the
mentioned prohibited pleadings under the Revised Rules on Summary Procedure conditions
that are not availing in the case of respondent Sunvar.
In Bayog, Alejandro Bayog filed with the Municipal Circuit Trial Court (MCTC) of
Patnongon-Bugasong-Valderama, Antique an ejectment case against Alberto Magdato, an
agricultural tenant-lessee who had built a house over his property. When Magdato, an illiterate
farmer, received the Summons from the MCTC to file his answer within 10 days, he was
stricken with pulmonary tuberculosis and was able to consult a lawyer in San Jose, Antique
only after the reglementary period. Hence, when the Answer of Magdato was filed three days
after the lapse of the 10-day period, the MCTC ruled that it could no longer take cognizance of
his Answer and, hence, ordered his ejectment from Bayogs land. When his house was
demolished in January 1994, Magdato filed a Petition for Relief with the RTC-San Jose,
Antique, claiming that he was a duly instituted tenant in the agricultural property, and that he
was deprived of due process. Bayog, the landowner, moved to dismiss the Petition on the
ground of lack of jurisdiction on the part of the RTC, since a petition for relief from judgment
covering a summary proceeding was a prohibited pleading. The RTC, however, denied his
Motion to Dismiss and remanded the case to the MCTC for proper disposal.
In resolving the Rule 65 Petition, we ruled that although a petition for relief from
judgment was a prohibited pleading under the Revised Rules on Summary Procedure, the
Court nevertheless allowed the filing of the Petition pro hac vice, since Magdato would
otherwise suffer grave injustice and irreparable injury:
We disagree with the RTCs holding that a petition for relief from
judgment (Civil Case No. 2708) is not prohibited under the Revised Rule
on Summary Procedure, in light of the Jakihaca ruling. When Section 19
of the Revised Rule on Summary Procedure bars a petition for relief
from judgment, or a petition for certiorari, mandamus, or prohibition
against any interlocutory order issued by the court, it has in mind no
other than Section 1, Rule 38 regarding petitions for relief from
judgment, and Rule 65 regarding petitions for certiorari, mandamus,
or prohibition, of the Rules of Court, respectively. These petitions are
cognizable by Regional Trial Courts, and not by Metropolitan Trial Courts,
Municipal Trial Courts, or Municipal Circuit Trial Courts. If Section 19 of
the Revised Rule on Summary Procedure and Rules 38 and 65 of the
Rules of Court are juxtaposed, the conclusion is inevitable that no petition
for relief from judgment nor a special civil action of certiorari,
prohibition, or mandamus arising from cases covered by the Revised
Rule on Summary Procedure may be filed with a superior court. This
is but consistent with the mandate of Section 36 of B.P. Blg. 129 to
achieve an expeditious and inexpensive determination of the cases subject
of summary procedure.
Nevertheless, in view of the unusual and peculiar
circumstances of this case, unless some form of relief is made available
to MAGDATO, the grave injustice and irreparable injury that visited
him through no fault or negligence on his part will only be
perpetuated. Thus, the petition for relief from judgment which he
filed may be allowed or treated, pro hac vice, either as an exception to
the rule, or a regular appeal to the RTC, or even an action to annul
the order (decision) of the MCTC of 20 September 1993. As an
exception, the RTC correctly held that the circumstances alleged therein
and the justification pleaded worked in favor of MAGDATO, and that the
motion to dismiss Civil Case No. 2708 was without merit.
xxx [58] (Emphasis supplied.)
On the other hand, in Go v. Court of Appeals, the Court was confronted with a
procedural void in the Revised Rules of Summary Procedure that justified the resort to a Rule
65 Petition in the RTC. In that case, the preliminary conference in the subject ejectment suit
was held in abeyance by the Municipal Trial Court in Cities (MTCC) of Iloilo City until after
the case for specific performance involving the same parties shall have been finally decided by
the RTC. The affected party appealed the suspension order to the RTC. In response, the
adverse party moved to dismiss the appeal on the ground that it concerned an interlocutory
order in a summary proceeding that was not the subject of an appeal. The RTC denied the
Motion to Dismiss and subsequently directed the MTCC to proceed with the hearing of the
ejectment suit, a ruling that was upheld by the appellate court.
In affirming the Decisions of the RTC and CA, the Supreme Court allowed the filing
of a petition for certiorari against an interlocutory order in an ejectment suit, considering that
the affected party was deprived of any recourse to the MTCCs erroneous suspension of a
summary proceeding. Retired Chief Justice Artemio V. Panganiban eloquently explained the
procedural void in this wise:
Indisputably, the appealed [suspension] order is interlocutory,
for it does not dispose of the case but leaves something else to be done by
the trial court on the merits of the case. It is axiomatic that an interlocutory
order cannot be challenged by an appeal. Thus, it has been held that the
proper remedy in such cases is an ordinary appeal from an adverse
judgment on the merits incorporating in said appeal the grounds for
assailing the interlocutory order. Allowing appeals from interlocutory
orders would result in the sorry spectacle of a case being subject of a
counterproductive ping-pong to and from the appellate court as often as a
trial court is perceived to have made an error in any of its interlocutory
rulings. However, where the assailed interlocutory order is patently
erroneous and the remedy of appeal would not afford adequate and
expeditious relief, the Court may allow certiorari as a mode of redress.
Clearly, private respondent cannot appeal the order, being
interlocutory. But neither can it file a petition for certiorari, because
ejectment suits fall under the Revised Rules on Summary Procedure,
33
 Section 19(g) of which considers petitions for certiorari prohibited
pleadings:
xxxxxxxxx
Based on the foregoing, private respondent was literally caught
between Scylla and Charybdis in the procedural void observed by the
Court of Appeals and the RTC. Under these extraordinary
circumstances, the Court is constrained to provide it with a remedy
consistent with the objective of speedy resolution of cases.
As correctly held by Respondent Court of Appeals, the purpose
of the Rules on Summary Procedure is to achieve an expeditious and
inexpensive determination of cases without regard to technical rules.
(Section 36, Chapter III, BP Blg. 129) Pursuant to this objective, the Rules
prohibit petitions for certiorari, like a number of other pleadings, in order
to prevent unnecessary delays and to expedite the disposition of cases. In
this case, however, private respondent challenged the MTCC
order delaying the ejectment suit, precisely to avoid the mischief
envisioned by the Rules.
Thus, this Court holds that in situations wherein a summary
proceeding is suspended indefinitely, a petition for certiorari alleging
grave abuse of discretion may be allowed. Because of the
extraordinary circumstances in this case, a petition for certiorari, in
fact, gives spirit and life to the Rules on Summary Procedure. A
contrary ruling would unduly delay the disposition of the case and negate
the rationale of the said Rules.[59] (Emphasis supplied.)
Contrary to the assertion of respondent Sunvar, the factual circumstances in these
two cases are not comparable with respondents situation, and our rulings therein are
inapplicable to its cause of action in the present suit. As this Court explained in Bayog, the
general rule is that no special civil action for certiorari may be filed with a superior court from
cases covered by the Revised Rules on Summary Procedure. Respondent Sunvar filed
a certiorari Petition in an ejectment suit pending before the MeTC. Worse, the subject matter
of the Petition was the denial of respondents Motion to Dismiss, which was necessarily an
interlocutory order, which is generally not the subject of an appeal. No circumstances similar
to the situation of the agricultural tenant-lessee in Bayog are present to support the relaxation
of the general rule in the instant case. Respondent cannot claim to have been deprived of
reasonable opportunities to argue its case before a summary judicial proceeding.
Moreover, there exists no procedural void akin to that in Go v. Court of Appeals that
would justify respondents resort to a certiorari Petition before the RTC. When confronted with
the MeTCs adverse denial of its Motion to Dismiss in the ejectment case, the expeditious and
proper remedy for respondent should have been to proceed with the summary hearings and to
file its answer. Indeed, its resort to a certiorari Petition in the RTC over an interlocutory order
in a summary ejectment proceeding was not only prohibited. The certiorari Petition was
already a superfluity on account of respondents having already taken advantage of a speedy
and available remedy by filing an Answer with the MeTC.
Respondent Sunvar failed to substantiate its claim of extraordinary circumstances
that would constrain this Court to apply the exceptions obtaining in Bayog and Go. The Court
hesitates to liberally dispense the benefits of these two judicial precedents to litigants in
summary proceedings, lest these exceptions be regularly abused and freely availed of to defeat
the very goal of an expeditious and inexpensive determination of an unlawful detainer suit. If
the Court were to relax the interpretation of the prohibition against the filing of certiorari
petitions under the Revised Rules on Summary Procedure, the RTCs may be inundated with
similar prayers from adversely affected parties questioning every order of the lower court and
completely dispensing with the goal of summary proceedings in forcible entry or unlawful
detainer suits.
III
Reckoning the One-Year Period in Unlawful Detainer Cases
We now come to another legal issue underlying the present Petition whether the
Complaint filed by petitioners is properly an action for unlawful detainer within the
jurisdiction of the MeTC or an accion publicianalodged with the RTC. At the heart of the
controversy is the reckoning period of the one-year requirement for unlawful detainer suits.
Whether or not petitioners action for unlawful detainer was brought within one year
after the unlawful withholding of possession will determine whether it was properly filed with
the MeTC. If, as petitioners argue, the one-year period should be counted from respondent
Sunvars receipt on 03 February 2009 of the Final Notice to Vacate, then their Complaint was
timely filed within the one-year period and appropriately taken cognizance of by the MeTC.
However, if the reckoning period is pegged from the expiration of the main lease contract
and/or sublease agreement, then petitioners proper remedy should have been an accion
publiciana to be filed with the RTC.
The Court finds that petitioners correctly availed themselves of an action for
unlawful detainer and, hence, reverses the ruling of the RTC.
Under the Rules of Court, lessors against whom possession of any land is unlawfully
withheld after the expiration of the right to hold possession may by virtue of any express or
implied contract, and within one year after the unlawful deprivation bring an action in the
municipal trial court against the person unlawfully withholding possession, for restitution of
possession with damages and costs. [60] Unless otherwise stipulated, the action of the lessor
shall commence only after a demand to pay or to comply with the conditions of the lease and
to vacate is made upon the lessee; or after a written notice of that demand is served upon the
person found on the premises, and the lessee fails to comply therewith within 15 days in the
case of land or 5 days in the case of buildings.[61]
In Delos Reyes v. Spouses Odenes,[62] the Court recently defined the nature and scope
of an unlawful detainer suit, as follows:
Unlawful detainer is an action to recover possession of real
property from one who illegally withholds possession after the expiration
or termination of his right to hold possession under any contract, express
or implied. The possession by the defendant in unlawful detainer is
originally legal but became illegal due to the expiration or termination of
the right to possess. The proceeding is summary in nature, jurisdiction
over which lies with the proper MTC or metropolitan trial court. The
action must be brought up within one year from the date of last
demand, and the issue in the case must be the right to physical
possession. (Emphasis supplied.)
Hence, a complaint sufficiently alleges a cause of action for unlawful detainer if it
states the following elements:
1. Initially, the possession of the property by the defendant was
by contract with or by tolerance of the plaintiff.
2. Eventually, the possession became illegal upon the plaintiffs
notice to the defendant of the termination of the latters right of possession.
3. Thereafter, the defendant remained in possession of the
property and deprived the plaintiff of the latters enjoyment.
34

4. Within one year from the making of the last demand on the
defendant to vacate the property, the plaintiff instituted the Complaint for
ejectment.[63]
On the other hand, accion publiciana is the plenary action to recover the right of
possession which should be brought in the proper regional trial court when dispossession has
lasted for more than one year. It is an ordinary civil proceeding to determine the better right of
possession of realty independently of title. In other words, if at the time of the filing of the
complaint, more than one year had elapsed since defendant had turned plaintiff out of
possession or defendants possession had become illegal, the action will be, not one of
forcible entry or illegal detainer, but an accion publiciana.[64]
There are no substantial disagreements with respect to the first three requisites for an
action for unlawful detainer. Respondent Sunvar initially derived its right to possess the
subject property from its sublease agreements with TRCFI and later on with PDAF. However,
with the expiration of the lease agreements on 31 December 2002, respondent lost possessory
rights over the subject property. Nevertheless, it continued occupying the property for almost
seven years thereafter. It was only on 03 February 2009 that petitioners made a final demand
upon respondent Sunvar to turn over the property. What is disputed, however, is the fourth
requisite of an unlawful detainer suit.
The Court rules that the final requisite is likewise availing in this case, and that the
one-year period should be counted from the final demand made on 03 February 2009.
Contrary to the reasoning of the RTC, [65] the one-year period to file an unlawful
detainer case is not counted from the expiration of the lease contract on 31 December 2002.
Indeed, the last demand for petitioners to vacate is the reckoning period for determining the
one-year period in an action for unlawful detainer. Such one year period should be counted
from the date of plaintiffs last demand on defendant to vacate the real property, because only
upon the lapse of that period does the possession become unlawful. [66]
In case several demands to vacate are made, the period is reckoned from the date of
the last demand.[67] In Leonin v. Court of Appeals,[68] the Court, speaking through Justice
Conchita Carpio Morales, reckoned the one-year period to file the unlawful detainer
Complaint filed on 25 February 1997 from the latest demand letter dated 24 October 1996, and
not from the earlier demand letter dated 03 July 1995:
Prospero Leonin (Prospero) and five others were co-owners of a
400-square meter property located at K-J Street, East Kamias, Quezon
City whereon was constructed a two-storey house and a three-door
apartment identified as No. 1-A, B, and C.
Prospero and his co-owners allowed his siblings, herein
petitioners, to occupy Apartment C without paying any rentals.
xxxxxxxxx
Petitioners further contend that respondents remedy is accion
publiciana because their possession is not de facto, they having been
authorized by the true and lawful owners of the property; and that one
year had elapsed from respondents demand given on July 3, 1995
when the unlawful detainer complaint was filed.
The petition fails.
Contrary to petitioners contention, the allegations in the
complaint make out a case for unlawful detainer. Thus, respondent
alleged, inter alia, that she is the registered owner of the property and that
petitioners, who are tenants by tolerance, refused to vacate the premises
despite the notice to vacate sent to them.
Likewise, contrary to petitioners contention, the one-year period
for filing a complaint for unlawful detainer is reckoned from the date of
the last demand, in this case October 24, 1996, the reason being that the
lessor has the right to waive his right of action based on previous demands
and let the lessee remain meanwhile in the premises. Thus, the filing of
the complaint on February 25, 1997 was well within the one year
reglementary period.[69] (Emphasis supplied.)
From the time that the main lease contract and sublease agreements expired (01
January 2003), respondent Sunvar no longer had any possessory right over the subject
property. Absent any express contractual renewal of the sublease agreement or any separate
lease contract, it illegally occupied the land or, at best, was allowed to do so by mere tolerance
of the registered owners petitioners herein. Thus, respondent Sunvars possession became
unlawful upon service of the final notice on 03 February 2009. Hence, as an unlawful
occupant of the land of petitioners, and without any contract between them, respondent is
necessarily bound by an implied promise that it will vacate upon demand, failing which a
summary action for ejectment is the proper remedy against them. [70] Upon service of the final
notice of demand, respondent Sunvar should have vacated the property and, consequently,
petitioners had one year or until 02 February 2010 in which to resort to the summary action for
unlawful detainer. In the instant case, their Complaint was filed with the MeTC on 23 July
2009, which was well within the one-year period.
The Court is aware that petitioners had earlier served a Notice to Vacate on 22
February 2008, which could have possibly tolled the one-year period for filing an unlawful
detainer suit. Nevertheless, they can be deemed to have waived their right of action against
respondent Sunvar and continued to tolerate its occupation of the subject property. That they
sent a final Notice to Vacate almost a year later gave respondent another opportunity to
comply with their implied promise as occupants by mere tolerance. Consequently, the one-
year period for filing a summary action for unlawful detainer with the MeTC must be
reckoned from the latest demand to vacate.
In the past, the Court ruled that subsequent demands that are merely in the nature of
reminders of the original demand do not operate to renew the one-year period within which to
commence an ejectment suit, considering that the period will still be reckoned from the date of
the original demand.[71] If the subsequent demands were merely in the nature of reminders of
the original demand, the one-year period to commence an ejectment suit would be counted
from the first demand.[72] However, respondent failed to raise in any of the proceedings below
this question of fact as to the nature of the second demand issued by the OSG. It is now too
late in the proceedings for them to argue that the 2009 Notice to Vacate was a mere reiteration
or reminder of the 2008 Notice to Vacate. In any event, this factual determination is beyond
the scope of the present Rule 45 Petition, which is limited to resolving questions of law.
The Court notes that respondent Sunvar has continued to occupy the subject
property since the expiration of its sublease on 31 December 2002. The factual issue of
whether respondent has paid rentals to petitioners from the expiration of the sublease to the
present was never raised or sufficiently argued before this Court. Nevertheless, it has not
escaped the Courts attention that almost a decade has passed without any resolution of this
controversy regarding respondents possession of the subject property, contrary to the aim of
expeditious proceedings under the Revised Rules on Summary Procedure. With the grant of
the instant Petition and the remand of the case to the MeTC for continued hearing, the Court
emphasizes the duty of the lower court to speedily resolve this matter once and for all,
especially since this case involves a prime property of the government located in the countrys
35
business district and the various opportunities for petitioners to gain public revenues from the
property.
WHEREFORE, the Court GRANTS the Petition for Review on Certiorari dated 14
February 2011, filed by petitioners Republic and National Power Corporation, which are
represented here by the Privatization Management Office. The assailed Decision dated 01
December 2010 of the Regional Trial Court of Makati City, Branch 134, is
hereby REVERSED and SET ASIDE. The Metropolitan Trial Court of Makati City, Branch
63, is DIRECTED to proceed with the summary proceedings for the unlawful detainer case in
Civil Case No. 98708.
SO ORDERED.
TERESITA BONGATO, petitioner, vs. Spouses SEVERO A. MALVAR and
TRINIDAD MALVAR, respondents.
DECISION
PANGANIBAN, J.:
An action for forcible entry is a quieting process that is summary in nature. It is
designed to recover physical possession in speedy proceedings that are restrictive in
nature, scope and time limits. The one-year bar within which to bring the suit is
prescribed to complement its summary nature. Thus, after the one-year period has
lapsed, plaintiffs can no longer avail themselves of the summary proceedings in the
municipal trial court but must litigate, in the normal course, in the regional trial court in
an ordinary action to recover possession, or to recover both ownership and
possession.
Statement of the Case
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court, assailing the December 16, 1998 Decision [1] and the September 1, 1999
Resolution[2] of the Court of Appeals (CA) in CA-GR SP No. 34204. The decretal
portion of the Decision reads:
WHEREFORE, the petition is hereby dismissed for lack of merit. Costs against petitioner.[3]
The assailed Resolution denied petitioners Motion for Reconsideration.
The CA sustained the Decision of the Regional Trial Court (RTC) of Butuan City
(Branch 4), which had disposed thus:
WHEREFORE, in view of all the foregoing, the Court hereby affirms the decision of the
Municipal Trial Court in Cities, Branch 2 penned by the Honorable Santos Rod. Cedro and the
Writ of Execution issued on the 24th day of August 1993 upon order of the Honorable Rosarito
F. Dabalos (Record, p. 42, Folio II) can now be served on the defendant. [4]
The Facts
The factual antecedents of the case are summarized by the Court of Appeals as
follows:
The spouses Severo and Trinidad Malvar filed a complaint for forcible entry against petitioner
Teresita Bongato, alleging that petitioner Bongato unlawfully entered a parcel of land covered
by TCT No. RT-16200 belonging to the said spouses and erected thereon a house of light
materials. The petitioner filed a motion for extension of time to file an answer which the
MTCC denied; it being proscribed under the Rule on Summary Procedure, and likewise
containing no notice of hearing. With a new counsel, Atty. Viador C. Viajar, petitioner filed an
answer which the MTCC disregarded, the same having been filed beyond the ten-day
reglementary period. Later, with still another counsel, Atty. Jesus G. Chavez of the Public
Attorneys Office, petitioner filed a motion to dismiss which the MTCC denied as being
contrary to the Rule on Summary Procedure.
Thereafter, the MTCC rendered a decision ordering petitioner to vacate the land in question,
and to pay rentals, attorneys fees, and the costs of the suit. The decision was affirmed by
respondent RTC judge. Petitioner filed a motion for reconsideration.
On March 4, 1994, respondent Judge issued an order granting the motion for reconsideration
only insofar as to determine the location of the houses involved in this civil case so that the
Court will know whether they are located on one and the same lot or a lot different from that
involved in the criminal case for Anti-Squatting. In the same order, respondent Judge
disallowed any extension and warned that if the survey is not made, the court might consider
the same abandoned and the writ of execution would be issued.
The criminal case for anti-squatting (Crim. Case No. 4659) was filed by private respondents
Malvar against petitioner Bongato. The case is still pending with the Regional Trial Court,
Branch I, Butuan City.
On March 28, 1994, petitioner filed a motion for extension of the March 29, 1994 deadline for
the submission of the relocation survey and to move the deadline to April 15, 1994, as the
engineer concerned, Engr. Lumarda, could not conduct his survey during the Holy Week, he
being a lay minister and parish council member.
On April 7, 1994, respondent Judge noted that no survey report was submitted and ordered the
record of the case returned to the court of origin for disposal. [5] (Citations omitted)
Ruling of the Court of Appeals
The CA held that the lot referred to in the present controversy was different from
that involved in the anti-squatting case.[6] It further ruled that the Municipal Trial Court
in Cities (MTCC) had jurisdiction, and that it did not err in rejecting petitioners Motion
to Dismiss. The appellate court reasoned that the MTCC had passed upon the issue
36
of ownership of the property merely to determine possession -- an action that did not
oust the latter of its jurisdiction.[7]
Unsatisfied with the CA Decision, petitioner lodged this Petition.[8]
Issues
In her Memorandum, petitioner raises the following issues for this Courts
consideration:
I applicable to the case under review.[21] In some instances, courts have also taken
Whether or not the Court of Appeals gravely abused its discretion in not finding that the trial
court lacked jurisdiction since the Complaint was filed beyond the one-year period from date
of alleged entry;
II
Whether or not the Court of Appeals gravely abused its discretion in ruling that the Motion to
Dismiss was a prohibited pleading.[9]
This Courts Ruling
The Petition is meritorious.
First Issue:
MTCC Jurisdiction
Petitioner claims that the MTCC had no jurisdiction, because the Complaint for
forcible entry was filed only in 1992 or beyond the one-year period provided under the
Rules of Civil Procedure.[10] She avers that in Criminal Case No. 4659 for anti-
squatting, Respondent Severo Malvar alleged in his Sworn Statement that petitioner
had illegally entered his land sometime in the first week of January 1987. [11]
On the other hand, respondents contend that the subject of the anti-squatting
case is different from the parcel of land involved here.[12]
Before tackling the issue directly, it is worthwhile to restate three basic legal
principles. First, in forcible entry, one employs force, intimidation, threat, strategy or
stealth to deprive another of physical possession of land or building. [13]Thus, the
plaintiff must allege and prove prior physical possession of the property in litigation
until deprived thereof by the defendant.[14] This requirement implies that the
possession of the disputed land by the latter was unlawful from the beginning. [15] The
sole question for resolution hinges on the physical or material possession
(possession de facto) of the property. Neither a claim of juridical possession
(possession de jure) nor an averment of ownership[16] by the defendant can outrightly
prevent the court from taking cognizance of the case.[17] Ejectment cases proceed
independently of any claim of ownership, and the plaintiff needs merely to prove prior
possession de facto and undue deprivation thereof.[18]
Second, as a general rule, courts do not take judicial notice of the evidence
presented in other proceedings, even if these have been tried or are pending in the
same court or before the same judge.[19] There are exceptions to this rule. Ordinarily,
an appellate court cannot refer to the record in another case to ascertain a fact not
shown in the record of the case before it, [20] yet, it has been held that it may consult
decisions in other proceedings, in order to look for the law that is determinative of or
judicial notice of proceedings in other cases that are closely connected to the matter
in controversy.[22] These cases may be so closely interwoven, or so clearly
interdependent, as to invoke a rule of judicial notice.[23]
Third, factual findings of trial courts, especially when affirmed by the Court of
Appeals, are binding on the Supreme Court. Indeed, the review of such findings is not
a function that this Court normally undertakes. [24] However, this Rule is not absolute; it
admits of exceptions, such as (1) when the findings are grounded entirely on
speculation, surmises or conjectures; (2) when a lower courts inference from its
factual findings is manifestly mistaken, absurd or impossible; (3) when there is grave
abuse of discretion in the appreciation of facts; (4) when the findings of the appellate
court go beyond the issues of the case, run contrary to the admissions of the parties
to the case, or fail to notice certain relevant facts which -- if properly considered -- will
justify a different conclusion; (5) when there is a misappreciation of facts; (6) when
the findings of fact are conclusions without mention of the specific evidence on which
they are based, are premised on the absence of evidence, or are contradicted by
evidence on record.[25]
Respondents in the present Petition filed three cases against petitioner: (1)
Criminal Case No. 4659 for violation of PD No. 772 [26] (filed on October 2, 1991), in
which petitioner was acquitted on the ground of good faith; (2) Civil Case No. 5681 for
forcible entry (filed on July 10, 1992) which was resolved by the MTCC on October
26, 1992.[27] (3) Criminal Case No. 5734 for Violation of PD No. 1096[28] (filed on July
15, 1993), wherein petitioner was again acquitted.
We agree with respondents that Lot 10-A, covered by Transfer Certificate of Title
(TCT) No. RT-16200[29] and registered under the name of Severo Malvar, is different
from Lot 1 which is covered by TCT No. RT-15993 [30] and registered under the name
of Severo Malvar also. However, we cannot ignore the Decision[31] dated April 30,
1996 in Criminal Case No. 4659 for violation of PD 772; or the Decision[32] dated
November 26, 1997 in Criminal Case No. 5734 for violation of PD 1096. The property
involved in these two criminal cases and in the instant case for forcible entry is one
and the same -- petitioners house.
The allegation of petitioner that there is only one house involved in these three
cases has not been controverted by respondents. Neither was there evidence
presented to prove that, indeed, she had constructed one house on Lot 1 and another
on Lot 10-A. On the contrary, she correctly points out that the house involved in these
three cases is found on one and the same location. Verily, in his Sworn
37
Statement[33] submitted in Criminal Case No. 4659, Respondent Severo Malvar stated
that petitioners house was located in front of the Museum and just behind the City
Hall. On the other hand, in the Complaint[34] for forcible entry, the subject property was
said to be located along Doongan Road and right in front of the Regional National
Museum and not far behind the City Hall of Butuan City. Lastly, the Decision[35] in
Criminal Case No. 5734 stated that the building inspector, Engineer Margarita Burias,
had responded to a verbal complaint involving a structure built near the Museum in
Upper Doongan, Butuan City.
Based on these factual antecedents, there is cogent basis for petitioners
contention that the MTCC lacked jurisdiction in this case.
First, respondents allege that the subject house was built by petitioner on Lot
10-A covered by TCT No. 16200. This allegation is belied by the sketch plan [36] dated
June 16, 1994, submitted by Engineer Regino A. Lomarda Jr. To recall, in an
Order[37] dated March 4, 1994, the RTC had required petitioner to submit a relocation
survey of Lot 10-A to determine the location of the house and to ascertain if it was the
same house involved in Criminal Case No. 4659 for anti-squatting. However, because
of the Holy Week, petitioner failed to submit the relocation survey within the period
provided by the RTC. In the said sketch plan that was offered in evidence as Exhibit 5
in the anti-squatting case, Engineer Lomarda Jr. certified that the hut of Teresita
Bongato is not within Lot 10-A as shown in this plan as relocated by the undersigned
based [o]n TCT No. RT-1576 of Benjamin Eva, et al. and [o]n TCT No. RT-16200 of
Lot 10-A of Severo Malvar.
Second, according to the Decision in Criminal Case No. 4659, petitioners house
is actually located on Lot 1, the parcel of land previously covered by TCT No. RT-
15993 and subject of the anti-squatting case. The RTC Judge in said case ruled:
The lot on which accuseds house is standing was formerly covered by Transfer Certificate of
Title No. RT-15993 dated January 24, 1983 in the name of Severo Malvar, and superseded by
Transfer Certificate of Title No. RT-24589 dated December 3, 1991 in the name of Butuan
Land Developers Group, Inc.[38]
Third, petitioners house had actually been in existence prior to February 1992,
the alleged date of illegal entry. Thus, in Criminal Case No. 5734 for violation of PD
1096, the RTC Judge opined as follows:
Firstly, the prosecution has not proven that the accused had constructed or for that matter was
constructing the questioned house in February of 1992, since it was never stated that when the
complaint was lodged with the City Engineers Office, that the house occupied by the accused
was under construction or under renovation. The fact that Engr. Burias even admitted that she
had no knowledge of when the structure was built implicitly indicates that the same was
completely erected or constructed before Engr. Burias visit, or even for that matter, before the
complaint was filed.[39]
That the house of petitioner had been constructed by her father and that she
had merely continued to reside therein was upheld by the Decision, which we quote:
Suffice it to state, however, that We are convinced, given the testimonial evidence offered that
the house in question was not built by the accused, but by her father, Jacinto
Bongato sometime in 1935; that accused merely lived in the house as a member of Jacinto
Bongatos family until the death of her parents, whereupon, she continued to reside in the said
house and now claims to be its owner.[40]
Fourth, Respondent Severo Malvar admitted in Criminal Case No. 4659 that he
had knowledge of petitioners house since January 1987. We quote from his
testimony:
Q Earlier, Judge Malvar, you told this Honorable Court that you discovered
sometime in January 1987, the accused was occupying your property
consisting of 348 square meters. What did you do upon discovering that the
accused already occupied a portion of your property without your
knowledge?
A I want to demolish her house. I told her that I am the owner of the land and she
is looking for the hectare that was not sold by her father to me.
Q And upon being informed by Teresita Bongato that they were looking for the
hectare lot which was not sold to you by her father, what did you say to her?
A I told her to remove her house. Then after that, I was so busy with the squatters
along Satorre Street of the Malvar Village that kept me so busy. It was only
last year that we were able to attend to this.[41]
It is wise to be reminded that forcible entry is a quieting process, and that the
restrictive time bar is prescribed to complement the summary nature of such process.
[42]
Indeed, the one-year period within which to bring an action for forcible entry is
generally counted from the date of actual entry to the land. However, when entry is
made through stealth, then the one-year period is counted from the time the plaintiff
learned about it.[43] After the lapse of the one-year period, the party dispossessed of a
parcel of land may file either an accion publiciana, which is a plenary action to
recover the right of possession; or an accion reivindicatoria, which is an action to
recover ownership as well as possession.[44]
On the basis of the foregoing facts, it is clear that the cause of action for forcible
entry filed by respondents had already prescribed when they filed the Complaint for
ejectment on July 10, 1992.[45] Hence, even if Severo Malvar may be the owner of the
land, possession thereof cannot be wrested through a summary action for ejectment
of petitioner, who had been occupying it for more than one (1) year. [46] Respondents
should have presented their suit before the RTC in an accion publiciana or
an accion reivindicatoria, not before the MTCC in summary proceedings for forcible
entry.[47] Their cause of action for forcible entry had prescribed already, and the MTCC
had no more jurisdiction to hear and decide it.[48]
Second Issue:
Motion to Dismiss
Petitioner further argues that a motion to dismiss based on lack of
jurisdiction over the subject matter is not a prohibited pleading, but is allowed under
Sec. 19(a) of the Revised Rule on Summary Procedure.[49] We agree.
38
 The Rule on Summary Procedure was promulgated specifically to achieve an
expeditious and inexpensive determination of cases.[50] The speedy resolution of
unlawful detainer cases is a matter of public policy,[51] and the Rule should equally
apply with full force to forcible entry cases, in which possession of the premises is
already illegal from the start.[52] For this reason, the Rule frowns upon delays and
prohibits altogether the filing of motions for extension of time. Consistently, Section 6
was added to give the trial court the power to render judgment, even motu proprio,
upon the failure of a defendant to file an answer within the reglementary period.
[53]
However, as forcible entry and detainer cases are summary in nature and involve
disturbances of the social order, procedural technicalities should be carefully
avoided[54] and should not be allowed to override substantial justice.[55]
Pursuant to Section 36[56] of BP 129,[57] the Court on June 16, 1983, promulgated
the Rule on Summary Procedure in Special Cases. [58] Under this Rule, a motion to
dismiss or quash is a prohibited pleading. Under the 1991 Revised Rule on Summary
Procedure, however,[59] a motion to dismiss on the ground of lack of jurisdiction over
the subject matter is an exception to the rule on prohibited pleadings:
SEC. 19. Prohibited pleadings and motions. The following pleadings, motions, or petitions
shall not be allowed in the cases covered by this Rule:
(a) Motion to dismiss the complaint or to quash the complaint or
information except on the ground of lack of jurisdiction over the
subject matter, or failure to comply with the preceding section;
xxxxxxxxx
Further, a courts lack of jurisdiction over the subject matter cannot be waived by
the parties or cured by their silence, acquiescence or even express consent. [60] A
party may assail the jurisdiction of the court over the action at any stage of the
proceedings and even on appeal.[61] That the MTCC can take cognizance of a motion
to dismiss on the ground of lack of jurisdiction, even if an answer has been belatedly
filed we likewise held in Bayog v. Natino:[62]
The Revised Rule on Summary Procedure, as well as its predecessor, do not provide that an
answer filed after the reglementary period should be expunged from the records. As a matter
of fact, there is no provision for an entry of default if a defendant fails to answer. It must
likewise be pointed out that MAGDATOs defense of lack of jurisdiction may have even been
raised in a motion to dismiss as an exception to the rule on prohibited pleadings in the Revised
Rule on Summary Procedure. Such a motion is allowed under paragraph (a) thereof, x x x.
In the case at bar, the MTCC should have squarely ruled on the issue of
jurisdiction, instead of erroneously holding that it was a prohibited pleading under the
Rule on Summary Procedure.[63] Because the Complaint for forcible entry was filed on
July 10, 1992, the 1991 Revised Rule on Summary Procedure was applicable.
Finally, the MTCC should have taken into account petitioners Answer,[64] in which
she averred that she had been in constant occupation on said land in question since
birth on March 17, 1941 up to the present, being an heir of the late Emiliana Eva-
Bongato, who inherited said property from her father Raymundo Eva with
considerable improvements thereon. It should have heard and received the evidence
adduced by the parties for the precise purpose of determining whether or not it
possessed jurisdiction over the subject matter.[65] And after such hearing, it could have
dismissed the case for lack of jurisdiction. [66] In this way, the long, drawn out
proceedings that took place in this case could have been avoided.[67]
WHEREFORE, the Petition is GRANTED and the assailed
Decision ANNULLED and SET ASIDE. The Complaint for forcible entry
is DISMISSED for lack of jurisdiction. No pronouncement as to costs.
SO ORDERED.
G.R. No. 169380 November 26, 2012
FIORELLO R. JOSE, Petitioner,
vs.
ROBERTO ALFUERTO, ERNESTO BACAY, ILUMINADO BACAY, MANUEL
BANTACULO, LETTY BARCELO, JING BERMEJO, MILNA BERMEJO, PABLO
BERMEJO, JHONNY BORJA, BERNADETTE BUENAFE, ALFREDO CALAGOS,
ROSAURO CALAGOS, ALEX CHACON, AIDA CONSULTA, CARMEN CORPUZ,
RODOLFO DE VERA, ANA DELA ROSA, RUDY DING, JOSE ESCASINAS,
GORGONIO ESPADERO, DEMETRIO ESTRERA, ROGELIO ESTRERA,
EDUARDO EVARDONE, ANTONIO GABALEO, ARSENIA GARING, NARCING
GUARDA, NILA LEBATO, ANDRADE LIGAYA, HELEN LOPEZ, RAMON
MACAIRAN, DOMINGO NOLASCO, JR., FLORANTE NOLASCO, REGINA
OPERARIO, CARDING ORCULLO, FELICISIMO PACATE, CONRADO P
AMINDALAN, JUN PARIL, RENE SANTOS, DOMINADOR SELVELYEJO, VILLAR,
JOHN DOE, JANE DOE and Unknown Occupants of Olivares Compound, Phase
II, Barangay San Dionisio, Paraaque City, Respondents.
DECISION
BRION, J.:
Before us is a petition for review on certiorari under Rule 45 of the Rules of Court
assailing the decision1 dated March 14, 2005 of the Court of Appeals in CA-G.R. SP
No. 80166. The Court of Appeals decision reversed the decisions of the Regional
Trial Court (RTC) of Paraaque City, Branch 257, and of the Metropolitan Trial Court
(MeTC) of Paraaque City, Branch 77, by dismissing petitioner Fiorello R. Joses
complaint for ejectment against Roberto Alfuerto, Ernesto Bacay, Iluminado Bacay,
Manuel Bantaculo, Letty Barcelo, Jing Bermejo, Milna Bermejo, Pablo Bermejo,
Jhonny Borja, Bernadette Buenafe, Alfredo Calagos, Rosauro Calagos, Alex Chacon,
Aida Consulta, Carmen Corpuz, Rodolfo De Vera, Ana Dela Rosa, Rudy Ding, Jose
Escasinas, Gorgonio Espadero, Demetrio Estrera, Rogelio Estrera, Eduardo
Evardone, Antonio Gabaleo, Arsenia Garing, Narcing Guarda, Nila Lebato, Andrade
Ligaya, Helen Lopez, Ramon Macairan, Domingo Nolasco, Jr., Florante Nolasco,
Regina Operario, Carding Orcullo, Felicisimo Pacate, Conrado Pamindalan, Jun Paril,
Rene Santos, Dominador Selvelyejo, Rosario Ubaldo, Sergio Villar, John Doe, Jane
Doe and Unknown Occupants of Olivares Compound, Phase II, Barangay San
Dionisio, Paraaque City (respondents), on the ground that the petitioners cause of
39
action was not for unlawful detainer but for recovery of possession. The appellate
court affirmed this decision in its resolution of August 22, 2005.2
The dispute involves a parcel of land registered in the name of Rodolfo Chua Sing
under Transfer Certificate of Title No. 52594,3 with an area of 1919 square meters,
located in Barangay San Dionisio, Paraaque City. Chua Sing purchased the land in
1991. On April 1, 1999, Chua Sing leased the property to the petitioner. Their contract
of lease was neither notarized nor registered with the Paraaque City Registry of
Deeds.4
The lease contract provided that:
That the term of this lease shall be FIVE (5) years and renewable for the same period
upon mutual agreement of the parties to commence upon the total eviction of any
occupant or occupants. The LESSOR hereby transfers all its rights and prerogative to
evict said occupants in favor of the LESSEE which shall be responsible for all
expenses that may be incurred without reimbursement from the LESSOR. It is
understood however that the LESSOR is hereby waiving, in favor of the LESSEE any
and all damages that may be recovered from the occupants.5(Underscore ours)
Significantly, the respondents already occupied the property even before the lease
contract was executed.
On April 28, 1999, soon after Chua Sing and the petitioner signed the lease contract,
the petitioner demanded in writing that the respondents vacate the property within 30
days and that they pay a monthly rental of P1,000.00 until they fully vacate the
property.6
The respondents refused to vacate and to pay rent. On October 20, 1999, the
petitioner filed an ejectment case against the respondents before Branch 77 of the
Paraaque City MeTC, docketed as Civil Case No. 11344.7
In this complaint, no mention was made of any proceedings before the barangay.
Jose then brought the dispute before the barangay for conciliation.8 The barangay
issued a Certification to File Action on March 1, 2000.9 Jose was then able to file an
amended complaint, incorporating the proceedings before the barangay before the
summons and copies of the complaint were served upon the named defendants.10
In the Amended Complaint11 dated March 17, 2000, the petitioner claimed that as
lessee of the subject property, he had the right to eject the respondents who
unlawfully occupy the land. He alleged that:
7. Defendants, having been fully aware of their unlawful occupancy of the subject lot,
have defiantly erected their houses thereat without benefit of any contract or law
whatsoever, much less any building permit as sanctioned by law, but by mere
tolerance of its true, lawful and registered owner, plaintiffs lessor.12
The petitioner also stated that despite his written demand, the respondents failed to
vacate the property without legal justification. He prayed that the court order the
respondents; (1) to vacate the premises; (2) to pay him not less than P41,000.00 a
month from May 30,1999 until they vacate the premises; and (3) to pay him attorneys
fees of no less than P50,000.00, and the costs of suit.13
In their Answer, the respondents likewise pointed out that they have been in
possession of the land long before Chua Sing acquired the property in 1991, and that
the lease contract between the petitioner and Chua Sing does not affect their right to
possess the land. The respondents also presented a Deed of Assignment,14 dated
February 13, 2000, issued by David R. Dulfo in their favor. They argued that the
MeTC had no jurisdiction over the case as the issue deals with ownership of the land,
and sought the dismissal of the complaint for lack of cause of action and for lack of
jurisdiction. They also filed a counterclaim for actual and moral damages for the filing
of a baseless and malicious suit.
After the required position papers, affidavits and other pieces of evidence were
submitted, the MeTC resolved the case in the petitioners favor. In its decision15 of
January 27, 2003, the MeTC held that the respondents had no right to possess the
land and that their occupation was merely by the owners tolerance. It further noted
that the respondents could no longer raise the issue of ownership, as this issue had
already been settled: the respondents previously filed a case for the
annulment/cancellation of Chua Sings title before the RTC, Branch 260, of
Paraaque City, which ruled that the registered owners title was genuine and valid.
Moreover, the MeTC held that it is not divested of jurisdiction over the case because
of the respondents assertion of ownership of the property. On these premises, the
MeTC ordered the respondents to vacate the premises and to remove all structures
introduced on the land; to each pay P500.00 per month from the date of filing of this
case until they vacate the premises; and to pay Jose, jointly and severally, the costs
of suit and P20,000.00 as attorneys fees.
On appeal before the RTC, the respondents raised the issue, among others, that no
legal basis exists for the petitioners claim that their occupation was by tolerance,
"where the possession of the defendants was illegal at the inception as alleged in the
complaint, there can be no tolerance."16
The RTC affirmed the MeTC decision of January 27, 2003. It issued its decision17 on
October 8, 2003, reiterating the MeTCs ruling that a case for ejectment was proper.
The petitioner, as lessee, had the right to file the ejectment complaint; the
respondents occupied the land by mere tolerance and their possession became
unlawful upon the petitioners demand to vacate on April 28, 1999. The RTC,
moreover, noted that the complaint for ejectment was filed on October 20, 1999, or
within one year after the unlawful deprivation took place. It cited Pangilinan, et al. v.
Hon. Aguilar, etc., et al.18 and Yu v. Lara, et al.19 to support its ruling that a case for
unlawful detainer was appropriate.
On March 14, 2005, the Court of Appeals reversed the RTC and MeTC decisions.20 It
ruled that the respondents possession of the land was not by the petitioner or his
lessors tolerance. It defined tolerance not merely as the silence or inaction of a lawful
possessor when another occupies his land; tolerance entailed permission from the
40
owner by reason of familiarity or neighborliness. The petitioner, however, alleged that
the respondents unlawfully entered the property; thus, tolerance (or authorized entry
into the property) was not alleged and there could be no case for unlawful detainer.
The respondents allegation that they had been in possession of the land before the
petitioners lessor had acquired it in 1991 supports this finding. Having been in
possession of the land for more than a year, the respondents should not be evicted
through an ejectment case.
The Court of Appeals emphasized that ejectment cases are summary proceedings
where the only issue to be resolved is who has a better right to the physical
possession of a property. The petitioners claim, on the other hand, is based on an
accion publiciana: he asserts his right as a possessor by virtue of a contract of lease
he contracted after the respondents had occupied the land. The dispositive part of the
decision reads:
WHEREFORE, the instant petition is GRANTED. The decision dated October 8, 2003
of the RTC, Branch 257, Paraaque City, in Civil Case No. 03-0127, is REVERSED
and SET ASIDE and the amended complaint for ejectment is DISMISSED.21
The petitioner filed a motion for reconsideration,22 which the Court of Appeals denied
in its resolution23 of August 22, 2005. In the present appeal, the petitioner raises
before us the following issues:
I have jurisdiction over the case.26
WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT THE
CAUSE OF ACTION OF THE SUBJECT COMPLAINT IS NOT FOR UNLAWFUL
DETAINER BUT FOR RECOVERY OF POSSESSION AND THEREFORE
DISMISSIBLE
II
WHETHER OR NOT THE COURT OF APPEALS ERRED IN DECIDING THE CASE
BASED ON RESPONDENTS MATERIAL CHANGE OF THEORY WHICH IS
COMPLETELY INCONSISTENT WITH THEIR DEFENSES INVOKED BEFORE THE
MUNICIPAL TRIAL COURT
III
WHETHER OR NOT THIS HONORABLE COURT MAY DECIDE THIS CASE ON
THE MERITS TO AVOID CIRCUITOUS PROCEDURE IN THE ADMINISTRATION OF
JUSTICE.24
The Courts Ruling
We find the petition unmeritorious.
Unlawful detainer is not the proper
remedy for the present case.
The key issue in this case is whether an action for unlawful detainer is the proper
remedy.
Unlawful detainer is a summary action for the recovery of possession of real property.
This action may be filed by a lessor, vendor, vendee, or other person against whom
the possession of any land or building is unlawfully withheld after the expiration or
termination of the right to hold possession by virtue of any contract, express or
implied. In unlawful detainer, the possession of the defendant was originally legal, as
his possession was permitted by the plaintiff on account of an express or implied
contract between them. However, the defendants possession became illegal when
the plaintiff demanded that the defendant vacate the subject property due to the
expiration or termination of the right to possess under the contract, and the defendant
refused to heed such demand. A case for unlawful detainer must be instituted one
year from the unlawful withholding of possession.25
The allegations in the complaint determine both the nature of the action and the
jurisdiction of the court. The complaint must specifically allege the facts constituting
unlawful detainer. In the absence of these allegations of facts, an action for unlawful
detainer is not the proper remedy and the municipal trial court or the MeTC does not
In his amended complaint, the petitioner presents the following allegations in support
of his unlawful detainer complaint:
3. On April 1, 1999, plaintiff leased from lessor, Mr. Rudy Chuasing, that parcel of lot
owned and registered in the lessors name, covering the area occupied by the
defendants.
xxxx
6. Plaintiffs lessor had acquired the subject property as early as 1991 through sale,
thereafter the aforesaid Transfer Certificate of Title was subsequently registered
under his name.
7. Defendants, having been fully aware of their unlawful occupancy of the subject lot,
have defiantly erected their houses thereat without benefit of any contract or law
whatsoever, much less any building permit as sanctioned by law, but by mere
tolerance of its true, lawful and registered owner, plaintiffs lessor.
8. By reason of defendants continued unlawful occupancy of the subject premises,
plaintiff referred the matter to his lawyer who immediately sent a formal demand upon
each of the defendants to vacate the premises. Copies of the demand letter dated 28
April 1999 are xxx hereto attached as annexes "C" to "QQ."
41
9. Despite notice, however, defendants failed and refused and continues to fail and
refuse to vacate the premises without valid or legal justification.27 (emphasis ours)
The petitioners allegations in the amended complaint run counter to the requirements
for unlawful detainer. In an unlawful detainer action, the possession of the defendant
was originally legal and his possession was permitted by the owner through an
express or implied contract.
In this case, paragraph 7 makes it clear that the respondents occupancy was
unlawful from the start and was bereft of contractual or legal basis. In an unlawful
detainer case, the defendants possession becomes illegal only upon the plaintiffs
demand for the defendant to vacate the property and the defendants subsequent
refusal. In the present case, paragraph 8 characterizes the defendants occupancy as
unlawful even before the formal demand letters were written by the petitioners
counsel. Under these allegations, the unlawful withholding of possession should not
be based on the date the demand letters were sent, as the alleged unlawful act had
taken place at an earlier unspecified date.
The petitioner nevertheless insists that he properly alleged that the respondents
occupied the premises by mere tolerance of the owner. No allegation in the complaint
nor any supporting evidence on record, however, shows when the respondents
entered the property or who had granted them permission to enter. Without these
allegations and evidence, the bare claim regarding "tolerance" cannot be upheld.
In Sarona, et al. v. Villegas, et al.,28 the Court cited Prof. Arturo M. Tolentinos
definition and characterizes "tolerance" in the following manner:
Professor Arturo M. Tolentino states that acts merely tolerated are "those which by
reason of neighborliness or familiarity, the owner of property allows his neighbor or
another person to do on the property; they are generally those particular services or
benefits which ones property can give to another without material injury or prejudice
to the owner, who permits them out of friendship or courtesy." He adds that: "they are
acts of little disturbances which a person, in the interest of neighborliness or friendly
relations, permits others to do on his property, such as passing over the land, tying a
horse therein, or getting some water from a well." And, Tolentino continues, even
though "this is continued for a long time, no right will be acquired by prescription."
Further expounding on the concept, Tolentino writes: "There is tacit consent of the
possessor to the acts which are merely tolerated. Thus, not every case of knowledge
and silence on the part of the possessor can be considered mere tolerance. By virtue
of tolerance that is considered as an authorization, permission or license, acts of
possession are realized or performed. The question reduces itself to the existence or
non-existence of the permission. [citations omitted; italics supplied]
The Court has consistently adopted this position: tolerance or permission must have
been present at the beginning of possession; if the possession was unlawful from the
start, an action for unlawful detainer would not be the proper remedy and should be
dismissed.29
It is not the first time that this Court adjudged contradictory statements in a complaint
for unlawful detainer as a basis for dismissal. In Unida v. Heirs of Urban,30 the claim
that the defendants possession was merely tolerated was contradicted by the
complainants allegation that the entry to the subject property was unlawful from the
very beginning. The Court then ruled that the unlawful detainer action should fail.
The contradictory statements in the complaint are further deemed suspicious when a
complaint is silent regarding the factual circumstances surrounding the alleged
tolerance. In Ten Forty Realty Corporation v. Cruz,31 the complaint simply stated that:
"(1) defendant immediately occupied the subject property after its sale to her, an
action merely tolerated by the plaintiff; and (2) the respondents allegedly illegal
occupation of the premises was by mere tolerance." The Court expressed its qualms
over these averments of fact as they did not contain anything substantiating the claim
that the plaintiff tolerated or permitted the occupation of the property by the
defendant:
These allegations contradict, rather than support, plaintiffs theory that its cause of
action is for unlawful detainer. First, these arguments advance the view that
defendants occupation of the property was unlawful at its inception. Second, they
counter the essential requirement in unlawful detainer cases that plaintiffs supposed
act of sufferance or tolerance must be present right from the start of a possession that
is later sought to be recovered.
As the bare allegation of plaintiffs tolerance of defendants occupation of the
premises has not been proven, the possession should be deemed illegal from the
beginning. Thus, the CA correctly ruled that the ejectment case should have been for
forcible entry an action that had already prescribed, however, when the Complaint
was filed on May 12, 1999. The prescriptive period of one year for forcible entry cases
is reckoned from the date of defendants actual entry into the land, which in this case
was on April 24, 1998.32
Similarly, in Go, Jr. v. Court of Appeals,33 the Court considered the owners lack of
knowledge of the defendants entry of the land to be inconsistent with the allegation
that there had been tolerance.
In Padre v. Malabanan,34 the Court not only required allegations regarding the grant of
permission, but proof as well. It noted that the plaintiffs alleged the existence of
tolerance, but ordered the dismissal of the unlawful detainer case because the
evidence was "totally wanting as to when and under what circumstances xxx the
alleged tolerance came about." It stated that:
Judging from the respondents Answer, the petitioners were never at all in physical
possession of the premises from the time he started occupying it and continuously up
to the present. For sure, the petitioners merely derived their alleged prior physical
possession only on the basis of their Transfer Certificate of Title (TCT), arguing that
the issuance of said title presupposes their having been in possession of the property
at one time or another.35
42
Thus, the complainants in unlawful detainer cases cannot simply anchor their claims
on the validity of the owners title. Possession de facto must also be proved.
As early as the 1960s, in Sarona, et al. v. Villegas, et al.,36 we already ruled that a
complaint which fails to positively aver any overt act on the plaintiffs part indicative of
permission to occupy the land, or any showing of such fact during the trial is fatal for a
case for unlawful detainer. As the Court then explained, a case for unlawful detainer
alleging tolerance must definitely establish its existence from the start of possession;
otherwise, a case for forcible entry can mask itself as an action for unlawful detainer
and permit it to be filed beyond the required one-year prescription period from the
time of forcible entry:
A close assessment of the law and the concept of the word "tolerance" confirms our
view heretofore expressed that such tolerance must be present right from the start of
possession sought to be recovered, to categorize a cause of action as one of unlawful
detainer not of forcible entry. Indeed, to hold otherwise would espouse a
dangerous doctrine. And for two reasons: First. Forcible entry into the land is an open
challenge to the right of the possessor. Violation of that right authorizes the speedy
redress in the inferior court provided for in the rules. If one year from the forcible
entry is allowed to lapse before suit is filed, then the remedy ceases to be speedy;
and the possessor is deemed to have waived his right to seek relief in the inferior
court. Second. If a forcible entry action in the inferior court is allowed after the lapse
of a number of years, then the result may well be that no action of forcible entry can
really prescribe. No matter how long such defendant is in physical possession,
plaintiff will merely make a demand, bring suit in the inferior court upon plea of
tolerance to prevent prescription to set in and summarily throw him out of the land.
Such a conclusion is unreasonable. Especially if we bear in mind the postulates that
proceedings of forcible entry and unlawful detainer are summary in nature, and that
the one year time-bar to the suit is but in pursuance of the summary nature of the
action.37 (italics supplied)
Given these rulings, it would be equally dangerous for us to deprive the respondents
of possession over a property that they have held for at least eight years before the
case was filed in 1999, by means of a summary proceeding, simply because the
petitioner used the word "tolerance" without sufficient allegations or evidence to
support it.
There was no change in the
respondents theory during
the appeal that would amount
to a deprivation of the petitioners
right to due process.
The petitioner alleges that the respondents had never questioned before the MeTC
the fact that their occupancy was by tolerance. The only issues the respondents
allegedly raised were: (1) the title to the property is spurious; (2) the petitioners
predecessor is not the true owner of the property in question; (3) the petitioners lease
contract was not legally enforceable; (4) the petitioner was not the real party-in-
interest; (5) the petitioners predecessor never had prior physical possession of the
property; and (6) the respondents right of possession was based on the "Deed of
Assignment of Real Property" executed by Dulfo. The respondents raised the issue of
tolerance merely on appeal before the RTC. They argue that this constitutes a change
of theory, which is disallowed on appeal.38
It is a settled rule that a party cannot change his theory of the case or his cause of
action on appeal. Points of law, theories, issues and arguments not brought to the
attention of the lower court will not be considered by the reviewing court. The
defenses not pleaded in the answer cannot, on appeal, change fundamentally the
nature of the issue in the case. To do so would be unfair to the adverse party, who
had no opportunity to present evidence in connection with the new theory; this would
offend the basic rules of due process and fair play.39
While this Court has frowned upon changes of theory on appeal, this rule is not
applicable to the present case. The Court of Appeals dismissed the action due the
petitioners failure to allege and prove the essential requirements of an unlawful
detainer case. In Serdoncillo v. Spouses Benolirao,40 we held that:
In this regard, to give the court jurisdiction to effect the ejectment of an occupant or
deforciant on the land, it is necessary that the complaint must sufficiently show such a
statement of facts as to bring the party clearly within the class of cases for which the
statutes provide a remedy, without resort to parol testimony, as these proceedings are
summary in nature. In short, the jurisdictional facts must appear on the face of the
complaint. When the complaint fails to aver facts constitutive of forcible entry or
unlawful detainer, as where it does not state how entry was effected or how and when
dispossession started, the remedy should either be an accion publiciana or accion
reivindicatoria. (emphasis ours; italics supplied)
Regardless of the defenses raised by the respondents, the petitioner was required to
properly allege and prove when the respondents entered the property and that it was
the petitioner or his predecessors, not any other persons, who granted the
respondents permission to enter and occupy the property. Furthermore, it was not the
respondents defense that proved fatal to the case but the petitioners contradictory
statements in his amended complaint which he even reiterated in his other
pleadings.41
Although the respondents did not use the word "tolerance" before the MeTC, they
have always questioned the existence of the petitioners tolerance. In their Answer to
Amended Complaint, the respondents negated the possibility of their possession of
the property under the petitioner and his lessors tolerance when the respondents
alleged to have occupied the premises even before the lessor acquired the property
in 1991. They said as much in their Position Paper:
RODOLFO CHUA SING never had actual physical possession of his supposed
property, as when he became an owner of the 1,919 square meters property
described in TCT No. 52594, the property had already been occupied by herein
DEFENDANTS since late 1970. Therefore, DEFENDANTS were already
occupants/possessors of the property from where they are being ejected by
FIORELLO JOSE, a supposed LESSEE of a property with a dubious title. The main
thing to be proven in the case at bar is prior possession and that the same was lost
through force, intimidation, threat, strategy and stealth, so that it behooves the court
43
to restore possession regardless of title or even ownership xxx. In the case at bar,
neither RODOLFO CHUA SING nor herein PLAINTIFF ever had any actual physical
possession of the property where DEFENDANTS have already possessed for more
than ten (10) years in 1991 when RODOLFO CHUA SING got his fake title to the
property.42 (citation omitted)
In addition, whether or not it was credible, the respondents claim that their
possession was based on the Deed of Assignment executed by Dulfo, in behalf of the
estate of Domingo de Ocampo, shows that they considered the petitioner and his
lessor as strangers to any of their transactions on the property, and could not have
stayed there upon the latters permission.
We note that even after the issue of tolerance had been directly raised by the
respondents before the RTC, the petitioner still failed to address it before the RTC,
the Court of Appeals, and the Supreme Court.43 At best, he belatedly states for the
first time in his Memorandum44 before this Court that his lessor had tolerated the
respondents occupancy of the lot, without addressing the respondents allegation that
they had occupied the lot in 1970, before the petitioners lessor became the owner of
the property in 1991, and without providing any other details. His pleadings continued
to insist on the existence of tolerance without providing the factual basis for this
conclusion. Thus, we cannot declare that the Court of Appeals had in anyway
deprived the petitioner of due process or had unfairly treated him when it resolved the
case based on the issue of tolerance.
The Court cannot treat an ejectment
case as an accion publiciana or
accion reivindicatoria.
The petitioner argues that assuming this case should have been filed as an accion
publiciana or accion reivindicatoria, this Court should still resolve the case, as
requiring him to properly refile the case serves no other ends than to comply with
technicalities.45
The Court cannot simply take the evidence presented before the MeTC in an
ejectment case and decide it as an accion publiciana or accion reivindicatoria. These
cases are not interchangeable and their differences constitute far more than mere
technicalities.
In Regis, Jr. v. Court of Appeals,46 we ruled that an action for forcible entry cannot be
treated as an accion publiciana and summarized the reasons therefor. We find these
same reasons also applicable to an unlawful detainer case which bears the same
relevant characteristics:
On the issue of whether or not an action for forcible entry can be treated as accion
publiciana, we rule in the negative. Forcible entry is distinct from accion publiciana.
First, forcible entry should be filed within one year from the unlawful dispossession of
the real property, while accion publiciana is filed a year after the unlawful
dispossession of the real property. Second, forcible entry is concerned with the issue
of the right to the physical possession of the real property; in accion publiciana, what
is subject of litigation is the better right to possession over the real property. Third, an
action for forcible entry is filed in the municipal trial court and is a summary action,
while accion publiciana is a plenary action in the RTC. [italics supplied]
The cause of action in ejectment is different from that in an accion publiciana or
accion reivindicatoria. An ejectment suit is brought before the proper inferior court to
recover physical possession only or possession de facto, not possession de jure.
Unlawful detainer and forcible entry cases are not processes to determine actual title
to property. Any ruling by the MeTC on the issue of ownership is made only to resolve
the issue of possession, and is therefore inconclusive.47 Because they only resolve
issues of possession de facto, ejectment actions are summary in nature, while accion
publiciana (for the recovery of possession) and accion reivindicatoria (for the recovery
of ownership) are plenary actions.48 The purpose of allowing actions for forcible entry
and unlawful detainer to be decided in summary proceedings is to provide for a
peaceful, speedy and expeditious means of preventing an alleged illegal possessor of
property from unjustly taking and continuing his possession during the long period it
would take to properly resolve the issue of possession de jure or ownership, thereby
ensuring the maintenance of peace and order in the community; otherwise, the party
illegally deprived of possession might take the law in his hands and seize the property
by force and violence.49 An ejectment case cannot be a substitute for a full-blown trial
for the purpose of determining rights of possession or ownership. Citing Mediran v.
Villanueva,50 the Court in Gonzaga v. Court of Appeals51 describes in detail how these
two remedies should be used:
In giving recognition to the action of forcible entry and detainer the purpose of the law
is to protect the person who in fact has actual possession; and in case of controverted
right, it requires the parties to preserve the status quo until one or the other of them
sees fit to invoke the decision of a court of competent jurisdiction upon the question of
ownership. It is obviously just that the person who has first acquired possession
should remain in possession pending the decision; and the parties cannot be
permitted meanwhile to engage in a petty warfare over the possession of the property
which is the subject of dispute. To permit this would be highly dangerous to individual
security and disturbing to social order.1wphi1 Therefore, where a person supposes
himself to be the owner of a piece of property and desires to vindicate his ownership
against the party actually in possession, it is incumbent upon him to institute an action
to this end in a court of competent jurisdiction; and he cannot be permitted, by
invading the property and excluding the actual possessor, to place upon the latter the
burden of instituting an action to try the property right. [italics supplied]
Thus, if we allow parties to file ejectment cases and later consider them as an accion
publiciana or accion reivindicatoria, we would encourage parties to simply file
ejectment cases instead of plenary actions. Courts would then decide in summary
proceedings cases which the rules intend to be resolved through full-blown trials.
Because these "summary" proceedings will have to tackle complicated issues
requiring extensive proof, they would no longer be expeditious and would no longer
serve the purpose for which they were created. Indeed, we cannot see how the
resulting congestion of cases, the hastily and incorrectly decided cases, and the utter
lack of system would assist the courts in protecting and preserving property rights.
44
WHEREFORE, we DENY the petition, and AFFIRM the Court of Appeals' decision
dated March 14, 2005 and resolution dated August 22, 2005 in CA-G.R. SP No.
80116.
SO ORDERED.
MELCHOR CARO, petitioner, vs. SUSANA SUCALDITO, respondent.
DECISION
CALLEJO, SR., J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court,
assailing the Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 45503,
affirming the dismissal of Civil Case No. 15529 by the Regional Trial Court (RTC) of
Iloilo City, Branch 39, as well as the resolution denying the motion for reconsideration
thereof.
The antecedent facts are as follows:
Gregorio Caro bought a parcel of land known as Assessors Lot No. 160 from
Ruperto Gepilano as evidenced by a Deed of Sale[2] dated October 21, 1953. The
said lot was situated in Sitio Bangyan, Barrio Calaya, Municipality of Nueva Valencia,
Iloilo City, consisting more or less of 17.9849 hectares. Thereafter, Gregorio Caro sold
a portion of the said lot to his son Melchor Caro, consisting of 70,124 square meters,
and now identified as Lot No. 4512 of the Cadastral survey of Nueva Valencia, Pls-
775. Father and son executed a Deed of Definite Sale [3] dated January 31, 1973
covering Lot No. 4512.
On August 1, 1974, Melchor Caro applied for a free patent before the Bureau of
Lands, District Land Office No. 6-1, covering the said area of the property which he
bought from his father. The application was, however, opposed by Deogracias de la
Cruz. On November 6, 1980, the Regional Director rendered a Decision [4] canceling
the said application, thusly:
This is a claim of Deogracias de la Cruz to Lot No. 4512, Pls-775 of Calaya, Nueva Valencia,
Guimaras, covered by the above-noted application of Melchor Caro.
In the investigation, respondent claims preferential rights over the land as he acquired it
through sale from his father Gregorio Caro who had likewise bought the land from Ruperto
Cepellano (sic) in 1953. On the other hand, protestant De la Cruz testified that the land in
controversy was bought by him from Cipriano Gallego in 1965; that he thereafter occupied,
possessed and improved the land by planting coconut trees; and that in 1968 he was forcibly
driven out by Gregorio Caro from the land in question.
Verification of the records disclosed that the land which was actually sold to Gregorio Caro by
Ruperto Gepellano (sic) is Assessors Lot No. 160. The description and physical identity of Lot
No. 160 is basically different and distinct from Lot No. 4512, the land in question. This could
be clearly seen in the Certified True Copy of the Sketch Plan from the Assessors Office of
Assessors Lot No. 160 and the Sketch Plan marked as Exhibit 9 of the Respondent-Applicant.
It has been established that Assessors Lot No. 160 corresponds to Lot No. 4511 and not Lot
No. 4512 claimed by the protestant. Moreover, Ruperto Cepellano (sic) in his affidavit
testified that what he sold to Gregorio Caro is a land distinct and different from the land in
question.
IN VIEW OF THE FOREGOING FINDINGS, it is ordered that the F.P.A. No. (VI-1)8548 of
applicant-respondent Melchor Caro be, as hereby it is, cancelled. Protestant Deogracias de la
Cruz if qualified, is given one hundred twenty (120) days from the finality of this decision to
file an appropriate public land application otherwise he shall lose his preferential right thereto.
SO ORDERED.[5]
Caro filed a notice of appeal before the Regional Land Office in Iloilo City,
docketed as MNR Case No. 5207. However, the appeal was dismissed in an
Order[6] dated June 29, 1982, on the ground of failure to file an appeal memorandum
within the reglementary period therefor.
On August 29, 1982, Susana R. Sucaldito, as the buyer of Lot No. 4512, filed an
Application for a Free Patent [7] covering the said lot, and was issued Free Patent No.
597599. Consequently, the Register of Deeds of Iloilo City issued Original Certificate
of Title (OCT) No. F-27162 in her favor. Sucaldito then filed a Petition for Writ of
Possession[8] before the RTC of Iloilo City, which was granted in an Order [9] dated May
7, 1984.
Thereafter, on February 20, 1984, Caro filed a Complaint[10] against Sucaldito for
Annulment of Title, Decision, Free Patent and/or Recovery of Ownership and/or
Possession with Damages before the RTC of Iloilo City. He later filed an amended
complaint,[11] alleging that he was the owner of the subject lot, and had been in
possession of the same since 1953 and/or even prior thereto in the concept of owner,
adversely, openly, continuously and notoriously. He further alleged that the said lot
had been declared for tax purposes in his name and that of his predecessors-in-
interest, and that the corresponding land taxes had been paid therefor. He claimed
that Assessors Lot No. 160 had actually been divided into two lots, namely, Lot No.
4511 and Lot No. 4512; Sucaldito had actually been claiming Lot No. 989 (Lot No.
4512), which was located two kilometers away. He lamented that despite the
overwhelming evidence proving his ownership and possession of the said property,
the Bureau of Lands did not award it to him.
Caro further alleged that since the issuance of the free patent over the subject
lot in favor of Sucaldito was wrongful and fraudulent, she had no right whatsoever
over the subject lot. Hence, as a trustee of a constructive trust, she was obliged to
return the same to him as the lawful owner. The complaint contained the following
prayer:
WHEREFORE, it is prayed that judgment be rendered:
1. Ordering the annulment and voiding of the decision of the Bureau of Lands, the free patent
and the Original Certificate of Title No. F-27162 or in the alternative;
45
2. Ordering defendant to reconvey the ownership and in the event she wrests possession from
plaintiff then, also the possession of Lot 4512 PLS-775 of Nueva Valencia, Guimaras
Cadastre, back to plaintiff;
3. Declaring plaintiff as the lawful owner and possessor of Lot 4512 PLS-775 of Nueva
Valencia, Guimaras Cadastre and ordering the issuance of a free patent or a torrens title in
favor of plaintiff;
4. Ordering defendant to pay the plaintiff P50,000.00 as moral damages, P2,000.00 as
attorneys fees and P2,000.00 as expenses on litigation plus exemplary damages in an amount
at the discretion of this Court.
Plaintiff further prays for such other relief just and equitable in the premises. [12]
In her answer with counterclaim, Sucaldito interposed, as a special affirmative
defense, the fact that she intervened in the proceedings on Caros application for a
free patent over Lot No. 4512 before the Bureau of Lands having bought the subject
land from De la Cruz. Moreover, contrary to the allegations of the petitioner, Lot No.
989 and Lot No. 4512 were one and the same lot, as per the findings of the Bureau of
Lands.
The parties thereafter presented evidence to prove their respective claims. In a
Decision[13] dated December 7, 1993, the trial court ruled in favor of the respondent
and dismissed the petitioners complaint. The dispositive portion reads:
WHEREFORE, premises considered, the complaint filed by plaintiff is dismissed. The
counterclaim of defendant which is merely the result of the filing of the complaint, is likewise
dismissed.
Costs against the plaintiff.
SO ORDERED.[14]
Citing the case of Maximo v. Court of First Instance of Capiz, Br. III,[15] the trial
court ruled that Caro had no personality to file the action for the annulment of the free
patent issued in favor of Sucaldito, which could only be brought by the Solicitor
General. It held that an applicant for a free patent who is not the owner of a parcel of
land cannot bring an action in court to recover the land, for the court may not usurp
the authority of the Director of Lands and the Secretary of Agriculture to dispose lands
of the public domain through administrative proceedings under the Public Land Act,
[16]
or Commonwealth Act No. 141, as amended. The trial court further stressed that
the remedy of a rival-applicant for a free patent over the same land was through
administrative channels, not judicial, because even if the oppositor succeeds in
annulling the title of the applicant, the former does not thereby become the owner of
the land in dispute.[17]
The trial court also declared that contrary to Caros claims, the evidence clearly
showed that Lot No. 4512, with an area of 70,677 square meters, was not included in
Assessors Lot No. 160, thus:
Assessors Lot 160 is Cadastral Lot 4511, which has an original area of around 17 hectares,
more or less, later on, increased to 21 hectares. If we add Lot 4512 to Lot 4511 following the
contention of the plaintiff, then the area would be more than 28 hectares. Thus, belying the
claim of plaintiff that Lot 4512 was formerly a part of Assessors Lot 160.
The contention of the plaintiff that the defendant is claiming Lot 989 which is owned by Felix
Galabo and located at Brgy. Olacon, is not well taken, because the identification of the lot as
stated in the tax declaration is not binding and conclusive. What is binding and conclusive is
what is stated in the title of the land and its technical description. In the technical description
as found in the title of the defendant [Sucaldito], it is clearly stated therein that the lot is Lot
4512 and is located at Brgy. Calaya and not Brgy. Olacon, Nueva Valencia, Guimaras. [18]
Aggrieved by the trial courts ruling, Caro elevated the case to the CA on the
following grounds:
I
THE COURT A QUO ERRED IN RULING THAT PLAINTIFF HAS NO PERSONALITY
TO BRING THE ACTION;
II
THE COURT A QUO ERRED IN RULING THAT EVEN IF THE PLANTIFF HAS THE
PERSONALITY TO BRING THE ACTION STILL HE CANNOT RECOVER THE LOT IN
QUESTION, CAD. LOT NO. 4512;
III
THE COURT ERRED IN NOT ORDERING THE DEFENDANT TO RECONVEY THE
LAND IN QUESTION TO PLAINTIFF AND TO PAY DAMAGES.[19]
The CA dismissed the petition in its Decision [20] dated July 31, 2002. The
appellate court agreed with the ruling of the RTC that the petitioner had no personality
to file the action under Section 101 of Commonwealth Act No. 141, considering
further that he was a mere applicant for a free patent. Citing several cases, [21] the
appellate court ruled that the findings of fact made by administrative agencies which
are supported by substantial evidence must be respected, particularly where the
question demands the exercise of sound administrative discretion requiring special
knowledge and experience.[22]
Caro filed a motion for reconsideration of the said decision, which the appellate
court denied in a Resolution[23] dated February 7, 2003.
Caro, now the petitioner, assails the ruling of the appellate court on the following
grounds:
THAT THE HONORABLE APPELLATE COURT COMMITTED AN ERROR IN
HOLDING THAT PETITIONER HAS NO LEGAL PERSONALITY TO FILE THIS
ACTION;
46
THAT THE HONORABLE APPELLATE COURT ERRED IN DISMISSING THE APPEAL
INTERPOSED BY PETITIONER ON THE GROUND THAT ONLY THE SOLICITOR
GENERAL CAN FILE AN ACTION FOR RECONVEYANCE OF PROPERTY ACQUIRED
BY PATENT.[24]
The petitioner insists that contrary to the ruling of the CA, he has the legal
personality to bring and institute the present action against the respondent,
considering that title issued on the basis of a patent is annullable on the ground of
fraud. Furthermore, the one-year period within which to file an action to cancel a
torrens title under Section 32 of Presidential Decree No. 1529 does not apply where
the registered owner, or the successor-in-interest, knew that the property described in
the title actually belongs to another, as in this case. The petitioner cites Vital v. Anore,
et al.[25] to bolster his claim. The petitioner also cites Director of Lands v.
Abanilla[26] where the Court stressed that any false statement in the application, which
is an essential condition of the patent or title under Section 91 of Commonwealth Act
No. 141, shall ipso facto produce the cancellation of the concession, title or permit
granted.
In her comment, the respondent points out that the decision of the Bureau of
Lands itself would show that the petitioner is not the true and lawful owner of the
subject lot; as such, the argument that he has the legal personality to file the action
for annulment of patent based on constructive trust is untenable. The respondent
further contends that the CA did not err in upholding the ruling of the RTC.
The petitioner merely reiterated his previous arguments in his Reply dated
December 30, 2003.
The Court agrees with the ruling of the RTC and the CA, and holds that the
petitioner has no personality to file a suit for reconveyance of the subject property.
The Court notes that the petitioners complaint before the RTC prays for the
annulment of the free patent issued in the respondents favor. Considering that the
ultimate relief sought is for the respondent to return the subject property to him, it is in
reality an action for reconveyance. In De Guzman v. Court of Appeals,[27] the Court
held that [t]he essence of an action for reconveyance is that the decree of registration
is respected as incontrovertible but what is sought instead is the transfer of the
property which has been wrongfully or erroneously registered in another persons
name, to its rightful owner or to one with a better right. [28] Indeed, in an action for
reconveyance filed by a private individual, the property does not go back to the State.
[29]
Reversion, on the other hand, is an action where the ultimate relief sought is to
revert the land back to the government under the Regalian doctrine. Considering that
the land subject of the action originated from a grant by the government, its
cancellation is a matter between the grantor and the grantee.[30]
Under Section 2, Rule 3 of the Rules of Court, [31] every action must be
prosecuted or defended in the name of the real party-in-interest, or one who stands to
be benefited or injured by the judgment in the suit. Corollarily, legal standing has been
defined as a personal and substantial interest in the case, such that the party has
sustained or will sustain direct injury as a result of the challenged act. Interest means
a material interest in issue that is affected by the questioned act or instrument, as
distinguished from a mere incidental interest in the question involved.[32]
Clearly then, a suit filed by one who is not a party-in-interest must be dismissed.
In this case, the petitioner, not being the owner of the disputed property but a mere
applicant for a free patent, cannot thus be considered as a party-in-interest with
personality to file an action for reconveyance. The Court, citing several of its holdings,
expounded on this doctrine in Tankiko v. Cezar[33] as follows:
Thus, in Lucas v. Durian [102 Phil. 1157 (1957)], the Court affirmed the dismissal of a
Complaint filed by a party who alleged that the patent was obtained by fraudulent means and,
consequently, prayed for the annulment of said patent and the cancellation of a certificate of
title. The Court declared that the proper party to bring the action was the government, to which
the property would revert. Likewise affirming the dismissal of a Complaint for failure to state
a cause of action, the Court in Nebrada v. Heirs of Alivio[104 Phil. 126 (1958)] noted that the
plaintiff, being a mere homestead applicant, was not the real party-in-interest to institute an
action for reconveyance.
...
Verily, the Court stressed that [i]f the suit is not brought in the name of or against the real
party-in-interest, a motion to dismiss may be filed on the ground that the complaint states no
cause of action [Travel Wide v. CA, 199 SCRA 205, 209 (1991), per Cruz, J.See also Suguister
v. Tamayo, 176 SCRA 579, August 21, 1989]. In fact, a final judgment may be invalidated if
the real parties-in-interest are not included. This was underscored by the Court in Arcelona v.
CA [280 SCRA 20, October 2, 1997], in which a final judgment was nullified because
indispensable parties were not impleaded.
In the present dispute, only the State can file a suit for reconveyance of a public land.
Therefore, not being the owners of the land but mere applicants for sales patents thereon,
respondents have no personality to file the suit. Neither will they be directly affected by the
judgment in such suit.[34]
In De la Pea v. Court of Appeals,[35] the Court, in dismissing the petitioners
imputation of fraud in securing a free patent and title over a parcel of land, declared
that reconveyance is a remedy granted only to the owner of the property alleged to
be erroneously titled in anothers name.[36] The Court further expounded:
Persons who have not obtained title to public lands could not question the titles legally issued
by the State [Reyes v. Rodriguez, 62 Phil. 771, 776 (1936)]. In such cases, the real party-in-
interest is the Republic of the Philippines to whom the property would revert if it is ever
established, after appropriate proceedings, that the free patent issued to the grantee is indeed
vulnerable to annulment on the ground that the grantee failed to comply with the conditions
imposed by the law. Not being an applicant, much less a grantee, petitioner cannot ask for
reconveyance.[37]
In VSC Commercial Enterprises, Inc. v. Court of Appeals,[38] where the private
respondents therein were mere lessees of the property in question, the Court ruled
that as mere lessees, they had no present substantial and personal interest with
respect to issues involving ownership of the disputed property. The Court went on to
declare:
47
The only interest they have, in the event the petitioners title over the subject property is
cancelled and ownership reverts to the State, is the hope that they become qualified buyers of
the subject parcel of land. Undoubtedly, such interest is a mere expectancy. Even the private
respondents themselves claim that in case of reversion of ownership to the State, they only
have pre-emptive rights to buy the subject property; that their real interest over the said
property is contingent upon the governments consideration of their application as buyers of the
same. It is settled that a suit filed by a person who is not a party-in-interest must be dismissed.
[39]
In fact, Section 101 of Commonwealth Act No. 141 states
Section 101. All actions for the reversion to the government of lands of the public domain or
improvements thereon shall be instituted by the Solicitor General or the officer acting in his
stead, in the proper courts, in the name of the Commonwealth [now Republic] of the
Philippines.
This provision was applied and discussed in Sumail v. Judge of the Court of
First Instance of Cotabato, et al.,[40] a case on all fours with the present one, as
follows:
Under Section 101 of the above reproduced, only the Solicitor General or the officer acting in
his stead may bring the action for reversion. Consequently, Sumail may not bring such action
or any action which would have the effect of cancelling a free patent and the corresponding
certificate of title issued on the basis thereof, with the result that the land covered thereby will
again form part of the public domain. Furthermore, there is another reason for withholding
legal personality from Sumail. He does not claim the land to be his private property. In fact, by
his application for a free patent, he had formally acknowledged and recognized the land to be
a part of the public domain; this, aside from the declaration made by the cadastral court that lot
3633 was public land. Consequently, even if the parcel were declared reverted to the public
domain, Sumail does not automatically become the owner thereof. He is a mere public land
applicant like others who may apply for the same.
To reiterate, the petitioner is not the proper party to file an action for
reconveyance that would result in the reversion of the land to the government. [41] The
petitioner has no personality to recover the property as he has not shown that he is
the rightful owner thereof.[42]
WHEREFORE, premises considered, the petition is DENIED for lack of merit.
The Decision of the Court of Appeals in CA-G.R. CV No. 45503 and the Resolution
dated February 7, 2003 are AFFIRMED.
SO ORDERED.
SPOUSES ELEGIO* CAEZO and G.R. No. 170189
DOLIA CAEZO,
Petitioners, Present:
CARPIO, J., Chairperson,
NACHURA,
BERSAMIN,**
- versus - ABAD, and
MENDOZA, JJ.
SPOUSES APOLINARIO and Promulgated:
CONSORCIA L. BAUTISTA,
Respondents. September 1, 2010
x--------------------------------------------------x
DECISION
CARPIO, J.:
G.R. No. 170189 is a petition for review[1] assailing the Decision[2] promulgated on 17 October
2005 by the Court of Appeals (appellate court) in CA-G.R. CV No. 75685. The appellate court
granted the appeal filed by the Spouses Apolinario and Consorcia L. Bautista (spouses
Bautista) and dismissed the complaint for the issuance of a writ of demolition with damages
filed by the Spouses Elegio and Dolia Caezo (spouses Caezo) without prejudice to the filing of
the appropriate action with the proper forum. In its Decision[3] on Civil Case No. MC-00-1069
dated 25 March 2002, Branch 213 of the Regional Trial Court of Mandaluyong City (trial
court) rendered judgment in favor of the spouses Caezo. The trial court also ordered the
issuance of a writ of demolition directing the removal of the structures built by the spouses
Bautista on the portion of the land belonging to the spouses Caezo.
The Facts
The appellate court narrated the facts as follows:
Spouses Elegio and Dolia Caezo (hereafter appellees) are the registered
owner[s] of a parcel of land with an area of One Hundred Eighty Six (186)
square meters, covered by Transfer Certificate of Title (TCT) No. 32911.
Spouses Apolinario and Consorcia Bautista (hereafter appellants) are the
registered owners of a parcel of land, containing an area of One Hundred
Eighty One (181) square meters, covered by Transfer Certificate of Title
(TCT) No. 31727. Both parcels of land are located at Coronado Heights,
Barangka Ibaba, Mandaluyong City and registered with the Registry of
Deeds of Mandaluyong City. Appellants lot is adjacent to that of appellees
[sic].
Sometime in 1995, appellees started the construction of a building on their
lot. During the construction, appellees discovered that their lot was
encroached upon by the structures built by appellants without appellees
knowledge and consent.
The three (3) surveys conducted confirmed the fact of
encroachment. However, despite oral and written demands, appellants
failed and refused to remove the structures encroaching appellees lot.
48
 Attempts were made to settle their dispute with the barangay lupon, but to
no avail. Appellees initiated a complaint with the RTC for the issuance of
a writ of demolition.
For failure to file an Answer within the extended period granted by the
court, appellants were declared in default. Appellees were allowed to
present their evidence ex parte before an appointed commissioner.
Thereafter the RTC rendered the assailed decision in the terms earlier set
forth.[4]
The spouses Caezo filed their complaint for the issuance of a writ of demolition with damages
on 13 April 2000. In an Order dated 15 August 2000, the trial court declared the spouses
Bautista in default for failure to answer within the reglementary period. The Public Attorneys
Office, which represented the spouses Bautista at the time, filed a Motion to Admit Answer
dated 15 June 2000. The trial court denied the motion in its Decision.
The Trial Courts Ruling
On 25 March 2002, the trial court promulgated its Decision in favor of the spouses Caezo. The
trial court found that the spouses Bautista built structures encroaching on the land owned by
the spouses Caezo. The spouses Bautista also refused to remove the structures and respect the
boundaries as established by the various surveyors. A referral to the Barangay Lupon failed to
settle the controversy amicably. The trial court thus ruled that the spouses Bautista are builders
in bad faith, such that the spouses Caezo are entitled to an issuance of a writ of demolition
with damages.
The dispositive portion of the Decision reads as follows:
IN VIEW WHEREOF, judgment is hereby rendered in favor of the
plaintiffs and against the defendants. Let a writ of demolition be
accordingly issued directing the removal/demolition of the structures built
by the defendants upon the portion of land belonging [to] the plaintiffs at
the formers expense.
Further,
1. the defendant is ordered to pay P50,000.00 (Philippine
Currency) as and by way of moral damages[; and]
2. [t]he defendant is hereby ordered to pay P30,000.00 as and by
way of attorneys fees.
SO ORDERED.[5]
The spouses Bautista filed a notice of appeal dated 29 April 2002 before the
appellate court.
The Appellate Courts Ruling
On 17 October 2005, the appellate court rendered its Decision which reversed the 25
March 2002 Decision of the trial court. The appellate court ruled that since the last demand
was made on 27 March 2000, or more than a year before the filing of the complaint, the
spouses Caezo should have filed a suit for recovery of possession and not for the issuance of a
writ of demolition. A writ of demolition can be granted only as an effect of a final judgment or
order, hence the spouses Caezos complaint should be dismissed. The spouses Caezo failed to
specify the assessed value of the encroached portion of their property. Because of this failure,
the complaint lacked sufficient basis to constitute a cause of action. Finally, the appellate court
ruled that should there be a finding of encroachment in the action for recovery of possession
and that the encroachment was built in good faith, the market value of the encroached portion
should be proved to determine the appropriate indemnity.
The dispositive portion of the appellate courts Decision reads as follows:
WHEREFORE, premises considered, the instant appeal is
GRANTED. The complaint filed by plaintiffs-appellees is hereby
DISMISSED without prejudice to the filing of the appropriate action with
the proper forum.
SO ORDERED.[6]
Issues
The spouses Caezo enumerated the following grounds to support their Petition:
I. Whether the Honorable Court of Appeals gravely erred in granting the
petition of the [spouses Bautista] and reversing the Decision of
the Court a quo; [and]
II. Whether the Honorable Court of Appeals gravely erred in stating that
the petitioners should have filed recovery of possession and not
writ of demolition.[7]
The Courts Ruling
The petition has merit.
The present case, while inaccurately captioned as an action for a Writ of Demolition with
Damages is in reality an action to recover a parcel of land or an accion reivindicatoria under
Article 434 of the Civil Code. Article 434 of the Civil Code reads: In an action to recover, the
property must be identified, and the plaintiff must rely on the strength of his title and not on
the weakness of the defendants claim. Accion reivindicatoria seeks the recovery of ownership
and includes the jus utendi and the jus fruendi brought in the proper regional trial
court. Accion reivindicatoria is an action whereby plaintiff alleges ownership over a parcel of
land and seeks recovery of its full possession.[8]
In order that an action for the recovery of title may prosper, it is indispensable, in accordance
with the precedents established by the courts, that the party who prosecutes it must fully
prove, not only his ownership of the thing claimed, but also the identity of the same.
[9] However, although the identity of the thing that a party desires to recover must be
established, if the plaintiff has already proved his right of ownership over a tract of land, and
the defendant is occupying without right any part of such tract, it is not necessary for plaintiff
to establish the precise location and extent of the portions occupied by the defendant within
the plaintiffs property.[10]
49
The spouses Caezo were able to establish their ownership of the encroached property. Aside
from testimonial evidence, the spouses Caezo were also able to present documentary and
object evidence which consisted of photographs,[11] transfer certificates of title,[12] and a
relocation survey plan.[13]
The relocation survey plan also corroborated Elegio Caezos testimony on the reason for the
spouses Bautistas attitude regarding the encroached property. The relocation survey plan
showed that the spouses Bautistas property encroached upon that of the spouses Caezo by
0.97 centimeters, while the spouses Bautistas property was encroached upon by 1.01
centimeters by another landowner. Elegio Caezo testified thus:
Q I am showing you a survey plan of lot 13. Can you please tell us what is
this survey plan?
A That is the survey plan of the surveyor whom we hired sir.
Q Can you please point to us where in this plan is your property indicated?
A This is our property, sir.
Q The witness, your Honor, is pointing to Lot 13 indicated in the survey
plan. How about the property of the defendants?
A The defendants property is this, sir.
Q The witness, your Honor, is pointing to Lot 14 indicated in the survey
plan. Now, Mr. Witness, you said that the defendants wanted you to
recover that portion of your property encroached on from the property
adjacent to theirs. Please illustrate to us by referring to this survey plan
what the defendants meant?
A The defendants want us to get the portion they had encroached on from
Lot 15 because, according to them, Lot 15 also encroached on their lot, sir.
Q The witness, your Honor, is pointing to Lot 15 indicated in
the plan. What happened next?
A We told them that this is not possible because Lot 15 is not adjacent to
our property, sir.
Q What did the defendants do?
A The defendants still refused to remove their structure, sir.
Q So, what happened?
A We filed a complaint against the defendants before the Office of the
Barangay Captain of Barangay Barangka, Ibaba, sir.
Q What happened in the Barangay?
A The Barangay council tried to settle the matter amicably
between us. However, no settlement was reached, sir.
Q While in the barangay, did you offer anything to the defendants in order
to settle the case?
A Yes, sir.
Q What was it?
A We offered that if the defendants will remove the structures, we
are willing to shoulder half of the expenses for the removal.
Q What did the defendants say to this?
A They refused our offer and insisted on their previous position that we
get our portion from Lot 15, sir.
Q What did the Barangay do after failing to settle the case?
A The Barangay issued a Certification to File Action, sir.[14]
Given the efforts made by the spouses Caezo to settle the present issue prior to the filing of a
Complaint, the trial court was justified in ruling that the spouses Bautista were in default and
in not admitting their Answer. The Complaint was not the spouses Bautistas first encounter
with the present issue. Moreover, the spouses Bautista failed to file their Answer even after the
expiry of the motion of extension granted to them.[15]
The testimony and the relocation survey plan both show that the spouses Bautista were aware
of the encroachment upon their lot by the owner of Lot 15 and thus they made a corresponding
encroachment upon the lot of the spouses Caezo. This awareness of the two encroachments
made the spouses Bautista builders in bad faith. The spouses Caezo are entitled to the issuance
of a writ of demolition in their favor and against the spouses Bautista, in accordance with
Article 450 of the Civil Code.[16]
We affirm the awards made by the trial court in its Decision:
x x x Considering the length of time when [the spouses Caezo] were
deprived of beneficial use on the subject portion of land owned by them,
the [spouses Bautista] are likewise liable to pay P30,000.00 (Philippine
Currency) in accordance with Article 451 of the Civil Code.
With respect to the prayer for the award of P50,000.00 (Philippine
Currency) as moral damages, the court decides to give due course to it in
view of the fact that the [spouses Caezo] satisfactorily proved the
existence of the factual basis of the damages and its causal relation to [the
spouses Bautistas] acts. There was bad faith on the part of the [spouses
Bautista] when they built the structures upon the land not belonging to
them. This wrongful act is the proximate cause which made the [spouses
Caezo] suffer mental anguish, sleepless nights and serious anxiety. The
[spouses Caezo] positively testified about these matters.
As regards the prayer for exemplary x x x damages, no sufficient evidence
were adduced which would warrant and justify this court to award the
same. The prayer for attorneys fees however, is found meritorious hence,
the same is hereby granted.[17]
WHEREFORE, we GRANT the petition. The Decision of the Court of Appeals in CA-G.R.
CV No. 75685 promulgated on 17 October 2005 is SET ASIDE and the dispositive portion of
the Decision of Branch 213, Regional Trial Court of Mandaluyong City promulgated on 25
March 2002 is AFFIRMED with MODIFICATION. A writ of demolition of the encroaching
structures should be issued against and at the expense of Spouses Apolinario and Consorcia L.
50
Bautista upon the finality of this judgment. Spouses Apolinario and Consorcia L. Bautista are
further ordered to pay Spouses Elegio and Dolia Caezo P30,000 as actual damages;P50,000 as
moral damages; and P30,000 as attorneys fees. The interest rate of 12% per annum shall apply
from the finality of judgment until the total amount awarded is fully paid.
SO ORDERED.
G.R. No. L-23685 April 25, 1968
CIRILA EMILIA, plaintiff-appellant,
vs.
EPIFANIO BADO (Alias Pao), ET AL., defendants-appellees.
Manuel Deao for plaintiff-appellant.
Irene D. Jurado for defendants-appellees.
SANCHEZ, J.:
The relief prayed for but denied in an order of the court below, now the subject of the
present appeal, is that injunction issue to restrain defendants from continuing with the
construction of a house of light materials on a 48-square meter area on the northern
border of plaintiff's land.
The suit started on December 12, 1963 with the complaint, as amended,1 that on or
about December 1, 1962, defendants, confederating and helping one another,
entered plaintiff's land and commenced the construction of a house of light materials
on the northern boundary of her Lot 1131 in Iligan City bordering the bank of Salabao
Creek, covered by her Torrens Title 0-267; that the continuance of such act against
the will of plaintiff would cause great and irreparable damage and injury and injustice
to her; and that there is no other plan, speedy and adequate remedy in the ordinary
course of law. Whereupon, she prayed for preliminary and final injunction and
damages. Preliminary injunction was issued ex-parte.
Plaintiff's said complaint was met by defendants' motion to dismiss upon the ground
of lack of cause of action. They attached to their motion the sketch of a private land
surveyor, Flordelito Aragon, and his affidavit, both of which were intended to convey
the alleged fact that the new house being constructed was inside defendant Glicerio
Bado's Lot 2894 (covered by his Torrens Title 0-275) being held by him. They averred,
too, that the house did not encroach upon the boundaries of plaintiff's adjoining
property (Lot 1131).
Obviously of the belief that procedural niceties should not bar consideration of the
equities of the case,2 the trial court, on the face of the conflicting assertions of fact,
called for a summary hearing.
On February 27, 1964, the trial court came out with an order sustaining the motion to
dismiss. The court gave credence to the testimony of surveyor Flordelito Aragon (also
a deputy public land surveyor) that the house under construction was within Glicerio
Bado's Lot 2894 (Torrens Title 0-275) and not on plaintiff's Lot 1131 (Torrens Title 0-
267). The trial court took the position that to stop defendants from building a house
within Glicerio Bado's lot "would be tantamount to depriving the enjoyment of his
lawful dominical rights; that even on the assumption that defendant Glicerio Bado's
title to Lot 2894 was obtained through fraud, as plaintiff avers, nonetheless, said title
subsists until declared null and void by a competent court; and that these
circumstances would tie up the hands of the court from granting the relief prayed for.
Whereupon, the court dissolved the preliminary injunction theretofore issued, and
dismissed the complaint.
1. The procedural question presented asks of us a ruling as to whether injunction is
the proper remedy in the premises.
Whether defendant Glicerio Bado's lot is registrable or not, because, as plaintiff avers,
that land registered in the name of defendant Glicerio Bado is a creek Salabao
Creek is beside the point here. Unless and until plaintiff succeeds in annulling the
decree of registration in defendant's favor which she has sought in the cadastral
proceedings, that title subsists.3 It is to be presumed that the judicial proceedings
leading to the issuance of the decree are valid.
The pivotal facts that the record discloses may thus be summarized this way: Plaintiff
claims that the house being built is on her land; defendants, on the other hand, say
that house is on the land of Glicerio Bado. Both hold Torrens titles. The lower
court, prima facie at least, believes that there is factual support for defendants'
averment.
The remedy of injunction has been the subject of numerous judicial pronouncements.
The court cannot now afford to depart from the well-ingrained precept that injunctions
are not available to take property out of possession or control of one party and place
it into that of another whose title has not clearly been established. Instructive in this
respect is the early 1909 decision in Devesa vs. Arbes, 13 Phil. 273, where injunction
was sought to recover possession of real property. Mr. Justice Carson there pithily
summed up4 the limited concept of injunction which may not be availed of "'while the
rights between the parties are undetermined, except in extraordinary cases where
material and irreparable injury will be done', which cannot be compensated in
damages." To hold otherwise, Mr. Justice Carson continued to say, "would be to
render practically of no effect the various provisions of the code (of civil procedure)
touching many if not most of the ordinary actions, and the enforcement of judgment in
such actions; for it may well be supposed that if a complainant could secure relief by
injunction in every case where 'the defendant is doing or threatens or is about to do,
or is procuring or suffering to be done, some act probably in violation of the plaintiff's
rights' and could enforce the judgment granting the injunction by the summary
contempt proceedings authorized in section 172 of the code to punish violations of
injunctions, he would seldom elect to enforce his rights in such cases by the ordinary
remedies, involving as they do the difficult and oft-times fruitless labor of enforcing
judgments obtained therein by execution."5
Long divorced from doubt is the doctrine that where legal title is disputed and the
possessor asserts ownership over the land in controversy, no injunction can issue to
51
dispossess him.6 Reason for this is that before the issue of ownership is determined possession (accion reivindicatoria) may bring about a head-on contest between
by evidence, justice and equity demand that the parties be maintained in their status plaintiff and Glicerio Bado in the same injunction case. As we make an appraisal of
quoso that no advantage may be given to one to the prejudice of the other.7 the record before us, however, we are constrained to say that confusion may arise
because of the so many pleadings filed and court actuations taken before this
Given the fact that there is the debatable question of where the house was being decision. With the voluminous record, difficulty may arise in pinpointing the exact
erected, we say that adherence to the precept just enunciated is a forbidding obstacle issue between the parties. Administration of justice could suffer thereby. And then,
to the grant of injunction. there is the continued pendency of this case which has been started since early five
years ago. A final decision on the validity of Glicerio Bado's title in the cadastral
proceeding could yet prevent further controversy between the parties.
2. To be sure, there are recognized exceptions to the rule, as where defendant is
clearly a mere intruder,8 or where the action seeks to prevent a purchaser at an
auction sale from molesting the debtor's co-owners whose rights have not been Upon the view we take of this case, we vote to affirm the order of February 27, 1964,
affected by the sale.9 But these, generally upon hearing and not upon ex dismissing the complaint.1wph1.t
parte application for injunction.10
With costs against plaintiff-appellant. So ordered.
3. Upon well-entrenched jurisprudence, plaintiff's principal suit for injunction cannot, at SPOUSES BONIFACIO R. VALDEZ, JR. and VENIDA G.R. No. 132424
bottom, prosper because there is an adequate remedy in law open to her. It is M. VALDEZ,
elementary to the point of triteness that the special remedy of injunction may not Present:
issue where there is a plain, speedy and adequate remedy in the ordinary course of Petitioners,
law. PANGANIBAN, C.J.
Chairperson,
It is in line with the principle just enunciated that in affirming Devesa vs. Arbes, supra, YNARES-SANTIAGO,
Palafox vs. Madamba, 19 Phil. 444, 446, declared in no uncertain terms that - versus - AUSTRIA-MARTINEZ,
injunction is not the appropriate remedy where "there exists the ordinary remedy of CALLEJO, SR., and
action for property of possession, which may be either plenary or summary, according CHICO-NAZARIO, JJ.
to the method by which she may have been deprived of her alleged possession." A
long line of cases has since then stabilized the principle.11 HON. COURT OF APPEALS, SPOUSES GABRIEL Promulgated:
FABELLA and FRANCISCA FABELLA,
Under the present state of the law, there are three kinds of actions available to Respondents. May 2, 2006
recover possession of real property: (a) the summary action for forcible entry (where
preliminary mandatory injunction may be sought within ten days from the filing of the x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
complaint under Article 539 of the Civil Code) or illegal detainer, which seeks the
recovery of physical possession only and is brought within one year in the municipal
court; (b) the accion publiciana, which is for the recovery of the right to possess and is
a plenary action in an ordinary civil proceeding in a Court of First Instance; and DECISION
(c) accin de reivindicacin, which seeks the recovery of ownership, which includes
the jus utendi and the jus fruendi, also brought in the Court of First Instance.12

CHICO-NAZARIO, J.:
Plaintiff Cirila Emilia claims ownership of a 48-square meter portion of land, which she
avers is covered by Torrens title in her name. Defendant Glicerio Bado, on the other
hand, also professes ownership over the same portion of land backed up, too, by a
Torrens title in his name. From these two directly opposing positions, a legitimate
This petition for review under Rule 45 of the Rules of Court, filed by
issue of ownership emerges. This guides us to no other conclusion than that plaintiff
petitioners spouses Bonifacio R. Valdez, Jr. and Venida M. Valdez, seeks to nullify
Cirila Emilia should have brought suit for ownership (accin de reivindicacin).
and set aside the 22 April 1997 decision[1] and 30 January 1998 resolution of the
Correctly did the trial judge dissolve the preliminary injunction wrongfully issued and
Court of Appeals in CA-G.R. SP No. 43492, which reversed the judgment, dated 8
refuse the grant of a perpetual injunction sought by her.
January 1997, of the Regional Trial Court of Antipolo, Rizal, Branch 74, in Civil Case
No. 3607, which, in turn, affirmedin toto the decision rendered by the Municipal Trial
4. In a situation like the present, it was suggested in Devesa vs. Arbes, supra, that it Court of Antipolo, Rizal, Branch II, in Civil Case No. 2547.
would not be improper if the record were to be returned to the court of origin with This case originated from a complaint for unlawful detainer filed by
instructions to further amend the complaint,13 such that the question of ownership and petitioners Bonifacio and Venida Valdez against private respondents Gabriel and

52
Francisca Fabella before the Municipal Trial Court of Antipolo, Rizal. The complaint
alleges these material facts:
2. That plaintiffs are the registered owner[s] of a piece of
residential lot denominated as Lot [N]o. 3 Blk 19 located
at Carolina Executive Village, Brgy. Sta. Cruz, Antipolo, Rizal which
[they] acquired from Carolina Realty, Inc. Sometime [i]n November
1992 by virtue of Sales Contract, xerox copy of which is hereto
attached marked as Annex A and the xerox copy of the Torrens
Certificate of Title in her name marked as Annex B;
3. That defendants, without any color of title
whatsoever occupie[d] the said lot by building their house in the
said lot thereby depriving the herein plaintiffs rightful possession
thereof;
4. That for several times, plaintiffs orally asked the herein
defendants to peacefully surrender the premises to them, but the
latter stubbornly refused to vacate the lot they unlawfully occupied;
5. That despite plaintiffs referral of the matter to the
Barangay, defendants still refused to heed the plea of the former to
surrender the lot peacefully;
6. That because of the unfounded refusal of the herein
defendants to settle the case amicably, the Barangay Captain was
forced to issue the necessary Certification to File Action in favor of
the herein plaintiffs in order that the necessary cause of action be
taken before the proper court, xerox copy of which is hereto
attached marked as Annex C;
7. That by reason of the deliberate, malicious and
unfounded refusal of the defendants to vacate/surrender the
premises in question, the herein plaintiffs were constrained to
engage the professional services of counsel thus incurring
expenses amounting to TEN THOUSAND PESOS (P10,000.00)
representing acceptance fee and additional ONE THOUSAND
PESOS (P1,000.00) per appearance, who on July 12, 1994 sent a
formal demand was likewise ignored, (sic) copy of which is hereto
attached as Annex D;
8. That likewise by virtue of the adamant refusal of the
defendants to vacate/surrender the said premises in question,
plaintiff[s] suffered serious anxiety, sleepless nights, mental torture
and moral erosion; x x x[2]
In their answer, private respondents contended that the complaint failed to state that
petitioners had prior physical possession of the property or that they were
the lessors of the former. In the alternative, private respondents claimed ownership
over the land on the ground that they had been in open, continuous, and adverse
possession thereof for more than thirty years, as attested by an ocular inspection
report from the Department of Environment and Natural Resources. They also
stressed that the complaint failed to comply with Supreme Court Circular No. 28-91
regarding affidavits against non-forum shopping.
The Municipal Trial Court (MTC) rendered a decision in favor of the petitioners,
ordering private respondents to vacate the property and to pay rent for the use and
occupation of the same plus attorneys fees.
Private respondents appealed the MTCs decision to the Regional Trial Court (RTC).
The RTC, in a decision dated 8 January 1997, affirmed in toto the decision of the
MTC.
Undeterred, the private respondents filed a petition for review with the Court
of Appeals on 10 March 1997 questioning the decision of the RTC.
In a decision dated 22 April 1997, the Court of Appeals reversed and set aside the
decision of the RTC. It held that petitioners failed to make a case for unlawful detainer
because they failed to show that they had given the private respondents the right to
occupy the premises or that they had tolerated private respondents possession of the
same, which is a requirement in unlawful detainer cases. It added that the allegations
in petitioners complaint lack jurisdictional elements for forcible entry which requires an
allegation of prior material possession. The Court of Appeals ratiocinated thus:
An examination of the complaint reveals that key jurisdictional
allegations that will support an action for ejectment are
conspicuously lacking. In particular, an allegation of prior material
possession is mandatory in forcible entry, xxx and the complaint is
deficient in this respect. On the other hand, neither does there
appear to be a case of unlawful detainer, since the private
respondents failed to show that they had given the petitioners the
right to occupy the premises, which right has now [been]
extinguished.
xxx
In light of the foregoing, the conclusion is inevitable that the
Municipal Trial Court before which the action for ejectment was filed
had no jurisdiction over the case. Consequently, the dismissal
thereof is in order.
WHEREFORE, the Petition is hereby GIVEN DUE COURSE, and
GRANTED. The decision dated 08 January 1997 rendered by the
respondent court is hereby REVERSED and SET ASIDE, and
judgment is hereby rendered DISMISSING the complaint in Civil
Case No. 2547 of the Municipal Trial Court of Antipolo, Rizal for
lack of jurisdiction.[3]
Petitioners filed a motion for reconsideration which was denied in a resolution
dated 30 January 1998.[4]
Hence, the instant petition.
Petitioners submit the following issues for the Courts consideration[5]:
53
 A. WHETHER OR NOT THE ALLEGATIONS OF THE
COMPLAINT CLEARLY MADE OUT A CASE FOR UNLAWFUL
DETAINER.
B. WHETHER OR NOT BASED ON THE ALLEGATION(S)
OF THE COMPLAINT, THE MUNICIPAL TRIAL COURT OF
ANTIPOLO, RIZAL, CLEARLY HAS ORIGINAL JURISDICTION
OVER THE INSTANT COMPLAINT FILED BEFORE IT.
Since the two issues are closely intertwined, they shall be discussed together.
In the main, petitioners claim that the averments of their complaint make out a case
for unlawful detainer having alleged that private respondents unlawfully withheld from
them the possession of the property in question, which allegation is sufficient to
establish a case for unlawful detainer. They further contend that the summary action
for ejectment is the proper remedy available to the owner if another occupies the land
at the formers tolerance or permission without any contract between the two as the
latter is bound by an implied promise to vacate the land upon demand by the owner.
The petition is not meritorious.
Under existing law and jurisprudence, there are three kinds of actions available to
recover possession of real property: (a) accion interdictal; (b) accion publiciana; and
(c) accion reivindicatoria.[6]
Accion interdictal comprises two distinct causes of action, namely, forcible entry
(detentacion) and unlawful detainer (desahuico).[7] In forcible entry, one is deprived of
physical possession of real property by means of force, intimidation, strategy, threats,
or stealth whereas in unlawful detainer, one illegally withholds possession after the
expiration or termination of his right to hold possession under any contract, express or
implied.[8] The two are distinguished from each other in that in forcible entry, the
possession of the defendant is illegal from the beginning, and that the issue is which
party has prior de facto possession while in unlawful detainer, possession of the
defendant is originally legal but became illegal due to the expiration or termination of
the right to possess.[9]
The jurisdiction of these two actions, which are summary in nature, lies in the proper
municipal trial court or metropolitan trial court.[10] Both actions must be brought within
one year from the date of actual entry on the land, in case of forcible entry, and from
the date of last demand, in case of unlawful detainer. [11] The issue in said cases is the
right to physical possession.
Accion publiciana is the plenary action to recover the right of possession which
should be brought in the proper regional trial court when dispossession has lasted for
more than one year.[12] It is an ordinary civil proceeding to determine the better right of
possession of realty independently of title.[13] In other words, if at the time of the filing
of the complaint more than one year had elapsed since defendant had turned plaintiff
out of possession or defendants possession had become illegal, the action will be, not
one of the forcible entry or illegal detainer, but an accion publiciana. On the other
hand, accion reivindicatoria is an action to recover ownership also brought in the
proper regional trial court in an ordinary civil proceeding.[14]
To justify an action for unlawful detainer, it is essential that the plaintiffs
supposed acts of tolerance must have been present right from the start of the
possession which is later sought to be recovered. [15] Otherwise, if the possession was
unlawful from the start, an action for unlawful detainer would be an improper remedy.
[16]
As explained in Sarona v. Villegas[17]:
But even where possession preceding the suit is by
tolerance of the owner, still, distinction should be made.
If right at the incipiency defendants possession was with
plaintiffs tolerance, we do not doubt that the latter may require him
to vacate the premises and sue before the inferior court under
Section 1 of Rule 70, within one year from the date of the demand
to vacate.
xxxx
A close assessment of the law and the concept of the
word tolerance confirms our view heretofore expressed that such
tolerance must be present right from the start of possession sought
to be recovered, to categorize a cause of action as one of unlawful
detainer - not of forcible entry. Indeed, to hold otherwise would
espouse a dangerous doctrine. And for two reasons: First. Forcible
entry into the land is an open challenge to the right of the
possessor. Violation of that right authorizes the speedy redress
in the inferior court - provided for in the rules. If one year from the
forcible entry is allowed to lapse before suit is filed, then the
remedy ceases to be speedy; and the possessor is deemed to
have waived his right to seek relief in the inferior court. Second, if a
forcible entry action in the inferior court is allowed after the lapse of
a number of years, then the result may well be that no action of
forcible entry can really prescribe. No matter how long such
defendant is in physical possession, plaintiff will merely make a
demand, bring suit in the inferior court upon a plea of tolerance to
prevent prescription to set in - and summarily throw him out of the
land. Such a conclusion is unreasonable.Especially if we bear in
mind the postulates that proceedings of forcible entry and unlawful
detainer are summary in nature, and that the one year time-bar to
suit is but in pursuance of the summary nature of the action.
[18]
(Underlining supplied)
It is the nature of defendants entry into the land which determines the cause
of action, whether it is forcible entry or unlawful detainer. If the entry is illegal, then the
action which may be filed against the intruder is forcible entry. If, however, the entry is
legal but the possession thereafter becomes illegal, the case is unlawful detainer.
Indeed, to vest the court jurisdiction to effect the ejectment of an occupant, it
is necessary that the complaint should embody such a statement of facts as brings
the party clearly within the class of cases for which the statutes provide a remedy, as
54
these proceedings are summary in nature.[19] The complaint must show enough on its
face the court jurisdiction without resort to parol testimony.[20]
The jurisdictional facts must appear on the face of the complaint. When the
complaint fails to aver facts constitutive of forcible entry or unlawful detainer, as
where it does not state how entry was affected or how and when dispossession
started, the remedy should either be an accion publiciana or
an accion reivindicatoria in the proper regional trial court. [21] Thus, in Go, Jr. v. Court
of Appeals,[22] petitioners filed an unlawful detainer case against respondent alleging
that they were the owners of the parcel of land through intestate succession which
was occupied by respondent by mere tolerance of petitioners as well as their
deceased mother. Resolving the issue on whether or not petitioners case for unlawful
detainer will prosper, the court ruled[23]:
Petitioners alleged in their complaint that they inherited the property
registered under TCT No. C-32110 from their parents; that
possession thereof by private respondent was by tolerance of their
mother, and after her death, by their own tolerance; and that they
had served written demand on December, 1994, but that private
respondent refused to vacate the property. x x x
It is settled that one whose stay is merely tolerated
becomes a deforciant illegally occupying the land the moment he is
required to leave. It is essential in unlawful detainer cases of this
kind, that plaintiffs supposed acts of tolerance must have been
present right from the start of the possession which is later sought
to be recovered. This is where petitioners cause of action fails. The
appellate court, in full agreement with the MTC made the
conclusion that the alleged tolerance by their mother and after her
death, by them, was unsubstantiated. x x x
The evidence revealed that the possession of defendant
was illegal at the inception and not merely tolerated as alleged in
the complaint, considering that defendant started to occupy the
subject lot and then built a house thereon without the permission
and consent of petitioners and before them, their
mother. xxx Clearly, defendants entry into the land was effected
clandestinely, without the knowledge of the owners, consequently, it
is categorized as possession by stealth which is forcible entry. As
explained in Sarona vs. Villegas, cited in Muoz vs. Court
of Appeals [224 SCRA 216 (1992)] tolerance must be present right
from the start of possession sought to be recovered, to categorize a
cause of action as one of unlawful detainer not of forcible
entry x x x.
And in the case of Ten Forty Realty and Development Corp. v. Cruz,
[24]
petitioners complaint for unlawful detainer merely contained the bare allegations
that (1) respondent immediately occupied the subject property after its sale to her, an
action merely tolerated by petitioner; and (2) her allegedly illegal occupation of the
premises was by mere tolerance. The court, in finding that the alleged tolerance did
not justify the action for unlawful detainer, held:
To justify an action for unlawful detainer, the permission or
tolerance must have been present at the beginning of the
possession. x x x
xxxx
In this case, the Complaint and the other pleadings do not
recite any averment of fact that would substantiate the claim of
petitioner that it permitted or tolerated the occupation of the
property by Respondent Cruz. The complaint contains only bare
allegations that 1) respondent immediately occupied the subject
property after its sale to her, an action merely tolerated by
petitioner; and 2) her allegedly illegal occupation of the premises
was by mere tolerance.
These allegations contradict, rather than support,
petitioners theory that its cause of action is for unlawful
detainer. First, these arguments advance the view that respondents
occupation of the property was unlawful at its
inception. Second,they counter the essential requirement in
unlawful detainer cases that petitioners supposed act of sufferance
or tolerance must be present right from the start of a possession
that is later sought to be recovered.[25]
In the instant case, the allegations in the complaint do not contain any
averment of fact that would substantiate petitioners claim that they permitted or
tolerated the occupation of the property by respondents. The complaint contains only
bare allegations that respondents without any color of title whatsoever occupies the
land in question by building their house in the said land thereby depriving petitioners
the possession thereof.Nothing has been said on how respondents entry
was effected or how and when dispossession started. Admittedly, no express contract
existed between the parties. This failure of petitioners to allege the key jurisdictional
facts constitutive of unlawful detainer is fatal.[26] Since the complaint did not satisfy the
jurisdictional requirement of a valid cause for unlawful detainer, the municipal trial
court had no jurisdiction over the case.[27] It is in this light that this Court finds that the
Court of Appeals correctly found that the municipal trial court had no jurisdiction over
the complaint.
WHEREFORE, the petition is DENIED and the judgment of the Court of
Appeals dismissing the complaint in Civil Case No. 2547 of the MTC Antipolo, Rizal
for lack of jurisdiction is hereby AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
55

G.R. No. 149418* July 27, 2006
SPOUSES PELAGIO GULLA and PERLITA GULLA, petitioners,
vs.
HEIRS OF ALEJANDRO LABRADOR, represented by ALEX
LABRADOR, respondents.
DECISION
CALLEJO, SR., J.:
Before the Court is a Petition for Review on Certiorari of the Decision1 of the Court of
Appeals (CA) in CA-G.R. SP No. 52176. The CA decision affirmed that of the
Regional Trial Court (RTC), Branch 69 of Iba, Zambales in Civil Case No. 1523-
I,2 which in turn affirmed the ruling of the Municipal Trial Court (MTC) of San Felipe,
Zambales in Civil Case No. 381.3
Angel Labrador, Leonardo Labrador, Fe Labrador Gamboa, Alex Labrador and Roger
Labrador filed a complaint against the spouses Pelagio and Perlita Gulla in the RTC
of Iba, Zambales for "Cancellation of Tax Declaration and Recovery of Possession
with Damages" (accion publiciana). The complaint involved a 22,590-square-meter lot
covered by Original Certificate of Title (OCT) No. P-13350, and the 562-square-meter
lot abutting the titled property. The case was thereafter forwarded to the MTC of San
Felipe, Zambales pursuant to Republic Act No. 7691.4
The titled property is located in San Felipe, Zambales and identified as Lot No. 520,
Cad. 686-D. According to the Labradors, the property was declared for taxation
purposes under their names (Tax Declaration No. 010-0469A) and the corresponding
taxes were paid thereon. In 1996, the spouses Gulla occupied a portion of the
property fronting the China Sea, as well as the 562-square-meter lot within the
salvage area. The spouses Gulla then constructed a house in the occupied property
and fenced its perimeter. The Labradors pointed out that whatever alleged claims the
spouses Gulla had on the property was acquired through a Deed of Waiver of Rights
dated July 23, 1996 executed in their favor by another "squatter" Alfonso Bactad. To
verify the exact location of the portion occupied by the spouses Gulla, a verification
survey of the land was conducted on August 17, 1990 in the presence of Pelagio
Gulla. Geodetic Engineer Crisostomo A. Magarro prepared a sketch indicating
portions occupied by the spouses Gulla, as well as the following report:
a. Lot A in Green color containing an area of 562 square meters is the claim
of Pelagio Gulla, Sr. which is outside the titled property of the Hrs. of
Alejandro Labrador and is within the Salvage Zone;
b. Lot B in Violet containing an area of 820 square meters is the claim of
Pelagio Gulla, Sr. and within the titled property of the Hrs. of Alejandro
Labrador and obviously within the Salvage Zone;
c. Lot C in Red color containing an area of 1,506 square meters is the claim
of Pelagio Gulla, Sr. [and] is also within the titled property of the Hrs. of
Alejandro Labrador, represented by Alex Labrador and covered by O.C.T.
No. P-13350.
The Total area claimed by Pelagio Gulla, Sr. is 2,888 square meters (more or
less). 5 (Underscoring supplied)
For their part, the spouses Gulla claimed that they had been in possession of the
2,888-square-meter property, Lot A in the sketch of Engr. Magarro, since 1984 and
declared the property for taxation purposes under their names in Tax Declaration
(T.D.) No. 010-0549. On October 8, 1994, they filed an application for miscellaneous
sales patent which was certified as alienable and disposable land by
the barangay captain, former Mayor Edilberto A. Abille, and Community Environment
and Natural Resources Officer Jaime Centeno. The property was likewise declared
for taxation purposes in their names under T.D. No. 010-0550-R in 1994.
On November 3, 1998, the MTC rendered judgment in favor of the Labradors,
ordering the spouses Gulla to vacate that portion of the property covered by OCT No.
P-13350 (Lots B and C in the sketch of Engr. Magarro), and the 562-square-meter lot
within the salvage zone (Lot A). The fallo of the decision reads:
WHEREFORE, by preponderance of evidences, it is hereby ordered upon
the defendants to VACATE the portion including the 565 salvage zone
actually occupied by them immediately and to pay P1,000.00 as monthly
rental from July 1996, until they vacate the premises and P10,000.00 as
actual damages and attorney's fee of P20,000.00.
SO ORDERED.6
56
According to the MTC, the Labradors were able to establish ownership over the
subject property, as evidenced by the title under their name (OCT No. P-13350). For
their part, the defendant-spouses failed to overcome the evidence of the plaintiffs,
and not being the riparian owners of Lot A which is within the salvage zone, they have
no right to possess the same.7
On appeal, the RTC rendered judgment on March 23, 1999 affirming the appealed
decision. It ratiocinated that, as correctly observed by the court a quo, Lot A is beyond
the perimeter of the property covered by OCT No. P-13350 and is within the salvage
zone that abutted the property of plaintiffs. Applying Article 440 of the New Civil Code,
the RTC declared that the Labradors had the right to possess the land, it being
inseparably attached to the titled property as an accessory. It further held that
"economic convenience is better attained in a state of single ownership than in co-
ownership," and that "natural justice demands that the owner of the principal or more
important thing should also own the accessory."8
This prompted the spouses Gulla to file a petition for review before the CA where they
alleged the following:
xxxx
2. THE LOWER COURT ERRED IN RELYING ON THE SURVEY WHICH
WAS UNILATERALLY CONDUCTED BY THE RESPONDENTS.
3. THE LOWER COURT ERRED IN HOLDING THAT THE LAND
OCCUPIED BY PETITIONERS IS WITHIN THE LOT COVERED BY
ORIGINAL CERTIFICATE OF TITLE NO. P-13350.
4. THE LOWER COURT ERRED IN EJECTING THE PETITIONERS EVEN
FROM THE ALLEGED SALVAGE ZONE.
5. THE LOWER COURT ERRED IN AWARDING MONTHLY RENTAL,
ACTUAL DAMAGES AND ATTORNEY'S FEES.9
The spouses Gulla insisted that the trial court erred in relying on the survey report of
Engr. Magarro. In contrast, their evidence showed that Lot A, with an area of 562
square meters, is alienable and disposable, and is covered by a 1936 tax declaration
under the name of Alfonso Bactad. Since the property is located within the salvage
zone, it is res nullius, hence, could not have been acquired by the Labradors through
accession under Article 440 of the New Civil Code. They also insisted that the trial
court had no jurisdiction to declare them entitled to the possession of Lot A since the
Republic of the Philippines was not a party to the case. The spouses Gulla concluded
that they cannot be held liable for monthly rentals, actual damages and attorney's
fees, since the claimed title over the subject property is fraudulent.
On December 11, 2000, the CA rendered judgment affirming the assailed decision.
Applying Article 440 of the New Civil Code, the appellate court declared that although
Lot A is outside the titled property of the Labradors, by analogy, as the owners of the
adjoining property, the latter have the "priority to use it." Stated differently, the
Labradors, although not the owners of the property within the salvage zone, have the
right to use it more than the spouses Gulla.
This prompted the aggrieved spouses to file a motion for reconsideration, which the
appellate court denied, hence, the present petition.
The sole issue in this case is whether or not petitioners are entitled to the possession
of Lot A which is located at the foreshore of San Felipe, Zambales as indicated in the
report10 of Engr. Magarro.
Petitioners point out that Lot A is not covered by any certificate of title. The free patent
issued to respondents, as well as the tax declaration covering the property, refers
only to "Lot 520," a totally different lot from what they are occupying, or Lot A.
Moreover, the lower courts erred in ruling that the salvage zone is incorporated in the
title of respondents, since the zone is res nullius and cannot be the subject of the
commerce of man, part of the public domain and intended for public use; so long as
this is so, it cannot be appropriated by any person except through express
authorization granted in due form by a competent authority.11 Petitioners insist that the
adjudication of the salvage zone is best determined at an appropriate forum.
Petitioners further allege that respondents are claiming possession over Lot A by
virtue of a fraudulently acquired patent, the validity of which is still the subject of a
pending civil case between Alfonso Bactad and herein respondents.
Petitioners reiterate that they occupied the subject land openly, notoriously, and in the
concept of owners for many years since 1986. Respondents' contention, that they
occupied the land clandestinely, is negated by the very location/nature of the property,
i.e., that it is situated in the coastal area which is very much exposed. Considering the
size of the alleged property of respondents, about 2.2 hectares, it is impossible to
"secretly" occupy the said area. It is thus more credible to state that respondents
were not actually working on or were never in possession of the contested property.
According to respondents, the lower courts should have taken judicial notice of the
alarming number of "smart individuals" who, after having obtained title by means of
connections, would suddenly file cases in courts knowing that rulings will be issued in
their favor on the basis of alleged titles.12
The petition is meritorious.
In ruling for respondents, the CA ratiocinated, thus:
The ownership of property gives the right by accession to everything which
is produced thereby, or which is incorporated or attached thereto, either
naturally or artificially (Article 440, Civil Code). Accession is the right of an
owner of a thing to the products of said thing as well as to whatever is
inseparably attached thereto as an accessory (Sanchez Roman, Vol. II, p.
89).
In the case at bar, it is undisputed that the area of 562 square meters is
outside the titled property of the respondents and is within the salvage zone
adjacent to respondents' property. However, while it is true that the salvage
57
 zone cannot be the subject of commerce, the adjoining owner thereof, the Felipe, Zambales, is ORDERED to dismiss the complaint of the plaintiffs in Civil Case
respondents in this case, has the priority to use it. Otherwise stated, herein No. 381 insofar as Lot A with an area of 562 square meters is concerned without
respondents [do] not own the salvage zone but as an adjacent owner, he prejudice to the right of the Republic of the Philippines to take such appropriate action
has the right to use it more than the petitioners applying the basic rule as for the recovery of said lot from petitioners.
stated above.
Let a copy of this decision be served on the Office of the Solicitor General for
Moreover, the law provides the different modes of acquiring ownership, appropriate action.
namely: (a) occupation; (b) intellectual creation; (c) law; (d) donation; (e)
succession; (f) tradition, as a consequence of certain contracts; and (g) SO ORDERED.
prescription. It will be noted that accession is not one of those listed therein.
It is therefore safe to conclude that accession is not a mode of acquiring
ownership. The reason is simple: accession presupposes a previously FIRST DIVISION
existing ownership by the owner over the principal. This is not necessarily so
in the other modes of acquiring ownership. Therefore, fundamentally and in
the last analysis, accession is a right implicitly included in ownership, without
which it will have no basis or existence. (p. 179, Paras, Vol. II, Thirteenth
Edition (1994), Civil Code). In general, the right to accession is automatic SULO SA NAYON, INC. and/or G.R. No. 170923
(ipso jure), requiring no prior act on the part of the owner of the principal PHILIPPINE VILLAGE HOTEL, INC. and JOSE
(Villanueva v. Claustro, 23 Phil. 54). MARCEL E. PANLILIO, Present:
Petitioners, PUNO, C.J., Chairperson,
In the light of the foregoing, the lower court therefore is correct in ejecting CARPIO,
the petitioners even if the portion occupied by them is in the salvage zone.13 CORONA,
AZCUNA, and
LEONARDO-DE CASTRO, JJ.
The trial court, the RTC and the CA were one in ruling that the 562-square-meter - versus -
property, Lot A, is part of the public domain, hence, beyond the commerce of men and Promulgated:
not capable of registration. In fact, the land is within the salvage zone fronting the January 20, 2009
China Sea as well as the property covered by OCT No. P-13350 in the name of
respondents. The provision relied upon is Article 440 of the New Civil Code, which NAYONG PILIPINO FOUNDATION,
states that "[t]he ownership of property gives the right by accession to everything Respondent.
which is produced thereby, or which is incorporated or attached thereto, either
naturally or artificially." The provision, however, does not apply in this case, x-----------------------------------------------------------x
considering that Lot A is a foreshore land adjacent to the sea which is alternately
covered and left dry by the ordinary flow of the tides. Such property belongs to the
public domain and is not available for private ownership until formally declared by the DECISION
government to be no longer needed for public use.14 Respondents thus have no
possessory right over the property unless upon application, the government, through
the then Bureau of Lands, had granted them a permit.15 PUNO, C.J.:
On appeal are the Court of Appeals (CAs) October 4, 2005 Decision [1] in CA-
There is no question that no such permit was issued or granted in favor of G.R. SP No. 74631 and December 22, 2005 Resolution,[2] reversing the November
respondents. This being the case, respondents have no cause of action to cause 29, 2002 Decision[3] of the Regional Trial Court (RTC) of Pasay City in Civil Case No.
petitioners' eviction from the subject property. The real party-in-interest to file a 02-0133. The RTC modified the Decision [4] of the Metropolitan Trial Court (MeTC)
complaint against petitioners for recovery of possession of the subject property and of Pasay City which ruled against petitioners and ordered them to vacate the
cause petitioner's eviction therefrom is the Republic of the Philippines, through the premises and pay their arrears. The RTC declared petitioners as builders in good
Office of the Solicitor General. Consequently, petitioners cannot be required to pay faith and upheld their right to indemnity.
any rentals to respondents for their possession of the property. The facts are as follows:
Respondent Nayong Pilipino Foundation, a government-owned and
IN LIGHT OF ALL THE FOREGOING, the petition is partially GRANTED. The controlled corporation, is the owner of a parcel of land in Pasay City, known as the
Decision of the Court of Appeals CA-G.R. SP No. 52176 is AFFIRMED WITH THE Nayong Pilipino Complex. Petitioner Philippine Village Hotel, Inc. (PVHI), formerly
MODIFICATION that the complaint of respondents is DISMISSEDinsofar as Lot A called Sulo sa Nayon, Inc., is a domestic corporation duly organized and existing
with an area of 562 square meters is concerned. The Municipal Trial Court of San

58
under Philippine laws. Petitioner Jose Marcel E. Panlilio is its Senior Executive Vice
President.
On June 1, 1975, respondent leased a portion of the Nayong Pilipino
Complex, consisting of 36,289 square meters, to petitioner Sulo sa Nayon, Inc. for the
construction and operation of a hotel building, to be known as the Philippine Village
Hotel. The lease was for an initial period of 21 years, or until May 1996. It is
renewable for a period of 25 years under the same terms and conditions upon due
notice in writing to respondent of the intention to renew at least 6 months before its
expiration. Thus, on March 7, 1995, petitioners sent respondent a letter notifying the
latter of their intention to renew the contract for another 25 years. On July 4, 1995, the
parties executed a Voluntary Addendum to the Lease Agreement. The addendum was
signed by petitioner Jose Marcel E. Panlilio in his official capacity as Senior Executive
Vice President of the PVHI and by Chairman Alberto A. Lim of the Nayong Pilipino
Foundation. They agreed to the renewal of the contract for another 25 years, or until
2021. Under the new agreement, petitioner PVHI was bound to pay the monthly rental
on a per square meter basis at the rate of P20.00 per square meter, which shall be
subject to an increase of 20% at the end of every 3-year period. At the time of the
renewal of the lease contract, the monthly rental amounted to P725,780.00.
Beginning January 2001, petitioners defaulted in the payment of their
monthly rental. Respondent repeatedly demanded petitioners to pay the arrears and
vacate the premises. The last demand letter was sent on March 26, 2001.
On September 5, 2001, respondent filed a complaint for unlawful detainer
before the MeTC of Pasay City. The complaint was docketed as Civil Case No. 708-
01. Respondent computed the arrears of petitioners in the amount of twenty-six
million one hundred eighty-three thousand two hundred twenty-five pesos and
fourteen centavos (P26,183,225.14), as of July 31, 2001.
On February 26, 2002, the MeTC rendered its decision in favor of
respondent. It ruled, thus:
. . . . The court is convinced by the evidence that indeed,
defendants defaulted in the payment of their rentals. It is basic that
the lessee is obliged to pay the price of the lease according to the
terms stipulated (Art. 1657, Civil Code). Upon the failure of the
lessee to pay the stipulated rentals, the lessor may eject (sic) and
treat the lease as rescinded and sue to eject the lessee (C. Vda[.]
De Pamintuan v. Tiglao, 53 Phil. 1). For non-payment of rentals, the
lessor may rescind the lease, recover the back rentals and recover
possession of the leased premises. . .
xxx
. . . . Improvements made by a lessee such as the
defendants herein on leased premises are not valid reasons for
their retention thereof. The Supreme Court has occasion to address
a similar issue in which it ruled that: The fact that petitioners
allegedly made repairs on the premises in question is not a reason
for them to retain the possession of the premises. There is no
provision of law which grants the lessee a right of retention over the
leased premises on that ground.Article 448 of the Civil Code, in
relation to Article 546, which provides for full reimbursement of
useful improvements and retention of the premises until
reimbursement is made, applies only to a possessor in good faith,
i.e., one who builds on a land in the belief that he is the owner
thereof. This right of retention does not apply to a mere lessee, like
the petitioners, otherwise, it would always be in his power to
improve his landlord out of the latters property (Jose L. Chua and
Co Sio Eng vs. Court of Appeals and Ramon Ibarra, G.R. No.
109840, January 21, 1999).
Although the Contract of Lease stipulates that the building
and all the improvements in the leased premises belong to the
defendants herein, such will not defeat the right of the plaintiff to its
property as the defendants failed to pay their rentals in violation of
the terms of the contract. At most, defendants can only invoke
[their] right under Article 1678 of the New Civil Code which grants
them the right to be reimbursed one-half of the value of the building
upon the termination of the lease, or, in the alternative, to remove
the improvements if the lessor refuses to make reimbursement.
The dispositive portion of the decision reads as follows:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of Nayong Pilipino Foundation, and against the
defendant Philippine Village Hotel, Inc[.], and all persons claiming
rights under it, ordering the latter to:
1. VACATE the subject premises and surrender
possession thereof to plaintiff;
2. PAY plaintiff its rental arrearages in the sum
of TWENTY SIX MILLION ONE HUNDRED
EIGHTY THREE THOUSAND TWO HUNDRED
TWENTY FIVE PESOS AND 14/100
(P26,183,225.14) incurred as of July 31, 2001;
3. PAY plaintiff the sum of SEVEN HUNDRED
TWENTY FIVE THOUSAND SEVEN HUNDRED
EIGHTY PESOS (P725,780.00) per month
starting from August 2001 and every month
thereafter by way of reasonable compensation for
the use and occupation of the premises;
4. PAY plaintiff the sum of FIFTY THOUSAND
PESOS (P50,000.00) by way of attorneys fees[;
and]
5. PAY the costs of suit.
The complaint against defendant Jose Marcel E. Panlilio is
hereby dismissed for lack of cause of action. The said defendants
counterclaim however is likewise dismissed as the complaint does
not appear to be frivolous or maliciously instituted.
SO ORDERED.[5]
Petitioners appealed to the RTC which modified the ruling of the MeTC. It
held that:
. . . it is clear and undisputed that appellants-lessees were
expressly required to construct a first-class hotel with complete
facilities. The appellants were also unequivocally declared in the
Lease Agreement as the owner of the improvements so
constructed. They were even explicitly allowed to use the
improvements and building as security or collateral on loans and
credit accommodations that the Lessee may secure for the purpose
of financing the construction of the building and other
59
improvements (Section 2; pars. A to B, Lease
Agreement). Moreover, a time frame was setforth (sic) with respect
to the duration of the lease initially for 21 years and renewable for
another 25 years in order to enable the appellants-lessees to
recoup their huge money investments relative to the construction
and maintenance of the improvements.
xxx
Considering therefore, the elements of permanency of the
construction and substantial value of the improvements as well as
the undispute[d] ownership over the land improvements, these,
immensely engender the application of Art. 448 of the Civil
Code. The only remaining and most crucial issue to be resolved is
whether or not the appellants as builders have acted in good faith in
order for Art. 448 in relation to Art. 546 of the Civil Code may apply
with respect to their rights over improvements.
xxx
. . . it is undeniable that the improvement of the hotel
building of appellants (sic) PVHI was constructed with the written
consent and knowledge of appellee. In fact, it was precisely the
primary purpose for which they entered into an agreement. Thus, it
could not be denied that appellants were builders in good faith.
Accordingly, and pursuant to Article 448 in relation to Art.
546 of the Civil Code, plaintiff-appellee has the sole option or
choice, either to appropriate the building, upon payment of proper
indemnity consonant to Art. 546 or compel the appellants to
purchase the land whereon the building was erected. Until such
time that plaintiff-appellee has elected an option or choice,
it has no right of removal or demolition against appellants unless
after having selected a compulsory sale, appellants fail to pay for
the land (Ignacio vs. Hilario; 76 Phil. 605). This, however, is without
prejudice from the parties agreeing to adjust their rights in some
other way as they may mutually deem fit and proper.
The dispositive portion of the decision of the RTC reads as follows:
WHEREFORE, and in view of the foregoing, judgment is
hereby rendered modifying the decision of [the] MTC, Branch 45 of
Pasay City rendered on February 26, 2002 as follows:
1. Ordering plaintiff-appellee to submit within thirty (30)
days from receipt of a copy of this decision a written
manifestation of the option or choice it selected, i.e.,
to appropriate the improvements upon payment of
proper indemnity or compulsory sale of the land
whereon the hotel building of PVHI and related
improvements or facilities were erected;
2. Directing the plaintiff-appellee to desist and/or refrain
from doing acts in the furtherance or exercise of its
rights and demolition against appellants unless and
after having selected the option of compulsory sale
and appellants failed to pay [and] purchase the land
within a reasonable time or at such time as this court
will direct;
3. Ordering defendants-appellants to pay plaintiff-
appellee [their] arrears in rent incurred as of July 31,
2001 in the amount of P26,183,225.14;
4. Ordering defendants-appellants to pay to plaintiff-
appellee the unpaid monthly rentals for the use and
occupation of the premises pending this appeal from
July to November 2002 only at P725,780.00 per
month;
5. The fourth and fifth directives in the dispositive
portion of the trial courts decision including that the
last paragraph thereof JME Panlilios complaint is
hereby affirmed;
6. The parties are directed to adjust their respective
rights in the interest of justice as they may deem fit
and proper if necessary.
SO ORDERED.[6]
Respondent appealed to the CA which held that the RTC erroneously
applied the rules on accession, as found in Articles 448 and 546 of the Civil Code
when it held that petitioners were builders in good faith and, thus, have the right to
indemnity. The CA held:
By and large, respondents are admittedly mere lessees of
the subject premises and as such, cannot validly claim that they are
builders in good faith in order to solicit the application of Articles
448 and 546 of the Civil Code in their favor.As it is, it is glaring error
on the part of the RTC to apply the aforesaid legal provisions on the
supposition that the improvements, which are of substantial value,
had been introduced on the leased premises with the permission of
the petitioner. To grant the respondents the right of retention and
reimbursement as builders in good faith merely because of the
valuable and substantial improvements that they introduced to the
leased premises plainly contravenes the law and settled
jurisprudential doctrines and would, as stated, allow the lessee to
easily improve the lessor out of its property.
. . . . Introduction of valuable improvements on the leased
premises does not strip the petitioner of its right to avail of
recourses under the law and the lease contract itself in case of
breach thereof. Neither does it deprive the petitioner of its right
under Article 1678 to exercise its option to acquire the
improvements or to let the respondents remove the same.
Petitioners Motion for Reconsideration was denied.
Hence, this appeal.[7]
Petitioners assign the following errors:
I
THE HONORABLE COURT OF APPEALS COMMITTED A
GRAVE REVERSIBLE ERROR IN NOT HOLDING THAT
PETITIONERS WERE BUILDERS IN GOOD FAITH OVER THE
SUBSTANTIAL AND VALUABLE IMPROVEMENTS WHICH THEY
HAD INTRODUCED ON THE SUBJECT PROPERTY, THUS
COMPELLING THE APPLICATION OF ARTICLE 448 OF THE
CIVIL CODE IN RELATION TO ARTICLE 546 OF THE SAME
CODE, INSTEAD OF ARTICLE 1678 OF THE CIVIL CODE.
II
60
 THE HONORABLE COURT OF APPEALS COMMITTED A
SERIOUS REVERSIBLE ERROR WHEN IT DISREGARDED THE
FACT THAT THE LEASE CONTRACT GOVERNS THE
RELATIONSHIP OF THE PARTIES AND CONSEQUENTLY THE
PARTIES MAY BE CONSIDERED TO HAVE IMPLIEDLY WAIVED
THE APPLICATION OF ARTICLE 1678 OF THE CIVIL CODE TO
THE INSTANT CASE.
III
ASSUMING ARGUENDO THAT THE PETITIONERS ARE
NOT BUILDERS IN GOOD FAITH, THE HONORABLE COURT OF
APPEALS COMMITTED A GRAVE REVERSIBLE ERROR WHEN
IT OVERLOOKED THE FACT THAT RESPONDENT ALSO ACTED
IN BAD FAITH WHEN IT DID NOT HONOR AND INSTEAD
BREACHED THE LEASE CONTRACT BETWEEN THE PARTIES,
THUS BOTH PARTIES ACTED AS IF THEY ARE IN GOOD FAITH.
IV
TO SANCTION THE APPLICATION OF ARTICLE 1678
OF THE CIVIL CODE INSTEAD OF ARTICLE 448 OF THE CIVIL
CODE IN RELATION TO ARTICLE 546 OF THE SAME CODE
WOULD NOT ONLY WREAK HAVOC AND CAUSE SUBSTANTIAL
INJURY TO THE RIGHTS AND INTERESTS OF PETITIONER
PHILIPPINE VILLAGE HOTEL, INC. WHILE RESPONDENT
NAYONG PILIPINO FOUNDATION, IN COMPARISON THERETO,
WOULD SUFFER ONLY SLIGHT OR INCONSEQUENTIAL
INJURY OR LOSS, BUT ALSO WOULD CONSTITUTE UNJUST
ENRICHMENT ON THE PART OF RESPONDENT AT GREAT
EXPENSE AND GRAVE PREJUDICE OF PETITIONERS.
V
THE HONORABLE COURT OF APPEALS COMMITTED A
GRAVE REVERSIBLE ERROR IN NOT HOLDING THAT THE
COURTS A QUO DID NOT ACQUIRE JURISDICTION OVER THE
UNLAWFUL DETAINER CASE FOR NON-COMPLIANCE WITH
JURISDICTIONAL REQUIREMENTS DUE TO THE ABSENCE OF
A NOTICE TO VACATE UPON PETITIONERS.[8]
First, we settle the issue of jurisdiction. Petitioners argue that the MeTC did
not acquire jurisdiction to hear and decide the ejectment case because they never
received any demand from respondent to pay rentals and vacate the premises, since
such demand is a jurisdictional requisite. We reiterate the ruling of the MeTC, RTC
and CA. Contrary to the claim of petitioners, documentary evidence proved that a
demand letter dated March 26, 2001 was sent by respondent through registered mail
to petitioners, requesting them to pay the rental arrears or else it will be constrained
to file the appropriate legal action and possess the leased premises.
Further, petitioners argument that the demand letter is inadequate because it
contained no demand to vacate the leased premises does not persuade. We have
ruled that:
. . . . The word vacate is not a talismanic word that must
be employed in all notices. The alternatives in this case are clear
cut. The tenants must pay rentals which are fixed and which
became payable in the past, failing which they must move
out. There can be no other interpretation of the notice given to
them. Hence, when the petitioners demanded that either he
pays P18,000 in five days or a case of ejectment would be filed
against him, he was placed on notice to move out if he does not
pay. There was, in effect, a notice or demand to vacate.[9]
In the case at bar, the language of the demand letter is plain and
simple: respondent demanded payment of the rental arrears amounting
to P26,183,225.14 within ten days from receipt by petitioners, or respondent will be
constrained to file an appropriate legal action against petitioners to recover the said
amount. The demand letter further stated that respondent will possess the leased
premises in case of petitioners failure to pay the rental arrears within ten days. Thus,
it is clear that the demand letter is intended as a notice to petitioners to pay the rental
arrears, and a notice to vacate the premises in case of failure of petitioners to perform
their obligation to pay.
Second, we resolve the main issue of whether the rules on accession, as
found in Articles 448 and 546 of the Civil Code, apply to the instant case.
Article 448 and Article 546 provide:
Art. 448. The owner of the land on which anything has
been built, sown or planted in good faith, shall have the right to
appropriate as his own the works, sowing or planting, after payment
of the indemnity provided for in Articles 546 and 548, or to oblige
the one who built or planted to pay the price of the land, and the
one who sowed, the proper rent. However, the builder or planter
cannot be obliged to buy the land if its value is considerably more
than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to
appropriate the building or trees after proper indemnity. The parties
shall agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.
Art. 546. Necessary expenses shall be refunded to every
possessor; but only the possessor in good faith may retain the thing
until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor
in good faith with the same right of retention, the person who has
defeated him in the possession having the option of refunding the
amount of the expenses or of paying the increase in value which
the thing may have acquired by reason thereof.
We uphold the ruling of the CA.
The late Senator Arturo M. Tolentino, a leading expert in Civil Law, explains:
This article [Article 448] is manifestly intended to apply
only to a case where one builds, plants, or sows on land in which
he believes himself to have a claim of title, [10] and not to lands
where the only interest of the builder, planter or sower is that of a
holder, such as a tenant.[11]
In the case at bar, petitioners have no adverse claim or title to the land. In
fact, as lessees, they recognize that the respondent is the owner of the land. What
petitioners insist is that because of the improvements, which are of substantial value,
that they have introduced on the leased premises with the permission of respondent,
they should be considered builders in good faith who have the right to retain
possession of the property until reimbursement by respondent.
61
 We affirm the ruling of the CA that introduction of valuable improvements on
the leased premises does not give the petitioners the right of retention and
reimbursement which rightfully belongs to a builder in good faith. Otherwise, such a
situation would allow the lessee to easily improve the lessor out of its property. We
reiterate the doctrine that a lessee is neither a builder in good faith nor in bad
faith[12] that would call for the application of Articles 448 and 546 of the Civil Code. His
rights are governed by Article 1678 of the Civil Code, which reads:
Art. 1678. If the lessee makes, in good faith, useful
improvements which are suitable to the use for which the lease is
intended, without altering the form or substance of the property
leased, the lessor upon the termination of the lease shall pay the
lessee one-half of the value of the improvements at that time.
Should the lessor refuse to reimburse said amount, the lessee may
remove the improvements, even though the principal thing may
suffer damage thereby. He shall not, however, cause any more
impairment upon the property leased than is necessary.
With regard to ornamental expenses, the lessee shall not
be entitled to any reimbursement, but he may remove the
ornamental objects, provided no damage is caused to the principal
thing, and the lessor does not choose to retain them by paying their
value at the time the lease is extinguished.
Under Article 1678, the lessor has the option of paying one-half of the value of the
improvements which the lessee made in good faith, which are suitable for the use for
which the lease is intended, and which have not altered the form and substance of
the land. On the other hand, the lessee may remove the improvements should the
lessor refuse to reimburse.
Petitioners argue that to apply Article 1678 to their case would result to
sheer injustice, as it would amount to giving away the hotel and its other structures at
virtually bargain prices. They allege that the value of the hotel and its appurtenant
facilities amounts to more than two billion pesos, while the monetary claim of
respondent against them only amounts to a little more than twenty six-million
pesos. Thus, they contend that it is the lease contract that governs the relationship of
the parties, and consequently, the parties may be considered to have impliedly
waived the application of Article 1678.
We cannot sustain this line of argument by petitioners. Basic is the doctrine
that laws are deemed incorporated in each and every contract. Existing laws always
form part of any contract. Further, the lease contract in
the case at bar shows no special kind of agreement between the parties as to how to
proceed in cases of default or breach of the contract. Petitioners maintain that the
lease contract contains a default provision which does not give respondent the right to
appropriate the improvements nor evict petitioners in cases of cancellation or
termination of the contract due to default or breach of its terms. They cite paragraph
10 of the lease contract, which provides that:
10. DEFAULT. - . . . Default shall automatically take place
upon the failure of the LESSEE to pay or perform its obligation
during the time fixed herein for such obligations without necessity of
demand, or, if no time is fixed, after 90 days from the receipt of
notice or demand from the LESSOR. . .
In case of cancellation or termination of this contract due
to the default or breach of its terms, the LESSEE will pay all
reasonable attorneys fees, costs and expenses of litigation that
may be incurred by the LESSOR in enforcing its rights under this
contract or any of its provisions, as well as all unpaid rents, fees,
charges, taxes, assessment and others which the LESSOR may be
entitled to.
Petitioners assert that respondent committed a breach of the lease
contract when it filed the ejectment suit against them. However, we find nothing
in the above quoted provision that prohibits respondent to proceed the way it did
in enforcing its rights as lessor. It can rightfully file for ejectment to evict
petitioners, as it did before the court a quo.
IN VIEW WHEREOF, petitioners appeal is DENIED. The October 4,
2005 Decision of the Court of Appeals in CA-G.R. SP No. 74631 and its
December 22, 2005 Resolution are AFFIRMED. Costs against petitioners.
SO ORDERED.
PHILIPPINE NATIONAL BANK, petitioner, vs. GENEROSO DE JESUS,
represented by his Attorney-in-Fact, CHRISTIAN DE
JESUS, respondent.
DECISION
VITUG, J.:
Petitioner Philippine National Bank disputes the decision handed down by the
Court of Appeals promulgated on 23 March 2001 in CA-G.R. CV No. 56001, entitled
Generoso De Jesus, represented by his Attorney-in-Fact, Christian De Jesus, versus
Philippine National Bank. The assailed decision has affirmed the judgment rendered
by the Regional Trial Court, Branch 44, of Mamburao, Occidental Mindoro, declaring
respondent Generoso de Jesus as being the true and lawful owner of the 124-square-
meter portion of the land covered by Transfer Certificate of Title (TCT) No. T-17197
and ordering petitioner bank to vacate the premises, to deliver possession thereof to
respondent, and to remove the improvement thereon.
It would appear that on 10 June 1995, respondent filed a complaint against
petitioner before the Regional Trial Court of Occidental Mindoro for recovery of
ownership and possession, with damages, over the questioned property. In his
complaint, respondent stated that he had acquired a parcel of land situated in
Mamburao, Occidental Mindoro, with an area of 1,144 square meters covered by TCT
No. T-17197, and that on 26 March 1993, he had caused a verification survey of the
property and discovered that the northern portion of the lot was being encroached
62
upon by a building of petitioner to the extent of 124 square meters. Despite two letters
of demand sent by respondent, petitioner failed and refused to vacate the area.
Petitioner, in its answer, asserted that when it acquired the lot and the building
sometime in 1981 from then Mayor Bienvenido Ignacio, the encroachment already
was in existence and to remedy the situation, Mayor Ignacio offered to sell the area in
question (which then also belonged to Ignacio) to petitioner at P100.00 per square
meter which offer the latter claimed to have accepted. The sale, however, did not
materialize when, without the knowledge and consent of petitioner, Mayor Ignacio
later mortgaged the lot to the Development Bank of the Philippines.
The trial court decided the case in favor of respondent declaring him to be the
rightful owner of the disputed 124-square-meter portion of the lot and ordering
petitioner to surrender possession of the property to respondent and to cause, at its
expense, the removal of any improvement thereon.
The Court of Appeals, on appeal, sustained the trial court but it ordered to be
deleted the award to respondent of attorneys fees, as well as moral and exemplary
damages, and litigation expenses.
Petitioner went to this Court, via a petition for review, after the appellate court
had denied the banks motion for reconsideration, here now contending that -
1. THE COURT OF APPEALS GRAVELY ERRED IN LAW IN ADJUDGING PNB A
BUILDER IN BAD FAITH OVER THE ENCROACHED PROPERTY IN QUESTION;
2. THE COURT OF APPEALS GRAVELY ERRED IN LAW IN NOT APPLYING IN
FAVOR OF PNB THE PROVISION OF ARTICLE 448 OF THE CIVIL CODE AND THE
RULING IN TECNOGAS PHILIPPINES MANUFACTURING CORP. VS. COURT OF
APPEALS, G.R. No. 108894, February 10, 1997, 268 SCRA 7.[1]
The Regional Trial Court and the Court of Appeals have both rejected the idea
that petitioner can be considered a builder in good faith. In the context that such term
is used in particular reference to Article 448, et seq., of the Civil Code, a builder in
good faith is one who, not being the owner of the land, builds on that land believing
himself to be its owner and unaware of any defect in his title or mode of acquisition.
The various provisions of the Civil Code, pertinent to the subject, read:
Article 448. The owner of the land on which anything has been built, sown, or planted
in good faith, shall have the right to appropriate as his own the works, sowing or
planting, after payment of the indemnity provided for in Articles 546 and 548, or to
oblige the one who built or planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or planter cannot be obliged to buy the
land if its value is considerably more than that of the building or trees. In such a case,
he shall pay reasonable rent, if the owner of the land does not choose to appropriate
the building or trees after proper indemnity. The parties shall agree upon the terms of
the lease and in case of disagreement, the court shall fix the terms thereof.
Article 449. He who builds, plants, or sows in bad faith on the land of another, loses
what is built, planted or sown without right to indemnity.
Article 450. The owner of the land on which anything has been built, planted or sown
in bad faith may demand the demolition of the work, or that the planting or sowing be
removed, in order to replace things in their former condition at the expense of the
person who built, planted or sowed; or he may compel the builder or planter to pay
the price of the land, and the sower the proper rent.
A builder in good faith can, under the foregoing provisions, compel the
landowner to make a choice between appropriating the building by paying the proper
indemnity or obliging the builder to pay the price of the land. The choice belongs to
the owner of the land, a rule that accords with the principle of accession, i.e., that the
accessory follows the principal and not the other way around. [2] Even as the option
lies with the landowner, the grant to him, nevertheless, is preclusive. He much choose
one. He cannot, for instance, compel the owner of the building to instead remove it
from the land.[3] In order, however, that the builder can invoke that accruing benefit
and enjoy his corresponding right to demand that a choice be made by the landowner,
he should be able to prove good faith on his part.
Good faith, here understood, is an intangible and abstract quality with no
technical meaning or statutory definition, and it encompasses, among other things, an
honest belief, the absence of malice and the absence of design to defraud or to seek
an unconscionable advantage. An individuals personal good faith is a concept of his
own mind and, therefore, may not conclusively be determined by his protestations
alone. It implies honesty of intention, and freedom from knowledge of circumstances
which ought to put the holder upon inquiry.[4] The essence of good faith lies in an
honest belief in the validity of ones right, ignorance of a superior claim, and absence
of intention to overreach another.[5]Applied to possession, one is considered in good
faith if he is not aware that there exists in his title or mode of acquisition any flaw
which invalidates it.[6]
Given the findings of both the trial court and the appellate court, it should be
evident enough that petitioner would fall much too short from its claim of good
faith. Evidently, petitioner was quite aware, and indeed advised, prior to its acquisition
of the land and building from Ignacio that a part of the building sold to it stood on the
land not covered by the land conveyed to it.
Equally significant is the fact that the building, constructed on the land by
Ignacio, has in actuality been part of the property transferred to petitioner. Article 448,
of the Civil Code refers to a piece of land whose ownership is claimed by two or more
parties, one of whom has built some works (or sown or planted something) and not to
a case where the owner of the land is the builder, sower, or planter who then
later loses ownership of the land by sale or otherwise for, elsewise stated,
where the true owner himself is the builder of works on his own land, the issue
of good faith or bad faith is entirely irrelevant. [7]
In fine, petitioner is not in a valid position to invoke the provisions of Article 448
of the Civil Code. The Court commiserates with petitioner in its present predicament;
upon the other hand, respondent, too, is entitled to his rights under the law,
particularly after having long been deprived of the enjoyment of his
property. Nevertheless, the Court expresses hope that the parties will still be able to
come up with an arrangement that can be mutually suitable and acceptable to them.
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 56001 is
AFFIRMED. No costs.
63
 SO ORDERED.
Spouses ISMAEL and TERESITA MACASAET, petitioners, vs. Spouses VICENTE
and ROSARIO MACASAET, respondents.
DECISION
PANGANIBAN, J.:
The present case involves a dispute between parents and children. The children
were invited by the parents to occupy the latters two lots, out of parental love and a
desire to foster family solidarity. Unfortunately, an unresolved conflict terminated this
situation. Out of pique, the parents asked them to vacate the premises. Thus, the
children lost their right to remain on the property. They have the right, however, to be
indemnified for the useful improvements that they constructed thereon in good faith
and with the consent of the parents. In short, Article 448 of the Civil Code applies.
The Case
Before us is a Petition for Review[1] under Rule 45 of the Rules of Court,
assailing the March 22, 2002 Decision[2] and the June 26, 2002 Resolution[3] of the
Court of Appeals (CA) in CA-GR SP Nos. 56205 & 56467. The challenged Decision
disposed as follows:
WHEREFORE, the assailed Decision is AFFIRMED with the
following MODIFICATIONS:
1. Vicente and Rosario should reimburse Ismael and Teresita one-half of
the value of the useful improvements introduced in the premises prior to
demand, which is equivalent to P475,000.00. In case the former refuse
to reimburse the said amount, the latter may remove the improvements,
even though the land may suffer damage thereby. They shall not,
however, cause any more impairment upon the property leased than is
necessary.
2. The award of attorneys fees is DELETED.
3. The records of these consolidated cases are REMANDED to the Court
of origin for further proceedings to determine the option to be taken by
Vicente and Rosario and to implement the same with dispatch.[4]
The assailed Resolution denied petitioners Motion for Reconsideration.
The Facts
Petitioners Ismael and Teresita[5] Macasaet and Respondents Vicente and
Rosario Macasaet are first-degree relatives. Ismael is the son of respondents, and
Teresita is his wife.[6]
On December 10, 1997, the parents filed with the Municipal Trial Court in Cities
(MTCC) of Lipa City an ejectment suit against the children.[7] Respondents alleged
that they were the owners of two (2) parcels of land covered by Transfer Certificate of
Title (TCT) Nos. T-78521 and T-103141, situated at Banay-banay, Lipa City; that by
way of a verbal lease agreement, Ismael and Teresita occupied these lots in March
1992 and used them as their residence and the situs of their construction business;
and that despite repeated demands, petitioners failed to pay the agreed rental
of P500 per week.[8]
Ismael and Teresita denied the existence of any verbal lease agreement. They
claimed that respondents had invited them to construct their residence and business
on the subject lots in order that they could all live near one other, employ Marivic (the
sister of Ismael), and help in resolving the problems of the family. [9] They added that it
was the policy of respondents to allot the land they owned as an advance grant of
inheritance in favor of their children. Thus, they contended that the lot covered by
TCT No. T-103141 had been allotted to Ismael as advance inheritance. On the other
hand, the lot covered by TCT No. T-78521 was allegedly given to petitioners as
payment for construction materials used in the renovation of respondents house.[10]
The MTCC[11] ruled in favor of respondents and ordered petitioners to vacate the
premises. It opined that Ismael and Teresita had occupied the lots, not by virtue of a
verbal lease agreement, but by tolerance of Vicente and Rosario.[12] As their stay was
by mere tolerance, petitioners were necessarily bound by an implied promise to
vacate the lots upon demand.[13] The MTCC dismissed their contention that one lot
had been allotted as an advance inheritance, on the ground that successional rights
were inchoate. Moreover, it disbelieved petitioners allegation that the other parcel had
been given as payment for construction materials.[14]
On appeal, the regional trial court[15] (RTC) upheld the findings of the
MTCC. However, the RTC allowed respondents to appropriate the building and other
improvements introduced by petitioners, after payment of the indemnity provided for
by Article 448 in relation to Articles 546 and 548 of the Civil Code. [16] It added that
respondents could oblige petitioners to purchase the land, unless its value was
considerably more than the building. In the latter situation, petitioners should pay rent
if respondents would not choose to appropriate the building.[17]
Upon denial of their individual Motions for Reconsideration, the parties filed with
the CA separate Petitions for Review, which were later consolidated.[18]
Ruling of the Court of Appeals
The CA sustained the finding of the two lower courts that Ismael and Teresita
had been occupying the subject lots only by the tolerance of Vicente and Rosario.
[19]
Thus, possession of the subject lots by petitioners became illegal upon their receipt
of respondents letter to vacate it.[20]
64
 Citing Calubayan v. Pascual,[21] the CA further ruled that petitioners status was
analogous to that of a lessee or a tenant whose term of lease had expired, but whose
occupancy continued by tolerance of the owner.[22] Consequently, in ascertaining the
right of petitioners to be reimbursed for the improvements they had introduced on
respondents properties,[23] the appellate court applied the Civil Codes provisions on
lease. The CA modified the RTC Decision by declaring that Article 448 of the Civil
Code was inapplicable. The CA opined that under Article 1678 of the same Code,
Ismael and Teresita had the right to be reimbursed for one half of the value of the
improvements made.[24]
Not satisfied with the CAs ruling, petitioners brought this recourse to this Court.
[25]
The Issues
Petitioners raise the following issues for our consideration:
1. a) Whether or not Section 17[,] Rule 70 of the Rules of Court on Judgment should
apply in the rendition of the decision in this case;
b) Whether or not the Complaint should have been dismissed;
c) Whether or not damages including attorneys fees should have been
awarded to herein petitioners;
2. a) Whether or not the rule on appearance of parties during the Pretrial should apply
on appearance of parties during Preliminary Conference in an unlawful detainer suit;
b) Whether or not the case of Philippine Pryce Assurance Corporation vs.
Court of Appeals (230 SCRA 164) is applicable to appearance of parties in an
unlawful detainer suit;
3. Whether or not Article 1678 of the Civil Code should apply to the case on the
matters of improvements, or is it Article 447 of the Civil Code in relation to the Article
453 and 454 thereof that should apply, if ever to apply the Civil Code;
4. Whether or not the [D]ecision of the Court of Appeals is supported by evidence,
appropriate laws, rules and jurisprudence;
5. Whether or not Assisting Judge Norberto Mercado of the MTCC Lipa City should
be held accountable in rendering the MTCC [D]ecision;
6. Whether or not Atty. Glenn Mendoza and Atty. Andrew Linatoc of the same [l]aw
office should be held accountable for pursuing the [e]jectment case[.][26]
The Courts Ruling
The Petition is partly meritorious.
First Issue:
Ejectment
Who is entitled to the physical or material possession of the premises? At the
outset, we stress that this is the main issue in ejectment proceedings. [27] In the
present case, petitioners failed to justify their right to retain possession of the subject
lots, which respondents own. Since possession is one of the attributes of ownership,
[28]
respondents clearly are entitled to physical or material possession.
Allegations of the Complaint
Petitioners allege that they cannot be ejected from the lots, because
respondents based their Complaint regarding the nonpayment of rentals on a verbal
lease agreement, which the latter failed to prove. [29] Petitioners contend that the lower
courts erred in using another ground (tolerance of possession) to eject them.
In actions for unlawful detainer, possession that was originally lawful becomes
unlawful upon the expiration or termination of the defendants right to possess, arising
from an express or implied contract. [30] In other words, the plaintiffs cause of action
comes from the expiration or termination of the defendants right to continue
possession.[31] The case resulting therefrom must be filed within one year from the
date of the last demand.
To show a cause of action in an unlawful detainer, an allegation that the
defendant is illegally withholding possession from the plaintiff is sufficient. The
complaint may lie even if it does not employ the terminology of the law, provided the
said pleading is couched in a language adequately stating that the withholding of
possession or the refusal to vacate has become unlawful. [32] It is equally settled that
the jurisdiction of the court, as well as the nature of the action, is determined from the
averments of the complaint.[33]
In the present case, the Complaint alleged that despite demands, petitioners
refused to pay the accrued rentals and [to] vacate the leased premises.[34] It prayed
that judgment be rendered [o]rdering [petitioners] and all those claiming rights under
them to vacate the properties x x x and remove the structures x x x constructed
thereon.[35] Effectively then, respondents averred that petitioners original lawful
occupation of the subject lots had become unlawful.
The MTCC found sufficient cause to eject petitioners. While it disbelieved the
existence of a verbal lease agreement, it nevertheless concluded that petitioners
occupation of the subject lots was by mere tolerance of respondents.Basing its
conclusion on the fact that the parties were close relatives, the MTCC ruled thus:
65
x x x [T]he parties herein are first degree relatives. Because of this relationship, this
Court takes judicial notice of the love, care, concern and protection imbued upon the
parents towards their [children], i.e., in the instant case, the love, care, concern and
protection of the [respondents] to the [petitioners]. With this in mind, this Court is
inclined to believe the position of the [petitioners] that there was no such verbal lease
agreement between the parties herein that took place in 1992. x x x.
From the allegations of the [petitioners], this Court is convinced that their stay and
occupancy of the subject premises was by mere tolerance of the [respondents], and
not by virtue of a verbal lease agreement between them.[36]
Having found a cause of action for unlawful detainer, the MTCC (as well as the
RTC and the CA) did not err in ordering the ejectment of petitioners as prayed for by
respondents. There was no violation of Section 17 of Rule 70[37] of the Rules of
Court. As earlier explained, unlawful detainer was sufficiently alleged in the Complaint
and duly proven during the trial. Significantly, the issue of whether there was enough
ground to eject petitioners was raised during the preliminary conference.[38]
Not Merely Tolerated
Possession
Petitioners dispute the lower courts finding that they occupied the subject lots on
the basis of mere tolerance. They argue that their occupation was not under such
condition, since respondents had invited, offered and persuaded them to use those
properties.[39]
This Court has consistently held that those who occupy the land of another at
the latters tolerance or permission, without any contract between them, are
necessarily bound by an implied promise that the occupants will vacate the property
upon demand.[40] A summary action for ejectment is the proper remedy to enforce this
implied obligation.[41] The unlawful deprivation or withholding of possession is to be
counted from the date of the demand to vacate.[42]
Toleration is defined as the act or practice of permitting or enduring something
not wholly approved of.[43] Sarona v. Villegas[44] described what tolerated acts means,
in this language:
Professor Arturo M. Tolentino states that acts merely tolerated are those which by
reason of neighborliness or familiarity, the owner of property allows his neighbor or
another person to do on the property; they are generally those particular services or
benefits which ones property can give to another without material injury or prejudice
to the owner, who permits them out of friendship or courtesy. x x x. And, Tolentino
continues, even though this is continued for a long time, no right will be acquired by
prescription. x x x. Further expounding on the concept, Tolentino writes: There is tacit
consent of the possessor to the acts which are merely tolerated. Thus, not every case
of knowledge and silence on the part of the possessor can be considered mere
tolerance. By virtue of tolerance that is considered as an authorization, permission or
license, acts of possession are realized or performed. The question reduces itself to
the existence or non-existence of the permission.[45]
We hold that the facts of the present case rule out the finding of possession by
mere tolerance. Petitioners were able to establish that respondents had invited them
to occupy the subject lots in order that they could all live near one other and help in
resolving family problems.[46] By occupying those lots, petitioners demonstrated their
acceptance of the invitation. Hence, there was a meeting of minds, and an agreement
regarding possession of the lots impliedly arose between the parties.
The occupancy of the subject lots by petitioners was not merely something not
wholly approved of by respondents. Neither did it arise from what Tolentino refers to
as neighborliness or familiarity. In point of fact, their possession was upon the
invitation of and with the complete approval of respondents, who desired that their
children would occupy the premises. It arose from familial love and a desire for family
solidarity, which are basic Filipino traits.
Right to Use the Lots Terminated
That Ismael and Teresita had a right to occupy the lots is therefore clear. The
issue is the duration of possession. In the absence of a stipulation on this point,
Article 1197 of the Civil Code allows the courts to fix the duration or the period.
Article 1197. If the obligation does not fix a period, but from its nature and the
circumstances it can be inferred that a period was intended, the courts may fix the
duration thereof.
The courts shall also fix the duration of the period when it depends upon the will of
the debtor.
In every case the courts shall determine such period as may under the circumstances
have been probably contemplated by the parties. Once fixed by the courts, the period
cannot be changed by them.
Article 1197, however, applies to a situation in which the parties intended a
period. Such qualification cannot be inferred from the facts of the present case.
To repeat, when Vicente and Rosario invited their children to use the lots, they
did so out of parental love and a desire for solidarity expected from Filipino
parents. No period was intended by the parties. Their mere failure to fix the duration
of their agreement does not necessarily justify or authorize the courts to do so.[47]
Based on respondents reasons for gratuitously allowing petitioners to use the
lots, it can be safely concluded that the agreement subsisted as long as the parents
and the children mutually benefited from the arrangement. Effectively, there is a
resolutory condition in such an agreement.[48] Thus, when a change in the condition
existing between the parties occurs -- like a change of ownership, necessity, death of
either party or unresolved conflict or animosity -- the agreement may be deemed
66
terminated. Having been based on parental love, the agreement would end upon the
dissipation of the affection.
When persistent conflict and animosity overtook the love and solidarity between
the parents and the children, the purpose of the agreement ceased.[49] Thus,
petitioners no longer had any cause for continued possession of the lots.Their right to
use the properties became untenable. It ceased upon their receipt of the notice to
vacate. And because they refused to heed the demand, ejectment was the proper
remedy against them. Their possession, which was originally lawful, became unlawful
when the reason therefor -- love and solidarity -- ceased to exist between them.
No Right to Retain
Possession
Petitioners have not given this Court adequate reasons to reverse the lower
courts dismissal of their contention that Lots T-78521 and T-103141, respectively,
were allegedly allotted to them as part of their inheritance and given in consideration
for past debts.
The right of petitioners to inherit from their parents is merely inchoate and is
vested only upon the latters demise. Indisputably, rights of succession are transmitted
only from the moment of death of the decedent.[50] Assuming that there was an
allotment of inheritance, ownership nonetheless remained with
respondents. Moreover, an intention to confer title to certain persons in the future is
not inconsistent with the owners taking back possession in the meantime for any
reason deemed sufficient.[51] Other than their self-serving testimonies and their
affidavits, petitioners offered no credible evidence to support their outlandish claim of
inheritance allocation.
We also agree with the lower courts that petitioners failed to prove the allegation
that, through a dation in payment, Lot T-78521 had been transferred to the latter as
payment for respondents debts.[52] The evidence presented by petitioners related only
to the alleged indebtedness of the parents arising from the latters purported
purchases and advances.[53] There was no sufficient proof that respondents had
entered into a contract of dation to settle the alleged debt. Petitioners even stated that
there was a disagreement in the accounting of the purported debt, [54] a fact that
disproves a meeting of the minds with the parents.
Petitioners also admitted that a portion of the alleged debt is the subject matter
of a collection case against respondents (Civil Case No. 0594-96).[55] Thus, the
formers allegation that the indebtedness has been paid through a dation cannot be
given credence, inconsistent as it is with their action to recover the same debt.
Despite their protestations, petitioners recognized the right of the parents to
recover the premises when they admitted in their Position Paper filed with the MTCC
that respondents had a title to the lots.
The [respondents] want to get their property because the title is theirs, the
[petitioners] do not object but what is due the [petitioners] including the reparation for
the tarnish of their dignity and honor must be given the [petitioners] for the benefits of
their children before the premises will be turned over.[56]
As a rule, the right of ownership carries with it the right of possession.
Second Issue:
Appearance at the Preliminary Conference
Section 8 of Rule 70 of the Rules of Court requires the appearance of the
plaintiff and the defendant during the preliminary conference. On the basis of this
provision, petitioners claim that the MTCC should have dismissed the case upon the
failure of respondents to attend the conference. However, petitioners do not dispute
that an attorney-in-fact with a written authorization from respondents appeared during
the preliminary conference.[57] The issue then is whether the rules on ejectment allow
a representative to substitute for a partys personal appearance.
Unless inconsistent with Rule 70, the provisions of Rule 18 on pretrial applies to
the preliminary conference.[58] Under Section 4 of this Rule, the nonappearance of a
party may be excused by the showing of a valid cause; or by the appearance of a
representative, who has been fully authorized in writing to enter into an amicable
settlement, to submit to alternative modes of dispute resolution, and to enter into
stipulations or admissions of facts and of documents.[59]
Section 4 of Rule 18 may supplement Section 8 of Rule 70. Thus, the spirit
behind the exception to personal appearance under the rules on pretrial is applicable
to the preliminary conference. If there are valid reasons or if a representative has a
special authority, a partys appearance may be waived. As petitioners are challenging
only the applicability of the rules on pretrial to the rule on preliminary conference, the
written authorization from respondents can indeed be readily considered as a special
authorization.
Third Issue:
Rights of a Builder in Good Faith
As applied to the present case, accession refers to the right of the owner to
everything that is incorporated or attached to the property. [60] Accession industrial --
building, planting and sowing on an immovable -- is governed by Articles 445 to 456
of the Civil Code.
Articles 447 and 1678 of the
Civil Code Inapplicable
67
 To buttress their claim of reimbursement for the improvements introduced on the
property, petitioners cite Article 447. [61] They allege that the CA erred in applying
Article 1678, since they had no lease agreement with respondents.
We clarify. Article 447 is not applicable, because it relates to the rules that apply
when the owner of the property uses the materials of another. It does not refer to the
instance when a possessor builds on the property of another, which is the factual
milieu here.
In view of the unique factual setting of the instant case, the contention of
petitioners regarding the inapplicability of Article 1678 deserves attention. The CA
applied the provisions on lease, because it found their possession by mere tolerance
comparable with that of a lessee, per the pronouncement in Calubayan v. Pascual,
[62]
from which we quote:
x x x. It has been held that a person who occupies the land of another at the latters
tolerance or permission, without any contract between them, is necessarily bound by
an implied promise that he will vacate upon demand, failing which a summary action
for ejectment is the proper remedy against them. The status of defendant is
analogous to that of a lessee or tenant whose term of lease has expired but whose
occupancy continued by tolerance of the owner. In such a case, the unlawful
deprivation or withholding of possession is to be counted from the date of the demand
to vacate.[63] (Emphasis in the original.)
As explained earlier, Ismael and Teresitas possession of the two lots was not by mere
tolerance, a circumstance that negates the applicability of Calubayan.
Article 448 Applicable
On the other hand, when a person builds in good faith on the land of another,
the applicable provision is Article 448, which reads:[64]
Article 448. The owner of the land on which anything has been built, sown or planted
in good faith, shall have the right to appropriate as his own the works, sowing or
planting, after payment of the indemnity provided for in Articles 546 and 548, or to
oblige the one who built or planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or planter cannot be obliged to buy the
land if its value is considerably more than that of the building or trees. In such case,
he shall pay reasonable rent, if the owner of the land does not choose to appropriate
the building or trees after proper indemnity. The parties shall agree upon the terms of
the lease and in case of disagreement, the court shall fix the terms thereof.
This Court has ruled that this provision covers only cases in which the builders,
sowers or planters believe themselves to be owners of the land or, at least, to have a
claim of title thereto.[65] It does not apply when the interest is merely that of a holder,
such as a mere tenant, agent or usufructuary. [66] From these pronouncements, good
faith is identified by the belief that the land is owned; or that -- by some title -- one has
the right to build, plant, or sow thereon.[67]
However, in some special cases, this Court has used Article 448 by recognizing
good faith beyond this limited definition. Thus, in Del Campo v. Abesia,[68] this
provision was applied to one whose house -- despite having been built at the time he
was still co-owner -- overlapped with the land of another. [69] This article was also
applied to cases wherein a builder had constructed improvements with the consent of
the owner. The Court ruled that the law deemed the builder to be in good faith.
[70]
In Sarmiento v. Agana,[71] the builders were found to be in good faith despite their
reliance on the consent of another, whom they had mistakenly believed to be the
owner of the land.[72]
Based on the aforecited special cases, Article 448 applies to the present factual
milieu. The established facts of this case show that respondents fully consented to
the improvements introduced by petitioners. In fact, because the children occupied
the lots upon their invitation, the parents certainly knew and approved of the
construction of the improvements introduced thereon.[73] Thus, petitioners may be
deemed to have been in good faith when they built the structures on those lots.
The instant case is factually similar to Javier v. Javier. [74] In that case, this Court
deemed the son to be in good faith for building the improvement (the house) with the
knowledge and consent of his father, to whom belonged the land upon which it was
built. Thus, Article 448[75] was applied.
Rule on Useful Expenses
The structures built by petitioners were useful improvements, because they
augmented the value or income of the bare lots. [76] Thus, the indemnity to be paid by
respondents under Article 448 is provided for by Article 546, which we quote:
Art. 546. Necessary expenses shall be refunded to every possessor; but only the
possessor in good faith may retain the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same
right of retention, the person who has defeated him in the possession having the
option of refunding the amount of the expenses or of paying the increase in value
which the thing may have acquired by reason thereof.
Consequently, respondents have the right to appropriate -- as their own -- the
building and other improvements on the subject lots, but only after (1) refunding the
expenses of petitioners or (2) paying the increase in value acquired by the properties
by reason thereof. They have the option to oblige petitioners to pay the price of the
land, unless its value is considerably more than that of the structures -- in which case,
petitioners shall pay reasonable rent.
In accordance with Depra v. Dumlao,[77] this case must be remanded to the trial
court to determine matters necessary for the proper application of Article 448 in
relation to Article 546. Such matters include the option that respondents would take
and the amount of indemnity that they would pay, should they decide to appropriate
the improvements on the lots. We disagree with the CAs computation of useful
expenses, which were based only on petitioners bare allegations in their Answer.[78]
68
Ruling on Improvement Justified
While, ordinarily, the jurisdiction of the MTCC on ejectment proceedings is
limited to the issue of physical or material possession of the property in question, this
Court finds it necessary to abbreviate the issue on the improvements in relation to
Article 448. First, the determination of the parties right to those improvements is
intimately connected with the MTCC proceedings in the light of the ejectment of
petitioners. Second, there is no dispute that while they constructed the improvements,
respondents owned the land. Third, both parties raised no objection when the RTC
and the CA ruled accordingly on this matter.
Equitable considerations compel us to settle this point immediately, pro hoc vice,
to avoid needless delay. Both parties have already been heard on this issue; to
dillydally or equivocate would not serve the cause of substantial justice.
Other Issues Raised
Given the foregoing rulings, it is no longer necessary to address petitioners
allegation that the MTCC judge and respondents lawyers should be respectively held
personally accountable for the Decision and for filing the case. [79] The insinuation of
petitioners that the lawyers manipulated the issuance of a false barangay certification
is unavailing.[80] Their contention that respondents did not attend the barangay
conciliation proceedings was based solely on hearsay, which has little or no probative
value.[81]
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals
are AFFIRMED with the following MODIFICATIONS:
1. The portion requiring Spouses Vicente and Rosario Macasaet to reimburse
one half of the value of the useful improvements, amounting to P475,000, and the
right of Spouses Ismael and Rosita Macasaet to remove those improvements (if the
former refuses to reimburse) is DELETED.
2. The case is REMANDED to the court of origin for further proceedings to
determine the facts essential to the proper application of Articles 448 and 546 of the
Civil Code, specifically to the following matters:
a. Spouses Vicente and Rosario Macasaets option to appropriate -- as their own --
the improvements on the lots, after paying the indemnity, as provided under Article
546 in relation to Article 448 of the Civil Code; or in requiring Spouses Ismael and
Rosita Macasaet to pay for the value of the lots, unless it is considerably more than
that of the improvements, in which case petitioners shall pay reasonable rent based
upon the terms provided under the Civil Code
b. The value of the useful expenses incurred by Spouses Ismael and Rosita
Macasaet in the construction of the improvements on the lots
c. The increase in value acquired by the lots by reason of the useful improvements
d. Spouses Vicente and Rosario Macasaets choice of type of indemnity to be paid
(whether b or c)
e. Whether the value of the lots is considerably more than that of the improvements
built thereon
No pronouncement as to costs.
SO ORDERED.
PLEASANTVILLE DEVELOPMENT CORPORATION, petitioner, vs. COURT OF
APPEALS, WILSON KEE, C.T. TORRES ENTERPRISES, INC. and
ELDRED JARDINICO, respondents.
DECISION
PANGANIBAN, J.:
Is a lot buyer who constructs improvements on the wrong property erroneously
delivered by the owners agent, a builder in good faith? This is the main issue resolved
in this petition for review on certiorari to reverse the Decision [1] of the Court of
Appeals[2] in CA-G.R. SP No. 11040, promulgated on August 20, 1987.
By resolution dated November 13, 1995, the First Division of this Court resolved
to transfer this case (along with several others) to the Third Division. After due
deliberation and consultation, the Court assigned the writing of this Decision to the
undersigned ponente.
The Facts
The facts, as found by respondent Court, are as follows:
Edith Robillo purchased from petitioner a parcel of land designated as Lot 9,
Phase II and located at Taculing Road, Pleasantville Subdivision, Bacolod City. In
1975, respondent Eldred Jardinico bought the rights to the lot from Robillo. At that
time, Lot 9 was vacant.
Upon completing all payments, Jardinico secured from the Register of Deeds of
Bacolod City on December 19, 1978 Transfer Certificate of Title No. 106367 in his
name. It was then that he discovered that improvements had been introduced
on Lot 9 by respondent Wilson Kee, who had taken possession thereof.
It appears that on March 26, 1974, Kee bought on installment Lot 8 of the same
subdivision from C.T. Torres Enterprises, Inc. (CTTEI), the exclusive real estate agent
of petitioner. Under the Contract to Sell on Installment, Kee could possess the lot
even before the completion of all installment payments. On January 20, 1975, Kee
paid CTTEI the relocation fee of P50.00 and another P50.00 on January 27, 1975, for
the preparation of the lot plan. These amounts were paid prior to Kees taking actual
possession of Lot 8. After the preparation of the lot plan and a copy thereof given to
69
Kee, CTTEI through its employee, Zenaida Octaviano, accompanied Kees wife,
Donabelle Kee, to inspect Lot 8. Unfortunately, the parcel of land pointed by
Octaviano was Lot 9. Thereafter, Kee proceeded to construct his residence, a store,
an auto repair shop and other improvements on the lot.
After discovering that Lot 9 was occupied by Kee, Jardinico confronted him. The
parties tried to reach an amicable settlement, but failed.
On January 30, 1981, Jardinicos lawyer wrote Kee, demanding that the latter
remove all improvements and vacate Lot 9. When Kee refused to vacate Lot 9,
Jardinico filed with the Municipal Trial Court in Cities, Branch 3, Bacolod City (MTCC),
a complaint for ejectment with damages against Kee.
Kee, in turn, filed a third-party complaint against petitioner and CTTEI.
The MTCC held that the erroneous delivery of Lot 9 to Kee was attributable to
CTTEI. It further ruled that petitioner and CTTEI could not successfully invoke as a
defense the failure of Kee to give notice of his intention to begin construction required
under paragraph 22 of the Contract to Sell on Installment and his having built a sari-
sari store without. the prior approval of petitioner required under paragraph 26 of said
contract, saying that the purpose of these requirements was merely to regulate the
type of improvements to be constructed on the lot[3].
However, the MTCC found that petitioner had already rescinded its contract with
Kee over Lot 8 for the latters failure to pay the installments due, and that Kee had not
contested the rescission. The rescission was effected in 1979, before the complaint
was instituted. The MTCC concluded that Kee no longer had any right over the lot
subject of the contract between him and petitioner. Consequently, Kee must pay
reasonable rentals for the use of Lot 9, and, furthermore, he cannot claim
reimbursement for the improvements he introduced on said lot.
The MTCC thus disposed:
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered as follows:
1. Defendant Wilson Kee is ordered to vacate tithe premises of Lot 9, covered by TCT
No. 106367 and to remove all structures and improvements he introduced thereon;
2. Defendant Wilson Kee is ordered to pay to the plaintiff rentals at the rate of P 15.00
a day computed from the time this suit was filed on March 12, 1981 until he actually
vacates the premises. This amount shall bear interests (sic) at the rate of 12 per cent
(sic) per annum.
3. Third-Party Defendant CT. Torres Enterprises, Inc. and Pleasantville Subdivision
are ordered to pay the plaintiff jointly and severally the sum of P3,000.00 as attorneys
fees and P700.00 as cost and litigation expenses.[4]
On appeal, the Regional Trial Court, Branch 48, Bacolod City (RTC) ruled that
petitioner and CTTEI were not at fault or were not negligent, there being no
preponderant evidence to show that they directly participated in the delivery of Lot 9
to Kee.[5] It found Kee a builder in bad faith. It further ruled that even
assuming arguendo that Kee was acting in good faith, he was, nonetheless, guilty of
unlawfully usurping the possessory right of Jardinico over Lot 9 from the time he was
served with notice to vacate said lot, and thus was liable for rental.
The RTC thus disposed:
WHEREFORE, the decision appealed from is affirmed with respect to the order
against the defendant to vacate the premises of Lot No. 9 covered by Transfer
Certificate of Title No. T-106367 of the land records of Bacolod City; the removal of all
structures and improvements introduced thereon at his expense and the payment to
plaintiff (sic) the sum of Fifteen (P 15.00) Pesos a day as reasonable rental to be
computed from January 30, 1981, the date of the demand, and not from the date of
the filing of the complaint, until he had vacated (sic) the premises, with interest
thereon at 12% per annum. This Court further renders judgment against the
defendant to pay the plaintiff the sum of Three Thousand (P3,000.00) Pesos as
attorneys fees, plus costs of litigation.
The third-party complaint against Third-Party Defendants Pleasantville Development
Corporation and C.T. Torres Enterprises, Inc. is dismissed. The order against Third-
Party Defendants to pay attorneys fees to plaintiff and costs of litigation is reversed.[6]
Following the denial of his motion for reconsideration on October 20, 1986, Kee
appealed directly to the Supreme Court, which referred the matter to the Court of
Appeals.
The appellate court ruled that Kee was a builder in good faith, as he was
unaware of the mix-up when he began construction of the improvements on Lot 8. It
further ruled that the erroneous delivery was due to the negligence of CTTEI, and that
such wrong delivery was likewise imputable to its principal, petitioner herein. The
appellate court also ruled that the award of rentals was without basis.
Thus, the Court of Appeals disposed:
WHEREFORE, the petition is GRANTED, the appealed decision is REVERSED, and
judgment is rendered as follows:
1. Wilson Kee is declared a builder in good faith with respect to the
improvements he introduced on Lot 9, and is entitled to the rights
granted him under Articles 448, 546 and 548 of the New Civil Code.
2. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville
Development Corporation are solidarily liable under the following
circumstances:
a. If Eldred Jardinico decides to appropriate the improvements and,
thereafter, remove these structures, the third-party defendants shall
answer for all demolition expenses and the value of the
improvements thus destroyed or rendered useless;
70
 b. If Jardinico prefers that Kee buy the land, the third-party defendants
shall answer for the amount representing the value of Lot 9 that Kee
should pay to Jardinico.
3. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville
Development Corporation are ordered to pay in solidum the amount of
P3,000.00 to Jardinico as attorneys fees, as well as litigation expenses.
4. The award of rentals to Jardinico is dispensed with.
Furthermore, the case is REMANDED to the court of origin for the determination of
the actual value of the improvements and the property (Lot 9), as well as for further
proceedings in conformity with Article 448 of the New Civil Code.[7]
Petitioner then filed the instant petition against Kee, Jardinico and CTTEI.
The Issues
The petition submitted the following grounds to justify a review of the respondent
Courts Decision, as follows:
1. The Court of Appeals has decided the case in a way probably not in accord with
law or the the (sic) applicable decisions of the Supreme Court on third-party
complaints, by ordering third-party defendants to pay the demolition expenses and/or
price of the land;
2. The Court of Appeals has so far departed from the accepted course of judicial
proceedings, by granting to private respondent-Kee the rights of a builder in good
faith in excess of what the law provides, thus enriching private respondent Kee at the
expense of the petitioner;
3. In the light of the subsequent events or circumstances which changed the rights of
the parties, it becomes imperative to set aside or at least modify the judgment of the
Court of Appeals to harmonize with justice and the facts;
4. Private respondent-Kee in accordance with the findings of facts of the lower court
is clearly a builder in bad faith, having violated several provisions of the contract to
sell on installments;
5. The decision of the Court of Appeals, holding the principal, Pleasantville
Development Corporation (liable) for the acts made by the agent in excess of its
authority is clearly in violation of the provision of the law;
6. The award of attorneys fees is clearly without basis and is equivalent to putting a
premium in (sic) court litigation.
From these grounds, the issues could be re-stated as follows:
(1) Was Kee a builder in good faith?
(2) What is the liability, if any, of petitioner and its agent, C.T. Torres Enterprises, Inc.?
and
(3) Is the award of attorneys fees proper?
The First Issue: Good Faith
Petitioner contends that the Court of Appeals erred in reversing the RTCs ruling
that Kee was a builder in bad faith.
Petitioner fails to persuade this Court to abandon the findings and conclusions
of the Court of Appeals that Kee was a builder in good faith. We agree with the
following observation of the Court of Appeals:
The roots of the controversy can be traced directly to the errors committed by CTTEI,
when it pointed the wrong property to Wilson Kee and his wife. It is highly improbable
that a purchaser of a lot would knowingly and willingly build his residence on a lot
owned by another, deliberately exposing himself and his family to the risk of being
ejected from the land and losing all improvements thereon, not to mention the social
humiliation that would follow.
Under the circumstances, Kee had acted in the manner of a prudent man in
ascertaining the identity of his property. Lot 8 is covered by Transfer Certificate of Title
No. T-69561, while Lot 9 is identified in Transfer Certificate of Title No. T-106367.
Hence, under the Torrens system of land registration, Kee is presumed to have
knowledge of the metes and bounds of the property with which he is dealing. x x x
xxx xxx xxx
But as Kee is a layman not versed in the technical description of his property, he had
to find a way to ascertain that what was described in TCT No. 69561
matched Lot 8. Thus, he went to the subdivision developers agent and applied and
paid for the relocation of the lot, as well as for the production of a lot plan by CTTEIs
geodetic engineer. Upon Kees receipt of the map, his wife went to the subdivision site
accompanied by CTTEIs employee, Octaviano, who authoritatively declared that the
land she was pointing to was indeed Lot 8. Having full faith and confidence in the
reputation of CTTEI, and because of the companys positive identification of the
property, Kee saw no reason to suspect that there had been a misdelivery. The steps
Kee had taken to protect his interests were reasonable. There was no need for him to
have acted ex-abundantia cautela, such as being present during the geodetic
engineers relocation survey or hiring an independent geodetic engineer to
countercheck for errors, for the final delivery of subdivision lots to their owners is part
71
of the regular course of everyday business of CTTEI. Because of CTTEIs blunder,
what Kee had hoped to forestall did in fact transpire. Kees efforts all went to naught.[8]
Good faith consists in the belief of the builder that the land he is building on is
his and his ignorance of any defect or flaw in his title. [9] And as good faith is
presumed, petitioner has the burden of proving bad faith on the part of Kee.[10]
At the time he built improvements on Lot 8, Kee believed that said lot was what
he bought from petitioner. He was not aware that the lot delivered to him was
not Lot 8. Thus, Kees good faith. Petitioner failed to prove otherwise.
To demonstrate Kees bad faith, petitioner points to Kees violation of paragraphs
22 and 26 of the Contract of Sale on Installment.
We disagree. Such violations have no bearing whatsoever on whether Kee was
a builder in good faith, that is, on his state of mind at the time he built the
improvements on Lot 9. These alleged violations may give rise to petitioners cause of
action against Kee under the said contract (contractual breach), but may not be bases
to negate the presumption that Kee was a builder in good faith.
Petitioner also points out that, as found by the trial court, the Contract of Sale on
Installment covering Lot 8 between it and Kee was rescinded long before the present
action was instituted. This has no relevance on the liability of petitioner, as such fact
does not negate the negligence of its agent in pointing out the wrong lot to Kee. Such
circumstance is relevant only as it gives Jardinico a cause of action for unlawful
detainer against Kee.
Petitioner next contends that Kee cannot claim that another lot was erroneously
pointed out to him because the latter agreed to the following provision in the Contract
of Sale on Installment, to wit:
13. The Vendee hereby declares that prior to the execution of his contract he/she has
personally examined or inspected the property made subject-matter hereof, as to its
location, contours, as well as the natural condition of the lots and from the date hereof
whatever consequential change therein made due to erosion, the said Vendee shall
bear the expenses of the necessary fillings, when the same is so desired by him/her.
[11]
The subject matter of this provision of the contract is the change of the location,
contour and condition of the lot due to erosion. It merely provides that the vendee,
having examined the property prior to the execution of the contract, agrees to
shoulder the expenses resulting from such change.
We do not agree with the interpretation of petitioner that Kee contracted away
his right to recover damages resulting from petitioners negligence. Such waiver would
be contrary to public policy and cannot be allowed. Rights may be waived, unless the
waiver is contrary to law, public order, public policy, morals, or good customs, or
prejudicial to a third person with a right recognized by law.[12]
The Second Issue: Petitioners Liability
Kee filed a third-party complaint against petitioner and CTTEI, which was
dismissed by the RTC after ruling that there was no evidence from which fault or
negligence on the part of petitioner and CTTEI can be inferred. The Court of Appeals
disagreed and found CTTEI negligent for the erroneous delivery of the lot by
Octaviano, its employee.
Petitioner does not dispute the fact that CTTEI was its agent. But it contends
that the erroneous delivery of Lot 9 to Kee was an act which was clearly outside the
scope of its authority, and consequently, CTTEI alone should be liable.It asserts that
while [CTTEI] was authorized to sell the lot belonging to the herein petitioner, it was
never authorized to deliver the wrong lot to Kee.[13]
Petitioners contention is without merit.
The rule is that the principal is responsible for the acts of the agent, done within
the scope of his authority, and should bear the damage caused to third persons. [14] On
the other hand, the agent who exceeds his authority is personally liable for the
damage.[15]
CTTEI was acting within its authority as the sole real estate representative of
petitioner when it made the delivery to Kee. In acting within its scope of authority, it
was, however, negligent. It is this negligence that is the basis of petitioners liability, as
principal of CTTEI, per Articles 1909 and 1910 of the Civil Code.
Pending resolution of the case before the Court of Appeals, Jardinico and Kee
on July 24, 1987 entered into a deed of sale, wherein the former sold Lot 9 to
Kee. Jardinico and Kee did not inform the Court of Appeals of such deal.
The deed of sale contained the following provision:
1. That Civil Case No. 3815 entitled Jardinico vs. Kee which is now pending appeal
with the Court of Appeals, regardless of the outcome of the decision shall be mutually
disregarded and shall not be pursued by the parties herein and shall be considered
dismissed and without effect whatsoever;[16]
Kee asserts though that the terms and conditions in said deed of sale are strictly
for the parties thereto and that (t)here is no waiver made by either of the parties in
said deed of whatever favorable judgment or award the honorable respondent Court
of Appeals may make in their favor against herein petitioner Pleasantville
Development Corporation and/or private respondent C.T. Torres Enterprises, Inc.[17]
Obviously, the deed of sale can have no effect on the liability of petitioner. As we
have earlier stated, petitioners liability is grounded on the negligence of its agent. On
the other hand, what the deed of sale regulates are the reciprocal rights of Kee and
Jardinico; it stressed that they had reached an agreement independent of the
outcome of the case.
Petitioner further assails the following holding of the Court of Appeals:
2. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development
Corporation are solidarily liable under the following circumstances:
72
 a. If Eldred Jardinico decides to appropriate the improvements and,
thereafter, remove these structures, the third-party defendants shall
answer for all demolition expenses and the value of the
improvements thus destroyed or rendered useless;
b. If Jardinico prefers that Kee buy the land, the third-party defendants
shall answer for the amount representing the value of Lot 9 that Kee
should pay to Jardinico.[18]
Petitioner contends that if the above holding would be carried out, Kee would be
unjustly enriched at its expense. In other words, Kee would be -able to own the lot, as
buyer, without having to pay anything on it, because the aforequoted portion of
respondent Courts Decision would require petitioner and CTTEI jointly and solidarily
to answer or reimburse Kee there for.
We agree with petitioner.
Petitioners liability lies in the negligence of its agent CTTEI. For such
negligence, the petitioner should be held liable for damages. Now, the extent and/or
amount of damages to be awarded is a factual issue which should be determined
after evidence is adduced. However, there is no showing that such evidence was
actually presented in the trial court; hence no damages could now be awarded.
The rights of Kee and Jardinico vis-a-vis each other, as builder in good faith and
owner in good faith, respectively, are regulated by law (i.e., Arts. 448, 546 and 548 of
the Civil Code). It was error for the Court of Appeals to make a slight modification in
the application of such law, on the ground of equity. At any rate, as it stands now, Kee
and Jardinico have amicably settled through their deed of sale their rights and
obligations with regards to Lot 9. Thus, we delete items 2 (a) and (b) of the dispositive
portion of the Court of Appeals Decision [as reproduced above] holding petitioner and
CTTEI solidarily liable.
The Third Issue: Attorneys Fees
The MTCC awarded Jardinico attorneys fees and costs in the amount of
P3,000.00 and P700.00, respectively, as prayed for in his complaint. The RTC deleted
the award, consistent with its ruling that petitioner was without fault or
negligence. The Court of Appeals, however, reinstated the award of attorneys fees
after ruling that petitioner was liable for its agents negligence.
The award of attorneys fees lies within the discretion of the court and depends
upon the circumstances of each case.[19] We shall not interfere with the discretion of
the Court of Appeals. Jardinico was compelled to litigate for the protection of his
interests and for the recovery of damages sustained as a result of the negligence of
petitioners agent.[20]
In sum, we rule that Kee is a builder in good faith. The disposition of the Court of
Appeals that Kee is entitled to the rights granted him under Articles 448, 546
and 548 of the New Civil Code is deleted, in view of the deed of sale entered into by
Kee and Jardinico, which deed now governs the rights of Jardinico and Kee as to
each other. There is also no further need, as ruled by the appellate Court, to remand
the case to the court of origin for determination of the actual value of the
improvements and the property (Lot 9), as well as for further proceedings in
conformity with Article 448 of the New Civil Code.
WHEREFORE, the petition is partially GRANTED. The Decision of the Court of
Appeals is hereby MODIFIED as follows:
(1) Wilson Kee is declared a builder in good faith;
(2) Petitioner Pleasantville Development Corporation and respondent C.T.
Tones Enterprises, Inc. are declared solidarily liable for damages
due to negligence; however, since the amount and/or extent of such
damages was not proven during the trial, the same cannot now be
quantified and awarded;
(3) Petitioner Pleasantville Develpment Corporation and respondent C.T.
Torres Enterprises, Inc. are ordered to pay in solidum the amount of
P3,000.00 to Jardinico as attorneys fees, as well as litigation
expenses; and
(4) The award of rentals to Jardinico is dispensed with.
SO ORDERED.
G.R. No. 95907 April 8, 1992
JOSE REYNANTE, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, THE HON. VALENTIN CRUZ, as
Presiding Judge, Regional Trial Court of Bulacan, Branch VIII, and the HEIRS
OF LEONCIO CARLOS and DOLORES A. CARLOS, and HEIRS OF GORGONIO
CARLOS and CONCEPCION CARLOS, respondents.
PARAS, J.:
This is a petition for review on certiorari which seeks the reversal of: a) decision 1 of
the Court of Appeals dated February 28, 1990 in CA-G.R. No. 1917 entitled "JOSE
REYNANTE versus HON. VALENTIN CRUZ, Judge, RTC of Malolos, Bulacan, and
HEIRS OF LEONCIO AND DOLORES CARLOS, et al.", affirming the decision 2 of the
Regional Trial Court
of Malolos, Bulacan, Branch 8, Third Judicial Region which reversed the decision 3 of
the Municipal Trial Court of Meycauayan, Bulacan, Branch 1, Third Judicial Region in
Civil Case No. 1526 entitled "HEIRS OF LEONCIO CARLOS & DOLORES A.
CARLOS and HEIRS OF GORGONIO A. CARLOS & CONCEPCION CARLOS
versus JOSE REYNANTE: and b) the resolution denying the motion for
reconsideration.
The facts as culled from the records of the case are as follows:
73
More than 50 years ago, petitioner Jose Reynante was taken as tenant by the late
Don Cosme Carlos, owner and father-in-law of herein private respondents, over a
fishpond located at Barrio Liputan, Meycauayan, Bulacan with an area of 188.711
square meters, more or less and covered by Transfer Certificate of Title No. 25618,
Land Registry of Bulacan.
During the tenancy, petitioner Jose Reynante constructed a nipa hut where he and his
family lived and took care of the nipa palms (sasahan) he had planted on lots 1 and 2
covering an area of 5,096 square meters and 6,011 square meters respectively.
These lots are located between the fishpond covered by TCT No. 25618 and the
Liputan (formerly Meycauayan) River. Petitioner harvested and sold said nipa palms
without interference and prohibition from anybody. Neither did the late Don Cosme
Carlos question his right to plant the nipa palms near the fishpond or to harvest and
appropriate them as his own.
After the death of Don Cosme Carlos, his heirs (private respondents' predecessors-in-
interest) entered into a written agreement denominated as "SINUMPAANG
SALAYSAY NG PAGSASAULI NG KARAPATAN" dated November 29, 1984 with
petitioner Jose Reynante whereby the latter for and in consideration of the sum of
P200,000.00 turned over the fishpond he was tenanting to the heirs of Don Cosme
Carlos and surrendered all his rights therein as caretaker or "bantay-kasama at
tagapamahala" (Rollo, p. 77).
Pursuant to the said written agreement, petitioner surrendered the fishpond and the
two huts located therein to private respondents. Private respondents thereafter leased
the said fishpond to one Carlos de la Cruz. Petitioner continued to live in the nipa hut
constructed by him on lots 1 and 2 and to take care of the nipa palms he had planted
therein.
On February 17, 1988, private respondents formally demanded that the petitioner
vacate said portion since according to them petitioner had already been indemnified
for the surrender of his rights as a tenant. Despite receipt thereof, petitioner refused
and failed to relinquish possession of lots 1 and 2.
Hence, on April 22, 1988, private respondents filed a complaint for forcible entry with
preliminary mandatory injunction against petitioner alleging that the latter by means of
strategy and stealth, took over the physical, actual and material possession of lots 1
and 2 by residing in one of the kubos or huts bordering the Liputan River and cutting
off and/or disposing of the sasa or nipa palms adjacent thereto.
On January 10, 1989, the trial court rendered its decision dismissing the complaint
and finding that petitioner had been in prior possession of lots 1
and 2.
Private respondents appealed to the Regional Trial Court and on August 8, 1989 it
rendered its decision, the dispositive portion of which reads as follows:
WHEREFORE, this Court renders judgment in favor of the plaintiffs
and against defendant and hereby reverses the decision of the
Court a quo. Accordingly, the defendant is ordered to restore
possession of that piece of land particularly described and defined
as Lots 1 & 2 of the land survey conducted by Geodetic Engineer
Restituto Buan on March 2, 1983, together with the sasa or nipa
palms planted thereon. No pronouncement as to attorney's fees.
Each party shall bear their respective costs of the suit.
SO ORDERED. (Rollo, p. 55; Decision, p. 4).
From said decision, petitioner filed with the Court of Appeals a petition for review
(Rollo, p. 30; Annex "A"). On February 28, 1990, the Court of Appeals rendered its
decision, the dispositive portion of which reads as follows:
WHEREFORE, the decision of the court a quo, being consistent
with law and jurisprudence, is hereby AFFIRMED in toto. The
instant petition seeking to issue a restraining order is hereby
denied.
SO ORDERED. (Rollo, p. 30; Decision, p. 3).
On November 5, 1990, the Court of Appeals denied the motion for reconsideration
filed by petitioner (Rollo, p. 35; Annex "B").
Hence, this petition.
In its resolution dated May 6, 1991, the Second Division of this court gave due course
to the petition and required both parties to file their respective memoranda (Rollo, p.
93).
The main issues to be resolved in this case are: a) who between the petitioner and
private respondents has prior physical possession of lots 1 and 2; and b) whether or
not the disputed lots belong to private respondents as a result of accretion.
An action for forcible entry is merely a quieting process and actual title to the property
is never determined. A party who can prove prior possession can recover such
possession even against the owner himself. Whatever may be the character of
his prior possession, if he has in his favor priority in time, he has the security that
entitles him to remain on the property until he is lawfully ejected by a person having a
better right by accion publiciana or accion reivindicatoria (German Management &
Services, Inc. v. Court of Appeals, G.R. No. 76216, September 14, 1989, 177 SCRA
495, 498, 499). On the other hand, if a plaintiff cannot prove prior physical
possession, he has no right of action for forcible entry and detainer even if he should
be the owner of the property (Lizo v. Carandang, 73 Phil. 469 [1942]).
Hence, the Court of Appeals could not legally restore private respondents' possession
over lots 1 and 2 simply because petitioner has clearly proven that he
had prior possession over lots 1 and 2.
74
The evidence on record shows that petitioner was in possession of the questioned
lots for more than 50 years. It is undisputed that he was the caretaker of the fishpond
owned by the late Don Cosme Carlos for more than 50 years and that he constructed
a nipa hut adjacent to the fishpond and planted nipa palms therein. This fact is
bolstered by the "SINUMPAANG SALAYSAY" executed by Epifanio Lucero (Records,
p. 66), Apolonio D. Morte (Records, p. 101) and Carling Dumalay (Records, p. 103),
all of whom are disinterested parties with no motive to falsify that can be attributed to
them, except their desire to tell the truth.
Moreover, an ocular inspection was conducted by the trial court dated December 2,
1988 which was attended by the parties and their respective counsels and the court
observed the following:
The Court viewed the location and the distance of the constructed
nipa hut and the subject "sasahan" which appears exists (sic) long
ago, planted and stands (sic) adjacent to the fishpond and the dikes
which serves (sic) as passage way of water river of lot 1 and lot 2.
During the course of the hearing, both counsel observed muniment
of title embedded on the ground which is located at the inner side of
the "pilapil" separating the fishpond from the subject "sasa" plant
with a height of 20 to 25 feet from water level and during the ocular
inspection it was judicially observed that the controversial premises
is beyond the titled property of the plaintiffs but situated along the
Liputan, Meycauayan River it being a part of the public domain.
(Rollo, p. 51; Decision, p. 12).
On the other hand, private respondents based their claim of possession over lots 1
and 2 simply on the written agreement signed by petitioner whereby the latter
surrendered his rights over the fishpond.
Evidently, the trial court did not err when it ruled that:
An examination of the document signed by the defendant (Exhibit
"B"), shows that what was surrendered to the plaintiffs was the
fishpond and not the "sasahan" or the land on which he constructed
his hut where he now lives. That is a completely different
agreement in which a tenant would return a farm or a fishpond to
his landlord in return for the amount that the landlord would pay to
him as a disturbance compensation. There is nothing that indicates
that the tenant was giving other matters not mentioned in a
document like Exhibit "B". Moreover, when the plaintiffs leased the
fishpond to Mr. Carlos de La Cruz there was no mention that the
lease included the hut constructed by the defendant and the nipa
palms planted by him (Exhibit "1"), a circumstance that gives the
impression that the nipa hut and the nipa palms were not included
in the lease to Mr. de la Cruz, which may not belong to the plaintiffs.
(Rollo, p. 49; Decision, p. 9).
With regard to the second issue, it must be noted that the disputed lots involved in
this case are not included in Transfer Certificate of Title No. 25618 as per verification
made by the Forest Management Bureau, Department of Environment and Natural
Resources. That tract of land situated at Barrio Liputan, Meycauayan, Bulacan
containing an area of 1.1107 hectares as described in the plan prepared and
surveyed by Geodetic Engineer Restituto Buan for Jose Reynante falls within
Alienable and Disposable Land (for fishpond development) under Project No. 15 per
B.F.L.C. Map No. 3122 dated May 8, 1987 (Rollo, p. 31; Decision, p. 2).
The respondent Court of Appeals ruled that lots 1 and 2 were created by alluvial
formation and hence the property of private respondents pursuant to Article 457 of the
New Civil Code, to wit:
Art. 457. To the owners of lands adjoining the banks of rivers
belong the accretion which they gradually receive from the effects
of the current of the waters.
Accretion benefits a riparian owner when the following requisites are present: (1) that
the deposit be gradual and imperceptible; (2) that it resulted from the effects of the
current of the water; and (c) that the land where accretion takes place is adjacent to
the bank of a river (Republic v. Court of Appeals, G.R. No. L-61647, October 12,
1984, 132 SCRA 514, cited in Agustin v. Intermediate Appellate Court, G.R. Nos.
66075-76, July 5, 1990, 187 SCRA 218).
Granting without conceding that lots 1 and 2 were created by alluvial formation and
while it is true that accretions which the banks of rivers may gradually receive from
the effect of the current become the property of the owner of the banks, such
accretion to registered land does not preclude acquisition of the additional area by
another person through prescription.
This Court ruled in the case of Ignacio Grande, et al. v. Hon. Court of Appeals, et al.,
G.R. No. L-17652, June 30, 1962, 115 Phil. 521 that:
An accretion does not automatically become registered land just
because the lot which receives such accretion is covered by a
Torrens Title. Ownership of a piece of land is one thing; registration
under the Torrens system of that ownership is another. Ownership
over the accretion received by the land adjoining a river is governed
by the Civil Code. Imprescriptibility of registered land is provided in
the registration law. Registration under the Land Registration and
Cadastral Act does not vest or give title to the land, but merely
confirms and, thereafter, protects the title already possessed by the
owner, making it imprescriptible by occupation of third parties. But
to obtain this protection, the land must be placed under the
operation of the registration laws, wherein certain judicial
procedures have beenprovided.
Assuming private respondents had acquired the alluvial deposit (the lot in question),
by accretion, still their failure to register said accretion for a period of fifty (50) years
subjected said accretion to acquisition through prescription by third persons.
75
It is undisputed that petitioner has been in possession of the subject lots for more
than fifty (50) years and unless private respondents can show a better title over the
subject lots, petitioner's possession over the property must be respected.
PREMISES CONSIDERED, the decision of the respondent Court of Appeals dated
February 28, 1990 is REVERSED and SET ASIDE and the decision of the Municipal
Trial Court of Meycauayan, Bulacan, Branch I, is hereby REINSTATED.
SO ORDERED.
G.R. Nos. L-66075-76 July 5, 1990
EULOGIO AGUSTIN, HEIRS OF BALDOMERO LANGCAY, ARTURO BALISI &
JUAN LANGCAY, petitioners,
vs.
INTERMEDIATE APPELLATE COURT, MARIA MELAD, TIMOTEO MELAD, PABLO
BINAYUG & GERONIMA UBINA, respondents.
Antonio N. Laggui for petitioners.
Pedro R. Perez, Jr. for private respondents.
GRIO-AQUINO, J.:
The Cagayan River separates the towns of Solana on the west and Tuguegarao on
the east in the province of Cagayan. According to the unrebutted testimony of Romeo
Rigor, Geodetic Engineer of the Bureau of Lands, in 1919 the lands east of the river
were covered by the Tuguegarao Cadastre. In 1925, Original Certificate of Title No.
5472 was issued for land east of the Cagayan River owned by defendant-petitioner
Eulogio Agustin (Exh. 2-Agustin).
As the years went by, the Cagayan River moved gradually eastward, depositing silt
on the western bank. The shifting of the river and the siltation continued until 1968.
In 1950, all lands west of the river were included in the Solana Cadastre. Among
these occupying lands covered by the Solana Cadastre were plaintiffs-private
respondents, namely, Pablo Binayug, who has been in possession of Lots 3349,
7876, 7877, 7878, 7879, 7875, 7881, 7882, 7883, 7884, 7885, 7891 and 7892, and
Maria Melad, who owns Lot 3351 (Exh. 3-Binayug; Exh. B-Melad). Pablo Binayug
began his possession in 1947. An area of eight (8) hectares was planted to tobacco
and corn while 12 hectares were overgrown with talahib (Exh. C-1 Binayug.)
Binayug's Homestead Application No. W-79055 over this land was approved in 1959
(Exh. B-Binayug). Binayug's possession was recognized in the decision in Civil Case
No. 101 (Exh. F-Binayug). On the other hand, as a result of Civil Case No. 343-T,
Macario Melad, the predecessor-in-interest of Maria Melad and Timoteo Melad, was
issued Original Certificate of Title No. P-5026 for Lot 3351 of Cad. 293 on June 1,
1956.
Through the years, the Cagayan River eroded lands of the Tuguegarao Cadastre on
its eastern bank among which was defendant-petitioner Eulogio Agustin's Lot 8457
(Exh. E-Melad), depositing the alluvium as accretion on the land possessed by Pablo
Binayug on the western bank.
However, in 1968, after a big flood, the Cagayan River changed its course, returned
to its 1919 bed, and, in the process, cut across the lands of Maria Melad, Timoteo
Melad, and the spouses Pablo Binayug and Geronima Ubina whose lands were
transferred on the eastern, or Tuguegarao, side of the river. To cultivate those lots
they had to cross the river.
In April, 1969, while the private respondents and their tenants were planting corn on
their lots located on the eastern side of the Cagayan River, the petitioners,
accompanied by the mayor and some policemen of Tuguegarao, claimed the same
lands as their own and drove away the private respondents from the premises.
On April 21, 1970, private respondents Maria Melad and Timoteo Melad filed a
complaint (Civil Case No. 343-T) to recover Lot No. 3351 with an area of 5 hectares
and its 6.6-hectare accretion. On April 24, 1970, private respondent Pablo Binayug
filed a separate complaint (Civil Case No. 344-T) to recover his lots and their
accretions.
On June 16, 1975, the trial court rendered a decision, the dispositive portion of which
reads:
WHEREFORE, premises considered, judgment is hereby made:
In Civil Case No. 343-T, commanding Eulogio Agustin, Gregorio
Tuliao, Jacinto Buquel and Octavio Bancud, or anybody acting as
their representative[s] or agents to vacate Lot No. 3351 of Solana
Cadastre together with its accretion consisting of portions of Lots
9463, 9462 and 9461 of Tuguegarao Cadastre and for these
defendants to restore ownership in favor of Maria Melad and
Timoteo Melad who are the only interested heirs of Macario Melad.
In Civil Case No. 344-T, commanding defendants Justo Adduru,
Andres Pastor, Teofilo Tagacay, Vicente Camilan, Nicanor Mora,
Baldomero Cagurangan, Domingo Quilang, Cesar Cabalza, Elias
Macababbad, Titong Macababbad, Arturo Balisi, Jose Allabun,
Eulogio Agustin, Banong Aquino, Junior Cambri and Juan Langoay,
or any of their agents or representatives to vacate the Lots 3349,
7876, 7877, 7878, 7879, 7875, 7881, 7882, 7883, 7884, 7885,
7891 and 7892, together with its accretion and to restore
possession to plaintiffs Pablo Binayug and Geronima Ubina.
Without pronouncement as to damages which were not properly
proven and to costs.
76
 SO ORDERED. (As amended by the order dated August 15, 1975.)
(pp. 24-25, Rollo.)
Only defendant-petitioner Eulogio Agustin appealed in Civil Case No. 343-T, while in
Civil Case No. 344-T, only defendants-petitioners Eulogio Agustin, Baldomero
Cagurangan (substituted by his heir), Arturo Balisi and Juan Langcay appealed. But
upon motion of plaintiffs-private respondents, the trial court ordered the execution
pending appeal of the judgment in Civil Case No. 344-T against Cagurangan, Balisi
and Langcay on the ground that their appeal was dilatory as they had not presented
evidence at the trial (Order dated August 15, 1975).
On November 29, 1983, the Intermediate Appellate Court rendered a decision
affirming in toto the judgment of the trial court, with costs against the defendants-
appellants.
In their petition for review of that decision, the petitioners allege that the Court of
Appeals erred:
1. in declaring that the land in question had become part of private
respondents' estate as a result of accretion;
2. in declaring that the accretion to private respondents' estate
which used to pertain to petitioners' estate cannot preclude the
private respondents from being the owners thereof; and
3. in declaring that the ownership of private respondents over the
accretion is not affected by the sudden and abrupt change in the
course of the Cagayan River when it reverted to its old bed
The petition is unmeritorious and must be denied.
The finding of the Court of Appeals that there had been accretions to the lots of the
private respondents who did not lose the ownership of such accretions even after
they were separated from the principal lots by the sudden change of course of the
river, is a finding of fact which is conclusive on this Court. That finding is supported by
Art. 457 of the New Civil Code which provides:
Art. 457. To the owners of lands adjoining the banks of rivers
belong the accretion which they gradually receive from the effects
of the current of the waters. (366)
Accretion benefits a riparian owner when the following requisites are present: (1) that
the deposit be gradual and imperceptible; (2) that it resulted from the effects of the
current of the water; and (3) that the land where accretion takes place is adjacent to
the bank of a river (Republic vs. CA, 132 SCRA 514).
All these requisites of accretion are present in this case for, as the trial court found:
. . . Cagayan River did move year by year from 1919 to 1968 or for
a period of 49 years. Within this period, the alluvium (sic) deposited
on the other side has become greater in area than the original
lands of the plaintiffs in both cases. Still the addition in every year is
imperceptible in nature, one could not discern it but can be
measured after the lapse of a certain time. The testimonial
evidence in these cases that said Cagayan River moved eastward
year by year is overwhelming as against the denial of defendant
Eulogio Agustin alone. Cesar Caronan, one time mayor of Solana,
Cagayan, said so. Arturo Taguian said so. Timoteo Melad said so.
Francisco Ubina said so. Geodetic Engineer Rigor impliedly said so
when he testified that when Solana Cadastre was executed in 1950
it overlapped portions of Tuguegarao Cadastre executed in 1919.
This could not have happened if that part of Tuguegarao Cadastre
was not eroded by the overflow of the Cagayan River. These
testimonies cannot be destroyed by the denials of Vicente Cauilan,
Marcelo Agustin and Eulogio Agustin alone . . . . (p. 27, Rollo.)
The appellate court confirmed that the accretion on the western bank of the Cagayan
River had been going on from 1919 up to 1968 or for a period of 49 years. It was
gradual and imperceptible. Only when Lot No. 3351, with an original area of 5
hectares described in the free patent that was issued to Macario Melad in June 1956,
was resurveyed in 1968 did it become known that 6.6 hectares had been added to it.
Lot No. 3351, covered by a homestead patent issued in June, 1950 to Pablo Binayug,
grew from its original area of 18 hectares, by an additional 50 hectares through
alluvium as the Cagayan River gradually moved to the east. These accretions belong
to riparian owners upon whose lands the alluvial deposits were made (Roxas vs.
Tuason, 9 Phil. 408; Director of Lands vs. Rizal, 87 Phil. 806). The reason for this
principle is because, if lands bordering on streams are exposed to floods and other
damage due to the destructive force of the waters, and if by virtue of law they are
subject to encumbrances and various kinds of easements, it is only just that such
risks or dangers as may prejudice the owners thereof should in some way be
compensated by the right of accretion (Cortes vs. City of Manila, 10 Phil. 567).itc-
asl
The private respondents' ownership of the accretion to their lands was not lost upon
the sudden and abrupt change of the course of the Cagayan River in 1968 or 1969
when it reverted to its old 1919 bed, and separated or transferred said accretions to
the other side (or eastern bank) of the river. Articles 459 and 463 of the New Civil
Code apply to this situation.
Art. 459. Whenever the current of a river, creek or torrent
segregates from an estate on its bank a known portion of land and
transfers it to another estate, the owner of the land to which the
segregated portion belonged retains the ownership of it, provided
that he removes the same within two years.
Art. 463. Whenever the current of a river divides itself into
branches, leaving a piece of land or part thereof isolated, the owner
of the land retains his ownership. He also retains it if a portion of
77
 land is separated from the estate by the current. (Emphasis
supplied).
In the case at bar, the sudden change of course of the Cagayan River as a
result of a strong typhoon in 1968 caused a portion of the lands of the
private respondents to be "separated from the estate by the current." The
private respondents have retained the ownership of the portion that was
transferred by avulsion to the other side of the river.
WHEREFORE, the petition is denied for lack of merit. The decision of the
Intermediate Appellate Court, now Court of Appeals, is hereby affirmed. Costs against
the petitioners.
SO ORDERED.
[G.R. No. 142595. October 15, 2003.]
RACHEL C. CELESTIAL, Petitioner, v. JESSE CACHOPERO, Respondent.
DECISION
CARPIO MORALES, J.:
In the instant appeal by petition for review on certiorari, 1 petitioner Rachel
Cachopero Celestial assails the February 15, 1999 Decision of the Court of Appeals
in CA-G.R. SP No. 45927, "Jesse C. Cachopero v. Regional Executive Director of
DENR, Region XII and Rachel C. Celestial," which reversed and set aside the Order
of the Regional Trial Court (RTC) of Midsayap, Cotabato, Branch 18 dismissing
respondents petition for certiorari, prohibition and mandamus, and mandated the
Regional Executive Director of the Department of Environment and Natural
Resources (DENR), Region XII to process the Miscellaneous Sales Application (MSA)
of respondent Jesse Cachopero in DENR Claim No. XII-050-90 to which petitioner
filed a protest.chanrob1es virtua1 1aw 1ibrary
Respondent, brother of petitioner, filed an MSA (Plan No. (XII-6)-1669) with the
Bureau of Lands covering a 415 square meter parcel of land located at Barrio 8,
Midsayap, Cotabato and formerly part of the Salunayan Creek in Katingawan,
Midsayap.
In his MSA, respondent alleged that he had, since 1968, been occupying the land
whereon he built a residential house and introduced other improvements.
Petitioner filed a protest against respondents MSA, claiming preferential right over
the land subject thereof since it is adjacent to, and is the only outlet from, her
residential house situated at Lot No. 2586-G-28 (LRC) Psd-105462, Poblacion 8,
Midsayap.
Following an ocular inspection, the Bureau of Lands, finding the land subject of
respondents MSA to be outside the commerce of man, dismissed petitioners protest
and denied respondents MSA, to wit:chanrob1es virtual 1aw library
In the ocular inspection, it was verified that the land in dispute with an area of 415
square meters was formerly a part of the Salunayan Creek that became dry as a
result of the construction of an irrigation canal by the National Irrigation
Administration. However, it was certified by Project Engineer Reynaldo Abeto of the
said office in his certification dated May 19, 1982, that only a portion of the same
containing an area of 59.40 square meters more or less was taken as part of the
National Irrigation Administration service road. It was also ascertained that the
P20,000.00 residential house wherein Jesse Cachopero and his family are living is
not within the 69-meters width of the national highway. However, per the certification
of the local office of the District Engineer for Public Works and Highways, the
government may need the area where the house stands for expansion in the future.
Moreover, it was also certified by the Office of Municipal Mayor that the whole area
covered by the miscellaneous sales application of Jesse Cachopero is needed by the
municipal government for future public improvements.
From the foregoing facts, it is clear that the subject land is outside the commerce of
man and therefore, not susceptible of private acquisition under the provision of the
Public Land Act. However, in keeping with the policy of our compassionate society in
tilting the balance of social forces by favoring the disadvantaged in life, we may allow
Jesse Cachopero to temporarily occupy the land in dispute, after excluding therefrom
the portion needed for the existing right of way being claimed by Rachel Celestial to
be [the] only adequate outlet to the public highway until such time that the land is
needed by the government for expansion of the road.
WHEREFORE, it is ordered that this case, be, as hereby it is, dismissed and this
case (sic), dropped from the records. The Miscellaneous Sales Application (New) of
Jesse Cachopero is hereby rejected and in lieu thereof, he shall file a revocable
permit application for the land in question after excluding from the southern part of the
land the area of five (5) meters for right of way purposes as shown in the sketch
drawn at the back of this order. The segregation survey of the area shall be at the
pro-rata expense of the parties.
SO ORDERED. 2 (Emphasis and Italics supplied)
Petitioner thereafter instituted an action for ejectment against respondent and his wife
before the Municipal Trial Court of Midsayap, Cotabato, docketed as Civil Case No.
711. A judgment based on a compromise was rendered in said case under the
following terms and conditions:chanrob1es virtual 1aw library
That Spouses Jesse Cachopero and Bema Cachopero, defendants in this case, are
going to vacate the premises in question and transfer the old house subject of this
ejectment case at the back of Lot No. 2586-G-28 (LRC) Psd-105462, located at 8,
Midsayap, Cotabato, within eight (8) months from today, but not later than April 30,
1990;
x x x
That plaintiff is willing to give a two (2)-meter wide exit alley on the eastern portion of
78
said lot as road-right-of-way up to the point of the NIA road on the west of Lot No.
2586-G-28, (LRC) Psd-105462;
That defendants hereby promise to remove all their improvements introduced fronting
the residence of the plaintiff before August 31, 1989; and the plaintiff shall likewise
remove all her existing improvements on the same area;
x x x 3 (Emphasis supplied)
Subsequently or on May 21, 1991, respondent filed another MSA with the DENR
Regional Office of Cotabato involving a portion of the same lot subject of his first
MSA, covering an area of 334 square meters, more or less (the subject land), and
docketed as DENR-XII-Claim No. 050-90. This time, the MSA was supported by a
certification 4 dated January 9, 1989 issued by the Office of the Mayor of Midsayap
and an Indorsement 5 dated January 16, 1989 by the District Engineer of the
Department of Public Works and Highways stating that the subject land is suitable for
residential purposes and no longer needed by the municipal government.
Petitioner likewise filed a protest against her brother-respondents second MSA,
alleging a preferential right over the subject land, she being the adjacent and riparian
owner, and maintaining that it is her only access to the national highway. She thus
reiterated her demand for a five (5)-meter road right of way through the
land.chanrob1es virtua1 1aw 1ibrary
After another investigation of the subject land, DENR Regional Executive Director
Macorro Macumbal issued an Order dated February 17, 1994 stating that it was
suitable for residential purposes but that, in light of the conflicting interest of the
parties, it be sold at public auction. Respondents second MSA was accordingly
dismissed, viz:chanrob1es virtual 1aw library
In the ocular investigation of the premises, it was established that the said property is
a dried bed of Salunayan Creek resulting from the construction of the irrigation canal
by the National Irrigation Administration; that it is suitable for residential purpose . . .
x x x February 17, 1994.
It is evident that under the law, property of the public domain situated within the first
(1st) to fourth class municipalities are disposable by sales only. Since municipality of
Midsayap, Cotabato is classified as third (3rd) class municipality and the property in
dispute, Lot no. (MSA-XII-6)-1669, is situated in the poblacion of Midsayap, Cotabato,
and considering the conflicting interest of the herein parties, it is therefore equitable to
dispose the same by sale at a public auction pursuant to Section 67, C.A. No. 141, as
amended, pertinent clause of which provides:chanrob1es virtual 1aw library
. . . sale shall be made through oral bidding; and adjudication shall be made to the
highest bidder, . . .
WHEREFORE, in view of all the foregoing, it is ordered as hereby is ordered that the
instant protest is dismissed and dropped from the records, and the Miscellaneous
Sales Application (New) of Jesse C. Cachopero is rejected and returned unrecorded.
Accordingly, the CENR Officer of CENRO XII-4B shall cause the segregation survey
of a portion of five (5) meters in width running parallel to line point C-1 of the
approved survey plan (MSA-XII-6)-1669, sketch is shown at the dorsal side hereof, as
a permanent easement and access road for the occupants of Lot No. 2386-G-28,
(LRC) Psd-105462 to the national highway. Thereafter, and pursuant to paragraph
G.2.3 of Department Administrative Order No. 38, Series of 1990, the CENRO XII 4B
shall dispose the remaining area of the lot in question through oral bidding.
SO ORDERED." 6 (Emphasis and Italics supplied)
Respondent filed a Motion for Reconsideration of the above-said order of the DENR
Regional Executive Director, but it was denied by Order of February 27, 1995 by the
OIC Regional Executive Director of Region XII, Cotabato City in this wise:chanrob1es
virtual 1aw library
A meticulous scrutiny of the records disclosed that Civil Case No. 711 for ejectment,
decided on the basis of compromise agreement of the parties dated August 10, 1989,
involved "transfer of the house from Lot No. MSA XII-6-1669 to the litigants parents
property situated at the back of protestant property, Lot No. 2586-G-28 (LRC), Psd-
105462." Whereas the issue in DENR XII Claim No. 050-90 involved the disposition of
lot no. (MSA II-6)-1669 a residential public land being exclusively vested with the
Director of Lands (Sec. 4, C.A. 141).
The two (2) meters wide exit alley provided in the compromise agreement was
established by the protestant from her private property (Lot No. 2586-G-28 (LRC),
Psd-105462) for the benefit of her brother, herein respondent, upon his transfer to
their parents property at the back of Lot No. 2586-G-28 (LRC), Psd-105462. Whereas
the five (5) meters wide easement imposed on Lot No. (MSA-XII-6)-1669, a public
land, provided in the decision in DENR Claim No. 050-90 is in accordance with Article
670 of the New Civil Code . . .
x x x
With all the above foregoing, we find no reversible error to reconsider our Order of
WHEREFORE, the instant motion for reconsideration is DENIED. 7
Respondent thereupon filed on April 3, 1995 with the RTC of Midsayap, Cotabato a
petition for certiorari, prohibition and mandamus with preliminary mandatory injunction
and temporary restraining order assailing the Orders dated February 17, 1994 and
February 27, 1995 of the DENR Regional Executive Director and OIC Regional
Executive Director of Region XII, Cotabato, attributing grave abuse of discretion in the
issuance thereof.
Petitioner moved for the dismissal of the petition, alleging lack of jurisdiction and non-
exhaustion of administrative remedies.
By Order of March 26, 1997, the RTC denied respondents petition for certiorari for
lack of merit and non-exhaustion of administrative remedies, as it did deny his motion
for reconsideration.
79
The Court of Appeals, before which respondent assailed the RTC orders by petition
for certiorari, prohibition and mandamus, granted said petition, and accordingly
reversed and set aside the assailed orders of the RTC and ordered the DENR to
process the MSA of Respondent. 8
Petitioners Motion for Reconsideration 9 of the appellate courts decision having
been denied by Resolution of March 2, 2000, 10 she lodged the present petition,
alleging that the Court of Appeals acted contrary to law and jurisprudence 1) in
holding that the RTC of Midsayap had jurisdiction over respondents petition, the
doctrine of exhaustion of administrative remedies was not applicable to the instant
case, and the contested land is public land; and 2) in ordering the processing of
respondents MSA pursuant to R.A. 730. 11
Petitioner contends that the RTC of Midsayap had no jurisdiction over respondents
petition for certiorarias (a) it "is in the nature of an appeal" 12 falling within the
jurisdiction of the Court of Appeals under Section 9(3) 13 of Batas Pambansa Blg.
129 (B.P. 129), as amended; and (b) respondent failed to exhaust administrative
remedies when he failed to appeal the questioned Orders to the Secretary of
Environment and Natural Resources. 14
Petitioners petition fails.chanrob1es virtua1 1aw 1ibrary
Petitioner has apparently confused the separate and distinct remedies of an appeal
(i.e. through a petition for review of a decision of a quasi judicial agency under Rule
43 of the Rules of Court) and a special civil action for certiorari (i.e. through a petition
for review under Rule 65 of the Rules of Court). In Silverio v. Court of Appeals, 15 this
Court, speaking through then Chief Justice Claudio Teehankee, distinguished
between these two modes of judicial review as follows:chanrob1es virtual 1aw library
The provisions of the Rules of Court permit an aggrieved party, in the general types of
cases, to take a cause and apply for relief to the appellate courts by way of either of
two distinctly different and dissimilar modes through the broad process of appeal
or the limited special civil action of certiorari. An appeal brings up for review errors of
judgment committed by a court with jurisdiction over the subject of the suit and the
persons of the parties or any such error committed by the court in the exercise of its
jurisdiction amounting to nothing more than an error of judgment. On the other hand,
the writ of certiorari issues for the correction of errors of jurisdiction only or grave
abuse of discretion amounting to lack or excess of jurisdiction. The writ
of certiorari "cannot legally be used for any other purpose." In terms of its function,
the writ of certiorari serves "to keep an inferior court within the bounds of its
jurisdiction or to prevent it from committing such a grave abuse of discretion
amounting to excess of jurisdiction" or to relieve parties from arbitrary acts of courts
acts which courts have no power or authority in law to perform. 16 (Italics,
emphasis and underscoring supplied)
Concomitantly, appellate jurisdiction is separate and distinct from the jurisdiction to
issue the prerogative writ of certiorari. An appellate jurisdiction refers to a process
which is a continuation of the original suit and not a commencement of a new action.
In contrast, to invoke a courts jurisdiction to issue the writ of certiorari requires the
commencement of a new and original action therefor, independent of the proceedings
which gave rise to the questioned decision or order. 17 As correctly held by the Court
of Appeals, 18 the RTCs have concurrent jurisdiction with the Court of Appeals and
the Supreme Court over original petitions for certiorari, prohibition and mandamus 19
under Section 21 20 of B.P. 129.
A perusal of respondents Petition dated April 3, 1995 filed before the RTC clearly
shows that it alleged that the DENR Regional Executive Director and OIC Regional
Executive Director acted with "grave abuse of discretion and without or in excess of
jurisdiction amounting to lack of jurisdiction" when they issued the questioned Orders
dated February 17, 1994 and February 27, 1995. Evidently, respondent sought a
judicial review of the questioned Orders through a special civil action
for certiorari which, as aforementioned, was within the jurisdiction of the RTC of
Midsayap, Cotabato. 21
Additionally, this Court finds no reason to disturb the Court of Appeals conclusion that
the instant case falls under the recognized exceptions to the rule on exhaustion of
administrative remedies, to wit:chanrob1es virtual 1aw library
The rule of exhaustion of administrative remedies is inapplicable if it should appear
that an irreparable injury or damage will be suffered by a party if he should await,
before taking court action, the final action of the administrative official concerned on
the matter as a result of a patently illegal order (Vivo v. Cloribel, 18 SCRA 713; De
Lara v. Cloribel, 14 SCRA 269); or where appeal would not prove to be speedy and
adequate remedy. 22
True, the doctrine of exhaustion of administrative remedies calls for resort first to the
appropriate administrative authorities in the resolution of a controversy falling under
their jurisdiction before the same may be elevated to the courts of justice for review,
and non-observance thereof is a ground for the dismissal of the complaint, 23 the
rationale being:chanrob1es virtual 1aw library
The thrust of the rule on exhaustion of administrative remedies is that the courts must
allow the administrative agencies to carry out their functions and discharge their
responsibilities within the specialized areas of their respective competence. It is
presumed that an administrative agency, if afforded an opportunity to pass upon a
matter, will decide the same correctly, or correct any previous error committed in its
forum. Furthermore, reasons of law, comity and convenience prevent the courts from
entertaining cases proper for determination by administrative agencies. Hence,
premature resort to the courts necessarily becomes fatal to the cause of action of the
petitioner. 24
However, this requirement of prior exhaustion of administrative remedies is not
absolute, there being instances when it may be dispensed with and judicial action
may be validly resorted to immediately, among which are: 1) when the question raised
is purely legal; 2) when the administrative body is in estoppel; 3) when the act
complained of is patently illegal; 4) when there is urgent need for judicial intervention;
5) when the claim involved is small; 6) when irreparable damage will be suffered; 7)
when there is no other plain, speedy and adequate remedy; 8) when strong public
interest is involved; and 9) in quo warranto proceedings.25cralaw:red
Hence, where the act complained of is patently illegal since the administrative body
acted without or in excess of jurisdiction or with such grave abuse of discretion as to
be tantamount to lack of jurisdiction, as was alleged in respondents petition before
the RTC, prior exhaustion of administrative remedies is not required and resort to the
80
courts through a special civil action for certiorari under Rule 65 is
permitted:chanrob1es virtual 1aw library
We hold that it was an error for the court a quo to rule that the petitioners should have
exhausted its remedy of appeal from the orders denying their application for
waiver/suspension to the Board of Trustees and thereafter to the Court of Appeals
pursuant to the Rules. Certiorari is an appropriate remedy to question the validity of
the challenged issuances of the HDMF which are alleged to have been issued with
grave abuse of discretion amounting to lack of jurisdiction.
Moreover, among the accepted exceptions to the rule on exhaustion of administrative
remedies are: (1) where the question in dispute is purely a legal one; and (2) where
the controverted act is patently illegal or was performed without jurisdiction or in
excess of jurisdiction. Moreover, while certiorari as a remedy may not be used as a
substitute for an appeal, especially for a lost appeal, this rule should not be strictly
enforced if the petition is genuinely meritorious. It has been said that where the rigid
application of the rules would frustrate substantial justice, or bar the vindication of a
legitimate grievance, the courts are justified in exempting a particular case from the
operation of the rules. 26 (Emphasis supplied)
To justify the issuance of the writ of certiorari, however, it must be clearly shown that
there is a patent and grave abuse of discretion amounting to an evasion of a positive
duty or to a virtual refusal to perform a duty enjoined by law, or to act at all in
contemplation of law, as where the power is exercised in an arbitrary and despotic
manner by reason of passion or personal hostility. 27
The crux of the case at bar is, therefore, whether the DENR Regional Executive
Director and OIC Regional Director acted with grave abuse of discretion amounting to
lack or excess of jurisdiction in issuing the questioned Orders dated February 17,
1994 and February 27, 1995, respectively.chanrob1es virtua1 1aw 1ibrary
In resolving respondents second MSA and petitioners protest thereto, the DENR
Regional Executive Director, after considering the conflicting interest of the parties,
found it equitable to resolve the same by directing the sale of the subject land at
public auction pursuant to Section 67, C.A. No. 141, as amended.
Section 67 of Commonwealth Act No. 141, otherwise known as "The Public Land
Act," provides the procedure for the disposition of lands of the public domain which
are open to disposition or concession and intended to be used for residential,
commercial, industrial or other productive purposes other than agricultural, to
wit:chanrob1es virtual 1aw library
SEC. 67. The lease or sale shall be made through oral bidding; and adjudication shall
be made to the highest bidder. However, where an applicant has made improvements
on the land by virtue of a permit issued to him by competent authority, the sale or
lease shall be made by sealed bidding as prescribed in Section twenty-six of this Act,
the provisions of which shall be applied wherever applicable. If all or part of the lots
remain unleased or unsold, the Director of Lands shall from time to time announce in
the Official Gazette or in any other newspapers of general circulation, the lease or
sale of those lots, if necessary. (Emphasis supplied)
With the enactment of Republic Act No. 730 28 on June 18, 1952, however, an
exception to the foregoing procedure was created by authorizing disposition of lands
of the public domain by private sale, instead of bidding, provided that: (1) the
applicant has in his favor the conditions specified therein and (2) the area applied for
is not more than 1,000 square meters. 29 The pertinent provision of R.A. 730 thus
provides:chanrob1es virtual 1aw library
SEC. 1. Notwithstanding the provisions of Sections 61 and 67 of Commonwealth Act
No. 141, as amended by Republic Act No. 293, any Filipino citizen of legal age who is
not the owner of a home lot in the municipality or city in which he resides and who
has in good faith established his residence on a parcel of the public land of the
Republic of the Philippines which is not needed for the public service, shall be given
preference to purchase at a private sale of which reasonable notice shall be given to
him not more than one thousand square meters at a price to be fixed by the Director
of Lands with the approval of the Secretary of Agriculture and Natural Resources. It
shall be an essential condition of this sale that the occupant has constructed his
house on the land and actually resided therein. Ten percent of the purchase price
shall be paid upon the approval of the sale and the balance may be paid in full, or in
ten equal annual installments.
SEC. 2. Land acquired under the provisions of this Act shall not be subject to any
restrictions against encumbrance or alienation before and after the issuance of the
patents thereon. 30
SEC. 3. The provisions of the Public Land Act with respect to the sale of lands for
residential purposes which are not inconsistent herewith shall be applicable.
SEC. 4. This Act shall take effect upon its approval.
Approved, June 18, 1952. (Emphasis supplied)
Given the foregoing provisions of R.A. 730 which took effect on June 18, 1952, and
the DENR Regional Executive Directors February 17, 1994 finding that the subject
land was "suitable for residential purposes," it was incumbent upon him to determine
whether the provisions of R.A. 730 were applicable to respondents MSA. As held by
the Court of Appeals:chanrob1es virtual 1aw library
Finally, petitioner contends that the DENR Regional Executive Director and OIC
Regional Executive Director gravely erred in ordering the sale of the subject lot
through oral bidding applying Section 67, Commonwealth Act No. 141 and not
Republic Act 730 authorizing the sale of public land without bidding.
We agree with the petitioner.
x x x
Apropos is the case of Reyes v. Court of Appeals, 125 SCRA 785, ruling
that:jgc:chanrobles.com.ph
"When public land lots of not more than 1,000 sq. ms. are used, or to be used as a
residence . . . they can be sold on private sales under the provisions of Republic Act
No. 730."cralaw virtua1aw library
81

In Agura v. Serfino, Sr., (204 SCRA 569), the Supreme Court held
that:jgc:chanrobles.com.ph
"R.A. 730 authorizes a sale by private sale, as an exception to the general rule that it
should be by bidding, if the area applied for does not exceed 1,000 square
meters, . . ."cralaw virtua1aw library
We see no reason why these ruling should not be applied in this case which involves
415 [should have been 334] square meters only. 31
The Regional Director, however, summarily chose to apply Section 67 of the Public
Land Act upon a finding that it was more "equitable" in light of the "conflicting interest"
of the parties. In his "Answer" to respondents petition before the RTC, the Director
justified his non-application of R.A. 730 in this wise:chanrob1es virtual 1aw library
. . . Republic Act No. 730 is not applicable to the case at bar, the land being disputed,
Republic Act No. 730 requisite (sic) vas not meet (sic) that for this law to apply to a
particular case, the land must be in the first place not a land in conflict. There being a
pending protest for final adjudication, the said conflict continues to exist thus an
impediment to the application of Republic Act 730 32 (Emphasis supplied)
which justification he reiterated in his Opposition 33 to respondents Motion for
Reconsideration of the RTC decision.
The Directors reliance on equity as basis for his action was misplaced, however. It is
well-settled that "equity follows the law." 34 Described as "justice outside legality," it is
applied only in the absence of, and never against, statutory law or legal
pronouncements. 35 Where pertinent positive rules are present, they should pre-empt
and prevail over all abstract arguments based only on equity. 36
A reading of R.A. 730 (or of the Public Land Act for that matter) shows nothing therein
to support the Directors contention that the pendency of a protest is a bar to the
application of R.A. 730 to an MSA. Indeed, that Section 1 of R.A. 730 gives a
qualified applicant preference to purchase alienable public land suitable for residential
purposes implies that there may be more than one party interested in purchasing
it.chanrob1es virtua1 1aw library
What is more, under Section 91 of the Public Land Act, it is the duty of the Director of
the Lands Management Bureau (formerly the Director of Lands) to determine whether
the material facts set forth in an MSA are true:chanrob1es virtual 1aw library
SEC. 91. The statements made in the application shall be considered as essential
conditions and parts of any concession, title, or permit issued on the basis of such
application, and any false statement therein or omission of facts altering, changing, or
modifying the consideration of the facts set forth in such statements, and any
subsequent modification, alteration, or change of the material facts set forth in the
application shall ipso facto produce the cancellation of the concession, title, or permit
granted. It shall be the duty of the Director of Lands, from time to time and whenever
he may deem it advisable, to make the necessary investigations for the purpose of
ascertaining whether the material facts set out in the application are true, or whether
they continue to exist and are maintained and preserved in good faith, and for the
purposes of such investigation, the Director of Lands is hereby empowered to issue
subpoenas and subpoenas duces tecum and, if necessary, to obtain compulsory
process from the courts. In every investigation made in accordance with this section,
the existence of bad faith, fraud, concealment, or fraudulent and illegal modification of
essential facts shall be presumed if the grantee or possessor of the land shall refuse
or fail to obey a subpoena or subpoena duces tecum lawfully issued by the Director of
Lands or his authorized delegates or agents, or shall refuse or fail to give direct and
specific answers to pertinent questions, and on the basis of such presumption, an
order of cancellation may issue without further proceedings. (Emphasis supplied)
Likewise, under Section 102 of the same Public Land Act, it is the duty of the Director
of the Lands Management Bureau to, after due hearing, verify whether the grounds of
a protest or objection to an MSA are well founded, and, if so, to cancel the
MSA:chanrob1es virtual 1aw library
SEC. 102. Any person, corporation, or association may file an objection under oath to
any application or concession under this Act, grounded on any reason sufficient under
this Act for the denial or cancellation of the application or the denial of the patent or
grant. If, after the applicant or grantee has been given suitable opportunity to be duly
heard, the objection is found to be well founded, the Director of Lands shall deny or
cancel the application or deny patent or grant, and the person objecting shall, if
qualified, be granted a prior right of entry for a term of sixty days from the date of the
notice. (Emphasis supplied)
There was thus clearly a positive duty on the part of the DENR Director to process
respondents MSA, and to ascertain, particularly in light of petitioners protest,
whether respondent was qualified to purchase the subject land at a private sale
pursuant to R.A. 730. This, he did not do.
In fine, by abdicating his duty to process respondents MSA and summarily ordering,
without factual or legal basis, that the subject land be disposed of via oral bidding
pursuant to Section 67 of the Public Land Act, the Director acted with patent grave
abuse of discretion amounting to lack or excess of jurisdiction. As the Court of
Appeals held:chanrob1es virtual 1aw library
Considering that the assailed Orders of public respondent DENR Regional Executive
Director applying Section 67 of Commonwealth Act No. 141 and ordering the sale of
the subject lot by oral bidding are patently erroneous, the authority of the court to
issue writs of certiorari, prohibition and mandamus is warranted. 37
The Directors commission of grave abuse of discretion does not, however, mean that
respondent automatically has the better right to the subject land. As mandated by law,
the Director must process respondents MSA, conduct an investigation, and
determine whether the material facts set forth therein are true to bring it within the
coverage of R.A. 730.
A thorough investigation is all the more imperative considering that petitioners protest
raises serious factual issues regarding respondents qualification to purchase the
subject land in particular, whether he already owns a home lot in Midsayap and
whether he has, in good faith, constructed his house on the subject land and actually
resided therein. These factual issues are properly within the authority of the DENR
and the Land Management Bureau, which are tasked with carrying out the provisions
82
of the Public Land Act and R.A. 730, 38 do determine, after both parties have been
given an opportunity to fully present their evidence.
As for petitioners claim of ownership over the subject land, admittedly a dried-up bed
of the Salunayan Creek, based on (1) her alleged long term adverse possession and
that of her predecessor-in-interest, Marcelina Basadre, even prior to October 22,
1966, when she purchased the adjoining property from the latter, and (2) the right of
accession under Art. 370 of the Spanish Civil Code of 1889 and/or Article 461 of the
Civil Code, the same must fail.
Since property of public dominion is outside the commerce of man 39 and not
susceptible to private appropriation and acquisitive prescription, 40 the adverse
possession which may be the basis of a grant of title in the confirmation of an
imperfect title refers only to alienable or disposable portions of the public domain. 41
It is only after the Government has declared the land to be alienable and disposable
agricultural land that the year of entry, cultivation and exclusive and adverse
possession can be counted for purposes of an imperfect title. 42
A creek, like the Salunayan Creek, is a recess or arm extending from a river and
participating in the ebb and flow of the sea. 43 As such, under Articles 420(1) 44 and
502(1) 45 of the Civil Code, the Salunayan Creek, including its natural bed, is
property of the public domain which is not susceptible to private appropriation and
acquisitive prescription. 46 And, absent any declaration by the government, that a
portion of the creek has dried-up does not, by itself, alter its inalienable
character.chanrob1es virtua1 1aw 1ibrary
This, in fact, was the very reason behind the denial of respondents first MSA, the
District Engineer having certified that the government may need the subject land for
future expansion, and the office of the Municipal Mayor having certified that it was
needed by t he municipal government for future public improvements. 47
Consequently, it was only after the same offices subsequently certified 48 that the
subject land was suitable for residential purposes and no longer needed by the
municipal government that it became alienable and disposable. Confronted with
similar factual circumstances, this Court in Bracewell v. Court of Appeals 49
held:chanrob1es virtual 1aw library
Clear from the above is the requirement that the applicant must prove that the land is
alienable public land. On this score, we agree with respondents that petitioner failed
to show that the parcels of land subject of his application are alienable or disposable.
On the contrary, it was conclusively shown by the government that the same were
only classified as alienable or disposable on March 27, 1972. Thus, even granting
that petitioner and his predecessors-in-interest had occupied the same since 1908, he
still cannot claim title thereto by virtue of such possession since the subject parcels of
land were not yet alienable land at that time nor capable of private appropriation. The
adverse possession which may be the basis of a grant of title or confirmation of an
imperfect title refers only to alienable or disposable portions of the public domain. 50
(Emphasis supplied)
With respect to petitioners invocation of the principle of accession under either Article
370 of the Spanish Civil Code of 1889 or Article 461 of the Civil Code, the same does
not apply to vest her with ownership over subject land.
Under Article 370 51 of the Spanish Civil Code of 1889 which took effect in the
Philippines on December 7, 1889, 52 the beds of rivers which remain abandoned
because the course of the water has naturally changed belong to the owners of the
riparian lands throughout their respective lengths. If the abandoned bed divided
estates belonging to different owners, the new dividing line shall run at equal distance
therefrom. 53
When the present Civil Code took effect on August 30, 1950, 54 the foregoing rule
was abandoned in favor of the present Article 461, which provides:chanrob1es virtual
1aw library
ART. 461. River beds which are abandoned through the natural change in the course
of the waters ipso facto belong to the owners whose lands are occupied by the new
course in proportion to the area lost. However, the owners of the lands adjoining the
old bed shall have the right to acquire the same by paying the value thereof, which
value shall not exceed the value of the area occupied by the new bed. (Emphasis
supplied)
Article 461 provides for compensation for the loss of the land occupied by the new
bed since it is believed more equitable to compensate the actual losers than to add
land to those who have lost nothing. 55 Thus, the abandoned river bed is given to the
owner(s) of the land(s) onto which the river changed its course instead of the riparian
owner(s). 56
Petitioner claims that on October 22, 1966, when she purchased the property
adjoining the subject land from Marcelina Basadre, the said subject land was already
a dried-up river bed such that "almost one-half portion of the residential house . . .
was so already built and is still now situated at the said dried-up portion of the
Salunayan Creek bed . . ." 57 She failed to allege, however, when the subject portion
of the Salunayan Creek dried up, a fact essential to determining whether the
applicable law is Article 370 of the Spanish Civil Code of 1889 or Article 461 of the
Civil Code.chanrob1es virtua1 1aw 1ibrary
Had the disputed portion of the Salunayan Creek dried up after the present Civil Code
took effect, the subject land would clearly not belong to petitioner or her predecessor-
in-interest since under the aforementioned provision of Article 461, "river beds which
are abandoned through the natural change in the course of the waters ipso facto
belong to the owners of the land occupied by the new course," and the owners of the
adjoining lots have the right to acquire them only after paying their value. 58
And both Article 370 of the Old Code and Article 461 of the present Civil Code are
applicable only when" [r]iver beds are abandoned through the natural change in the
course of the waters." It is uncontroverted, however, that, as found by both the
Bureau of Lands and the DENR Regional Executive Director, the subject land
became dry as a result of the construction of an irrigation canal by the National
Irrigation Administration. Thus, in Ronquillo v. Court of Appeals, 59 this Court
held:chanrob1es virtual 1aw library
The law is clear and unambiguous. It leaves no room for interpretation. Article 370
applies only if there is a natural change in the course of the waters. The rules on
alluvion do not apply to man-made or artificial accretions nor to accretions to lands
that adjoin canals or esteros or artificial drainage systems. Considering our earlier
83
finding that the dried-up portion of Estero Calubcub was actually caused by the active
intervention of man, it follows that Article 370 does not apply to the case at bar and,
hence, the Del Rosarios cannot be entitled thereto supposedly as riparian owners.
The dried-up portion of Estero Calubcub should thus be considered as forming part of
the land of the public domain which cannot be subject to acquisition by private
ownership. . . 60 (Emphasis supplied)
Furthermore, both provisions pertain to situations where there has been a change in
the course of a river, not where the river simply dries up. In the instant Petition, it is
not even alleged that the Salunayan Creek changed its course. In such a situation,
commentators are of the opinion that the dry river bed remains property of public
dominion. 61
Finally, while this Court notes that petitioner offered to purchase the subject land from
the government, 62 she did so through an informal letter dated August 9, 1989 63
instead of the prescribed form. By such move, she is deemed to have acknowledged
that the subject land is public land, for it would be absurd for her to have applied for
its purchase if she believed it was hers. She is thus stopped from claiming otherwise.
64
WHEREFORE, the petition is hereby DENIED for lack of merit.
SO ORDERED.chanrob1es virtua1 1aw 1ibrary
SPOUSES BEDER MORANDARTE and MARINA FEBRERA, petitioners, vs.
COURT OF APPEALS, REPUBLIC OF THE PHILIPPINES, and SPOUSES
VIRGINIO B. LACAYA and NENITA LACAYA, respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before us is a petition for review on certiorari under Rule 45 of the Rules of
Court which seeks the reversal of the Decision,[1] dated August 23, 1995, of the Court
of Appeals (CA for brevity) in CA-G.R. CV No. 36258, affirming the Decision, dated
November 5, 1991, rendered by the Regional Trial Court (Branch 7), Dipolog City,
Zamboanga del Norte (RTC for brevity) in Civil Case No. 3890, declaring Free Patent
No. (IX-8) 785[2] and Original Certificate of Title No. P-21972, in the name of petitioner
Beder Morandarte (Morandarte for brevity), and all its derivative titles, null and
void ab initio.
The factual antecedents are as follows:
Morandarte filed an application for free patent, dated December 5, 1972, before
the Bureau of Lands, Dipolog City District Land Office (BOL for brevity), covering a
parcel of land located at Sta. Filomena, Dipolog City with an area of 4.5499 hectares
and described as a portion of Lot 1038 of Dipolog Cadastre No. 85.[3]
On July 27, 1976, the District Land Officer of the BOL approved the free patent
application of Morandarte and directed the issuance of a free patent in his favor.
[4]
Accordingly, Free Patent No. (IX-8) 785 for Lot No. 7, Csd-09-05-00078-D was
issued in the name of Morandarte. On September 20, 1976, the Register of Deeds of
Zamboanga del Norte issued the corresponding Original Certificate of Title No. (P-
21972) 5954.[5]
Subsequently, Morandarte caused a subdivision survey of the lot, dividing the
same into Lot No. 6781-A, with an area of 13,939 square meters, and Lot No. 6781-B,
with an area of 32,819 square meters. As a result of the subdivision survey, Transfer
Certificates of Title Nos. T-1835 and T-1836 covering Lots 6781-A and 6781-B,
respectively, were issued in favor of Morandarte on May 12, 1980 by the Registry of
Deeds of Dipolog City.[6]
On May 22, 1981, Morandarte and his wife, Marina Febrera, executed a real
estate mortgage over Lot 6781-B, subject of TCT No. 1836, in favor of the
Development Bank of the Philippines, Dipolog City branch (DBP for brevity), in
consideration of a loan in the amount of P52,160.00.[7]
More than ten years after the issuance of the OCT in Morandartes name, or on
March 19, 1987, respondent Republic of the Philippines (Republic for brevity),
represented by the Director of Lands, filed before the RTC a Complaint for Annulment
of Title and Reversion against the Morandarte spouses, the Register of Deeds of
Zamboanga del Norte, the Register of Deeds of Dipolog City, and DBP, docketed as
Civil Case No. 3890.[8]
The Republic alleged that the BOL found that the subject land includes a portion
of the Miputak River which cannot be validly awarded as it is outside the commerce of
man and beyond the authority of the BOL to dispose of. It claimed that the
Morandarte spouses deliberately and intentionally concealed such fact in the
application to ensure approval thereof. Considering that the Morandarte spouses are
guilty of fraud and misrepresentation in the procurement of their title, the Republic
stressed that their title is void.[9]
The Register of Deeds of Dipolog City filed a Motion to Dismiss, dated April 7,
1987, praying for the dismissal of the complaint as against her since the complaint
failed to state a claim against her.[10]
In their Answer dated April 13, 1987, the Morandarte spouses denied the
allegations of the complaint and claimed that they were able to secure the title in
accordance and in compliance with the requirements of the law. They alleged that the
land is a portion of inherited property from Antonio L. Morandarte whose ownership
thereof is covered by Tax Declaration No. 2296.
As regards the Miputak River, they argued that the river changed its course
brought about by the fact that a portion of the Miputak River was leased by the
Bureau of Fisheries (BOF for brevity) to a certain Aguido Realiza whose rights were
subsequently transferred to Virginio Lacaya. They alleged that they indicated in their
survey plan the actual location of the Miputak River in relation to the property but the
BOL returned the survey with the directive that the existence of the river should not be
indicated as the original survey did not show its existence, to which they complied
with by submitting a new survey plan which did not indicate the existence of the river.
In the alternative, they alleged that inclusion of the Miputak River should not
render the title void; only the portion of the property covered by the Miputak River
should be nullified but their title to the remaining portion should be maintained.[11]
84
 For its part, DBP filed its Answer dated April 13, 1987 praying for the dismissal
of the complaint as against it since it had nothing to do with the issuance of the title to
the spouses.[12] DBP interposed a cross-claim against the spouses for the payment of
their outstanding obligations.[13] The Morandarte spouses filed an Answer to the
Crossclaim dated April 29, 1987.[14]
No answer was filed by the Register of Deeds of Zamboanga del Norte.
On March 4, 1988, upon prior leave of court, herein respondent spouses Virginio
B. Lacaya and Nenita Lacaya filed their Complaint-In-Intervention which alleged that
they are holders of a fishpond lease agreement covering a fishpond area of about
5.0335 hectares, 1.2681 hectares of which have been included in the title issued to
the Morandarte spouses. Considering that the land of the Morandarte spouses
encroaches on the area leased to them, the Lacaya spouses submit that the formers
title thereto is void.[15]
In their Answer to the complaint-in-intervention, dated March 19, 1988, the
Morandarte spouses denied the allegations of the Lacaya spouses.[16] They
maintained that the portion of the fishpond originally belonged to Antonio L.
Morandarte, their predecessor-in-interest, and the Lacaya spouses have never been
in possession thereof but are actually squatters therein.
On the other hand, the Republic, in its Answer to the complaint-in-intervention,
dated March 21, 1988, adopted the allegations of the complaint-in-intervention to
further support its claim that the title of the Morandarte spouses is void. [17] The Lacaya
spouses filed their Reply and Answer on March 30, 1988, denying the arguments of
the Morandarte spouses and reiterating the allegations in their complaint-in-
intervention.[18]
Following trial on the merits, on November 5, 1992, the RTC rendered a
Decision[19] in favor of the Republic and the Lacaya spouses. The RTC declared that
while fraud in the procurement of the title was not established by the State,
Morandartes title is, nonetheless, void because it includes a portion of the Miputak
River which is outside the commerce of man and beyond the authority of the BOL to
dispose of. In addition, the RTC sustained the fishpond rights of the Lacaya spouses
over a portion included in Morandartes title based on a Deed of Transfer of Fishpond
Rights from Felipe B. Lacaya and a Fishpond Lease Agreement with the BOF.
The dispositive portion of the decision of the trial court reads:
WHEREFORE, judgment is hereby rendered:
1. Declaring null and void ab initio Free Patent No. (IX-5) (sic) 785 and
Original Certificate of Title No. P-21972 in the name of Beder
Morandarte, as well as all derivative titles issued thereafter;
2. Ordering defendants spouses Beder Morandarte and Marina Febrera to
surrender their owners duplicate copies of Transfer Certificate of Title
Nos. T-1835 and T-1836, which were the derivative titles of Original
Certificate of Title No. P-21972;
3. Directing the Register of Deeds of Zamboanga del Norte to cancel
Original Certificate of Title No. P-21972 in the name of Beder
Morandarte, and the Register of Deeds of Dipolog City to cancel
Transfer Certificate of Title Nos. T-1835 and T-1836 in the name of
the same defendant;
4. Ordering the reversion of the land in question to the state, free from
liens and encumbrances;
5. Enjoining defendants spouses Beder Morandarte and Marina Febrera
from exercising any act of ownership or possession of the subject
property;
6. Dismissing the Cross-Claim of defendant Development Bank of the
Philippines against Cross Defendants Spouses Beder Morandarte
and Marina Febrera, for being premature, but ordering the latter cross
defendants to give a substitute security in favor of DBP as indicated in
this decision;
7. Declaring valid and enforceable the Lease Agreement for a period of
twenty five years over the fishpond area of Intervenors;
8. Denying Intervenors prayer for damages against defendants-spouses
Morandarte; and
9. Dismissing, for lack of merit, the counterclaim and prayer for damages
of defendants spouses Morandarte against the Intervenors.
No costs against defendant-spouses Morandarte.
IT IS SO ORDERED.[20]
Dissatisfied, the Morandarte spouses appealed to the CA.[21] In a Decision dated
August 23, 1995, the CA affirmed the decision of the RTC,[22] ratiocinating, as follows:
The present controversial Miputak River used to occupy the area adjacent to the
northern and western boundaries of Lot No. 6781 Cad-85 (Exh. J). As time passed, it
changed its course and occupies (sic) Lot No. 6781 Cad-85 (identical to Lot 7, Exh.
H). This will explain Beder Morandartes argument that when he applied for the Sales
Patent Lot 7 (identical to Lot 6781), the original technical description did not show the
Miputak River. But it is inescapable though, that while originally, Lot 6781 is not
occupied by the river, at the time that the Sales Application was filed by Beder
Morandarte, the Miputak River was actually occupying said Lot 6781 or Lot 7 covered
by his Sales Application and the titles sought to be annulled in this case.
Rivers and their natural beds are undoubtedly properties of public dominion (Art. 502
par. 1, Civil Code of the Philippines). Whether navigable or not, rivers belong to the
public and cannot be acquired by prescription (Com vs. Meneses, 38 O.G. 2839,
85
Paras, Civil Code, p. 328, Vol. II, 12th Edition). In fact, a stream located within private
land is still property of public dominion, even if the Torrens Title of the land does not
show the existence of said stream (Talion vs. Sec. of Public Works and Highways, L-
24281, May 16, 1967; Paras, supra).
Correspondingly, Art. 462 of the same Civil Code provides:
Art. 462. Whenever a river, changing its course by natural causes, opens a new bed
through a private estate, this bed shall become of public dominion.
The rule is the same that even if the new bed is on private property. The bed
becomes property of public dominion. Just as the old bed had been of public
dominion before the abandonment, the new riverbed shall likewise be of public
dominion (Hilario vs. City of Manila, L-19570, April 27, 1967).[23]
On October 10, 1995, the Morandarte spouses filed a motion for
reconsideration.[24] In its Resolution dated January 19, 1996, the CA found no
justifiable cause or reason to modify or reverse its decision.[25]
Hence, the instant petition for review anchored on the following assigned errors:
A.
RESPONDENT COURT COMMITTED A GRAVE ERROR OF LAW IN APPLYING
ARTICLE 462 OF THE CIVIL CODE TO THIS CASE WHEN THE CHANGE IN
COURSE OF THE OLD MIPUTAK RIVER WAS NOT DUE TO NATURAL CAUSES
BUT WAS ACCIDENTAL.
B.
ASSUMING ARGUENDO THAT THE CHANGE OF COURSE OF THE OLD
MIPUTAK RIVER WAS DUE TO NATURAL CAUSE ONLY A PORTION OF THE
SUBJECT PROPERTY OF PETITIONERS WAS AFFECTED THEREBY SO THAT
THE TITLE OF PETITIONERS TO THE REMAINING PORTION IS VALID AND
CANNOT BE NULLIFIED AS IT REMAINED PRIVATE PROPERTY.
C.
RESPONDENT COURT GRAVELY ERRED IN ORDERING THE REVERSION OF
LOT 7, CSD-09-05-00078-D TO THE PUBLIC DOMAIN.
D.
RESPONDENT COURT GRAVELY ERRED IN NOT DECLARING AS NULL AND
VOID THE LEASE AGREEMENT EXECUTED IN FAVOR OF INTERVENORS.
E.
RESPONDENT COURT GRAVELY ERRED IN NOT DISMISSING THE COMPLAINT
CONSIDERING THAT NO FRAUD OR MISREPRESENTATION WAS EMPLOYED
BY THE SPOUSES MORANDARTE IN OBTAINING THE TITLE.[26]
The Morandarte spouses emphatically argue that the CA failed to take into
consideration the true state of the present Miputak River in relation to Lot 7. They
contend that the Miputak River changed its course due to the closure of the river bed
through the construction of dikes by the Lacaya spouses, forcing the river to be
diverted into Lot 6781-B. Thus, they submit that the applicable provision is Article 77
of the Law of Waters, which provides that [l]ands accidentally inundated by the waters
of lakes, or by creeks, rivers and other streams shall continue to be the property of
their respective owners.
Furthermore, they staunchly claim that the Miputak River does not actually
correspond to Lot 7. The Miputak River occupies only 12,162 square meters of Lot 7
which has an area of 45,499 square meters. Also, they insist that the lower courts
made capital, albeit erroneously, of their agreement to a reversion. The reversion
agreed to refers only to the 12,162 square meters portion covered by the Miputak
River, which should be voided, while the portion unaffected by the Miputak River is
valid and their title thereto should be maintained and respected.
Moreover, they vigorously contend that the CA erred in sustaining the validity of
fishpond rights of the Lacaya spouses. They aver that the Lacaya spouses violated
the terms of the lease agreement by constructing dikes for the fishponds which
caused the Miputak River to traverse the property of the Morandarte spouses.
Prefatorily, it must be stated that in petitions for review on certiorari, only
questions of law may be raised by the parties and passed upon by this Court.
[27]
Factual findings of the trial court, when adopted and confirmed by the CA, are
binding and conclusive upon the Supreme Court and generally will not be reviewed
on appeal.[28] Inquiry upon the veracity of the CAs factual findings and conclusion is
not the function of the Supreme Court for the Court is not a trier of facts.[29]
While this Court has recognized several exceptions to this rule, to wit: (1) when
the findings are grounded entirely on speculation, surmises, or conjectures; (2) when
the inference made is manifestly mistaken, absurd, or impossible; (3) when there is
grave abuse of discretion; (4) when the judgment is based on a misapprehension of
facts; (5) when the findings of facts are conflicting; (6) when in making its findings, the
CA went beyond the issues of the case, or its findings are contrary to the admissions
of both the appellant and the appellee; (7) when the findings are contrary to the trial
court; (8) when the findings are conclusions without citation of specific evidence on
which they are based; (9) when the facts set forth in the petition as well as in the
petitioners main and reply briefs are not disputed by the respondent; (10) when the
findings of fact are premised on the supposed absence of evidence and contradicted
by the evidence on record; and (11) when the CA manifestly overlooked certain
relevant facts not disputed by the parties, which, if properly considered, would justify
a different conclusion,[30] none of these exceptions find application here.
86
 A complaint for reversion involves a serious controversy, involving a question of
fraud and misrepresentation committed against the government and it seeks the
return of the disputed portion of the public domain. It seeks to cancel the original
certificate of registration, and nullify the original certificate of title, including the
transfer certificate of title of the successors-in-interest because the same were all
procured through fraud and misrepresentation.[31]
The State, as the party alleging that fraud and misrepresentation attended the
application for free patent, bears the burden of proof. The circumstances evidencing
fraud and misrepresentation are as varied as the people who perpetrate it in each
case. It assumes different shapes and forms and may be committed in as many
different ways.[32] Therefore, fraud and misrepresentation are never presumed but
must be proved by clear and convincing evidence;[33]mere preponderance of evidence
not even being adequate.[34]
In this case, the State failed to prove that fraud and misrepresentation attended
the application for free patent. The RTC, in fact, recognized that no fraud attended the
application for free patent[35] but declared reversion based on the judicial admission of
the Morandarte spouses that reversion is warranted due to the inalienability of the
Miputak River. Ordinarily, a judicial admission requires no proof and a party is
precluded from denying it except when it is shown that such admission was made
through palpable mistake or that no such admission was made. [36] In this case, the
exception finds application since the records lay bare that such admission was made
through mistake and not in the context it was considered. As reflected in the Order
dated May 25, 1998,[37] the Morandarte spouses essentially agreed only to a
reconveyance of the portion covering the Miputak River. Undoubtedly, such
acquiescence to return the portion covering the Miputak River is not, and cannot be
considered, an admission that fraud and misrepresentation attended the application
for free patent. This fact, standing alone, does not prove fraud and misrepresentation.
Besides, it is undisputed that the original survey plan submitted by Morandarte
to the BOL reflected the true state of the Miputak River in Lot 1038 but the BOL did
not approve the plan because a 1916 survey did not so indicate the existence of a
river traversing Lot 1038 such that Morandarte was directed to submit an amended
plan deleting the existence of the Miputak River. This mothered the subsequent error
of the BOL of approving the amended plan as CAS-09-05-000078-D.
This error could have been discovered through a thorough ocular inspection of
the property claimed under the free patent application. However, Aurelio F. Bureros,
Hearing Officer I of the BOL, surprisingly failed to notice the existence of the river
traversing Lot 1038 in the field investigation he conducted on January 10, 1976.[38]
Neither did Bureros note the 13,339 square meter portion already covered by an
existing fishpond lease agreement granted by the BOF in favor of Felipe B. Lacaya,
the predecessor-in-interest of the Lacaya spouses.[39]
The records reveal that as early as 1948, 4.6784 hectares [40] of the public land
have been leased for fishpond purposes. Aguido S. Realiza was the initial grantee of
a fishpond lease agreement.[41] Amor A. Realiza, Aguidos son, acquired his fishpond
permit on May 29, 1953.[42] Amor A. Realiza transferred his fishpond rights to Felipe B.
Lacaya on May 14, 1956.[43] By 1960, the public land leased for fishpond purposes
had increased to 5.0335 hectares.[44] Felipe B. Lacaya transferred his fishpond rights
to Virgilio B. Lacaya on October 25, 1977.[45] Thus, the fishpond rights have been in
existence since 1948, prior to the 1972 free patent application of Morandarte.
Regardless of the foregoing, Aurelio F. Bureros, concluded that Morandarte is a
qualified applicant and recommended that a free patent be granted to him. This error
culminated in the erroneous grant of a free patent on July 27, 1976 covering the
Miputak River and land subject of the fishpond rights of Felipe B. Lacaya.[46]
Be that as it may, the mistake or error of the officials or agents of the BOL in this
regard cannot be invoked against the government with regard to property of the public
domain. It has been said that the State cannot be estopped by the omission, mistake
or error of its officials or agents.[47]
It is well-recognized that if a person obtains a title under the Public Land Act
which includes, by oversight, lands which cannot be registered under the Torrens
system, or when the Director of Lands did not have jurisdiction over the same
because it is a public domain, the grantee does not, by virtue of the said certificate of
title alone, become the owner of the land or property illegally included. [48] Otherwise
stated, property of the public domain is incapable of registration and its inclusion in a
title nullifies that title.[49]
The present controversy involves a portion of the public domain that was merely
erroneously included in the free patent. A different rule would apply where fraud is
convincingly shown. The absence of clear evidence of fraud will not invalidate the
entire title of the Morandarte spouses.
Accordingly, the 12,162-square meter portion traversed by the Miputak River
and the 13,339-square meter portion covered by the fishpond lease agreement of the
Lacaya spouses which were erroneously included in Free Patent No. (IX-8) 785 and
Original Certificate of Title No. P-21972 should be reconveyed back to the State.
The Morandarte spouses cannot seek refuge in their claim that Antonio A.
Morandarte, their predecessor-in-interest, was already the owner of that portion of Lot
1038 when the fishpond application of Aguido S. Realiza was approved in 1948
because Lot 1038 was still part of the public domain then. It was only in 1972, through
Forestry Administrative Order No. 4-1257, which was approved August 14, 1972,
when Lot 1038 was declared alienable or disposable property of the State.[50]
It is a settled rule that unless a public land is shown to have been reclassified as
alienable or actually alienated by the State to a private person, that piece of land
remains part of the public domain. Hence, Antonio A. Morandartes occupation thereof,
however long, cannot ripen into private ownership.[51]
The Morandarte spouses also unsuccessfully harp on the inapplicability of
Article 462 of the Civil Code by claiming that the change of course of the Miputak
River was due to a man-made cause and not by natural means. They offered no iota
of evidence to substantiate this claim, other than the bare testimony of Beder
Morandarte. Neither is there proof that the movement of the river was caused by
accident or calamity, such as a typhoon, and not by the natural movements thereof.
General statements, which are mere conclusions of law and not proofs, are unavailing
and cannot suffice.
Besides, at the time of the filing of the application for free patent in 1972, a
portion of the Miputak River was already in its present course, traversing Lot 1038,
particularly Lot 7 of the amended plan submitted by Morandarte.
87
 We need not delve on the question of whether the Lacaya spouses violated the
terms of the fishpond lease agreement. It is not material in this case in the sense that
it was not made an issue by the parties. Neither is there evidence to corroborate the
bare allegation of petitioners that the Lacaya spouses constructed dikes for the
fishponds which caused the Miputak River to traverse Lot 7. What is significant here
is the established fact that there was an existing fishpond lease agreement between
Felipe Lacaya and the Bureau of Fisheries at the time of Morandartes application for
free patent; in effect, proving that the area covering the fishpond belongs to the
Government and petitioners have no rights thereto.
In closing, we cannot but decry the carelessness of the BOL in having issued
the Free Patent in Morandartes favor which covered the Miputak River and the
fishpond rights of Felipe B. Lacaya. Surely, a more diligent search into their records
and thorough ocular inspection of Lot 7 would have revealed the presence of the
Miputak River traversing therein and an existing fishpond right thereon. Had more
vigilance been exercised by the BOL, the government agency entrusted specifically
with the task of administering and disposing of public lands, the present litigation
could have been averted.
WHEREFORE, the petition is partly GRANTED. The assailed Decision of the
Court of Appeals, dated August 23, 1995, in CA G.R. No. 36258 is REVERSED
insofar only as it affirmed the nullity of Free Patent No. (IX-8) 785 and Original
Certificate of Title No. P-21972, in the name of petitioner Beder Morandarte. In its
stead, petitioners Spouses Beder Morandarte and Marina Febrera are directed to
reconvey to the respondent Republic of the Philippines within thirty (30) days from the
finality of this Decision the 12,162-square meter portion traversed by the Miputak
River and the 13,339-square meter portion covered by the fishpond lease agreement
of the Lacaya spouses. No pronouncement as to costs.
SO ORDERED.
G.R. No. 94283 March 4, 1991
MAXIMO JAGUALING, ANUNCITA JAGUALING and MISAMIS ORIENTAL
CONCRETE PRODUCTS, INC.,petitioners,
vs.
COURT OF APPEALS (FIFTEENTH DIVISION), JANITA F. EDUAVE and
RUDYGONDO EDUAVE, respondents.
Cabanlas, Resma & Cabanlas Law Offices for petitioners.
Jaime Y Sindiong for private respondents.
GANCAYCO, J.:
Between the one who has actual possession of an island that forms in a non-
navigable and non-flotable river and the owner of the land along the margin nearest
the island, who has the better right thereto? This is the issue to be resolved in this
petition.
The parties to this case dispute the ownership of a certain parcel of land located in
Sta. Cruz, Tagoloan, Misamis Oriental with an area of 16,452 square meters, more or
less, forming part of an island in a non-navigable river, and more particularly
described by its boundaries as follows:
North by the Tagoloan River,
South by the Tagoloan River,
East by the Tagoloan River and
West by the portion belonging to Vicente Neri.
Private respondents filed with the Regional Trial Court of Misamis Oriental1 an action
to quiet title and/or remove a cloud over the property in question against petitioners.
Respondent Court of Appeals2 summarized the evidence for the parties as follows:
The appellant [private respondent Janita Eduave] claims that she inherited
the land from his [sic] father, Felomino Factura, together with his co-heirs,
Reneiro Factura and Aldenora Factura, and acquired sole ownership of the
property by virtue of a Deed of Extra Judicial Partition with sale (Exh. D).
The land is declared for tax purposes under Tax Decl. No. 26137 (Exh. E)
with an area of 16,452 square meters more or less (Exh. D). Since the death
of her father on May 5, 1949, the appellant had been in possession of the
property although the tax declaration remains in the name of the deceased
father.
The appellants further state that the entire land had an area of 16,452
square meters appearing in the deed of extrajudicial partition, while in [the]
tax declaration (Exh. E) the area is only 4,937 square meters, and she
reasoned out that she included the land that was under water. The land was
eroded sometime in November 1964 due to typhoon Ineng, destroying the
bigger portion and the improvements leaving only a coconut tree. In 1966
due to the movement of the river deposits on the land that was not eroded
increased the area to almost half a hectare and in 1970 the appellant started
to plant bananas [sic].
In 1973 the defendants-appellees [petitioners herein] asked her permission
to plant corn and bananas provided that they prevent squatters to come to
the area.
The appellant engaged the services of a surveyor who conducted a survey
and placed concrete monuments over the land. The appellant also paid
taxes on the land in litigation, and mortgaged the land to the Luzon Surety
and Co., for a consideration of P6,000.00.
The land was the subject of a reconveyance case, in the Court of First
Instance of Misamis Oriental, Branch V, at Cagayan de Oro City, Civil Case
No. 5892, between the appellant Janita Eduave vs. Heirs of Antonio
Factura which was the subject of judgment by compromise in view of the
amicable settlement of the parties, dated May 31, 1979. (Exh. R);
88
 That the heirs of Antonio Factura, who are presently the defendants-
appellees in this case had ceded a portion of the land with an area of 1,289
square meters more or less, to the appellant, Janita Eduave, in a notarial
document of conveyance, pursuant to the decision of the Court of First
Instance, after a subdivision of the lot No. 62 Pls-799, and containing 1,289
square meters more or less was designated as Lot No. 62-A [sic], and the
subdivision plan was approved as Pls-799-Psd-10-001782. (Exh. R; R-1 and
R-2);
The portion Lot No. 62-A, is described as follows:
A parcel of land (Lot No. 62-A, Psd-10-001782 being a portion of
Lot 62, Pls-799, Tagoloan Public Land Subdivision) situated in Bo.
Sta. Cruz, Municipality of Tagoloan, Province of Misamis Oriental.
Bounded on the W, and on the N along lines 4-5-1 by Lot 62-B of
the subdivision plan 10-001782; on the E by line 1-2 by Lot 64; Pls-
799; on the S, along line 2-3-4 by Saluksok Creek, containing an
area of one thousand two hundred eighty nine (1,289) square
meters more or less.
Appellant also applied for concession with the Bureau of Mines to extract
200 cubic meters of gravel (Exh. G & G-1); and after an ocular inspection the
permit was granted (Exh. K, and K-1 and K-2). That the appellant after
permit was granted entered into an agreement with Tagoloan Aggregates to
extract sand and gravel (Exh. L; L-1; and L-2), which agreement was
registered in the office of the Register of Deeds (Exh. M; M-1; and M-2);
The defendants-appellees [petitioners herein] denied the claim of ownership
of the appellant, and asserted that they are the real owners of the land in
litigation containing an area of 18,000 square meters more or less. During
the typhoon Ineng in 1964 the river control was washed away causing the
formation of an island, which is now the land in litigation. The defendants
started occupying the land in 1969, paid land taxes as evidenced by tax
declaration No. 26380 (Exh. 4) and tax receipts (Exhs. 7 to 7-G), and tax
clearances (Exhs. 8 & 9). Photographs showing the actual occupation of the
land by the defendants including improvements and the house were
presented as evidence (Exh. 11 to 11-E). The report of the Commissioner
who conducted the ocular inspection was offered as evidence of the
defendants (Exh. G).
The sketch plan prepared by Eng. Romeo Escalderon (Exh. 12) shows that
the plaintiffs' [private respondents'] land was across the land in litigation
(Exh. 12-A), and in going to the land of the plaintiff, one has to cross a
distance of about 68 meters of the Tagoloan river to reach the land in
litigation.3
On 17 July 1987 the trial court dismissed the complaint for failure of private
respondents as plaintiffs therein to establish by preponderance of evidence their
claim of ownership over the land in litigation. The court found that the island is a delta
forming part of the river bed which the government may use to reroute, redirect or
control the course of the Tagoloan River. Accordingly, it held that it was outside the
commerce of man and part of the public domain, citing Article 420 of the Civil Code.4
As such it cannot be registered under the land registration law or be acquired by
prescription. The trial court, however, recognized the validity of petitioners'
possession and gave them preferential rights to use and enjoy the property. The trial
court added that should the State allow the island to be the subject of private
ownership, the petitioners have rights better than that of private respondents.5
On appeal to the Court of Appeals, respondent court found that the island was formed
by the branching off of the Tagoloan River and subsequent thereto the accumulation
of alluvial deposits. Basing its ruling on Articles 463 and 465 of the Civil Code6 the
Court of Appeals reversed the decision of the trial court, declared private respondents
as the lawful and true owners of the land subject of this case and ordered petitioners
to vacate the premises and deliver possession of the land to private respondents.7
In the present petition, petitioners raise the following as errors of respondent court, to
wit:
1. Whether [or not] respondent court correctly applied the provisions of
Articles 463 and 465 of the new Civil Code to the facts of the case at bar;
and
2. Whether [or not] respondent court gravely abused its discretion in the
exercise of its judicial authority in reversing the decision appealed from.8
Petitioners point out as merely speculative the finding of respondent court that the
property of private respondents was split by the branching off or division of the river.
They argue that because, as held by the trial court, private respondents failed to
prove by preponderance of evidence the identity of their property before the same
was divided by the action of the river, respondent court erred in applying Article 463 of
the Civil Code to the facts of this case.
It must be kept in mind that the sole issue decided by respondent court is whether or
not the trial court erred in dismissing the complaint for failure of private respondents
(plaintiffs below] to establish by preponderance of evidence their claim of ownership
over the island in question. Respondent court reversed the decision of the trial court
because it did not take into account the other pieces of evidence in favor of the
private respondents. The complaint was dismissed by the trial court because it did not
accept the explanation of private respondents regarding the initial discrepancy as to
the area they claimed: i.e., the prior tax declarations of private respondents refer to an
area with 4,937 square meters, white the Extra-judicial Partition with Sale, by virtue of
which private respondents acquired ownership of the property, pertains to land of
about 16,452 square meters.
The trial court favored the theory of petitioners that private respondents became
interested in the land only in 1979 not for agricultural purposes but in order to extract
gravel and sand. This, however, is belied by other circumstances tantamount to acts
of ownership exercised by private respondents over the property prior to said year as
89
borne out by the evidence, which apparently the trial court did not consider at all in
favor of private respondents. These include, among others, the payment of land taxes
thereon, the monuments placed by the surveyor whose services were engaged by the
private respondent, as evidenced by the pictures submitted as exhibits, and the
agreement entered into by private respondents and Tagoloan Aggregates to extract
gravel and sand, which agreement was duly registered with the Register of Deeds.
Private respondents also presented in evidence the testimony of two disinterested
witnesses: Gregorio Neri who confirmed the metes and bounds of the property of
private respondents and the effects of the typhoon on the same, and Candida Ehem
who related on the agreement between private respondents and petitioners for the
latter to act as caretakers of the former.9 The trial court disregarded their testimony
without explaining why it doubted their credibility and instead merely relied on the
self-serving denial of petitioners.10
From the evidence thus submitted, respondent court had sufficient basis for the
finding that the property of private respondents actually existed and was Identified
prior to the branching off or division of the river. The Court of Appeals, therefore,
properly applied Article 463 of the Civil Code which allows the ownership over a
portion of land separated or isolated by river movement to be retained by the owner
thereof prior to such separation or isolation.11
Notwithstanding the foregoing and assuming arguendo as claimed by petitioners that
private respondents were not able to establish the existence and identity of the
property prior to the branching off or division of the Tagoloan River, and hence, their
right over the same, private respondents are nevertheless entitled under the law to
their respective portion of the island.
It is clear petitioners do not dispute that the land in litigation is an island that appears
in a non-flotable and non-navigable river; they instead anchor their claim on adverse
possession for about fifteen years. It is not even controverted that private
respondents are the owners of a parcel of land along the margin of the river and
opposite the island. On the other hand, private respondents do not dispute that the
island in question has been in the actual physical possession of petitioners; private
respondents insist only that such possession by petitioners is in the concept of
caretakers thereof with the permission of private respondents.
This brings Us, as phrased earlier in this opinion, to the underlying nature of the
controversy in this case: between the one who has actual possession of an island that
forms in a non-navigable and non-flotable river and the owner of the land along the
margin nearest the island, who has the better light thereto?
The parcel of land in question is part of an island that formed in a non-navigable and
non-flotable river; from a small mass of eroded or segregated outcrop of land, it
increased to its present size due to the gradual and successive accumulation of
alluvial deposits. In this regard the Court of Appeals also did not err in applying Article
465 of the Civil Code.12 Under this provision, the island belongs to the owner of the
land along the nearer margin as sole owner thereof; or more accurately, because the
island is longer than the property of private respondents, they are deemed ipso jure to
be the owners of that portion which corresponds to the length of their property along
the margin of the river.
What then, about the adverse possession established by petitioners? Are their rights
as such not going to be recognized? It is well-settled that lands formed by accretion
belong to the riparian owner.13 This preferential right is, under Article 465, also
granted the owners of the land located in the margin nearest the formed island for the
reason that they are in the best position to cultivate and attend to the exploitation of
the same.14 In fact, no specific act of possession over the accretion is required.15 If,
however, the riparian owner fails to assert his claim thereof, the same may yield to the
adverse possession of third parties, as indeed even accretion to land titled under the
torrens system must itself still be registered.16
Petitioners may therefore, acquire said property by adverse possession for the
required plumber of years under the doctrine of acquisitive prescription. Their
possession cannot be considered in good faith, however, because they are presumed
to have notice of the status of private respondents as riparian owners who have the
preferential right to the island as recognized and accorded by law; they may claim
ignorance of the law, specifically Article 465 of the Civil Code, but such is not, under
Articles 3 and 526 of the same code, an adequate and valid defense to support their
claim of good faith.17 Hence, not qualifying as possessors in good faith, they may
acquire ownership over the island only through uninterrupted adverse possession for
a period of thirty years.18 By their own admission, petitioners have been in possession
of the property for only about fifteen years. Thus, by this token and under the theory
adopted by petitioners, the island cannot be adjudicated in their favor.
This case is not between parties as opposing riparian owners contesting ownership
over an accession but rather between a riparian owner and the one in possession of
the island. Hence, there is no need to make a final determination regarding the origins
of the island, i.e., whether the island was initially formed by the branching off or
division of the river and covered by Article 463 of the Civil Code, in which case there
is strictly no accession because the original owner retains ownership, or whether it
was due to the action of the river under Article 465, or, as claimed by petitioners,
whether it was caused by the abrupt segregation and washing away of the stockpile
of the river control, which makes it a case of avulsion under Article 459.19
We are not prepared, unlike the trial court, to concede that the island is a delta which
should be outside the commerce of man and that it belongs to the State as property
of the public domain in the absence of any showing that the legal requirements to
establish such a status have been satisfied, which duty properly pertains to the
State.20 However, We are also well aware that this petition is an upshot of the action
to quiet title brought by the private respondents against petitioners. As such it is not
technically an action in rem or an action in personam, but characterized as quasi in
rem which is an action in personam concerning real property.22 Thus, the judgment in
proceedings of this nature is conclusive only between the parties23 and does not bind
the State or the other riparian owners who may have an interest over the island
involved herein.
90
WHEREFORE, We find no error committed by respondent court and DENY the Vitalez, Paraaque City and covered by Tax Declaration Nos. 01027 and 01472 in the
petition for lack of sufficient merit. The decision of respondent Court of Appeals is name of respondent Mario D. Ebio. Said land was an accretion of Cut-cut creek.
hereby AFFIRMED, without pronouncement as to costs. Respondents assert that the original occupant and possessor of the said parcel of
land was their great grandfather, Jose Vitalez. Sometime in 1930, Jose gave the land
SO ORDERED. to his son, Pedro Vitalez. From then on, Pedro continuously and exclusively occupied
and possessed the said lot. In 1966, after executing an affidavit declaring possession
and occupancy,[4] Pedro was able to obtain a tax declaration over the said property in
OFFICE OF THE CITY MAYOR OF G.R. No. 178411 his name.[5] Since then, respondents have been religiously paying real property taxes
PARAAQUE CITY, OFFICE OF THE CITY for the said property.[6]
ADMINISTRATOR OF PARAAQUE CITY, Meanwhile, in 1961, respondent Mario Ebio married Pedros daughter, Zenaida. Upon
OFFICE OF THE CITY ENGINEER OF Present: Pedros advice, the couple established their home on the said lot. In April 1964 and in
PARAAQUE CITY, OFFICE OF THE CITY October 1971, Mario Ebio secured building permits from the Paraaque municipal
PLANNING AND DEVELOPMENT office for the construction of their house within the said compound.[7] On April 21,
COORDINATOR, OFFICE OF THE CARPIO MORALES, J., 1987, Pedro executed a notarized Transfer of Rights[8] ceding his claim over the entire
BARANGAY CAPTAIN AND Chairperson, parcel of land in favor of Mario Ebio. Subsequently, the tax declarations under Pedros
SANGGUNIANG PAMBARANGAY OF BRION, name were cancelled and new ones were issued in Mario Ebios name.[9]
BARANGAY VITALEZ, PARAAQUE CITY, BERSAMIN, On March 30, 1999, the Office of the Sangguniang Barangay of Vitalez passed
TERESITA A. GATCHALIAN, ENRICO R. ABAD,* and Resolution No. 08, series of 1999[10] seeking assistance from the City Government of
ESGUERRA, ERNESTO T. PRACALE, JR., VILLARAMA, JR., JJ. Paraaque for the construction of an access road along Cut-cut Creek located in the
MANUEL M. ARGOTE, CONRADO M. said barangay. The proposed road, projected to be eight (8) meters wide and sixty
CANLAS, JOSEPHINE S. DAUIGOY, (60) meters long, will run from Urma Drive to the main road of Vitalez
ALLAN L. GONZALES, ESTER C. Compound[11] traversing the lot occupied by the respondents. When the city
ASEHAN, MANUEL A. FUENTES, and government advised all the affected residents to vacate the said area, respondents
MYRNA P. ROSALES, immediately registered their opposition thereto. As a result, the road project was
Petitioners, temporarily suspended.[12]
In January 2003, however, respondents were surprised when several officials from
the barangay and the city planning office proceeded to cut eight (8) coconut trees
- versus - planted on the said lot. Respondents filed letter-complaints before the Regional
Director of the Bureau of Lands, the Department of Interior and Local Government
and the Office of the Vice Mayor. [13] On June 29, 2003, the Sangguniang Barangay of
MARIO D. EBIO AND HIS Promulgated: Vitalez held a meeting to discuss the construction of the proposed road. In the said
CHILDREN/HEIRS namely, ARTURO V. meeting, respondents asserted their opposition to the proposed project and their
EBIO, EDUARDO V. EBIO, RENATO V. June 23, 2010 claim of ownership over the affected property. [14] On November 14, 2003, respondents
EBIO, LOURDES E. MAGTANGOB, MILA attended another meeting with officials from the city government, but no definite
V. EBIO, and ARNEL V. EBIO, agreement was reached by and among the parties.[15]
Respondents. On March 28, 2005, City Administrator Noli Aldip sent a letter to the respondents
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x ordering them to vacate the area within the next thirty (30) days, or be physically
evicted from the said property. [16] Respondents sent a letter to the Office of the City
Administrator asserting, in sum, their claim over the subject property and expressing
DECISION intent for a further dialogue.[17] The request remained unheeded.
Threatened of being evicted, respondents went to the RTC of Paraaque City on April
VILLARAMA, JR., J.: 21, 2005 and applied for a writ of preliminary injunction against petitioners. [18] In the
course of the proceedings, respondents admitted before the trial court that they have
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil a pending application for the issuance of a sales patent before the Department of
Procedure, as amended, assailing the January 31, 2007 Decision[1] and June 8, 2007 Environment and Natural Resources (DENR).[19]
Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 91350 allegedly for being On April 29, 2005, the RTC issued an Order [20] denying the petition for lack of merit. The
contrary to law and jurisprudence. The CA had reversed the Order [3] of the Regional trial court reasoned that respondents were not able to prove successfully that they have
Trial Court (RTC) of Paraaque City, Branch 196, issued on April 29, 2005 in Civil Case an established right to the property since they have not instituted an action for
No. 05-0155. confirmation of title and their application for sales patent has not yet been granted.
Below are the facts. Additionally, they failed to implead the Republic of the Philippines, which is an
Respondents claim that they are the absolute owners of a parcel of land consisting of indispensable party.
406 square meters, more or less, located at 9781 Vitalez Compound in Barangay Respondents moved for reconsideration, but the same was denied.[21]

91
Aggrieved, respondents elevated the matter to the Court of Appeals. On January 31,
2007, the Court of Appeals issued its Decision in favor of the respondents. According
to the Court of Appeals--
The issue ultimately boils down to the question of ownership of the
lands adjoining Cutcut Creek particularly Road Lot No. 8
(hereinafter RL 8) and the accreted portion beside RL 8.
The evidentiary records of the instant case, shows that RL 8
containing an area of 291 square meters is owned by Guaranteed
Homes, Inc. covered by TCT No. S-62176. The same RL 8 appears
to have been donated by the Guaranteed Homes to the City
Government of Paraaque on 22 March 1966 and which was
accepted by the then Mayor FLORENCIO BERNABE on 5 April
1966. There is no evidence however, when RL 8 has been intended
as a road lot.
On the other hand, the evidentiary records reveal that PEDRO
VITALEZ possessed the accreted property since 1930 per his
Affidavit dated 21 March 1966 for the purpose of declaring the said
property for taxation purposes. The property then became the
subject of Tax Declaration No. 20134 beginning the year 1967 and
the real property taxes therefor had been paid for the years 1966,
1967, 1968, 1969, 1970, 1972, 1973, 1974, 1978, 1980, 1995,
1996, 1997, 1998, 1999, 2000, 2001, 2002, 2003, and 2004.
Sometime in 1964 and 1971, construction permits were issued in
favor of Appellant MARIO EBIO for the subject property. On 21 April
1987, PEDRO VITALEZ transferred his rights in the accreted
property to MARIO EBIO and his successors-in-interest.
Applying [Article 457 of the Civil Code considering] the foregoing
documentary evidence, it could be concluded that Guaranteed
Homes is the owner of the accreted property considering its
ownership of the adjoining RL 8 to which the accretion attached.
However, this is without the application of the provisions of the Civil
Code on acquisitive prescription which is likewise applicable in the
instant case.
xxxx
The subject of acquisitive prescription in the instant case is the
accreted portion which [was] duly proven by the Appellants. It is
clear that since 1930, Appellants together with their predecessor-in-
interest, PEDRO VITALEZ[,] have been in exclusive possession of
the subject property and starting 1964 had introduced
improvements thereon as evidenced by their construction permits.
Thus, even by extraordinary acquisitive prescription[,] Appellants
have acquired ownership of the property in question since 1930
even if the adjoining RL 8 was subsequently registered in the name
of Guaranteed Homes. x x x.
xxxx
Further, it was only in 1978 that Guaranteed Homes was able to
have RL 8 registered in its name, which is almost fifty years from
the time PEDRO VITALEZ occupied the adjoining accreted property
in 1930. x x x.
xxxx
We likewise note the continuous payment of real property taxes of
Appellants which bolster their right over the subject property. x x x.
xxxx
In sum, We are fully convinced and so hold that the Appellants
[have] amply proven their right over the property in question.
WHEREFORE, premises considered, the instant appeal is
hereby GRANTED. The challenged Order of the court a quo
is REVERSED and SET ASIDE.
SO ORDERED.[22]
On June 8, 2007, the appellate court denied petitioners motion for reconsideration.
Hence, this petition raising the following assignment of errors:
I. WHETHER OR NOT THE DECISION AND RESOLUTION
OF THE HONORABLE COURT OF APPEALS THAT
RESPONDENTS HAVE A RIGHT IN ESSE IS IN ACCORD
WITH THE LAW AND ESTABLISHED JURISPRUDENCE[;]
II. WHETHER OR NOT THE DECISION AND RESOLUTION OF
THE HONORABLE COURT OF APPEALS THAT THE
SUBJECT LOT IS AVAILABLE FOR ACQUISITIVE
PRESCRIPTION IS IN ACCORD WITH THE LAW AND
ESTABLISHED JURISPRUDENCE[;] AND
III. WHETHER OR NOT THE STATE IS AN INDISPENSABLE
PARTY TO THE COMPLAINT FILED BY RESPONDENTS IN
THE LOWER COURT.[23]
The issues may be narrowed down into two (2): procedurally, whether the State is an
indispensable party to respondents action for prohibitory injunction; and substantively,
whether the character of respondents possession and occupation of the subject
property entitles them to avail of the relief of prohibitory injunction.
The petition is without merit.
An action for injunction is brought specifically to restrain or command the
performance of an act.[24] It is distinct from the ancillary remedy of preliminary
injunction, which cannot exist except only as part or as an incident to an independent
action or proceeding. Moreover, in an action for injunction, the auxiliary remedy of a
preliminary prohibitory or mandatory injunction may issue.[25]
In the case at bar, respondents filed an action for injunction to prevent the local
government of Paraaque City from proceeding with the construction of an access
road that will traverse through a parcel of land which they claim is owned by them by
virtue of acquisitive prescription.
Petitioners, however, argue that since the creek, being a tributary of the river, is
classified as part of the public domain, any land that may have formed along its banks
through time should also be considered as part of the public domain. And
respondents should have included the State as it is an indispensable party to the
action.
We do not agree.
It is an uncontested fact that the subject land was formed from the alluvial deposits
that have gradually settled along the banks of Cut-cut creek. This being the case, the
law that governs ownership over the accreted portion is Article 84 of the Spanish Law
of Waters of 1866, which remains in effect,[26] in relation to Article 457 of the Civil
Code.
Article 84 of the Spanish Law of Waters of 1866 specifically covers ownership over
alluvial deposits along the banks of a creek. It reads:
92
 ART. 84. Accretions deposited gradually upon lands contiguous to
creeks, streams, rivers, and lakes, by accessions or sediments
from the waters thereof, belong to the owners of such lands.[27]
Interestingly, Article 457 of the Civil Code states:
Art. 457. To the owners of lands adjoining the banks of rivers
belong the accretion which they gradually receive from the effects
of the current of the waters.
It is therefore explicit from the foregoing provisions that alluvial deposits along the
banks of a creek do not form part of the public domain as the alluvial property
automatically belongs to the owner of the estate to which it may have been
added. The only restriction provided for by law is that the owner of the adjoining
property must register the same under the Torrens system; otherwise, the alluvial
property may be subject to acquisition through prescription by third persons.[28]
In contrast, properties of public dominion cannot be acquired by prescription. No
matter how long the possession of the properties has been, there can be no
prescription against the State regarding property of public domain. [29] Even a city or
municipality cannot acquire them by prescription as against the State.[30]
Hence, while it is true that a creek is a property of public dominion, [31] the land which
is formed by the gradual and imperceptible accumulation of sediments along its banks
does not form part of the public domain by clear provision of law.
Moreover, an indispensable party is one whose interest in the controversy is such that
a final decree would necessarily affect his/her right, so that the court cannot proceed
without their presence.[32] In contrast, a necessary party is one whose presence in the
proceedings is necessary to adjudicate the whole controversy but whose interest is
separable such that a final decree can be made in their absence without affecting
them.[33]
In the instant case, the action for prohibition seeks to enjoin the city government of
Paraaque from proceeding with its implementation of the road construction project.
The State is neither a necessary nor an indispensable party to an action where no
positive act shall be required from it or where no obligation shall be imposed upon it,
such as in the case at bar. Neither would it be an indispensable party if none of its
properties shall be divested nor any of its rights infringed.
We also find that the character of possession and ownership by the respondents over
the contested land entitles them to the avails of the action.
A right in esse means a clear and unmistakable right.[34] A party seeking to avail of an
injunctive relief must prove that he or she possesses a right in esse or one that is
actual or existing.[35] It should not be contingent, abstract, or future rights, or one
which may never arise.[36]
In the case at bar, respondents assert that their predecessor-in-interest, Pedro
Vitalez, had occupied and possessed the subject lot as early as 1930. In 1964,
respondent Mario Ebio secured a permit from the local government of Paraaque for
the construction of their family dwelling on the said lot. In 1966, Pedro executed an
affidavit of possession and occupancy allowing him to declare the property in his
name for taxation purposes. Curiously, it was also in 1966 when Guaranteed Homes,
Inc., the registered owner of Road Lot No. 8 (RL 8) which adjoins the land occupied
by the respondents, donated RL 8 to the local government of Paraaque.
From these findings of fact by both the trial court and the Court of Appeals, only one
conclusion can be made: that for more than thirty (30) years, neither Guaranteed
Homes, Inc. nor the local government of Paraaque in its corporate or private capacity
sought to register the accreted portion. Undoubtedly, respondents are deemed to
have acquired ownership over the subject property through prescription. Respondents
can assert such right despite the fact that they have yet to register their title over the
said lot. It must be remembered that the purpose of land registration is not the
acquisition of lands, but only the registration of title which the applicant already
possessed over the land. Registration was never intended as a means of acquiring
ownership.[37] A decree of registration merely confirms, but does not confer,
ownership.[38]
Did the filing of a sales patent application by the respondents, which remains pending
before the DENR, estop them from filing an injunction suit?
We answer in the negative.
Confirmation of an imperfect title over a parcel of land may be done either through
judicial proceedings or through administrative process. In the instant case,
respondents admitted that they opted to confirm their title over the property
administratively by filing an application for sales patent.
Respondents application for sales patent, however, should not be used to prejudice or
derogate what may be deemed as their vested right over the subject property. The
sales patent application should instead be considered as a mere superfluity
particularly since ownership over the land, which they seek to buy from the State, is
already vested upon them by virtue of acquisitive prescription. Moreover, the State
does not have any authority to convey a property through the issuance of a grant or a
patent if the land is no longer a public land.[39]
Nemo dat quod dat non habet. No one can give what he does not have. Such
principle is equally applicable even against a sovereign entity that is the State.
WHEREFORE, the petition is DENIED for lack of merit. The January 31,
2007 Decision, as well as the July 8, 2007 Resolution, of the Court of Appeals in CA-
G.R. SP No. 91350 are hereby AFFIRMED.
With costs against petitioners.
SO ORDERED.
INOCENCIO Y. LUCASAN for himself and as the Judicial G.R. No. 176929
Administrator of the Intestate Estate of the late JULIANITA
SORBITO LUCASAN, Present:
Petitioner,
YNARES-SANTIAGO, J.,
- versus - Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC) NACHURA, and
as receiver and liquidator of the defunct PACIFIC BANKING REYES, JJ.
CORPORATION,
Respondent. Promulgated:
July 4, 2008
x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:
93

On appeal is the March 23, 2006 Decision [1] of the Court of Appeals (CA) in CA-G.R.
CV No. 81518, affirming the July 24, 2003 Order[2] of the Regional Trial Court (RTC)
of Bacolod City, Branch 43, granting respondents motion to dismiss, as well as its
subsequent Resolution[3] denying petitioners motion for reconsideration.
The factual antecedents are as follows.
Petitioner Inocencio Y. Lucasan (Lucasan) and his wife Julianita Sorbito (now
deceased) were the owners of Lot Nos. 1500-A and 229-E situated in Bacolod City,
respectively covered by TCT Nos. T-68115 and T-13816.
On August 3, 1972, Pacific Banking Corporation (PBC) extended
a P5,000.00 loan to Lucasan, with Carlos Benares as his co-maker. Lucasan
and Benares failed to pay the loan when it became due and
demandable.Consequently, PBC filed a collection case with the RTC of Bacolod City,
docketed as Civil Case No. 12188.
On April 30, 1979, the RTC rendered a decision ordering Lucasan
and Benares to jointly and severally pay PBC P7,199.99 with interest at 14% per
annum computed from February 7, 1979, until the full payment of the obligation.
Lucasan failed to pay the monetary award; thus, to satisfy the judgment, the RTC
issued a writ of execution directing the sheriff to effect a levy on the properties owned
by Lucasan and sell the same at public auction.
In compliance with the writ, the City Sheriff of Bacolod issued a Notice of
Embargo on January 8, 1981, which was annotated on Lucasans TCT Nos. T-68115
and T-13816 as Entry No. 110107. Annotated as prior encumbrances on the same
titles were the mortgages in favor of Philippine National Bank (PNB) and Republic
Planters Bank (RPB) executed to secure Lucasans loans with the banks.
On May 13, 1981, the lots were sold at public auction and were awarded to
PBC as the highest bidder. A certificate of sale was executed in its favor and was
registered and annotated on TCT Nos. T- 68115 and T-13816 as Entry No. 112552
on June 5, 1981. Neither PNB nor RPB, the mortgagees, assailed the auction sale.
Lucasan, as well as the mortgagee banks, PNB and RPB, did not redeem the
properties within the redemption period. Nevertheless, PBC did not file a petition for
consolidation of ownership.
In January 1997, Lucasan, through counsel, wrote a letter to the Philippine
Deposit Insurance Corporation (PDIC), PBCs receiver and liquidator seeking the
cancellation of the certificate of sale and offering to pay PBCs claim against Lucasan.
[4]
Not long thereafter, Lucasan paid his loans with the PNB and
RPB. Consequently, the mortgagee banks executed their respective releases of
mortgage, resulting in the cancellation of the prior encumbrances in favor of PNB and
RPB.
On August 13, 2001, PDIC denied Lucasans request for the cancellation of
the certificate of sale stating:
Please be informed that based on our records, TCT Nos.
T-68115 and T-13816 have already become part of the acquired
assets of Pacific Banking Corporation by virtue of a Certificate of
Sale dated May 13, 1981 executed by the City Sheriff of
Bacolod. Subsequently, this document was registered on the titles
on June 5, 1981 so that the last day of the redemption period
was June 5, 1982.
With regard to your request, we regret to inform you that
reacquisition of the subject properties have to be through sale
following PDICs policy on disposal. Accordingly, these properties
can be disposed through public bidding using the latest appraised
value in the total amount of P2,900,300.00 as of March 29, 2000 as
a minimum bid. If you are still interested to acquire the properties,
please get in touch with our Asset Management Group x x x.[5]
Lucasan then filed a petition denominated as declaratory relief with the RTC
of Bacolod City docketed as Civil Case No. 02-11874.[6] He sought confirmation of his
rights provided in the second paragraph of Section 1, Rule 63 of the Rules of Court in
relation to Section 75 of Presidential Decree (P.D.) No. 1529. Lucasan also pleaded
for the lifting and/or cancellation of the notice of embargo and the certificate of sale
annotated on TCT Nos. T-68115 and T-13816, and offered to pay P100,000.00 or
such amount as may be determined by the RTC, as consideration for the
cancellation.
PDIC moved to dismiss the complaint for lack of cause of action. It averred
that an action to quiet title under Section 1 of Rule 63 may only be brought when
there is a cloud on, or to prevent a cloud from being cast upon, the title to real
property. It asseverated that a cloud on the title is an outstanding instrument record,
claim, encumbrance or proceeding which is actually invalid or inoperative, but which
may nevertheless impair or affect injuriously the title to property. PDIC claimed that
the notice of embargo was issued pursuant to a writ of execution in Civil Case No.
12188, while the certificate of sale was executed as a result of a public bidding.Thus,
their annotations on the titles were valid, operative or effective. PDIC asserted that
Lucasans petition is nothing but a disguised attempt to compel PDIC to resell the
properties at a reduced price of P100,000.00. Accordingly, it prayed for the dismissal
of the petition.[7]
Lucasan opposed the motion.[8] He countered that the subject properties
were still in his possession, and neither PBC nor PDIC instituted an action for
consolidation of ownership. Since the certificate of title was still in his name, he
contended that he could pursue all legal and equitable remedies, including those
provided for in Section 1, Rule 63 of the Rules of Court to reacquire the
properties. He also claimed that PDICs policy of disposing the subject properties
through public bidding at the appraised value of P2,900,300.00 was unjust, capricious
and arbitrary, considering that the judgment debt amounted only to P7,199.99 with
interest at 14% per annum. Lucasan urged the RTC to apply the liberal construction
of the redemption laws stressed in Cometa v. Court of Appeals.[9]
94

In its Order[10] dated July 24, 2003, the RTC granted PDICs motion to
dismiss, thus:
The clouds contemplated by the provision of law under
Article 476 of the Civil Code is one where the instrument, record,
claim, encumbrance or proceeding is apparently valid or effective
on its face that nothing appears to be wrong, but in reality, is null
and void. Hence, the petition filed by [Lucasan] pursuant to the said
article is equivalent to questioning the validity of the subsequent
annotation of Entry No. 110107 and Entry No. 112522 in TCT Nos.
T-13816 and T-68115.
Records disclose that Entry No. 110107 which is a Notice
of Embargo was issued by virtue of a valid judgment rendered in
Civil Case No. 12188 entitled Pacific Banking Corporation vs.
[Inocencio] Lucasan, et al., whereby the Court found [Lucasan]
liable in favor of [PBC] the sum of P7,199.99 with 14% interest per
annum to be computed from February 7, 1979 until fully paid.
As mandated in Sec. 12, Rule 39 of the Revised Rules of
Court, such levy on execution create a lien in favor of [PBC] over
the right, title and interest of [Lucasan] over the two (2) subject
parcels of land covered by TCT Nos. T-13816 and T-68115, subject
to liens and encumbrances then existing. The fact that [Lucasan]
has redeemed the mortgage properties from the first mortgages
(sic), PNB and PNB (sic) Republic Bank, does not vest him any title
free from the lien of [PBC].
While the law requires that the judgment debtor, [Lucasan]
must be served with a notice of levy and even if not served
therewith, the defect is cured by service on him of the notice of sale
prior to the sale, nowhere in the petition which alleges that
[Lusasan] refutes the validity of the execution sale. Thus, he is
deemed to have received and recognized the same.
As support for his thesis, [Lucasan] cites the case of
Balanga vs. Ca., et al. (supra). However this Court is unable to
agree that it is applicable to the present case. As correctly argued
by [PDIC], in that case the proceedings under execution suffered
infirmity from the very start as the levy and sale made by the sheriff
of the land of petitioner Balanga included the house erected on the
land [and] constituted as a family home which, under the law,
exempt from execution. In the case at bar, no objection was
interposed by [Lucasan] as a valid levy has been made pursuant to
Sec. 7, Rule 57 of the Revised Rules of Court, as a consequence of
which, the sale made pursuant to Sec. 11 of the same rule is also
valid and effective.[11]
The dispositive portion of the RTC Order reads:
WHEREFORE, finding the claim of any cloud over the
titles of [Lucasan] to be bereft of basis in fact and in law, the Motion
to Dismiss filed by [PDIC] is granted. Accordingly, this is hereby
ordered DISMISSED.
SO ORDERED.[12]
Lucasan filed a motion for reconsideration, but the RTC denied it on October 20,
2003.[13]
On appeal, the CA affirmed in toto the RTC ruling. It declared that Lucasan
already lost his right to redeem the properties when he failed to exercise it within the
prescribed period. The effect of such failure was to vest in PBC absolute ownership
over the subject properties.[14]
The CA disposed, thus:
WHEREFORE, in view of all the foregoing premises, the
appeal is hereby DENIED. Accordingly, the assailed Order of the
Regional Trial Court of Bacolod City, Branch 43 dated 24 July 2003
dismissing [Lucasans] Petition for Declaratory Relief and the
subsequent Order of the same Court dated 20 October 2003
denying [Lucasans] motion for reconsideration from the Order of
Denial (sic) are hereby affirmed in toto. No costs.
SO ORDERED.[15]
Lucasan sought a reconsideration of the CA Decision, but the same was denied
on February 7, 2007.[16]
Before us, Lucasan impugns the CA Decision on the following grounds:
1- THE COURT OF APPEALS ERRED AND GRAVELY
ABUSED ITS DISCRETION IN AFFIRMING THE ORDER OF
DISMISSAL OF THE PETITIONERS PETITION IN THE REGIONAL
TRIAL COURT WHEN IT DISREGARDED THE CLEAR
PROVISION OF SECTION 75 OF PRESIDENTIAL DECREE NO.
1529 AND PUT TO NAUGHT THE APPLICABLE
JURISPRUDENCE IN ZACARIAS COMETA x x x AND THE
CASES CITED THEREIN, INSPITE (sic) OF THE CLEAR AND
OUTSTANDING SIMILARITY OF FACTS WITH THE CASE
UNDER CONSIDERATION.
2- THE COURT OF APPEALS ALSO ERRED AND
GRAVELY ABUSED ITS DISCRETION WHEN IT FAILED TO
CONSIDER THAT THE NOTICE OF EMBARGO AND
CERTIFICATE OF SALE ISSUED BY THE CITY SHERIFF WERE
95
 ONLY LEVY ON THE INTEREST OF THE PETITIONER ON THE
TWO (2) SUBJECT LOTS, AS DECREED IN QUEZON BEARING
& PARTS CORPORATION, x x x, WHICH IS LIKEWISE
APPLICABLE TO THE CASE AT BAR.[17]
Lucasan posits that he has sufficient cause of action against PDIC; thus, he
chides the RTC for dismissing his complaint, and the CA for affirming the dismissal. In
support of his thesis, he cites Section 75 of Presidential Decree (PD) No. 1529, or the
Property Registration Decree[18] and Cometa v. Court of Appeals.[19]
As gleaned from the averments of the complaint, Lucasans action was one
for quieting of title under Rule 63 of the Rules of Court. Essentially, he sought the
cancellation of the notice of embargo and the certificate of sale annotated on TCT
Nos. T-68115 and T-13816 claiming that the said annotations beclouded the validity
and efficacy of his title. The RTC, however, dismissed his complaint for lack of cause
of action which was affirmed by the CA in its assailed Decision. Thus, the key issue
for our consideration is whether the dismissal of Lucasans complaint was proper.
Quieting of title is a common law remedy for the removal of any cloud of
doubt or uncertainty with respect to real property. The Civil Code authorizes the said
remedy in the following language:
ART. 476. Whenever there is a cloud on title to real
property or any interest therein, by reason of any instrument,
record, claim, encumbrance or proceeding which is apparently valid
or effective but is in truth and in fact invalid, ineffective, voidable, or
unenforceable, and may be prejudicial to said title, an action may
be brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from
being cast upon title to real property or any interest therein.
ART. 477. The plaintiff must have legal or equitable title to,
or interest in the real property which is the subject-matter of the
action. He need not be in possession of said property.
To avail of the remedy of quieting of title, two (2) indispensable requisites
must concur, namely: (1) the plaintiff or complainant has a legal or an equitable title to
or interest in the real property subject of the action; and (2) the deed, claim,
encumbrance or proceeding claimed to be casting a cloud on his title must be shown
to be in fact invalid or inoperative despite its prima facie appearance of validity or
legal efficacy.[20] Stated differently, the plaintiff must show that he has a legal or at
least an equitable title over the real property in dispute, and that some deed or
proceeding beclouds its validity or efficacy.
Unfortunately, the foregoing requisites are wanting in this case.
Admittedly, the subject parcels of land were levied upon by virtue of a writ of
execution issued in Civil Case No. 12188. On May 13, 1981, a public auction of the
subject parcels of land was held and the lots were awarded to PBC as the highest
bidder. A certificate of sale in favor of PBC was issued on the same day, and was
registered and annotated on TCT Nos. T-68115 and T-13816 as Entry No. 112552
on June 5, 1981.
Under the 1964 Rules of Court, which were in effect at that time, the
judgment debtor or redemptioner had the right to redeem the property from PBC
within twelve (12) months from the registration of the certificate of sale.[21] With the
expiration of the twelve-month period of redemption and no redemption having been
made, as in this case, the judgment debtor or the redemptioner lost whatever right he
had over the land in question.[22]
Lucasan admitted that he failed to redeem the properties within the
redemption period, on account of his then limited financial situation. [23] It was only in
January 1997 or fifteen (15) years later that he manifested his desire to reacquire the
properties. Clearly thus, he had lost whatever right he had over Lot Nos. 1500-A and
229-E.
The payment of loans made by Lucasan to PNB and RPB in 1997 cannot, in
any way, operate to restore whatever rights he had over the subject properties. Such
payment only extinguished his loan obligations to the mortgagee banks and the liens
which Lucasan claimed were subsisting at the time of the registration of the notice of
embargo and certificate of sale.
Neither can Lucasan capitalize on PBCs failure to file a petition for
consolidation of ownership after the expiration of the redemption period. As we
explained in Calacala v. Republic:[24]
[P]etitioners' predecessors-in-interest lost whatever right they had
over [the] land in question from the very moment they failed to
redeem it during the 1-year period of redemption. Certainly, the
Republic's failure to execute the acts referred to by the petitioners
within ten (10) years from the registration of the Certificate of Sale
cannot, in any way, operate to restore whatever rights petitioners'
predecessors-in-interest had over the same. For sure, petitioners
have yet to cite any provision of law or rule of jurisprudence, and
we are not aware of any, to the effect that the failure of a buyer in a
foreclosure sale to secure a Certificate of Final Sale, execute an
Affidavit of Consolidation of Ownership and obtain a writ of
possession over the property thus acquired, within ten (10) years
from the registration of the Certificate of Sale will operate to bring
ownership back to him whose property has been previously
foreclosed and sold.
xxxx
Moreover, with the rule that the expiration of the 1-year
redemption period forecloses the obligor's right to redeem and that
the sale thereby becomes absolute, the issuance thereafter of a
final deed of sale is at best a mere formality and mere confirmation
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 of the title that is already vested in the purchaser. As this Court has entirely within his discretion to set a higher price, for after all, the
said in Manuel vs. Philippine National Bank, et al.: property already belongs to him as owner.

Note must be taken of the fact that under the

Rules of Court the expiration of that one-year
period forecloses the owner's right to redeem,
thus making the sheriff's sale absolute. The
issuance thereafter of a final deed of sale
becomes a mere formality, an act merely
confirmatory of the title that is already in the
purchaser and constituting official evidence
of that fact. (Emphasis supplied.)
Accordingly, the condition imposed by the PDIC for the re-acquisition of the property
cannot be considered unjust or unreasonable.
Verily, in several cases,[26] this Court allowed redemption even after the lapse
of the redemption period. But in those cases a valid tender was made by the original
owners within the redemption period. Even in Cometa, the redemption was allowed
beyond the redemption period because a valid tender of payment was made within
the redemption period. The same is not true in the case before us.

In fine, we find that the RTC correctly dismissed Lucasans complaint

Certainly, Lucasan no longer possess any legal or equitable title to or interest over the for quieting of title. Thus, the CA committed no reversible error in sustaining the RTC.
subject parcels of land; hence, he cannot validly maintain an action for quieting of
title. WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of
Appeals in CA-G.R. CV No. 81518, are AFFIRMED. Costs against the petitioner.
Furthermore, Lucasan failed to demonstrate that the notice of embargo and SO ORDERED.
the certificate of sale are invalid or inoperative. In fact, he never put in issue the
validity of the levy on execution and of the certificate of sale duly registered on June
5, 1981. It is clear, therefore, that the second requisite for an action to quiet title is,
likewise, absent.

Concededly, Lucasan can pursue all the legal and equitable remedies to
impeach or annul the execution sale prior to the issuance of a new certificate of title in
favor of PBC. Unfortunately, the remedy he had chosen cannot prosper because he
failed to satisfy the requisites provided for by law for an action to quiet title. Hence,
the RTC rightfully dismissed Lucasans complaint.

Lucasan tries to find solace in our ruling in Cometa v. Court of Appeals. Sadly for him,
that case is not on all fours with his case, for it was not for quieting of title but a
petition for issuance of a writ of possession and cancellation of lis pendens. Likewise,
in Cometa the registered owner assailed the validity of the levy and sale, which
Lucasan failed to do.

Undoubtedly, Lucasans right to redeem the subject properties had elapsed

on June 5, 1982. His offer to redeem the same in 1997 or long after the expiration of
the redemption period is not really one for redemption but for repurchase. Thus, PBC
and PDIC, its receiver and liquidator, are no longer bound by the bid price. It is
entirely within their discretion to set a higher price. As we explained in De Robles v.
Court of Appeals:[25]

The right to redeem becomes functus officio on the date of

its expiry, and its exercise after the period is not really one of
redemption but a repurchase. Distinction must be made because
redemption is by force of law; the purchaser at public auction is
bound to accept redemption. Repurchase however of foreclosed
property, after redemption period, imposes no such obligation. After
expiry, the purchaser may or may not re-sell the property but no law
will compel him to do so.And, he is not bound by the bid price; it is

97