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[G.R. No. 116909. February 25, 1999] Obviously, the petitioners themselves, who are lawyers,
RUIZ vs. CA believed that their cause of action against the private
respondent is in the nature of actio in personam.
FACTS: Respondent Pedro V. Garcia engaged the
legal services of herein petitioners, Attys. Vivencio M. “Actio in personam is a personal action seeking redress
Ruiz and Emilio D. Castellanes, and an Agreement against a particular person. Personal actions are such
denominated as a Contract of Retainership. Pablo V. whereby a man claims a debt, or personal duty, or
Garcia unilaterally terminated the said Contract of damages in lieu thereof.” In the present case, petitioners
Retainership on the alleged ground that the seek to recover attorney’s fees from private respondent for
petitioners, his lawyers, failed to settle amicably his professional services they rendered to the latter.
differences with V. C. Ponce Co., Inc. Petitioners were Attorney’s fee is basically a compensation. In its ordinary
paid attorney’s fees up to the month of July, 1982. sense, “the term (compensation) applies not only to
salaries, but to compensation by fees for specific service.”
Thereafter, the petitioners Ruiz and Castellanes
manifested their withdrawal as counsel for Pedro V. Viewed in proper perspective, an action to recover
Garcia and moved that their attorney’s lien be put on attorney’s fees is basically a monetary claim, which under
record, in the cases involved. Such motion was Section 21, Rule 3 of B.P. 129 is an action that does not
granted by the trial court. survive. Such is the fate of Civil Case No. 6465.

Petitioners Ruiz and Castellanes brought their action Petitioners theorize that the inclusion of real properties as
“For Collection of Sum of Money and for Specific part of the attorney’s fees private respondent owe them,
Performance”, before RTC Makati City. While the said converted the action into one that survives or at the very
case was pending before the said lower court of origin, least, split the action into one that did not survive, with
Pedro V. Garcia died. And so, after notifying the trial respect to the monetary obligation, and which survived,
court of the demise of their client, counsel moved for with respect to the real properties of the deceased.
the dismissal of the case, invoking Section 21, Rule 3
of the Rules of Court. RTC issued an Order In Harden vs. Harden, 20 SCRA 706, the Court ruled that
dismissing petitioners’ complaint. On appeal, CA an action for the satisfaction of attorney’s fees is founded
affirmed. on a personal obligation which does not survive the
death of the defendant before adjudication.
ISSUE: Whether or not the case at bar has survived
the death of the private respondent, Pedro V. Garcia. As enunciated in Bonila, the litmus test in determining
what action survives and what does not depends on the
RULING: To determine whether the action survives or nature of the action and not on the object or kind of
not, the Court ruling in Bonilla vs. Barcena (71 SCRA property sought to be recovered. All things studiedly
491) comes to the fore, thus: considered, we are of the opinion, and, so hold, that the
respondent Court of Appeals erred not in affirming the
“The question as to whether an action survives or decision of the court a quo.
not depends on the nature of the action and the
damage sued for (Iron Gate Bank vs. Brady, 184 [G.R. No. 122947. July 22, 1999]
U.S. 665, 22 SCT, 46 L.ed 739). In the cause of BALUYOT vs. CA
action which survive, the wrong complained
affects primarily and principally property and FACTS: Petitioners filed a complaint for specific
property rights, the injuries to the person being performance and damages against private respondent
merely incidental, while in the causes of action University of the Philippines before the RTC QC. The
which do not survive, the injury complained of is to complaint was later on amended to include private
the person, the property and rights of property respondent Quezon City government as defendant.
affected being incidental xxx..”
Herein petitioners and their ascendants have been in
The core of petitioners’ argument is that action should open, peaceful, adverse and continuous possession in the
not be dismissed since their complaint involves not just concept of an owner since memory can no longer recall of
monetary claim but also real properties, as well. that parcel of riceland (now Diliman, Quezon City); U.P.
Board of Regents approved the donation of about 9.2
Petitioners’ contention is untenable. While they hectares of the site, directly to the residents of Brgy. Krus
maintain that what they are claiming include real Na Ligas; Notwithstanding the willingness of U.P. to
properties, their Complaint is captioned as “For proceed with the donation, Execution of the legal
Collection of Money and for Specific Performance.” instrument to formalize it failed because of the
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unreasonable demand of the residents for an area denied respondents’ joint motion to dismiss petitioners’
bigger than 15.8 hectares.” action on the ground that respondent UP was barred from
contesting petitioners’ right to remain in possession on the
That upon advise of counsel and close study of the ground of laches.
said offer of defendant UP to donate 15.8379
hectares, plaintiff Association proposed to accept and This is error. While prescription does not run against
the defendant UP manifested in writing [its] consent to registered lands, nonetheless a registered owner’s action
the intended donation directly to the plaintiff to recover possession of his land may be barred by
Association for the benefit of the bonafide residents of laches.
Barrio Cruz-na-Ligas and plaintiffs’ Association have
agreed to comply with the terms and conditions of the We hold that while defendant may not be considered as
donation; having acquired title by virtue of his and his predecessors’
long continued possession for 37 years, the original
UP backed-out from the arrangement to donate owner’s right to recover back the possession of the
directly to the plaintiff Association for the benefit of the property and the title thereto from the defendant has, by
qualified residents and high-handedly resumed to the long period of 37 years and by patentee’s inaction and
negotiate the donation thru the defendant Quezon City neglect, been converted into a stale demand.
Government under the terms disadvantageous or Thus, laches is a defense against a registered owner suing
contrary to the rights of the bonafide residents. to recover possession of the land registered in its name.

But UP is not suing in this case. It is petitioners who are,

A joint Motion to Dismiss was filed by UP and the and their suit is mainly to seek enforcement of the deed of
Quezon City government on the ground that the donation made by UP in favor of the Quezon City
complaint fails to state a cause of action. RTC denied government. The appellate court therefore correctly
respondents’ motion to dismiss. Respondents filed a overruled the trial court on this point. Indeed, petitioners
petition for certiorari with the Court of Appeals, do not invoke laches. What they allege in their complaint
charging the trial court with grave abuse of discretion is that they have been occupying the land in question from
in refusing to dismiss the complaint filed by time immemorial, adversely, and continuously in the
petitioners. concept of owner, but they are not invoking laches. If at
all, they are claiming ownership by prescription which, as
CA rendered a decision setting aside the trial court’s already stated, is untenable considering that the land in
order. Petitioners argue that, on its face, their question is a registered land. Nor can petitioners question
amended complaint alleges facts constituting a cause the validity of UP’s title to the land. For as the Court of
of action which must be fully explored during trial. Appeals correctly held, this constitutes a collateral attack
They cite paragraphs 18, 19, and 20 of their complaint on registered title which is not permitted.
questioning the validity of the revocation of the
donation and seek the enforcement of the donation On the other hand, we think that the Court of Appeals
through specific performance. erred in dismissing petitioners’ complaint for failure to state
a cause of action. A cause of action exists if the following
On the other hand, respondents contend that by elements are present, namely:
seeking specific performance of the deed of donation
as their primary cause of action, petitioners cannot at (1) a right in favor of the plaintiff by whatever means
the same time claim ownership over the property and under whatever law it arises or is created;
subject of the donation by virtue of laches or (2) an obligation on the part of the defendant to
acquisitive prescription. Petitioners cannot base their respect or not to violate such right; and
case on inconsistent causes of action. Moreover, as (3) an act or omission on the part of such defendant in
the trial court already found the deed to have been violation of the right of the plaintiff or constituting a
validly revoked, the primary cause of action was breach of the obligations of the defendant to the
already thereby declared inexistent. Hence, according plaintiff for which the latter may maintain an action for
to respondents, the Court of Appeals correctly recovery of damages.
dismissed the complaint.
We find all the elements of a cause of action contained in
First. The trial court held that inasmuch as the the amended complaint of petitioners. While, admittedly,
donation made by UP to the Quezon City government petitioners were not parties to the deed of donation, they
had already been revoked, petitioners, for whose anchor their right to seek its enforcement upon their
benefit the donation had been made, had no cause of allegation that they are intended beneficiaries of the
action for specific performance. Nevertheless, it
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donation to the Quezon City government. (Refer to that such income consisted of rentals from tenants of the
Art. 1311 on stipulation pour autrui) land and that private respondents filed the land registration
case and withheld possession of the land from petitioners
It is hardly necessary to state that our conclusion that in bad faith.
petitioners’ complaint states a cause of action against
respondents is in no wise a ruling on the merits. That Petitioners filed an Amended Complaint to insert therein
is for the trial court to determine in light of respondent an allegation that “earnest efforts towards a compromise
UP’s defense that the donation to the Quezon City have been made between the parties but the same were
government, upon which petitioners rely, has been unsuccessful.”
validly revoked. Private respondents filed an Answer to Amended
Complaint with Counterclaim, in which they denied, among
It is evident that the trial court’s ruling on this question other things, that earnest efforts had been made to reach a
was only tentative, without prejudice to the final compromise but the parties were unsuccessful.
resolution of the question after the presentation by the
parties of their evidence. Petitioners moved for a judgment on the pleadings on the
ground that private respondents’ answer did not tender an
Second. It is further contended that the amended issue or that it otherwise admitted the material allegations
complaint alleges inconsistent causes of action for of the complaint. RTC denied petitioners’ motion.
specific performance of the deed of donation.
Respondents make much of the fact that while Petitioners in their amended complaint allege that earnest
petitioners claim to be the beneficiaries-donees of 15.8 efforts towards a compromise with the defendants were
hectares subject of the deed, they at the same time made, the fact is that their complaint was not verified as
seek recovery/delivery of title to the 42 hectares of provided in Article 151 of the Family Code. Besides, it is
land included in UP’s certificate of title. These are not not believed that there were indeed earnest efforts made
inconsistent but, rather, alternative causes of action to patch up and/or reconcile the two feuding brothers,
which Rule 8, §2 of the Rules of Court allows: Gregorio and Augusto, both surnamed Hontiveros.

Alternative causes of action or defenses.- A party RTC orders the dismissal of this case. Petitioners moved
may set forth two or more statements of a claim or for a reconsideration of the order of dismissal, but their
defense alternatively or hypothetically, either in motion was denied. Hence, this petition for review on
one cause of action or defense or in separate certiorari.
causes of action or defenses. When two or more
statements are made in the alternative and one of Private respondents raise a preliminary question. They
them if made independently would be sufficient, argue that petitioners should have brought this case on
the pleading is not made insufficient by the appeal to the Court of Appeals since the order of the trial
insufficiency of one or more of the alternative court judge was actually a decision on the merits. On the
statements. other hand, even if petition for certiorari were the proper
remedy, they contend that the petition is defective because
Thus, the parties are allowed to plead as many the judge of the trial court has not been impleaded as a
separate claims as they may have, regardless of respondent.
consistency, provided that no rules regarding venue
and joinder of parties are violated. WHEREFORE, the Private respondents’ contention is without merit. The
decision of the Court of Appeals is REVERSED and petition in this case was filed pursuant to Rule 45 of the
the case is REMANDED to the Regional Trial Court of Rules of Court.
Quezon City, Branch 89, for trial on the merits.
SO ORDERED. The rule, therefore, is that direct appeals to this Court from
the trial court on questions of law have to be through the
[G.R. No. 125465. June 29, 1999] filing of a petition for review on certiorari. It has been held

FACTS: Petitioner spouses Hontiveros, filed a x x x when a CFI (RTC) adjudicates a case in the
complaint for damages against private respondents exercise of its original jurisdiction, the correct mode of
Gregorio Hontiveros and Teodora Ayson before the elevating the judgment to the Court of Appeals is by
RTC Iloilo City. Petitioners alleged that they are the ordinary appeal, or appeal by writ of error, involving
owners of a parcel of land, in the Province of Capiz, merely the filing of a notice of appeal - except only if
that petitioners were deprived of income from the land the appeal is taken in special proceedings and other
as a result of the filing of the land registration case; cases wherein multiple appeals are allowed under the
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law, in which even the filing of a record on appeal claiming damages must satisfactorily prove the amount
is additionally required. Of course, when the thereof. . . .” Necessarily, a trial must be held.
appeal would involve purely questions of law or
any of the other cases (except criminal cases as Under the rules, if there is no controverted matter in the
stated hereunder) specified in Section 5(2), Article case after the answer is filed, the trial court has the
X of the Constitution, it should be taken to the discretion to grant a motion for judgment on the pleadings
Supreme Court by petition for review on certiorari filed by a party. Where there are actual issues raised in the
in accordance with Rules 42 and 45 of the Rules answer, such as one involving damages, which require the
of Court. presentation of evidence and assessment thereof by the
trial court, it is improper for the judge to render judgment
By way of implementation of the aforestated provisions based on the pleadings alone. In this case, aside from the
of law, this Court issued on March 9, 1990 Circular No. amount of damages, the following factual issues have to
2-90, paragraph 2 of which provides: be resolved, namely, (1) private respondent Teodora
Ayson’s participation and/or liability, if any, to petitioners
Appeals from Regional Courts to the Supreme and (2) the nature, extent, and duration of private
Court. – Except in criminal cases where the respondents’ possession of the subject property. The trial
penalty imposed is life imprisonment or reclusion court, therefore, correctly denied petitioners’ motion for
perpetua, judgments of regional trial courts may judgment on the pleadings.
be appealed to the Supreme Court only by petition
for review on certiorari in accordance with Rule 45 However, the trial court erred in dismissing petitioners’
of the Rules of Court in relation to Section 17 of complaint on the ground that, although it alleged that
the Judiciary Act of 1948, as amended, this being earnest efforts had been made toward the settlement of
the clear intendment of the provision of the Interim the case but they proved futile, the complaint was not
Rules that (a)ppeals to the Supreme Court shall verified for which reason the trial court could not believe
be taken by petition for certiorari which shall be the veracity of the allegation.
governed by Rule 45 of the Rules of Court.
The absence of the verification required in Art. 151 does
On the other hand, petitioners contend that the trial not affect the jurisdiction of the court over the subject
court erred in dismissing the complaint when no matter of the complaint. The verification is merely a formal
motion to that effect was made by any of the parties. requirement intended to secure an assurance that matters
They point out that, in opposing the motion for which are alleged are true and correct. If the court
judgment on the pleadings, private respondents did doubted the veracity of the allegations regarding efforts
not seek the dismissal of the case but only the denial made to settle the case among members of the same
of petitioners’ motion. Indeed, what private family, it could simply have ordered petitioners to verify
respondents asked was that trial be held on the merits. them.

Of course, there are instances when the trial court may As this Court has already ruled, the court may simply order
order the dismissal of the case even without a motion the correction of unverified pleadings or act on it and waive
to that effect filed by any of the parties. In Baja v. strict compliance with the rules in order that the ends of
Macandog, this Court mentioned these cases, to wit: justice may be served. Otherwise, mere suspicion or doubt
on the part of the trial court as to the truth of the allegation
The court cannot dismiss a case motu proprio that earnest efforts had been made toward a compromise
without violating the plaintiff’s right to be heard, but the parties’ efforts proved unsuccessful is not a ground
except in the following instances: if the plaintiff for the dismissal of an action. Only if it is later shown that
fails to appear at the time of the trial; if he fails to such efforts had not really been exerted would the court be
prosecute his action for an unreasonable length of justified in dismissing the action.
time; or if he fails to comply with the rules or any
order of the court; or if the court finds that it has no [G.R. No. 122269. September 30, 1999]
jurisdiction over the subject matter of the suit. REPUBLIC vs. CA, ET. AL.,

However, none of these exceptions appears in this FACTS: The parcel of land that is presently the subject of
case. Moreover, the trial court itself found that the dispute in the instant case Lot 3 Portion forms part of
“judgment on the pleadings is inappropriate not only the above-mentioned parcel of land declared by this
for the fact that [private respondents] in their answer . . Honorable Court as belonging to the public domain,
. specifically denied the claim of damages against classified/zonified land available for fishpond development.
them, but also because of the [rule] . . . that the party

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This lot has been leased to Mr. Porfirio Morado by the RULING: First, is the question whether petitioner has
Republic of the Philippines, represented by the personality to bring the action below. To begin with, an
Secretary of Agriculture, for a period of 25 years, or up action to recover a parcel of land is in personam. As such,
to December 31, 2013, under Fishpond Lease it is binding only between the parties thereto, as this Court
Agreement. explained in Ching v. Court of Appeals, viz:

On July 6, 1988, however, the late Zenaida Bustria An action to redeem, or to recover title to or
[daughter of Isidro Bustria] filed a complaint against possession of, real property is not an action in rem or
Porfirio Morado in the Regional Trial Court of an action against the whole world, like a land
Alaminos, Pangasinan for ownership and possession registration proceeding or the probate of a will; it is an
over the lot in question. Herein petitioner, the Republic action in personam, so much so that a judgment
of the Philippines, was not made a party to that suit. therein is binding only upon the parties properly
impleaded and duly heard or given an opportunity to
In her complaint, Zenaida Bustria claimed absolute be heard. Actions in personam and actions in rem
ownership and quiet and peaceful possession of differ in that the former are directed against specific
several lots under PSU-155696 surveyed in the name persons and seek personal judgments, while the latter
of her father, Isidro Bustria. She further asserted that are directed against the thing or property or status of a
said Porfirio Morado maliciously applied for a fishpond person and seek judgments with respect thereto as
permit with the Bureau of Fisheries and Aquatic against the whole world. An action to recover a parcel
Resources over Lot 3 thereof (the subject lot), well- of land is a real action but it is an action in personam,
knowing that said lot had always been occupied, for it binds a particular individual only although it
possessed and worked by her and her predecessors- concerns the right to a tangible thing.
The appellate court, holding that the proceedings before
Porfirio Morado denied the allegations in the the trial court were in personam, ruled that since petitioner
complaint, claiming that the lot in question is part of was not a party to Civil Case No. A-1759, it is not a real
the public domain which he developed and converted party-in-interest and, therefore, has no personality to bring
into a fishpond. Due, however, to Porfirio Morado’s the action for annulment of the judgment rendered in that
and his counsel’s failure to appear at the pre-trial and case.
subsequent court hearings, the trial court subsequently
declared Porfirio Morado ‘as in default.’ The appellate court is in error. In Islamic Da’wah Council
of the Phils. v. Court of Appeals, this Court held that a
Respondent Judge rendered a decision declaring the party claiming ownership of a parcel of land which is the
plaintiff as the exclusive and absolute owner of the subject of foreclosure proceedings has a sufficient interest
land in question. Petitioner (REPUBLIC), filed with the to bring an action for annulment of the judgment rendered
CA a petition for the annulment of the trial court’s in the foreclosure proceedings even though it was not a
decision. Petitioner alleged that the land in question is party in such proceedings. It was held:
within the classified/zonified alienable and disposable
land for fishpond development and that since the land [A] person need not be a party to the judgment sought
formed part of the public domain, the BFAR has to be annulled. What is essential is that he can prove
jurisdiction over its disposition in accordance with P.D. his allegation that the judgment was obtained by the
No. 704, §4. CA rendered a decision dismissing the use of fraud and collusion and he would be adversely
petition. Hence, this petition for review. affected thereby.

The judgment rendered in a case may be annulled on Private respondents do not deny that Isidro Bustria, to
any of the following grounds: (a) the judgment is void whom they trace their ownership, previously filed a
for want of jurisdiction or for lack of due process of fishpond application with the BFAR over the disputed land.
law; or (b) it was obtained through extrinsic fraud. The Neither do they deny that the disputed land formed part of
question in this case is whether the decision of the the public domain.
Regional Trial Court is void on any of these grounds.
The preliminary question, however, is whether the We agree with petitioner. The State clearly stands to be
government can bring such action even though it was adversely affected by the trial court’s disposition of
not a party to the action in which the decision sought inalienable public land. The land involved in this case was
to be annulled was rendered. We shall deal with these classified as public land suitable for fishpond development.
questions in inverse order. In controversies involving the disposition of public land, the
burden of overcoming the presumption of state ownership
of lands of the public domain lies upon the private
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claimant. Private respondents have not discharged this Petitioners SITI and Cometa filed their respective answers.
burden. After the pre-trial of the case, they filed a joint motion to
dismiss with alternative motion to drop respondent HBI as
The fact that the land in dispute was transformed into a party plaintiff, upon the following grounds: The complaint
a “fully developed fishpond” does not mean that it has states no cause of action; Secretary Drilon,
lost its character as one declared “suitable for fishpond Undersecretary Bello and the prosecutor, not impleaded
purposes” under the decree. By applying for a herein, are the real parties in-interest-defendants, which
fishpond permit with BFAR, Isidro Bautista admitted again makes the complaint lack a cause of action. At the
the character of the land as one suitable for fishpond least, the above public official are indispensable parties,
development since the disposition of such lands is and their non-inclusion renders this court without
vested in the BFAR. Consequently, private jurisdiction over the case; The action seeks to impose a
respondents, as his successors-in-interests, are penalty on the right to litigate and for that reason is
estopped from claiming otherwise. unconstitutional and against settled public policy.

It is settled under the Public Land Law that alienable Trial court after a thorough perusal of the contents
public land held by a possessor, personally or through embodied in said pleadings, in the exercise of its sound
his predecessor-in-interest, openly, continuously, and judicial discretion finds that there are sufficient allegations
exclusively for 30 years is ipso jure converted to of cause of action in the Complaint. The defense of lack of
private property by the mere lapse of time. However, cause of action, and that defendants are not the real
only public lands classified as agricultural are parties in interest, in the considered opinion of this Court,
alienable. Lands declared for fishery purposes are not are matters of defense, which will be considered, after the
alienable and their possession, no matter how long contending parties thru counsel shall have rested their
continued, cannot ripen into ownership. cases, and the case submitted for Decision.
Since the disposition of lands declared suitable for
fishpond purposes fall within the jurisdiction of the Petitioners, in separate motions, asked for a
BFAR, in accordance with P.D. No 704, §4, the trial reconsideration but their motions were denied. CA
court’s decision is null and void. The trial court has no rendered its decision denying the petition for certiorari and
jurisdiction to make a disposition of inalienable public prohibition of petitioners. Petitioners filed a motion for
land. reconsideration but the appellate court denied their motion.

[G.R. No. 124062. January 21, 1999] Hence, this petition. The principal question for decision is
COMETA vs. CA whether the complaint filed by private respondents against
petitioners in the Regional Trial Court states a cause of
FACTS: Petitioner State Investment Trust, Inc. (SITI), action. First, petitioners maintain it does not as the
formerly State Investment House, Inc. (SIHI), is an allegations in the complaint are insufficient and
investment house engaged in quasi-banking activities. indispensable parties were not impleaded in the case.
Petitioner Reynaldo Cometa is its president. Private Secondly, they contend that private respondent HBI should
respondent Honeycomb Builders, Inc. (HBI), on the have been dropped as a party plaintiff upon petitioners’
other hand, is a corporation engaged in the business motion therefor. Both contentions are without merit.
of developing, constructing, and selling townhouses
and condominium units. Private respondent Reynaldo First. A complaint for malicious prosecution states a cause
Guevara is president of HBI and chairman of the board of action if it alleges:
of directors of Guevent Industrial Development Corp.
(GIDC). 1. that the defendant was himself the prosecutor or
that at least he instigated the prosecution;
An information for Falsification of Public Document 2. that the prosecution finally terminated in the
was thus filed against private respondent Guevara in plaintiff’s acquittal;
the Regional Trial Court of Makati. After the 3. that in bringing the action the prosecutor acted
prosecution presented its evidence, Guevara filed a without probable cause; and
demurrer to evidence which the trial court granted. 4. that the prosecutor was actuated by malice, i.e., by
improper and sinister motives.
Following the dismissal of the criminal case against
him, private respondents Reynaldo S. Guevara and Whether the facts pleaded and the substantive law entitle
HBI filed a complaint for malicious prosecution against plaintiff to a judgment. Otherwise stated, can a judgment
petitioners Cometa and SITI in the Regional Trial be rendered upon the facts alleged and deemed admitted,
Court of Quezon City. in accordance with the prayer in the complaint? To

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resolve this, the allegations of the complaint must be speculative. On this point, we think the Court of Appeals
examined. correctly ruled.

The mere allegation in a complaint for malicious It is true that a criminal case can only be filed against the
prosecution that an information was filed after officers of a corporation and not against the corporation
preliminary investigation and that a warrant of arrest itself. It does not follow from this, however, that the
was thereafter issued does not by itself negate corporation cannot be a real-party-in-interest for the
allegations in the same complaint that the prosecution purpose of bringing a civil action for malicious prosecution.
was malicious. All criminal prosecutions are by
direction and control of the public prosecutor. To
sustain petitioners’ stand that an allegation in a [G.R. No. 132644. November 19, 1999]
complaint for malicious prosecution that the DAVID vs. MALAY
information in the criminal case was filed after
appropriate preliminary investigation negates a FACTS: The spouses Andres Adona and Leoncia Abad,
contrary allegation that the filing of the case was husband and wife for a good number of years, were
malicious would result in the dismissal of every action blessed with five children among them being Carmen
for malicious prosecution. Adona. Carmen married Filomeno Malay; three children
were begotten by the marriage (among the herein private
In contrast, the decision of the criminal court in the respondents). Following the death of Leoncia Abad in
present case indicates that there was not even prima 1923, Andres Adona cohabited with Maria Espiritu, herself
facie evidence to prove the alleged guilt of the a widow, apparently without the benefit of marriage.
accused. Consequently, a trial was in fact Andres and Maria sired two children, represented herein
unnecessary and the criminal court dismissed the case by her heirs. Maria Espiritu likewise had a child by her
against private respondent Guevara on the basis of a previous marriage, now herein represented also by his
demurrer to evidence. own heirs.

Second. Petitioners contend that the Secretary and During his lifetime, Andres Adona applied for a homestead
the Undersecretary of the Department of Justice and patent over a parcel of agricultural land located at Iba,
the Assistant Provincial Prosecutor should have been Zambales. After Andres Adona had died, Maria Espiritu,
included in the case for malicious prosecution because predecessor-in-interest of herein petitioners, succeeded in
it was they who found probable cause against private obtaining OCT over the land in her name. After Maria
respondents and under the law the prosecution of Espiritu had died in 1945, the children, as well as
criminal actions is vested in the public prosecutor. descendants of Andres Adona by his marriage with
According to petitioners, they did not conduct the Leoncia Abad, continued to be in peaceful and quiet
preliminary investigation or order the filing of an possession of the subject land.
information and their participation was limited to
initiating the investigation in the NBI and testifying. Sometime in 1989, petitioners executed a deed of
“Extrajudicial Settlement with Sale” over the subject
There is no merit in this contention. The issue in those property in favor of Mrs. Venancia Ungson. Private
cases was not whether the complaint stated a cause of respondents protested the sale claiming that they were the
action against defendants who were complainants in true owners of the land. Ultimately, in any event, the sale
the criminal cases which led to the filing of civil cases in favor of Mrs. Ungson was rescinded in view of the
for damages but whether they were liable to the latter’s failure to pay in full the consideration agreed upon.
plaintiffs. The Court merely ruled in those cases that Subsequently, petitioners executed another deed of
the complainant in the criminal case is not necessarily Extrajudicial Settlement with Sale. In this new instrument,
liable simply because he initiated the criminal case dated 15 December 1990, petitioners divided the land
which eventually was dismissed. It is noteworthy that, equally among themselves and sold their respective
in the case at bar, private respondents do not only shares to their co-petitioners herein, Antonio de Ubago,
allege that petitioners initiated the filing of the criminal Jr., TCT was issued in favor of the de Ubagos.
case against them but that because of the evidence
they (petitioners) presented, the Department of Justice Private respondents filed a complaint for “Annulment of
could have been induced to order the filing of a Sale with Restraining Order, Injunction and Damages”
criminal case in court. against petitioners. Private respondents averred that the
disputed land sold by the heirs of Maria Espiritu to the de
Third. It is contended that HBI is not a real-party-in- Ubagos was the subject of a homestead application by
interest, whatever interest it may have being purely their great grandfather, Andres Adona, but that OCT was
instead fraudulently issued to Maria Espiritu,
Danniel Ancheta Page 7 of 16 11/9/2009

not its issuance been attended with fraud. The attendance

Upon her false representation that she was the widow of fraud created an implied trust in favor of private
of Andres Adona. After a hearing on the merits of the respondents and gave them the right of action to seek the
case, the trial court dismissed the complaint for lack of remedy of reconveyance of the property wrongfully
cause of action and on the ground of prescription. It obtained. In Javier vs. Court of Appealsthis Court ruled:
opined that the action being one for annulment of sale
anchored on a fraudulent titling of the subject property, “x x x The basic rule is that after the lapse of one (1)
the cause of action constituted a collateral attack on year, a decree of registration is no longer open to
the Torrens Certificate of Title. The court a quo added review or attack although its issuance is attended with
that even if the action were to be treated as being one actual fraud. This does not mean however that the
for reconveyance, the suit would still have to fail since aggrieved party is without a remedy at law. If the
an action for reconveyance could only be brought property has not yet passed to an innocent purchaser
within 10 years counted from the date of issuance of for value, an action for reconveyance is still
the certificate of title (in 1933). available. The decree becomes incontrovertible and
can no longer be reviewed after one (1) year from the
On appeal, CA set aside the order of the trial court and date of the decree so that the only remedy of the
directed the cancellation of TCT. Petitioners have landowner whose property has been wrongfully or
come to this Court and seek to dispute the judgment of erroneously registered in another’s name is to bring an
the CA. ordinary action in court for reconveyance, which is an
action in personam and is always available as long as
Private respondents, upon the other hand, asks this the property has not passed to an innocent third party
Court to sustain the decision of the Court of Appeals for value. If the property has passed into the hands of
on the thesis that the property in question indubitably an innocent purchaser for value, the remedy is an
belongs to the estate of Andres Adona whose action for damages.”
incontestable right to it is derived from the perfected
homestead application two years prior to his death as The caption of the case before the court a quo while
so admitted by Maria Espiritu herself in her affidavit denominated as being one for “Annulment of Sale with
submitted to the Director of Lands. Damages” is in reality an action for reconveyance since
the ultimate relief sought by private respondents would be
RULING: The Court rules for the affirmance of the for the property covered by Original Certificate of Title No.
challenged decision. A certificate of title issued under 398 to be reconveyed to the estate of Andres Adona. In
an administrative proceeding pursuant to a homestead this jurisdiction, the dictum adhered to is that the nature of
patent covering a disposable public land within the an action is determined, more importantly, by the body of
contemplation of the Public Land Law or the pleading or complaint itself than by its title or heading.
Commonwealth Act No. 141 is as indefeasible as a
certificate of title issued under a judicial registration The Court of Appeals did not err in treating the action
proceeding. Under the Land Registration Act, title to brought by private respondents as one for reconveyance
the property covered by a Torrens certificate becomes or as one that seeks the transfer of the property,
indefeasible after the expiration of one year from the wrongfully registered by another, to its rightful and legal
entry of the decree of registration. Such decree of owner. It would seem that Andres Adona did perfect his
registration is incontrovertible and becomes binding on homestead application prior to his death, the right to the
all persons whether or not they were notified of, or issuance of the patent on which vests after complying with
participated in, the in rem registration process. all the requirements of the law.

There is no specific provision in the Public Land Law The next crucial issue focuses on the ruling of the Court of
or the Land Registration Act (Act 496), now Appeals to the effect that if a person who claims to be the
Presidential Decree 1529, fixing a similar one-year owner of the property is in actual possession thereof, the
period within which a public land patent can be right to seek reconveyance does not prescribe.
considered open to review on the ground of actual
fraud, such as that provided for in Section 38 of the There is no doubt about the fact that an action for
Land Registration Act, and now Section 32 of reconveyance based on an implied trust ordinarily
Presidential Decree 1529, and clothing a public land prescribes in ten years. This rule assumes, however, that
patent certificate of title with indefeasibility. there is an actual need to initiate that action, for when the
right of the true and real owner is recognized, expressly or
Original Certificate of Title No. 398 was issued in the implicitly such as when he remains undisturbed in his
name of Maria Espiritu on 04 December 1933 and possession, the statute of limitation would yet be
would have become indefeasible a year thereafter had irrelevant. An action for reconveyance, if nonetheless
Danniel Ancheta Page 8 of 16 11/9/2009

brought, would be in the nature of a suit for quieting of Finally, this Court sees no cogent reasons to disturb the
title, or its equivalent, an action that is imprescriptible. finding of the Court of Appeals that the de Ubagos may not
be considered buyers in good faith. Said the Appellate
In Faja vs. Court of Appeals, the Court has held that a Court.
person in actual possession of a piece of land under
claim of ownership may wait until his possession is “x x x An innocent purchaser for value is one who
disturbed or his title is attacked before taking steps to buys property of another, without notice that some
vindicate his right, and that his undisturbed possession other person has a right to, or interest in, such
gives him the continuing right to seek the aid of a court property and pays a full and fair price for the same, at
of equity to ascertain and determine the nature of the the time of such purchase, or before he has notice of
adverse claim of a third party and its effect on his title. the claim or interest of some other persons in the
In the words of the Court - property. He buys the property with the belief that the
person from whom he receives the thing was the
“x x x There is settled jurisprudence that one who owner and could convey title to the property. A
is in actual possession of a piece of land claiming purchaser can not close his eyes to facts which should
to be owner thereof may wait until his possession put a reasonable man on his guard and still claim he
is disturbed or his title is attacked before taking acted in good faith (Sandoval vs. Court of Appeals,
steps to vindicate his right, the reason for the rule 260 SCRA 283, 296 [1996])
being, that his undisturbed possession gives him a
continuing right to seek the aid of a court of equity “It is well settled that one who deals with property
to ascertain and determine the nature of the registered under the Torrens system need not go
adverse claim of a third party and its effect on his beyond the same, but only has to rely on the title. He
own title, which right can be claimed only by one is charged with notice only of such burdens and claims
who is in possession. No better situation can be as are annotated on the title. (Sandoval, supra., at p.
conceived at the moment for Us to apply this rule 295)
on equity than that of herein petitioners whose
mother, Felipa Faja, was in possession of the “The aforestated principle admits of an unchallenged
litigated property for no less than 30 years and exception: that a person dealing with registered land
was suddenly confronted with a claim that the land has a right to rely on the Torrens certificate of title and
she had been occupying and cultivating all these to dispense with the need of inquiring further except
years, was titled in the name of a third person. when the party has actual knowledge of facts and
We hold that in such a situation the right to quiet circumstances that would impel a reasonably cautious
title to the property, to seek its reconveyance and man to make such inquiry or when the purchaser has
annul any certificate of title covering it, accrued some knowledge of a defect or the lack of title in his
only from the time the one in possession was vendor or of sufficient facts to induce a reasonably
made aware of a claim adverse to his own, and it prudent man to inquire into the status of the title of the
is only then that the statutory period of prescription property in litigation. The presence of anything which
commences to run against such possessor.” excites or arouses suspicion should then prompt the
vendee to look beyond the certificate and investigate
The same dictum is reiterated in Heirs of Jose Olviga the title of the vendor appearing on the face of said
vs. Court of Appeals; thus - certificate. One who falls within the exception can
neither be denominated an innocent purchaser for
“With regard to the issue of prescription, this Court value nor a purchaser in good faith and hence does
has ruled a number of times before that an action not merit the protection of the law. (Sandoval, supra.)
for reconveyance of a parcel of land based on (Underscoring supplied)
implied or constructive trust prescribes in ten
years, the point of reference being the date of The rule is settled that a buyer of real property which is in
registration of the deed or the date of the issuance the possession of persons other than the seller must be
of the certificate of title over the property (Vda de wary and should investigate the rights of those in
Portugal vs. IAC, 159 SCRA 178) But this rule possession. Otherwise, without such inquiry, the buyer
applies only when the plaintiff is not in possession can hardly be regarded as a buyer in good faith. The
of the property, since if a person claiming to be the buyer who has failed to know or discover that the land sold
owner thereof is in actual possession of the to him is in the adverse possession of another buyer in
property, the right to seek reconveyance, which in bad faith. (Embrado vs. Court of Appeals, 233 SCRA 335,
effect seeks to quiet title to the property, does not 347 [1994]).WHEREFORE, the decision of CA is
prescribe.” AFFIRMED.

Danniel Ancheta Page 9 of 16 11/9/2009


[G.R. No. 115794. June 10, 1999] ownership of the land fraudulently titled to respondent has
MANANGAN vs. DELOS REYES prescribed and is barred by laches. We affirm.
Petitioner’s right of action to recover ownership of the land
FACTS: Respondents were co-owners of 3 parcels of in question has prescribed and is barred by laches.
land located in San Narciso, Zambales, covered by
OCT No. 7372 of the Register of Deeds of Zambales. In Alvarez vs. Intermediate Appellate Court, we ruled that
Petitioner, on the other hand, was a tenant of the the remedy of the landowner whose property has been
respondents and had been sharing the harvest of the wrongfully or erroneously registered in another’s name is
land with respondents’ mother, Macaria Villanueva, to bring an action in the ordinary courts of justice for
during her lifetime. reconveyance. The Court of Appeals correctly ruled that
an action for reconveyance based on an implied or
On December 11, 1932, Macaria Villanueva sold the constructive trust prescribes in ten (10) years from the
parcels of land in question to Victoriano Manangan, issuance of the torrens title over the property, citing Tale
petitioner’s father, evidenced by a duly notarized deed vs. Court of Appeals.
of sale signed by Macaria and the respondents except
Inocencio de los Reyes. After cadastral proceedings Petitioner slept on his right for thirty eight (38) years
were initiated over the land, the registration court counted from the time the Original Certificate of Title was
decreed registration under the torrens system of the issued on June 21, 1937, until he filed his amended
parcels of land involved in the names of Macaria answer to respondents’ complaint on March 14, 1975,
Villanueva, Cirilo de los Reyes, and Francisco de los asking for reconveyance of the lots in question. The
Reyes. petitioner’s right to bring such action was barred by laches
as he took no step towards that direction reasonably after
RD of Zambales, pursuant to the decree of the title to the property was issued under the torrens
registration, issued Original Certificate of Title No. system. Finally, petitioner cannot invoke Article 1141 of the
7372 in the names of Macaria Villanueva, Cirilo de los Civil Code as this law provides only a period of thirty (30)
Reyes, and Francisco de los Reyes, now all years to bring real actions over immovable property.
deceased. Macaria is survived by three children,
respondents herein. Francisco is survived by two [G.R. No. 63145. October 5, 1999]
children, respondents herein. Cirilo died without any VENTURA vs. HON. MILITANTE
FACTS: Private respondent filed a Complaint for a Sum of
On July 6, 1974, respondents filed with the Court of Money and Damages against petitioner. During the lifetime
First Instance of Zambales, a complaint for recovery of of Carlos Ngo he was indebted with the plaintiff (herein
possession of the aforesaid parcels of land against priv. resp.). Said obligation is already due and demandable
petitioner claiming the right of possession of said land. and the defendant thru Ms. Ventura who is ostensibly
Petitioner resisted such claim alleging fraud in causing taking care of the properties/estate of deceased Carlos
the land to be registered in respondents’ names Ngo, refused, failed and neglected and still continues to
despite its sale to petitioner’s father. Petitioner filed refuse, fail and neglect to pay despite repeated demands.
with the lower court an amended answer for
reconveyance of the lots in question. Petitioner moved to dismiss the foregoing complaint on the
ground that “the estate of Carlos Ngo has no legal
RTC rendered a decision in favor of respondents personality,” the same being “neither a natural nor legal
declaring that they had a better right over the subject person in contemplation of law.”
parcels of land. Petitioners appealed to CA. CA
affirmed the trial court’s conclusion and ruling that In his Opposition to Motion to Dismiss, petitioner insisted
petitioner’s action had prescribed and was barred by that since “the money claim subject of this case actually
laches. Hence, this petition for review on certiorari. represents the costs of automotive spare
parts/replacements contracted by deceased Carlos Ngo
ISSUE: Can possession by a vendee of an during his lifetime for the benefit/business of the family x x
unregistered real property defeat the torrens title x the conjugal partnership x x x shall be accountable for
thereon later secured by the vendor inspite of the sale, the payment thereof.” Subsequently, private respondent's
where the title was obtained in land registration counsel manifested that he is poised to “amend the
proceedings filed thirty eight (38) years ago? complaint in order to state the correct party defendant that
he intends to sue in this case”. The public respondent
RULING: In this appeal via certiorari, petitioner seeks gave private respondent fifteen (15) days to make the
to reverse the decision of the Court of Appeals holding amendment.
that an action for reconveyance or recovery of
Danniel Ancheta Page 10 of 16 11/9/2009

Petitioner filed a Motion for Reconsideration of the petitioner pay her husband's debt which, he insisted,
order of public respondent permitting private redounded to the benefit of everyone in her family.
respondent to amend his complaint. Public respondent
issued the herein assailed order that the indebtedness It is true that amendments to pleadings are liberally
was incurred by Carlos Ngo and defendant Sulpicia allowed in furtherance of justice, in order that every case
Ventura and since Carlos Ngo is now dead that will not may so far as possible be determined on its real facts, and
preclude the plaintiff from filing a case against the in order to speed the trial of causes or prevent the circuitry
living defendant, Sulpicia Ventura. of action and unnecessary expense. But amendments
cannot be allowed so as to confer jurisdiction upon a court
Petitioner scurried to this Court praying that the that never acquired it in the first place. When it is evident
foregoing order of the public respondent be set aside that the court has no jurisdiction over the person and the
and the amended complaint of private respondent. subject matter and that the pleading is so fatally defective
as not to be susceptible of amendment, or that to permit
RULING: We grant the petition. The original complaint such amendment would radically alter the theory and the
of petitioner named the “estate of Carlos Ngo as nature of the action, then the court should refuse the
represented by surviving spouse Ms. Sulpicia Ventura” amendment of the defective pleading and order the
as the defendant. Petitioner moved to dismiss the dismissal of the case.
same on the ground that the defendant as named in
the complaint had no legal personality. We agree. Moreover, as correctly argued by petitioner, the conjugal
partnership terminates upon the death of either spouse.
Neither a dead person nor his estate may be a party After the death of one of the spouses, in case it is
plaintiff in a court action. A deceased person does not necessary to sell any portion of the conjugal property in
have such legal entity as is necessary to bring action order to pay outstanding obligations of the partnership,
so much so that a motion to substitute cannot lie and such sale must be made in the manner and with the
should be denied by the court. An action begun by a formalities established by the Rules of Court for the sale of
decedent's estate cannot be said to have been begun the property of deceased persons. Where a complaint is
by a legal person, since an estate is not a legal entity; brought against the surviving spouse for the recovery of an
such an action is a nullity and a motion to amend the indebtedness chargeable against said conjugal property,
party plaintiff will not likewise lie, there being nothing any judgment obtained thereby is void. The proper action
before the court to amend. Considering that capacity should be in the form of a claim to be filed in the testate or
to be sued is a correlative of the capacity to sue, to the intestate proceedings of the deceased spouse.
same extent, a decedent does not have the capacity to
be sued and may not be named a party defendant in a In many cases as in the instant one, even after the death
court action. of one of the spouses, there is no liquidation of the
conjugal partnership. This does not mean, however, that
It is clear that the original complaint of private the conjugal partnership continues. And private
respondent against the estate of Carlos Ngo was a suit respondent cannot be said to have no remedy. Under
against Carlos Ngo himself who was already dead at Sec. 6, Rule 78 of the Revised Rules of Court, he may
the time of the filing of said complaint. At that time, apply in court for letters of administration in his capacity as
and this, private respondent admitted, no special a principal creditor of the deceased Carlos Ngo if after
proceeding to settle his estate had been filed in court. thirty (30) days from his death, petitioner failed to apply for
As such, the trial court did not acquire jurisdiction over administration or request that administration be granted to
either the deceased Carlos Ngo or his estate. some other person.

To cure this fatal defect, private respondent amended [G.R. No. 116151. July 2, 1999]
his original complaint. In his amended complaint, ALMORA vs. CA
private respondent deleted the estate of Carlos Ngo
and named petitioner as the defendant. When FACTS: As found by the lower court, the disputed property
petitioner, in her comment to the amended complaint, is public land, such being a part of the Mount Data
reasoned that the conjugal partnership of gains National Reservation Park, over which Ben Almora, the
between her and Carlos Ngo was terminated upon the late father of petitioners, was granted an occupancy permit
latter's death and that the debt which he contracted, by the Bureau of Forestry, and over which Ben Almora and
assuming it was a charge against the conjugal petitioners herein have consistently paid real property
property, could only be paid after an inventory is made taxes since the property’s declaration in 1945 until 1987.
in the appropriate testate or intestate proceeding,
private respondent simply reiterated his demand that Ben Almora leased the disputed property and the building
situated thereon in favor of Federico Peralta, the now
Danniel Ancheta Page 11 of 16 11/9/2009

deceased father of private respondents, as evidenced RTC Baguio City rendered a decision in favor of plaintiffs,
by a Contract of Lease, in which Ben Almora petitioners herein ordering private respondents to vacate
represented himself to be the “true and lawful owner” the premises of the property and to restore the possession
of the leased property, and in which Federico Peralta thereof to petitioners. CA reversed the decision of the
acknowledged the said true and lawful ownership of RTC.
Ben Almora.
In the course of this appeal, private respondents brought
Federico Peralta failed to pay the rentals as they fell up several procedural matters which we summarize as
due, thus prompting Ben Almora to file a case for follows: (1) the petition was filed out of time, resulting in
unlawful detainer and recovery of unpaid rentals. MTC this Court’s failure to acquire jurisdiction and take
ruled in favor of Almora, ordering Peralta to vacate the cognizance of the appeal; (2) no motion for
premises of the leased property and to pay the arrears reconsideration was filed in the Court of Appeals, thus
in rentals. The MTC decision was affirmed by the depriving the said court of an opportunity to correct any
defunct Court of First Instance of Baguio which errors as it may have made; and (3) the petition raises
decision on appeal became final and executory, no questions of fact which are not the proper subject of review
appeal having been interposed to the Court of Appeals in a petition for review under Rule 45.
or Supreme Court.
RULING: Rule 45, Section 1 of the Rules of Court,
Inspite of said decision, the Peraltas refused to vacate however, distinctly provides that
the premises of the disputed property; rather, they
continued to occupy it. When Federico Peralta died, “A party may appeal by certiorari from a judgment of
his three children built their respective houses on the the Court of Appeals, by filing with the Supreme Court
lot and continued to occupy the same. Before his a petition for certiorari within fifteen (15) days from
death, Ben Almora sold the land in question, covered notice of judgment, or of the denial of his motion for
by and forming part of the property declared under Tax reconsideration filed in due time. (Emphasis
Declaration No. 9577, together with his other lands, to supplied)”
his children, petitioners herein, through a Deed of Sale
of Unregistered Lands. The conjunctive “or” clearly indicates that the 15-day
reglementary period for the filing of a petition for certiorari
Private respondents did not dispute the fact of the under Rule 45 commences either from notice of the
lease between Ben Almora and their father, Federico questioned judgment or from notice of denial of the
Peralta, but contended that their father, along with the appellant’s motion for reconsideration. A prior motion for
other lessees of Lots A and B, ceased to pay rentals reconsideration is not indispensable for a petition for
upon learning that Ben Almora had no title to the lands review on certiorari under Rule 45 to prosper. The
he was leasing out, but was merely issued an reliance of private respondents in the cases cited in their
occupancy permit by the Bureau of Forestry. They also Comment is unfounded, for all of these cases addressed
pointed out that the permit granted to Ben Almora petitions for certiorari grounded on grave abuse of
embodied specific restrictions against the alienation or discretion, or what is now known as special civil action of
subletting of the subject property. certiorari under Rule 65 of the Rules of Court. For such
action to commence, the Rules require that the petitioner
These conflicting claims to occupy and use the be left with “no appeal, nor any plain, speedy, and
disputed lots reached the Secretary of Agriculture and adequate remedy in the ordinary course of law.” A motion
Natural Resources (SANR) and the Office of the for reconsideration of an assailed decision is deemed a
President for resolution. Per Decision No. 1039 dated plain and adequate remedy provided by law.
July 18, 1974, series of 1974, the Office of the
President decided in favor of Federico Peralta and the Where, under Rule 45, certiorari is resorted to as a mode
other lessees-applicants, upholding their right to also of appeal, the indispensability of a motion for
file applications for permits to occupy and use the reconsideration is negated, and the party aggrieved may
respective portions occupied by them as against the validly file a petition for review on certiorari with the
claim of Ben Almora that he already owned the said Supreme Court within 15 days from notice of judgment of
properties by virtue of prescription, and directing that the Court of Appeals.
Almora and all the occupants of the land be allowed to
continue their occupation thereof upon the issuance of Thirdly, petitioners seek to involve us in a re-evaluation of
occupancy permits by the Bureau of Forest the factual veracity and probative value of the evidence
Development. they submitted in the lower court, contrary to the dictates
of Rule 45 that only questions of law may be raised and
resolved on petition. Absent any whimsical or capricious
Danniel Ancheta Page 12 of 16 11/9/2009

exercise of judgment, and unless the lack of any basis [G.R. No. 133491. October 13, 1999]
for the conclusions made by the lower courts be amply ASUNCION vs. EVANGELISTA
demonstrated, the Supreme Court will not disturb such
factual findings. FACTS: Private respondent organized Embassy Farms,
Inc. and registered it with the Securities and Exchange
Having set aside these procedural issues, We proceed Commission. Private respondent was the majority
to evaluate the merits of this Petition. Do private stockholder of the corporation, with 90% of the shares in
respondents hold a better right of possession over the his name. He also served as its president and chief
property than petitioners, who had prior possession executive officer. Private respondent borrowed from
thereof? several financial institutions to use as working capital for
Embassy Farms. He executed a real estate mortgage on
We hold in the affirmative. A perusal of the entire three of his properties as security for the loan. Private
records of the case shows that Federico Peralta was respondent defaulted in his loan payments.
granted an occupancy permit over the disputed
property by the Bureau of Forestry. Petitioner and private respondent executed a
Memorandum of Agreement ceding to petitioner his assets
The possession of the Almoras of the contested lots in exhange for the former’s assumption of his obligations.
was not exclusive and was in fact interrupted by the However, more than a year after the signing of the
adverse possessions of the other claimants who were Memorandum of Agreement, the landholdings of private
similarly granted occupancy permits by the Bureau of respondent which were mortgaged to Paluwagan ng
forestry (now Bureau of Forest Development). Bayan Savings and Loan Association, PAIC Savings and
Mortgage Bank and Mercator Finance Corporation still
The issuance of an occupancy permit to Federico remained titled in his name. Neither did he inform said
Peralta as a claimant in the administrative case vested mortgagees of the transfer of his lands.
upon him and private respondents, as his successors-
in-interest, possessory rights over the land in dispute Petitioner filed in RTC a complaint for rescission of the
to the exclusion of all others, except the State and Memorandum of Agreement with a prayer for damages.
such persons as may hold legal and equitable title RTC rendered judgment in favor of private respondent. It
under law. Such issuance also resulted in the ruled "The Memorandum of Agreement is essentially a
dispossession of petitioners and the tacit cancellation contract of sale where [private respondent] agreed to sell
of petitioners’ permit over the same land, to the extent his nineteen parcels of land and his shares in Embassy
of the property covered by the permit issued to Farms, in consideration, among others, of the assumption
Peralta, as the fact of possession cannot be by [petitioner] of [private respondent’s] loans with three
recognized at the same time in two different persons. financial institutions. As a matter of law and practice, it is
incumbent upon the vendee to first comply with his
As the present possessors of the property, by virtue of obligations under the contract of sale before he can
a permit to ocuupy granted by the governmental demand performance by the vendor. In a contract of sale,
authority vested with the power to issue the same, the vendor is not required to deliver the thing sold until the
prior to the perfection of a sales application over the price is paid. Court hereby declared the MOA rescinded
same property, private respondents’ possessory rights and of no further force and effect.
are preferred over anyone else’s, and clearly surpass
the claim of petitioners of prior possession, which has A copy of the decision of the trial court was sent by
long since terminated. registered mail to petitioner’s counsel of record, Atty.
Romeo Z. Comia. However, unknown to petitioner, Atty.
Firstly, recovery upon claim of ownership has no place Comia died while the case was still pending in the trial
in an accion publiciana. Where the object of the court. Private respondent filed in the trial court a Notice of
parties is to recover dominion over the property as Death of petitioner’s counsel, with a request that a copy of
owner, the appropriate action to file is an accion its decision be personally served on petitioner.
reinvindicatoria, and not a plenary action to recover
possession as the case herein, which involves Private respondent filed by registered mail a Motion for
restitution of possession only, when the cause of Execution. RTC issued a writ of execution against
dispossession is not among those covered by the petitioner. Petitioner filed in the trial court a Notice of
grounds for forcible entry and unlawful detainer, or Appeal, Substitution of Counsel, and an Urgent Motion to
when possession has been lost for more than one year Recall the Order of Execution and Quash the Writ of
and can no longer be maintained under Rule 70 of the Execution. Trial court issued an Order suspending the
Rules of Court. execution of its decision. CA affirmed the decision of the
trial court and ordered its immediate execution.
Danniel Ancheta Page 13 of 16 11/9/2009

others, the outright payment by petitioner of a lump sum,

CA issued a Resolution denying petitioner’s Motion for the continuous operation of the piggery at his expense and
Reconsideration and noting private respondent’s Ex- the assumption by petitioner of all the financial obligations
Parte Motion for Issuance of a Writ of Attachment. of private respondent upon their restructuring.
Hence this petition raising the following issues:
The records show that while petitioner paid private
“1. WHETHER OR NOT THE JULY 1, 1994 respondent the stipulated lump sum and gave more money
DECISION OF THE REGIONAL TRIAL COURT for the restructuring of private respondent’s loans and for
WAS ALREADY FINAL AND EXECUTORY the continued operation of Embassy Farms, Inc., private
WHEN ASUNCION FILED HIS NOTICE OF respondent never executed a deed of sale with
APPEAL. assumption of mortgage over his landholdings, and
"2. WHETHER OR NOT THE MEMORANDUM although he endorsed in blank his certificates of stock, he
OF AGREEMENT EXECUTED BETWEEN never delivered them to petitioner to effectuate their valid
JOINT VENTURE. Private respondent is clearly obliged under the
"3. WHETHER IT WAS ASUNCION OR Memorandum of Agreement to execute the deed of
EVANGELISTA WHO FIRST RENEGED OR conveyance with assumption of mortgage in favor of
FAILED TO COMPLY WITH HIS petitioner. Had such deed been executed, the interests of
CORRESPONDING OBLIGATIONS UNDER THE both petitioner and private respondent would have been
MEMORANDUM OF AGREEMENT.” simultaneously secured, the former, as regards his
ownership rights over the subject lands sold to him, and
The petition is meritorious. the latter, as regards the substitution, in his place, of
petitioner as the new debtor in his loan obligations with
One. The respondent Court of Appeals erred in Paluwagan ng Bayan Savings and Loan Association, PAIC
holding that the decision of the trial court dated July 1, Savings and Mortgage Bank and Mercator Finance
1994 had become final and executory. It is Corporation.
established that petitioner was not aware of his
counsel’s death while the case was pending in the trial Private respondent, however, failed and refused, despite
court. He could not have known, therefore, that a copy demands, to execute this legal document. It follows that
of the trial court’s decision was sent by registered mail petitioner could not be faulted when he desisted from
to his counsel. Indeed, it was private respondent who further paying private respondent's debts.
notified the trial court of the death of petitioner’s
counsel and who requested that a copy of the decision Three. In fine, petitioner and private respondent entered
be served personally to petitioner. His request was, into what the law regards as reciprocal obligations. Of
however, denied. such specie of legal contracts, Tolentino says:

While petitioner was furnished a copy of the decision “x x x Reciprocity arises from identity of cause, and
by mail, the registry receipt evidencing its date of necessarily the two obligations are created at the
mailing did not bear a date. There was, therefore, no same time.
date from which to reckon the reglementary period to
appeal. That petitioner received a copy of the motion “Reciprocal obligations, therefore, are those which
and order for writ of execution should not be taken as arise from the same cause, and in which each party is
a waiver of his right to appeal. Not only is petitioner a a debtor and a creditor of the other, such that the
non-lawyer who could not be expected to know the obligation of one is dependent upon the obligation of
legal consequences of the motion and the order, but the other. They are to be performed simultaneously,
the case is of such merit that it deserves a liberal so that the performance of one is conditioned upon the
interpretation of the rules in the interest of justice. simultaneous fulfillment of the other."

Two. After a meticulous perusal of the voluminous We find that private respondent failed to perform his
records of this case, we hold that the respondent Court substantial obligations under the Memorandum of
of Appeals grossly misappreciated the facts and the Agreement. Hence, petitioner sought the rescission of the
applicable law. Under the Memorandum of Memorandum of Agreement and ceased infusing capital
Agreement, it was the obligation of private respondent into the piggery business of private respondent.
to cede and convey, in a manner absolute and
irrevocable, his real properties and stockholdings in This Court holds, in fine, that the Memorandum of
the farm in favor of petitioner in exchange for, among Agreement entered into by petitioner and private
Danniel Ancheta Page 14 of 16 11/9/2009

respondent should indeed be rescinded. As

aforediscussed, the respondent appellate court erred Upon denial of the motion for reconsideration, petitioners
in assessing damages against petitioner for his refusal went to the CA and rendered a decision setting aside the
to fully pay private respondent's overdue loans. Such order of the trial court. Trial court rendered a decision in
refusal was justified, considering that private favor of petitioners directing respondent-spouses Dizon (a)
respondent was the first to refuse to deliver to to render a true and correct accounting of the financial
petitioner the lands and certificates of stock that were obligation of petitioners to the Rural Bank of Pandi, Inc., in
the consideration for the almost six million pesos in Bulacan as assigned to respondent Dizons; (b) to allow
debt that petitioner was to assume and pay. petitioners to exercise their right of redemption over the
one-half undivided portion of the parcel of land covered by
Five. Nevertheless, neither is petitioner entitled to TCT.
recover the amount of P3,194,941.88 that he spent as
lump sum payment, as feeds and veterinary costs for After the judgment had become final and executory, the
the continued operation of the piggery and as loan trial court issued an order directing the issuance of a writ
restructuring fees. Mutual restitution is required in of execution. A writ of execution was issued which was
rescission, but this presupposes that both parties may however returned unsatisfied for the reason that the
be restored in their original situation. In this case, it property was already sold to respondent-spouses Eugenio
cannot be gainsaid that an essential part of the and Vicenta Reyes.
consideration of the amount of P3,194,941.88 paid by
the petitioner was taking over the effective TCT was issued in the name of the spouses Eugenio and
management of Embassy Farms, Inc. Vicenta Reyes. Petitioners filed a Motion for Second Alias
Writ of Execution claiming, inter alia, that a notice of lis
Mutual restitution would require, thus, that petitioner pendens had been annotated in the title with the filing of
restore private respondent in the effective Civil Case and respondents Vicenta and Eugenio Reyes
management of said corporation and that private were transferees pendente lite when respondent-spouses
respondent return said amount to petitioner. This, Dizon sold and transferred to them the property subject of
however, has been rendered impossible by the a pending litigation.
foreclosure of the landholdings of private respondent
and the shutdown of the piggery's operations. Private Trial court issued an order denying petitioners’ motion for
respondent has lost in his venture, and while he is not second alias writ of execution. Petitioner's motion for
blameless for his unfortunate fate, to still order him to reconsideration was also denied. CA dismissed the
remit a considerable amount of money without petition.
receiving anything in return would certainly run counter
to the essence of rescission as a remedy in equity. RULING: We find the petition meritorious. Based on the
records and the pleadings of the parties with this Court,
[G.R. No. 132294. August 26, 1999] the following facts are undisputed: that during the
VOLUNTAD vs. SPOUSES DIZON pendency of Civil Case No. 142-M-93 with the trial court,
petitioners caused the annotation of a notice of lis
FACTS: For failure of petitioners to pay the loan, the pendens on TCT covering the subject property; that
Rural Bank of Pandi foreclosed the mortgage and the pursuant to the order of the trial court the Register of
property was sold at public auction with the Bank Deeds cancelled the previous annotation of lis pendens.
becoming the highest bidder. More than three (3) The following inscriptions appear in TCT:
months after the certificates of sheriff's sale were
registered, the mortgagee-vendee Bank, without the Entry No. 74364(M): Lis Pendens in favor of Delfin R.
knowledge of petitioners, assigned its rights over the Voluntad - An action has been commenced and is now
property to respondent-spouses Magtanggol and pending in RTC of Bulacan Branch
Corazon Dizon. In their petition with the trial court,
petitioners prayed to be allowed to exercise their right From the attendant circumstances, it is crystal clear that
of redemption over the subject property. an examination of the certificate of title and the
annotations therein would disclose that a civil action was
The Dizons then filed an omnibus motion to dismiss filed with the trial court involving the property described in
the petition and to strike out the notice of lis pendens. the title. The annotation in the title that the property was
Trial court issued an order dismissing the case on the involved in a suit should have prompted the prudent
ground of res judicata and granting the motion to strike purchaser to inquire and verify if the suit was finally
out the notice of lis pendens "there is no longer need terminated and the property freed from any legal infirmity
for such annotation on the title of the subject property or judicial inquiry.
with the dismissal of the case."
Danniel Ancheta Page 15 of 16 11/9/2009

Although the notice of lis pendens was cancelled petitioners to file a separate action to enforce their right to
pursuant to the order of the trial court dismissing the repurchase the property as against the new registered
civil action, the cancellation effected after barely 4 owners.
days was premature because the court order was not
yet final, as petitioners still had the remaining period of In Lising v. Plan, this Court ruled that a writ of execution
11 days to appeal the order. In fact, a mere inquiry may be issued against a person not a party to the case
with the trial court which issued the order of dismissal where the latter’s remedy which he did not avail of was to
and the cancellation of the lis pendens would reveal intervene in the case involving rights over the same parcel
that petitioners timely appealed the dismissal to the of land of which he claims to be the vendee. The
Court of Appeals. cancellation of the lis pendens on the title of respondent-
spouses Dizon prior to the purchase by the respondent-
The general rule is that a person dealing with spouses Reyes need not alter our conclusion as the
registered land has a right to rely on the Torrens cancellation was prematurely done while the appeal in the
Certificate of Title without the need of inquiring further. case between petitioners and respondent-spouses Dizon
But this rule cannot apply when the party has actual was still pending with the appellate court.
knowledge of facts and circumstances that would
impel a reasonably cautious man to make such inquiry Having purchased registered land with full notice of the
or when the purchaser has knowledge of a defect or fact that it is in litigation between the vendor and a third
lack of title in his vendor or of sufficient facts to induce party, respondent-spouses Reyes stand in the place of
a reasonably prudent man to inquire into the status of their vendor and their title is subject to the incidents and
the title of the property in litigation. results of the pending litigation. Ought to have been
aware of the pendency of the case, respondent-spouses
Hence, when there is something in the certificate of Reyes should have intervened in the suit for the protection
title to indicate any cloud or vice in the ownership of of their alleged rights. Having failed to do so, they are
the property or any encumbrance thereon, the bound by the results.
purchaser is required to explore further than what the
Torrens title upon its face indicates in quest for any A transferee pendente lite stands exactly in the shoes of
hidden defect or inchoate right which may the transferor and is bound by any judgment or decree
subsequently defeat his right thereto. which may be rendered for or against the transferor.
Petitioners can legally enforce the final judgment of the
As a purchaser, respondent-spouses Reyes should trial court against respondent-spouses Eugenio and
have examined the certificate of title and all factual Vicenta Reyes with respect to the petitioners' right to
circumstances necessary for them to determine repurchase the property from the Reyeses as transferees
whether or not flaws existed which might invalidate pendente lite of respondent-spouses Magtanggol and
their title. It is a settled rule that a purchaser of real Corazon Dizon.
estate with knowledge of any defect or lack of title of
the vendor cannot claim that he has acquired title
thereto in good faith as against the true owner of the
land or interest therein.

The same rule applies to one with knowledge of facts

which should have put him on inquiry and investigation
as might be necessary to acquaint him with the defects
in the title of his vendor. If circumstances exist that
require a prudent man to investigate and he does not,
he is deemed to have acted in mala fide. A party’s
mere refusal to believe that a defect exists or his willful
closing of his eyes to the possibility of the existence of
a defect in his vendor’s title will not make him an
innocent purchaser for value if it afterwards develops
that the title was in fact defective.

Similarly, a buyer of registered land who fails to act

with the diligence of a prudent man cannot be a
purchaser in good faith. Therefore, given the facts of
this case which are clearly set forth in the records and
established by the evidence, there is no need for
Danniel Ancheta Page 16 of 16 11/9/2009