G.R. No.

157906 November 2, 2006

JOAQUINITA P. CAPILI, Petitioner,
vs.
SPS. DOMINADOR CARDAA and ROSALITA CARDAA, Respondents.
D E C I S I O N
QUISUMBING, J .:
Before us is a petition for review assailing the Decision
1
dated October 18, 2002 of the Court of
Appeals in CA-G.R. CV. No. 54412, declaring petitioner liable for negligence that resulted in the
death of Jasmin Cardaa, a school child aged 12, enrolled in Grade 6, of San Roque Elementary
School, where petitioner is the principal. Likewise assailed is the Resolution
2
dated March 20, 2003
denying reconsideration.
The facts are as follows:
On February 1, 1993, Jasmin Cardaa was walking along the perimeter fence of the San Roque
Elementary School when a branch of a caimito tree located within the school premises fell on her,
causing her instantaneous death. Thus, her parents - Dominador and Rosalita Cardaa - filed a case
for damages before the Regional Trial Court of Palo, Leyte against petitioner.
The Cardaas alleged in their complaint that even as early as December 15, 1992, a resident of
the barangay, Eufronio Lerios, reported on the possible danger the tree posed to passersby. Lerios
even pointed to the petitioner the tree that stood near the principals office. The Cardaas averred
that petitioners gross negligence and lack of foresight caused the death of their
daughter
.
Petitioner denied the accusation and said that at that time Lerios had only offered to buy the tree.
She also denied knowing that the tree was dead and rotting. To prove her point, she presented
witnesses who attested that she had brought up the offer of Lerios to the other teachers during a
meeting on December 15, 1992 and assigned Remedios Palaa to negotiate the sale.
In a Decision
3
dated February 5, 1996, the trial court dismissed the complaint for failure of the
respondents to establish negligence on the part of the petitioner.
On appeal, the Court of Appeals reversed the trial courts decision. The appellate court found the
appellee (herein petitioner) liable for Jasmins death, as follows:
Foregoing premises considered, the instant appeal is GRANTED. Appellee Joaquinita Capili is
hereby declared liable for negligence resulting to the death of Jasmin D. Cardaa. She is hereby
ordered to indemnify appellants, parents of Jasmin, the following amounts:
1. For the life of Jasmin D. Cardaa P50,000.00;
2. For burial expenses 15,010.00;
3. For moral damages 50,000.00;
4. For attorneys fees and litigation 10,000.00.
expenses
SO ORDERED.
4

Petitioners motion for reconsideration was denied. Petitioner now comes before us submitting the
following issues for our resolution:
I
WHETHER OR NOT THE COURT OF APPEALS VIS--VIS THE SET OF FACTS STATED
IN THE CHALLENGED DECISION, ERRED IN FINDING THE PETITIONER NEGLIGENT
AND THEREFORE LIABLE FOR DAMAGES UNDER ARTICLE 2206 OF THE CIVIL CODE
AND IN ORDERING THE PETITIONER TO PAY DAMAGES TO THE RESPONDENTS;
AND
II
WHETHER OR NOT THE COURT OF APPEALS ERRED IN DENYING PETITIONERS
MOTION FOR RECONSIDERATION.
5

On the other hand, respondents posit the following issue:
Whether or not the Decision of the Honorable Court of Appeals, Twelfth Division, in CA G.R. CV. No.
54412 promulgated on October 18, 2002 should be affirmed and respected, thus remain
undisturbed.
6

Primarily, the issue is whether petitioner is negligent and liable for the death of Jasmin Cardaa.
Petitioner asserts that she was not negligent about the disposal of the tree since she had assigned
her next-in-rank, Palaa, to see to its disposal; that despite her physical inspection of the school
grounds, she did not observe any indication that the tree was already rotten nor did any of her 15
teachers inform her that the tree was already rotten;
7
and that moral damages should not be granted
against her since there was no fraud nor bad faith on her part.
On the other hand, respondents insist that petitioner knew that the tree was dead and rotting, yet,
she did not exercise reasonable care and caution which an ordinary prudent person would have
done in the same situation.
To begin, we have to point out that whether petitioner was negligent or not is a question of fact which
is generally not proper in a petition for review, and when this determination is supported by
substantial evidence, it becomes conclusive and binding on this Court.
8
However, there is an
exception, that is, when the findings of the Court of Appeals are incongruent with the findings of the
lower court.
9
In our view, the exception finds application in the present case.
The trial court gave credence to the claim of petitioner that she had no knowledge that the tree was
already dead and rotting and that Lerios merely informed her that he was going to buy the tree for
firewood. It ruled that petitioner exercised the degree of care and vigilance which the circumstances
require and that there was an absence of evidence that would require her to use a higher standard
of care more than that required by the attendant circumstances.
10
The Court of Appeals, on the other
hand, ruled that petitioner should have known of the condition of the tree by its mere sighting and
that no matter how hectic her schedule was, she should have had the tree removed and not merely
delegated the task to Palaa. The appellate court ruled that the dead caimito tree was a nuisance
that should have been removed soon after petitioner had chanced upon it.
11

A negligent act is an inadvertent act; it may be merely carelessly done from a lack of ordinary
prudence and may be one which creates a situation involving an unreasonable risk to another
because of the expectable action of the other, a third person, an animal, or a force of nature. A
negligent act is one from which an ordinary prudent person in the actors position, in the same or
similar circumstances, would foresee such an appreciable risk of harm to others as to cause him not
to do the act or to do it in a more careful manner.
12

The probability that the branches of a dead and rotting tree could fall and harm someone is clearly a
danger that is foreseeable. As the school principal, petitioner was tasked to see to the maintenance
of the school grounds and safety of the children within the school and its premises. That she was
unaware of the rotten state of a tree whose falling branch had caused the death of a child speaks ill
of her discharge of the responsibility of her position.
In every tort case filed under Article 2176 of the Civil Code, plaintiff has to prove by a preponderance
of evidence: (1) the damages suffered by the plaintiff; (2) the fault or negligence of the defendant or
some other person for whose act he must respond; and (3) the connection of cause and effect
between the fault or negligence and the damages incurred.
13

The fact, however, that respondents daughter, Jasmin, died as a result of the dead and rotting tree
within the schools premises shows that the tree was indeed an obvious danger to anyone passing
by and calls for application of the principle of res ipsa loquitur.
The doctrine of res ipsa loquitur applies where (1) the accident was of such character as to warrant
an inference that it would not have happened except for the defendants negligence; (2) the accident
must have been caused by an agency or instrumentality within the exclusive management or control
of the person charged with the negligence complained of; and (3) the accident must not have been
due to any voluntary action or contribution on the part of the person injured.
14

The effect of the doctrine of res ipsa loquitur is to warrant a presumption or inference that the mere
falling of the branch of the dead and rotting tree which caused the death of respondents daughter
was a result of petitioners negligence, being in charge of the school.
In the case of D.M. Consunji,
Inc
. v. Court of Appeals,
15
this Court held:
As a rule of evidence, the doctrine of res ipsa loquitur is peculiar to the law of negligence which
recognizes thatprima facie negligence may be established without direct proof and furnishes a
substitute for specific proof of negligence.
The concept of res ipsa loquitur has been explained in this wise:
While negligence is not ordinarily inferred or presumed, and while the mere happening of an
accident or injury will not generally give rise to an inference or presumption that it was due to
negligence on defendants part, under the doctrine of res ipsa loquitur, which means, literally, the
thing or transaction speaks for itself, or in one jurisdiction, that the thing or instrumentality speaks for
itself, the facts or circumstances accompanying an injury may be such as to raise a presumption, or
at least permit an inference of negligence on the part of the defendant, or some other person who is
charged with negligence.
x x x where it is shown that the thing or instrumentality which caused the injury complained of was
under the control or management of the defendant, and that the occurrence resulting in the injury
was such as in the ordinary course of things would not happen if those who had its control or
management used proper care, there is sufficient evidence, or, as sometimes stated, reasonable
evidence, in the absence of explanation by the defendant, that the injury arose from or was caused
by the defendants want of care.
The procedural effect of the doctrine of res ipsa loquitur is that petitioners negligence is presumed
once respondents established the requisites for the doctrine to apply. Once respondents made out
a prima facie case of all requisites, the burden shifts to petitioner to explain. The presumption or
inference may be rebutted or overcome by other evidence and, under appropriate circumstances a
disputable presumption, such as that of due care or innocence, may outweigh the inference.
16

Was petitioners explanation as to why she failed to have the tree removed immediately sufficient to
exculpate her?
As the school principal, petitioner was tasked to see to the maintenance of the school grounds and
safety of the children within the school and its premises. That she was unaware of the rotten state of
the tree calls for an explanation on her part as to why she failed to be vigilant.
Petitioner contends she was unaware of the state of the dead and rotting tree because Lerios merely
offered to buy the tree and did not inform her of its condition. Neither did any of her teachers inform
her that the tree was an imminent danger to anyone. She argues that she could not see the
immediate danger posed by the tree by its mere sighting even as she and the other teachers
conducted ground inspections. She further argues that, even if she should have been aware of the
danger, she exercised her duty by assigning the disposition of the tree to another teacher.
We find petitioners explanation wanting. As school principal, petitioner is expected to oversee the
safety of the schools premises.1wphi 1 The fact that she failed to see the immediate danger posed by the
dead and rotting tree shows she failed to exercise the responsibility demanded by her position.
Moreover, even if petitioner had assigned disposal of the tree to another teacher, she exercises
supervision over her assignee.
17
The record shows that more than a month had lapsed from the time
petitioner gave instruction to her assistant Palaa on December 15, 1992, to the time the incident
occurred on February 1, 1993. Clearly, she failed to check seasonably if the danger posed by the
rotting tree had been removed. Thus, we cannot accept her defense of lack of negligence.
Lastly, petitioner questions the award of moral damages. Moral damages are awarded if the
following elements exist in the case: (1) an injury clearly sustained by the claimant; (2) a culpable act
or omission factually established; (3) a wrongful act or omission by the defendant as the proximate
cause of the injury sustained by the claimant; and (4) the award of damages predicated on any of
the cases stated in Article 2219 of the Civil Code.
18
However, the person claiming moral damages
must prove the existence of bad faith by clear and convincing evidence for the law always presumes
good faith. It is not enough that one merely suffered sleepless nights, mental anguish, and serious
anxiety as the result of the actuations of the other party. Invariably, such action must be shown to
have been willfully done in bad faith or with ill motive.
19
Under the circumstances, we have to
concede that petitioner was not motivated by bad faith or ill motive vis--vis respondents daughters
death. The award of moral damages is therefore not proper.
In line with applicable jurisprudence, we sustain the award by the Court of Appeals of P50,000 as
indemnity for the death of Jasmin,
20
and P15,010 as reimbursement of her burial expenses.
21

WHEREFORE, the petition is DENIED. The Decision dated October 18, 2002 and the Resolution
dated March 20, 2003, of the Court of Appeals in CA-G.R. CV. No. 54412 are AFFIRMED with
MODIFICATION such that the award of moral damages is hereby deleted.
Costs against petitioner.
SO ORDERED.
LEONARDO A. QUISUMBING
Associate Justice




G.R. No. 72694 December 1, 1987
AURORA DEL BANCO, EVELYN DEL BANCO, FEDERICO TAINO, SOLEDAD TAINO,
JOVENCIO TAINO, SAMSON TAINO, NOE TAINO, SOCORRO TAINO and CLEOFAS
TAINO, petitioners,
vs.
INTERMEDIATE APPELLATE COURT (Second Civil Cases Division), ALEJANDRA
PANSACOLA, LEONILA ENCALLADO, VEDASTO ENCALLADO, JOSE YEPES, et
al., respondents.

PARAS, J .:
This is a petition for review on certiorari by way of appeal from: (a) the decision of respondent Court
of Appeals (Intermediate Appellate Court) * promulgated on May 17, 1985 in AC-G.R. CV No. 70460, entitled "Alejandra
Pansacola, et al. vs. Domen Villabona del Banco, et al." which reversed and set aside the judgment ** of the trial court; and (b) its
resolution ** of October 15, 1985 in the same case, denying petitioners' motion for reconsideration of the aforementioned decision and their
supplement to motion for reconsideration.
The dispositive portion of the questioned decision (Rollo, p. 97) reads, as follows:
ACCORDINGLY, the decision appealed from is hereby SET ASIDE insofar as it
dismisses the complaint, and another one entered
(1) Declaring plaintiffs-appellants and defendants-appellees, in their respective
capacities as described in par. V of the complaint, as co-owners of the property in
dispute, but subject to the four-part pro-indiviso division already made by said
property;
(2) Ordering the cancellation of all certificates of title that may have been issued to
any of the parties hereto; and
(3) Ordering the complete and final partition of the subject property in conformity with
law.
For this purpose, this case is hereby remanded to the Court of origin so that a final
partition shall be made in accordance with Sections 2, 3, et. seq., Rule 69 of the
Rules of Court.
Let a copy of this decision be furnished to the Register of Deeds for the Province of
Quezon.
The facts of the case are taken from the decision of the Appellate Court (Rollo, p. 39) as follows:
In a document executed in the Municipality of San Rafael, Bulacan, on February 11, 1859, three
brothers, Benedicto Pansacola, Jose Pansacola and Manuel Pansacola (known as Fr. Manuel Pena)
entered into an agreement which provided, among others:
(1) That they will purchase from the Spanish Government the lands comprising the Island of
Cagbalite which is located within the boundaries of the Municipality of Mauban, Province of Tayabas
(now Quezon) and has an approximate area of 1,600 hectares;
(2) That the lands shall be considered after the purchase as their common property;
(3) That the co-ownership includes Domingo Arce and Baldomera Angulo, minors at that time
represented by their father, Manuel Pansacola (Fr. Manuel Pena) who will contribute for them in the
proposed purchase of the Cagbalite Island;
(4) That whatever benefits may be derived from the Island shall be shared equally by the co-owners
in the following proportion: Benedicto Pansacola-1/4 share; Jose Pansacola-1/4 share; and,
Domingo Arce and Baldomera Angulo-2/4 shares which shall be placed under the care of their
father, Manuel Pansacola (Fr. Manuel Pena).
On August 14, 1866, co-owners entered into the actual possession and enjoyment of the Island
purchased by them from the Spanish Government. On April 11, 1868 they agreed to modify the
terms and conditions of the agreement entered into by them on February 11, 1859. The new
agreement provided for a new sharing and distribution of the lands, comprising the Island of
Cagbalite and whatever benefits may be derived therefrom, as follows:
(a) The first one-fourth (1/4) portion shall belong to Don Benedicto Pansacola;
(b) The second one-fourth (1/4) portion shall belong to Don Jose Pansacola;
(c) The third one-fourth(1/4) portion shall henceforth belong to the children of their
deceased brother, Don Eustaquio Pansacola, namely: Don Mariano Pansacola,-
Maria Pansacola and Don Hipolito Pansacola;
(d) The fourth and last one-fourth (1/4) portion shall belong to their nephews and
nieces (1) Domingo Arce, (2) Baldomera Angulo, (3) Marcelina Flores, (4) Francisca
Flores, (5) Candelaria dela Cruz, and (6) Gervasio Pansacola who, being all minors,
are still under the care of their brother, Manuel Pansacola (Fr. Manuel Pena). The
latter is the real father of said minors.
About one hundred years later, on November 18, 1968, private respondents brought a special action
for partition in the Court of First Instance of Quezon, under the provisions of Rule 69 of the Rules of
Court, including as parties the heirs and successors-in-interest of the co-owners of the Cagbalite
Island in the second contract of co-ownership dated April 11, 1968. In their answer some of the
defendants, petitioners herein, interposed such defenses as prescription, res judicata, exclusive
ownership, estoppel and laches.
After trial on the merits, the trial court rendered a decision *** dated November 6, 1981 dismissing the complaint, the
dispositive portion of which reads as follows:
WHEREFORE, and in the fight of all the foregoing this Court finds and so holds that
the Cagbalite Island has already been partitioned into four (4) parts among the
original co-owners or their successors-in-interest.
Judgment is therefore rendered for the defendants against the plaintiffs dismissing
the complaint in the above entitled case.
Considering that the cross claims filed in the above entitled civil case are not
compulsory cross claims and in order that they may be litigated individually the same
are hereby dismissed without prejudice.
IT IS SO ORDERED.
The motion for reconsideration filed by the plaintiffs, private respondents herein, was denied by the
trial court in an order dated February 25, 1982 (Record on Appeal, p. 241).
On appeal, respondent Court reversed and set aside the decision of the lower court (Rollo, p. 117). It
also denied the motion for reconsideration and the supplement to motion for reconsideration filed by
private respondents, in its resolution dated October 15, 1983 (Rollo, p. 86).
Instant petition was filed with the Court on December 5, 1985 (Rollo, p. 12). Petitioners Josefina
Pansacola, et al. having filed a separate petition (G.R. No. 72620) on the same subject matter and
issues raised in the instant 'petition, the counsel for private respondents filed a consolidated
comment on the separate petitions for review on February 24, 1986 with the First Division of the
Court (Rollo, p. 119). It appears that counsel for petitioners also filed a consolidated reply to the
consolidated comment of private respondents as required by the Second Division of the Court
(Rollo, p. 151). However, petitioners filed a separate reply in the instant case on February 18,1987
(Rollo, p. 168)as required by the Court in a Resolution of the Second Division dated November 24,
1986 (Rollo, p. 160).
On May 19, 1987, private respondents in the instant petition filed a manifestation praying for the
denial of the instant petition in the same manner that G.R. No. 72620 was denied by the Court in its
Resolution dated July 23, 1986 (Rollo, p. 151). Their rejoinder to the reply of petitioners was filed on
May 25,1987 (Rollo, p. 179).
On June 8, 1987, the Court resolved to give due course to the petition (Rollo, p. 192). The
memorandum of private respondents was mailed on July 18, 1987 and received in the Court on July
29, 1987 (Rollo, p. 112); the memorandum for petitioners was mailed on August 18, 1987 and
received in the Court on September 7, 1987 (Rollo, p. 177).
The sole issue to be resolved by the Court is the question of whether or not Cagbalite Island is still
undivided property owned in common by the heirs and successors-in-interest of the brothers,
Benedicto, Jose and Manuel Pansacola.
The Pansacola brothers purchased the Island in 1859 as common property and agreed on how they
would share in the benefits to be derived from the Island. On April 11, 1868, they modified the terms
and conditions of the agreement so as to include in the co-ownership of the island the children of
their deceased brothers Eustaquio and the other children of Manuel Pansacola (Fr. Manuel Pena)
who were committed in the agreement of February 11, 1859. The new agreement provided for a new
sharing proportion and distribution of the Island among the co-owners.
On January 20, 1907, the representative of the heirs of all the original owners of Cagbalite Island
entered into an agreement to partition the Island, supplemented by another agreement dated April
18, 1908. The contract dated January 20, 1907 provides as follows:
Sa Mauban, Tayabas, ika 20 ng Enero ng 1907 caming mga quinatawan ng mga
ibang co-herederos na hindi caharap, sa pulong na ito, sa nasa naming lahat na
magcaroon na ng catahimikan ang aming-aming cabahagui sa Pulong Kagbalete
sumacatuid upang mapagtoos ang hangahan ng apat na sapul na pagcacabahagui
nitong manang ito, pagcacausap na naming lahat at maihanay at mapagtalonan ang
saysay ng isa't isa, ay cusa naming pinagcasunduan at pinasiya ang
nangasosonod:
Una: Ang malaquing calupaan, alis ang lahat na pacatan ay babahaguin alinsunod
sa pagcabaki na guinawa sa croquis na niyari ng practico agrimensor Don Jose
Garcia.
Icalawa: Ang Lomingoy, doon ang tuid na guhit sa ilong ng Pait ay pagaapatin ding
sinlaqui ayon sa dating pagkakabaki.
Icatlo: Cung magawa na ang tunay na piano at icapit na sa lupa, paglalagay ng
nadarapat na mojon, ang masacupan ng guhit, sumacatuid ang caingin at pananim
ng isa na nasacupan ng pucto na noocol sa iba, ay mapapasulit sa dapat mag-ari, na
pagbabayaran nito ang nagtanim sa halagang:- bawat caponong niog na nabunga, P
1.00 'un peso); cung ang bias ay abot sa isang vara, P 0.50; cung bagong tanim o
locloc P 0. 50 ang capono.
Icapat: Ang lahat na pacatan ay bacod na pagaapatin at bawat bahagui ay noocol sa
isat-isa sa apat na sanga ng paganacang nagmana.
Icalima: Upang ang naipatanim ng bawat isa ay matama sa canya ng mailagan ang
hirap ng loob ng nagatikha; ay pagtotolong-tolongan ng lahat naiba na mahusay ang
dalawang partes na magcalapit na mapa ayong tumama, hangang may pagluluaran,
sa nagsikap at maoyanam, maidaco sa lugar na walang cailangang pagusapan.
Icanim: Ang casulatang ito, cung mapermahan na na magcacaharap sampong ng
mga ibang co-herederos na notipicahan nitong lahat na pinagcasundoan ay
mahahabilin sa camay ng agrimensor, Amadeo Pansacola, upang canyang
mapanusugan ang maipaganap ang dito'y naootos.
Na sa catunayan at catibayan ng lahat na nalalagda dito, sa pag galang at pag
ganap dito sa paingacaisahan ay pumirma sampo ng mga sacsing caharap at
catanto ngayong fecha ayon sa itaas.
The contract dated April 18, 1908 provides as follows:
Sa Mauban, ika 18 ng Abril ng 1908, sa pagcacatipon ng lahat na firmantes nito ay
pinagcaisahan itong nangasosonod:
Una Pinagtitibay ang mga pinagcasundoan sa itaas noong 20 ng Enero ng 1907,
liban na lamang sa mga pangcat na una at icapat at tongcol doon pinasiya naming
bahaguinin ng halohalo at paparejo ang calupaan at pacatan.
Ycalawa Sa pagsucat ng agrimensor na si Amadeo at paggawa ng piano at
descripcion ay pagbabayaran siya ng sa bawat isa naoocol sa halagang isang piso
sa bawat hectares.
Icatlo Ang counting pucto sa 'Mayanibulong' na may caingin ni G. Isidro
Altamarino, asawa ni Restitute ay tutumbasan naman cay G. Norberto Pansacola sa
lugar ng Dapo calapit ng Pinangalo ng gasing sucat.
Icapat Sa inilahad na piano ay pinasiya nang itoloy at upang maca pagparehistro
ang isa't isa ay pinagcaisahang magcacagastos na parepareho para sa tablang
pangmohon at ibat iba pang cagastusan.
Sa catunayan at catibayan ay cami, pumirma. (Record on Appeal, p. 224)
There is
nothing
in all four agreements that suggests that actual or physical partition of the Island had really been made by either the original owners or their
heirs or successors-in-interest. The agreement entered into in 1859 simply provides for the sharing of whatever benefits can be derived from
the island. The agreement, in fact, states that the Island to be purchased shall be considered as their common property. In the second
agreement entered in 1868 the co-owners agreed not only on the sharing proportion of the benefits derived from the Island but also on the
distribution of the Island each of the brothers was allocated a 1/4 portion of the Island with the children of the deceased brother, Eustaquio
Pansacola allocated a 1/4 portion and the children of Manuel Pansacola (Fr. Manuel Pena) also allocated a 1/4 portion of the Island. With the
distribution agreed upon each of the co-owner is a co-owner of the whole, and in this sense, over the whole he exercises the right of
dominion, but he is at the same time the sole owner of a portion, in the instant case, a 1/4 portion (for each group of co-owners) of the Island
which is truly abstract, because until physical division is effected such portion is merely an Ideal share, not concretely determined (3
Manresa, Codigo Civil, 3rd Ed., page 486, cited in Lopez vs. Cuaycong, 74 Phil. 601; De la Cruz vs. Cruz, 32 SCRA 307 [1970]; Felices vs.
Colegado, 35 SCRA 173 [1970],; Dultra vs. CFl 70 SCRA 465 [1976]; Gatchalian vs. Arlegui, 75 SCRA 234 [1977].)
In the agreement of January 20, 1907, the heirs that were represented agreed on how the Island
was to be partitioned. The agreement of April 18, 1908 which supplements that of January 20, 1907
reveals that as of the signing of the 1908 agreement no actual partition of the Island had as yet been
done. The second and fourth paragraphs of the agreement speaks of a survey yet to be conducted
by a certain Amadeo and a plan and description yet to be made. Virgilio Pansacola, a son of the
surveyor named Amadeo who is referred to in the contract dated April 18, 1908 as the surveyor to
whom the task of surveying Cagbalite Island pursuant to said agreement was entrusted, however,
testified that said contracts were never implemented because nobody defrayed the expenses for
surveying the same (Record on Appeal, p. 225).
Petitioners invoke res judicata to bar this action for partition in view of the decision of the Court in
G.R. No. 21033,"Domingo Arce vs. Maria Villabona, et al.," 21034, "Domingo Arce vs. Francisco
Pansacola, et al.," and 21035,"Domingo Arce vs. Emiliano Pansacola, et al." promulgated on
February 20, 1958 (Rollo, p. 141) and Brief for Defendants-Appellees, p. 87 Appendix 1), wherein
the Court said:
Considering the facts that he waited for a period of nearly 23 years after the return
from his deportation before taking any positive action to recover his pretended right
in the property in question, gives great credit, in our opinion, to the declaration of the
witnesses for the defense (a) that the original parcel of land was partitioned as they
claim, and (b) that the plaintiff had disposed of all the right and interest which he had
in the portion which had been given to him.
The issue in the aforementioned case which were tried together is not whether there has already
been a partition of the Cagbalite Island. The actions were brought by the plaintiff to recover
possession of three distinct parcels of land, together with damages. In fact the word partition was
used in the metaphysical or Ideal sense (not in its physical sense).
Commenting on the above ruling of the Court in connection with the instant case, the respondent
Court said:
Concededly, the Supreme Court decision in G.R. Nos. 21033-35 (Exh. X) did use or
employ the word "partition." A careful reading of the said decision will, however,
reveal, and we so hold, that the employment or use of the word "partition" therein
was made not in its technical and legal meaning or sense adverted to above, but,
rather in its Ideal, abstract and spiritual sense, this is (at) once evident from the bare
statement in said decision to the effect that the property was divided into four parts,
without any reference to the specific parts of the property that may have been
adjudicated to each owner. There being no such reference in the decision and in the
judgment affirmed therein to the adjudication of specific and definite portions of the
property to each co-owner, there is a clear and logical inference that there was
indeed no adjudication of specific and definite portions of the property made to each
co-owner.
It must be admitted that the word "partition" is not infrequently used both in popular and technical
parlance (Fule vs. Fule, 52 Phil. 750 [1929]). For purposes of the aforementioned case, evidently the
Court used the word "partition" to refer to the distribution of the Cagbalite Island agreed upon by the
original owners and in the later agreements, by the heirs and their subsequent successors-in-
interest. There need not be a physical partition; a distribution of the Island even in a state of indiviso
or was sufficient in order that a co-owner may validly sell his portion of the co-owned property. The
sale of part of a particular lot thus co-owned by one co-owner was within his right pro-indivisois valid
in its entirety (Pamplona vs. Moreto, 96 SCRA 775 [1980]) but he may not convey a physical portion
with boundaries of the land owned in common (Mercado vs. Liwanag, 5 SCRA 472 [1962]).
Definitely, there was no physical partition of the Island in 1859. Neither could there have been one in
1894 because the manner of subdividing the Island was only provided for in the later agreements
entered into by the heirs in 1907 and 1908. There was a distribution of the Island in 1868 as agreed
upon by the original co-owners in their agreement of April 11, 1868. Any agreement entered into by
the parties in 1894 could be no more than another agreement as to the distribution of the Island
among the heirs of the original co-owners and the preparation of a tentative plan by a practical
surveyor, a Mr. Jose Garcia, mentioned in the first paragraph of the 1907 agreement, preparatory to
the preparation of the real plan to be prepared by the surveyor Amadeo, mentioned in the agreement
of April 18, 1908.
What is important in the Court's ruling in the three aforementioned cases is that, the fact that there
was a distribution of the Island among the co-owners made the sale of Domingo Arce of the portion
allocated to him though pro-indiviso, valid. He thus disposed of all his rights and interests in the
portion given to him.
It is not disputed that some of the private respondents and some of the petitioners at the time the
action for partition was filed in the trial court have been in actual possession and enjoyment of
several portions of the property in question (Rollo, p. 148). This does not provide any proof that the
Island in question has already been actually partitioned and co-ownership terminated. A co-owner
cannot, without the conformity of the other co-owners or a judicial decree of partition issued pursuant
to the provision of Rule 69 of the Rules of Court (Rule 71 of the Old Rules), adjudicate to himself in
fee simple a determinate portion of the lot owned in common, as his share therein, to the exclusion
of other co-owners (Santos, Jr. vs. Buenconsejo, 14 SCRA 407 [1965]; Carvajal vs. Court of
Appeals, 112 SCRA 237 [1982]). It is a basic principle in the law of co-ownership both under the
present Civil Code as in the Code of 1889 that no individual co- owner can claim any definite portion
thereof (Diversified Credit Corporation vs. Rosada 26 SCRA 470 [1968]). lt is therefore of no
moment that some of the co-owners have succeeded in securing cadastral titles in their names to
some portions of the Island occupied by them (Rollo, p. 10).
It is not enough that the co-owners agree to subdivide the property. They must have a subdivision
plan drawn in accordance with which they take actual and exclusive possession of their respective
portions in the plan and titles issued to each of them accordingly (Caro vs. Court of Appeals, 113
SCRA 10 [1982]). The mechanics of actual partition should follow the procedure laid down in Rule
69 of the Rules of Court. Maganon vs. Montejo, 146 SCRA 282 [1986]).
Neither can such actual possession and enjoyment of some portions of the Island by some of the
petitioners herein be considered a repudiation of the co-ownership. It is undisputed that the
Cagbalite Island was purchased by the original co-owners as a common property and it has not
been proven that the Island had been partitioned among them or among their heirs. While there is
co-ownership, a co-owner's possession of his share is co-possession which is linked to the
possession of the other co-owners (Gatchalian vs. Arlegui, 75 SCRA 234 [1977]).
Furthermore, no prescription shall run in favor of a co-owner against his co-owners or co-heirs so
long as he expressly or impliedly recognizes the co-ownership (Valdez vs. Olonga, 51 SCRA 71
[1973], Tero vs. Tero, 131 SCRA 100 [1984]). Co-owners cannot acquire by prescription the share of
the other co-owners, absent a clear repudiation of the co-ownership clearly communicated to the
other co-owners (Mariano vs. De Vega, 148 SCRA 342 [1987]).
An action for partition does not prescribe. Article 403 of the Old Civil Code, now Article 497, provides
that the assignees of the co-owners may take part in the partition of the common property, and
Article 400 of the Old Code, now Article 494 provides that each co-owner may demand at any time
the partition of the common property, a provision which implies that the action to demand partition is
imprescriptible or cannot be barred by laches (Budlong vs. Pondoc, 79 SCRA 24 [1977]). An action
for partition does not lie except when the co-ownership is properly repudiated by the co- owner
(Jardin vs. Hollasco, 117 SCRA 532 [1982]).
On July 23, 1986, the Court through its Second Division denied the petition for the review of G.R.
No. 72620, the petition for review on certiorari separately filed by Josefina Pansacola (Rollo, p. 151).
PREMISES CONSIDERED, the instant petition is likewise DENIED for lack of merit.
SO ORDERED.
Teehankee, C.J., Narvasa, Cruz and Gancayco, JJ., concur.





G.R. No. L-4656 November 18, 1912
RICARDO PARDELL Y CRUZ and
VICENTA ORTIZ Y FELIN DE PARDELL, plaintiffs-appellees,
vs.
GASPAR DE BARTOLOME Y ESCRIBANO and
MATILDE ORTIZ Y FELIN DE BARTOLOME, defendants-appellants.
Gaspar de Bartolome, in his own behalf.
B. Gimenez Zoboli, for appellees.

TORRES, J .:
This is an appeal by bill of exceptions, from the judgment of October 5, 1907, whereby the
Honorable Dionisio Chanco, judge, absolved the defendants from the complaint, and the plaintiff
from a counterclaim, without special finding as to costs.
Counsel for the spouses Ricardo y Cruz and Vicente Ortiz y Felin de Pardell, the first of whom,
absent in Spain by reason of his employment, conferred upon the second sufficient and ample
powers to appear before the courts of
justice
, on June 8, 1905, in his written complaint, alleged that the plaintiff, Vicente Ortiz, and the
defendant, Matilde Ortiz, are the duly recognized natural daughters of the spouses Miguel Ortiz
and Calixta Felin y Paula who died in Vigan, Ilocos Sur, in 1875 and 1882, respectively; that
Calixta Felin, prior to her death, executed on August 17, 1876, a nuncupative will in Vigan
whereby she made her four children, named Manuel, Francisca, Vicenta, and Matilde, surnamed
Ortiz y Felin, her sole and universal heirs of all her property; that, of the persons enumerated,
Manuel died before his mother and Francisca a few years after her death, leaving no heirs by
force of law, and therefore the only existing heirs of the said testatrix are the plaintiff Vicenta
Ortiz and the defendant Matilde Ortiz; that, aside from some personal property and jewelry
already divided among the heirs, the testatrix possessed, at the time of the execution of her will,
and left at her death the real properties which, with their respective cash values, are as follows:
1. A house of strong material, with the lot on which it is built, situated on Escolta
Street, Vigan, and valued at
P6,000.00
2. A house of mixed material, with the lot on which it stands, at No. 88
Washington Street, Vigan; valued at
1,500.00
3. A lot on Magallanes Street, Vigan; valued at 100.00
4. A parcel of rice land, situated in the barrio of San Julian, Vigan; valued at 60.00
5. A parcel of rice land in the pueblo of Santa Lucia; valued at 86.00
6. Three parcels of land in the pueblo of Candon; valued at 150.00
Total 7,896.00
That, on or about the first months of the year 1888, the defendants, without judicial authorization, nor
friendly or extrajudicial agreement, took upon themselves the administration and enjoyment of the
said properties and collected the rents, fruits, and products thereof, to the serious detriment of the
plaintiffs' interest; that, notwithstanding the different and repeated demands extrajudicially made
upon Matilde Ortiz to divide the aforementioned properties with the plaintiff Vicente and to deliver to
the latter the one-half thereof, together with one-half of the fruits and rents collected therefrom, the
said defendant and her husband, the self-styled administrator of the properties mentioned, had been
delaying the partition and delivery of the said properties by means of unkept promises and other
excuses; and that the plaintiffs, on account of the extraordinary delay in the delivery of one-half of
said properties, or their value in cash, as the case might be, had suffered losses and damages in the
sum of P8,000. Said counsel for the plaintiffs therefore asked that judgment be rendered by
sentencing the defendants, Gaspar de Bartolome, and Matilde Ortiz Felin de Bartolome, to restore
and deliver to the plaintiffs one-half of the total value in cash, according to appraisal, of the undivided
property specified, which one-half amounted approximately to P3,948, or if deemed proper, to
recognize the plaintiff Vicenta Ortiz to be vested with the full and absolute right of ownership to the
said undivided one-half of the properties in question, as universal testamentary heir thereof together
with the defendant Matilde Ortiz, to indemnify the plaintiffs in the sum of P8,000, for losses and
damages, and to pay the costs.
Counsel for the defendants, in his answer denied the facts alleged in paragraphs 1, 4, 6, 7, and 8
thereof, inasmuch as, upon the death of the litigating sister's brother Manuel, their mother, who was
still living, was his heir by force of law, and the defendants had never refused to give to the plaintiff
Vicente Ortiz her share of the said properties; and stated that he admitted the facts alleged in
paragraph 2, provided it be understood, however, that the surname of the defendant's mother was
Felin, and not Feliu, and that Miguel Ortiz died in Spain, and not in Vigan; that he also admitted
paragraph 3 of the complaint, with the difference that the said surname should be Felin, and likewise
paragraph 5, except the part thereof relating to the personal property and the jewelry, since the latter
had not yet been divided; that the said jewelry was in the possession of the plaintiffs and consisted
of: one Lozada gold chronometer watch with a chain in the form of a bridle curb and a watch charm
consisting of the engraving of a postage stamp on a stone mounted in gold and bearing the initials
M. O., a pair of cuff buttons made of gold coins, four small gold buttons, two finger rings, another
with the initials M. O., and a gold bracelet; and that the defendants were willing to deliver to the
plaintiffs, in conformity with their petitions, one-half of the total value in cash, according to
appraisement, of the undivided real properties specified in paragraph 5, which half amounted to
P3,948.
In a special defense said counsel alleged that the defendants had never refused to divide the said
property and had in fact several years before solicited the partition of the same; that, from 1886 to
1901, inclusive, there was collected from the property on Calle Escolta the sum of 288 pesos,
besides a few other small amounts derived from other sources, which were delivered to the plaintiffs
with other larger amounts, in 1891, and from the property on Calle Washington, called La Quinta,
990.95 pesos, which proceeds, added together, made a total of 1,278.95 pesos, saving error or
omission; that, between the years abovementioned, Escolta, and that on Calle Washington, La
Quinta, 376.33, which made a total of 1,141.71, saving error or omission; that, in 1897, the work of
reconstruction was begun of the house on Calle Escolta, which been destroyed by an earthquake,
which work was not finished until 1903 and required an expenditure on the part of the defendant
Matilde Ortiz, of 5,091.52 pesos; that all the collections made up to August 1, 1905, including the
rent from the stores, amounted to only P3,654.15, and the expenses, to P6,252.32, there being,
consequently, a balance of P2,598.17, which divided between the sisters, the plaintiff and the
defendant, would make the latter's share P1,299.08; that, as shown by the papers kept by the
plaintiffs, in the year 1891 the defendant Bartolome presented to the plaintiffs a statement in
settlements of accounts, and delivered to the person duly authorized by the latter for the purpose,
the sum of P2,606.29, which the said settlement showed was owing his principals, from various
sources; that, the defendant Bartolome having been the administrator of the undivided property
claimed by the plaintiffs, the latter were owing the former legal remuneration of the percentage
allowed by law for administration; and that the defendants were willing to pay the sum of P3,948,
one-half of the total value of the said properties, deducting therefrom the amount found to be owing
them by the plaintiffs, and asked that judgment be rendered in their favor to enable them to recover
from the latter that amount, together with the costs and expenses of the suit.
The defendants, in their counter claim, repeated each and all of the allegations contained in each of
the paragraphs of section 10 of their answer; that the plaintiffs were obliged to pay to the
administrator of the said property the remuneration allowed him by law; that, as the revenues
collected by the defendants amounted to no more than P3,654.15 and the expenditures incurred by
them, to P6,252.32, it followed that the plaintiffs owed the defendants P1,299.08, that is one-half of
the difference between the amount collected from and that extended on the properties, and asked
that judgment be therefore rendered in their behalf to enable them to collect this sum from the
plaintiffs, Ricardo Pardell and Vicenta Ortiz, with legal interest thereon from December 7, 1904, the
date when the accounts were rendered, together with the sums to which the defendant Bartolome
was entitled for the administration of the undivided properties in question.
By a written motion of August 21, 1905, counsel for the plaintiffs requested permission to amend the
complaint by inserting immediately after the words "or respective appraisal," fifth line of paragraph 5,
the phrase "in cash in accordance with the assessed value," and likewise further to amend the same,
in paragraph 6 thereof, by substituting the following word in lieu of the petition for the remedy sought:
"By reason of all the foregoing, I beg the court to be pleased to render the judgment by sentencing
the defendants, Gaspar de Bartolome and Matilde Ortiz Felin de Bartolome, to restore and deliver to
the plaintiffs an exact one-half of the total vale of the undivided properties described in the
complaint, such value to be ascertained by the expert appraisal of two competent persons, one of
whom shall be appointed by the plaintiffs and the other by the defendants, and, in case of
disagreement between these two appointees such value shall be determined by a third expert
appraiser appointed by the court, or, in a proper case, by the price offered at public auction; or, in
lieu thereof, it is requested that the court recognize the plaintiff, Vicenta Ortiz, to be vested with a full
and absolute right to an undivided one-half of the said properties; furthermore, it is prayed that the
plaintiffs be awarded an indemnity of P8,000 for losses and damages, and the costs."
Notwithstanding the opposition of the defendants, the said amendment was admitted by the court
and counsel for the defendants were allowed to a period of three days within which to present a new
answer. An exception was taken to this ruling.
The proper proceedings were had with reference to the valuation of the properties concerned in the
division sought and incidental issues were raised relative to the partition of some of them and their
award to one or the other of the parties. Due consideration was taken of the averments and
statements of both parties who agreed between themselves, before the court, that any of them might
at any time acquire, at the valuation fixed by the expert judicial appraiser, any of the properties in
question, there being none in existence excluded by the litigants. The court, therefore, by order of
December 28, 1905, ruled that the plaintiffs were entitled to acquire, at the valuation determined by
the said expert appraiser, the building known as La Quinta, the lot on which it stands and the
warehouses and other improvements comprised within the inclosed land, and the seeds lands
situated in the pueblos of Vigan and Santa Lucia; and that the defendants were likewise entitled to
acquire the house on Calle Escolta, the lot on Calle Magallanes, and the three parcels of land
situated in the pueblo of Candon.
After this partition had been made counsel for the defendants, by a writing of March 8, 1906, set
forth: That, having petitioned for the appraisement of the properties in question for the purpose of
their partition, it was not to be understood that he desired from the exception duly entered to the
ruling made in the matter of the amendment to the complaint; that the properties retained by the
defendants were valued at P9,310, and those retained by the plaintiffs, at P2,885, one-half of which
amounts each party had to deliver to the other, as they were pro indiviso properties; that, therefore,
the defendants had to pay the plaintiffs the sum of P3,212.50, after deducting the amount which the
plaintiffs were obliged to deliver to the defendants, as one-half of the price of the properties retained
by the former; that, notwithstanding that the amount of the counterclaim for the expenses incurred in
the reconstruction of the pro indiviso property should be deducted from the sum which the
defendants had to pay the plaintiffs, the former, for the purpose of bringing the matter of the partition
to a close, would deliver to the latter, immediately upon the signing of the instrument of purchase
and sale, the sum of P3,212.50, which was one-half of the value of the properties alloted to the
defendants; such delivery, however, was not to be understood as a renouncement of the said
counterclaim, but only as a means for the final termination of the pro indiviso status of the property.
The case having been heard, the court on October 5, 1907, rendered judgment holding that the
revenues and the expenses were compensated by the residence enjoyed by the defendant party,
that no losses or damages were either caused or suffered, nor likewise any other expense besides
those aforementioned, and absolved the defendants from the complaint and the plaintiffs from the
counterclaim, with no special finding as to costs. An exception was taken to this judgment by
counsel for the defendants who moved for a new trial on the grounds that the evidence presented
did not warrant the judgment rendered and that the latter was contrary to law. This motion was
denied, exception whereto was taken by said counsel, who filed the proper bill of exceptions, and the
same was approved and forwarded to the clerk of this court, with a transcript of the evidence.
Both of the litigating sisters assented to a partition by halves of the property left in her will by their
mother at her death; in fact, during the course of this suit, proceedings were had, in accordance with
the agreement made, for the division between them of the said hereditary property of common
ownership, which division was recognized and approved in the findings of the trial court, as shown
by the judgment appealed from.
The issues raised by the parties, aside from said division made during the trial, and which have been
submitted to this court for decision, concern: (1) The indemnity claimed for losses and damages,
which the plaintiffs allege amount to P8,000, in addition to the rents which should have been derived
from the house on Calle Escolta, Vigan; (2) the payment by the plaintiffs to the defendants of the
sum of P1,299.08, demanded by way of counterclaim, together with legal interest thereon from
December 7, 1904; (3) the payment to the husband of the defendant Matilde Ortiz, of a percentage
claimed to be due him as the administrator of the property of common ownership; (4) the division of
certain jewelry in the possession of the plaintiff Vicenta Ortiz; and (5) the petition that the
amendment be held to have been improperly admitted, which was made by the plaintiffs in their
written motion of August 21, 1905, against the opposition of the defendants, through which
admission the latter were obliged to pay the former P910.50.lawphil. net
Before entering upon an explanation of the propriety or impropriety of the claims made by both
parties, it is indispensable to state that the trial judge, in absolving the defendants from the
complaint, held that they had not caused losses and damages to the plaintiffs, and that the revenues
and the expenses were compensated, in view of the fact that the defendants had been living for
several years in the Calle Escolta house, which was pro indivisoproperty of joint ownership.
By this finding absolving the defendants from the complaint, and which was acquiesced in by the
plaintiffs who made no appeal therefrom, the first issue has been decided which was raised by the
plaintiffs, concerning the indemnity for losses and damages, wherein are comprised the rents which
should have been obtained from the upper story of the said house during the time it was occupied by
the defendants, Matilde Ortiz and her husband, Gaspar de Bartolome.
Notwithstanding the acquiescence on the part of the plaintiffs, assenting to the said finding whereby
the defendants were absolved from the complaint, yet, as such absolution is based on the
compensation established in the judgment of the trial court, between the amounts which each party
is entitled to claim from the other, it is imperative to determine whether the defendant Matilde Ortiz,
as coowner of the house on Calle Escolta, was entitled, with her husband, to reside therein, without
paying to her coowner, Vicenta Ortiz, who, during the greater part of the time, lived with her husband
abroad, one-half of the rents which the upper story would have produced, had it been rented to a
stranger.
Article 394 of the Civil Code prescribes:
Each coowner may use the things owned in common, provided he uses them in accordance
with their object and in such manner as not to injure the interests of the community nor
prevent the coowners from utilizing them according to their rights.
Matilde Ortiz and her husband occupied the upper story, designed for use as a dwelling, in the
house of joint ownership; but the record shows no proof that, by so doing, the said Matilde
occasioned any detriment to the interest of the community property, nor that she prevented her sister
Vicenta from utilizing the said upper story according to her rights. It is to be noted that the stores of
the lower floor were rented and accounting of the rents was duly made to the plaintiffs.
Each coowner of realty held pro indiviso exercises his rights over the whole property and may use
and enjoy the same with no other limitation than that he shall not injure the interests of his coowners,
for the reason that, until a division be made, the respective part of each holder can not be
determined and every one of the coowners exercises, together with his other coparticipants, joint
ownership over the pro indiviso property, in addition to his use and enjoyment of the same.
As the hereditary properties of the joint ownership of the two sisters, Vicenta Ortiz, plaintiff, and
Matilde Ortiz, defendant, were situated in the Province of Ilocos Sur, and were in the care of the last
named, assisted by her husband, while the plaintiff Vicenta with her husband was residing outside of
the said province the greater part of the time between 1885 and 1905, when she left these Islands
for Spain, it is not at all strange that delays and difficulties should have attended the efforts made to
collect the rents and proceeds from the property held in common and to obtain a partition of the
latter, especially during several years when, owing to the insurrection, the country was in a turmoil;
and for this reason, aside from that founded on the right of coownership of the defendants, who took
upon themselves the administration and care of the properties of joint tenancy for purposes of their
preservation and improvement, these latter are not obliged to pay to the plaintiff Vicenta one-half of
the rents which might have been derived from the upper of the story of the said house on Calle
Escolta, and, much less, because one of the living rooms and the storeroom thereof were used for
the storage of some belongings and effects of common ownership between the litigants. The
defendant Matilde, therefore, in occupying with her husband the upper floor of the said house, did
not injure the interests of her coowner, her sister Vicenta, nor did she prevent the latter from living
therein, but merely exercised a legitimate right pertaining to her as coowner of the property.
Notwithstanding the above statements relative to the joint-ownership rights which entitled the
defendants to live in the upper story of the said house, yet in view of the fact that the record shows it
to have been proved that the defendant Matilde's husband, Gaspar de Bartolome, occupied for four
years a room or a part of the lower floor of the same house on Calle Escolta, using it as an office for
the justice of the peace, a position which he held in the capital of that province, strict justice, requires
that he pay his sister-in-law, the plaintiff, one half of the monthly rent which the said quarters could
have produced, had they been leased to another person. The amount of such monthly rental is fixed
at P16 in accordance with the evidence shown in the record. This conclusion as to Bartolome's
liability results from the fact that, even as the husband of the defendant coowner of the property, he
had no right to occupy and use gratuitously the said part of the lower floor of the house in question,
where he lived with his wife, to the detriment of the plaintiff Vicenta who did not receive one-half of
the rent which those quarters could and should have produced, had they been occupied by a
stranger, in the same manner that rent was obtained from the rooms on the lower floor that were
used as stores. Therefore, the defendant Bartolome must pay to the plaintiff Vicenta P384, that is,
one-half of P768, the total amount of the rents which should have been obtained during four years
from the quarters occupied as an office by the justice of the peace of Vigan.
With respect to the second question submitted for decision to this court, relative to the payment of
the sum demanded as a counterclaim, it was admitted and proved in the present case that, as a
result of a serious earthquake on August 15, 1897, the said house on Calle Escolta was left in ruins
and uninhabitable, and that, for its reconstruction or repair, the defendants had to expend the sum of
P6,252.32. This expenditure, notwithstanding that it was impugned, during the trial, by the plaintiffs,
was duly proved by the evidence presented by the defendants. Evidence, unsuccessfully rebutted,
was also introduced which proved that the rents produced by all the rural and urban properties of
common ownership amounted, up to August 1, 1905, to the sum of P3,654.15 which, being applied
toward the cost of the repair work on the said house, leaves a balance of P2,598.17, the amount
actually advanced by the defendants, for the rents collected by them were not sufficient for the
termination of all the work undertaken on the said building, necessary for its complete repair and to
replace it in a habitable condition. It is therefore lawful and just that the plaintiff Vicenta Ortiz, who
was willing to sell to her sister Matilde for P1,500, her share in the house in question, when it was in
a ruinous state, should pay the defendants one-half of the amount expanded in the said repair work,
since the building after reconstruction was worth P9,000, according to expert appraisal.
Consequently, the counterclaim made by the defendants for the payment to them of the sum of
P1,299.08, is a proper demand, though from this sum a reduction must be made of P384, the
amount of one-half of the rents which should have been collected for the use of the quarters
occupied by the justice of the peace, the payment of which is incumbent upon the husband of the
defendant Matilde, as aforesaid, and the balance remaining, P915.08, is the amount which the
plaintiff Vicenta must pay to the defendants.
The defendants claim to be entitled to the collection of legal interest on the amount of the
counterclaim, from December 7, 1904. This contention can not be sustained, inasmuch as, until this
suit is finally decided, it could not be known whether the plaintiffs would or would not be obliged to
pay the sum whatever in reimbursement of expenses incurred by the plaintiffs in the repair work on
the said house on Calle Escolta, whether or not the defendants, in turn, were entitled to collect any
such amount, and, finally, what the net sum would be which the plaintiff's might have to pay as
reimbursement for one-half of the expenditure made by the defendants. Until final disposal of the
case, no such net sum can be determined, nor until then can the debtor be deemed to be in arrears.
In order that there be an obligation to pay legal interest in connection with a matter at issue between
the parties, it must be declared in a judicial decision from what date the interest will be due on the
principal concerned in the suit. This rule has been established by the decisions of the supreme court
of Spain, in reference to articles 1108, 1109, and 1110 of the Civil Code, reference on April 24,
1867, November 19, 1869, and February 22, 1901.
With regard to the percentage, as remuneration claimed by the husband of the defendant Matilde for
his administration of the property of common ownership, inasmuch as no stipulation whatever was
made in the matter by and between him and his sister-in-law, the said defendant, the claimant is not
entitled to the payment of any remuneration whatsoever. Of his own accord and as an officious
manager, he administered the said pro indivisoproperty, one-half of which belonged to his wife who
held it in joint tenancy, with his sister-in-law, and the law does not allow him any compensation as
such voluntary administrator. He is merely entitled to a reimbursement for such actual and
necessary expenditures as he may have made on the undivided properties and an indemnity for the
damages he may have suffered while acting in that capacity, since at all events it was his duty to
care for and preserve the said property, half of which belonged to his wife; and in exchange for the
trouble occasioned him by the administration of his sister-in-law's half of the said property, he with
his wife resided in the upper story of the house aforementioned, without payment of one-half of the
rents said quarters might have produced had they been leased to another person.
With respect to the division of certain jewelry, petitioned for by the defendants and appellants only in
their brief in this appeal, the record of the proceedings in the lower court does not show that the
allegation made by the plaintiff Vicenta is not true, to the effect that the deceased mother of the
litigant sisters disposed of this jewelry during her lifetime, because, had she not done so, the will
made by the said deceased would have been exhibited in which the said jewelry would have been
mentioned, at least it would have been proved that the articles in question came into the possession
of the plaintiff Vicenta without the expressed desire and the consent of the deceased mother of the
said sisters, for the gift of this jewelry was previously assailed in the courts, without success;
therefore, and in view of its inconsiderable value, there is no reason for holding that the said gift was
not made.
As regards the collection of the sum of P910.50, which is the difference between the assessed value
of the undivided real properties and the price of the same as determined by the judicial expert
appraiser, it is shown by the record that the ruling of the trial judge admitting the amendment to the
original complaint, is in accord with the law and principles of justice, for the reason that any of the
coowners of a pro indiviso property, subject to division or sale, is entitled to petition for its valuation
by competent expert appraisers. Such valuation is not prejudicial to any of the joint owners, but is
beneficial to their interests, considering that, as a general rule, the assessed value of a building or a
parcel of realty is less than the actual real value of the property, and this being appraiser to
determine, in conjunction with the one selected by the plaintiffs, the value of the properties of joint
ownership. These two experts took part in the latter proceedings of the suit until finally, and during
the course of the latter, the litigating parties agreed to an amicable division of the pro
indiviso hereditary property, in accordance with the price fixed by the judicial expert appraiser
appointed as a third party, in view of the disagreement between and nonconformity of the appraisers
chosen by the litigants. Therefore it is improper now to claim a right to the collection of the said sum,
the difference between the assessed value and that fixed by the judicial expert appraiser, for the
reason that the increase in price, as determined by this latter appraisal, redounded to the benefit of
both parties.
In consideration of the foregoing, whereby the errors assigned to the lower court have been duly
refuted, it is our opinion that, with a partial reversal of the judgment appealed from, in so far as it
absolves the plaintiffs from the counterclaim presented by the defendants, we should and hereby do
sentence the plaintiffs to the payment of the sum of P915.08, the balance of the sum claimed by the
defendants as a balance of the one-half of the amount which the defendants advanced for the
reconstruction or repair of the Calle Escolta house, after deducting from the total of such sum
claimed by the latter the amount of P384 which Gaspar de Bartolome, the husband of the defendant
Matilde, should have paid as one-half of the rents due for his occupation of the quarters on the lower
floor of the said house as an office for the justice of the peace court of Vigan; and we further find: (1)
That the defendants are not obliged to pay one-half of the rents which could have been obtained
from the upper story of the said house; (2) that the plaintiffs can not be compelled to pay the legal
interest from December 7, 1904, on the sum expanded in the reconstruction of the aforementioned
house, but only the interest fixed by law, at the rate of 6 per cent per annum, from the date of the
judgment to be rendered in accordance with this decision; (3) that the husband of the defendant
Matilde Ortiz is not entitled to any remuneration for the administration of the pro indiviso property
belonging to both parties; (4) that, neither is he entitled to collect from the plaintiffs the sum of
P910.50, the difference between the assessed valuation and the price set by the expert appraisal
solicited by the plaintiffs in their amendment to the complaint; and, (5) that no participation shall be
made of jewelry aforementioned now in the possession of the plaintiff Vicenta Ortiz. The said
judgment, as relates to the points appealed, is affirmed, in so far as its findings agree with those of
this decision, and is reversed, in so far as they do not. No special finding is made regarding the
costs of both instances. So ordered.
Arellano, C.J., Mapa, Johnson, Carson and Trent, JJ., concur.





G.R. No. 76351 October 29, 1993
VIRGILIO B. AGUILAR, petitioner,
vs.
COURT OF APPEALS and SENEN B. AGUILAR, respondents.
Jose F. Manacop for petitioner.
Siruello, Muyco & Associates Law Office for private respondent.

BELLOSILLO, J .:
This is a petition for review on certiorari seeking to reverse and set aside the Decision of the Court of
Appeals in CA-GR CV No. 03933 declaring null and void the orders of 23 and 26 April, 1979, the
judgment by default of 26 July 1979, and the order of 22 October 1979 of the then Court of First
Instance of Rizal, Pasay City, Branch 30, and directing the trial court to set the case for pre-trial
conference.
Petitioner Virgilio and respondent Senen are brothers; Virgilio is the youngest of seven (7) children
of the late Maximiano Aguilar, while Senen is the fifth. On 28 October 1969, the two brothers
purchased a house and lot in Paraaque where their father could spend and enjoy his remaining
years in a peaceful neighborhood. Initially, the brothers agreed that Virgilio's share in the co-
ownership was two-thirds while that of Senen was one-third. By virtue of a written memorandum
dated 23 February 1970, Virgilio and Senen agreed that henceforth their interests in the house and
lot should be equal, with Senen assuming the remaining mortgage obligation of the original owners
with the Social Security System (SSS) in exchange for his possession and enjoyment of the house
together with their father.
Since Virgilio was then disqualified from obtaining a loan from SSS, the brothers agreed that the
deed of sale would be executed and the title registered in the meantime in the name of Senen. It
was further agreed that Senen would take care of their father and his needs since Virgilio and his
family were staying in Cebu.
After Maximiano Aguilar died in 1974, petitioner demanded from private respondent that the latter
vacate the house and that the property be sold and proceeds thereof divided among them.
Because of the refusal of respondent to give in to petitioner's demands, the latter filed on 12 January
1979 an action to compel the sale of the house and lot so that the they could divide the proceeds
between them.
In his complaint, petitioner prayed that the proceeds of the sale, be divided on the basis of two-thirds
(2/3) in his favor and one-third (1/3) to respondent. Petitioner also prayed for monthly rentals for the
use of the house by respondent after their father died.
In his answer with counterclaim, respondent alleged that he had no objection to the sale as long as
the best selling price could be obtained; that if the sale would be effected, the proceeds thereof
should be divided equally; and, that being a co-owner, he was entitled to the use and enjoyment of
the property.
Upon issues being joined, the case was set for pre-trial on 26 April 1979 with the lawyers of both
parties notified of the pre-trial, and served with the pre-trial order, with private respondent executing
a special power of attorney to his lawyer to appear at the pre-trial and enter into any amicable
settlement in his behalf.
1

On 20 April 1979, Atty. Manuel S. Tonogbanua, counsel for respondent, filed a motion to cancel pre-
trial on the ground that he would be accompanying his wife to Dumaguete City where she would be
a principal sponsor in a wedding.
On 23 April 1979, finding the reasons of counsel to be without merit, the trial court denied the motion
and directed that the pre-trial should continue as scheduled.
When the case was called for pre-trial as scheduled on 26 April 1979, plaintiff and his counsel
appeared. Defendant did not appear; neither his counsel in whose favor he executed a special
power of attorney to represent him at the pre-trial. Consequently, the trial court, on motion of plaintiff,
declared defendant as in default and ordered reception of plaintiff's evidence ex parte.
On 7 May 1979, defendant through counsel filed an omnibus motion to reconsider the order of
default and to defer reception of evidence. The trial court denied the motion and plaintiff presented
his evidence.
On 26 July 1979, rendering judgment by default against defendant, the trial court found him and
plaintiff to be co-owners of the house and lot, in equal shares on the basis of their written agreement.
However, it ruled that plaintiff has been deprived of his participation in the property by defendant's
continued enjoyment of the house and lot, free of rent, despite demands for rentals and continued
maneuvers of defendants, to delay partition. The trial court also upheld the right of plaintiff as co-
owner to demand partition. Since plaintiff could not agree to the amount offered by defendant for the
former's share, the trial court held that this property should be sold to a third person and the
proceeds divided equally between the parties.
The trial court likewise ordered defendant to vacate the property and pay plaintiff P1,200.00 as
rentals
2
from January 1975 up to the date of decision plus interest from the time the action was filed.
On 17 September 1979, defendant filed an omnibus motion for new trial but on 22 October 1979 the
trial court denied the motion.
Defendant sought relief from the Court of Appeals praying that the following orders and decision of
the trial court be set aside: (a) the order of 23 April 1970 denying defendants motion for
postponement of the pre-trial set on 26 April 1979; (b) the order of 26 April 1979 declaring him in
default and authorizing plaintiff to present his evidence ex-parte; (e) the default judgment of 26 July
1979; and, (d) the order dated 22 October 1979 denying his omnibus motion for new trial.
On 16 October 1986, the Court of Appeals set aside the order of the trial court of 26 April 1979 as
well as the assailed judgment rendered by default., The appellate court found the explanation of
counsel for defendant in his motion to cancel pre-trial as satisfactory and devoid of a manifest
intention to delay the disposition of the case. It also ruled that the trial court should have granted the
motion for postponement filed by counsel for defendant who should not have been declared as in
default for the absence of his counsel.
Petitioner now comes to us alleging that the Court of Appeals erred (1) in not holding that the motion
of defendant through counsel to cancel the pre-trial was dilatory in character and (2) in remanding
the case to the trial court for pre-trial and trial.
The issues to be resolved are whether the trial court correctly declared respondent as in default for
his failure to appear at the pre-trial and in allowing petitioner to present his evidence ex-parte, and
whether the trial court correctly rendered the default judgment against respondent.
We find merit in the petition.
As regards the first issue, the law is clear that the appearance of parties at the pre-trial is
mandatory.
3
A party who fails to appear at a pre-trial conference may be non-suited or considered as in
default.
4
In the case at bar, where private respondent and counsel failed to appear at the scheduled pre-
trial, the trial, court has authority to declare respondent in default.
5

Although respondent's counsel filed a motion to postpone pre-trial hearing, the grant or denial
thereof is within the sound discretion of the trial court, which should take into account two factors in
the grant or denial of motions for postponement, namely: (a) the reason for the postponement and
(b) the merits of the case of movant.
6

In the instant case, the trial court found the reason stated in the motion of counsel for respondent to
cancel the pre-trial to be without merit. Counsel's explanation that he had to go to by boat as early as
25 March 1979 to fetch his wife and accompany her to a wedding in Dumaguete City on 27 April
1979 where she was one of the principal sponsors, cannot be accepted. We find it insufficient to
justify postponement of the pre-trial, and the Court of Appeals did not act wisely in overruling the
denial. We sustain the trial court and rule that it did not abuse its discretion in denying the
postponement for lack of merit. Certainly, to warrant a postponement of a mandatory process as pre-
trial would require much more than mere attendance in a social function. It is time indeed we
emphasize that there should be much more than mere perfunctory treatment of the pre-trial
procedure. Its observance must be taken seriously if it is to attain its objective, i.e., the speedy and
inexpensive disposition of cases.
Moreover, the trial court denied the motion for postponement three (3) days before the scheduled
pre-trial. If indeed, counsel for respondent could not attend the pre-trial on the scheduled date,
respondent at least should have personally appeared in order not to be declared as in default. But,
since nobody appeared for him, the order of the trial court declaring him as in default and directing
the presentation of petitioner's evidence ex parte was proper.
7

With regard to the merits of the judgment of the trial court by default, which respondent appellate
court did not touch upon in resolving the appeal, the Court holds that on the basis of the pleadings of
the parties and the evidence presented ex parte, petitioner and respondents are co-owners of
subject house and lot in equal shares; either one of them may demand the sale of the house and lot
at any time and the other cannot object to such demand; thereafter the proceeds of the sale shall be
divided equally according to their respective interests.
Private respondent and his family refuse to pay monthly rentals to petitioner from the time their
father died in 1975 and to vacate the house so that it can be sold to third persons. Petitioner alleges
that respondent's continued stay in the property hinders its disposal to the prejudice of petitioner. On
the part of petitioner, he claims that he should be paid two-thirds (2/3) of a monthly rental of
P2,400.00 or the sum of P1,600.00.
In resolving the dispute, the trial court ordered respondent to vacate the property so that it could be
sold to third persons and the proceeds divided between them equally, and for respondent to pay
petitioner one-half (1/2) of P2,400.00 or the sum of P1,200.00 as monthly rental, conformably with
their stipulated sharing reflected in their written agreement.
We uphold the trial court in ruling in favor of petitioner, except as to the effectivity of the payment of
monthly rentals by respondent as co-owner which we here declare to commence only after the trial
court ordered respondent to vacate in accordance with its order of 26 July 1979.
Article 494 of the Civil Code provides that no co-owner shall be obliged to remain in the co-
ownership, and that each co-owner may demand at any time partition of the thing owned in common
insofar as his share is concerned. Corollary to this rule, Art. 498 of the Code states that whenever
the thing is essentially, indivisible and the co-owners cannot agree that it be, allotted to one of them
who shall indemnify the others, it shall be sold and its proceeds accordingly distributed. This is
resorted to (1) when the right to partition the property is invoked by any of the co-owners but
because of the nature of the property it cannot be subdivided or its subdivision would prejudice the
interests of the co-owners, and (b) the co-owners are not in agreement as to who among them shall
be allotted or assigned the entire property upon proper reimbursement of the co-owners. In one
case,
8
this Court upheld the order of the trial court directing the holding of a public sale of the properties
owned in common pursuant to Art. 498 of the Civil Code.
However, being a co-owner respondent has the right to use the house and lot without paying any
compensation to petitioner, as he may use the property owned in common long as it is in
accordance with the purpose for which it is intended and in a manner not injurious to the interest of
the other co-owners.
9
Each co-owner of property held pro indiviso exercises his rights over the whole
property and may use and enjoy the same with no other limitation than that he shall not injure the
interests of his co-owners, the reason being that until a division is made, the respective share of each
cannot be determined and every co-owner exercises, together with his co-participants joint ownership
over the pro indivisoproperty, in addition to his use and enjoyment of the
same.
10

Since petitioner has decided to enforce his right in court to end the co-ownership of the house and
lot and respondent has not refuted the allegation that he has been preventing the sale of the
property by his continued occupancy of the premises,
justice
and equity demand that respondent and his family vacate the property so that the sale can be effected
immediately. In fairness to petitioner, respondent should pay a rental of P1,200.00 per month, with legal
interest; from the time the trial court ordered him to vacate, for the use and enjoyment of the other half of
the property appertaining to petitioner.
When petitioner filed an action to compel the sale of the property and the trial court granted the
petition and ordered the ejectment of respondent, the co-ownership was deemed terminated and the
right to enjoy the possession jointly also ceased. Thereafter, the continued stay of respondent and
his family in the house prejudiced the interest of petitioner as the property should have been sold
and the proceeds divided equally between them. To this extent and from then on, respondent should
be held liable for monthly rentals until he and his family vacate.
WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals dated 16
October 1986 is REVERSED and SET ASIDE. The decision of the trial court in Civil Case No. 69.12-
P dated 16 July 1979 is REINSTATED, with the modification that respondent Senen B. Aguilar is
ordered to vacate the premises in question within ninety (90) days from receipt of this and to pay
petitioner Virgilio B. Aguilar a monthly rental of P1,200.00 with interest at the legal rate from the time
he received the decision of the trial court directing him to vacate until he effectively leaves the
premises.
The trial court is further directed to take immediate steps to implement this decision conformably with
Art. 498 of the Civil Code and the Rules of Court. This decision is final and executory.
SO ORDERED.
Cruz, Davide, Jr., Quiason, JJ., concur.

G.R. No. 78178 April 15, 1988
DELIA BAILON-CASILAO, LUZ PAULINO-ANG, EMMA PAULINO-YBANEZ, NILDA PAULINO-
TOLENTINO, and SABINA BAILON, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and CELESTINO AFABLE, respondents.
Veronico E. Rubio for petitioners.
Mario G. Fortes for private-respondent.

CORTES, J .:
The fate of petitioners' claim over a parcel of land rests ultimately on a determination of whether or
not said petitioners are chargeable with such laches as may effectively bar their present action.
The petitioners herein filed a case for recovery of property and damages with notice of lis
pendens on March 13, 1981 against the defendant and herein private respondent, Celestino Afable.
The parcel of land involved in this case, with an area of 48,849 square meters, is covered by Original
Certificate of Title No. 1771 issued on June 12, 1931, in the names of Rosalia, Gaudencio, Sabina
Bernabe, Nenita and Delia, all surnamed Bailon, as co-owners, each with a 1/6 share. Gaudencio
and Nenita are now dead, the latter being represented in this case by her children. Luz, Emma and
Nilda. Bernabe went to China in 1931 and had not been heard from since then [Decision of the Court
of Appeals, Rollo, p. 39].
It appears that on August 23, 1948, Rosalia Bailon and Gaudencio Bailon sold a portion of the said
land consisting of 16,283 square meters to Donato Delgado. On May 13, 1949, Rosalia Bailon alone
sold the remainder of the land consisting of 32,566 square meters to Ponciana V. Aresgado de
Lanuza. On the same date, Lanuza acquired from Delgado the 16,283 square meters of land which
the latter had earlier acquired from Rosalia and Gaudencio. On December 3, 1975, John Lanuza,
acting under a special power of attorney given by his wife, Ponciana V. Aresgado de Lanuza, sold
the two parcels of land to Celestino Afable, Sr.
In all these transfers, it was stated in the deeds of sale that the land was not registered under the
provisions of Act No. 496 when the fact is that it is. It appears that said land had been successively
declared for taxation first, in the name of Ciriaca Dellamas, mother of the registered co-owners, then
in the name of Rosalia Bailon in 1924, then in that of Donato Delgado in 1936, then in Ponciana de
Lanuza's name in 1962 and finally in the name of Celestino Afable, Sr. in 1983.
In his answer to the complaint filed by the herein petitioners, Afable claimed that he had acquired the
land in question through prescription and contended that the petitioners were guilty of laches.He
later filed a third-party complaint against Rosalia Bailon for damages allegedly suffered as a result of
the sale to him of the land.
After trial, the lower court rendered a decision:
1. Finding and declaring Celestino Afable, a co-owner of the land described in
paragraph III of the complaint having validly bought the two-sixth (2/6) respective
undivided shares of Rosalia Bailon and Gaudencio Bailon;
2. Finding and declaring the following as pro-indiviso co-owners, having 1/6 share
each, of the property described in paragraph III of the complaint, to wit:
a. Sabina Bailon
b. Bernabe Bailon
c. Heirs of Nenita Bailon-Paulino
d. Delia Bailon-Casilao;
3. Ordering the segregation of the undivided interests in the property in order to
terminate co-ownership to be conducted by any Geodetic Engineer selected by the
parties to delineate the specific part of each of the co-owners.
4. Ordering the defendant to restore the possession of the plaintiffs respective shares
as well as all attributes of absolute dominion;
5. Ordering the defendant to pay the following:
a. P5,000.00 as damages;
b. P2,000.00 as attorney's fees and;
c. to pay the costs.
[Decision of the Trial Court, Rollo, p. 37-38].
On appeal, the respondent Court of Appeals affirmed the decision of the lower court insofar as it
held that prescription does not he against plaintiffs-appellees because they are co-owners of the
original vendors. However, the appellate court declared that, although registered property cannot be
lost by prescription, nevertheless, an action to recover it may be barred by laches, citing the ruling
in Mejia de Lucaz v. Gamponia [100 Phil. 277 (1956)]. Accordingly, it held the petitioners guilty of
laches and dismissed their complaint. Hence, this petition for review on certiorari of the decision of
the Court of Appeals.
The principal issue to be resolved in this case concerns the applicability of the equitable doctrine of
laches. Initially though, a determination of the effect of a sale by one or more co-owners of the entire
property held in common without the consent of all the co-owners and of the appropriate remedy of
the aggrieved co-owners is required.
The rights of a co-owner of a certain property are clearly specified in Article 493 of the Civil
Code.Thus:
Art. 493. Each co-owner shall have the full ownership of his part and of the acts and
benefits pertaining thereto, and he may therefore alienate assign or mortgage it and
even substitute another person in its enjoyment, except when personal rights are
involved. But the effect of the alienation or mortgage, with respect to the co-owners,
shall be limited to the portion which may be allotted to him in the division upon the
termination of the co-ownership. [Emphasis supplied.]
As early as 1923, this Court has ruled that even if a co-owner sells the whole property as his, the
sale will affect only his own share but not those of the other co-owners who did not consent to the
sale [Punsalan v. Boon Liat 44 Phil. 320 (1923)]. This is because under the aforementioned codal
provision, the sale or other disposition affects only his undivided share and the transferee gets only
what would correspond to his grantor in the partition of the thing owned in common.[Ramirez v.
Bautista, 14 Phil. 528 (1909)]. Consequently, by virtue of the sales made by Rosalia and Gaudencio
Bailon which are valid with respect to their proportionate shares, and the subsequent transfers which
culminated in the sale to private respondent Celestino Afable, the said Afable thereby became a co-
owner of the disputed parcel of land as correctly held by the lower court since the sales produced
the effect of substituting the buyers in the enjoyment thereof [Mainit v. Bandoy, 14 Phil. 730 (1910)].
From the foregoing, it may be deduced that since a co-owner is entitled to sell his undivided share, a
sale of the entire property by one co-owner without the consent of the other co-owners is not null
and void. However, only the rights of the co-owner-seller are transferred, thereby making the buyer a
co-owner of the property.
The proper action in cases like this is not for the nullification of the sale or for the recovery of
possession of the thing owned in common from the third person who substituted the co-owner or co-
owners who alienated their shares, but the DIVISION of the common property as if it continued to
remain in the possession of the co-owners who possessed and administered it [Mainit v.
Bandoy, supra.]
Thus, it is now settled that the appropriate recourse of co-owners in cases where their consent were
not secured in a sale of the entire property as well as in a sale merely of the undivided shares of
some of the co-owners is an action. for PARTITION under Rule 69 of the Revised Rules of Court.
Neither recovery of possession nor restitution can be granted since the defendant buyers are
legitimate proprietors and possessors in joint ownership of the common property claimed [Ramirez v.
Bautista, supra].
As to the action for petition, neither prescription nor laches can be invoked.
In the light of the attendant circumstances, defendant-appellee's defense of prescription is a vain
proposition. Pursuant to Article 494 of the Civil Code, '(n)o co-owner shall be obliged to remain in the
co-ownership. Such co-owner may demand at anytime the partition of the thing owned in common,
insofar as his share is concerned.' [Emphasis supplied.] In Budiong v. Bondoc [G.R. No. L-27702,
September 9, 1977, 79 SCRA 241, this Court has interpreted said provision of law to mean that the
action for partition is imprescriptible or cannot be barred by prescription. For Article 494 of the Civil
Code explicitly declares: "No prescription shall lie in favor of a co-owner or co- heir so long as he
expressly or impliedly recognizes the co-ownership."
Furthermore, the disputed parcel of land being registered under the Torrens System, the express
provision of Act No. 496 that '(n)o title to registered land in derogation to that of the registered owner
shall be acquired by prescription or adverse possession' is squarely applicable. Consequently,
prescription will not lie in favor of Afable as against the petitioners who remain the registered owners
of the disputed parcel of land.
It is argued however, that as to the petitioners Emma, Luz and Nelda who are not the registered co-
owners but merely represented their deceased mother, the late Nenita Bailon, prescription
lies.Respondents bolster their argument by citing a decision of this Court in Pasion v.
Pasion [G.R.No. L-15757, May 31, 1961, 2 SCRA 486, 489] holding that "the imprescriptibility of a
Torrens title can only be invoked by the person in whose name the title is registered" and that 'one
who is not the registered owner of a parcel of land cannot invoke imprescriptibility of action to claim
the same.'
Reliance on the aforesaid Pasion case is futile. The ruling therein applies only against transferees
other than direct issues or heirs or to complete strangers. The rational is clear:
If prescription is unavailing against the registered owner, it must be equally
unavailing against the latter's hereditary successors, because they merely step into
the shoes of the decedent by operation of law (New Civil Code, Article 777; Old Civil
Code, Article 657), the title or right undergoing no change by its transmission mortis
causa [Atus, et al., v. Nunez, et al., 97 Phil. 762, 764].
The latest pronouncement of this Court in Umbay v. Alecha [G. R. No. 67284, March 18, 1985, 135
SCRA 427, 429], which was promulgated subsequent to the Pasion case reiterated
the Atus doctrine. Thus:
Prescription is unavailing not only against the registered owner but also against his
hereditary successors, because they merely step into the shoes of the decedent by
operation of law and are merely the continuation of the personality of their
predecessor-in-interest. [Barcelona v. Barcelona, 100 Phil. 251, 257].
Laches is likewise unavailing as a shield against the action of herein petitioners.
Well-stated in this jurisdiction are the four basic elements of laches, namely: (1) conduct on the part
of the defendant or of one under whom he claims, giving rise to the situation of which complaint is
made and for which the complainant seeks a remedy; (2) delay in asserting the corporations
complainant's rights, the complainant having had knowledge or notice of the defendant's conduct
and having been afforded an opportunity to institute suit; (3) lack of knowledge or notice on the part
of the defendant that the complainant would assert the right on which he bases his suit; and, (4)
injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is
not held to be barred [Go China Gun, et al. v. Co Cho et al., 96 Phil. 622 (1955)].
While the first and last elements are present in this case, the second and third elements are missing.
The second element speaks of delay in asserting the complainant's rights. However, the mere fact of
delay is insufficient to constitute, laches. It is required that (1) complainant must have
had knowledge of the conduct of defendant or of one under whom he claims and (2) he must have
been afforded an opportunity to institute suit. This court has pointed out that laches is not concerned
with the mere lapse of time. Thus:
Laches has been defined as the failure or neglect, for an unreasonable length of time
to do that which by exercising due diligence could or should have been done earlier;
it is negligence or omission to assert a right within a reasonable time warranting a
presumption that the party entitled to assert it either has abandoned it or declined to
assert it. Tijam, et al., v. Sibonghanoy, G.R. No. L-21450, April 25, 1968, 23 SCRA
29,35; Tendo v. Zamacoma, G.R. No. L-63048, August 7, 1985, 138 SCRA 78, 90].
The doctrine of "laches" or of "stale demands" is based upon grounds of public policy
which requires for the peace of society, the discouragement of stale claims and
unlike the statute of limitations, is not a mere question of time but is principally a
question of inequity or unfairness of permitting a right or claim to be enforced or
asserted," [Tijam v. Sibonghanoy, supra, p. 35]. [Emphasis supplied.]
It must be noted that while there was delay in asserting petitioners' rights, such delay was not
attended with any knowledge of the sale nor with any opportunity to bring suit. In the first place,
petitioners had no notice of the sale made by their eldest sister. It is undisputed that the petitioner
co-owners had entrusted the care and management of the parcel of land to Rosalia Bailon who was
the oldest among them [TSN, July 27, 1983, p. 14]. In fact, Nicanor Lee, a son of Rosalia, who was
presented as a witness by the plaintiffs-petitioners, testified on cross-examination that his mother
was only the administrator of the land as she is the eldest and her brothers and sisters were away
[TSN, October 5, 1983, p. 15]. Indeed, when Delia Bailon-Casilao left Sorsogon in 1942 after she got
married, it was only in 1983 that she returned. Sabina on the other hand, is said to be living in
Zamboanga while Bernabe who left for China in 1931 has not been heard from since then.
Consequently, when Rosalia, from whom the private respondent derived his title, made the disputed
sales covering the entire property, the herein petitioners were unaware thereof.
In the second place, they were not afforded an opportunity to bring suit inasmuch as until 1981, they
were kept in the dark about the transactions entered into by their sister. It was only when Delia
Bailon-Casilao returned to Sorsogon in 1981 that she found out about the sales and immediately,
she and her co-petitioners filed the present action for recovery of property. The appellate court thus
erred in holding that 'the petitioners did nothing to show interest in the land." For the administration
of the parcel of land was entrusted to the oldest co-owner who was then in possession thereof
precisely because the other co-owners cannot attend to such a task as they reside outside of
Sorsogon where the land is situated. Her co-owners also allowed her to appropriate the entire
produce for herself because it was not even enough for her daily consumption [TSN, October 5,
1983, pp. 17-18]. And since petitioner was the one receiving the produce, it is but natural that she
was the one to take charge of paying the
real estate
taxes. Now, if knowledge of the sale by Rosalia was conveyed to the petitioners only later, they cannot be faulted for the acts of their co-
owner who failed to live up to the trust and confidence expected of her. In view of the lack of knowledge by the petitioners of the conduct of
Rosalia in selling the land without their consent in 1975 and the absence of any opportunity to institute the proper action until 1981, laches
may not be asserted against the petitioners.
The third element of laches is likewise absent. There was no lack of knowledge or notice on the part
of the defendant that the complainants would assert the right on which they base the suit. On the
contrary, private respondent is guilty of bad faith in purchasing the property as he knew that the
property was co-owned by six persons and yet, there were only two signatories to the deeds of sale
and no special authorization to self was granted to the two sellers by the other co-owners.
Even as the land here was misrepresented in the deeds of sale as "unregistered," the truth was that
Afable already had notice that the land was titled in the name of six persons by virtue of the
Certificate of Title which was already in his possession even before the sale. Such fact is apparent
from his testimony before the court a quo:
COURT:
Q: From whom did you get the certificate of Title?
A: When it was mortgaged by Ponciana Aresgado.
Q: It was mortgaged to you before you bought it?
A: Yes, Your Honor. (TSN, March 5, 1984, p. 12) When cross-
examined, he stated:
Q: Mr. Witness, the original Certificate of Title was given to you in the
year 1974, was it not?
A: 1975.
Q: In 1975, you already discovered that the title was in the name of
several persons, is it not?
A: Yes, sir.
Q: When you discovered that it is in the name of several persons, you
filed a case in court for authority to cancel the title to be transferred in
your name, is it not?
A: Yes, sir.
Q: And that was denied by the Court of First Instance of Sorsogon
because there was ordinary one signatory to the deed of sale instead
of six, was it not?
A: Not one but two signatories.
[Decision of the Regional Trial Court of Sorsogon, Rollo, p. 35]
Such actual knowledge of the existence of other co-owners in whose names the lot subject of the
sale was registered should have prompted a searching inquiry by Afable considering the well- known
rule in this jurisdiction that:
... a person dealing with a registered land has a right to rely upon the face of the
Torrens certificate of title and to dispense with the need of inquiring further, except
when the party concerned has actual knowledge of facts and circumstances that
would impel a reasonably cautions man to make such inquiry. [Gonzales v. IAC and
Rural Bank of Pavia,
Inc
., G.R. No. 69622, January 29, 1988).
Moreover, the undisputed fact is that petitioners are relatives of his wife. As a genuine gesture of
good faith, he should have contacted the petitioners who were still listed as co-owners in the
certificate of title which was already in his possession even before the sale. In failing to exercise
even a minimum degree of ordinary prudence required by the situation, he is deemed to have
bought the lot at his own risk. Hence any prejudice or injury that may be occasioned to him by such
sale must be borne by him.
Indeed, aware of the flaws impairing his title, Afable went to the herein petitioner Delia Bailon-
Casilao, asking the latter to sign a document obviously to cure the flaw [TSN, July 27, 1983, p.6].
Later, he even filed a petition in the Court of First Instance to register the title in his name which was
denied as aforesaid.
It may be gleaned from the foregoing examination of the facts that Celestino Afable is not a buyer in
good faith. Laches being an equitable defense, he who invokes it must come to the court with clean
hands.
WHEREFORE, the petition for certiorari is hereby GRANTED, the challenged decision of the Court
of Appeals is SET ASIDE, and the decision of the trial court is REINSTATED.
SO ORDERED.
Fernan, Gutierrez, Jr., Feliciano and Bidin, JJ., concur.
G.R. No. 75886 August 30, 1988
CONCEPCION ROQUE, petitioner,
vs.
HON. INTERMEDIATE APPELLATE COURT, ERNESTO ROQUE, FILOMENA OSMUNDO,
CECILIA ROQUE, MARCELA ROQUE, JOSE ROQUE and RUBEN ROQUE, respondents.
Lorenzo J. Liwag for petitioner.
Dominador Ad Castillo for private respondents.

FELICIANO, J .:
The subject of the present Petition for Review is the 31 July 1986 Decision of the former
Intermediate Appellate Court in AC-G.R. CV No. 02248 (entitled, "Concepcion Roque, plaintiff-
appellee, vs. Ernesto Roque, Filomena Osmunda Cecilia Roque, Marcela Roque, Jose Roque and
Ruben Roque, defendants-appellants") which reversed and set aside on appeal the decision of the
Regional Trial Court of Malolos, Branch 9.
The controversy here involves a 312 square meter parcel of land situated in San Juan, Malolos,
Bulacan and designated as Lot No. 1549 of the Cadastral Survey of Malolos. The property was
registered originally in the name of Januario Avendao, a bachelor who died intestate and without
issue on 22 October 1945.
On 21 September 1959, the intestate heirs of Januario Avendafio executed a document entitled
"Paghahati at Pagtagabuyan ng Mana sa Labas ng Hukuman."
1
Through this instrument, extrajudicial
partition of Lot No. 1549 was effected among the intestate heirs as follows:
a. One-fourth (1/4) undivided portion to Illuminada Avendao.
b. One-fourth (1/4) undivided portion to Gregorio Avendafio and
Miguel
Avendao.
c. One-fourth (1/4) undivided portion to Bernardino, Bienvenido, Numeriano and
Rufina, all surnamed Avendao.
d. One-fourth (1/4) undivided portion to respondent Emesto Roque and Victor
Roque.
2

On 28 September 1959, co-owners Illuminada, Gregorio, Miguel, Bernardino, Bienvenido,
Numeriano and Rufina, all surnamed Avendao, in consideration of the aggregate amount of
P500.00, transferred their collective and undivided threefourths (3/4) share in Lot No. 1549 to
respondent Ernesto Roque and Victor Roque, thereby vesting in the latter full and complete
ownership of the property. The transactions were embodied in two (2) separate deeds of sale both
entitled "Kasulatan ng Bilihang Patuluyan"
3
and both duly notarized. Subsequently, in an unnotarized
"Bilihan Lubos at Patuluyan"
4
dated 27 November 1961, Emesto and Victor Roque purportedly sold a
three-fourths (3/4) undivided portion of Lot No. 1549 to their half-sister, petitioner Concepcion Roque, for
the same amount. The property, however, remained registered in the name of the decedent, Januario
Avendao.
Upon the instance of petitioner Concepcion Roque and allegedly of respondent Ernesto Roque, Lot
No. 1549 was surveyed on 20 September 1975. Consequent thereto, a Subdivision Plan
5
was drawn
up by the Geodetic Engineer Identifying and delineating a one-fourth (1/4) portion (78 square meters) of
the property as belonging to respondent Ernesto Roque and Victor Roque (who had died on 14 April
1962), upon the one hand, and a three-fourths (3/4) portion (234 square meters) of the same property as
belonging to petitioner Concepion Roque, upon the other hand. Petitioner claimed that preparation of the
Subdivision Plan, which was approved on 3 November 1975 by the Land Registration Commission was a
preliminary step leading eventually to partition of Lot No. 1549, partition allegedly having been previously
agreed upon inter se by the co-owners. Respondents Ernesto Roque and the legal heirs of Victor Roque, however,
refused to acknowledge petitioner's claim of ownership of any portion of Lot No. 1549 and rejected the plan to divide the land.
Attempts at amicable settlement having fallen through, petitioner Concepcion Roque, on 6
December 1977, filed a Complaint for "Partition with Specific Performance"
6
(docketed as Civil Case
No. 5236-M) with Branch 2 of the then Court of First Instance of Malolos against respondents Emesto
Roque and the heirs of Victor Roque. In her complaint, petitioner (plaintiff below) claimed legal ownership
of an undivided threefourths (3/4) portion of Lot No. 1549, by virtue of the 27 November 1961 "Bilihan
Lubos at Patuluyan" executed in her favor by Emesto Roque and Victor Roque. In support of this claim,
petitioner also presented an undated and unnotarized "Kasulatang Pagkilala sa Bilihan Patuluyan ng
Bahagui at Pagmamana sa Labas ng Hukuman at Paghahati-hati at Abuyan ng Bahagui"
7
said to have
been signed by the respondents in acknowledgment of the existence and validity of the Bilihan in favor of
petitioner. Finally, petitioner alleged that, as a coowner of Lot No. 1549, she had a right to seek partition
of the property, that she could not be compelled to remain in the coownership of the same.
In an Answer with Compulsory Counterclaim
8
filed on 28 December 1977, respondents (defendants
below) impugned the genuineness and due execution of the "Bilihan Lubos at Patuluyan" dated 27
November 1961 on the ground "that the signatures appearing thereon are not the authentic signatures of
the supposed signatories ...." It was also alleged that petitioner Concepcion Roque, far from being a co-
owner of Lot No. 1549, "occupied a portion of the lot in question by mere tolerance of the [defendants]."
Respondents also refused to honor the unnotarized Kasulatan and, additionally, denied having had any
participation in the preparation of the Subchvision Plan.
On 27 June 1983, the trial court (now Branch 9, Regional Trial Court of Malolos) rendered a
Decision,
9
the dispositive portion of which read:
WHEREFORE, judgment is hereby rendered, in favor of the plaintiff and against the
defendants;
1. Ordering the heirs of the late Victor Roque namely Filomena Osmunda his spouse,
his children, Cecilia Roque, Marcela Roque, Jose Roque and Ruben Roque and their
uncle and co-defendant Emesto Roque, to execute a deed of confirmation of the sale
made by Emesto and Victor Roque in favor of plaintiff Concepcion Roque, entitled
"Bilihan Lubos at Patuluyan," executed on November 27, 1961, Exh. E, over the 3/4
portion of the subject property;
2. Ordering the partition of the parcel of land described in par. 3 of tie complaint
covered by Original Certificate of Title No. 1442 Bulacan issued in the name of
Januario Avendafio, in the proportion of 3/4 to pertain to Concepcion Roque, and 1/4
to pertain to Emesto Roque and his co- defendants, his sister-in-law, nephews and
nieces, in accordance with the approved subdivision plan (LRC Psd-230726).
3. Ordering defendants,jointly and severally, to pay to plaintiff the sum of P2,000.00
as and for attomey's fees and the costs of suit.
SO ORDERED.
The respondents appealed from this decision alleging the following errors:
I
The lower court erred when it decided and ordered defendantsappellants to execute
a confirmation of the "Bilihan Lubos at Patuluyan," Exh. "E."
II
The lower court erred when it decided and ordered the defendantsappellant,s to
deliver unto the plaintiff [a] 3/4 share of the land in question.
III
The lower court erred in deciding this case in favor of the plaintiff-appellee, based on
an unnotarized and forged signature of defendantappellant Ernesto Roque.
IV
The lower court erred in giving credence to the testimony of the plaintiff-appellee
Concepcion Roque despite [its] gross inconsistencies.
10

Acting on the appeal (docketed as A.C.-G.R. CV No. 02248), the Intermediate Appellate Court, in a
Decision
11
dated 31 July 1986, reversed the judgment of the trial court and dismissed both the petitioner's
complaint and the respondents' appeal. A Motion for Reconsideration of petitioner Concepcion Roque
was denied.
The present Petition for Review was filed with this Court on 18 September 1986. In a resolution
dated 27 July 1987, we gave due course to the Petition and required the parties to submit their
respective Memoranda.
1. On the matter of dismissal of petitioner's complaint, the Intermediate Appellate Court stated in its
decision:
While the action filed by the plaintiff is for partition, the defendantz, after denying
plaintiff's assertion of co-ownership, asserted that they are the exclusive and sole
owners of the 314 portion of the parcel of land claimed by the plaintiff.
Upon the issue thusjoined by the pleadings, it is obvious that the case has become
one ofownership of the disputed portion of the subject lot.
It is well settled that an action for partition will not prosper as such from the moment
an alleged co-owner asserts an adverse title. The action that may be brought by an
aggrieved co-owner is accion reivindicatoria or action for recovery of title and
possession (Jardin vs. Hallasgo, 11 7 SCRA 532, 536, 537; Paner vs. Gaspar, 3 CA
Rep. 155, 158). (Emphasis supplied)
Viewed in the light of the facts of the present case, the Intermediate Appellate Court's decision
appears to imply that from the moment respondents (defendants below) alleged absolute and
exclusive ownership of the whole of Lot No. 1549 in their Answer, the trial court should have
immediately ordered the dismissal of the action for partition and petitioner (plaintiff below), if she so
desired, should have refiled the case but this time as an accion reinvindicatoria. Taking this analysis
a step further should the reivindicatory action prosper i.e., a co-ownership relation is found to
have existed between the parties a second action for partition would still have to be instituted in
order to effect division of the property among the co-owners.
We do not agree with the above view. An action for partition-which is typically brought by a person
claiming to be co-owner of a specified property against a defendant or defendants whom the plaintiff
recognizes to be co-owners may be seen to present simultaneously two principal issues. First,
there is the issue of whether the plaintiff is indeed a co-owner of the property sought to be
partitioned. Second, assuming that the plaintiff successfully hurdles the first issue, there is the
secondary issue of how the property is to be divided between plaintiff and defendant(s) i.e., what
portion should go to which co-owner.
Should the trial court find that the defendants do not dispute the status of the plaintiff as co-owner,
the court can forthwith proceed to the actual partitioning of the property involved. In case the
defendants assert in their Answer exclusive title in themselves adversely to the plaintiff, the court
should not dismiss the plaintiffs action for partition but, on the contrary and in the exercise of its
general jurisdiction, resolve the question of whether the plaintiff is co-owner or not. Should the trial
court find that the plaintiff was unable to sustain his claimed status as co-owner, or that the
defendants are or have become the sole and exclusive owners of the property involved, the court will
necessarily have to dismiss the action for partition. This result would be reached, not because the
wrong action was commenced by the plaintiff, but rather because the plaintiff having been unable to
show co-ownership rights in himself, no basis exists for requiring the defendants to submit to
partition the property at stake. If, upon the other hand, the court after trial should find the eidstence
of co-ownership among the parties litigant, the court may and should order the partition of the
property in the same action. Judgment for one or the other party being on the merits, the losing party
(respondents in this case) may then appeal the same. In either case, however, it is quite
unnecessary to require the plaintiff to file another action, separate and independent from that for
partition originally instituted. Functionally, an action for partition may be seen to be at once an action
for declaration of coownership and for segregation and conveyance of a determinate portion of the
property involved. This is the import of our jurisprudence on the matter.
12
and is sustained by the
public policy which abhors multiplicity of actions.
The question of prescription also needs to be addressed in this connection. It is sometimes said that
"the action for partition of the thing owned in common (actio communi dividendo or actio familiae
erciscundae) does not prescribe."
13
This statement bears some refinement. In the words of Article 494
of the Civil Code, "each co-owner may demand at any time the partition of the thing owned in common,
insofar as his share is concemed." No matter how long the co-ownership has lasted, a co-owner can
always opt out of the co-ownership, and provided the defendant co-owners or co-heirs have theretofore
expressly or impliedly recognized the co-ownership, they cannot set up as a defense the prescription of
the action for partition. But if the defendants show that they had previously asserted title in themselves
adversely to the plaintiff and for the requisite period of time, the plaintiffs right to require recognition of his
status as a co-owner will have been lost by prescription and the court cannot issue an order requiring
partition. This is precisely what happened in Jardin v. Hallasgo,117 SCRA 532 (1982), which the
respondent appellate court cited to support its position quoted above.
The case of Jardin involved, among others, two (2) parcels of land which were inherited in 1920 by
the brothers Catalino jardin and Galo Jardin together with their half-brother, Sixto Hallasgo. The
three (3) held these lands in co-ownership until Sixto later (the date was not specified) repudiated
the coownership and occupied and possessed both parcels of land, claiming the same exclusively
as his own. Sometime in 1973, the heirs of Catalino and Galo instituted an action for partition of the
two (2) properties against Sixto's heirs, who had refused to surrender any portion of the same to the
former. The trial court, assuming that prescription had started to run in that case even before the
Civil Code took effect, held that the action for partition filed by the heirs of Catalino and Galo had
already prescribed. On appeal, this Court affirmed the trial court on this point in the following terms:
Article 494 of the Civil Code provides that "no co-owner shall be obliged to remain in
the co- ownership" and that "each co-owner may demand at any time the partition of
the thing owned in common, insofar as his share is concerned." It also provides that
'no prescription shall run in favor of a co-owner or co-heir against his co-owners or
co-heirs so long as he expressly or impliedly recognizes the co-ownership.
While the action for the partition of the thing owned in common (actio communi
dividendo or actio familiae erciscundae) does not prescribe, the co-ownership does
not last forever since it may be repudiated by a co-owner [i.e., Sixto]. In such a case,
the action for partition does not lie. What may be brought by the aggrieved co-owner
[i.e., the heirs of Catalino and Galo] is an accion reivindicatoria or action for recovery
of title and possession. That action may be barred by prescription.
If the co-heir or co-owner having possession of the hereditary or community property,
holds the same in his own name, that is, under claim of exclusive ownership, he may
acquire the property by prescription if his possession meets all the other
requirements of the law, and after the expiration of the prescriptive period, his co-heir
or co-owner may lose their right to demand partition, and their action may then be
held to have prescribed (De los Santos vs. Santa Teresa, 44 Phil. 811).
xxx xxx xxx
(Emphasis supplied)
In the light of the foregoing discussion, it will be seen that the underscored portion of the Court's
opinion in Jardin is actually obiter. For there, the Court simply held the action for partition by the
heirs of Catalino and Galo had prescribed and did not require such heirs to start a new action (which
would have been quite pointless); on the other hand, the Court remanded the case to the lower court
for further proceedings in respect of the recovery of a 350 square meter lot which the evidence
showed was owned by the plaintiffs but wrongfully included by Sixto in the cadastral survey of his
share of the adjoining lot.
In Jardin, the claim of co-ownership asserted by the heirs of Catalino and Galo was effectively
refuted by the heirs of Sixto, who not only claimed for themselves absolute and exclusive ownership
of the disputed properties but were also in actual and adverse possesion thereof for a substantial
length of time. The Court found, further, that the action for partition initially available to the heirs of
Catalino and Galo had, as a result of the preceding circumstance, already prescribed.
An entirely different situation, however, obtains in the case at bar. First of all, petitioner Concepcion
Roque-the co-owner seeking partition has been and is presently in open and continuous
possession of a three-fourths (3/4) portion of the property owned in common. The Court notes in this
respect the finding of the trial court that petitioner, following execution of the "Bilihan Lubos at
Pattlluyan" on 27 November 1961, had been in "continuous occupancyof the 3/4 portion of the lot
... up to the present, and whereon plaintifrs house and that of her son are erected. "
14
Respondents
do not dispute this finding of fact, although they would claim that petitioner's possession is merely
tolerated by them. Second, prior to filing in 1977 of the Complaint in Civil Case No. 5236-M, neither of the
parties involved had asserted or manifested a claim of absolute and exclusive ownership over the whole
of Lot No. 1549 adverse to that of any of the other co-owners: in other words, co-ownership of the
property had continued to be recognized by all the owners. Consequently, the action for partition could
not have and, as a matter of fact, had not yet prescribed at the time of institution by Concepcion of the
action below.
2. Coming now to the matter regarding dismissal of the respondents'appeal, the Intermediate
Appellate Court held that inasmuch as the attack on the validity of the "Bilihan Lubos at Patuluyan"
was predicated on fraud and no action for annulment of the document had been brought by
respondents within the four (4) year prescriptive period provided under Article 1391 of the Civil
Code, such action had already prescribed.
We find it unnecessary to deal here with the issue of prescription discussed by the respondent court
in its assailed decision. The facts on record clearly show that petitioner Concepcion Roque had been
in actual, open and continuous possession of a three-fourths (3/4) portion of Lot No. 1549 ever since
execution of the "Bilihan Lubos at Patuluyan" in November of 1961. The Court notes that it was only
in their Answer with Compulsory Counterclaim filed with the trial court in December of 1977 more
than sixteen (16) years later that respondents first questioned the genuineness and authenticity of
the "Bilihan Lubos at Patuluyan." Not once during those sixteen (16) years did respondents contest
petitioner's occupation of a three-fourths (3/4) portion of Lot No. 1549. Furthermore, if indeed it is
true that respondents, as they claim, are the absolute owners of the whole of Lot No. 1549, it is most
unusual that respondents would have allowed or tolerated such prolonged occupation by petitioner
of a major portion (3/4) of the land while they, upon the other hand, contented themselves with
occupation of only a fourth thereof. This latter circumstance, coupled with the passage of a very
substantial length of time during which petitioner all the while remained undisturbed and
uninterrupted in her occupation and possession, places respondents here in laches: respondents
may no longer dispute the existence of the co-ownership between petitioner and themselves nor the
validity of petitioner's claim of a threefourths (3/4) interest in Lot No. 1549, as they are deemed, by
their unreasonably long inaction, to have acquiesced in the coow,aership.
15
In this respect, we affirm
the decision of the respondent appellate court presently under review.
WHEREFORE, the Decision of the Intermediate Appellate Court dated 31 July 1986 in A.C.-G.R. CV
No. 02248 is SET ASIDE with respect to that portion which orders the dismissal of the Complaint in
Civil Case No. 5236-M, but is AFFIRMED with respect to that portion which orders the dismissal of
the respondents'appeal in A.C.-G.R. CV No. 02248. The Decision of Branch 9 of the Regional Trial
Court of Malolos dated 27 June 1983 in Civil Case No. 5236-M is hereby REINSTATED. No
pronouncement as to costs.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr. and Cortes, JJ., concur.
Bidin, J., took no part.




G.R. No. L-46296 September 24, 1991
EPITACIO DELIMA, PACLANO DELIMA, FIDEL DELIMA, VIRGILIO DELIMA, GALILEO DELIMA,
JR., BIBIANO BACUS, OLIMPIO BACUS and PURIFICACION BACUS, petitioners,
vs.
HON. COURT OF APPEALS, GALILEO DELIMA (deceased), substituted by his legal heirs,
namely: FLAVIANA VDA. DE DELIMA, LILY D. ARIAS, HELEN NIADAS, ANTONIO DELIMA,
DIONISIO DELIMA, IRENEA DELIMA, ESTER DELIMA AND FELY DELIMA, respondents.
Gabriel J. Canete for petitioners.
Emilio Lumontad, Jr. for private respondents.

MEDIALDEA, J .:p
This is a petition for review on certiorari of the decision of the Court of Appeals reversing the trial
court's judgment which declared as null and void the certificate of title in the name of respondents'
predecessor and which ordered the partition of the disputed lot among the parties as co-owners.
The antecedent facts of the case as found both by the respondent appellate court and by the trial
court are as follows:
During his lifetime, Lino Delima acquired Lot No. 7758 of the Talisay-Minglanilla Friar Lands Estate
in Cebu by sale on installments from the government. Lino Delima later died in 1921 leaving as his
only heirs three brothers and a sister namely: Eulalio Delima, Juanita Delima, Galileo Delima and
Vicente Delima. After his death, TCT No. 2744 of the property in question was issued on August 3,
1953 in the name of the Legal Heirs of Lino Delima, deceased, represented by Galileo Delima.
On September 22, 1953, Galileo Delima, now substituted by respondents, executed an affidavit of
"Extra-judicial Declaration of Heirs." Based on this affidavit, TCT No. 2744 was cancelled and TCT
No. 3009 was issued on February 4,1954 in the name of Galileo Delima alone to the exclusion of the
other heirs.
Galileo Delima declared the lot in his name for taxation purposes and paid the taxes thereon from
1954 to 1965.
On February 29, 1968, petitioners, who are the surviving heirs of Eulalio and Juanita Delima, filed
with the Court of First Instance of Cebu (now Regional Trial Court) an action for reconveyance
and/or partition of property and for the annulment of TCT No. 3009 with damages against their
uncles Galileo Delima and Vicente Delima,. Vicente Delima was joined as party defendant by the
petitioners for his refusal to join the latter in their action.
On January 16, 1970, the trial court rendered a decision in favor of petitioners, the dispositive portion
of which states:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the following are the declared
owners of Lot No. 7758 of the Talisay-Minglanilla Friar Lands Estate presently
covered by transfer Certificate of Title No. 3009, each sharing a pro-indiviso share of
one-fourth;
1) Vicente Delima (one-fourth)
2) Heirs of Juanita Delima, namely: Bibiano Bacus, Olimpio Bacus and Purificacion
Bacus (on-fourth);
3) Heirs of Eulalio Delima, namely Epitacio, Pagano, Fidel, Virgilio and Galileo Jr., all
surnamed Delima (one-fourth); and
4) The Heirs of Galileo Delima, namely Flaviana Vda. de Delima, Lily D. Arias, Helen
Niadas and Dionisio, Antonio, Eotu Irenea, and Fely, all surnamed Delima (one-
fourth).
Transfer Certificate of Title No. 3009 is declared null and void and the Register of
Deeds of Cebu is ordered to cancel the same and issue in lieu thereof another title
with the above heirs as pro-indiviso owners.
After the payment of taxes paid by Galileo Delima since 1958, the heirs of Galileo
Delima are ordered to turn a over to the other heirs their respective shares of the
fruits of the lot in question computed at P170.00 per year up to the present time with
legal (interest).
Within sixty (60) days from receipt of this decision the parties are ordered to petition
the lot in question and the defendants are directed to immediately turn over
possession of the shares here awarded to the respective heirs.
Defendants are condemned to pay the costs of the suit.
The counterclaim is dismissed.
SO ORDERED. (pp. 54-55, Rollo)
Not satisfied with the decision, respondents appealed to the Court of Appeals. On May 19, 1977,
respondent appellate court reversed the trial court's decision and upheld the claim of Galileo Delima
that all the other brothers and sister of Lino Delima, namely Eulalio, Juanita and Vicente, had
already relinquished and waived their rights to the property in his favor, considering that he (Galileo
Delima) alone paid the remaining balance of the purchase price of the lot and the realty taxes
thereon (p. 26, Rollo).
Hence, this petition was filed with the petitioners alleging that the Court of Appeals erred:
1) In not holding that the right of a co-heir to demand partition of inheritance is
imprescriptible. If it does, the defenses of prescription and laches have already been
waived.
2) In disregarding the evidence of the petitioners.(p.13, Rollo)
The issue to be resolved in the instant case is whether or not petitioners' action for partition is
already barred by the statutory period provided by law which shall enable Galileo Delima to perfect
his claim of ownership by acquisitive prescription to the exclusion of petitioners from their shares in
the disputed property. Article 494 of the Civil Code expressly provides:
Art. 494. No co-owner shall be obliged to remain in the co-ownership. Each co-owner
may demand at any time the partition of the thing owned in
common
, insofar as his share is concerned.
Nevertheless, an agreement to keep the thing undivided for a certain period of time,
not exceeding ten years, shall be valid. This term may be extended by a new
agreement.
A donor or testator may prohibit partition for a period which shall not exceed twenty
years.
Neither shall there be any partition when it is prohibited by law.
No prescription shall run in favor of a co-owner or co-heir against his co-owners or
co-heirs so long as he expressly or impliedly recognizes the co-ownership.
As a rule, possession by a co-owner will not be presumed to be adverse to the others, but will be
held to benefit all. It is understood that the co-owner or co-heir who is in possession of an
inheritance pro-indiviso for himself and in representation of his co-owners or co-heirs, if, as such
owner, he administers or takes care of the rest thereof with the obligation of delivering it to his co-
owners or co-heirs, is under the same situation as a depository, a lessee or a trustee (Bargayo v.
Camumot, 40 Phil, 857; Segura v. Segura, No. L-29320, September 19, 1988, 165 SCRA 368).
Thus, an action to compel partition may be filed at any time by any of the co-owners against the
actual possessor. In other words, no prescription shall run in favor of a co-owner against his co-
owners or co-heirs so long as he expressly or impliedly recognizes the co-ownership (Del Blanco v.
Intermediate Appellate Court, No. 72694, December 1, 1987, 156 SCRA 55).
However, from the moment one of the co-owners claims that he is the absolute and exclusive owner
of the properties and denies the others any share therein, the question involved is no longer one of
partition but of ownership (De Castro v. Echarri, 20 Phil. 23; Bargayo v. Camumot, supra; De los
Santos v. Santa Teresa, 44 Phil. 811). In such case, the imprescriptibility of the action for partition
can no longer be invoked or applied when one of the co-owners has adversely possessed the
property as exclusive owner for a period sufficient to vest ownership by prescription.
It is settled that possession by a co-owner or co-heir is that of a trustee. In order that such
possession is considered adverse to the cestui que trust amounting to a repudiation of the co-
ownership, the following elements must concur: 1) that the trustee has performed unequivocal acts
amounting to an ouster of the cestui que trust; 2) that such positive acts of repudiation had been
made known to the cestui que trust; and 3) that the evidence thereon should be clear and conclusive
(Valdez v. Olorga, No. L-22571, May 25, 1973, 51 SCRA 71; Pangan v. Court of Appeals, No. L-
39299, October 18, 1988, 166 SCRA 375).
We have held that when a co-owner of the property in question executed a deed of partition and on
the strength thereof obtained the cancellation of the title in the name of their predecessor and the
issuance of a new one wherein he appears as the new owner of the property, thereby in effect
denying or repudiating the ownership of the other co-owners over their shares, the statute of
limitations started to run for the purposes of the action instituted by the latter seeking a declaration of
the existence of the co-ownership and of their rights thereunder (Castillo v. Court of Appeals, No. L-
18046, March 31, 1964, 10 SCRA 549). Since an action for reconveyance of land based on implied
or constructive trust prescribes after ten (10) years, it is from the date of the issuance of such title
that the effective assertion of adverse title for purposes of the statute of limitations is counted
(Jaramil v. Court of Appeals, No. L-31858, August 31, 1977, 78 SCRA 420).
Evidence shows that TCT No. 2744 in the name of the legal heirs of Lino Delima, represented by
Galileo Delima, was cancelled by virtue of an affidavit executed by Galileo Delima and that on
February 4, 1954, Galileo Delima obtained the issuance of a new title in Ms name numbered TCT
No. 3009 to the exclusion of his co-heirs. The issuance of this new title constituted an open and
clear repudiation of the trust or co-ownership, and the lapse of ten (10) years of adverse possession
by Galileo Delima from February 4, 1954 was sufficient to vest title in him by prescription. As the
certificate of title was notice to the whole world of his exclusive title to the land, such rejection was
binding on the other heirs and started as against them the period of prescription. Hence, when
petitioners filed their action for reconveyance and/or to compel partition on February 29, 1968, such
action was already barred by prescription. Whatever claims the other co-heirs could have validly
asserted before can no longer be invoked by them at this time.
ACCORDINGLY, the petition is hereby DENIED and the assailed decision of the Court of Appeals
dated May 19, 1977 is AFFIRMED.
SO ORDERED.
Narvasa (Chairman), Cruz and Grio-Aquino, JJ., concur.



G.R. No. 82680 August 15, 1994
NICANOR SOMODIO, petitioner,
vs.
COURT OF APPEALS, EBENECER PURISIMA, and FELOMINO AYCO, respondents.
Jose V. Panes for petitioner.
Vencer, Purisima & Associates for private respondents.

QUIASON, J .:
This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court to reverse and
set aside the Decision dated September 29, 1987 and the Resolution dated February 2, 1988 of the
Court of Appeals in CA-G.R. SP No. 11602.
I
On October 21, 1974, Jose Ortigas executed an instrument designated as a Transfer of Rights,
conveying to Wilfredo Mabugat the possession of a residential lot situated at Rajah Muda, Bula,
General Santos City and described in the said instrument as:
Lot No. (Unnumbered), bounded on the North by Temporary Road, on
the South
by Customs Zone (Sarangani Bay), on the East by Public Land, and on the West by
Public Land.
Nicanor Somodio, herein petitioner, contributed one-half of the purchase price. On October 22,
1974, Mabugat executed an Affidavit of Trust expressly recognizing the right of petitioner over one-
half undivided portion of the lot. Later, petitioner discovered in the District Land Office that the lot
was numbered "6328-X, Csd 2281-D." Thereafter, petitioner and Mabugat partitioned the property
into two portions, with petitioner taking the western part. Immediately after the partition, petitioner
took possession of his portion and planted thereon ipil-ipil trees, coconut trees and other fruit-
bearing trees.
In 1976, petitioner began construction of a structure with a dimension of 22-by-18 feet on his lot. His
employment, however, took him to Kidapawan, North Cotabato, and he left the unfinished structure
to the case of his uncle. He would visit the property every three months or on weekened when he
had time.
Sometime in October 1977, petitioner allowed respondent Felomino Ayco, to transfer his hut to
petitioner's lot. About six years later, petitioner demanded that Ayco vacate the premises but such
demand proved futile. Hence, on August 23, 1983, petitioner filed an action for unlawful detainer with
damages against respondent Ayco before the Municipal Trial Court, Branch I, General Santos,
docketed as Civil Case No. 2032-II.
Meanwhile, on June 26, 1983, respondent Ebenecer Purisima entered the land and constructed a
house thereon. Four days later, petitioner filed against respondent Purisima a complaint for forcible
entry before the same court docketed as Civil Case No. 2013-I. Said case was later consolidated
with Civil Case No. 2032-II.
In his answer, respondent Purisima averred that the lot was a portion of the land subject of his
application for miscellaneous sales patent with the Bureau of Lands. Purisima described the lot in
question as:
Lot No. 6328-Y, CSD-2281-D, Bula, General Santos, Cotabato. Bounded on the
North by 6328-X; on the South by Sarangani Bay; on the East by a Municipal Road;
and on the West by Lot No. 6328-W, containing an area of 1,095 square meters and
covered by Tax Declaration No. 9647 (Rollo, p. 36; Emphasis supplied).
Respondent Purisima contended that his father, a geodetic engineer, had surveyed the parcel of
land comprising of Lots Nos. 6427 and 6328 for the Small Farmers Fishpond Association, Inc. in
February 1958, and that his father's survey plan was approved by the Director of Lands in 1960.
Respondent Ayco, on the other hand, did not present any evidence but merely anchored his right to
possess the property on the evidence of Purisima.
On April 30, 1986, the trial court rendered a decision finding that respondent Purisima built his house
"almost on the spot where Somodio's unfinished house" stood "thru stealth and strategy," not
knowing that the house was built on Lot No. 6328-X and not on Lot No. 6328-Y, the lot said
respondent was claiming (Rollo, p. 43). The court went on to state that:
. . . . He (private respondent Purisima) was a frequent visitor in Rajah Muda and had
sometimes stayed with Mrs. Maturan in Judge Purisima's house on the adjoining lots,
and could not have remained unaware of the possession of Somodio. He must have
depended on the thought that it was his father who made the subdivision survey and
had fenced an area which he had claimed. He did not exactly verify that the area
fenced by his father had an area of only 1,095 square meters, which did not include
the are Lot No. 6328-X could eventually be standing on his property, for Lot No.
6328-X is not claimed by him and has not been applied for even by his father. His
father has been abroad and has not taken steps to apply for Lot No. 6328-X. This lot
is not declared for taxation purposes in the name of any claimant-applicant. Unless
and until there would be an administrative proceedings and the title ultimately issued
in favor of an applicant, the possession of the actual claimant and occupant has to be
respected and maintained in the interest of public order . . . (Rollo, pp. 43-44).
The Municipal Trial Court further held that petitioner was the actual possessor of Lot No. 6328-X.
The court did not believe respondent Ayco's claim that the administratrix of the estate of respondent
Purisima's father authorized him to build a hut on Lot No. 6328-X in 1976. At any rate, the court said
that respondent Ayco was willing to vacate the premises provided he be given financial assistance to
do so (Rollo, pp. 43-44).
Nothing that the ocular inspection of the area showed that the houses of respondents Purisima and
Ayco were "inside Lot No. 6328-X" and not on Lot No. 6328-Y, the Municipal Trial Court held that the
case became one which entailed mere removal of the houses from the lot in question. Accordingly,
the court ordered private respondents to remove their respective houses, to deliver the land to
petitioner, and to pay attorney's fees and litigation expenses.
On appeal, the Regional Trial Court, Branch 22, General Santos City, affirmed in toto the decision of
the Municipal Trial Court. Respondent then elevated the cases on a petition for review to the Court
of Appeals, which, in its decision dated September 27, 1987, set aside the decisions of the two trial
courts and ordered the dismissal of the two complaints filed by petitioner.
The Court of Appeals held that herein petitioner had not "clearly and conclusively established
physical, prior possession over Lot No. 6328-X."
Petitioner's motion for the reconsideration of the decision of the Court of Appeals having been
denied, he filed the instant petition for review on certiorari.
We grant the petition.
II
The procedural issue raised by private respondents should first be resolved. The issue is whether
the instant petition is proper considering that petitioner "merely touch(es) upon questions of fact
which had been carefully considered" by the Court of Appeals (Rollo, p. 92). As a general rule, the
findings of fact of the Court of Appeals are binding on this Court. This rule, however, is not without
exceptions, one of which is when the factual findings of the Court of Appeals and the trial court are
contrary to each other. In such a case, this Court may scrutinize the evidence on record in order to
arrive at the correct findings based on the record (Valenzuela v. Court of Appeals, 191 SCRA 1
[1990]; Roman Catholic Bishop of Malolos, Inc. v. Intermediate Appellate Court, 191 SCRA 411
[1990]).
Upon a review of the records, we are convinced that petitioner indeed enjoyed priority of possession
over Lot No. 6328-X, notwithstanding respondent Purisima's claim to the contrary.
In ejectment cases, the only issue for resolution is who is entitled to the physical or material
possession of the property involved, independent of any claim of ownership set forth by any of the
party-litigants. Anyone of them who can prove prior possession de facto may recover such
possession even from the owner himself. This rule holds true regardless of the character of a party's
possession, provided, that he has in his favor priority of time which entitles him to stay on the
property until he is lawfully ejected by a person having a better right by either accion
publiciana oraccion reivindicatoria (De Luna v. Court of Appeals, 212 SCRA 276 [1992]).
Petitioner took possession of the property sometime in 1974 when he planted the property to
coconut trees, ipil- ipil trees and fruit trees. In 1976, he started the construction of a building on the
property. It is immaterial that the building was unfinished and that he left for Kidapawan for
employment reasons and visited the property only intermittently. Possession in the eyes of the law
does not mean that a man has to have his feet on every square meter of ground before it can be
said that he is in possession (Ramos v. Director of Lands, 39 Phil. 175 [1918]). It is sufficient that
petitioner was able to subject the property to the action of his will.
Article 531 of the Civil Code of the Philippines provides:
Possession is acquired by the material occupation of a thing or the exercise of a
right, or by the fact that it is subject to the action of our will, or by the proper acts and
legal formalities established for acquiring such right.
Even if the Court of Appeals is correct in its finding that petitioner started introducing improvements
on the land only in 1981, he still enjoyed priority of possession because respondent Purisima
entered the premises only in 1983.
It should be emphasized that the Court of Appeals noted that none of the parties had produced tax
declarations or applications as public land claimants. As such, what should have been scrutinized is
who between the claimants had priority of possession.
Moreover, neither is the fact that respondent Purisima's father surveyed the property of help to his
cause. As the Court of Appeals found, respondent Purisima's father surveyed the land for the Small
Farmers Fishpond Association, Inc., not for himself. Although respondent Purisima now claims that
Lot No. 6328-X was in payment of his fee for the
services
of his father and that he caused the construction of a perimeter wall in the area, these facts do not mean
that respondent Purisima himself had prior possession. He did not present any proof that his father had
authorized him to enter the land as his successor-in-interest. Neither did he present proof that between
1958, when his father allegedly took possession of the land, and 1983, when said respondent himself
entered the land, his father ever exercised whatever right of possession he should have over the
property. Under these circumstances, priority in time should be the pivotal cog in resolving the issue of
possession.
The Court of Appeals opined that petitioner had not properly identified the lot he had occupied. The
matter of identification of the land, however, had been resolved by respondent Purisima's admission
in his pleadings, as well as by two ocular inspections.
In his answer to the complaint, respondent Purisima claimed possession over Lot No. 6328-Y, while
petitioner identified the lot adjacent to it, Lot
NO. 6328-X, as the area where private respondents built their houses. That these two lots are
distinct from one another was resolved by the ocular inspection conducted by a Senior Geodetic
Engineer of the Office of the City Engineer, who found that "south of lot 6328-H across a 10 meter
wide road is lot 6328-Y and from thence to the south is lot 6328-X." On June 13, 1985, the Municipal
Trial Court judge himself went to the premises in question and discovered that aside from the
houses of respondents Purisima and Ayco, five other houses had been built on Lot No. 6328-X.
Petitioner's prior possession over the property, however, is not synonymous with his right of
ownership over the same. As earlier stated, resolution of the issue of possession is far from the
resolution of the issue of ownership. Forcible entry is merely a quieting process and never
determines the actual title to an estate (German Management & Services, Inc. v. Court of Appeals,
177 SCRA 495 [1989]; Manuel v. Court of Appeals, 199 SCRA 603 [1991].
WHEREFORE, the decision of the Court of Appeals is REVERSED and SET ASIDE and that of the
trial courts REINSTATED. Costs against private respondents.
SO ORDERED.
Davide, Jr., Bellosillo and Kapunan, JJ., concur.
Cruz, J., On official leave.


G.R. No. 46623 December 7, 1939
MARCIAL KASILAG, petitioner,
vs.
RAFAELA
RODRIGUEZ
, URBANO ROQUE, SEVERO MAPILISAN and IGNACIO DEL ROSARIO, respondents.
Luis M. Kasilag for petitioner.
Fortunato de Leon for respondents.

IMPERIAL, J .:
This is an appeal taken by the defendant-petitioner from the decision of the Court of Appeals which
modified that rendered by the court of First Instance of Bataan in civil case No. 1504 of said court
and held: that the contract Exhibit "1" is entirely null and void and without effect; that the plaintiffs-
respondents, then appellants, are the owners of the disputed land, with its improvements, in
common ownership with their brother Gavino Rodriguez, hence, they are entitled to the possession
thereof; that the defendant-petitioner should yield possession of the land in their favor, with all the
improvements thereon and free from any lien; that the plaintiffs-respondents jointly and severally pay
to the defendant-petitioner the sum of P1,000 with interest at 6 percent per annum from the date of
the decision; and absolved the plaintiffs-respondents from the cross-complaint relative to the value
of the improvements claimed by the defendant-petitioner. The appealed decision also ordered the
registrar of deeds of Bataan to cancel certificate of title No. 325, in the name of the deceased
Emiliana Ambrosio and to issue in lieu thereof another certificate of title in favor of the plaintiffs-
respondents and their brother Gavino Rodriguez, as undivided owners in equal parts, free of all liens
and incumbrances except those expressly provided by law, without special pronouncement as to the
costs.
The respondents, children and heirs of the deceased Emiliana Ambrosio, commenced the aforesaid
civil case to the end that they recover from the petitioner the possession of the land and its
improvements granted by way of homestead to Emiliana Ambrosio under patent No. 16074 issued
on January 11, 1931, with certificate of title No. 325 issued by the registrar of deeds of Bataan on
June 27, 1931 in her favor, under section 122 of Act No. 496, which land was surveyed and
identified in the cadastre of the municipality of Limay, Province of Bataan, as lot No. 285; that the
petitioner pay to them the sum of P650 being the approximate value of the fruits which he received
from the land; that the petitioner sign all the necessary documents to transfer the land and its
possession to the respondents; that he petitioner be restrained, during the pendency of the case,
from conveying or encumbering the land and its improvements; that the registrar of deeds of Bataan
cancel certificate of title No. 325 and issue in lieu thereof another in favor of the respondents, and
that the petitioner pay the costs of suit.
The petitioner denied in his answer all the material allegations of the complaint and by way of special
defense alleged that he was in possession of the land and that he was receiving the fruits thereof by
virtue of a mortgage contract, entered into between him and the deceased Emiliana Ambrosio on
May 16, 1932, which was duly ratified by a notary public; and in counterclaim asked that the
respondents pay him the sum of P1,000 with 12 per cent interest per annum which the deceased
owed him and that, should the respondents be declared to have a better right to the possession of
the land, that they be sentenced to pay him the sum of P5,000 as value of all the improvements
which he introduced upon the land.lawphil .net
On May 16, 1932 Emiliana Ambrosio, in life, and the petitioner executed the following public deed:
"This agreement, made and entered into this 16th day of May, 1932, by and between Emiliana
Ambrosio, Filipino, of legal age, widow and resident of Limay, Bataan, P.L., hereinafter called the
party of the first part, and Marcial Kasilag, Filipino, of legal age, married to Asuncion Roces, and
resident at 312 Perdigon Street, Manila, P.L., hereinafter called party of the second part.
WITNESSETH: That the parties hereto hereby covenant and agree to and with each other as
follows:
ARTICLE I. That the party of the first part is the absolute registered owner of a parcel of land
in the barrio of Alngan, municipality of Limay, Province of Bataan, her title thereto being
evidenced by homestead certificate of title No. 325 issued by the Bureau of Lands on June
11, 1931, said land being lot No. 285 of the Limay Cadastre, General Land Registration
Office Cadastral Record No. 1054, bounded and described as follows:
Beginning at point marked 1 on plan E-57394, N. 84 32' W. 614.82 m. from B.B.M. No. 3, thence N.
66 35' E. 307.15 m. to point "2"; S. 5 07' W. to point "5"; S.6 10' E. 104.26 m. to point "4"; S. 82
17' W. to point "5"; S. 28 53' W. 72.26 m. to point "6"; N. 71 09' W. to point "7"; N. 1 42' E. 173.72
m. to point 1, point of beginning, "Containing an area of 6.7540 hectares. "Points 1,2,6 and 7, B.L.;
points 3,4 and 5, stakes; points 4, 5 and 6 on bank of Alangan River. "Bounded on the North, by
property claimed by Maria Ambrosio; on the East, by Road; on the South, by Alangan River and
property claimed by Maxima de la Cruz; and on the West, by property claimed by Jose del Rosario.
"Bearing true. Declination 0 51' E. "Surveyed under authority of sections 12-22, Act No. 2874 and in
accordance with existing regulations of the Bureau of Lands, by Mamerto Jacinto, public land
surveyor, on July 8, 1927 and approved on February 25, 1931.
ARTICLE II. That the improvements on the above described land consist of the following:
Four (4) mango trees, fruit bearing: one hundred ten (110) hills of bamboo trees; one (1)
tamarind and six (6) boga trees.
ARTICLE III. That the assessed value of the land is P940 and the assessed value of the
improvements is P860, as evidenced by tax declaration No. 3531 of the municipality of
Limay, Bataan.
ARTICLE IV. That for and in consideration of the sum of one thousand pesos (P1,000)
Philippine currency, paid by the party of second part to the party of the first part, receipt
whereof is hereby acknowledged, the party of the first part hereby encumbers and
hypothecates, by way of mortgage, only the improvements described in Articles II and III
hereof, of which improvements the party of the first part is the absolute owner.
ARTICLE V. That the condition of said mortgage is such that if the party of the first part shall
well and truly pay, or cause to paid to the party of the second part, his heirs, assigns, or
executors, on or before the 16th day of November, 1936, or four and one-half (4) years
after date of the execution of this instrument, the aforesaid sum of one thousand pesos
(P1,000) with interest at 12 per cent per annum, then said mortgage shall be and become
null and void; otherwise the same shall be and shall remain in full force and effect, and
subject to foreclosure in the manner and form provided by law for the amount due
thereunder, with costs and also attorney's fees in the event of such foreclosure.lawphil.net
ARTICLE VI. That the party of the first part shall pay all taxes and assessments which are or
may become due on the above described land and improvements during the term of this
agreement.
ARTICLE VII. That within thirty (30) days after date of execution of this agreement, the party
of the first part shall file a motion before the Court of First Instance at Balanga, Bataan, P. I.,
requesting cancellation of Homestead Certificate of Title No. 325 referred to in Article I
hereof and the issuance, in lieu thereof, of a certificate of title under the provisions of Land
Registration Act No. 496, as amended by Act 3901.
ARTICLE III. It if further agreed that if upon the expiration of the period of time (4) years
stipulated in this mortgage, the mortgagor should fail to redeem this mortgage, she would
execute a deed of absolute sale of the property herein described for the same amount as this
mortgage, including all unpaid interests at the rate of 12 per cent per annum, in favor of the
mortgagee.
ARTICLE IX. That in the event the contemplated motion under Article VII hereof is not
approved by the Court, the foregoing contract of sale shall automatically become null and
void, and the mortgage stipulated under Article IV and V shall remain in full force and effect.
In testimony whereof, the parties hereto have hereunto set their hands the day and year first
herein before written.
(Sgd.) MARCIAL KASILAG
(Sgd.) EMILIANA AMBROSIO
Signed in the presence of:
(Sgd.) ILLEGIBLE
(Sgd.) GAVINO RODRIGUEZ.

PHILIPPINE ISLANDS } ss.
BALANGA, BATAAN } ss.
Before me this day personally appeared Emiliana Ambrosio without cedula by reason of her
sex, to me known and known to me to be the person who signed the foregoing instrument,
and acknowledged to me that she executed the same as her free and voluntary act and
deed.
I hereby certify that this instrument consists of three (3) pages including this page of the
acknowledgment and that each page thereof is signed by the parties to the instrument and
the witnesses in their presence and in the presence of each other, and that the land treated
in this instrument consists of only one parcel.
In witness whereof I have hereunto set my hand and affixed my notarial seal, this 16th day of
May, 1932.
(Sgd.) NICOLAS NAVARRO
Notary Public
My commission expires December 31, 1933.


Doc. No. 178
Page 36 of my register
Book No. IV
One year after the execution of the aforequoted deed, that is, in 1933, it came to pass that Emiliana
Ambrosio was unable to pay the stipulated interests as well as the tax on the land and its
improvements. For this reason, she and the petitioner entered into another verbal contract whereby
she conveyed to the latter the possession of the land on condition that the latter would not collect the
interest on the loan, would attend to the payment of the land tax, would benefit by the fruits of the
land, and would introduce improvements thereon. By virtue of this verbal contract, the petitioner
entered upon the possession of the land, gathered the products thereof, did not collect the interest
on the loan, introduced improvements upon the land valued at P5,000, according to him and on May
22, 1934 the tax declaration was transferred in his name and on March 6, 1936 the assessed value
of the land was increased from P1,020 to P2,180.
After an analysis of the conditions of Exhibit "1" the Court of Appeals came to the conclusion and so
held that the contract entered into by and between the parties, set out in the said public deed, was
one of absolute purchase and sale of the land and its improvements. And upon this ruling it held null
and void and without legal effect the entire Exhibit 1 as well as the subsequent verbal contract
entered into between the parties, ordering, however, the respondents to pay to the petitioner, jointly
and severally, the loan of P1,000 with legal interest at 6 per cent per annum from the date of the
decision. In this first assignment of error the petitioner contends that the Court of Appeals violated
the law in holding that Exhibit 1 is an absolute deed of sale of the land and its improvements and
that it is void and without any legal effect.
The cardinal rule in the interpretation of contracts is to the effect that the intention of the contracting
parties should always prevail because their will has the force of law between them. Article 1281 of
the Civil Code consecrates this rule and provides, that if the terms of a contract are clear and leave
no doubt as to the intention of the contracting parties, the literal sense of its stipulations shall be
followed; and if the words appear to be contrary to the evident intention of the contracting parties,
the intention shall prevail. The contract set out in Exhibit 1 should be interpreted in accordance with
these rules. As the terms thereof are clear and leave no room for doubt, it should be interpreted
according to the literal meaning of its clauses. The words used by the contracting parties in Exhibit 1
clearly show that they intended to enter into the principal contract of loan in the amount of P1,000,
with interest at 12 per cent per annum, and into the accessory contract of mortgage of the
improvements on the land acquired as homestead, the parties having moreover, agreed upon the
pacts and conditions stated in the deed. In other words, the parties entered into a contract of
mortgage of the improvements on the land acquired as homestead, to secure the payment of the
indebtedness for P1,000 and the stipulated interest thereon. In clause V the parties stipulated that
Emiliana Ambrosio was to pay, within four and a half years, or until November 16, 1936, the debt
with interest thereon, in which event the mortgage would not have any effect; in clause VI the parties
agreed that the tax on the land and its improvements, during the existence of the mortgage, should
be paid by the owner of the land; in clause VII it was covenanted that within thirty days from the date
of the contract, the owner of the land would file a motion in the Court of First Instance of Bataan
asking that certificate of title No. 325 be cancelled and that in lieu thereof another be issued under
the provisions of the Land Registration Act No. 496, as amended by Act No. 3901; in clause VIII the
parties agreed that should Emiliana Ambrosio fail to redeem the mortgage within the stipulated
period of four years and a half, she would execute an absolute deed of sale of the land in favor of
the mortgagee, the petitioner, for the same amount of the loan of P1,000 including unpaid interest;
and in clause IX it was stipulated that in case the motion to be presented under clause VII should be
disapproved by the Court of First Instance of Bataan, the contract of sale would automatically
become void and the mortgage would subsist in all its force.
Another fundamental rule in the interpretation of contracts, not less important than those indicated, is
to the effect that the terms, clauses and conditions contrary to law, morals and public order should
be separated from the valid and legal contract and when such separation can be made because they
are independent of the valid contract which expresses the will of the contracting parties. Manresa,
commenting on article 1255 of the Civil Code and stating the rule of separation just mentioned, gives
his views as follows:
On the supposition that the various pacts, clauses or conditions are valid, no difficulty is
presented; but should they be void, the question is as to what extent they may produce the
nullity of the principal obligation. Under the view that such features of the obligation are
added to it and do not go to its essence, a criterion based upon the stability of juridical
relations should tend to consider the nullity as confined to the clause or pact suffering
therefrom, except in case where the latter, by an established connection or by manifest
intention of the parties, is inseparable from the principal obligation, and is a condition,
juridically speaking, of that the nullity of which it would also occasion. (Manresa,
Commentaries on the Civil Code, Volume 8, p. 575.)
The same view prevails in the Anglo-American law, as condensed in the following words:
Where an agreement founded on a legal consideration contains several promises, or a
promise to do several things, and a part only of the things to be done are illegal, the
promises which can be separated, or the promise, so far as it can be separated, from the
illegality, may be valid. The rule is that a lawful promise made for a lawful consideration is
not invalid merely because an unlawful promise was made at the same time and for the
same consideration, and this rule applies, although the invalidity is due to violation of a
statutory provision, unless the statute expressly or by necessary implication declares the
entire contract void. . . . (13 C. J., par. 470, p. 512; New York Cent. etc. R. Co. v. Gray, 239
U.S., 583; 60 Law ed., 451; U.S. v. Mora, 97 U.S., 413, 24 Law. ed., 1017; U.S. v. Hodson,
10 Wall, 395; 19 Law ed. 937; Gelpcke v. Dubuque, 1 Wall. 175, 17 Law ed., 520; U.S. v.
Bradly, 10 Pet. 343, 9 Law. ed., 448; Borland v. Prindle, 144 Fed 713; Western Union Tel.
Co. v. Kansas Pac. R. Co., 4 Fed., 284; Northern Pac. R. Co. v. U.S., 15 Ct. Cl., 428.)
Addressing ourselves now to the contract entered into by the parties, set out in Exhibit 1, we stated
that the principal contract is that of loan and the accessory that of mortgage of the improvements
upon the land acquired as a homestead. There is no question that the first of these contract is valid
as it is not against the law. The second, or the mortgage of the improvements, is expressly
authorized by section 116 of Act No. 2874, as amended by section 23 of Act No. 3517, reading:
SEC. 116. Except in favor of the Government or any of its branches, units or institutions, or
legally constituted banking corporations, lands acquired under the free patent or homestead
provisions shall not be subject to encumbrance or alienation from the date of the approval of
the application and for a term of five years from and after the date of issuance of the patent
or grant, nor shall they become liable to the satisfaction of any debt contracted prior to the
expiration of said period; but the improvements or crops on the land may be mortgaged or
pledged to qualified persons, associations, or corporations.
It will be recalled that by clause VIII of Exhibit 1 the parties agreed that should Emiliana Ambrosio fail
to redeem the mortgage within the stipulated period of four and a half years, by paying the loan
together with interest, she would execute in favor of the petitioner an absolute deed of sale of the
land for P1,000, including the interest stipulated and owing. The stipulation was verbally modified by
the same parties after the expiration of one year, in the sense that the petitioner would take
possession of the land and would benefit by the fruits thereof on condition that he would condone
the payment of interest upon the loan and he would attend to the payment of the land tax. These
pacts made by the parties independently were calculated to alter the mortgage a contract clearly
entered into, converting the latter into a contract of antichresis. (Article 1881 of the Civil Code.) The
contract of antichresis, being a real encumbrance burdening the land, is illegal and void because it is
legal and valid.
The foregoing considerations bring us to the conclusion that the first assignment of error is well-
founded and that error was committed in holding that the contract entered into between the parties
was one of absolute sale of the land and its improvements and that Exhibit 1 is null and void. In the
second assignment of error the petitioner contends that the Court of Appeals erred in holding that he
is guilty of violating the Public Land Act because he entered into the contract, Exhibit 1. The
assigned error is vague and not specific. If it attempts to show that the said document is valid in its
entirety, it is not well-founded because we have already said that certain pacts thereof are illegal
because they are prohibited by section 116 of Act No. 2874, as amended.
In the third assignment of error the petitioner insists that his testimony, as to the verbal agreement
entered into between him and Emiliana Ambrosio, should have been accepted by the Court of
Appeals; and in the fourth and last assignment of error the same petitioner contends that the Court
of Appeals erred in holding that he acted in bad faith in taking possession of the land and in taking
advantage of the fruits thereof, resulting in the denial of his right to be reimbursed for the value of the
improvements introduced by him.
We have seen that subsequent to the execution of the contract, Exhibit 1, the parties entered into
another verbal contract whereby the petitioner was authorized to take possession of the land, to
receive the fruits thereof and to introduce improvements thereon, provided that he would renounce
the payment of stipulated interest and he would assume payment of the land tax. The possession by
the petitioner and his receipt of the fruits of the land, considered as integral elements of the contract
of antichresis, are illegal and void agreements because, as already stated, the contract of antichresis
is a lien and such is expressly prohibited by section 116 of Act No. 2874, as amended. The Court of
Appeals held that the petitioner acted in bad faith in taking possession of the land because he knew
that the contract he made with Emiliana Ambrosio was an absolute deed of sale and, further, that the
latter could not sell the land because it is prohibited by section 116. The Civil Code does not
expressly define what is meant by bad faith, but section 433 provides that "Every person who is
unaware of any flaw in his title, or in the manner of its acquisition, by which it is invalidated, shall be
deemed a possessor in good faith"; and provides further, that "Possessors aware of such flaw are
deemed possessors in bad faith". Article 1950 of the same Code, covered by Chapter II relative to
prescription of ownership and other real rights, provides, in turn, that "Good faith on the part of the
possessor consists in his belief that the person from whom he received the thing was the owner of
the same, and could transmit the title thereto." We do not have before us a case of prescription of
ownership, hence, the last article is not squarely in point. In resume, it may be stated that a person is
deemed a possessor in bad faith when he knows that there is a flaw in his title or in the manner of its
acquisition, by which it is invalidated.
Borrowing the language of Article 433, the question to be answered is whether the petitioner should
be deemed a possessor in good faith because he was unaware of any flaw in his title or in the
manner of its acquisition by which it is invalidated. It will be noted that ignorance of the flaw is the
keynote of the rule. From the facts found established by the Court of Appeals we can neither deduce
nor presume that the petitioner was aware of a flaw in his title or in the manner of its acquisition,
aside from the prohibition contained in section 116. This being the case, the question is whether
good faith may be premised upon ignorance of the laws. Manresa, commenting on article 434 in
connection with the preceding article, sustains the affirmative. He says:
"We do not believe that in real life there are not many cases of good faith founded upon an error of
law. When the acquisition appears in a public document, the capacity of the parties has already
been passed upon by competent authority, and even established by appeals taken from final
judgments and administrative remedies against the qualification of registrars, and the possibility of
error is remote under such circumstances; but, unfortunately, private documents and even verbal
agreements far exceed public documents in number, and while no one should be ignorant of the law,
the truth is that even we who are called upon to know and apply it fall into error not infrequently.
However, a clear, manifest, and truly unexcusable ignorance is one thing, to which undoubtedly
refers article 2, and another and different thing is possible and excusable error arising from complex
legal principles and from the interpretation of conflicting doctrines.
But even ignorance of the law may be based upon an error of fact, or better still, ignorance of
a fact is possible as to the capacity to transmit and as to the intervention of certain persons,
compliance with certain formalities and appreciation of certain acts, and an error of law is
possible in the interpretation of doubtful doctrines. (Manresa, Commentaries on the Spanish
Civil Code. Volume IV, pp. 100, 101 and 102.)
According to this author, gross and inexcusable ignorance of law may not be the basis of good faith,
but possible, excusable ignorance may be such basis. It is a fact that the petitioner is not conversant
with the laws because he is not a lawyer. In accepting the mortgage of the improvements he
proceeded on the well-grounded belief that he was not violating the prohibition regarding the
alienation of the land. In taking possession thereof and in consenting to receive its fruits, he did not
know, as clearly as a jurist does, that the possession and enjoyment of the fruits are attributes of the
contract of antichresis and that the latter, as a lien, was prohibited by section 116. These
considerations again bring us to the conclusion that, as to the petitioner, his ignorance of the
provisions of section 116 is excusable and may, therefore, be the basis of his good faith. We do not
give much importance to the change of the tax declaration, which consisted in making the petitioner
appear as the owner of the land, because such an act may only be considered as a sequel to the
change of possession and enjoyment of the fruits by the petitioner, to about which we have stated
that the petitioner's ignorance of the law is possible and excusable. We, therefore, hold that the
petitioner acted in good faith in taking possession of the land and enjoying its fruits.
The petitioner being a possessor in good faith within the meaning of article 433 of the Civil Code and
having introduced the improvements upon the land as such, the provisions of article 361 of the same
Code are applicable; wherefore, the respondents are entitled to have the improvements and plants
upon indemnifying the petitioner the value thereof which we fix at P3,000, as appraised by the trial
court; or the respondents may elect to compel the petitioner to have the land by paying its market
value to be fixed by the court of origin.
The respondents also prayed in their complaint that the petitioner be compelled to pay them the sum
of P650, being the approximate value of the fruits obtained by the petitioner from the land. The Court
of Appeals affirmed the judgment of the trial court denying the claim or indemnity for damages, being
of the same opinion as the trial court that the respondents may elect to compel the petitioner to have
the land. The Court of Appeals affirmed the judgment of the trial court that the respondents have not
established such damages. Under the verbal contract between the petitioner and the deceased
Emiliana Ambrosio, during the latter's lifetime, the former would take possession of the land and
would receive the fruits of the mortgaged improvements on condition that he would no longer collect
the stipulated interest and that he would attend to the payment of the land tax. This agreement, at
bottom, is tantamount to the stipulation that the petitioner should apply the value of the fruits of the
land to the payment of stipulated interest on the loan of P1,000 which is, in turn, another of the
elements characterizing the contract of antichresis under article 1881 of the Civil Code. It was not
possible for the parties to stipulate further that the value of the fruits be also applied to the payment
of the capital, because the truth was that nothing remained after paying the interest at 12% per
annum. This interest, at the rate fixed, amounted to P120 per annum, whereas the market value of
the fruits obtainable from the land hardly reached said amount in view of the fact that the assessed
value of said improvements was, according to the decision, P860. To this should be added the fact
that, under the verbal agreement, from the value of the fruits had to be taken a certain amount to pay
the annual land tax. We mention these data here to show that the petitioner is also not bound to
render an accounting of the value of the fruits of the mortgaged improvements for the reason stated
that said value hardly covers the interest earned by the secured indebtednes.
For all the foregoing considerations, the appealed decision is reversed, and we hereby adjudge: (1)
that the contract of mortgage of the improvements, set out in Exhibit 1, is valid and binding; (2) that
the contract of antichresis agreed upon verbally by the parties is a real incumbrance which burdens
the land and, as such, is a null and without effect; (3) that the petitioner is a possessor in good faith;
(4) that the respondents may elect to have the improvements introduced by the petitioner by paying
the latter the value thereof, P3,000, or to compel the petitioner to buy and have the land where the
improvements or plants are found, by paying them its market value to be filed by the court of origin,
upon hearing the parties; (5) that the respondents have a right to the possession of the land and to
enjoy the mortgaged improvements; and (6) that the respondents may redeem the mortgage of the
improvements by paying to the petitioner within three months the amount of P1,000, without interest,
as that stipulated is set off by the value of the fruits of the mortgaged improvements which petitioner
received, and in default thereof the petitioner may ask for the public sale of said improvements for
the purpose of applying the proceeds thereof to the payment of his said credit. Without special
pronouncement as to the costs in all instances. So ordered.
Diaz, J., concur.



G.R. Nos. L-20300-01 April 30, 1965
ANTONINO DIZON, ADELAIDA D. REYES, CONSOLACION DEGOLLACION, ET AL., petitioners,
vs.
HON. JUAN DE G.
RODRIGUEZ
, as Secretary of Agriculture & Natural Resources,
HERACLITO MONTALBAN, as Acting Director of Fisheries,
MIGUEL TOLENTINO, REPUBLIC OF THE PHILIPPINES, ET AL., respondents.
-----------------------------
G.R. Nos. L-20355-56 April 30, 1965
REPUBLIC OF THE PHILIPPINES, THE SECRETARY OF AGRICULTURE & NATURAL
RESOURCES, DIRECTOR OF FISHERIES, MIGUEL TOLENTINO, and CLEMENCIA
TOLENTINO, petitioners,
vs.
HON. COURT OF APPEALS, ANTONINO DIZON, ADELAIDA D. REYES, CONSOLACION DE
DEGOLLACION, ARTEMIO DIZON, AMORANDO DIZON, REMEDIOS MANAPAT SY-JUCO, and
LEONILA SIOCHI GOCO,respondents.
Jalandoni and Jamir for petitioners Antonino Dizon, et al.
Office of the Solicitor General for respondents Republic, et al.
Miguel Tolentino for and in his own behalf.
BARRERA, J .:
These are separate appeals instituted by Antonino Dizon, et al. (G.R. Nos. L-20300-01) and the
Republic of the Philippines, et al. (G.R. Nos. L-20355-56), from a single decision of the Court of
Appeals, as modified by its resolution of August 20, 1962, holding that Lots Nos. 49 and 1 of
subdivision plan Psd.-27941 are parts of the navigable boundary of the Hacienda Calatagan,
covered by Transfer Certificate of Title No. T-722, and declaring the occupants Dizon, et al.
possessors in good faith, entitled to remain therein until reimbursed, by the intervenor Republic of
the Philippines, of the necessary expenses made on the lots in the sum of P40,000.00 and
P25,000.00, respectively.
The facts of these cases, briefly stated, are as follows:
Hacienda Calatagan owned by Alfonso and Jacobo Zobel was originally covered by TCT No. T-722.
In 1938, the Hacienda constructed a pier, called "Santiago Landing," about 600 meters long from the
shore into the navigable waters of the Pagaspas Bay, to be used by vessels loading sugar produced
by the Hacienda sugar mill. When the sugar mill ceased its operation in 1948, the owners of the
Hacienda converted the pier into a fishpond dike and built additional strong dikes enclosing an area
of about 30 hectares (of the Bay) and converted the same into a fishpond. The Hacienda owners
also enclosed a similar area of about 37 hectares of the Bay on the other side of the pier which was
also converted into a fishpond.
In 1949, the Zobels ordered the subdivision of the Hacienda by ordering the preparation of the
subdivision plan Psd-27941 wherein fishpond No. 1 (with 30 hectares) was referred to as Lot No. 1
and fishpond No. 2 (with 37 hectares) was referred to as Lot No. 49. The plan was approved by the
Director of Lands, and the Register of Deeds issued, from TCT No. T-722, TCT No. 2739 for lots 49
and 1 in the name of Jacobo Zobel.
In 1950, Jacobo Zobel sold to Antonino Dizon, et al. Lot 49 for which said purchasers obtained at
first TCT No. T-2740 and later T-4718, Lot 1, on the other hand, was purchased by Carlos Goco, et
al., who, in turn, sold one-half thereof to Manuel Sy-Juco, et al. Transfer Certificate of Title No. 4159
was issued in the names of the Gocos and Sy-Jucos.
On May 24, 1952, Miguel Tolentino filed with the Bureau of Fisheries an application for ordinary
fishpond permit or lease for Lot 49, and an application for a similar permit, for Lot 1, was filed by his
daughter Clemencia Tolentino.
The Dizons, Sy-Jucos, and Gocos filed a protest with the Bureau of Fisheries, claiming the
properties to be private land covered by a certificate of title. This protest was dismissed by the
Director of Fisheries, on the ground that the areas applied for are outside the boundaries of TCT No.
T-722 of Hacienda Calatagan. This ruling was based upon the findings of the committee created by
the Secretary of Agriculture and Natural Resources to look into the matter, that Lots 1 and 49 are not
originally included within the boundaries of the hacienda.
On October 1, 1954, the protestants Dizons, Sy-Jucos, and Gocos filed an action in the Court of
First Instance of Manila (Civ. Case No. 24237) to restrain the Director of Fisheries from issuing the
fishpond permits applied for by the Tolentinos. The court dismissed this petition for non-exhaustion
of administrative remedy, it appearing that petitioners had not appealed from the decision of the
Director of Fisheries to the Secretary of Agriculture and Natural Resources. On appeal to this Court,
the decision of the lower court was sustained (G.R. No. L-8654, promulgated April 28, 1956). The
protestants then filed an appeal with the Secretary of Agriculture and Natural Resources. This time,
the same was dismissed for being filed out of time.1wph 1. t
On August 16, 1956, the Dizons filed Civil Case 135 and the Sy-Jucos and Gocos, Civil Case 136, in
the Court of First Instance of Batangas, to quiet their titles over Lots 49 and 1. Named defendants
were the Secretary of Agriculture and Natural Resources and applicants Tolentinos. The Republic of
the Philippines was allowed to intervene in view of the finding by the investigating committee created
by the respondent Secretary, that the lots were part of the foreshore area before their conversion
into fishponds by the hacienda-owners.
On January 30, 1958, after due hearing, the Court of First Instance of Batangas promulgated a joint
decision making the finding, among others, that the subdivision plan Psd-27941 was prepared in
disregard of the technical description stated in TCT No. T-722, because the surveyor merely
followed the existing shoreline and placed his monuments on the southwest lateral of Lot 49, which
was the pier abutting into the sea; and made the conclusion that Lots 1 and 49 of Psd-27941 were
part of the foreshore lands. As the certificate of title obtained by petitioners covered lands not subject
to registration, the same were declared null and void, and Lots 1 and 49 were declared properties of
the public domain. Petitioners appealed to the Court of Appeals.
In its decision of October 31, 1961, as well as the resolution of August 20, 1962, the appellate court
adopted the findings of the lower court, that the lots in question are part of the foreshore area and
affirmed the ruling cancelling the titles to plaintiffs. Although in the decision of October 31, 1961, the
Court of Appeals awarded to applicants Tolentinos damages in the amount of P200.00 per hectare
from October 1, 1954, when plaintiffs were notified of the denial of their protest by the Director of
Fisheries, such award was eliminated in the resolution of August 20, 1962, for the reason that
plaintiffs, who relied on the efficacy of their certificates of title, cannot be considered possessors in
bad faith until after the legality of their said titles has been finally determined. Appellants were thus
declared entitled to retention of the properties until they are reimbursed by the landowner, the
Republic of the Philippines, of the necessary expenses made on the lands, in the sums of
P40,000.00 (for Lot 49) and P25,000.00 (for Lot 1). It is from this portion of the decision as thus
modified that defendants Tolentinos and the intervenor Republic of the Philippines appealed (in G.R.
Nos. L-20355-56), claiming that plaintiffs' possession became in bad faith when their protest against
the application for lease was denied by the Director of Fisheries. In addition, the intervenor contends
that being such possessors in bad faith, plaintiffs are not entitled to reimbursement of the expenses
made on the properties.
In G.R. Nos. L-20300-01, plaintiffs Dizon, et al., claim that the finding that the Lots in question are
part of the seashore or foreshore area was erroneous, because from defendants' own evidence, the
same appear to be marshland before their conversion into fishponds.
It is noteworthy in connection with the appeal of plaintiffs, that they do not contest the existence of
the pier that was used by the hacienda owners in the loading of their manufactured sugar to vessels.
The fact that said pier jutted out 600 meters to the sea indicates that the area over which such
cemented structure spanned was part of the sea or at least foreshore land. And, plaintiffs were not
able to disprove the testimonial evidence that the fishponds in question were constructed by
enclosing the areas with dikes, using the pier as one of the ends of the fishponds. It is clear that the
areas thus enclosed and converted into fishponds were really part of the foreshore. This, and the
fact that the subdivision plan Psd-27941 was found to have been prepared not in accordance with
the technical descriptions in TCT No. T-722 but in disregard of it, support the conclusion reached by
both the lower court and the Court of Appeals that Lots 49 and 1 are actually part of the territorial
waters and belong to the State. And, it is an elementary principle that the incontestable and
indefeasible character of a Torrens certificate of title does not operate when the land thus covered is
not capable of registration.
On the matter of possession of plaintiffs-appellants, the ruling of the Court of Appeals must be
upheld. There is no showing that plaintiffs are not purchasers in good faith and for value. As such
title-holders, they have reason to rely on the indefeasible character of their certificates.
On the issue of good faith of the plaintiffs, the Court of Appeals reasoned out:
The concept of possessors in good faith given in Art. 526 of the Civil Code and when said
possession loses this character under Art. 528, needs to be reconciled with the doctrine of
indefeasibility of a Torrens Title. Such reconciliation can only be achieved by holding that the
possessor with a Torrens Title is not aware of any flaw in his Title which invalidates it until his
Torrens Title is declared null and void by final judgment of the Courts.
Even if the doctrine of indefeasibility of a Torrens Title were not thus reconciled, the result
would be the same, considering the third paragraph of Art. 526 which provides that:
ART. 526. ...
Mistake upon a doubtful or difficult question of law may be the basis of good faith.
The legal question whether plaintiffs-appellants' possession in good faith, under their Torrens
Titles acquired in good faith, does not lose this character except in the case and from the
moment their Titles are declared null and void by the Courts, a difficult one. Even the
members of this Court were for a long time divided, two to one, on the answer. It was only
after several sessions, where the results of exhaustive researches on both sides were
thoroughly discussed, that an undivided Court finally found the answer given in the next
preceding paragraph. Hence, even if it be assumed for the sake of argument that the
Supreme Court would find that the law is not as we have stated it in the next preceding
paragraph and that the plaintiffs-appellants made a mistake in relying thereon, such mistake
on a difficult question of law may be the basis of good faith. Hence, their possession in good
faith does not lose this character except in the case and from the moment their Torrens Titles
are declared null and void by the Courts.
Under the circumstances of the case, especially where the subdivision plan was originally approved
by the Director of Lands, we are not ready to conclude that the above reasoning of the Court of
Appeals on this point is a reversible error. Needless to state, as such occupants in good faith,
plaintiffs have the right to the retention of the property until they are reimbursed the necessary
expenses made on the lands.
With respect to the contention of the Republic of the Philippines that the order for the reimbursement
by it of such necessary expenses constitutes a judgment against the government in a suit not
consented to by it, suffice it to say that the Republic, on its own initiative, asked and was permitted to
intervene in the case and thereby submitted itself voluntarily to the jurisdiction of the court.
IN VIEW OF THE FOREGOING CONSIDERATIONS, the decision appealed from is hereby affirmed
in all respects, without costs. So ordered.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Paredes, Dizon, Regala, Makalintal and
Bengzon, J.P., JJ., concur.



G.R. No. 111737 October 13, 1999
DEVELOPMENT BANK OF THE PHILIPPINES, petitioner,
vs.
THE HONORABLE COURT OF APPEALS AND SPOUSES TIMOTEO and SELFIDA S.
PIEDA, respondents.
GONZAGA-REYES, J .:
Before us is a Petition for Review on Certiorari of the decision of the Court of Appeals
1
in CA-G.R.
CV No. 28549 entitled "SPOUSES TIMOTEO PIEDA, ET. AL. vs. DEVELOPMENT BANK OF THE
PHILIPPINES" which affirmed the decision of the Regional Trial Court (RTC), Branch 16
2
, Roxas City in
Civil Case No. V-4590, for cancellation of certificate of title and/or specific performance, accounting and
damages with a prayer for the issuance of a writ of preliminary injunction.1wphi1. nt
The records show that respondent spouses Pieda (PIEDAS) are the registered owners of a parcel
of land (Lot 11-14-1-14) situated at barangay Astorga Dumarao, Capiz containing an area of
238,406 square meters, more or less, and covered by Homestead Patent No. 0844 and Original
Certificate of Title No. P-1930. On March 7, 1972, the PIEDAS mortgaged the above described
parcel of land to petitioner, Development Bank of the Philippines (DBP) to secure their agricultural
loan in the amount of P20,000.00. The PIEDAS failed to comply with the terms and conditions of
the mortgage compelling DBP to extrajudicially foreclose on February 2, 1977. In the foreclosure
sale, DBP was the highest bidder and a Sheriff Certificate of Sale was executed in its favor. In the
corresponding Certificate of Sale, the sheriff indicated that "This property is sold subject to the
redemption within five (5) years from the date of registration of this instrument and in the manner
provided for by law applicable to this case". The certificate of sale was registered in the Register of
Deeds of Capiz on April 25, 1977. On March 10, 1978, after the expiration of the one-year
redemption period provided for under Section 6, ACT 3135, DBP consolidated its title over the
foreclosed property by executing an Affidavit of Consolidation of Ownership. Subsequently, a Final
Deed of Sale was executed in DBP's favor, which was registered together with the Affidavit of
Consolidation of Ownership with the Register of Deeds of Capiz on May 30, 1978. Consequently,
Original Certificate of Title No. P-1930 was cancelled and TCT No. T-15559 was issued in the name
of DBP. Thereafter, DBP took possession of the foreclosed property and appropriated the produce
thereof.
On July 5, 1978, the Ministry of Justice issued Opinion No. 92, Series of 1978
3
which declared that
lands covered by P.D. No. 27
4
, like the herein subject property, may not be the object of foreclosure
proceedings after the promulgation of said decree on Oct. 21, 1972.
On August 24, 1981, the PIEDAS offered to redeem the foreclosed property by offering P10,000.00
as partial redemption payment. This amount was accepted by DBP who issued O.R. No. 1665719
and through a letter, conditionally approved the offer of redemption considering the P10,000.00 as
down payment.
5
However, on November 11, 1981, DBP sent the PIEDAS another letter informing
them that pursuant to P.D. 27, their offer to redeem and/or repurchase the subject property could not be
favorably considered for the reason that said property was tenanted.
6
On November 16, 1981, in
deference to the above-mentioned opinion, DBP through Ramon Buenaflor sent a letter to the Acting
Register of Deeds of Capiz requesting the latter to cancel TCT No. T-15559 and to restore Original
Certificate of Title No. P-1930 in the name of the PIEDAS. The Acting Register of Deeds, in reply to
such request, suggested that DBP file a petition in court pursuant to Section 108 of Presidential Decree
1529
7
. In compliance with said suggestion, DBP petitioned for the cancellation of TCT No. T-15559 with
then Court of First Instance of Capiz, Branch II, docketed as Special Case No. 2653. The petition was
favorably acted upon on February 22, 1982. Thus, the foreclosure proceeding conducted on February 2,
1977 was declared null and void and the Register of Deeds of Capiz was ordered to cancel TCT No.
15559; OCT No. 1930 was ordered revived.
Meanwhile, on December 21, 1981, the PIEDAS filed the instant complaint against DBP for
cancellation of certificate of title and/or specific performance, accounting and damages with a prayer
for the issuance of a writ of preliminary injunction averring that DBP, in evident bad faith, caused the
consolidation of its title to the parcel of land in question in spite of the fact that the 5-year redemption
period expressly stated in the Sheriff's Certificate of Sale had not yet lapsed and that their offer to
redeem the foreclosed property was made well within said period of redemption.
8

After trial, the RTC ruled in favor of the PIEDAS stating that DBP violated the stipulation in the
Sheriff's Certificate of Sale which provided that the redemption period is five (5) years from the
registration thereof in consonance with Section 119
9
of CA No. 141
10
. DBP should therefore assume
liability for the fruits that said property produced from said land considering that it prematurely took
possession thereof. The dispositive portion of the decision reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against the
defendant Development Bank of the Philippines as follows:
1. Condemning the defendant DBP to pay the plaintiffs P201,138.28 less whatever
amount the plaintiffs still have to pay the said defendant DBP as balance of their loan
account reckoned up to the date of this decision; P20,000.00 as attorney's fees;
P5,000.00 as litigation expenses and costs.
SO ORDERED.
11

DBP appealed to the Court of Appeals, which affirmed the decision of the RTC. The Court of
Appeals stated that since DBP was in evident bad faith when it unlawfully took possession of the
property subject of the dispute and defied what was written on the Sheriff's Certificate of Sale, the
PIEDAS were entitled to recover the fruits produced by the property or its equivalent valued at
P72,000.00 per annum or a total of P216,000.00 for the three-year period. Respondent court stated
that said amount was not rebutted by DBP and was fair considering the size of the land in question.
The court added that any discussion with respect to the redemption period was of little significance
since the foreclosure proceeding was declared null and void in Special Civil Case No. 2653
12
on
February 22, 1982. Thus, the right of the PIEDAS to redeem the property has become moot and
academic. Finally, the award of attorney's fees amounting to P10,000.00
13
was justified considering that
the PIEDAS were compelled to protect their interests.
14

DBP's Motion for Reconsideration
15
was denied; hence this petition where it assigns the following
errors:
Ground No. 1 The Honorable Court Of Appeals Gravely Erred In Affirming The
Court A Quo's Decision Awarding Actual Damages In The Amount Of P216,000.00 In
Favor Of The Private Respondents Notwithstanding The Absence Of Evidence
Substantiating Said Award. Thus, The Honorable Court Of Appeals Had Decided
This Instant Case In A Way Not In Accord With Applicable Law And Jurisprudence.
2. Ground No. 2 The Honorable Court Of Appeals Gravely Erred In Affirming The
Court A Quo's Finding That DBP Was In Bad Faith When It Took Possession Of The
Property In Question Notwithstanding the Contrary Evidence Adduced By Petitioner
DBP. Thus, The Honorable Court Of Appeals Departed From The Accepted And
Usual Course f Judicial Proceedings.
3. Ground No. 3 The Honorable Court Of Appeals Gravely Erred In Affirming The
Court A Quo's Decision Awarding Attorney's Fees And Litigation Costs In Favor Of
The Private Respondents Notwithstanding Absence Of Evidence Proving The
Same. Clearly, The Lower Court Be Committed Misapprehension Of Facts That Can
Be Considered A Question Of Law.
16

DBP maintains that the valuation of the income derived from the property in dispute allegedly
amounting to P216,000.00 was not proven by the PIEDAS. DBP argues that they granted the
PIEDAS a loan of P20,000.00 in March 7, 1972 and up to the time of the foreclosure of the
property, the PIEDAS have paid only P2,000.00 on their principal. The failure of the PIEDAS to
pay this loan is attributable to the fact that said property did not produce income amounting to
P72,000.00 per annum. According to DBP, in the absence of receipts or other evidence to support
such a claim, the Court of Appeals should not have granted said amount considering that the
PIEDAS had the burden of proving actual damages. Furthermore, Selfida Pieda herself admitted
that the property never produced income amounting to P72,000.00 per annum. At any rate, the
actual amount earned by the property in terms of rentals turned over by the tenant-farmers or
caretakers of the land were duly receipted and were duly accounted for by the DBP.
DBP also alleges that the mere fact that DBP took possession and administration of the property
does not warrant a finding that DBP was in bad faith. First, records show that the PIEDAS
consented to and approved the takeover of DBP. Second, Sec. 7
17
of Act No. 3135
18
allows the
mortgagee-buyer to take possession of the mortgaged property even during the redemption period. Third,
DBP's act of consolidating the title of the property in its name does not constitute bad faith as there is no
law which prohibits the purchaser at public auction from consolidating title in its name after the expiration
of the one (1) year redemption period reckoned from the time the Certificate of Sale was registered; and
neither is there any law or jurisprudence which prohibits the PIEDAS from exercising their right of
redemption over said property within five (5) years even if title is consolidated in the name of the
purchaser. When DBP consolidated title over the property in its name, the new TCT issued in its favor
was subject to the lien i.e. the right of redemption of the PIEDAS; if there was a failure to register this in
the TCT, DBP should not be faulted. Besides, even if the five (5) year period of redemption was not
indicated therein, Sec. 44
19
and 46
20
of Presidential Decree No. 1529
21
attaches such lien by operation
of law even in the absence of an annotation in the title. Moreover, Sec. 119 of CA No. 141 also makes
said right of redemption a statutory lien, which subsists and binds the whole world despite the absence of
registration.
DBP also could not have been in bad faith when it denied the PIEDAS' offer to redeem the property
since the denial was premised on Opinion No. 92 of the Minister of Justice series of 1978 which
stated that said land was covered under P.D. 27 and could not be the subject of foreclosure
proceedings. For this reason, DBP immediately filed a petition to nullify the foreclosure proceedings
which was favorably acted upon prior to the service of summons and the complaint in the present
case on DBP on June 30, 1982. If DBP was really in bad faith, it would not have filed said petition for
said petition was against its own interests.
Further, DBP asserts that PIEDAS appointed DBP as their attorney-in-fact or agent in case of
foreclosure of the property under Section 4 of the mortgage contract, which provides:
4. . . . In case of foreclosure, the Mortgagor hereby consents to the appointment of
the mortgagee or any of its employees as receiver, without any bond, to take charge
of the mortgage property at once, and to hold possession of the case and the rents
and profits derived from the mortgaged property before the sale. . . .
22

DBP was therefore entitled to take possession of the property pursuant to the mortgage
contract.
Finally, considering that DBP lawfully had material possession of the property after it consolidated its
title, DBP was entitled to the fruits and income thereof pursuant to Section 34, Rule 39 of the Rules
of Court:
Sec. 34. Rents and Profits Pending Redemption. Statement thereof and credit
therefor on redemption. The purchaser, from the time of the sale until a
redemption, and a redemptioner, from the time of his redemption until another
redemption, is entitled to receive the rents of the property sold or the value of the use
or occupation thereof when such property is in the possession of a tenant. . . .
Taking all this into consideration, DBP cannot be faulted for taking over possession of the property in
question.
The core issue in this case is whether DBP was in bad faith when it took possession of the disputed
lot.
We rule in the negative and find DBP's contentions meritorious.
A possessor in good faith is one who is not aware that there exists in his title or mode of acquisition
any flaw, which invalidates it.
23
Good faith is always presumed, and upon him who alleges bad faith on
the part of a possessor rests the burden of proof.
24
It was therefore incumbent on the PIEDAS to prove
that DBP was aware of the flaw in its title i.e. the nullity of the foreclosure. This, they failed to do.
Respondent PIEDAS argue that DBP's bad faith stems from the fact that DBP consolidated title
over the disputed property despite the statement in the Sheriff's Certificate of Sale to the effect that
said land was subject to a five year redemption period. The period of redemption of extrajudicially
foreclosed land is provided under Section 6 of ACT No. 3135 to wit:
Sec. 6. 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 judicial creditor
or judgment creditor of said debtor, 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
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,
25
in so far as these are not inconsistent with the provisions of this Act.
If no redemption is made within one year, the purchaser is entitled as a matter of right to
consolidate
26
and to possess
27
the property.
28
Accordingly, DBP's act of consolidating its title and taking
possession of the subject property after the expiration of the period of redemption was in accordance with
law. Moreover, it was in consonance with Section 4 of the mortgage contract between DBP and the
PIEDAS where they agreed to the appointment of DBP as receiver to take charge and to hold
possession of the mortgage property in case of foreclosure. DBP's acts cannot therefore be tainted with
bad faith.
The right of DBP to consolidate its title and take possession of the subject property is not affected by
the PIEDAS' right to repurchase said property within five years from the date of conveyance
granted by Section 119 of CA No. 141. In fact, without the act of DBP consolidating title in its name,
the PIEDAS would not be able to assert their right to repurchase granted under the aforementioned
section. Respondent PIEDAS are of the erroneous belief that said section prohibits a purchaser of
homestead land in a foreclosure sale from consolidating his title over said property after the one-
year period to redeem said property has expired. Section 119 does not contain any prohibition to
convey homestead land but grants the homesteader, his widow or legal heirs a right to repurchase
said land within a period of five years in the event that he conveys said land. This is in consonance
with the policy of homestead laws to distribute disposable agricultural lands of the State to land-
destitute citizens for their home and cultivation.
29
The right to repurchase under Section 119 aims to
preserve and keep in the family of the homesteader that portion of public land which the State had
gratuitously given him.
30
Such right is based on the assumption that the person under obligation to
reconvey the property has the full title to the property because it was voluntarily conveyed to him or that
he consolidated his title thereto by reason of a redemptioner's failure to exercise his right of
redemption.
31
It is also settled that "the five-year period of redemption fixed in Section 119 of the Public
Land Law of homestead sold at extrajudicial foreclosure begins to run from the day after the expiration of
the one-year period of repurchase allowed in an extrajudicial foreclosure".
32
Thus DBP's consolidation of
title did not derogate from or impair the right of the PIEDAS to redeem the same under C.A. No. 141.
It may be argued that P.D. 27 was already in effect when DBP foreclosed the property. However, the
legal propriety of the foreclosure of the land was put into question only after Opinion No. 92 series of
1978 of the Ministry of Justice declared that said land was covered by P.D. 27 and could not be
subject to foreclosure proceedings. The Opinion of the Ministry of Justice was issued on July 5, 1978
or almost two months after DBP consolidated its title to the property on March 10, 1978. By law and
jurisprudence, a mistake upon a doubtful or difficult question of law may properly be the basis of
good faith.
33

In the case of Maneclang vs. Baun,
34
we held that when a contract of sale is void, the possessor is
entitled to keep the fruits during the period for which it held the property in good faith. Good faith of the
possessor ceases when an action to recover possession of the property is filed against him and he is
served summons therefore.
35
In the present case, DBP was served summons on June 30, 1982.
36
By
that time, it was no longer in possession of the disputed land as possession thereof was given back to the
PIEDAS after the foreclosure of DBP was declared null and void on February 22, 1982. Therefore, any
income collected by DBP after it consolidated its title and took possession of the property on May 30,
1978 up to February 22, 1982 belongs to DBP as a possessor in good faith since its possession was
never legally interrupted.
Finally, we delete the award for attorney's fees. Although attorney's fees may be awarded if the
claimant is compelled to litigate with third persons or to incur expenses to protect his interest by
reason of an unjustified act or omission of the party from whom it is sought
37
, we hold that DBP's acts
were clearly not unjustified.
WHEREFORE, the instant petition is hereby GRANTED, and the appealed decision of the Court of
Appeals is REVERSED. The Development Bank of the Philippines is absolved from any liability to
Timoteo and Selfida Pieda in so far as it orders the DBP to pay the PIEDAS P216,000.00 as
annual produce value of the land; P20,000.00 in attorney's fees, P5,000.00 in litigation expenses
and the costs of the suit. This decision is without prejudice to whatever liability the PIEDAS may
still have to the DBP with respect to their loan.
SO ORDERED.
Melo, Vitug, Panganiban and Purisima, JJ., concur



G.R. No. L-50264 October 21, 1991
IGNACIO WONG, petitioner,
vs.
HON. LUCAS D. CARPIO, as Presiding Judge, Court of First Instance of Davao del Sur,
Branch V and MANUEL MERCADO, respondents.
Rodolfo B. Quiachon for petitioner.
Jose M. Ilagan for private respondent.

BIDIN, J .:p
This is a petition for review on certiorari, certified to this Court by the Court of Appeals as it involves
purely question of law, seeking the annulment of the September 29, 1978 decision of the then Court
of First Instance ** of Davao del Sur, Branch V, in Civil Case No. 1258 which reversed the February
20, 1978 decision of the Municipal Court of Sta. Maria, *** Davao del Sur in an action for Forcible
Entry (Civil Case No. 13) ordering the dismissal of the complaint as well as the counterclaim.
The undisputed facts of this case, as found by both the trial court and the then Court of First
Instance of Davao del Sur, are as follows:
On the basis of the admission of parties in their respective pleadings, the oral
testimonies of all witnesses for both plaintiff and defendants and the documentary
evidence offered and admitted this Court finds that plaintiff Manuel Mercado acquired
his rights to possess the land in litigation, particularly lot 3 (LRC) Pcs-295, (situated
at Colonga, Sta. Maria, Davao del Sur) and which is particularly described and
embraced in Transfer Certificate of title No. (T-4244) T-972 from William Giger by
virtue of a deed of sale with right to repurchase which was executed in 1972 for a
consideration of P3,500.00 (testimony of plaintiff, T.S.N., p. 3, hearing of January 7,
1977). Then, in 1973, William Giger again asked an additional amount of P2,500.00
from plaintiff and so he required William Giger to sign a new deed of Pacto de
Retro Sale (Exhibit "A") on November 5,1973 at Davao City before Notary Public
Gregorio C. Batiller (T.S.N., p. 5, hearing of January 7, 1977). In 1972, plaintiff began
harvesting only the coconut fruits and he paid the taxes on the land (Exhibits B to E)
for Mr. Giger. He went periodically to the land to make copra but he never placed any
person on the land in litigation to watch it. Neither did he reside on the land as he is a
businessman and storekeeper by occupation and resides at Lower Sta. Maria, Davao
del Sur while the land in litigation is at Colongan, Sta. Maria. Neither did he put any
sign or hut to show that he is in actual possession (p. 8, T.S.N., p. 7, hearing of
January 14, 1978). He knew defendants' laborers were in the land in suit as early as
August, 1976 and that they have a hut there but he did not do anything to stop them.
Instead plaintiff was happy that there were people and a hut on the land in suit (p. 14,
T.S.N., hearing of January 14, 1978).
Before July, 1976, defendant Ignacio Wong went to the land in litigation to find out if
there were other people residing there or claiming it besides the owner and he found
none. So, in July, 1976, defendant Ignacio Wong bought the parcel of land in
litigation from William Giger and his wife Cecilia Valenzuela (Exhibit 5). After the
execution of Exhibit 5, defendant Ignacio Wong asked for the delivery of the title to
him and so he has in his possession TCT No. (T-4244) T-974 (Exhibit 6) in the name
of William Giger. Mr. Wong declared the land in suit for taxation purposes in his
name (Exhibit 7). He tried to register thepacto de retro sale with the Register of
Deeds by paying the registration fee (Exhibit 8) but due to some technicalities,
the pacto de retro sale could not be registered. The defendant Wong placed laborers
on the land in suit, built a small farm house after making some clearings and fenced
the boundaries. He also placed signboards (T.S.N., pp. 14-15, hearing of September
15, 1977). On September 27, 1976, plaintiff Manuel Mercado again went to the land
in suit to make copras. That was the time the matter was brought to the attention of
the police
of Sta. Maria, Davao del Sur and the incident entered in the police blotter (Exhibit 11). Then on November 18, 1976,
defendant Wong ordered the hooking of the coconuts from the land in litigation and nobody disturbed him. But on
November 29, 1976, defendant received a copy of plaintiff's complaint for forcible entry with summons to answer which
is the case now before the Court. During the pendency of this instant complaint for forcible entry, spouses William
Giger and Cecilia Valenzuela filed a case for reformation of instrument with the Court of First Instance of Digos, Davao
del Sur against plaintiff Mercado (Exhibit 4). The case pertains to Exhibit "A" of plaintiff. (pp. 1-3, CA Decision, pp. 82-
84, Rollo).
On the basis of the aforestated undisputed facts, the Municipal Court of Sta. Maria, Davao del Sur in
its February 20, 1978 Decision found that herein petitioner (defendant Ignacio Wong) had prior,
actual and continuous physical possession of the disputed property and dismissed both the
complaint and the counter-claim.
On appeal, the then Court of First Instance of Davao del Sur, in its September 29, 1978 Decision
drew a completely different conclusion from the same set of facts and ruled in favor of herein private
respondent (plaintiff Manuel Mercado). The decretal portion of the said decision, reads:
WHEREFORE, the Court finds the plaintiff to have taken possession of the property
earlier in point of time and defendant is an intruder and must, as he is hereby
ordered to return, the possession of the land in question for the plaintiff, paying a
monthly rental of P400.00 from August, 1976, till the property is returned with costs
against the defendant. Judgment is reversed.
Petitioner filed the instant petition with the Court of Appeals. But the Court of Appeals, in its March 1,
1979 Resolution **** found that the only issue is a pure question of law the correctness of the conclusion drawn from the
undisputed facts and certified the case to this Court.
In its April 4, 1979 Resolution, the Second Division of this Court docketed the case in this Court and
considered it submitted for decision.
Petitioner alleged two (2) errors committed by respondent judge, to wit:
A) THE CONCLUSION DRAWN BY RESPONDENT JUDGE THAT PETITIONER IS AN INTRUDER
IS WITHOUT FACTUAL AND LEGAL BASIS FOR PURPOSES OF A FORCIBLE ENTRY.
B) THE CONCLUSION DRAWN BY RESPONDENT JUDGE THAT PETITIONER MUST PAY A
MONTHLY RENTAL OF P400.00 FROM AUGUST, 1976 TILL THE PROPERTY IS RETURNED
HAS NO LEGAL AND FACTUAL BASIS.
The petition is without merit.
Petitioner, in claiming that the private respondent has not established prior possession, argues that
private respondent's periodic visit to the lot to gather coconuts may have been consented to
and allowed or tolerated by the owner thereof for the purposes of paying an obligation that may be
due to the person gathering said nuts and that a person who enters a property to gather coconut
fruits and convert the same to copras may only be a hired laborer who enters the premises every
harvest season to comply with the contract of labor with the true owner of the property.
The argument is untenable.
It should be stressed that "possession is acquired by the material occupation of a thing or the
exercise of a right, or by the fact that it is subject to the action of our will, or by the proper acts and
legal formalities for acquiring such right." (Art. 531, Civil Code; Rizal Cement Co., Inc. vs. Villareal,
135 SCRA 15 [1985]); and that the execution of a sale thru a public instrument shall be equivalent to
the delivery of the thing, unless there is stipulation to the contrary . . . . If, however, notwithstanding
the execution of the instrument, the purchaser cannot have the enjoyment and material tenancy of
the thing and make use of it herself, because such tenancy and enjoyment are opposed by another,
then delivery has not been effected. (Paras, Civil Code of the Philippines, Vol. II, 1989 Ed., p. 400).
Applying the above pronouncements on the instant case, it is clear that possession passed from
vendor William Giger to private respondent Manuel Mercado by virtue of the first sale a retro (Exhibit
A), and accordingly, the later sale a retro (Exhibit 5) in favor of petitioner failed to pass the
possession of the property because there is an impediment the possession exercised by private
respondent. Possession as a fact cannot be recognized at the same time in two different
personalities except in the cases of co-possession. Should a question arise regarding the fact of
possession, the present possessor shall be preferred; if there are two possessions, the one longer in
possession, if the dates of possession are the same, the one who presents a title; and if these
conditions are equal, the thing shall be placed in judicial deposit pending determination of its
possession or ownership through proper proceedings (Art. 538, Civil Code).
As to petitioner's query that "Is the entry of petitioner to the property characterized by force,
intimidation, threat, strategy, or stealth in order to show that private respondent has had possession
so that the case is within the jurisdiction of the inferior court?" (p. 15, Petition; p. 16, Rollo). The
same is answered in the affirmative.
The act of entering the property and excluding the lawful possessor therefrom necessarily implies
the exertion of force over the property, and this is all that is necessary. Under the rule, entering upon
the premises by strategy or stealth is equally as obnoxious as entering by force. The foundation of
the action is really the forcible exclusion of the original possessor by a person who has entered
without right. The words "by force, intimidation, threat, strategy, or stealth" include every situation or
condition under which one person can wrongfully enter upon real property and exclude another who
has had prior possession therefrom. If a trespasser enters upon land in open daylight, under the very
eyes of person already clothed with lawful possession, but without the consent of the latter, and
there plants himself and excludes such prior possessor from the property, the action of forcible entry
and detainer can unquestionably be maintained, even though no force is used by the trespasser
other than such as is necessarily implied from the mere acts of planting himself on the ground and
excluding the other party. (Tolentino, Civil Code of the Philippines, Vol. II, 1983 Ed., pp. 243-244;
Drilon vs. Gaurana, 149 SCRA 342 [1987]).
Anent the award of rentals in favor of private respondent, the same is in order. Petitioner's argument
that there is no legal or factual basis for the payment of monthly rentals because bad faith on the
part of petitioner was never proved deserves no merit.
It should be noted that possession acquired in good faith does not lose this character except in the
case and from the moment facts exist which show that the possessor is not unaware that he
possesses the thing improperly or wrongfully. (Art. 528, Civil Code).
Possession in good faith ceases from the moment defects in the title are made known to the
possessors, by extraneous evidence or by suit for recovery of the property by the true owner.
Whatever may be the cause or the fact from which it can be deduced that the possessor has
knowledge of the defects of his title or mode of acquisition, it must be considered sufficient to show
bad faith. (Tolentino, Civil Code of the Philippines, Vol. II, p. 226). Such interruption takes place
upon
service
of summons (Manotok Realty vs. Judge Tecson, 164 SCRA 587 [1988] citing Mindanao Academy, Inc. v. Yap (13 SCRA 190 [1965]). In the
latter case, this Court held:
. . . Although the bad faith of one party neutralizes that of the other and hence as
between themselves their rights would be as if both of them had acted in good faith
at the time of the transaction, this legal fiction of Yap's good faith ceased when the
complaint against him was filed, and consequently the court's declaration of liability
for the rents thereafter is correct and proper. A possessor in good faith is entitled to
the fruits only so long as his possession is not legally interrupted, and such
interruption takes place upon service of judicial summons (Arts. 544 and 1123, Civil
Code).
A perusal of the records of the case shows that petitioner received private respondent's complaint for
forcible entry with summons on November 29, 1976 (Rollo, p. 46). His good faith therefore ceased
on November 29,1976. Accordingly, the computation of the payment of monthly rental should start
from December, 1976, instead of August, 1976.
WHEREFORE, with the modification that the computation of the monthly rental should start from
December, 1976 instead of August, 1976, the September 29, 1978 decision of respondent judge is
Affirmed in all other respects, with costs against petitioner.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Feliciano and Davide, Jr., JJ., concur.



G.R. No. 150654 December 13, 2007
HEIRS OF ANACLETO B. NIETO, namely, SIXTA P. NIETO, EULALIO P. NIETO, GAUDENCIO
P. NIETO, and CORAZON P. NIETO-IGNACIO, represented by EULALIO P. NIETO, Petitioners,
vs.
MUNICIPALITY OF MEYCAUAYAN, BULACAN, represented by MAYOR EDUARDO
ALARILLA, Respondent.
D E C I S I O N
NACHURA, J .:
This is a petition for review on certiorari of the Decision
1
of the Court of Appeals, dated October 30,
2001, which dismissed the petition for review of the Decision of the Regional Trial Court (RTC) of
Malolos, Bulacan. The latter dismissed a complaint to recover possession of a registered land on the
ground of prescription and laches.
The antecedents are as follows:
Anacleto Nieto was the registered owner of a parcel of land, consisting of 3,882 square meters,
situated at Poblacion, Meycauayan, Bulacan and covered by TCT No. T-24.055 (M). The property is
being used by respondent, Municipality of Meycauayan, Bulacan, which constructed an extension of
the public market therein.
Upon Anacletos death on July 26, 1993, his wife, Sixta P. Nieto, and their three children, namely,
Eulalio P. Nieto, Gaudencio Nieto and Corazon Nieto-Ignacio, herein petitioners, collated all the
documents pertaining to his estate. When petitioners failed to locate the owners duplicate copy of
TCT No. T-24.055 (M), they filed a petition for the issuance of a second owners copy with the RTC,
Malolos, Bulacan. In that case, petitioners discovered that the missing copy of the title was in the
possession of the respondent. Consequently, petitioners withdrew the petition and demanded from
respondent the return of property and the certificate of title.
On February 23, 1994, petitioners formally demanded from respondent the return of the possession
and full control of the property, and payment of a monthly rent with interest from January 1964.
Respondent did not comply with petitioners demand.
2

On December 28, 1994, petitioners filed a complaint
3
for recovery of possession and damages
against respondent alleging that the latter was in possession of the owners copy of TCT No. T-
24.055 (M). They averred that, in 1966, respondent occupied the subject property by making it
appear that it would expropriate the same. Respondent then used the land as a public market site
and leased the stalls therein to several persons without paying Anacleto Nieto the value of the land
or rent therefor. Petitioners prayed that respondent be ordered to surrender to them the owners
copy of TCT No. T-24.055 (M), vacate the property, and pay them the rents thereon from 1966 until
the date of the filing of the complaint for the total of P1,716,000.00, and P10,000.00 a month
thereafter, as well asP300,000.00 as moral damages, and P100,000.00 as attorneys fees.
In its Answer,
4
respondent alleged that the property was donated to it and that the action was
already time-barred because 32 years had elapsed since it possessed the property.
Respondent and counsel failed to appear during the scheduled pre-trial conference.
5
Upon
petitioners motion, respondent was declared as in default and petitioners were allowed to present
evidence ex parte. Respondent filed a motion for reconsideration which the RTC granted.
Respondent was then allowed to cross-examine petitioners lone witness and present its own
evidence. However, despite notice, respondent failed again to appear during the scheduled hearing.
Hence, the RTC considered respondent to have waived its right to cross-examine petitioners
witness and present its own evidence. The case was then submitted for decision.
On August 1, 1995, the RTC rendered a Decision dismissing the complaint as well as respondents
counterclaims for damages. For lack of proof, the RTC disregarded respondents claim that Anacleto
Nieto donated the property to it in light of the fact that the title remained in the name of Anacleto.
Nonetheless, the RTC did not rule in favor of petitioners because of its finding that the case was
already barred by prescription. It held that the imprescriptibility of actions to recover land covered by
the Torrens System could only be invoked by the registered owner, Anacleto Nieto, and that the
action was also barred by laches.
Petitioners appealed the case to the Court of Appeals (CA). On October 30, 2001, the CA rendered
a Decision dismissing the case for lack of jurisdiction. According to the CA, the petition involved a
pure question of law; hence, petitioners should have filed a petition directly with this Court.
6

Accordingly, petitioners elevated the case to this Court through a petition for review on certiorari,
raising the following issues:
A. Are lands covered by the Torrens System subject to prescription?
B. May the defense of [l]aches be invoked in this specific case?
C. May the defense of imprescriptibility only be invoked by the registered owner to the
exclusion of his legitimate heirs?
7

The petition is meritorious.
Respondent argues that the action of petitioner to recover possession of the property is already
barred by prescription.
We do not agree.
An action to recover possession of a registered land never prescribes in view of the provision of
Section 44 of Act No. 496 to the effect that no title to registered land in derogation of that of a
registered owner shall be acquired by prescription or adverse possession.
8
It follows that an action
by the registered owner to recover a real property registered under the Torrens System does not
prescribe.
Despite knowledge of this avowed doctrine, the trial court ruled that petitioners cause of action had
already prescribed on the ground that the imprescriptibility to recover lands registered under the
Torrens System can only be invoked by the person under whose name the land is registered.
Again, we do not agree. It is well settled that the rule on imprescriptibility of registered lands not only
applies to the registered owner but extends to the heirs of the registered owner as well.
9
Recently in
Mateo v. Diaz,
10
the Court held that prescription is unavailing not only against the registered owner,
but also against his hereditary successors because the latter step into the shoes of the decedent by
operation of law and are the continuation of the personality of their predecessor-in-interest. Hence,
petitioners, as heirs of Anacleto Nieto, the registered owner, cannot be barred by prescription from
claiming the property.
Aside from finding that petitioners cause of action was barred by prescription, the trial court
reinforced its dismissal of the case by holding that the action was likewise barred by laches.
Laches has been defined as the failure or neglect, for an unreasonable and unexplained length of
time, to do that which, by exercising due diligence could or should have been done earlier. It is
negligence or omission to assert a right within a reasonable time, warranting the presumption that
the party entitled to assert his right has either abandoned or declined to assert it.
11

In a number of cases, the Court has held that an action to recover registered land covered by the
Torrens System may not be barred by laches.
12
Laches cannot be set up to resist the enforcement of
an imprescriptible legal right.
13
Laches, which is a principle based on equity, may not prevail against a
specific provision of law, because equity, which has been defined as "justice outside legality," is
applied in the absence of and not against statutory law or rules of procedure.
14

In recent cases,
15
however, the Court held that while it is true that a Torrens title is indefeasible and
imprescriptible, the registered landowner may lose his right to recover possession of his registered
property by reason of laches.
Yet, even if we apply the doctrine of laches to registered lands, it would still not bar petitioners
claim. It should be stressed that laches is not concerned only with the mere lapse of time.
16
The
following elements must be present in order to constitute laches:
(1) conduct on the part of the defendant, or of one under whom he claims, giving rise to the
situation of which complaint is made for which the complaint seeks a remedy;
(2) delay in asserting the complainants rights, the complainant having had knowledge or
notice, of the defendants conduct and 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 on which he bases his suit; and
(4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or
the suit is not held to be barred.
17

We note that the certificate of title in the name of Anacleto Nieto was found in respondents
possession but there was no evidence that ownership of the property was transferred to the
municipality either through a donation or by expropriation, or that any compensation was paid by
respondent for the use of the property. Anacleto allegedly surrendered the certificate of title to
respondent upon the belief that the property would be expropriated. Absent any showing that this
certificate of title was fraudulently obtained by respondent, it can be presumed that Anacleto
voluntarily delivered the same to respondent. Anacletos delivery of the certificate of title to
respondent could, therefore, be taken to mean acquiescence to respondents plan to expropriate the
property, or a tacit consent to the use of the property pending its expropriation.
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.
18
The status of the possessor is analogous to
that of a lessee or tenant whose term of lease has expired but whose occupancy continues by
tolerance of the owner. In such case, the unlawful deprivation or withholding of possession is to be
counted from the date of the demand to vacate.
19
Upon the refusal to vacate the property, the
owners cause of action accrues.
In this case, the first element of laches occurred the moment respondent refused to vacate the
property, upon petitioners demand, on February 23, 1994. The filing of the complaint on December
28, 1994, after the lapse of a period of only ten months, cannot be considered as unreasonable
delay amounting to laches.
Moreover, case law teaches that if the claimants possession of the land is merely tolerated by its
lawful owner, the latters right to recover possession is never barred by laches. Even if it be
supposed that petitioners were aware of respondents occupation of the property, and regardless of
the length of that possession, the lawful owners have a right to demand the return of their property at
any time as long as the possession was unauthorized or merely tolerated, if at all.
20

Furthermore, the doctrine of laches cannot be invoked to defeat justice or to perpetrate fraud and
injustice. It is the better rule that courts, under the principle of equity, will not be guided or bound
strictly by the statute of limitations or the doctrine of laches when by doing so, manifest wrong or
injustice would result.
21

Finally, we find that
the rentals
being prayed for by petitioners are reasonable considering the size and location of the subject
property. Accordingly, the award of rentals is warranted.
WHEREFORE, premises considered, the petition is GRANTED. The Decision of the Regional Trial
Court of Malolos, Bulacan, dated August 1, 1995, is REVERSED and SET ASIDE. Respondent is
ORDERED (a) to vacate and surrender peaceful possession of the property to petitioners, or pay the
reasonable value of the property; (b) to payP1,716,000.00 as reasonable compensation for the use
of the property from 1966 until the filing of the complaint and P10,000.00 monthly rental thereafter
until it vacates the property, with 12% interest from the filing of the complaint until fully paid; and (c)
to return to petitioners the duplicate copy of TCT No. T-24.055 (M).
SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate Justice


G.R. No. L-30351 September 11, 1974
AUREA BAEZ and RAMON BAEZ Substituted by their legal heir, OSCAR VIRATA
BAEZ, petitioners,
vs.
COURT OF APPEALS and PIO ARCILLA, respondents.
Domingo A. Songalia for petitioners.
Arsenio R. Reyes for respondent.

ZALDIVAR, J .:p
A petition for review of the decision of the Court of Appeals in C.A. G.R. No. 36227-R (Pio Arcilla,
plaintiff-appellant, versus Aurea Baez, Ramon Baez and People's Homesite and Housing
Corporation, defendants-appellees).
The pertinent facts or the case are as follows: In 1956 respondent Pio Arcilla occupied a parcel of
land, later known as Lot 5, Block E-130 East Avenue Subdivision, Diliman, Quezon City, owned by
the People's Homesite and Housing Corporation (hereinafter referred to as PHHC). He fenced the lot
with wire, and erected a house and made some plantings thereon. His moves to apply for the
acquisition of the lot from the PHHC when the same became available for disposition came to
naught because the employees of the PHHC whose help he sought merely regaled him with
promises that the matter would be attended to. Nevertheless, his occupancy was made a matter of
record with the PHHC in connection with a census of occupants and squatters taken some time
later.
Notwithstanding respondent Arcilla's occupancy, the lot was awarded, on May 20, 1960, to Cristeta
L. Laquihon pursuant to a conditional contract to sell executed by the PHHC, subject to the standard
resolutory conditions imposed upon grants of similar nature, including the grantee's undertaking to
eject trespassers, intruders or squatters on the land, and to construct a residential house on the lot
within a period of one year from the signing of the contract, non-compliance with, which conditions
would result in the contract being "deemed annulled and cancelled". Respondent Arcilia had no
notice of this award, and neither did the grantee nor the PHHC take any step to oust him from the
premises occupied by him. It was only on April 29, 1963 that he was first required to leave the area
aforesaid.
Meanwhile, on May 9, 1962, grantee Cristeta L. Laquihon died, survived by her father, Basilio
Laquihon, who, on July 27, 1962, executed a deed of adjudication in his favor of the rights and
interests thus far acquired by his deceased daughter over the lot in question. In said deed Basilio
Laquihon also acknowledged an indebtedness of the deceased to herein petitioner Aurea V. Baez
in the sum of P3,000.00 and agreed to assign the rights thus adjudicated by way of payment of the
debt. The corresponding request for the transfer of the rights from Cristeta to Basilio L. Laquihon
was made by the latter to the PHHC on August 9, 1962, while an undated request for the approval of
the assignment of said land to Aurea V. Baez as above stated was similarly filed with the PHHC.
The PHHC referred the requests for transfer and for assignment to its Head Executive Assistant,
Olimpio N. Epis, for study. Mr. Epis. in his memorandum, opined that, because the grantee failed,
among others, to construct a residential house on the land within the period provided in the
conditional contract, the grantee's rights under the contract were forfeited and, accordingly, she did
not acquire any right which could be transmitted upon her death to her alleged successor, Basilio
Laquihon. Hence, he recommended the disapproval of the petition for transfer. It appears, however,
that the unfavorable recommendation of Mr. Epis was not acted upon by the Board of the PHHC but,
instead, was returned by the General Manager to Mr. Epis with verbal instructions to restudy the
matter. After a restudy, Mr. Epis changed his opinion, and considered the transfers from Cristeta L.
Laquihon to Basilio Laquihon, and from the latter to Aurea V. Baez, to be proper and meritorious,
and recommended the approval of the same. This was in conformity with a previous
recommendation made by PHHC's Homesite Sales Supervisor, Roman Carreaga, to the PHHC's
General Manager. On November 15, 1962, PHHC's Board of Directors adopted Resolution No. 200
approving the transfer of rights from Basilio Laquihon to Aurea V. Baez as a meritorious case. The
transfer thus approved, petitioner Aurea V. Baez continued paying the installments on the purchase
price of the land.
Respondent Pio Arcilia did not know of the foregoing developments until sometime in 1963 when he
was given notice to vacate the lot occupied by him. He then interposed a protest against the award
and transfer to petitioner Aurea V. Baez, claiming that the original awardee acquired no rights to
the aforesaid lot and that the transferee was disqualified from acquiring lots of the PHHC. Since the
PHHC's Board of Directors had theretofore approved the transfer objected to, the Administrative
Investigating Committee, to whom the protest was referred for resolution, considered itself without
any further power to review the action of the Board, and accordingly dismissed the protest. In the
meantime, petitioner Aurea V. Baez completed the installment payments on the land, and on
October 29, 1964, the PHHC executed the corresponding deed of sale over the lot in her favor.
Thus left without recourse before the PHHC, respondent Arcilla went to court with his complaint to
nullify the award of the lot in question in favor of petitioner Aurea V. Baez and to compel the PHHC
to award the same to him, with prayer for attorney's fees and costs. After trial on the merits, the
court a quo found for petitioners and accordingly decreed the dismissal of respondent's complaint,
without costs.
Respondent Arcilla appealed to the Court of Appeals, which rendered the decision sought to be
reviewed, the dispositive portion of which decision reads thus:
WHEREFORE, the judgment appealed from is hereby reversed and, in lieu thereof,
another is hereby rendered declaring null and void the transfer of rights over and
award of lot 5, Block B-130, East Avenue Subdivision of appellee PHHC, in favor of
appellee Aurea Baez and ordering appellee People's Homesite and Housing
Corporation to afford appellant Pio Arcilla the opportunity, within thirty (30) days from
the finality of this decision, to perfect his preferential right to purchase said lot and
thereafter to execute and deliver such deed and documents necessary to
consummate the sale to said appellant.
Seeking a review of the decision, petitioners filed the instant petition. During its pendency, petitioner
Ramon Baez died on March 30, 1972, and petitioner Aurea Baez also died on August 11, 1972,
and the motion to have their heir, Oscar Virata Baez, substituted for them, was granted by this
Court on October 9, 1972.
Petitioners in their Brief made assignments of error, as follows:
1. That the Court of Appeals erred in holding that the respondent Pio Arcilla has the
personality to seek the annulment of the award and sale, of Lot 5, Block E-130, East
Avenue Subdivision, Diliman, Quezon City, belonging to the PHHC, to the applicant
Cristela L. Laquihon on May 20, 1960, by PHHC, and the transfer of her rights over
the lot by her father Basilio Laquihon to the petitioner Aurea Baez in payment of the
indebtedness of Cristeta L. Laquihon to the petitioner Aurea Baez in the amount of
P3,000.00;
2. The Court of Appeals erred in holding that the respondent Pio Arcilla has a
preferential right to purchase the lot in question, lot 5, block E-130, East Avenue
Subdivision, Quezon City, of the People's Homesite and Housing Corporation;
3. That the Court of Appeals erred in holding that the award of the lot in question to
Cristeta L. Laquihon, made on May 20, 1960 was null and void, because said
awardee failed to construct a house in the lot within a period of one (1) year from the
signing of the contract to sell and, therefore, upon the death of Cristeta L. Laquihon
on May 9, 1962, she transferred no rights to her father Basilio Laquihon and said
Basilio Laquihon could not validly sell his rights of the lot in question to the
petitioners;
4. That the Court of Appeals erred in holding that the approval of the transfer of rights
of the late Cristeta L. Laquihon by her father Basilio Laquihon to the petitioner Aurea
Baez was due to the intercession of the then Senator Estanislao Fernandez; and
5. That the Court of Appeals erred in holding that the petitioners are not qualified to
acquire the lot in question for having allegedly a lot in San Juan, Rizal.
1. Article 1397 of the Civil Code provides that the action for annulment of contracts may be instituted
by all who are thereby obliged principally or subsidiarily. Hence strangers to the contract who are not
bound thereby have neither the right nor the personality to bring an action to annul such contract. It
cannot be gainsaid that respondent Pio Arcilla was a stranger to, and not bound principally or
subsidiarily by, the conditional contract to sell executed on May 20, 1960 by the PHHC in favor of
Cristeta L. Laquihon, and the transfer of rights over the same lot from Basilio Laquihon to Aurea V.
Baez. Hence respondent Pio Arcilla could not bring an action to annul the same.
There is, however, an exception to the rule laid down in Article 1397. This Court, in Teves vs.
People's Homesite and Housing Corporation, L-21498, June 27, 1968
1
citing Ibaez vs. Hongkong
and Shanghai Bank
2
, held that "a person who is not a partly obliged principally or subsidiarily in a
contract may exercise an action for nullity of the contract if he is prejudiced in his rights with respect to
one of the contracting parties, and can show the detriment which would positively result to him from the
contract in which he had no intervention." Pursuant to said doctrine, in order that respondent Pio Arcilla
might bring an action for the nullity of the contracts aforesaid, he should have been not only prejudiced in
his rights with respect to one of the contracting parties, but must have also shown the detriment which he
would positively suffer from the contracts. It becomes, therefore, necessary to inquire, whether
respondent Pio Arcilla's rights were prejudiced by the aforesaid contracts, and as to what detriment, if
any, he suffered because of those contracts.
What rights of respondent Pio Arcilla were prejudiced? The Court of Appeals found that Pio Arcilla
"makes no pretense that he entered into and built his land upon appellee PHHC's land with the
consent of the latter." Pio Arcilia was, therefore, a trespasser, or a squatter, he being a person who
settled or located on land, in closed or uninclosed with "no bona fide claim or color of title and
without consent of the owner."
3
He began his material possession of the lot in bad faith, knowing that he
did not have a right thereto, and it is presumed that his possession continued to be enjoyed in the same
character in which it was acquired, i.e. in bad faith until the contrary is proved.
4
And what right can a
squatter have to the land into which he has intruded against the owner of the land? The answer is not
hard to find, A squatter can have no possessory rights whatsoever, and his occupancy of the land is only
at the owner's sufferance, his acts are merely tolerated and cannot affect the owner's possession.
5
The
squatter is necessarily bound to an implied promise, that he will vacate upon demand.
This Court, in Bernardo et al. vs. Bernardo and Court of Appeals
6
, laid down the doctrine that:
In carrying out its social re-adjustment policies, the government could not simply lay
aside moral standards, and aim to favor usurpers, squatters, and intruders, unmindful
of the lawful or unlawful origin and character of their occupancy. Such a policy would
perpetuate conflicts instead of attaining their just solution.
Respondent Pio Arcilla, having no possessory rights whatsoever, what detriment could be have
suffered from the aforesaid contracts?
The Court of Appeals, however, held that respondent Pio Arcilia had a right to purchase the lot
occupied by him. The discussion of this alleged right brings us to the second assignment of error.
2. We find merit in petitioners' second assignment of error. Relying on the decision of the Court of
Appeals, respondent Arcilia anchored his alleged preferential right to purchase Lot 5, Block E-130 on
Resolution No. 562 of PHHC's Board of Directors, dated June 27, 1963, which reads as follows:
(1) No preference, advantage or benefit shall be given to squatters in the allocation
of PHHC residential lots by reason alone of their prior occupancy thereof, but they
shall be treated on the same footing as other qualified applicants. Squatters who are
found qualified and deserving shall be given preferential awards only in PHHC
resettlement projects, if they voluntarily comply with PHHC rules and policies without
waiting to be evicted thru court proceedings.
and on Resolution No. 558, dated April 16, 1962, which approved the recommendations of its Acting
Legal Officer. The recommendations included the proposed "Application Forms No. 6-D and No. 6-F"
for non-occupants and occupants or squatters, respectively, and provided, among others, that:
(6) The Sales and Management Department should have a ready and up-to- date
census of all lots occupied by squatters within PHHC subdivisions open for sale or
award, in order that lots occupied by squatters who are not qualified to buy the same,
or who do not merit an award shall not be awarded to anybody until the PHHC has
obtained a final court decision for the eviction of such squatter. (Exhibit 1-B).
It should not be lost sight of, however, that according to the decision of the Court of Appeals, "Time
there may have been, perhaps, when occupancy of a lot without the consent of said appellee was
not recognized at all as basis for a claim to a right to purchase said lot;" and that "on the face of the
evidence presented before us in this case, we note a clear shift in policy in the disposition of lots of
appellee PHHC," and the shift in policy was evidenced by the afore-quoted resolutions.
If the afore-quoted resolutions relied upon by respondent Arcilla were evidence of the shift of policy,
then, it stands to reason that before the adoption of said resolutions, the policy of the PHHC was
different;
otherwise
, there would have been no reason for a change of policy. Resolution No. 562 was dated June 27, 1963.
Hence the policy before June 27, 1963 was different. In fact even the Court of Appeals noted that before
said date, "occupancy of a lot" was perhaps "not recognized at all as a basis for a claim of a right to
purchase said lot." Hence at the time Lot No. 5 was awarded to Cristeta L. Laquihon on May 20, 1960,
and at the time the PHHC approved the transfer of original awardee's rights to herein petitioners on Nov.
15, 1962, it was not yet the policy of the PHHC to recognize mere occupancy of a lot as giving a right to
purchase the same, for said Policy was adopted only later, i.e. on June 27, 1963.
Moreover, it is not stated expressly in the above-quoted resolutions, and neither can it be
necessarily implied therefrom, that the occupant was given a preferential right to purchase the lot he
occupied. In fact Resolution No. 562 explicitly states that although a squatter shall be treated on the
same footing as other qualified applicants, said occupant has no preference at all by reason of said
occupancy. In the instant case, it is not even shown, although it was taken for granted, that
respondent Pio Arcilia was a qualified applicant who should be treated on the Same footing as
others. The fact is that said respondent never filed an application for the lot, so he cannot be
a qualified applicant. A squatter found to be qualified and deserving was to be given preferential
award, not necessarily to the same lot he occupies but only in PHHC resettlement projects; and it
does not appear that Lot 5, Block E-130, in question, is in a resettlement project.
Furthermore, said preferential award in resettlement projects is granted only in case the squatter is
not evicted through court proceedings. In the instant case, respondent Arcilla had been ejected from
the lot through court proceedings in Civil Case No. IV-11691 of the City Court of Quezon City. If a
squatter was given a Preferential right to the lot he occupies, how come that the same resolution No.
562 also provided that "No administrative case shall be entertained on the basis alone of a squatter's
claim of prior or actual occupancy of PHHC lot?"
We hold that the claim, of respondent Pio Arcilla to the alleged preferential right to purchase Lot 5,
Block E-130, had not been substantiated.
3. Respondent Arcilla argues that the awardee of the lot, Cristeta L. Laquihon, did not comply with
the resolutory condition of building a house; so, she acquired no rights that could be transmitted to
her father.
This Court cannot sustain respondent's stand.
This Court of Appeals stated in its decision that the contract to sell, dated May 20, 1960, executed
by the PHHC in favor of Cristeta L. Laquihon was.
Subject to the standard resolutory conditions imposed upon grants of similar nature,
including the grantee's undertaking to eject trespassers, intruders or squatters on the
land and to 'construct a residential house on the lot and shall complete the same
within a period of (1) year from the signing of this contract with no extension,' the
non-compliance with which results in the contract being 'deemed annulled and
cancelled (Exhibit 7).
Because no residential house, continued the Court of Appeals, was ever erected by the awardee on
the premises not even until she died on May 9, 1962, "she failed to comply with a condition of the
award, the non-compliance with which has a resolutory effect upon the award," such that when
Cristeta L. Laquihon died, she acquired no vested right in the land, and she transmitted nothing to
her father, Basilio Laquihon, who, on his part, could not have transferred any right to petitioners
Baez.
It is granted that by virtue of the resolutory condition, the resolution of the contract took place by
force of law and that there was no need of judicial declaration to resolve the contract. Civilists,
however, are not agreed on whether the injured party retains the option of demanding fulfillment or
rescission of the obligation as provided in Article 1191 or not. Thus Collin y Capitant, Curson
Elemental de Derecho Civil, Vol. III, p. 750 says:
En la hipotesis de una clausula del contrato que pronuncie una resolucion eventual,
hay que proclamar la validez de tal clausula en el Derecho espanol siempre que no
aparezca por sus circumstancias como contraria a la ley o a las buenas costumbres.
El efecto de tal clausula sera que la resolucion se produzca de pleno derecho, sin
intervencion judicial; pero entendemos que, a pesar de ella el acreedor conservara el
derecho de opcion que le concede el art. 1124 [Art. 1191 of the Civil Code of the
Philippines] a no ser que la clausula misma resulte otra cosa.
Manresa, in Commentaries al Codigo Civil Espanol, 1967, Vol. VIII, p. 416, however, says that the
stipulated resolution of the contract in case one of the parties does not comply with his undertaking
is produced by force of law, but the option of the injured party disappears.
If the creditor could still demand, in spite of the resolution ipso jure of the contract, then the
resolution would not be mandatory on the creditor and the resolution would produce its effect when
the creditor notified the debtor of his decision. (Tolentino, Civil Code of the Philippines, Vol. IV, p.
175.)
It is certain, therefore, that the said contract to sell in the instant case was by virtue of the stipulated
resolutory conditions resolved by operation of law. But the Court of Appeals overlooked in the instant
case the express provision of the contract to sell that said resolution becomes effective only from the
date written notice thereof is sent by the PHHC to the applicant. Thus paragraph 12 of the contract
to sell (Exhibit 7) provides:
12. Should the APPLICANT violate, refuse or fail to comply with any of the terms and
conditions stipulated herein or default in the payment of three monthly installments
as provided for in paragraph 1 hereof, this contract shall be deemed annulled and
cancelled and the CORPORATION shall be at liberty to dispose of said property to
any other person in the same manner as if the contract had never been made ... The
annulment and cancellation and the right of the CORPORATION to repossess the
property shall become effective from the date written notice thereof is sent by the
CORPORATION to the APPLICANT at his last known post-office address ...
The record does not show, and the decision of the Court of Appeals does not state, that the PHHC
ever notified in writing the awardee of the cancellation of the contract to sell. Hence, the resolution of
the contract never became effective. Consequently, whatever rights the original awardee Cristeta
Laquihon had over the disputed lot were transmitted upon her death to her only legal and
compulsory heir, her father Basilio (Art. 777, Civil Code) which rights the latter could also convey to
herein petitioners.
But even if it be assumed gratia argumenti, that the original awardee Cristeta Laquihon acquired no
vested right to the lot upon her death because of her failure to comply with the resolutory condition of
constructing a house on the lot, and the lot had to revert to the PHHC, still it cannot be denied that
the PHHC waived the effects of said resolutory condition when its Board of Directors approved, on
November 15, 1962, the transfer to Aurea Baez. In consenting to the transfer, the PHHC
necessarily waived any right that might have accrued to it by virtue of the resolution of the contract
before the transfer.
Regarding the other resolutory condition mentioned by the decision sought to be reviewed, and
emphasized by private respondent, that the original awardee did not file an action for ejectment, it is
to be noted that the awardee was not obliged to file said ejectment suit against respondent, the latter
having squatted on the land since 1956 and the award to Cristeta Laquihon having been made only
on May 20, 1960. On this matter, the Constitutional Contract to Sell (Exhibit 7) explicitly provides
that:
3. ... The applicant shall undertake the ejectment of any trespasser, intruder or
squatter who shall build on the lot or who shall deprive him of the right to possess the
same from the date of this contract.
The awardee was obliged to eject squatters 44 who shall build on the lot ... from the date of this
contract." Hence, respondent Arcilla having built his house or squatted on the land very much
before, i.e. 4 years before the land was awarded to awardee, the latter was not under contractual
obligation to eject him.
Resolution No. 558 does not require, furthermore, that the applicant for, or transferee of, a PHHC lot
should reside in Quezon City. What the Resolution requires is that he should have his "permanent
residence or principal place of work or business in Quezon City, Manila or suburbs ..." San Juan, the
address of petitioners herein, is certainly included in the term "suburbs."
4. In support of their fourth assignment of error, that the Court of Appeals erred in
holding that the approval of the transfer of the rights to the lot to petitioners was due
to the intercession of the then Senator Estanislao Fernandez, petitioners argued that
the issue of whether the letter of Senator Fernandez influenced the approval of the
transfer was not assigned as error in respondent Arcilla's brief in the Court of
Appeals, and neither was such influence alleged in the complaint, hence the Court of
Appeals could not decide said issue; and that the Board of Directors, uninfluenced by
politicians, used its discretion in approving the transfer.
Section 7 of Rule 51 of the Rules of Court provides that in order that a question may be considered
by the Court of Appeals, said question must be stated in the assignment of errors and it must be
properly argued in the brief. (Traders Insurance and Surety Co. vs. Golangco, et al., 95 Phil. 824,
830; Tan Si Kick v. Tiacho, 79 Phil. 696, 698.) We note that there were only two errors assigned in
appellant's brief in the Court of Appeals, namely: that the trial court erred in holding that (1) the claim
of plaintiff that defendant was disqualified to acquire lot 5 for she already owned lot in San Juan was
not substantiated, and (2) there was a valid perfected contract of sale between the PHHC and the
late Cristeta Laquihon, and between the PHHC and Aurea Baez and Ramon Baez, and that they
are bound by the terms and conditions thereof. Hence the alleged intercession of the then Senator
Estanislao Fernandez in the transfer of right by Basilio Laquihon to petitioners, which was not stated
in the assignment of errors and not argued in the brief, should have not been considered by the
Court of Appeals.
Moreover, the evidence on which the finding of the Court of Appeals that the PHHC accommodated
petitioners because of the intercession of whoever wrote "Exhibit C, has no evidentiary basis, for
Exhibit C was rejected by the trial court "for being immaterial, irrelevant, impertinent and not properly
identified (TSN, Nov. 4, 1964, p. 90)." The party introducing it did not even ask permission from the
Court that the same be attached to the record so that the appellate court may review the ruling of the
trial court (U.S. vs. Cabaraban, 36 Phil. 251, 253-254; Velez vs. Chaves, 50 Phil. 676, 678-679).
Evidence ruled out at the trial of the case cannot be taken into consideration in the decision, for that
would infringe the constitutional right of the adverse party to due process of law (Tinsay vs. Yusay
and Yusay, 47 Phil. 639, 643). Documents forming no part of the proofs before the appellate court
will not be considered in disposing of the issues of an action (De Castro v. Court of Appeals, 75
Phil., 824, 835, citing Dayrit v. Gonzalez, 7 Phil. 182; 5 Encyc. of Evidence, 469). Although said
letter was written on stationery bearing the letterhead of the then Senator Fernandez, it does not
conclusively follow that it was Senator Fernandez himself who wrote the letter. Even the signature of
the letter was "illegible".
But assuming that the letter was written by Senator Fernandez, it cannot be implied from the facts of
the case that the transfer of rights from Basilio Laquihon to petitioners herein was approved solely
on the strength of such letter, for the approval of the transfer was recommended as "extremely
meritorious" by the Head Executive Assistant (Exh. "2"), and by the Homesite Sales Supervisor
(Exh. F). Neither can it be said that the approval of the transfer by the Board of Directors was vitiated
by undue influence or that it was illegal. That letter, even if it was written really by Senator
Fernandez, could not destroy the free agency of the PHHC Board of Directors, and it could not have
interfered with the exercise of Board's independent discretion. This Court has already said that
solicitation, importunity, argument and persuasion are not undue influence, and a contract is not to
be set aside merely because one party used these means to obtain the consent of the others.
Influence obtained by persuasion or argument or by appeals to the affections is not prohibited either
in law or morals, and i s not obnoxious even in courts of equity. Such may be termed "due influence."
(Martinez vs. Hongkong and Shanghai Bank, 15 Phil. 252, 270.)
5. In support of their fifth assignment of error, petitioners argued that the Court of Appeals erred in
relying merely on the certification of the Municipal Treasurer of San Juan to the effect that his office
"has a record of real property holding of Ramon and Aurea Baez" consisting of a lot located at M. J.
Paterno Street and assessed at P31,190.00 under Tax Declaration No. 23804 of the land records of
said municipality, for a tax declaration is not evidence of title of property, and respondent Arcilla did
not present any other evidence to prove that petitioners are really owners of a lot in San Juan, Rizal;
that even granting that they are owners of a lot, still as maintained by the PHHC, they are not
disqualified to acquire the lot in question as they merely stepped into the shoes of the original
purchaser Cristeta Laquihon; that R. A. No. 498, relied upon by respondent in his complaint in
asserting that the award of the lot to petitioner Aurea Baez was null and void, is not applicable to
the case and could not therefore have been violated.
In the decision under review, the Court of Appeals said that to be an awardee of PHHC's lots, one
must not "already own or hold under a contract to buy residential lot or lots in any subdivision
situated in ... San Juan ... (Exhibits D-2 and Z)."
Paragraph 9 of the Conditional Contract to Sell (Exhibit 7) also provides that "any transfer that may
be authorized or permitted by the CORPORATION shall be under the condition that the transferee is
qualified to acquire a lot under the rules and regulations of the CORPORATION ..."
The sole evidence submitted by respondent Arcilla to prove that petitioners herein were disqualified
to be transferees of the lot in question was the certification of the Treasurer of San Juan (Exhibit I)
that there is a tax declaration No. 23804 of the land records of said municipality in the name of
Ramon and Aurea Baez. Said Tax declaration is insufficient to prove ownership. It has been held
anent this matter that
Assessment alone is of little value as proof of title. Mere tax declaration does not vest
ownership of the property in the declarant" (Province of Camarines Sur vs. Director
of Lands, 64 Phil. 600, 613 citing Evangelista vs. Tabayuyong, 7 Phil., 607; Casimiro
vs. Fernandez, 9 Phil., 562; Elumbaring vs. Elumbaring, 12 Phil. 384).
It is well-settled that neither tax receipts nor declaration of ownership for taxation purposes are
evidence of ownership or of the right to possess realty when not supported by other effective proofs.
(Elumbaring vs. Elumbaring, 12 Phil. 384, 388389).
It has not been proven, therefore, that petitioners herein are owners of a lot in San Juan, and
consequently disqualified to be transferees of the questioned lot.
R.A. No. 498, relied upon by herein respondent in his complaint, in asserting that the award to
petitioners was null and void, is not applicable to the instant case. Said Act authorizes cities,
municipalities and provinces to purchase and/or expropriate home sites and landed estates and
subdivide them for resale at cost, and provides in Section 3 that 14 no such lot shall be sold to any
person, who already owns a residential lot, and any sale made to such person shall be void." The
PHHC not being a city, municipality, or province, it is apparent that Act is not applicable to the instant
case.
IN VIEW OF THE FOREGOING, the decision of the Court of Appeals, dated January 9, 1969, in CA-
G. R. No. 36227-R, is set aside, and the decision of the Court of First Instance of Quezon City in
Civil Case No. Q-7679, is affirmed. Costs against respondent Pio Arcilla.
IT IS SO ORDERED.
Fernando, Barredo, Antonio and Aquino, JJ., concur.
Fernandez, J., took no part.


G.R. No. L-54526 August 25, 1986
METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, petitioner,
vs.
THE COURT OF APPEALS and THE CITY OF DAGUPAN, respondents.
Miguel T. Caguioa, Ireneo B. Orlino and Manuel D. Victorio for respondent City of Dagupan.

FERIA, J .:
This is a petition for review on certiorari of the decision of the Court of Appeals which affirmed the
decision of the then Court of First Instance of Pangasinan. The lower court had declared respondent
City of Dagupan the lawful owner of the Dagupan Waterworks System and held that the
National
Waterworks and Sewerage Authority, now petitioner Metropolitan Waterworks and Sewerage
System, was a possessor in bad faith and hence not entitled to indemnity for the useful
improvements it had introduced.
Before proceeding further, it may be necessary to invite attention to the common error of joining the
court (be it a Regional Trial Court, the Intermediate Appellate Court, or the Sandiganbayan) as a
party respondent in an appeal by certiorari to this Court under Rule 45 of the Rules of Court. The
only parties in an appeal by certiorari are the appellant as petitioner and the appellee as respondent.
(Cf. Elks Club vs. Rovira, 80 Phil. 272) The court which rendered the judgment appealed from is not
a party in said appeal. It is in the special civil action of certiorari under Section 5 of Rule 65 of the
Rules of Court where the court or judge is required to be joined as party defendant or respondent.
The joinder of the Intermediate Appellate Court or the Sandiganbayan as party respondent in an
appeal by certiorari is necessary in cases where the petitioner-appellant claims that said court acted
without or in excess of its jurisdiction or with grave abuse of discretion. An
example
of this is a case where the petitioner-appellant claims that the Intermediate Appellate Court or the
Sandiganbayan acted with grave abuse of discretion in making its findings of fact, thus justifying the
review by this court of said findings of fact. (See the exceptions to the rule of conclusiveness of the
findings of fact of the Intermediate Appellate Court or the Sandiganbayan in the case of Sacay vs.
Sandiganbayan, G.R. Nos. 66497-98, July 10, 1986.) In such a case, the petition for review on
certiorari under Rule 45 of the Rules of Court is at the same time a petition for certiorari under Rule
65, and the joinder of the Intermediate Appellate Court or the Sandiganbayan becomes necessary.
(Cf. Lianga Lumber Company vs. Lianga Timber Co., Inc., March 31, 1977, 76 SCRA 197).
The City of Dagupan (hereinafter referred to as the CITY) filed a complaint against the former
National Waterworks and Sewerage Authority (hereinafter referred to as the NAWASA), now the
Metropolitan Waterworks and Sewerage System (hereinafter referred to as MWSS), for recovery of
the ownership and possession of the Dagupan Waterworks System. NAWASA interposed as one of
its special defenses R.A. 1383 which vested upon it the ownership, possession and control of all
waterworks systems throughout the Philippines and as one of its counterclaims the reimbursement
of the expenses it had incurred for necessary and useful improvements amounting to P255,000.00.
Judgment was rendered by the trial court in favor of the CITY on the basis of a stipulation of facts.
The trial court found NAWASA to be a possessor in bad faith and hence not entitled to the
reimbursement claimed by it. NAWASA appealed to the then Court of Appeals and argued in its lone
assignment of error that the CITY should have been held liable for the amortization of the balance of
the loan secured by NAWASA for the improvement of the Dagupan Waterworks System. The
appellate court affirmed the judgment of the trial court and ruled as follows:
However, as already found above, these useful expenses were made in utter bad
faith for they were instituted after the complaint was filed and after numerous
Supreme Court decisions were promulgated declaring unconstitutional the taking by
NAWASA of the patrimonial waterworks systems of cities, municipalities and
provinces without just compensation.
Under Article 546 of the New Civil Code cited by the appellant, it is clear that a
builder or a possessor in bad faith is not entitled to indemnity for any useful
improvement on the premises. (Santos vs. Mojica, L-25450, Jan. 31, 1969). In fact,
he is not entitled to any right regarding the useful expenses (II Paras (1971) 387). He
shall not have any right whatsoever. Consequently, the owner shall be entitled to all
of the useful improvements without any obligation on his part (Jurado, Civil Law
Reviewer (1974) 223).
Petitioner-Appellant MWSS, successor-in-interest of the NAWASA, appealed to this Court raising the
sole issue of whether or not it has the right to remove all the useful improvements introduced by
NAWASA to the Dagupan Waterworks System, notwithstanding the fact that NAWASA was found to
be a possessor in bad faith. In support of its claim for removal of said useful improvements, MWSS
argues that the pertinent laws on the subject, particularly Articles 546, 547 and 549 of the Civil Code
of the Philippines, do not definitely settle the question of whether a possessor in bad faith has the
right to remove useful improvements. To bolster its claim MWSS further cites the decisions in the
cases of Mindanao Academy, Inc. vs. Yap (13 SCRA 190) and Carbonell vs. Court of Appeals (69
SCRA 99).
The CITY in its brief questions the raising of the issue of the removal of useful improvements for the
first time in this Court, inasmuch as it was not raised in the trial court, much less assigned as an
error before the then Court of Appeals. The CITY further argues that petitioner, as a possessor in
bad faith, has absolutely no right to the useful improvements; that the rulings in the cases cited by
petitioner are not applicable to the case at bar; that even assuming that petitioner has the right to
remove the useful improvements, such improvements were not actually identified, and hence a
rehearing would be required which is improper at this stage of the proceedings; and finally, that such
improvements, even if they could be identified, could not be separated without causing substantial
injury or damage to the Dagupan Waterworks System.
The procedural objection of the CITY is technically correct. NAWASA should have alleged its
additional counterclaim in the alternative-for the reimbursement of the expenses it had incurred for
necessary and useful improvements or for the removal of all the useful improvements it had
introduced.
Petitioner, however, argues that although such issue of removal was never pleaded as a
counterclaim nevertheless it was joined with the implied consent of the CITY, because the latter
never filed a counter-manifestation or objection to petitioner's manifestation wherein it stated that the
improvements were separable from the system, and
quotes
the first part of Sec. 5 of Rule 10 of the Rules of Court to support its contention. Said provision reads
as follows:
SEC. 5. Amendment to conform to or authorize presentation of evidence.-When
issues not raised by the pleadings are tried by express or implied consent of the
parties, they shall be treated in all respects, as if they had been raised in the
pleadings. Such amendment of the pleadings as may be necessary to cause them to
conform to the evidence and to raise these issues may be made upon motion of any
party at any time, even after judgment; but failure so to amend does not affect the
result of the trial of these issues. ...
This argument is untenable because the above-quoted provision is premised on the fact that
evidence had been introduced on an issue not raised by the pleadings without any objection thereto
being raised by the adverse party. In the case at bar, no evidence whatsoever had been introduced
by petitioner on the issue of removability of the improvements and the case was decided on a
stipulation of facts. Consequently, the pleadings could not be deemed amended to conform to the
evidence.
However, We shall overlook this procedural defect and rule on the main issue raised in this appeal,
to wit: Does a possessor in bad faith have the right to remove useful improvements? The answer is
clearly in the negative. Recognized authorities on the subject are agreed on this point. *
Article 449 of the Civil Code of the Philippines provides that "he who builds, plants or sows in bad
faith on the land of another, loses what is built, planted or sown without right to indemnity." As a
builder in bad faith, NAWASA lost whatever useful improvements it had made without right to
indemnity (Santos vs. Mojica, Jan. 31, 1969, 26 SCRA 703).
Moreover, under Article 546 of said code, only a possessor in good faith shall be refunded for useful
expenses with the right of retention until reimbursed; and under Article 547 thereof, only a possessor
in good faith may remove useful improvements if this can be done without damage to the principal
thing and if the person who recovers the possession does not exercise the option of reimbursing the
useful expenses. The right given a possessor in bad faith is to remove improvements applies only to
improvements for pure luxury or mere pleasure, provided the thing suffers no injury thereby and the
lawful possessor does not prefer to retain them by paying the value they have at the time he enters
into possession (Article 549, Id.).
The decision in the case of Mindanao Academy, Inc. vs. Yap (13 SCRA 190) cited by petitioner does
not support its stand. On the contrary, this Court ruled in said case that "if the defendant constructed
a new building, as he alleges, he cannot recover its value because the construction was done after
the filing of the action for annulment, thus rendering him a builder in bad faith who is denied by law
any right of reimbursement." What this Court allowed appellant Yap to remove were the equipment,
books, furniture and fixtures brought in by him, because they were outside of the scope of the
judgment and may be retained by him.
Neither may the decision in the case of Carbonell vs. Court of Appeals (69 SCRA 99), also cited by
petitioner, be invoked to modify the clear provisions of the Civil Code of the Philippines that a
possessor in bad faith is not entitled to reimbursement of useful expenses or to removal of useful
improvements.
In said case, both the trial court and the Court of Appeals found that respondents Infantes were
possessors in good faith. On appeal, the First Division of this Court reversed the decision of the
Court of Appeals and declared petitioner Carbonell to have the superior right to the land in question.
On the question of whether or not respondents Infantes were possessors in good faith four Members
ruled that they were not, but as a matter of equity allowed them to remove the useful improvements
they had introduced on the land. Justice Teehankee (now Chief Justice) concurred on the same
premise as the dissenting opinion of Justice Munoz Palma that both the conflicting buyers of the real
property in question, namely petitioner Carbonell as the first buyer and respondents Infantes as the
second buyer, may be deemed purchasers in good faith at the respective dates of their purchase.
Justice Munoz Palma dissented on the ground that since both purchasers were undoubtedly in good
faith, respondents Infantes' prior registration of the sale in good faith entitled them to the ownership
of the land. Inasmuch as only four Members concurred in ruling that respondents Infantes were
possessors in bad faith and two Members ruled that they were possessors in good faith said
decision does not establish a precedent. Moreover, the equitable consideration present in said case
are not present in the case at bar.
WHEREFORE, the decision of the appellate court is affirmed with costs against petitioner.
SO ORDERED.
Fernan, Gutierrez, Jr., Paras and Cruz, JJ., concur.
Alampay, ** J., took no part.



G.R. No. 77266 July 19, 1989
ARTHUR PAJUNAR and INVENCIA PAJUNAR, petitioners,
vs.
HON. COURT OF APPEALS, MAURO ELUNA and TEOFILA ELUNA, respondents.

PARAS, J .:
This is a petition for review on certiorari seeking to set aside the decision of the Second Division of
the Court of Appeals ** in C.A. G.R. No. SP. 02247 (UDK 7544), entitled "Arthur & Invencia Pajunar v. Hon. Pedro Gabaton, Judge,
RTC, Branch XLI, Negros Oriental, Mauro Eluna and Teofila Eluna" for Recovery of Personal Property with Writ of Replevin which affirmed
the Order of the aforenamed Regional Trial Court of Negros Oriental *** which reads:
This is a case of Recovery of Personal Property with a Writ of Replevin filed by one
Arthur and Invencia Pajunar as plaintiffs, against one Mauro and Teofila Eluna as
defendants, tried and decided by the Municipal Court of Siaton.
The decision is in favor of the defendants and against the plaintiffs apparently based
primarily on the preponderance of evidence and prescription.
Upon close reading of the exhaustive memorandum submitted by each of the parties
in this case and a close perusal of all the evidences on record and checking them
against the decision itself appealed, this court is of the opinion and so holds that the
grounds upon which this decision is based are well taken, so that there is nothing
that this court can add neither can deduct for the same conforms to the thinking of
this court.
WHEREFORE, premises considered, the appealed decision of the above-entitled
case rendered by the Municipal Court of Siaton is hereby affirmed. (Rollo, p. 9)
The facts of the case as found by public respondent Court of Appeals are as follows:
Sometime in 1969, respondent Mauro Eluna bartered his three-year old male cow for one year old
female carabao then in the possession of Aurelio Enopia. The female carabao, which is the one in
question, bore the brand "ART" in her front and hind legs at the time she was acquired by Mauro.
Although the animal was branded, said respondent did not or could not register the transfer to him.
In March, 1980, petitioner Arthur Pajunar learned that the disputed carabao was in the possession of
respondent Eluna. Claiming that he was the original owner of the carabao which got lost in 1974,
petitioner demanded her return. He demanded also the delivery to him of the two offsprings of the
carabao which were five years and eight months old at the time they were registered in 1980. When
Eluna refused to do so despite repeated demands, petitioner went to court to recover possession
(Rollo, pp. 10-11).
From the adverse order of the Regional Trial Court, plaintiff appealed to public respondent Court of
Appeals.
In its decision dated October 30, 1986, the Court of Appeals affirmed the decision of the lower court,
with appellate tribunal declaring:
Consequently, since respondent Eluna had possessed the carabao since 1969, that
is, for more than ten (10) years, he acquired ownership by prescription under Article
1132 of the Civil Code.
ART. 1132. The ownership of movables prescribes through uninterrupted possession
for four years in good faith.
The ownership of personal property also prescribes through uninterrupted
possession for eight years, without need of any other condition.
With regard to the right of the owner to recover personal property lost or of which he
has been illegally deprived, as well as with respect to movables acquired in a public
sale, fair or market, or from a merchant's store, the provisions of articles 559 and
1505 of this Code shall be observed. (1955a).
On March 23, 1987, the Court resolved, after considering the pleadings filed by both respondent and
petitioner, to give due course to the petition.
The three assignments of error raised by the petitioner (Rollo, p. 4) in this case, may be reduced to
one main issue:
Whether or not the findings of the lower court which were affirmed by the Court of
Appeals are supported by substantial evidence.
Petitioner contends that private respondent Eluna has failed to establish his ownership of the
mestisa carabao found in his possession. Since the female carabao bears the brand "ART" on the
fore and hind legs of the animal as branded by petitioners before it got lost (Rollo, p. 4), failure of
defendant Mauro Eluna to register in his name the said carabao, constitutes a flaw in his ownership
as required by law (Rollo, pp. 10-11).
Private respondents claim that the female carabao has been in their possession for more than ten
(10) years as the subject carabao was acquired by the defendants now respondents through barter
from one Aurelio Enopia in 1969. The incident was discovered by the plaintiffs only in March, 1980.
Hence respondents acquired ownership of said carabao by prescription under Article 1132 of the
Civil Code (Rollo, p. 12) as found by public respondent Court of Appeals.
The trial court's findings of facts carry great weight for having the advantage of having examined the
deportment and demeanor of the witnesses. The only exception to the rule is when the trial court
plainly overlooked certain facts and circumstances of weight and influence which, if considered, will
materially alter the result of the case (People v. Ramos, 153 SCRA 276 [1987]; People v. Camay,
152 SCRA 401 [1987]).
A careful examination of the records shows that there are circumstances of substance and value
which were overlooked and which affect the result of the case.
This can be gleaned from the decision of the Court of Appeals, when it stated:
In issuing the foregoing order, the respondent Judge apparently relied on the findings
of fact and conclusions of law made by the Municipal Court of Siaton, Negros
Oriental. Unfortunately, the decision of the Municipal Court was wanting in many
respects particularly in its findings. It failed, for instance, to make a determination of
certain factual matters which could have helped in the faster disposition of the case.
Instead of general statements explaining why he was adopting the decision of the
Municipal Court, it would have been better if the respondent Judge had made his
own finding and analysis of the evidence on record. This was called for because the
respondent Judge was acting in the exercise of the appellate jurisdiction of his
court. (Emphasis supplied) (Rollo, p. 10)
Well-settled is the rule that findings of facts of the Appellate Court are generally binding on this Court
(People v. Atanacio, 128 SCRA 22 [1984] Aguirre v. People, 155 SCRA 337 [1987]; Cue Bie v.
Intermediate Appellate Court, 154 SCRA 599 [1987]). However, there are exceptions to the general
rule that findings of facts of the Court of Appeals are binding upon the Supreme Court as when the
Court of Appeals clearly misconstrued and misapplied the law, drawn from incorrect conclusions of
fact established by evidence and
otherwise
at certain conclusions which are based on misapprehension of facts and pure conjectures, and made inferences which are manifestly
mistaken and absurd (Chase v. Buencamino, Jr., 136 SCRA 365 [1985]; Baliwag Transit,
Inc
. v. CA, 147 SCRA 82 [1987]; International Harvester, Inc. v. Joson & CA, 149 SCRA 641 [1987]; Maclan v. Santos, 156 SCRA 542 [1987];
Mendoza v. CA, 156 SCRA 597 [1987]).
From the records it is clear that although the animal was branded "ART" in her front and hind legs at
the time she was acquired by respondent Mauro, said respondent did not or could not register the
transfer to him in accordance with Section 529 of the Revised Administrative Code (Rollo, p. 11).
Section 529 of the Revised Administrative Code provides:
Registration necessary to validity of transfer. No transfer shall be valid unless the
same is registered and a certificate of transfer obtained as herein provided, but the
large cattle under two years of age may be registered and branded gratis for the
purpose of effecting a valid transfer, if the registration and transfer are made at the
same time.
The records show that respondents did not comply with this requirement (Petition, p. 2; Rollo, p. 3).
Respondents are not possessors in good faith, as a possessor in good faith is one not aware that
there exists in his title or mode of acquisition any flaw which invalidates it. Furthermore, failure of a
party to exercise precaution to acquaint himself with the defects in the title of his vendor precludes
him claiming possession in good faith (Caram v. Laureta, 103 SCRA [1981] cited in Manotok Realty,
Inc. v. Court of Appeals, 134 SCRA 325 [1985]).
This duty to make a closer inquiry into the certificate of registration of the female carabao which was
the subject of the barter, defendant Mauro Eluna should have performed but did not. Thus, his being
in bad faith, in acquiring the carabao from his vendor, Aurelio Enopia.
Thus, as has been stressed by this Court:
A purchaser cannot close his eyes to facts which should put a reasonable man upon
his guard, and then claim that he acted in good faith under the belief that there was
no defect in the title of the vendor. His mere refusal to believe that such defect exists,
or his willful closing of the 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 and it appears that he had such notice of
the defect would have led to its discovery had he acted with the measure of
precaution which may reasonably be required of a prudent man in a like situation.
(Leung Lee v. Strong, 37 Phil. 644, see also Emos v. Zusuarregui, 53 Phil. 197, cited
in Francisco v. Court of Appeals, 153 SCRA 330).
It is clear from the foregoing that possession in good faith for four (4) years is not applicable, neither
can possession in bad faith of eight (8) years benefit respondents, for when the owner of a movable
has lost or has been illegally deprived of his property he can recover the same without need to
reimburse the possessor, as provided in Art. 559 of the Civil Code which states:
Art. 559. The possession of movable property acquired in good faith is equivalent to
a title. Nevertheless, one who has lost any movable or has been unlawfully deprived
thereof, may recover it from the person in possession of the same.
If the possessor of a movable lost or of which the owner has been unlawfully
deprived, has acquired it in good faith at a public sale, the owner cannot obtain its
return without reimbursing the price paid therefor. (464a)
Neither can Art. 716 of the Civil Code apply, for this article evidently refers to a possessor in good
faith. Art. 716 say:
The owner of a swarm of bees shall have a right to pursue them to another's land,
indemnifying the possessor of the latter for the damage. If the owner has not pursued
the swarm, or ceases to do so within two consecutive days, the possessor of the land
may occupy or retain the same. The owner of domesticated animals may also claim
them within twenty days to be counted from their occupation by another person. This
period having expired, they shall pertain to him who has caught and kept them.
(612a)
PREMISES CONSIDERED, the decision of the Court of Appeals in CA-G.R. SP No. 02247 is
REVERSED and SET ASIDE and petitioners Arthur Pajunar and Invencia Pajunar are declared the
owners of the carabaos in question.
SO ORDERED.
Melencio-Herrera, (Chairperson), Padilla, Sarmiento and Regalado, JJ., concur.


G.R. No. 80298 April 26, 1990
EDCA PUBLISHING & DISTRIBUTING CORP., petitioner,
vs.
THE SPOUSES LEONOR and GERARDO SANTOS, doing business under the name and style
of "SANTOS BOOKSTORE," and THE COURT OF APPEALS, respondents.
Emiliano S. Samson, R. Balderrama-Samson, Mary Anne B. Samson for petitioner.
Cendana Santos, Delmundo & Cendana for private respondents.

CRUZ, J .:
The case before us calls for the interpretation of Article 559 of the Civil Code and raises the
particular question of when a person may be deemed to have been "unlawfully deprived" of movable
property in the hands of another. The article runs in full as follows:
Art. 559. The possession of movable property acquired in good faith is equivalent to
a title. Nevertheless, one who has lost any movable or has been unlawfully deprived
thereof, may recover it from the person in possession of the same.
If the possessor of a movable lost or of which the owner has been unlawfully
deprived has acquired it in good faith at a public sale, the owner cannot obtain its
return without reimbursing the price paid therefor.
The movable property in this case consists of books, which were bought from the petitioner by an
impostor who sold it to the private respondents. Ownership of the books was recognized in the
private respondents by the Municipal Trial Court,
1
which was sustained by the Regional Trial
Court,
2
which was in turn sustained by the Court of Appeals.
3
The petitioner asks us to declare that all
these courts have erred and should be reversed.
This case arose when on October 5, 1981, a person identifying himself as Professor Jose Cruz
placed an order by telephone with the petitioner company for 406 books, payable on
delivery.
4
EDCA prepared the corresponding invoice and delivered the books as ordered, for which Cruz
issued a personal check covering the purchase price of P8,995.65.
5
On October 7, 1981, Cruz sold 120
of the books to private respondent Leonor Santos who, after verifying the seller's ownership from the
invoice he showed her, paid him P1,700.00.
6

Meanwhile, EDCA having become suspicious over a second order placed by Cruz even before
clearing of his first check, made inquiries with the De la Salle College where he had claimed to be a
dean and was informed that there was no such person in its employ. Further verification revealed
that Cruz had no more account or deposit with the Philippine Amanah Bank, against which he had
drawn the payment check.
7
EDCA then went to
the police
, which set a trap and arrested Cruz on October 7, 1981. Investigation disclosed his real name as Tomas
de la Pea and his sale of 120 of the books he had ordered from EDCA to the private
respondents.
8

On the night of the same date, EDCA sought the assistance of the police in Precinct 5 at the UN
Avenue, which forced their way into the store of the private respondents and threatened Leonor
Santos with prosecution for buying stolen property. They seized the 120 books without warrant,
loading them in a van belonging to EDCA, and thereafter turned them over to the petitioner.
9

Protesting this high-handed action, the private respondents sued for recovery of the books after
demand for their return was rejected by EDCA. A writ of preliminary attachment was issued and the
petitioner, after initial refusal, finally surrendered the books to the private respondents.
10
As
previously stated, the petitioner was successively rebuffed in the three courts below and now hopes to
secure relief from us.
To begin with, the Court expresses its disapproval of the arbitrary action of the petitioner in taking
the law into its own hands and forcibly recovering the disputed books from the private respondents.
The circumstance that it did so with the assistance of the police, which should have been the first to
uphold legal and peaceful processes, has compounded the wrong even more deplorably. Questions
like the one at bar are decided not by policemen but by judges and with the use not of brute force
but of lawful writs.
Now to the merits
It is the contention of the petitioner that the private respondents have not established their ownership
of the disputed books because they have not even produced a receipt to prove they had bought the
stock. This is unacceptable. Precisely, the first sentence of Article 559 provides that "the possession
of movable property acquired in good faith is equivalent to a title," thus dispensing with further proof.
The argument that the private respondents did not acquire the books in good faith has been
dismissed by the lower courts, and we agree. Leonor Santos first ascertained the ownership of the
books from the EDCA invoice showing that they had been sold to Cruz, who said he was selling
them for a discount because he was in financial need. Private respondents are in the business of
buying and selling books and often deal with hard-up sellers who urgently have to part with their
books at reduced prices. To Leonor Santos, Cruz must have been only one of the many such sellers
she was accustomed to dealing with. It is hardly bad faith for any one in the business of buying and
selling books to buy them at a discount and resell them for a profit.
But the real issue here is whether the petitioner has been unlawfully deprived of the books because
the check issued by the impostor in payment therefor was dishonored.
In its extended memorandum, EDCA cites numerous cases holding that the owner who has been
unlawfully deprived of personal property is entitled to its recovery except only where the property
was purchased at a public sale, in which event its return is subject to reimbursement of the purchase
price. The petitioner is begging the question. It is putting the cart before the horse. Unlike in the
cases invoked, it has yet to be established in the case at bar that EDCA has been unlawfully
deprived of the books.
The petitioner argues that it was, because the impostor acquired no title to the books that he could
have validly transferred to the private respondents. Its reason is that as the payment check bounced
for lack of funds, there was a failure of consideration that nullified the contract of sale between it and
Cruz.
The contract of sale is consensual and is perfected once agreement is reached between the parties
on the subject matter and the consideration. According to the Civil Code:
Art. 1475. The contract of sale is perfected at the moment there is a meeting of
minds upon the thing which is the object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to the
provisions of the law governing the form of contracts.
xxx xxx xxx
Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon
the actual or constructive delivery thereof.
Art. 1478. The parties may stipulate that ownership in the thing shall not pass to the
purchaser until he has fully paid the price.
It is clear from the above provisions, particularly the last one quoted, that ownership in the thing sold
shall not pass to the buyer until full payment of the purchase only if there is a stipulation to that
effect. Otherwise, the rule is that such ownership shall pass from the vendor to the vendee upon the
actual or constructive delivery of the thing soldeven if the purchase price has not yet been paid.
Non-payment only creates a right to demand payment or to rescind the contract, or to criminal
prosecution in the case of bouncing checks. But absent the stipulation above noted, delivery of the
thing sold will effectively transfer ownership to the buyer who can in turn transfer it to another.
In Asiatic Commercial Corporation v. Ang,
11
the plaintiff sold some cosmetics to Francisco Ang, who in
turn sold them to Tan Sit Bin. Asiatic not having been paid by Ang, it sued for the recovery of the articles
from Tan, who claimed he had validly bought them from Ang, paying for the same in cash. Finding that
there was no conspiracy between Tan and Ang to deceive Asiatic the Court of Appeals declared:
Yet the defendant invoked Article 464
12
of the Civil Code providing, among other things
that "one who has been unlawfully deprived of personal property may recover it from any
person possessing it." We do not believe that the plaintiff has been unlawfully deprived of
the cartons of Gloco Tonic within the scope of this legal provision. It has voluntarily
parted with them pursuant to a contract of purchase and sale. The circumstance that the
price was not subsequently paid did not render illegal a transaction which was valid and
legal at the beginning.
In Tagatac v. Jimenez,
13
the plaintiff sold her car to Feist, who sold it to Sanchez, who sold it to
Jimenez. When the payment check issued to Tagatac by Feist was dishonored, the plaintiff sued to
recover the vehicle from Jimenez on the ground that she had been unlawfully deprived of it by reason of
Feist's deception. In ruling for Jimenez, the Court of Appeals held:
The point of inquiry is whether plaintiff-appellant Trinidad C. Tagatac has been
unlawfully deprived of her car. At first blush, it would seem that she was unlawfully
deprived thereof, considering that she was induced to part with it by reason of the
chicanery practiced on her by Warner L. Feist. Certainly, swindling, like robbery, is
an illegal method of deprivation of property. In a manner of speaking, plaintiff-
appellant was "illegally deprived" of her car, for the way by which Warner L. Feist
induced her to part with it is illegal and is punished by law. But does this "unlawful
deprivation" come within the scope of Article 559 of the New Civil Code?
xxx xxx xxx
. . . The fraud and deceit practiced by Warner L. Feist earmarks this sale as a
voidable contract (Article 1390 N.C.C.). Being a voidable contract, it is susceptible of
either ratification or annulment. If the contract is ratified, the action to annul it is
extinguished (Article 1392, N.C.C.) and the contract is cleansed from all its defects
(Article 1396, N.C.C.); if the contract is annulled, the contracting parties are restored
to their respective situations before the contract and mutual restitution follows as a
consequence (Article 1398, N.C.C.).
However, as long as no action is taken by the party entitled, either that of annulment
or of ratification, the contract of sale remains valid and binding. When plaintiff-
appellant Trinidad C. Tagatac delivered the car to Feist by virtue of said voidable
contract of sale, the title to the car passed to Feist. Of course, the title that Feist
acquired was defective and voidable. Nevertheless, at the time he sold the car to
Felix Sanchez, his title thereto had not been avoided and he therefore conferred a
good title on the latter, provided he bought the car in good faith, for value and without
notice of the defect in Feist's title (Article 1506, N.C.C.). There being no proof on
record that Felix Sanchez acted in bad faith, it is safe to assume that he acted in
good faith.
The above rulings are sound doctrine and reflect our own interpretation of Article 559 as applied to
the case before us.
Actual delivery of the books having been made, Cruz acquired ownership over the books which he
could then validly transfer to the private respondents. The fact that he had not yet paid for them to
EDCA was a matter between him and EDCA and did not impair the title acquired by the private
respondents to the books.
One may well imagine the adverse consequences if the phrase "unlawfully deprived" were to be
interpreted in the manner suggested by the petitioner. A person relying on the seller's title who buys
a movable property from him would have to surrender it to another person claiming to be the original
owner who had not yet been paid the purchase price therefor. The buyer in the second sale would
be left holding the bag, so to speak, and would be compelled to return the thing bought by him in
good faith without even the right to reimbursement of the amount he had paid for it.
It bears repeating that in the case before us, Leonor Santos took care to ascertain first that the
books belonged to Cruz before she agreed to purchase them. The EDCA invoice Cruz showed her
assured her that the books had been paid for on delivery. By contrast, EDCA was less than cautious
in fact, too trusting in dealing with the impostor. Although it had never transacted with him before,
it readily delivered the books he had ordered (by telephone) and as readily accepted his personal
check in payment. It did not verify his identity although it was easy enough to do this. It did not wait
to clear the check of this unknown drawer. Worse, it indicated in the sales invoice issued to him, by
the printed terms thereon, that the books had been paid for on delivery, thereby vesting ownership in
the buyer.
Surely, the private respondent did not have to go beyond that invoice to satisfy herself that the books
being offered for sale by Cruz belonged to him; yet she did. Although the title of Cruz was presumed
under Article 559 by his mere possession of the books, these being movable property, Leonor
Santos nevertheless demanded more proof before deciding to buy them.
It would certainly be unfair now to make the private respondents bear the prejudice sustained by
EDCA as a result of its own negligence. We cannot see the justice in transferring EDCA's loss to the
Santoses who had acted in good faith, and with proper care, when they bought the books from Cruz.
While we sympathize with the petitioner for its plight, it is clear that its remedy is not against the
private respondents but against Tomas de la Pea, who has apparently caused all this trouble. The
private respondents have themselves been unduly inconvenienced, and for merely transacting a
customary deal not really unusual in their kind of business. It is they and not EDCA who have a right
to complain.
WHEREFORE, the challenged decision is AFFIRMED and the petition is DENIED, with costs against
the petitioner.
Narvasa, Gancayco, Grio-Aquino and Medialdea, JJ., concur.



JAIME LEDESMA, Petitioner, v. THE HONORABLE COURT OF APPEALS and CITIWIDE MOTORS,
INC
., Respondents.

Ledesma, Saludo & Associates for Petitioner.

Magtanggol C. Gunigundo for Private Respondent.


SYLLABUS


1. CIVIL LAW; POSSESSION; REQUISITES TO MAKE POSSESSION OF MOVABLE PROPERTY EQUIVALENT TO
TITLE. It is quite clear that a party who (a) has lost any movable or (b) has been unlawfully deprived
thereof can recover the same from the present possessor even if the latter acquired it in good faith and has,
therefore, title thereto for under the first sentence of Article 559, such manner of acquisition is equivalent to
a title. There are three (3) requisites to make possession of movable property equivalent to title, namely:
(a) the possession should be in good faith; (b) the owner voluntarily parted with the possession of the thing;
and (c) the possession is in the concept of owner. (TOLENTINO, A.M., Civil Code of the Philippines, Vol. II,
1983 ed., 275-276, citing 2-II Colin and Capitant 942; De Buen: Ibid., 1009, 2 Salvat 165; 4 Manresa 339).
Undoubtedly, one who has lost a movable or who has been unlawfully deprived of it cannot be said to have
voluntarily parted with the possession thereof. This is the justification for the exceptions found under the
second sentence of Article 559 of the Civil Code.

2. CIVIL LAW; SPECIAL CONTRACTS; CONTRACT OF SALE; ABSENCE OF CONSIDERATION; EFFECT
THEREOF. There was a perfected unconditional contract of sale between private respondent and the
original vendee. The former voluntarily caused the transfer of the certificate of registration of the vehicle in
the name of the first vendee even if the said vendee was represented by someone who used a fictitious
name and likewise voluntarily delivered the cars and the certificate of registration to the vendees alleged
representative Title thereto was forthwith transferred to the vendee. The subsequent dishonor of the check
because of the alteration merely amounted to a failure of consideration which does not render the contract
of sale void, but merely allows the prejudiced party to sue for specific performance or rescission of the
contract, and to prosecute the impostor for estafa under Article 315 of the Revised Penal Code.


D E C I S I O N


DAVIDE, JR., J.:


Petitioner impugns the Decision of 22 September 1988 of respondent Court of Appeals 1 in C.A.-G.R. CV No.
05955 2 reversing the decision of then Branch XVIII-B (Quezon City) of the then Court of First Instance
(now Regional Trial Court) of Rizal in a replevin case, Civil Case No. Q-24200, the dispositive portion of
which reads:chanroblesvirtualawli brary

"Accordingly, the Court orders the plaintiff to return the repossessed Isuzu Gemini, 1977 Model vehicle,
subject of this case to the defendant Ledesma. The incidental claim (sic) for damages professed by the
plaintiff are dismissed for lack of merit. On defendants counterclaim, Court (sic) makes no pronouncement
as to any form of damages, particularly, moral, exemplary and nominal in view of the fact that Citiwide has
a perfect right to litigate its claim, albeit by this pronouncement, it did not succeed." 3

which was supplemented by a Final Order dated 26 June 1980, the dispositive portion of which reads:jgc:chanrobles.com.ph

"IN VIEW OF THE FOREGOING, the Court grants defendant Ledesma the sum of P35,000.00 by way of actual
damages recoverable upon plaintiffs replevin bond. Plaintiff and its surety, the Rizal Surety and Insurance
Co., are hereby ordered jointly and severally to pay defendant Jaime Ledesma the sum of P10,000.00 as
damages for the wrongful issue of the writ of seizure, in line with Rule 57, Sec. 20, incorporated in Rule 60,
Sec. 10.

In conformity with the rules adverted to, this final order shall form part of the judgment of this Court on
September 5, 1979.

The motion for reconsideration of the judgment filed by the plaintiff is hereby DENIED for lack of merit. No
costs at this instance." 4

The decision of the trial court is anchored on its findings that (a) the proof on record is not persuasive
enough to show that defendant, petitioner herein, knew that the vehicle in question was the object of a
fraud and a swindle 5 and (b) that plaintiff, private respondent herein, did not rebut or contradict Ledesmas
evidence that valuable consideration was paid for it.

The antecedent facts as summarized by the respondent Court of Appeals are as follows:jgc:chanrobles.com.ph

"On September 27, 1977, a person representing himself to be Jojo Consunji, purchased purportedly for his
father, a certain Rustico T. Consunji, two (2) brand new motor vehicles from plaintiff-appellant Citiwide
Motors, Inc., more particularly described as follows:chanrobles lawl ibrary : rednad

a) One (1) 1977 Isuzu Gemini, 2-door Model PF 50ZIK, with Engine No. 751214 valued at P42,200.00; and

b) One (1) 1977 Holden Premier Model 8V41X with Engine No. 198-1251493, valued at P58,800.00.

Said purchases are evidenced by Invoices Nos. 3054 and 3055, respectively. (See Annexes A and B).

On September 28, 1977, plaintiff-appellant delivered the two-above described motor vehicles to the person
who represented himself as Jojo Consunji, allegedly the son of the purported buyers Rustico T. Consunji,
and said person in turn issued to plaintiff-appellant Managers Check No. 066-110-0638 of the Philippine
Commercial and Industrial Bank dated September 28, 1977 for the amount of P101,000.00 as full payment
of the value of the two (2) motor vehicles.

However, when plaintiff-appellant deposited the said check, it was dishonored by the bank on the ground
that it was tampered with, the correct amount of P101.00 having been raised to P101,000.00 per the banks
notice of dishonor (Annexes F and G).

On September 30, 1977, plaintiff-appellant reported to the Philippine Constabulary the criminal act
perpetrated by the person who misrepresented himself as Jojo Consunji and in the course of the
investigation, plaintiff-appellant learned that the real identity of the wrongdoer/impostor is Armando Suarez
who has a long line of criminal cases against him for estafa using this similar modus operandi.

On October 17, 1977, plaintiff-appellant was able to recover the Holden Premier vehicle which was found
abandoned somewhere in Quezon City.

On the other hand, plaintiff-appellant learned that the 1977 Isuzu Gemini was transferred by Armando
Suarez to third persona and was in the possession of one Jaime Ledesma at the time plaintiff-appellant
instituted this action for replevin on November 16, 1977.

In his defense, Jaime Ledesma claims that he purchases (sic) and paid for the subject vehicle in good faith
from its registered owner, one Pedro Neyra, as evidenced by the Land Transportation Commission
Registration Certificate No. RCO1427249.chanrobles.com. ph : virtual law l ibrary

After posting the necessary bond in the amount double the value of the subject motor vehicle, plaintiff-
appellant was able to recover possession of the 1977 Isuzu Gemini as evidenced by the Sheriffs Return
dated January 23, 1978." 6

After trial on the merits, the lower court rendered the decision and subsequently issued the Final Order both
earlier adverted to, which plaintiff (private respondent herein) appealed to the respondent Court of Appeals;
it submitted the following assignment of errors:jgc:chanrobles. com.ph

"The trial court erred.
I


IN HOLDING THAT THE DEFENDANT IS ENTITLED TO THE POSSESSION OF THE CAR;
II


IN HOLDING THAT THE DEFENDANT IS AN INNOCENT PURCHASER IN GOOD FAITH AND FOR VALUE;
III


IN RULING THAT THE PLAINTIFF SHOULD RETURN THE CAR TO DEFENDANT, DISMISSING ITS CLAIM FOR
DAMAGES, AND GRANTING DEFENDANT P35,000.00 DAMAGES RECOVERABLE AGAINST THE REPLEVIN
BOND AND P101,000.00 DAMAGES FOR ALLEGED WRONGFUL SEIZURE;
IV


IN RENDERING THE DECISION DATED SEPTEMBER 3, 1979 AND THE FINAL ORDER DATED JUNE 26, 1980."
7

In support of its first and second assigned errors, private respondent cites Article 559 of the Civil Code
which provides:jgc: chanrobles.com.ph

"ARTICLE 559. The possession of movable property acquired in good faith is equivalent to a title.
Nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may recover it from
the person in possession of the same.

If the possessor of a movable lost or of which the owner has been unlawfully deprived, has acquired it in
good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor."cralaw virtua1aw
library

Without in any way reversing the findings of the trial court that herein petitioner was a buyer in good faith
and for valuable consideration, the respondent Court ruled that:chanroblesvi rtualawlibrary

"Under Article 559, Civil Code, the rule is to the effect that if the owner has lost a thing, or if he has been
unlawfully deprived of it, he has a right to recover it not only from the finder, thief or robber, but also from
third persons who may have acquired it in good faith from such finder, thief or robber. The said article
establishes two (2) exceptions to the general rule of irrevendicability (sic), to wit: when the owner (1) has
lost the thing, or (2) has been unlawfully deprived thereof. In these cases, the possessor cannot retain the
thing as against the owner who may recover it without paying any indemnity, except when the possessor
acquired it in a public sale. (Aznar v. Yapdiangco, 13 SCRA 486).

Put differently, where the owner has lost the thing or has been unlawfully deprived thereof, the good faith of
the possessor is not a bar to recovery of the movable unless the possessor acquired it in a public sale of
which there is no pretense in this case. Contrary to the court a assumption, the issue is not primarily the
good faith of Ledesma for even if this were true, this may not be invoked as a valid defense, if it be shown
that Citiwide was unlawfully deprived of the vehicle.

In the case of Dizon v. Suntay, 47 SCRA 160, the Supreme Court had occasion to define the phrase
unlawfully deprived, to wit:chanrob1e s virtual 1aw li brary

. . . it extends to all cases where there has been no valid transmission of ownership including depositary or
lessee who has sold the same. It is believed that the owner in such a case is undoubtedly unlawfully
deprived of his property and may recover the same from a possessor in good faith.
x x x


In the case at bar, the person who misrepresented himself to be the son of the purported buyer, Rustico T.
Consunji, paid for the two (2) vehicles using a check whose amount has been altered from P101.00 to
P101,000.00. There is here a case of estafa. Plaintiff was unlawfully deprived of the vehicle by false
pretenses executed simultaneously with the commission of fraud (Art. 315 2(a) R.P.C.). Clearly, Citiwide
would not have parted with the two (2) vehicles were it not for the false representation that the check
issued in payment thereupon (sic) is in the amount of P101,000.00, the actual value of the two (2)
vehicles." 8

In short, said buyer never acquired title to the property; hence, the Court rejected the claim of herein
petitioner that at least, Armando Suarez had a voidable title to the property.

His motion for reconsideration having been denied in the resolution of the respondent Court of 12 December
1988, 9 petitioner filed this petition alleging therein that:chanrobles virtualawli brary chanrobles.com: chanrobles.com.ph

"A

THE HONORABLE COURT OF APPEALS ERRED IN APPLYING ARTICLE 559 OF THE NEW CIVIL CODE TO THE
INSTANT CASE DESPITE THE FACT THAT PRIVATE RESPONDENT CITIWIDE MOTORS, INC. WAS NOT
UNLAWFULLY DEPRIVED OF THE SUBJECT CAR, AS IN FACT CITIWIDE VOLUNTARILY PARTED WITH THE
TITLE AND POSSESSION OR (sic) THE SAME IN FAVOR OF ITS IMMEDIATE TRANSFEREE.
B


THE FACTUAL MILIEU OF THE INSTANT CASE FALLS WITHIN THE OPERATIVE EFFECTS OF ARTICLES 1505
AND 1506 OF THE NEW CIVIL CODE CONSIDERING THAT THE IMMEDIATE TRANSFEREE OF THE PRIVATE
RESPONDENT CITIWIDE MOTORS, INC., ACQUIRED A VOIDABLE TITLE OVER THE CAR IN QUESTION WHICH
TITLE WAS NOT DECLARED VOID BY A COMPETENT COURT PRIOR TO THE ACQUISITION BY THE
PETITIONER OF THE SUBJECT CAR AND ALSO BECAUSE PRIVATE RESPONDENT, BY ITS OWN CONDUCT, IS
NOW PRECLUDED FROM ASSAILING THE TITLE AND POSSESSION BY THE PETITIONER OF THE SAID CAR."
10

There is merit in the petition. The assailed decision must be reversed.

The petitioner successfully proved that he acquired the car in question from his vendor in good faith and for
valuable consideration. According to the trial court, the private respondents evidence was not persuasive
enough to establish that petitioner had knowledge that the car was the object of a fraud and a swindle and
that it did not rebut or contradict petitioners evidence of acquisition for valuable consideration. The
respondent Court concedes to such findings but postulates that the issue here is not whether petitioner
acquired the vehicle in that concept but rather, whether private respondent was unlawfully deprived of it so
as to make Article 559 of the Civil Code apply.

It is quite clear that a party who (a) has lost any movable or (b) has been unlawfully deprived thereof can
recover the same from the present possessor even if the latter acquired it in good faith and has, therefore,
title thereto for under the first sentence of Article 559, such manner of acquisition is equivalent to a title.
There are three (3) requisites to make possession of movable property equivalent to title, namely: (a) the
possession should be in good faith; (b) the owner voluntarily parted with the possession of the thing; and
(c) the possession is in the concept of owner. 11

Undoubtedly, one who has lost a movable or who has been unlawfully deprived of it cannot be said to have
voluntarily parted with the possession thereof. This is the justification for the exceptions found under the
second sentence of Article 559 of the Civil Code.

The basic issue then in this case is whether private respondent was unlawfully deprived of the cars when it
sold the same to Rustico Consunji, through a person who claimed to be Jojo Consunji, allegedly the latters
son, but who nevertheless turned out to be Armando Suarez, on the faith of a Managers Check with a face
value of P101,000.00, dishonored for being altered, the correct amount being only P101.00.chanrobles vi rtual lawlibrary

Under this factual milieu, the respondent Court was of the opinion, and thus held, that private respondent
was unlawfully deprived of the car by false pretenses.

We disagree. There was a perfected unconditional contract of sale between private respondent and the
original vendee. The former voluntarily caused the transfer of the certificate of registration of the vehicle in
the name of the first vendee even if the said vendee was represented by someone who used a fictitious
name and likewise voluntarily delivered the cars and the certificate of registration to the vendees alleged
representative Title thereto was forthwith transferred to the vendee. The subsequent dishonor of the check
because of the alteration merely amounted to a failure of consideration which does not render the contract
of sale void, but merely allows the prejudiced party to sue for specific performance or rescission of the
contract, and to prosecute the impostor for estafa under Article 315 of the Revised Penal Code. This is the
rule enunciated in EDCA Publishing and Distributing Corp. v. Santos, 12 the facts of which do not materially
and substantially differ from those obtaining in the instant case. In said case, a person identifying himself as
Professor Jose Cruz, dean of the De la Salle College, placed an order by telephone with petitioner for 406
books, payable upon delivery. Petitioner agreed, prepared the corresponding invoice and delivered the books
as ordered, for which Cruz issued a personal check covering the purchase price. Two (2) days later, Cruz
sold 120 books to private respondent Leonor Santos who, after verifying the sellers ownership from the
invoice the former had shown her, paid the purchase price of P1,700.00. Petitioner became suspicious over
a second order placed by Cruz even before his first check had cleared, hence, it made inquiries with the De
la Salle College. The latter informed the petitioner that Cruz was not in its employ. Further verification
revealed that Cruz had no more account or deposit with the bank against which he drew the check.
Petitioner sought the assistance of
the police
which then set a trap and arrested Cruz. Investigation disclosed his real name, Tomas de la Pea, and his
sale of 120 of the books to Leonor Santos. On the night of the arrest; the policemen whose assistance the
petitioner sought, forced their way into the store of Leonor and her husband, threatened her with
prosecution for the buying of stolen property, seized the 120 books without a warrant and thereafter turned
said books over to the petitioner. The Santoses then sued for recovery of the books in the Municipal Trial
Court which decided in their favor; this decision was subsequently affirmed by the Regional Trial Court and
sustained by the Court of Appeals. Hence, the petitioner came to this Court by way of a petition for review
wherein it insists that it was unlawfully deprived of the books because as the check bounced for lack of
funds, there was failure of consideration that nullified the contract of sale between it and the impostor who
then acquired no title over the books. We rejected said claim in this wise:jgc: chanrobles. com.ph

"The contract of sale is consensual and is perfected once agreement is reached between the parties on the
subject matter and the consideration. According to the Civil Code:chanrob1es virtual 1aw l ibrary

ART. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing
which is the object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to the provisions of the law
governing the form of contracts.chanrobles. com : virtual law l ibrary
x x x


ART. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or
constructive delivery thereof.

ART. 1478. The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has
fully paid the price.

It is clear from the above provisions, particularly the last one quoted, that ownership in the thing sold shall
not pass to the buyer until full payment of the purchase price only if there is a stipulation to that effect.
Otherwise, the rule is that such ownership shall pass from the vendor to the vendee upon the actual or
constructive delivery of the thing sold even if the purchase price has not yet been paid.

Non-payment only creates a right to demand payment or to rescind the contract, or to criminal prosecution
in the case of bouncing checks. But absent the stipulation above noted, delivery of the thing sold will
effectively transfer ownership to the buyer who can in turn transfer it to another." 13

In the early case of Chua Hai v. Hon. Kapunan, 14 one Roberto Soto purchased from the Youngstown
Hardware, owned by private respondent, corrugated galvanized iron sheets and round iron bars for
P6,137.70, in payment thereof, he issued a check drawn against the Security Bank and Trust Co. without
informing Ong Shu that he (Soto) had no sufficient funds in said bank to answer for the same. In the
meantime, however, Soto sold the sheets to, among others, petitioner Chua Hai. In the criminal case filed
against Soto, upon motion of the offended party, the respondent Judge ordered petitioner to return the
sheets which were purchased from Soto. Petitioners motion for reconsideration having been denied, he
came to this Court alleging grave abuse of discretion and excess of jurisdiction. In answer to the petition, it
is claimed that inter alia, even if the property was acquired in good faith, the owner who has been unlawfully
deprived thereof may recover it from the person in possession of the same unless the property was acquired
in good faith at a public sale. 15 Resolving this specific issue, this Court ruled that Ong Shu was not illegally
deprived of the possession of the property:jgc:chanrobles.com.ph

". . . It is not denied that Ong Shu delivered the sheets to Soto upon a perfected contract of sale, and such
delivery transferred title or ownership to the purchaser. Says Art. 1496:chanrob1es virtual 1aw l ibrary

Art. 1496. The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him
in any of the ways specified in articles 1497 to 1501, or in any other manner signifying an agreement that
the possession is transferred from the vendor to the vendee. (C.C.)

The failure of the buyer to make good the price does not, in law, cause the ownership to revest in the seller
until and unless the bilateral contract of sale is first rescinded or resolved pursuant to Article 1191 of the
new Civil Code.chanrobles lawlibrary : rednad

And, assuming that the consent of Ong Shu to the sale in favor of Soto was obtained by the latter through
fraud or deceit, the contract was not thereby rendered void ab initio, but only voidable by reason of the
fraud, and Article 1390 expressly provides that:chanrob1es vi rtual 1aw library

ART. 1390. The following contracts are voidable or annullable, even though there may have been no
damage to the contracting parties:chanrob1es virtual 1aw library

(1) Those where one of the parties is incapable of giving consent to a contract;

(2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.

These contracts are binding, unless they are annulled by a proper action in court. They are susceptible of
ratification.

Agreeably to this provision, Article 1506 prescribes:chanrob1es vi rtual 1aw li brary

ARTICLE 1506. Where the seller of goods has a voidable title thereto, but his title has not been avoided at
the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith, for
value, and without notice of the sellers defect of title. (C.C.)

Hence, until the contract of Ong Shu with Soto is set aside by a competent court (assuming that the fraud is
established to its satisfaction), the validity of appellants claim to the property in question can not be
disputed, and his right to the possession thereof should be respected." 16

It was therefore erroneous for the respondent Court to declare that the private respondent was illegally
deprived of the car simply because the check in payment therefor was subsequently dishonored; said Court
also erred when it divested the petitioner, a buyer in good faith who paid valuable consideration therefor, of
his possession thereof.chanrobles virtualawli brary chanrobles.com: chanrobles. com.ph

WHEREFORE, the challenged decision of the respondent Court of Appeals of 22 September 1988 and its
Resolution of 12 December 1988 in C.A.-G.R. CV No. 05955 are hereby SET ASIDE and the Decision of the
trial court of 3 September 1979 and its Final Order of 26 June 1980 in Civil Case No. Q-24200 are hereby
REINSTATED, with costs against private respondent Citiwide Motors, Inc.

SO ORDERED.

Gutierrez, Jr., Bidin and Romero, JJ., concur.

Feliciano, J., is on leave.




G.R. No. L-20264 January 30, 1971
CONSUELO S. DE GARCIA and ANASTACIO GARCIA, petitioners,
vs.
HON. COURT OF APPEALS, ANGELINA D. GUEVARA and JUAN B. GUEVARA, respondents.
Deogracias T. Reyes and Jose M. Luison for petitioners.
Tolentino and Garcia and D.R. Cruz for private respondents.

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

How the defendant, Consuelo S. de Garcia, the present petitioner before us, along with her husband
Anastacio Garcia, sought to meet plaintiff's claim was narrated thus: "On the other hand, defendant
denied having made any admission before plaintiff or Mr. Rebullida or the sheriff. Her evidence
tends to show that the ring (Exhibit 1) was purchased by her from Mrs. Miranda who got it from Miss
Angelita Hinahon who in turn got it from the owner, Aling Petring, who was boarding in her house;
that the ring she bought could be similar to, but not the same ring plaintiff purchased from Mr.
Rebullida which was stolen; that according to a pawn-shop owner the big diamond on Exhibit 1 was
before the trial never dismantled. When dismantled, defendant's diamond was found to weigh 2.57
cts."
3

Plaintiff lost in the lower court. She elevated the matter to respondent Court of Appeals with the
judgment of the lower court being reversed. It is this decision now under review.
These are the facts as found by respondent Court of Appeals: "That the ring brought by the parties
for examination by Rafael Rebullida on December 14, 1953 was the same ring purchased by plaintiff
from R. Rebullida, Inc. on October 27, 1947 and stolen in February, 1952 has been abundantly
established by plaintiff's evidence. Before plaintiff lost the ring, she had been wearing it for six years
and became familiar with it. Thus, when she saw the missing ring in the finger of defendant, she
readily and definitely identified it. Her identification was confirmed by Mr. Rafael Rebullida, whose
candid testimony is entitled to great weight, with his 30 years experience behind him in the jewelry
business and being a disinterested witness since both parties are his customers. Indeed, defendant
made no comment when in her presence Rebullida after examining the ring and stock card told
plaintiff that that was her ring, nor did she answer plaintiff's letter of demand, ... asserting ownership.
Further confirmation may be found in the extra-judicial admissions, contained in defendant's original
and first amended answers ..."
4

These further facts likewise appeal therein: "The foregoing proof is not counter-balanced by the
denial on the part of defendant or the presentation of the ring, Exhibit I, which has a diamond-
solitaire 2.57 cts., or much heavier than the lost diamond weighing 2.05 cts. only. It is noteworthy
that defendant gave a rather dubious source of her ring. Aling Petring from whom the ring
supposedly came turned out to be a mysterious and ephemeral figure. Miss Hinahon did not even
know her true and full name, nor her forwarding address. She appeared from nowhere, boarded
three months in the house of Miss Hinahon long enough to sell her diamond ring, disappearing from
the scene a week thereafter. Indeed, the case was terminated without any hearing on the third-party
and fourth-party complaints, which would have shown up the falsity of defendant's theory. Moreover,
Mrs. Baldomera Miranda, third-party defendant, who tried to corroborate defendant on the latter's
alleged attempt to exchange the ring defendant bought through her, is [belied] by her judicial
admission in her Answer that appellee `suggested that she would make alterations to the mounting
and structural design of the ring to hide the true identity and appearance of the original one'
(Cunanan vs. Amparo, 45 O.G. 3796). Finally, defendant is refuted by her own extra-judicial
admissions ... although made by defendant's counsel. For an attorney who acts as counsel of record
and is permitted to act such, has the authority to manage the cause, and this includes the authority
to make admission for the purpose of the litigation... Her proffered explanation that her counsel
misunderstood her is puerile because the liability to error as to the identity of the vendor and the
exchange of the ring with another ring of the same value, was rather remote."
5

It is in the light of the above facts as well as the finding that the discrepancy as to the weight
between the diamond-solitaire in Exhibit I and the lost diamond was due to defendant having
"substituted a diamond-solitaire of plaintiff with a heavier stone" that the decision was rendered,
respondent Court reversing the lower court and ordering defendant, now petitioner Consuelo S. de
Garcia, to return plaintiff's ring or fact value of P1,000.00 and costs, as well as to pay plaintiff
P1,000.00 as attorney's fee and P1,000.00 as exemplary damages. Hence this appeal.
To repeat, there is no occasion to reverse respondent Court. It correctly applied the law to the facts
as found.
1. The controlling provision is Article 559 of the Civil Code. It reads thus: "The possession of
movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any
movable or has been unlawfully deprived thereof may recover it from the person in possession of the
same. If the possessor of a movable lost of which the owner has been unlawfully deprived, has
acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the
price paid therefor." Respondent Angelina D. Guevara, having been unlawfully deprived of the
diamond ring in question, was entitled to recover it from petitioner Consuelo S. de Garcia who was
found in possession of the same. The only exception the law allows is when there is acquisition in
good faith of the possessor at a public sale, in which case the owner cannot obtain its return without
reimbursing the price. As authoritative interpreted in Cruz v. Pahati,
6
the right of the owner cannot be
defeated even by proof that there was good faith by the acquisition by the possessor. There is a
reiteration of this principle in Aznar v. Yapdiangco.
7
Thus: "Suffice it to say in this regard that the right of
the owner to recover personal property acquired in good faith by another, is based on his being
dispossessed without his consent. The common law principle that where one of two innocent persons
must suffer by a fraud perpetrated by the another, the law imposes the loss upon the party who, by his
misplaced confidence, has enabled the fraud to be committed, cannot be applied in a case which is
covered by an express provision of the new Civil Code, specifically Article 559. Between a common law
principle and statutory provision, the latter must prevail in this jurisdiction."
8

2. It is thus immediately apparent that there is no merit to the contention raised in the first assigned
error that her possession in good faith, equivalent to title, sufficed to defeat respondent Guevara's
claim. As the above cases demonstrate, even on that assumption the owner can recover the same
once she can show illegal deprivation. Respondent Court of Appeals was so convinced from the
evidence submitted that the owner of the ring in litigation is such respondent. That is a factual
determination to which we must pay heed. Instead of proving any alleged departure from legal
norms by respondent Court, petitioner would stress Article 541 of the Civil Code, which provides: 'A
possessor in the concept of owner has in his favor the legal presumption that he possesses with a
just title and he cannot be obliged to show or prove it." She would accord to it a greater legal
significance than that to which under the controlling doctrines it is entitled.lwph1. t The brief for respondents
did clearly point out why petitioner's assertion is lacking in support not only from the cases but even
from commentators. Thus: "Actually, even under the first clause, possession in good faith does not
really amount to title, for the reason that Art. 1132 of the Code provides for a period of acquisitive
prescription for movables through `uninterrupted possession for four years in good faith' (Art. 1955 of
the old Spanish Code, which provided a period of three years), so that many Spanish writers,
including Manresa, Sanchez Roman, Scaevola, De Buen, and Ramos, assert that under Art. 464 of
the Spanish Code (Art. 559 of the New Civil Code), the title of the possessor is not that of ownership,
but is merely a presumptive title sufficient to serve as a basis of acquisitive prescription (II Tolentino,
Civil Code of the Phil. p. 258: IV Manresa, Derecho Civil Espaol, 6th Ed., p. 380). And it is for the
very reason that the title established by the first clause of Art. 559 is only a presumptive title
sufficient to serve as a basis for acquisitive prescription, that the clause immediately following
provides that `one who has lost any movable or has been unlawfully deprived thereof, may recover it
from the person in possession of the same.' As stated by the Honorable
Justice
Jose B. L. Reyes of this Court in Sotto vs. Enage (C.A.), 43 Off. Gaz. 5075, Dec. 1947: `Article 559 in
fact assumes that possessor is as yet not the owner; for it is obvious that where the possessor has come
to acquire indefeasible title by, let us say, adverse possession for the necessary period, no proof of loss
or illegal deprivation could avail the former owner of the chattel. He would no longer be entitled to recover
it under any condition.' "
9

The second assigned error is centered on the alleged failure to prove the identity of the diamond
ring. Clearly the question raised is one of the fact. What the Court of Appeals found is conclusive.
Again, petitioner could not demonstrate that in reaching such a conclusion the Court of Appeals
acted in an arbitrary manner. As made mention of in the brief for respondents two disinterested
witnesses, Mr. Rafael Rebullida as well as Lt. Col. Reynaldo Cementina of the Pasay City Police
Department, both of whom could not be accused of being biased in favor of respondent Angelina D.
Guevara, did testify as to the identity of the ring.
The third assigned error of petitioners would find fault with respondent Court relying "on the
weakness of the title or evidence" of petitioner Consuelo S. de Garcia. It is true, in the decision
under review, mention was made of petitioner Consuelo S. de Garcia making no comment when in
her presence Rebullida, after examining the ring the stock card, told respondent Angelina L.
Guevara that that was her ring, nor did petitioner answer a letter of the latter asserting ownership. It
was likewise stated in such decision that there were extra-judicial admissions in the original and first
amended answers of petitioner. In the appraisal of her testimony, respondent Court likewise spoke
of her giving a rather dubious source of her ring, the person from whom she allegedly bought it
turning out "to be a mysterious and ephemeral figure." As a matter of fact, as set forth a few pages
back, respondent Court did enumerate the flaws in the version given by petitioner. From the
weakness of the testimony offered which, as thus made clear, petitioner, did not even seek to refute,
she would raise the legal question that respondent Court relied on the "weakness of [her] title or
evidence" rather than on the proof justifying respondent Angelina D. Guevara's claim of ownership.
Petitioner here would ignore the finding of fact of respondent Court that such ownership on her part
"has been abundantly established" by her evidence. Again here, in essence, the question raised is
one of fact, and there is no justification for us to reverse respondent Court.
The legal question raised in the fourth assignment of error is that the matter of the substitution of the
diamond on the ring was a question raised for the first time on appeal as it was never put in issue by
the pleadings nor the subject of reception of evidence by both parties and not touched upon in the
decision of the lower court. Why no such question could be raised in the pleadings of respondent
Angelina D. Guevara was clarified by the fact that the substitution came after it was brought for
examination to Mr. Rebullida. After the knowledge of such substitution was gained, however, the
issue was raised at the trial according to the said respondent resulting in that portion of the decision
where the lower court reached a negative conclusion. As a result, in the motion for reconsideration,
one of the points raised as to such decision being contrary to the evidence is the finding that there
was no substitution. It is not necessary to state that respondent Court, exercising its appellate power
reversed the lower court. What was held by it is controlling. What is clear is that there is no factual
basis for the legal arguments on which the fourth assigned error is predicated.
What is said takes care of the fifth assigned error that respondent Court was mistaken in its finding
that there was such a substitution. Again petitioner would have us pass on a question of credibility
which is left to respondent Court of Appeals. The sixth assigned error would complain against the
reversal of the lower court judgment as well as petitioner Consuelo S. de Garcia being made to pay
respondent Angelina D. Guevara exemplary damages, attorney's fees and costs. The reversal is
called for in the light of the appraisal of the evidence of record as meticulously weighed by
respondent Court. As to the attorney's fees and exemplary damages, this is what respondent Court
said in the decision under review: "Likewise, plaintiff is entitled to recover reasonable attorney's fees
in the sum of P1,000, it being just and equitable under the circumstances, and another P1,000 as
exemplary damages for the public good to discourage litigants from resorting to fraudulent devices to
frustrate the ends of justice, as defendant herein tried to substitute the ring, Exhibit 1, for plaintiff's
ring."
10
Considering the circumstances, the cursory discussion of the sixth assigned error on the matter
by petitioner fails to demonstrate that respondent Court's actuation is blemished by legal defects.
WHEREFORE, the decision of respondent Court of Appeals of August 6, 1962 is hereby affirmed.
With costs.



G.R. No. L-30817 September 29, 1972
DOMINADOR DIZON, doing business under the firm name "Pawnshop of Dominador
Dizon", petitioner,
vs.
LOURDES G. SUNTAY, respondent.
Andres T. Velarde for petitioner.
Rafael G. Suntay for respondent.

FERNANDO, J .:p
In essence there is nothing novel in this petition for review of a decision of the Court of Appeals
affirming a lower court judgment sustaining the right of an owner of a diamond ring, respondent
Lourdes G. Suntay, as against the claim of petitioner Dominador Dizon, who owns and operates a
pawnshop. The diamond ring was turned over to a certain Clarita R. Sison, for sale on commission,
along with other pieces of jewelry of respondent Suntay. It was then pledged to petitioner. Since
what was done was violative of the terms of the agency, there was an attempt on her part to recover
possession thereof from petitioner, who refused. She had to file an action then for its recovery. She
was successful, as noted above, both in the lower court and thereafter in the Court of Appeals. She
prevailed as she had in her favor the protection accorded by Article 559 of the Civil
Code.
1
The matter was then elevated to us by petitioner. Ordinarily, our discretion would have been
exercised against giving due course to such petition for review. The vigorous plea however, grounded on
estoppel, by his counsel, Atty. Andres T. Velarde, persuaded us to act
otherwise
. After a careful perusal of the respective contentions of the parties, we fail to perceive any sufficient
justification for a departure from the literal language of the applicable codal provision as uniformly
interpreted by this Court in a number of decisions. The invocation of estoppel is therefore unavailing. We
affirm.
The statement of the case as well as the controlling facts may be found in the Court of Appeals
decision penned by Justice
Perez
. Thus: "Plaintiff is the owner of a three-carat diamond ring valued at P5,500.00. On June 13, 1962, the
plaintiff and Clarita R. Sison entered into a transaction wherein the plaintiff's ring was delivered to Clarita
R. Sison for sale on commission. Upon receiving the ring, Clarita R. Sison executed and delivered to the
plaintiff the receipt ... . The plaintiff had already previously known Clarita R. Sison as the latter is a close
friend of the plaintiff's cousin and they had frequently met each other at the place of the plaintiff's said
cousin. In fact, about one year before their transaction of June 13, 1962 took place, Clarita R. Sison
received a piece of jewelry from the plaintiff to be sold for P500.00, and when it was sold, Clarita R. Sison
gave the price to the plaintiff. After the lapse of a considerable time without Clarita R. Sison having
returned to the plaintiff the latter's ring, the plaintiff made demands on Clarita R. Sison for the return of her
ring but the latter could not comply with the demands because, without the knowledge of the plaintiff, on
June 15, 1962 or three days after the ring above-mentioned was received by Clarita R. Sison from the
plaintiff, said ring was pledged by Melia Sison, niece of the husband of Clarita R. Sison, evidently in
connivance with the latter, with the defendant's pawnshop for P2,600.00 ... ."
2
Then came this portion of
the decision under review: "Since the plaintiff insistently demanded from Clarita R. Sison the return of her
ring, the latter finally delivered to the former the pawnshop ticket ... which is the receipt of the pledge with
the defendant's pawnshop of the plaintiff's ring. When the plaintiff found out that Clarita R. Sison pledged,
she took steps to file a case of estafa against the latter with the fiscal's office. Subsequently thereafter,
the plaintiff, through her lawyer, wrote a letter ... dated September 22, 1962, to the defendant asking for
the delivery to the plaintiff of her ring pledged with defendant's pawnshop under pawnshop receipt serial-
B No. 65606, dated June 15, 1962 ... . Since the defendant refused to return the ring, the plaintiff filed the
present action with the Court of First Instance of Manila for the recovery of said ring, with P500.00 as
attorney's fees and costs. The plaintiff asked for the provisional remedy of replevin by the delivery of the
ring to her, upon her filing the requisite bond, pending the final determination of the action. The lower
court issued the writ of replevin prayed for by plaintiff and the latter was able to take possession of the
ring during the pendency of the action upon her filing the requisite bond."
3
It was then noted that the
lower court rendered judgment declaring that plaintiff, now respondent Suntay, had the right to the
possession of the ring in question. Petitioner Dizon, as defendant, sought to have the judgment reversed
by the Court of Appeals. It did him no good. The decision of May 19, 1969, now on review, affirmed the
decision of the lower court.
In the light of the facts as thus found by the Court of Appeals, well-nigh conclusive on use, with the
applicable law being what it is, this petition for review cannot prosper. To repeat, the decision of the
Court of Appeals stands.
1. There is a fairly recent restatement of the force and effect of the governing codal norm in De
Gracia v. Court of Appeals.
4
Thus: "The controlling provision is Article 559 of the Civil Code. It reads
thus: 'The possession of movable property acquired in good faith is equivalent to a title. Nevertheless,
one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in
possession of the same. If the possessor of a movable lost of which the owner has been unlawfully
deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without
reimbursing the price paid therefor.' Respondent Angelina D. Guevara, having been unlawfully deprived
of the diamond ring in question, was entitled to recover it from petitioner Consuelo S. de Garcia who was
found in possession of the same. The only exception the law allows is when there is acquisition in good
faith of the possessor at a public sale, in which case the owner cannot obtain its return without
reimbursing the price. As authoritatively interpreted in Cruz v. Pahati, the right of the owner cannot be
defeated even by proof that there was good faith in the acquisition by the possessor. There is a reiteration
of this principle in Aznar v. Yapdiangco. Thus: 'Suffice it to say in this regard that the right of the owner to
recover personal property acquired in good faith by another, is based on his being dispossessed without
his consent. The common law principle that were one of two innocent persons must suffer by a fraud
perpetrated by another, the law imposes the loss upon the party who, by his misplaced confidence, has
enabled the fraud to be committed, cannot be applied in a case which is covered by an express provision
of the new Civil Code, specifically Article 559. Between a common law principle and a statutory provision,
the latter must prevail in this jurisdiction." "
5

2. It must have been a recognition of the compulsion exerted by the above authoritative precedents
that must have caused petitioner to invoke the principle of estoppel. There is clearly a
misapprehension. Such a contention is devoid of any persuasive force.
Estoppel as known to the Rules of Court
6
and prior to that to the Court of Civil Procedure,
7
has its roots
in equity. Good faith is its basis.
8
It is a response to the demands of moral right and natural justice.
9
For
estoppel to exist though, it is indispensable that there be a declaration, act or omission by the party who
is sought to be bound. Nor is this all. It is equally a requisite that he, who would claim the benefits of such
a principle, must have altered his position, having been so intentionally and deliberately led to comport
himself thus, by what was declared or what was done or failed to be done. If thereafter a litigation arises,
the former would not be allowed to disown such act, declaration or omission. The principle comes into full
play. It may successfully be relied upon. A court is to see to it then that there is no turning back on one's
word or a repudiation of one's act. So it has been from our earliest decisions. As Justice Mapa pointed out
in the first case, a 1905 decision, Rodriguez v. Martinez,
10
a party should not be permitted "to go against
his own acts to the prejudice of [another]. Such a holding would be contrary to the most rudimentary
principles of justice and law."
11
He is not, in the language of Justice Torres, in Irlanda v.
Pitargue,
12
promulgated in 1912, "allowed to gainsay [his] own acts or deny rights which [he had]
previously recognized."
13
Some of the later cases are to the effect that an unqualified and unconditional
acceptance of an agreement forecloses a claim for interest not therein provided.
14
Equally so the
circumstance that about a month after the date of the conveyance, one of the parties informed the other
of his being a minor, according to Chief Justice Paras, "is of no moment, because [the former's] previous
misrepresentation had already estopped him from disavowing the contract.
15
It is easily understandable
why, under the circumstances disclosed, estoppel is a frail reed to hang on to. There was clearly the
absence of an act or omission, as a result of which a position had been assumed by petitioner, who if
such elements were not lacking, could not thereafter in law be prejudiced by his belief in what had been
misrepresented to him.
16
As was put by Justice Labrador, "a person claimed to be estopped must have
knowledge of the fact that his voluntary acts would deprive him of some rights because said voluntary
acts are inconsistent with said rights."
17
To recapitulate, there is this pronouncement not so long ago,
from the pen of Justice Makalintal, who reaffirmed that estoppel "has its origin in equity and, being based
on moral right and natural justice, finds applicability wherever and whenever the special circumstances of
a case so demand."
18

How then can petitioner in all seriousness assert that his appeal finds support in the doctrine of
estoppel? Neither the promptings of equity nor the mandates of moral right and natural justice come
to his rescue. He is engaged in a business where presumably ordinary prudence would manifest
itself to ascertain whether or not an individual who is offering a jewelry by way of a pledge is entitled
to do so. If no such care be taken, perhaps because of the difficulty of resisting opportunity for profit,
he should be the last to complain if thereafter the right of the true owner of such jewelry should be
recognized. The law for this sound reason accords the latter protection. So it has always been
since Varela v.
Finnick,
19
a 1907 decision. According to Justice Torres: "In the present case not only has the ownership
and the origin of the jewels misappropriated been unquestionably proven but also that the accused,
acting fraudulently and in bad faith, disposed of them and pledged them contrary to agreement, with no
right of ownership, and to the prejudice of the injured party, who was thereby illegally deprived of said
jewels; therefore, in accordance with the provisions of article 464, the owner has an absolute right to
recover the jewels from the possession of whosoever holds them, ... ."
20
There have been many other
decisions to the same effect since then. At least nine may be cited.
21
Nor could any other outcome be
expected, considering the civil code provisions both in the former Spanish legislation
22
and in the present
Code.
23
Petitioner ought to have been on his guard before accepting the pledge in question. Evidently
there was no such precaution availed of. He therefore, has only himself to blame for the fix he is now in. It
would be to stretch the concept of estoppel to the breaking point if his contention were to prevail.
Moreover, there should have been a realization on his part that courts are not likely to be impressed with
a cry of distress emanating from one who is in a business authorized to impose a higher rate of interest
precisely due to the greater risk assumed by him. A predicament of this nature then does not suffice to
call for less than undeviating adherence to the literal terms of a codal provision. Moreover, while the
activity he is engaged in is no doubt legal, it is not to be lost sight of that it thrives on taking advantage of
the necessities precisely of that element of our population whose lives are blighted by extreme poverty.
From whatever angle the question is viewed then, estoppel certainly cannot be justly invoked.
WHEREFORE, the decision of the Court of Appeals of May 19, 1969 is affirmed, with costs against
petitioner.
Concepcion, C.J., Zaldivar, Makasiar, Antonio and Esguerra, JJ., concur.
Makalintal and Barredo, JJ., took no part.
Castro, J., reserves his vote.



G.R. No. L-18536 March 31, 1965
JOSE B. AZNAR, plaintiff-appellant,
vs.
RAFAEL YAPDIANGCO, defendant-appellee;
TEODORO SANTOS, intervenor-appellee.
Florentino M. Guanlao for plaintiff-appellant.
Rafael Yapdiangco in his own behalf as defendant-appellee.
Lorenzo Sumulong, R. B. Hilao and B. S. Felipe for intervenor-appellee.
REGALA, J .:
This is an appeal, on purely legal questions, from a decision of the Court of First Instance of Quezon
City, Branch IV, declaring the intervenor-appellee, Teodoro Santos, entitled to the possession of the
car in dispute.
The records before this Court disclose that sometime in May, 1959, Teodoro Santos advertised in
two metropolitan papers the sale of his FORD FAIRLANE 500. In the afternoon of May 28, 1959, a
certain L. De Dios, claiming to be a nephew of Vicente Marella, went to the Santos residence to
answer the ad. However, Teodoro Santos was out during this call and only the latter's son, Irineo
Santos, received and talked with De Dios. The latter told the young Santos that he had come in
behalf of his uncle, Vicente Marella, who was interested to buy the advertised car.
On being informed of the above, Teodoro Santos instructed his son to see the said Vicente Marella
the following day at his given address: 1642 Crisostomo Street, Sampaloc, Manila. And so, in the
morning of May 29, 1959, Irineo Santos went to the above address. At this meeting, Marella agreed
to buy the car for P14,700.00 on the understanding that the price would be paid only after the car
had been registered in his name.
Irineo Santos then fetched his father who, together with L. De Dios, went to the office of a certain
Atty. Jose Padolina where the deed of the sale for the car was executed in Marella's favor. The
parties to the contract thereafter proceeded to the Motor Vehicles Office in Quezon City where the
registration of the car in Marella's name was effected. Up to this stage of the transaction, the
purchased price had not been paid.
From the Motor Vehicles Office, Teodoro Santos returned to his house. He gave the registration
papers and a copy of the deed of sale to his son, Irineo, and instructed him not to part with them until
Marella shall have given the full payment for the car. Irineo Santos and L. De Dios then proceeded to
1642 Crisostomo Street, Sampaloc, Manila where the former demanded the payment from Vicente
Marella. Marella said that the amount he had on hand then was short by some P2,000.00 and
begged off to be allowed to secure the shortage from a sister supposedly living somewhere on
Azcarraga Street, also in Manila. Thereafter, he ordered L. De Dios to go to the said sister and
suggested that Irineo Santos go with him. At the same time, he requested the registration papers
and the deed of sale from Irineo Santos on the pretext that he would like to show them to his lawyer.
Trusting the good faith of Marella, Irineo handed over the same to the latter and thereupon, in the
company of L. De Dios and another unidentified person, proceeded to the alleged house of Marella's
sister.
At a place on Azcarraga, Irineo Santos and L. De Dios alighted from the car and entered a house
while their unidentified companion remained in the car. Once inside, L. De Dios asked Irineo Santos
to wait at the sala while he went inside a room. That was the last that Irineo saw of him. For, after a
considerable length of time waiting in vain for De Dios to return, Irineo went down to discover that
neither the car nor their unidentified companion was there anymore. Going back to the house, he
inquired from a woman he saw for L. De Dios and he was told that no such name lived or was even
known therein. Whereupon, Irineo Santos rushed to 1642 Crisostomo to see Marella. He found the
house closed and Marella gone. Finally, he reported the matter to his father who promptly advised
the police
authorities.
That very same day, or on the afternoon of May 29, 1959 Vicente Marella was able to sell the car in
question to the plaintiff-appellant herein, Jose B. Aznar, for P15,000.00. Insofar as the above
incidents are concerned, we are bound by the factual finding of the trial court that Jose B. Aznar
acquired the said car from Vicente Marella in good faith, for a valuable consideration and without
notice of the defect appertaining to the vendor's title.
While the car in question was thus in the possession of Jose B. Aznar and while he was attending to
its registration in his name, agents of the Philippine Constabulary seized and confiscated the same
in consequence of the report to them by Teodoro Santos that the said car was unlawfully taken from
him.
In due time, Jose B. Aznar filed a complaint for replevin against Captain Rafael Yapdiangco, the
head of the Philippine Constabulary unit which seized the car in question Claiming ownership of the
vehicle, he prayed for its delivery to him. In the course of the litigation, however, Teodoro Santos
moved and was allowed to intervene by the lower court.
At the end of the trial, the lower court rendered a decision awarding the disputed motor vehicle to the
intervenor-appellee, Teodoro Santos. In brief, it ruled that Teodoro Santos had been unlawfully
deprived of his personal property by Vicente Marella, from whom the plaintiff-appellant traced his
right. Consequently, although the plaintiff-appellant acquired the car in good faith and for a valuable
consideration from Vicente Marella, the said decision concluded, still the intervenor-appellee was
entitled to its recovery on the mandate of Article 559 of the New Civil Code which provides:
ART. 559. The possession of movable property acquired in good faith is equivalent to title.
Nevertheless, one who lost any movable or has been unlawfully deprived thereof, may
recover it from the person in possession of the same.
If the possessor of a movable lost or of which the owner has been unlawfully deprived, has
acquired it in good faith at a public sale, the owner cannot obtain its return without
reimbursing the price paid therefor.
From this decision, Jose B. Aznar appeals.
The issue at bar is one and simple, to wit: Between Teodoro Santos and the plaintiff-appellant, Jose
B. Aznar, who has a better right to the possession of the disputed automobile?
We find for the intervenor-appellee, Teodoro Santos.
The plaintiff-appellant accepts that the car in question originally belonged to and was owned by the
intervenor-appellee, Teodoro Santos, and that the latter was unlawfully deprived of the same by
Vicente Marella. However, the appellant contends that upon the facts of this case, the applicable
provision of the Civil Code is Article 1506 and not Article 559 as was held by the decision under
review. Article 1506 provides:
ART. 1506. Where the seller of goods has a voidable title thereto, but his, title has not been
voided at the time of the sale, the buyer acquires a good title to the goods, provided he buys
them in good faith, for value, and without notice of the seller's defect of title.
The contention is clearly unmeritorious. Under the aforequoted provision, it is essential that the seller
should have a voidable title at least. It is very clearly inapplicable where, as in this case, the seller
had no title at all.
Vicente Marella did not have any title to the property under litigation because the same was never
delivered to him. He sought ownership or acquisition of it by virtue of the contract. Vicente Marella
could have acquired ownership or title to the subject matter thereof only by the delivery or tradition of
the car to him.
Under Article 712 of the Civil Code, "ownership and other real rights over property are acquired and
transmitted by law, by donation, by testate and intestate succession, and in consequence of certain
contracts, by tradition." As interpreted by this Court in a host of cases, by this provision, ownership is
not transferred by contract merely but by tradition or delivery. Contracts only constitute titles or rights
to the transfer or acquisition of ownership, while delivery or tradition is the mode of accomplishing
the same (Gonzales v. Rojas, 16 Phil. 51; Ocejo,
Perez
and Co. v. International Bank, 37 Phil. 631, Fidelity and Deposit Co. v. Wilson, 8 Phil. 51;
Kuenzle & Streiff v. Wacke & Chandler, 14 Phil. 610; Easton v. Diaz Co., 32 Phil. 180).
For the legal acquisition and transfer of ownership and other property rights, the thing
transferred must be delivered, inasmuch as, according to settled jurisprudence, the tradition
of the thing is a necessary and indispensable requisite in the acquisition of said ownership by
virtue of contract. (Walter Laston v. E. Diaz & Co. & the Provincial Sheriff of Albay, supra.)
So long as property is not delivered, the ownership over it is not transferred by contract
merely but by delivery. Contracts only constitute titles or rights to the transfer or acquisition
of ownership, while delivery or tradition is the method of accomplishing the same, the title
and the method of acquiring it being different in our law. (Gonzales v. Roxas, 16 Phil. 51)
In the case on hand, the car in question was never delivered to the vendee by the vendor as to
complete or consummate the transfer of ownership by virtue of the contract. It should be recalled
that while there was indeed a contract of sale between Vicente Marella and Teodoro Santos, the
former, as vendee, took possession of the subject matter thereof by stealing the same while it was in
the custody of the latter's son.
There is no adequate evidence on record as to whether Irineo Santos voluntarily delivered the key to
the car to the unidentified person who went with him and L. De Dios to the place on Azcarraga
where a sister of Marella allegedly lived. But even if Irineo Santos did, it was not the delivery
contemplated by Article 712 of the Civil Code. For then, it would be indisputable that he turned it
over to the unidentified companion only so that he may drive Irineo Santos and De Dios to the said
place on Azcarraga and not to vest the title to the said vehicle to him as agent of Vicente Marella.
Article 712 above contemplates that the act be coupled with the intent of delivering the thing. (10
Manresa 132)
The lower court was correct in applying Article 559 of the Civil Code to the case at bar, for under it,
the rule is to the effect that if the owner has lost a thing, or if he has been unlawfully deprived of it,
he has a right to recover it, not only from the finder, thief or robber, but also from third persons who
may have acquired it in good faith from such finder, thief or robber. The said article establishes two
exceptions to the general rule of irrevindicability, to wit, when the owner (1) has lost the thing, or (2)
has been unlawfully deprived thereof. In these cases, the possessor cannot retain the thing as
against the owner, who may recover it without paying any indemnity, except when the possessor
acquired it in a public sale. (Del Rosario v. Lucena, 8 Phil. 535; Varela v. Finnick, 9 Phil. 482; Varela
v. Matute, 9 Phil. 479; Arenas v. Raymundo, 19 Phil. 46. Tolentino, id., Vol. II, p. 261.)
In the case of Cruz v. Pahati, et al., 52 O.G. 3053 this Court has already ruled
that
Under Article 559 of the new Civil Code, a person illegally deprived of any movable may
recover it from the person in possession of the same and the only defense the latter may
have is if he has acquired it in good faith at a public sale, in which case, the owner cannot
obtain its return without reimbursing the price paid therefor. In the present case, plaintiff has
been illegally deprived of his car through the ingenious scheme of defendant B to enable the
latter to dispose of it as if he were the owner thereof. Plaintiff, therefore, can still recover
possession of the car even if it is in the possession of a third party who had acquired it in
good faith from defendant B. The maxim that "no man can transfer to another a better title
than he had himself" obtains in the civil as well as in the common law. (U.S. v. Sotelo, 28
Phil. 147)
Finally, the plaintiff-appellant here contends that inasmuch as it was the intervenor-appellee who had
caused the fraud to be perpetrated by his misplaced confidence on Vicente Marella, he, the
intervenor-appellee, should be made to suffer the consequences arising therefrom, following the
equitable principle to that effect. Suffice it to say in this regard that the right of the owner to recover
personal property acquired in good faith by another, is based on his being dispossessed without his
consent. The common law principle that where one of two innocent persons must suffer by a fraud
perpetrated by another, the law imposes the loss upon the party who, by his misplaced confidence,
has enabled the fraud to be committed, cannot be applied in a case which is covered by an express
provision of the new Civil Code, specifically Article 559. Between a common law principle and a
statutory provision, the latter must prevail in this jurisdiction. (Cruz v. Pahati, supra)
UPON ALL THE FOREGOING, the instant appeal is hereby dismissed and the decision of the lower
court affirmed in full. Costs against the appellant.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Makalintal,
Bengzon, J.P., and Zaldivar, JJ., concur.