[G.R. No. 148830.

April 13, 2005]

NATIONAL HOUSING AUTHORITY, petitioner, vs. COURT OF APPEALS, BULACAN
GARDEN CORPORATION and MANILA SEEDLING BANK FOUNDATION,
INC., respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review [1] seeking to set aside the Decision [2] dated 30 March
2001 of the Court of Appeals (appellate court) in CA-G.R. CV No. 48382, as well as its
Resolution dated 25 June 2001 denying the motion for reconsideration. The appellate
court reversed the Decision[3] of Branch 87 of the Regional Trial Court of Quezon City
(trial court) dated 8 March 1994 in Civil Case No. Q-53464. The trial court dismissed the
complaint for injunction filed by Bulacan Garden Corporation (BGC) against the National
Housing Authority (NHA). BGC wanted to enjoin the NHA from demolishing BGCs
facilities on a lot leased from Manila Seedling Bank Foundation, Inc. (MSBF). MSBF
allegedly has usufructuary rights over the lot leased to BGC.
Antecedent Facts
On 24 October 1968, Proclamation No. 481 issued by then President Ferdinand
Marcos set aside a 120-hectare portion of land in Quezon City owned by the NHA [4] as
reserved property for the site of the National Government Center (NGC). On 19
September 1977, President Marcos issued Proclamation No. 1670, which removed a
seven-hectare portion from the coverage of the NGC. Proclamation No. 1670 gave
MSBF usufructuary rights over this segregated portion, as follows:
Pursuant to the powers vested in me by the Constitution and the laws of the Philippines, I,
FERDINAND E. MARCOS, President of the Republic of the Philippines, do hereby exclude
from the operation of Proclamation No. 481, dated October 24, 1968, which established the
National Government Center Site, certain parcels of land embraced therein and reserving the
same for the Manila Seedling Bank Foundation, Inc., for use in its operation and
projects, subject to private rights if any there be, and to future survey, under the
administration of the Foundation.
This parcel of land, which shall embrace 7 hectares, shall be determined by the future survey
based on the technical descriptions found in Proclamation No. 481, and most particularly on the

original survey of the area, dated July 1910 to June 1911, and on the subdivision survey dated
April 19-25, 1968. (Emphasis added)
MSBF occupied the area granted by Proclamation No. 1670. Over the years,
MSBFs occupancy exceeded the seven-hectare area subject to its usufructuary rights.
By 1987, MSBF occupied approximately 16 hectares. By then the land occupied by
MSBF was bounded by Epifanio de los Santos Avenue (EDSA) to the west, Agham
Road to the east, Quezon Avenue to the south and a creek to the north.
On 18 August 1987, MSBF leased a portion of the area it occupied to BGC and
other stallholders. BGC leased the portion facing EDSA, which occupies 4,590 square
meters of the 16-hectare area.
On 11 November 1987, President Corazon Aquino issued Memorandum Order No.
127 (MO 127) which revoked the reserved status of the 50 hectares, more or less,
remaining out of the 120 hectares of the NHA property reserved as site of the National
Government Center. MO 127 also authorized the NHA to commercialize the area and to
sell it to the public.
On 15 August 1988, acting on the power granted under MO 127, the NHA gave
BGC ten days to vacate its occupied area. Any structure left behind after the expiration
of the ten-day period will be demolished by NHA.
BGC then filed a complaint for injunction on 21 April 1988 before the trial court. On
26 May 1988, BGC amended its complaint to include MSBF as its co-plaintiff.
The Trial Courts Ruling
The trial court agreed with BGC and MSBF that Proclamation No. 1670 gave MSBF
the right to conduct the survey, which would establish the seven-hectare area covered
by MSBFs usufructuary rights. However, the trial court held that MSBF failed to act
seasonably on this right to conduct the survey. The trial court ruled that the previous
surveys conducted by MSBF covered 16 hectares, and were thus inappropriate to
determine the seven-hectare area. The trial court concluded that to allow MSBF to
determine the seven-hectare area now would be grossly unfair to the grantor of the
usufruct.
On 8 March 1994, the trial court dismissed BGCs complaint for injunction. Thus:
Premises considered, the complaint praying to enjoin the National Housing Authority from
carrying out the demolition of the plaintiffs structure, improvements and facilities in the premises

in question is hereby DISMISSED, but the suggestion for the Court to rule that Memorandum
Order 127 has repealed Proclamation No. 1670 is DENIED. No costs.
SO ORDERED.[5]
The NHA demolished BGCs facilities soon thereafter.
The Appellate Courts Ruling
Not content with the trial courts ruling, BGC appealed the trial courts Decision to the
appellate court. Initially, the appellate court agreed with the trial court that Proclamation
No. 1670 granted MSBF the right to determine the location of the seven-hectare area
covered by its usufructuary rights. However, the appellate court ruled that MSBF did in
fact assert this right by conducting two surveys and erecting its main structures in the
area of its choice.
On 30 March 2001, the appellate court reversed the trial courts ruling. Thus:
WHEREFORE, premises considered, the Decision dated March 8, 1994 of the Regional Trial
Court of Quezon City, Branch 87, is hereby REVERSED and SET ASIDE. The National
Housing Authority is enjoined from demolishing the structures, facilities and improvements of
the plaintiff-appellant Bulacan Garden Corporation at its leased premises located in Quezon City
which premises were covered by Proclamation No. 1670, during the existence of the contract of
lease it (Bulacan Garden) had entered with the plaintiff-appellant Manila Seedling Bank
Foundation, Inc.
No costs.
SO ORDERED.[6]
The NHA filed a motion for reconsideration, which was denied by the appellate court
on 25 June 2001.
Hence, this petition.
The Issues
The following issues are considered by this Court for resolution:
WHETHER THE PETITION IS NOW MOOT BECAUSE OF THE DEMOLITION OF
THE STRUCTURES OF BGC; and

WHETHER THE PREMISES LEASED BY BGC FROM MSBF IS WITHIN THE

SEVEN-HECTARE AREA THAT PROCLAMATION NO. 1670 GRANTED TO
MSBF BY WAY OF USUFRUCT.
The Ruling of the Court
We remand this petition to the trial court for a joint survey to determine finally the
metes and bounds of the seven-hectare area subject to MSBFs usufructuary rights.
Whether the Petition is Moot because of the
Demolition of BGCs Facilities
BGC claims that the issue is now moot due to NHAs demolition of BGCs facilities
after the trial court dismissed BGCs complaint for injunction. BGC argues that there is
nothing more to enjoin and that there are no longer any rights left for adjudication.
We disagree.
BGC may have lost interest in this case due to the demolition of its premises, but
its co-plaintiff, MSBF, has not. The issue for resolution has a direct effect on MSBFs
usufructuary rights. There is yet the central question of the exact location of the sevenhectare area granted by Proclamation No. 1670 to MSBF. This issue is squarely raised
in this petition. There is a need to settle this issue to forestall future disputes and to put
this 20-year litigation to rest.
On the Location of the Seven-Hectare Area Granted by
Proclamation No. 1670 to MSBF as Usufructuary
Rule 45 of the 1997 Rules of Civil Procedure limits the jurisdiction of this Court to
the review of errors of law.[7] Absent any of the established grounds for exception, [8] this
Court will not disturb findings of fact of lower courts. Though the matter raised in this
petition is factual, it deserves resolution because the findings of the trial court and the
appellate court conflict on several points.
The entire area bounded by Agham Road to the east, EDSA to the west, Quezon
Avenue to the south and by a creek to the north measures approximately 16 hectares.
Proclamation No. 1670 gave MSBF a usufruct over only a seven-hectare area. The
BGCs leased portion is located along EDSA.

A usufruct may be constituted for a specified term and under such conditions as the
parties may deem convenient subject to the legal provisions on usufruct. [9] A
usufructuary may lease the object held in usufruct. [10] Thus, the NHA may not evict BGC
if the 4,590 square meter portion MSBF leased to BGC is within the seven-hectare area
held in usufruct by MSBF. The owner of the property must respect the lease entered into
by the usufructuary so long as the usufruct exists. [11] However, the NHA has the right to
evict BGC if BGC occupied a portion outside of the seven-hectare area covered by
MSBFs usufructuary rights.
MSBFs survey shows that BGCs stall is within the seven-hectare area. On the other
hand, NHAs survey shows otherwise. The entire controversy revolves on the question
of whose land survey should prevail.
MSBFs survey plots the location of the seven-hectare portion by starting its
measurement from Quezon Avenue going northward along EDSA up until the creek,
which serves as the northern boundary of the land in question. Mr. Ben Malto (Malto),
surveyor for MSBF, based his survey method on the fact that MSBFs main facilities are
located within this area.
On the other hand, NHAs survey determines the seven-hectare portion by starting
its measurement from Quezon Avenue going towards Agham Road. Mr. Rogelio
Inobaya (Inobaya), surveyor for NHA, based his survey method on the fact that he saw
MSBFs gate fronting Agham Road.
BGC presented the testimony of Mr. Lucito M. Bertol (Bertol), General Manager of
MSBF. Bertol presented a map,[12] which detailed the area presently occupied by MSBF.
The map had a yellow-shaded portion, which was supposed to indicate the sevenhectare area. It was clear from both the map and Bertols testimony that MSBF knew
that it had occupied an area in excess of the seven-hectare area granted by
Proclamation No. 1670.[13] Upon cross-examination, Bertol admitted that he personally
did not know the exact boundaries of the seven-hectare area. [14] Bertol also admitted
that MSBF prepared the map without consulting NHA, the owner of the property.[15]
BGC also presented the testimony of Malto, a registered forester and the Assistant
Vice-President of Planning, Research and Marketing of MSBF. Malto testified that he
conducted the land survey, which was used to construct the map presented by Bertol.
[16]
Bertol clarified that he authorized two surveys, one in 1984 when he first joined
MSBF, and the other in 1986. [17]In both instances, Mr. Malto testified that he was asked
to survey a total of 16 hectares, not just seven hectares. Malto testified that he
conducted the second survey in 1986 on the instruction of MSBFs general manager.
According to Malto, it was only in the second survey that he was told to determine the

seven-hectare portion. Malto further clarified that he based the technical descriptions of
both surveys on a previously existing survey of the property.[18]
The NHA presented the testimony of Inobaya, a geodetic engineer employed by the
NHA. Inobaya testified that as part of the NHAs Survey Division, his duties included
conducting surveys of properties administered by the NHA. [19] Inobaya conducted his
survey in May 1988 to determine whether BGC was occupying an area outside the
seven-hectare area MSBF held in usufruct. [20] Inobaya surveyed the area occupied by
MSBF following the same technical descriptions used by Malto. Inobaya also came to
the same conclusion that the area occupied by MSBF, as indicated by the boundaries in
the technical descriptions, covered a total of 16 hectares. He further testified that the
seven-hectare portion in the map presented by BGC, [21] which was constructed by
Malto, does not tally with the boundaries BGC and MSBF indicated in their complaint.
Article 565 of the Civil Code states:
ART. 565. The rights and obligations of the usufructuary shall be those provided in the title
constituting the usufruct; in default of such title, or in case it is deficient, the provisions
contained in the two following Chapters shall be observed.
In the present case, Proclamation No. 1670 is the title constituting the usufruct.
Proclamation No. 1670 categorically states that the seven-hectare area shall be
determined by future survey under the administration of the Foundation subject to
private rights if there be any. The appellate court and the trial court agree that MSBF
has the latitude to determine the location of its seven-hectare usufruct portion within the
16-hectare area. The appellate court and the trial court disagree, however, whether
MSBF seasonably exercised this right.
It is clear that MSBF conducted at least two surveys. Although both surveys covered
a total of 16 hectares, the second survey specifically indicated a seven-hectare area
shaded in yellow. MSBF made the first survey in 1984 and the second in 1986, way
before the present controversy started. MSBF conducted the two surveys before the
lease to BGC. The trial court ruled that MSBF did not act seasonably in exercising its
right to conduct the survey. Confronted with evidence that MSBF did in fact conduct two
surveys, the trial court dismissed the two surveys as self-serving. This is clearly an error
on the part of the trial court. Proclamation No. 1670 authorized MSBF to determine the
location of the seven-hectare area. This authority, coupled with the fact that
Proclamation No. 1670 did not state the location of the seven-hectare area, leaves no
room for doubt that Proclamation No. 1670 left it to MSBF to choose the location of the
seven-hectare area under its usufruct.

More evidence supports MSBFs stand on the location of the seven-hectare area.
The main structures of MSBF are found in the area indicated by MSBFs survey. These
structures are the main office, the three green houses, the warehouse and the
composting area. On the other hand, the NHAs delineation of the seven-hectare area
would cover only the four hardening bays and the display area. It is easy to distinguish
between these two groups of structures. The first group covers buildings and facilities
that MSBF needs for its operations. MSBF built these structures before the present
controversy started. The second group covers facilities less essential to MSBFs
existence. This distinction is decisive as to which survey should prevail. It is clear that
the MSBF intended to use the yellow-shaded area primarily because it erected its main
structures there.
Inobaya testified that his main consideration in using Agham Road as the starting
point for his survey was the presence of a gate there. The location of the gate is not a
sufficient basis to determine the starting point. MSBFs right as a usufructuary as
granted by Proclamation No. 1670 should rest on something more substantial than
where MSBF chose to place a gate.
To prefer the NHAs survey to MSBFs survey will strip MSBF of most of its main
facilities. Only the main building of MSBF will remain with MSBF since the main building
is near the corner of EDSA and Quezon Avenue. The rest of MSBFs main facilities will
be outside the seven-hectare area.
On the other hand, this Court cannot countenance MSBFs act of exceeding the
seven-hectare portion granted to it by Proclamation No. 1670. A usufruct is not simply
about rights and privileges. A usufructuary has the duty to protect the owners interests.
One such duty is found in Article 601 of the Civil Code which states:
ART. 601. The usufructuary shall be obliged to notify the owner of any act of a third person, of
which he may have knowledge, that may be prejudicial to the rights of ownership, and he shall
be liable should he not do so, for damages, as if they had been caused through his own fault.
A usufruct gives a right to enjoy the property of another with the obligation of preserving
its form and substance, unless the title constituting it or the law otherwise provides.
[22]
This controversy would not have arisen had MSBF respected the limit of the
beneficial use given to it. MSBFs encroachment of its benefactors property gave birth to
the confusion that attended this case. To put this matter entirely to rest, it is not enough
to remind the NHA to respect MSBFs choice of the location of its seven-hectare area.
MSBF, for its part, must vacate the area that is not part of its usufruct. MSBFs rights
begin and end within the seven-hectare portion of its usufruct. This Court agrees with
the trial court that MSBF has abused the privilege given it under Proclamation No. 1670.

The direct corollary of enforcing MSBFs rights within the seven-hectare area is the
negation of any of MSBFs acts beyond it.
The seven-hectare portion of MSBF is no longer easily determinable considering
the varied structures erected within and surrounding the area. Both parties advance
different reasons why their own surveys should be preferred. At this point, the
determination of the seven-hectare portion cannot be made to rely on a choice between
the NHAs and MSBFs survey. There is a need for a new survey, one conducted jointly
by the NHA and MSBF, to remove all doubts on the exact location of the seven-hectare
area and thus avoid future controversies. This new survey should consider existing
structures of MSBF. It should as much as possible include all of the facilities of MSBF
within the seven-hectare portion without sacrificing contiguity.
A final point. Article 605 of the Civil Code states:
ART. 605. Usufruct cannot be constituted in favor of a town, corporation, or association for
more than fifty years. If it has been constituted, and before the expiration of such period the
town is abandoned, or the corporation or association is dissolved, the usufruct shall be
extinguished by reason thereof. (Emphasis added)
The law clearly limits any usufruct constituted in favor of a corporation or
association to 50 years. A usufruct is meant only as a lifetime grant. Unlike a natural
person, a corporation or associations lifetime may be extended indefinitely. The usufruct
would then be perpetual. This is especially invidious in cases where the usufruct given
to a corporation or association covers public land. Proclamation No. 1670 was issued
19 September 1977, or 28 years ago. Hence, under Article 605, the usufruct in favor of
MSBF has 22 years left.
MO 127 released approximately 50 hectares of the NHA property as reserved site
for the National Government Center. However, MO 127 does not affect MSBFs sevenhectare area since under Proclamation No. 1670, MSBFs seven-hectare area was
already exclude[d] from the operation of Proclamation No. 481, dated October 24, 1968,
which established the National Government Center Site.
WHEREFORE, the Decision of the Court of Appeals dated 30 March 2001 and its
Resolution dated 25 June 2001 in CA-G.R. CV No. 48382 are SET ASIDE. This case is
REMANDED to Branch 87 of the Regional Trial Court of Quezon City, which shall order
a joint survey by the National Housing Authority and Manila Seedling Bank Foundation,
Inc. to determine the metes and bounds of the seven-hectare portion of Manila Seedling
Bank Foundation, Inc. under Proclamation No. 1670. The seven-hectare portion shall be
contiguous and shall include as much as possible all existing major improvements of

Manila Seedling Bank Foundation, Inc. The parties shall submit the joint survey to the
Regional Trial Court for its approval within sixty days from the date ordering the joint
survey.
SO ORDERED.
Davide,
JJ., concur.

Jr.,

G.R. No. 186069

C.J.,

(Chairman),

Quisumbing,

Ynares-Santiago, and Azcuna,

January 30, 2013

SPOUSES JESUS L. CABAHUG AND CORONACION M. CABAHUG, Petitioners,

vs.
NATIONAL POWER CORPORATION, Respondent.
DECISION
PEREZ, J.:
This Rule 45 Petition for Review on Certiorari seeks the reversal of (a) the 16 May 2007
Decision1 rendered by the Eighteenth Division of the Court of Appeals (CA) in CA-G.R.
CV No. 67331 which reversed the 14 March 2000 Decision rendered by the Regional
Trial Court (RTC), Branch 17, Palompon, Leyte, in Civil Case No. PN-0213 and ordered
the dismissal of the complaint for just compensation tiled by petitioners Spouses Jesus
L. Cabahug and Coronacion M. Cabahug (Spouses Cabahug) against respondent
National Power Corporation (NPC);2 and (b) the CA's Resolution dated 9 January 2009,
denying the motion for reconsideration of the 16 May 2007 Decision for lack of merit. 3

The facts are not in dispute.

The Spouses Cabahug are the owners of two parcels of land situated in Barangay
Capokpok, Tabango, Leyte, registered in their names under Transfer Certificate of Title
(TCT) Nos. T-9813 and T-1599 of the Leyte provincial registry.4 They were among the
defendants in Special Civil
Action No. 0019-PN, a suit for expropriation earlier filed by NPC before the RTC, in
connection with its Leyte-Cebu Interconnection Project. The suit was later dismissed
when NPC opted to settle with the landowners by paying an easement fee equivalent to
10% of value of their property in accordance with Section 3-A of Republic Act (RA) No.
6395.5 In view of the conflicting land values presented by the affected landowners, it
appears that the Leyte Provincial Appraisal Committee, upon request of NPC, fixed the
valuation of the affected properties at P45.00 per square meter.6
On 9 November 1996, Jesus Cabahug executed two documents denominated as Right
of Way Grant in favor of NPC. For and in consideration of the easement fees in the
sums of P112,225.50 and P21,375.00, Jesus Cabahug granted NPC a continuous
easement of right of way for the latters transmissions lines and their appurtenances
over 24,939 and 4,750 square meters of the parcels of land covered by TCT Nos. T9813 and T-1599, respectively. By said grant, Jesus Cabahug agreed not to construct
any building or structure whatsoever, nor plant in any area within the Right of Way that
will adversely affect or obstruct the transmission line of NPC, except agricultural crops,
the growth of which will not exceed three meters high. Under paragraph 4 of the grant,
however, Jesus Cabahug reserved the option to seek additional compensation for
easement fee, based on the Supreme Courts 18 January 1991 Decision in G.R. No.
60077, entitled National Power Corporation v. Spouses Misericordia Gutierrez and
Ricardo Malit, et al. (Gutierrez).7
On 21 September 1998, the Spouses Cabahug filed the complaint for the payment of
just compensation, damages and attorneys fees against NPC which was docketed as
Civil Case No. PN-0213 before the RTC. Claiming to have been totally deprived of the
use of the portions of land covered by TCT Nos. T-9813 and T-1599, the Spouses
Cabahug alleged, among other matters, that in accordance with the reservation
provided under paragraph 4 of the aforesaid grant, they have demanded from NPC
payment of the balance of the just compensation for the subject properties which, based
on the valuation fixed by the Leyte Provincial Appraisal Committee, amounted to
P1,202,404.50.8 In its answer, on the other hand, NPC averred that it already paid the
full easement fee mandated under Section 3-A of RA 6395 and that the reservation in
the grant referred to additional compensation for easement fee, not the full just
compensation sought by the Spouses Cabahug. 9

Acting on the motion for judgment on the pleadings that was filed by the Spouses
Cabahug, the RTC went on to render a Decision dated 14 March 2000. Brushing aside
NPCs reliance on Section 3-A of RA 6395, the RTC applied the ruling handed down by
this Court in Gutierrez to the effect that NPCs easement of right of way which
indefinitely deprives the owner of their proprietary rights over their property falls within
the purview of the power of eminent domain.10 As a consequence, the RTC disposed of
the complaint in the following wise:
WHEREFORE, premises considered, judgment is hereby rendered for the Spouses
Cabahug and against NPC, ordering NPC:
1. To pay the Spouses Cabahug the sum of ONE MILLION THREE HUNDRED
THIRTY SIX THOUSAND and FIVE PESOS (P1,336,005.00) together with the
legal rate of interest thereon per annum reckoned from January 3, 1997 less the
amount previously paid by NPC to the Spouses Cabahug for easement fee only;
2. To pay the Spouses Cabahug the sum equivalent to FIVE (5%) PERCENT of
the amount mentioned in the next preceding paragraph for attorneys fees; and
3. To pay the Spouses Cabahug the sum of TWENTY THOUSAND (P20,000.00)
PESOS for actual damages and litigation expenses plus costs of the
proceedings.
SO ORDERED.11
Aggrieved by the foregoing decision, the NPC perfected the appeal which was docketed
as CA-G.R. CV No. 67331 before the CA which, on 16 May 2007, rendered the herein
assailed decision, reversing and setting aside the RTCs appealed decision. Finding that
the facts of a case are different from those obtaining in Gutierrez and that Section 3-A of
RA 6395 only allows NPC to acquire an easement of right of way over properties
traversed by its transmission lines,12 the CA succinctly ruled as follows:
Unfortunately, the Spouses Cabahug had already accepted the payment of easement
fee, pursuant to R.A. 6395, as amended, way back in 1996. Therefore, NPCs easement
of right of way has for all legal intents and purposes, been established as far back as
1996. Since vested right has already accrued in favor of NPC, to allow the Spouses
Cabahug to pursue this case when the easement of right of way had already been
consummated would be in violation of the contract. The contracting parties, the
Spouses Cabahug and NPC had already conformed with the terms and conditions of
the agreement. To allow the Spouses Cabahug to again collect from NPC payment of
just compensation would amount to unjust enrichment at the expense of NPC and

would sanction violation of the parties contract, which the Spouses Cabahug cannot do
in the case at bench. Further, the award of attorneys fees and litigation expenses and
the costs of suit in favor of the Spouses Cabahug cannot be justified in the case at bar
since it appears that the complaint actually has no legal basis. 13
The Spouses Cabahugs motion for reconsideration of the 16 May 2007 Decision 14 was
denied for lack of merit in the CAs Resolution dated 9 January 2009. Hence, this
petition for review on certiorari.15 In urging the reversal of the CAs assailed Decision
and Resolution, the Spouses Cabahug argue that the CA erred: (a) in disregarding
paragraph 4 of the Grant of Right of Way whereby Jesus Cabahug reserved the right to
seek additional compensation for easement fee; and (b) in not applying this Courts
ruling in Gutierrez case.16 In representation of NPC, on the other hand, the Office of the
Solicitor General (OSG) argues that the sums paid in 1996 by way of easement fees
represent the full amount allowed by law and agreed upon by the parties. Considering
that Gutierrez concerned the payment of just compensation for property expropriated by
the NPC, the OSG maintains the CA did not err in according scant consideration to the
Spouses Cabahugs invocation of the ruling in said case. 17
We find the petition impressed with merit.
The CA regarded the Grant of Right of Way executed by Jesus Cabahug in favor of
NPC as a valid and binding contract between the parties, a fact affirmed by the OSG in
its 8 October 2009 Comment to the petition at bench. 18Given that the parties have
already agreed on the easement fee for the portions of the subject parcels traversed by
NPCs transmissions lines, the CA ruled that the Spouses Cabahugs attempt to collect
further sums by way of additional easement fee and/or just compensation is violative of
said contract and tantamount to unjust enrichment at the expense of NPC. As correctly
pointed out by the Spouses Cabahug, however, the CAs ruling totally disregards the
fourth paragraph of the Grant executed by Jesus Cabahug which expressly states as
follows:
That I hereby reserve the option to seek additional compensation for Easement Fee,
based on the Supreme Court Decision in G.R. No. 60077, promulgated on January 18,
1991, which jurisprudence is designated as "NPC vs. Gutierrez" case. 19
From the foregoing reservation, it is evident that the Spouses Cabahugs receipt of the
easement fee did not bar them from seeking further compensation from NPC. Even by
the basic rules in the interpretation of contracts, we find that the CA erred in holding that
the payment of additional sums to the Spouses Cabahug would be violative of the
parties contract and amount to unjust enrichment. Indeed, the rule is settled that a
contract constitutes the law between the parties who are bound by its

stipulations20 which, when couched in clear and plain language, should be applied
according to their literal tenor.21 Courts cannot supply material stipulations, read into the
contract words it does not contain22 or, for that matter, read into it any other intention
that would contradict its plain import.23Neither can they rewrite contracts because they
operate harshly or inequitably as to one of the parties, or alter them for the benefit of
one party and to the detriment of the other, or by construction, relieve one of the parties
from the terms which he voluntarily consented to, or impose on him those which he did
not.24
Considering that Gutierrez was specifically made the point of reference for Jesus
Cabahugs reservation to seek further compensation from NPC, we find that the CA
likewise erred in finding that the ruling in said case does not apply to the case at bench.
Concededly, the NPC was constrained to file an expropriation complaint in Gutierrez
due to the failure of the negotiations for its acquisition of an easement of right of way for
its transmission lines. The issue that was eventually presented for this Courts
resolution, however, was the propriety of making NPC liable for the payment of the full
market value of the affected property despite the fact that transfer of title thereto was
not required by said easement. In upholding the landowners right to full just
compensation, the Court ruled that the power of eminent domain may be exercised
although title is not transferred to the expropriator in an easement of right of way. Just
compensation which should be neither more nor less than the money equivalent of the
property is, moreover, due where the nature and effect of the easement is to impose
limitations against the use of the land for an indefinite period and deprive the landowner
its ordinary use.
Even without the reservation made by Jesus Cabahug in the Grant of Right of Way, the
application of Gutierrez to this case is not improper as NPC represents it to be. Where
the right of way easement, as in this case, similarly involves transmission lines which
not only endangers life and limb but restricts as well the owner's use of the land
traversed thereby, the ruling in Gutierrez remains doctrinal and should be applied. 25 It
has been ruled that the owner should be compensated for the monetary equivalent of
the land if, as here, the easement is intended to perpetually or indefinitely deprive the
owner of his proprietary rights through the imposition of conditions that affect the
ordinary use, free enjoyment and disposal of the property or through restrictions and
limitations that are inconsistent with the exercise of the attributes of ownership, or when
the introduction of structures or objects which, by their nature, create or increase the
probability of injury, death upon or destruction of life and property found on the land is
necessary.26 Measured not by the takers gain but the owners loss, just compensation is
defined as the full and fair equivalent of the property taken from its owner by the
expropriator.271wphi1

Too, the CA reversibly erred in sustaining NPCs reliance on Section 3-A of RA 6395
which states that only 10% of the market value of the property is due to the owner of the
property subject to an easement of right of way. Since said easement falls within the
purview of the power of eminent domain, NPCs utilization of said provision has been
repeatedly struck down by this Court in a number of cases. 28 The determination of just
compensation in eminent domain proceedings is a judicial function and no statute,
decree, or executive order can mandate that its own determination shall prevail over the
court's findings.29 Any valuation for just compensation laid down in the statutes may
serve only as a guiding principle or one of the factors in determining just compensation,
but it may not substitute the court's own judgment as to what amount should be
awarded and how to arrive at such amount.30Hence, Section 3A of R.A. No. 6395, as
amended, is not binding upon this Court.31
In this case, the Leyte Provincial Appraisal Committee fixed the valuation of the affected
properties at P45.00 per square meter at the instance of NPC. Considering that the
installation of the latters transmission lines amounted to the taking of 24,939 and 4,750
square meters from the parcels of land covered by TCT Nos. T-9813 and T-1599 or a
total of 29,689 square meters, the RTC correctly determined that the Spouses Cabahug
are entitled to P1,336,005.00 (29,689 x P45.00) by way of just compensation for their
properties. Inasmuch as NPC had already paid the sums of P112,225.50 and
P21,375.00 as easement fee, the sum of P133,600.50 should be deducted from
P1,336,005.00 for a remaining balance of P1,202,404.50. To this latter sum, the RTC
also correctly imposed legal interest since the Spouses Cabahug, as landowners, are
entitled to the payment of legal interest on the compensation for the subject lands from
the time of the taking of their possession up to the time that full payment is made by
petitioner. In accordance with jurisprudence, the legal interest allowed in payment of just
compensation for lands expropriated for public use is six percent (6%) per annum. 32
For want of a statement of the rationale for the award in the body of the RTCs 14 March
2000 Decision, we are constrained, however, to disallow the grant of attorneys fees in
favor of the Spouses Cabahug in an amount equivalent to 5% of the just compensation
due as well as the legal interest thereon. Considered the exception rather than the
general rule, the award of attorneys fees is not due every time a party prevails in a suit
because of the policy that no premium should be set on the right to litigate. 33 The RTC's
award of litigation expenses should likewise be deleted since, like attorney's fees, the
award thereof requires that the reasons or grounds therefor must be set forth in the
decision of the court.34 This is particularly true in this case where the litigation expenses
awarded were alternatively categorized by the RTC as actual damages which, by
jurisprudence, should be pleaded and adequately proved. Time and again, it has been
ruled that the fact and amount of actual damages cannot be based on speculation,
conjecture or guess work, but must depend on actual proof. 35

WHEREFORE, premises considered, the petition is GRANTED and the CA's assailed
16 May 2007 Decision and 9 January 2009 Resolution are, accordingly, REVERSED
and SET ASIDE. In lieu thereof, another is entered REINSTATING the RTC's 14 March
2000 Decision, subject to the MODIFICATION that the awards of attorney's fees, actual
damages and/or litigation expenses are DELETED.
SO ORDERED.

[G.R. No. 124699. July 31, 2003]

BOGO-MEDELLIN MILLING CO., INC., petitioner, vs. COURT OF APPEALS AND
HEIRS OF MAGDALENO VALDEZ SR., respondents.
DECISION
CORONA, J.:
This is an appeal by certiorari under Rule 45 of the Rules of Court seeking to annul
and set aside the decision [1] dated November 17, 1995 of the Court of Appeals, Tenth
Division, which reversed the decision [2] dated November 27, 1991 of the Regional Trial
Court of Cebu City, Branch IX, which ruled in favor of herein petitioner, Bogo-Medellin
Milling Company, Inc. and dismissed herein private respondents' complaint for payment
of compensation and/or recovery of possession of real property and damages with
application for restraining order or preliminary injunction; and its resolution dated March
2, 1996 denying petitioner's motion for reconsideration.
The antecedent facts follow.

Magdaleno Valdez, Sr., father of herein private respondents Sergio Valdez, Angelina
Valdez-Novabos, Teresita Argawanon-Mangubat and Daylinda Argawanon-Melendres
(hereafter the heirs), purchased from Feliciana Santillan, on December 9, 1935, a parcel
of unregistered land covered by Tax Declaration No. 3935 with an area of one hectare,
34 ares and 16 centares, located in Barrio Dayhagon, Medellin, Cebu. [3] He took
possession of the property and declared it for tax purposes in his name. [4]
Prior to the sale, however, the entire length of the land from north to south was
already traversed in the middle by railroad tracks owned by petitioner Bogo-Medellin
Milling Co., Inc. (hereafter Bomedco). The tracks were used for hauling sugar cane from
the fields to petitioners sugar mill.
When Magdaleno Valdez, Sr. passed away in 1948, herein private respondents
inherited the land. However, unknown to them, Bomedco was able to have the disputed
middle lot which was occupied by the railroad tracks placed in its name in the Cadastral
Survey of Medellin, Cebu in 1965. The entire subject land was divided into three,
namely, Cadastral Lot Nos. 953, 954 and 955. Lot Nos. 953 and 955 remained in the
name of private respondents. However, Lot No. 954, the narrow lot where the railroad
tracks lay, was claimed by Bomedco as its own and was declared for tax purposes in its
name. [5]
It was not until 1989 when private respondents discovered the aforementioned
claim of Bomedco on inquiry with the Bureau of Lands. Through their lawyer, they
immediately demanded the legal basis for Bomedco's claim over Cadastral Lot No. 954
but their letter of inquiry addressed to petitioner went unheeded, as was their
subsequent demand for payment of compensation for the use of the land. [6]
On June 8, 1989, respondent heirs filed a Complaint for Payment of Compensation
and/or Recovery of Possession of Real Property and Damages with Application for
Restraining Order/Preliminary Injunction against Bomedco before the Regional Trial
Court of Cebu.[7] Respondent heirs alleged that, before she sold the land to Valdez, Sr.
in 1935, Santillan granted Bomedco, in 1929, a railroad right of way for a period of 30
years. When Valdez, Sr. acquired the land, he respected the grant. The right of way
expired sometime in 1959 but respondent heirs allowed Bomedco to continue using the
land because one of them was then an employee of the company.[8]
In support of the complaint, they presented an ancient document an original copy
of the deed of sale written in Spanish and dated December 9, 1935 [9] to evidence the
sale of the land to Magdaleno Valdez, Sr.; several original real estate tax
receipts[10] including Real Property Tax Receipt No. 3935 [11] dated 1922 in the name of
Graciano de los Reyes, husband of Feliciana Santillan, and Real Property Tax Receipt

No. 09491[12] dated 1963 in the name of Magdaleno Valdez, Sr. Magdaleno Valdez, Jr.
also testified for the plaintiffs during the trial.
On the other hand, Bomedcos principal defense was that it was the owner and
possessor of Cadastral Lot No. 954, having allegedly bought the same from Feliciana
Santillan in 1929, prior to the sale of the property by the latter to Magdaleno Valdez, Sr.
in 1935. It also contended that plaintiffs claim was already barred by prescription and
laches because of Bomedcos open and continuous possession of the property for more
than 50 years.
Bomedco submitted in evidence a Deed of Sale [13] dated March 18, 1929; seven
real estate tax receipts[14] for the property covering the period from 1930 to 1985; a 1929
Survey Plan of private land for Bogo-Medellin Milling Company; [15] a Survey Notification
Card;[16] Lot Data Computation for Lot No. 954;[17] a Cadastral Map for Medellin
Cadastre[18] as well as the testimonies of Vicente Basmayor, Geodetic Engineer and
property custodian for Bomedco, and Rafaela A. Belleza, Geodetic Engineer and Chief
of the Land Management Services of the DENR, Region VIII.
In its decision dated November 27, 1991, the trial court [19] rejected Bomedco's
defense of ownership on the basis of a prior sale, citing that its evidence a xerox copy of
the Deed of Sale dated March 18, 1929 was inadmissible and had no probative value.
Not only was it not signed by the parties but defendant Bomedco also failed to present
the original copy without valid reason pursuant to Section 4, Rule 130 of the Rules of
Court.[20]
Nonetheless, the trial court held that Bomedco had been in possession of Cadastral
Lot No. 954 in good faith for more than 10 years, thus, it had already acquired
ownership of the property through acquisitive prescription under Article 620 of the Civil
Code. It explained:
Under Article 620 of the Civil Code, CONTINUOUS and APPARENT easements can be
acquired by prescription after ten (10) years. The apparent characteristic of the questioned
property being used by defendant as an easement is no longer at issue, because plaintiffs
themselves had acknowledged that the existence of the railway tracks of defendant Bomedco was
already known by the late Magdaleno Valdez, herein plaintiffs predecessor-in-interest, before the
late Magdaleno Valdez purchased in 1935 from the late Feliciana Santillan the land described in
the Complaint where defendants railway tracks is traversing [sic] (TSN of February 5, 1991, pp.
7-8). As to the continuity of defendants use of the strip of land as easement is [sic] also manifest
from the continuous and uninterrupted occupation of the questioned property from 1929 up to the
date of the filing of the instant Complaint. In view of the defendants UNINTERRUPTED
possession of the strip of land for more than fifity (50) years, the Supreme Courts ruling in the

case of Ronquillo, et al. v. Roco, et al. (103 Phil 84) is not applicable. This is because in said
case the easement in question was a strip of dirt road whose possession by the dominant estate
occurs only everytime said dirt road was being used by the dominant estate. Such fact would
necessarily show that the easements possession by the dominant estate was never continuous. In
the instant case however, there is clear continuity of defendants possession of the strip of land it
had been using as railway tracks. Because the railway tracks which defendant had constructed on
the questioned strip of land had been CONTINUOUSLY occupying said easement. Thus,
defendant Bomedcos apparent and continuous possession of said strip of land in good faith for
more than ten (10) years had made defendant owner of said strip of land traversed by its railway
tracks. Because the railway tracks which defendant had constructed on the questioned strip of
land had been continuously occupying said easement [sic].Thus, defendant Bomedcos apparent
and continuous possession of said strip of land in good faith for more than ten (10) years had
made defendant owner of said strip of land traversed by its railway tracks.
Respondent heirs elevated the case to the Court of Appeals which found that
Bomedco did not acquire ownership over the lot. It consequently reversed the trial
court. In its decision dated November 17, 1995, the appellate court held that Bomedco
only acquired an easement of right of way by unopposed and continuous use of the
land, but not ownership, under Article 620 of the Civil Code.
The appellate court further ruled that Bomedcos claim of a prior sale to it by
Feliciana Santillan was untrue. Its possession being in bad faith, the applicable
prescriptive period in order to acquire ownership over the land was 30 years under
Article 1137 of the Civil Code. Adverse possession of the property started only in 1965
when Bomedco registered its claim in the cadastral survey of Medellin. Since only 24
years from 1965 had elapsed when the heirs filed a complaint against Bomedco in
1989, Bomedcos possession of the land had not yet ripened into ownership.
And since there was no showing that respondent heirs or their predecessor-ininterest was ever paid compensation for the use of the land, the appellate court
awarded compensation to them, to be computed from the time of discovery of the
adverse acts of Bomedco.
Its motion for reconsideration having been denied by the appellate court in its
resolution dated March 22, 1996, Bomedco now interposes before us this present
appeal by certiorari under Rule 45, assigning the following errors:
I

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT REVERSED

AND SET ASIDE THE TRIAL COURTS DECISION DISMISSING PRIVATE
RESPONDENTS COMPLAINT.
II
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT ORDERED
THE PETITIONER TO PAY THE PRIVATE RESPONDENT THE REASONABLE VALUE OF
LOT 954 AND THE AMOUNT OF TEN THOUSAND (P10,000.00) PESOS AS
REASONABLE ATTORNEYS FEES.
Petitioner
Bomedco
reiterates
its
claim
of ownership
of
the
land through extraordinary acquisitive prescription under Article 1137 of the Civil Code
and laches to defeat the claim for compensation or recovery of possession by
respondent heirs. It also submits a third ground originally tendered by the trial court
acquisition of the easement of right of way by prescriptionunder Article 620 of the
Civil Code.
Extraordinary Acquisitive Prescription
Under Art. 1137 of the Civil Code
Petitioners claim of ownership through extraordinary acquisitive prescription under
Article 1137 of the Civil Code cannot be sustained.
There is no dispute that the controversial strip of land has been in the continuous
possession of petitioner since 1929. But possession, to constitute the foundation of a
prescriptive right, must be possession under a claim of title, that is, it must be adverse.
[21]
Unless coupled with the element of hostility towards the true owner, possession,
however long, will not confer title by prescription. [22]
After a careful review of the records, we are inclined to believe the version of
respondent heirs that an easement of right of way was actually granted to petitioner for
which reason the latter was able to occupy Cadastral Lot No. 954. We cannot disregard
the fact that, for the years 1930, 1937, 1949, 1962 and 1963, petitioner unequivocally
declared the property to be a central railroad right of way or sugar central railroad right
of way in its real estate tax receipts when it could have declared it to be industrial land
as it did for the years 1975 and 1985. [23]Instead of indicating ownership of the lot, these
receipts showed that all petitioner had was possession by virtue of the right of way
granted to it. Were it not so and petitioner really owned the land, petitioner would not
have consistently used the phrases central railroad right of way and sugar central

railroad right of way in its tax declarations until 1963. Certainly an owner would have
found no need for these phrases. A person cannot have an easement on his own land,
since all the uses of an easement are fully comprehended in his general right of
ownership.[24]
While it is true that, together with a persons actual and adverse possession of the
land, tax declarations constitute strong evidence of ownership of the land occupied by
him,[25] this legal precept does not apply in cases where the property is declared to be a
mere easement of right of way.
An easement or servitude is a real right, constituted on the corporeal immovable
property of another, by virtue of which the owner has to refrain from doing, or must allow
someone to do, something on his property, for the benefit of another thing or person. It
exists only when the servient and dominant estates belong to two different owners. It
gives the holder of the easement an incorporeal interest on the land but grants no title
thereto. Therefore, an acknowledgment of the easement is an admission that the
property belongs to another.[26]
Having held the property by virtue of an easement, petitioner cannot now assert that
its occupancy since 1929 was in the concept of an owner. Neither can it declare that the
30-year period of extraordinary acquisitive prescription started from that year.
Petitioner, however, maintains that even if a servitude was merely imposed on the
property in its favor, its possession immediately became adverse to the owner in the late
1950s when the grant was alleged by respondent heirs to have expired. It stresses that,
counting from the late 1950s (1959 as found by the trial court), the 30-year
extraordinary acquisitive prescription had already set in by the time respondent heirs
made a claim against it in their letters dated March 1 and April 6, 1989.
We do not think so. The mere expiration of the period of easement in 1959 did not
convert petitioners possession into an adverse one. Mere material possession of land is
not adverse possession as against the owner and is insufficient to vest title, unless such
possession is accompanied by the intent to possess as an owner. [27] There should be a
hostile use of such a nature and exercised under such circumstances as to manifest
and give notice that the possession is under a claim of right.
In the absence of an express grant by the owner, or conduct by petitioner sugar mill
from which an adverse claim can be implied, its possession of the lot can only be
presumed to have continued in the same character as when it was acquired (that is, it
possessed the land only by virtue of the original grant of the easement of right of way),
[28]
or was by mere license or tolerance of the owners (respondent heirs). [29] It is a

fundamental principle of law in this jurisdiction that acts of possessory character

executed by virtue of license or tolerance of the owner, no matter how long, do not start
the running of the period of prescription.[30]
After the grant of easement expired in 1959, petitioner never performed any act
incompatible with the ownership of respondent heirs over Cadastral Lot No. 954. On the
contrary, until 1963, petitioner continued to declare the sugar central railroad right of
way in its realty tax receipts, thereby doubtlessly conceding the ownership of
respondent heirs. Respondents themselves were emphatic that they simply tolerated
petitioners continued use of Cadastral Lot No. 954 so as not to jeopardize the
employment of one of their co-heirs in the sugar mill of petitioner.[31]
The only time petitioner assumed a legal position adverse to respondents
was when it filed a claim over the property in 1965 during the cadastral survey of
Medellin. Since then (1965) and until the filing of the complaint for the recovery of the
subject land before the RTC of Cebu in 1989, only 24 years had lapsed. Since the
required 30-year extraordinary prescriptive period had not yet been complied with in
1989, petitioner never acquired ownership of the subject land.
Laches
Neither can petitioner find refuge in the principle of laches. It is not just the lapse of
time or delay that constitutes laches. The essence of laches is the failure or neglect, for
an unreasonable and unexplained length of time, to do that which, through due
diligence, could or should have been done earlier, thus giving rise to a presumption that
the party entitled to assert it had either abandoned or declined to assert it. [32]
Its essential elements are: (a) conduct on the part of the defendant, or of one under
whom he claims, giving rise to the situation complained of; (b) delay in asserting
complainants rights after he had knowledge of defendants acts and after he has had the
opportunity to sue; (c) lack of knowledge or notice by defendant that the complainant
will assert the right on which he bases his suit; and (d) injury or prejudice to the
defendant in the event the relief is accorded to the complainant. [33]
The second element (which in turn has three aspects) is lacking in the case at bar.
These aspects are: (a) knowledge of defendant's action, (b) opportunity to sue
defendant after obtaining such knowledge and (c) delay in the filing of such suit. [34]
Records show that respondent heirs only learned about petitioners claim on their
property when they discovered the inscription for the cadastral survey in the records of
the Bureau of Lands in 1989. Respondents lost no time in demanding an explanation for

said claim in their letters to the petitioner dated March 1, 1989 and April 6, 1989. When
petitioner ignored them, they instituted their complaint before the Regional Trial Court of
Cebu City on June 8, 1989.
Petitioners reliance on Caro vs. Court of Appeals [35] and Vda. de Alberto vs. Court
of Appeals [36] is misplaced. There, laches was applied to bar petitioners from
questioning the ownership of the disputed properties precisely because they had
knowledge of the adverse claims on their properties yet tarried for an extraordinary
period of time before taking steps to protect their rights.
Further, there is no absolute rule on what constitutes laches. It is a rule of equity
and applied not to penalize neglect or sleeping on ones rights but rather to avoid
recognizing a right when to do so would result in a clearly unfair situation. The question
of laches is addressed to the sound discretion of the court and each case must be
decided according to its particular circumstances. [37] It is the better rule that courts,
under the principle of equity, should not be guided or bound strictly by the statute of
limitations or the doctrine of laches if wrong or injustice will result.
It is clear that petitioner never acquired ownership over Cadastral Lot No. 954
whether by extraordinary acquisitive prescription or by laches.
Acquisition of Easement of Right of Way By
Prescription Under Art. 620 of the Civil Code
Petitioner contends that, even if it failed to acquire ownership of the subject land, it
nevertheless became legally entitled to the easement of right of way over said land by
virtue of prescription under Article 620 of the Civil Code:
Continuous and apparent easements are acquired either by virtue of a title or by prescription of
ten years.
The trial court and the Court of Appeals both upheld this view for the reason that the
railroad right of way was, according to them, continuous and apparent in nature. The
more
or
less
permanent
railroad
tracks
were
visually apparent and
they continuously occupied the subject strip of land from 1959 (the year the easement
granted by Feliciana Santillan to petitioner expired). Thus, with the lapse of the 10-year
prescriptive period in 1969, petitioner supposedly acquired the easement of right of way
over the subject land.

Following the logic of the courts a quo, if a road for the use of vehicles or the
passage of persons is permanently cemented or asphalted, then the right of way over it
becomes continuous in nature. The reasoning is erroneous.
Under civil law and its jurisprudence, easements are either continuous or
discontinuous according to the manner they are exercised, not according to the
presence of apparent signs or physical indications of the existence of such easements.
Thus, an easement is continuous if its use is, or may be, incessant without the
intervention of any act of man, like the easement of drainage; [38] and it is discontinuous if
it is used at intervals and depends on the act of man, like the easement of right of way.
[39]

The easement of right of way is considered discontinuous because it is exercised

only if a person passes or sets foot on somebody elses land. Like a road for the
passage of vehicles or persons, an easement of right of way of railroad tracks is
discontinuous because the right is exercised only if and when a train operated by a
person passes over another's property. In other words, the very exercise of the
servitude depends upon the act or intervention of man which is the very essence of
discontinuous easements.
The presence of more or less permanent railroad tracks does not in any way
convert the nature of an easement of right of way to one that is continuous. It is not the
presence of apparent signs or physical indications showing the existence of an
easement, but rather the manner of exercise thereof, that categorizes such easement
into continuous or discontinuous.The presence of physical or visual signs only classifies
an easement into apparent or non-apparent. Thus, a road (which reveals a right of way)
and a window (which evidences a right to light and view) are apparent easements, while
an easement of not building beyond a certain height is non-apparent. [40]
In Cuba, it has been held that the existence of a permanent railway does not make
the right of way a continuous one; it is only apparent. Therefore, it cannot be acquired
by prescription.[41] In Louisiana, it has also been held that a right of passage over
another's land cannot be claimed by prescription because this easement is
discontinuous and can be established only by title. [42]
In this case, the presence of railroad tracks for the passage of petitioners trains
denotes the existence of an apparent but discontinuous easement of right of way.
And under Article 622 of the Civil Code, discontinuous easements, whether apparent or
not, may be acquired only by title. Unfortunately, petitioner Bomedco never acquired
any title over the use of the railroad right of way whether by law, donation, testamentary
succession or contract. Its use of the right of way, however long, never resulted in its

acquisition of the easement because, under Article 622, the discontinuous easement of
a railroad right of way can only be acquired by title and not by prescription.
To be sure, beginning 1959 when the original 30-year grant of right of way given to
petitioner Bomedco expired, its occupation and use of Cadastral Lot No. 954 came to
be by mere tolerance of the respondent heirs. Thus, upon demand by said heirs in 1989
for the return of the subject land and the removal of the railroad tracks, or, in the
alternative, payment of compensation for the use thereof, petitioner Bomedco which had
no title to the land should have returned the possession thereof or should have begun
paying compensation for its use.
But when is a party deemed to acquire title over the use of such land (that is, title
over the easement of right of way)? In at least two cases, we held that if: (a) it had
subsequently entered into a contractual right of way with the heirs for the continued use
of the land under the principles of voluntary easements or (b) it had filed a case against
the heirs for conferment on it of a legal easement of right of way under Article 629 of the
Civil Code, then title over the use of the land is deemed to exist. The conferment of a
legal easement of right of way under Article 629 is subject to proof of the following:
(1) it is surrounded by other immovables and has no adequate outlet to a public
highway;
(2) payment of proper indemnity;
(3) the isolation is not the result of its own acts; and
(4) the right of way claimed is at the point least prejudicial to the servient estate, and,
insofar as consistent with this rule, the distance from the dominant estate to the
highway is the shortest.[43]
None of the above options to acquire title over the railroad right of way was ever
pursued by petitioner despite the fact that simple resourcefulness demanded such
initiative, considering the importance of the railway tracks to its business. No doubt, it is
unlawfully occupying and using the subject strip of land as a railroad right of way without
valid title yet it refuses to vacate it even after demand of the heirs. Furthermore, it
tenaciously insists on ownership thereof despite a clear showing to the contrary.
We thus uphold the grant by the Court of Appeals of attorneys fees in the amount
of P10,000 considering the evident bad faith of petitioner in refusing respondents just
and lawful claims, compelling the latter to litigate. [44]

WHEREFORE, the petition is DENIED. The appealed decision dated November 17,
1995 and resolution dated March 2, 1996 of the Court of Appeals are AFFIRMED with
MODIFICATION. Petitioner Bogo-Medellin Milling Company, Inc. is hereby ordered to
vacate the subject strip of land denominated as Cadastral Lot No. 954, remove its
railway tracks thereon and return its possession to the private respondents, the heirs of
Magdaleno Valdez, Sr. It is also hereby ordered to pay private respondents attorney's
fees in the amount ofP10,000.
SO ORDERED.

PRIVATE
DEVELOPMENT
CORPORATION
OF
THE
PHILIPPINES, PELAGIO TOLOSA,
in his capacity as Register of
Deeds, General Santos City,
and ATANACIO M. VILLEGAS,
Petitioners,
- versus THE COURT OF APPEALS and
GENERAL SANTOS DOCTORS
HOSPITAL, INC.,
Respondents.

G.R. No. 136897

Present:
PANGANIBAN, J., Chairman
SANDOVAL-GUTIERREZ,
CORONA,
CARPIO MORALES, and
GARCIA, JJ.
Promulgated:
November 22, 2005

x------------------------------------------------------------------------------------x
DECISION
GARCIA, J.:
In this petition for review on certiorari under Rule 45 of the Rules of
Court, petitioners Private Development Corporation of the Philippines and
Atanacio M. Villegas seek the reversal and setting aside of the following
issuances of the Court of Appeals in CA-G.R. CV No. 52542, to wit:

1.
Decision dated July 16, 1998,[1] affirming an earlier decision
of the Regional Trial Court at General Santos City which ordered the petitioners,
in particular petitioner Atanacio M. Villegas, to present before the Register of
Deeds of General Santos City TCT No. T-32610 covering Lot 908-B-6-L-4-B for
the annotation thereon of a Memorandum of Agreementestablishing an easement
of right-of-way in favor of private respondent General Santos Doctors Hospital,
Inc.; and
2.
Resolution dated January 8, 1999,[2] denying petitioners
motion for reconsideration.
Culled from the records are the following factual antecedents:
The spouses Agustin Narciso and Aurora Narciso (the Narcisos, for
short) were the original owners of two (2) lots situated at Barrio Lagao,
General Santos City, Cotabato.
The first lot, which is a portion of a bigger parcel of land known as Lot
No. 908-B-6-L-3 and covered by TCT No. 22608, is identified as Lot No. 908-B6-L-3-A, hereinafter referred to as the interior lot, with an area of one (1)
hectare. Adjacent to this lot and abutting the national highway is the second
lot, Lot No. 908-B-6-L-4-B, hereinafter referred to as the exterior lot,
covered by TCT No. 13550.[3]
On September 6, 1968, the Narcisos executed in favor of herein
respondent, General Santos Doctors Hospital, Inc. (GSDHI) an Option to
Buy[4] theinterior lot, subject, among others, to the condition that:
5. The vendors shall construct a 10 meter wide road commencing from the
National Highway, traversing the property of the Vendors and terminating
perpendicularly at the mid-point of the Southern boundary of the property
subject of this Option, facing the national highway. Additionally, the
vendors shall also construct a 10 meter wide road alongside the same
southern boundary of the subject land, forming a right angle with the road
first above described. The Vendors shall also provide drainage facilities.[5]
True enough, on September 25, 1968, the interior lot was bought by
GSDHI, as evidenced by a Deed of Absolute Sale.[6]
On the same day of the sale, a Memorandum of Agreement[7] was
executed by and between the Narcisos and GSDHI, paragraph 7 of which
practically reproduced the same condition, supra, appearing in the
earlier Option to Buy, thus:

7. The vendors [Narcisos] also known as Party of the First Part, shall construct a
ten (10) meter wide road commencing from the National Highway,
traversing the property of the vendors and terminating perpendicularly at
the mid-point of the Southern boundary of the property subject of the sale
facing the National Highway. Additionally, the vendors or party of the first
part, shall also construct a ten (10) meter wide road alongside the same
Southern boundary of the subject land, forming a right angle with the road
first above-described. The vendors shall also provide drainage facilities.[8]
Years later, or on September 30, 1977, the exterior lot was mortgaged by
the Narcisos to one of the petitioners herein, Private Development
Corporation of the Philippines (PDCP). Upon the Narcisos failure to pay
the mortgage obligation, the mortgage was foreclosed and the mortgaged
property (exterior lot) sold at a public auction on June 21, 1982 with PDCP as
the lone bidder. Accordingly, the Narcisos title covering the exterior lot was
cancelled and in lieu thereof TCT No. 23202 was issued in the name of PDCP.
On April 18, 1988, in the Regional Trial Court at General Santos City,
respondent GSDHI, claiming that it has an easement of right-of-way over the
foreclosed property (exterior lot), filed a complaint for specific performance
against PDCP, therein impleading the Register of Deeds of General Santos
City, Pelagio T. Tolosa, as a nominal party-defendant, to compel PDCP to
present before the Register of Deeds its duplicate copy of TCT No. 23202
over the exterior lot for the annotation thereon of the Memorandum of
Agreement establishing an easement of right-of-way in favor of GSDHI.
In its complaint, docketed with the trial court as Civil Case No. 4128,
respondent GSDHI, as plaintif, alleged that the easement was a condition
and primary consideration for its purchase from the Narcisos of the interior
lot so that the hospital it intends to build thereat would have an access to
the national highway; that the grant is evidenced by two (2) public
documents executed between it and the Narcisos, i.e., Option to Buy [9] the
interior
lot
dated
September
6,
1968
and
Memorandum
of
Agreement[10] dated September 25, 1968; that the portion covered by the
easement was inadvertently and erroneously included in the mortgage of
the exterior lot as the same was not segregated from the mother title; that
upon informing PDCP of the easement on January 27, 1983, it (respondent)
even ofered to buy the whole exterior lot so as to avoid future litigation but
although negotiations lasted until August of 1988, no agreement was
reached on the price, hence, it (respondent) opted to continue and preserve
the easement of right-of-way established in its favor since 1968.
In its Answer, PDCP denied any knowledge of the alleged easement of
right-of-way, averring that it was not a party to any of the transactions
between respondent and the Narcisos. PDCP argued that the Option to Buy
and Memorandum of Agreement cannot by themselves constitute a valid

agreement to create and vest in favor on respondent an easement of rightof-way in the absence of terms providing for, among others, the amount of
consideration therefor. And, even assuming that the Memorandum of
Agreement created such an easement, PDCP contended that it cannot be
bound thereby because said agreement was not duly inscribed and
registered with the Registry of Deeds. Furthermore, PDCP asserted that it is
an innocent purchaser for value and in good faith, hence, the alleged
easement cannot be enforced against it.
Meanwhile, during the pendency of the case, or sometime in January,
1989, PDCP sold the exterior lot to the other petitioner herein, Atanacio
M. Villegas. On account thereof, PDCPs title over the exterior lot was
cancelled and TCT No. 32610 issued in the name of Villegas.
Consequently, respondent GSDHI amended its complaint by impleading
Villegas as additional party-defendant. For his part, Villegas formally adopted
PDCPs aforementioned allegations and defenses in its Answer.
Eventually, in a decision dated December 15, 1998, [11] the trial court
rendered judgment for plaintif GSDHI and against defendants PDCP and
Villegas, to wit:
Accordingly, judgment is rendered for the plaintiff and against the
defendants ordering the latter, particularly Atanacio M. Villegas to present before
the Register of Deeds of General Santos City Transfer Certificate of Title No. T32610 for annotation of the Memorandum of Agreement establishing the
casement of right-of-way in favor of the plaintiff.
SO ORDERED.
Explains the trial court in its decision:
The long and short of the seeming complexity of the issues raised by the
parties is summed up by the question of whether or not the plaintiff under the
circumstances is entitled to compel the defendants particularly Atanacio M.
Villegas to respect and annotate in the certificate of title the easement of right of
way, or conversely whether the defendants are innocent mortgagor or purchaser
for value, hence not bound by it.
The dominion of the plaintiff over the disputed road that virtually cut into
two lot 908-B-6-L-4-B comprising a total area of 1,000 square (10 m x 100m)
was elucidated and clarified by Agustin N. Narciso, the source of plaintiffs rights.
(Exhibits A and B) When Lot 908-B-L-3-A was sold by Narciso to GSDHI way
back on September 25, 1963 the imperfection of the document of absolute sale
was discovered at once. (Exhibit D) So a Memorandum of Agreement was
executed that same day to rectify the omission and put in black and white the
agreement regarding the direct access road to the national highway passing

through the adjoining lot 908-B-6-L-4-B then owned by Narciso. (Exhibit E) The
relevant portion of the agreement provides:
xxx 7. The vendors also known as Party of the First Part, shall
construct a ten (10) meter wide road commencing from the
National Highway, traversing the property of the vendors and
terminating perpendicularly at the mid-point of the Southern
boundary of the property subject of the sale facing the National
Highway. Additionally, the vendors or party of the first part,
shall also construct a ten (10) meter wide road alongside the
same Southern boundary of the subject land, forming a right
angle with the road first above-described. The vendors shall
also provide drainage facilities. xxx
Prior to the execution of the Deed of Absolute Sale and the Memorandum of
Agreement, the Narcisos and the plaintiff executed a document denominated
Option to Buy on September 6, 1968, the pertinent portion of which provides:
xxx 5. The vendors shall construct a 10 meter wide road
commencing from the National Highway, traversing the property
of the Vendors and terminating perpendicularly at the mid-point of
the Southern boundary of the property subject of this Option,
facing the national highway. Additionally, the vendors shall also
construct a 10 meter wide road alongside the same southern
boundary of the subject land, forming a right angle with the road
first above described. The Vendors shall also provide drainage
facilities. xxx
In keeping with their agreement with the plaintiff, the Narcisos caused to
be constructed a 10 meter wide road starting from the National Highway passing
through Lot 908-B-6-L-4-B until the mid-point of the Southern boundary of Lot
908-B-L-3-A which was the property sold to the plaintiff. He also had a 10 meter
wide road alongside the southern boundary of the land sold to the plaintiff
forming an angle with the road that commenced from the national highway.
These undertakings of the Narcisos were in compliance with their
agreement with the plaintiff to guarantee direct access to the national highway
from the hospital that was to be constructed by the plaintiff on inner Lot 908-B-L3-A. The total consideration for the sale of Lot 908-B-L-3-A covering an area of
one hectare was P100,000.00 and an additional of P10,000.00 was paid for the 10
meter wide road right-of-way from the southern boundary of the property straight
to the national highway with an approximate length of 100 meters. This was not
specifically mentioned in the Deed of Absolute Sale but this was in pursuance of
their agreement that the one hectare lot was priced at P10.00 per square meter, or
for P100,000.00. Narcisos agreement with the plaintiff for the construction of the
road right-of-way was for its use in perpetuity by the plaintiff as well as the
public. The road right-of-way was constructed immediately upon execution of the

Deed of Sale but it is being maintained ever since by the plaintiff. The road was
located in the shortest distance between the national highway and the hospital of
the plaintiff and because of it the property over which the easement of road rightof-way passing through at the middle was substantially benefited making it
commercial.
Sometime in 1976 or 1977, the Narcisos mortgaged Lot 908-B-6-L-4-B which was the
servient estate to PDCP thru its branch office in Davao City. As a requirement, the
Narcisos submitted to PDCP the title of the land, the map and the sketch on the
easement that was granted by the plaintiff to the CSDHI. When the property was
inspected, Agustin Narciso showed the extent of the property offered as collateral
and together with the manager and other officers of the PDCP even passed
through the road right-of-way in question. The metes and bounds of the Narcisos
property was also shown to the officers of the PDCP including the signboard
along the national highway leading to the hospital. Thereafter the loan was
approved.
On cross-examination, Agustin Narciso admitted having mortgaged the property covered
by his title but excluding the 10 X 100 meter road which was paid for by the
plaintiff. The Memorandum of Agreement, however, and the Option to Buy which
embodied the meeting of minds of the plaintiff and the Narcisos regarding the
easement of right-of-way over Lot 908-B-6-L-4-B was not registered or
annotated. Agustin Narciso reiterated that when the property mortgaged to PDCP
was verified, several personnel of PDCP came, a certain Mr. Rey Feria, Mr. Lim,
Mr. Alcantara and a certain Mr. Delgado. He did not, however, furnish them
copies of the Option to Buy and the Memorandum of Agreement.
The importance of the road right-of-way to the plaintiff was underscored
by officers of the plaintiff. Acquisition of the hospital site was premised on the
grant by the then owner and seller Agustin Narciso of the ten meter wide access
road through the servient property owned by the seller. It was a condition sine
qua non of the contract between plaintiff and the Narcisos because the plaintiff
wanted the site to be a bit far from the national highway but with easy and direct
access to the highway because of the nature of the business they were putting up.
The hospital having been constructed sometime in 1968, plaintiff maintained the
10 x 100 meters road to the highway and used it including the public openly,
continuously and notoriously without being challenged by any party.
When the Narcisos failed to pay their account with the defendant PDCP Lot 908B-L-3-B which was put up as guarantee thereof was foreclosed and in the
subsequent public auction sale the defendant PDCP was the lone bidder and
therefore it became the owner.
The plaintiff learned of the acquisition by PDCP of the property
previously owned by the Narcisos and steps were taken by the plaintiff to buy
peace when it was realized that the Memorandum of Agreement as well as the
Option to Buy evidencing their ownership of the road right-of-way of 10 x 100

meters was only duly recorded with the Register of Deeds. Negotiations were had
with the defendant PDCP but no agreement was reached because of the wide gap
between the offers and counter offers made.
In the meantime, the defendant PDCP never asserted that it is the rightful
owner of the road right-of-way, neither did it interrupt the continued use by the
plaintiff and the general public of the road in question.
Requests were made of the defendant PDCP to allow the plaintiff to have
its right over the road right-of-way annotated in the title of the said defendant but
it was ignored. Overtures were made by the plaintiff to buy peace or as gesture of
compromise to the defendant PDCP but those were fruitless.
The defendants, particularly the original and one of the principal
defendants, did not challenge the genuiness and authenticity of the documents in
the possession of the plaintiff and presented in evidence like the Option to Buy,
Memorandum of Agreement and the Deed of Absolute Sale. The centerpiece of
PDCPs defense was the nonregistration of the Option to Buy and Memorandum of
Agreement embodying the right of the plaintiff over the contested road right of
way.
The defendant Atanacio M. Villegas relied entirely on the defenses put up
by its predecessor-in-interest PDCP.
It was the contention also of the defendant PDCP that had it known of the
existence of the road right-of-way over the property mortgaged and subsequently
acquired by it in a public auction sale, they would not have paid the big amount
for the property considering that with the existence of the road right-of-way the
value of the property was very much diminished.
Considering, however, that the defendant PDCP is a banking institution
and it is normal business practice that when loan is granted the property offered as
security is invariably inspected, it would be unlikely cr unrealistic that the
defendant PDCP accepted Lot-908-B-6-L-4-B without knowing its actual state.
The evidence also disclosed that when the loan was contracted by the previous
owner Agustin Narciso several officers of the bank repaired to the area and made
an on-the-spot verification of the land.
On the part of Atanacio Villegas, his attorney-in-fact who took the witness
stand affirmed that the road right-of-way has been in existence way back in the
late 1960s and he noticed it when he frequently traveled to General Santos City
even when this was still a rustic community as reflected in his testimony.
In the light of the undisputed facts obtaining that the road right-of-way is
conspicuously situated and has been in existence and in constant use for a long
period of time, or for over 25 years failure of the plaintiff to cause the registration

of its road right-of-way did not in the face of reality militate against its right over
the casement.[12]
From the trial courts decision, petitioners went to the Court of Appeals (CA)
whereat their appellate recourse was docketed as CA-G.R. CV No. 52542.
In the herein assailed Decision dated July 16, 1998, the CA affirmed
that of the trial court.
With their motion for reconsideration having been denied by the
appellate court in its equally challenged Resolution of January 8, 1999,
petitioners are now with us via this petition for review, imputing error to the
CA: (1) in affirming the lower courts decision without first resolving the issue
of whether or not respondent is entitled to an easement of right-of-way; (2)
in finding and concluding that petitioners are not innocent mortgagees or
purchasers for value; and (3) in not holding that respondent GSDHI is not
entitled to a legal easement of right-of-way.
The petition is bereft of merit.
At bottom, the issues are: (1) whether or not respondent GSDHI has an
easement of right-of-way over the exterior lot (Lot No. 908-B-6-L-4-B); and
(2) whether or not petitioners are innocent mortgagees/purchasers for value
of the same lot.
We resolve both issues in favor of respondent.
As defined, an easement is a real right on anothers property, corporeal
and immovable, whereby the owner of the latter must refrain from doing or
allow somebody else to do or something to be done on his property, for the
benefit of another person or tenement.[13] Easements are established either
by law or by the will of the owner. The former are called legal, and the latter,
voluntary easements.[14]
As correctly found by the trial court, the easement of right-of-way over
the exterior lot in favor of respondent GSDHI was voluntarily constituted by
agreement between the latter and the original owner thereof, the Narcisos.
It is beyond cavil that the Narcisos did intend to establish an easement
of right-of-way over the exterior lot for the respondents benefit. This is very
evident from the fact that in the Option to Buy in connection with the interior
lot, one of the conditions stipulated upon is that the Narcisos will construct
two (2) ten-meter wide roads along the exterior lot from the interior lot
leading to the national highway.[15]

True, the Deed of Absolute Sale between respondent and the Narcisos
covering the interior lot did not embody the aforementioned condition. It was
precisely to cure this deficiency, however, that on the very same day the
deed of sale was executed, the Narcisos and respondent forged a
Memorandum of Agreement to reflect what they failed to state in the
document of sale. In the precise words of the trial court: xxx the
imperfection of the document of absolute sale was discussed at once (Exhibit
D). So a Memorandum of Agreement was executed that same day to rectify
the omission and put in black and white the agreement regarding the direct
access road to the national highway passing through the adjoining lot 908-B6-L-4-B then owned by Narciso.
Moreover, contrary to the petitioners assertion, the Narcisos grant of
the easement to respondent was for a valuable consideration. Again, we
quote from the trial courts decision:
The total consideration for the sale of Lot 908-B-L-3-A covering an area
of one hectare was P100,000.00 and an additional of P10,000.00 was paid for the
10 meter wide road right-of-way from the southern boundary of the property
straight to the national highway with an approximate length of 100 meters. This
was not specifically mentioned in the Deed of Absolute Sale but this was in
pursuance of their agreement that the one hectare lot was priced at P10.00 per
square meter, or for P100,000.00.[16]
In any event, it bears stressing that the two courts below are one in
their common factual finding about the existence of the conventional
easement of right of way in favor of respondent. Absent, as here, of any
credible evidence to the contrary, the Court is not inclined to disturb such a
finding. After all, this Court is not a trier of facts.
Having ruled on the existence of an easement of right of way, we now
come to the second issue.
It is petitioners posture that they cannot be bound by the subject
easement because the Memorandum of Agreement establishing the same
was not annotated in the certificate of title of the exterior lot and registered
with the Registry of Deeds. Having relied on a title which does not reflect any
easement thereon, petitioner PDCP contends that it was an innocent
mortgagee and later an innocent purchaser for value. Chanting the same
tone, petitioner Villegas insists that he, too, is an innocent purchaser of said
lot.
We are unimpressed.

Concededly, a person, be he a buyer or mortgagee, dealing with a

titled property, as the exterior lot is, is not required to go beyond what
appears on the face of the covering title itself. [17] Section 39 of Act 496 or
the Land Registration Decree[18]says as much.
Unfortunately for petitioner PDCP, however, the aforementioned rule
does not apply to banks,[19] of which PDCP is. So it is that in Robles vs. CA,
[20]
this Court, citing Tomas vs. Tomas,[21] ruled:
xxx Banks, indeed, should exercise more care and prudence in dealing even with
registered lands, than private individuals, for their business is one affected with
public interest, keeping in trust money belonging to their depositors, which they
should guard against loss by not committing any act of negligence which amounts
to lack of good faith by which they would be denied the protective mantle of land
registration statute, Act 496, extended only to purchasers for value and in good
faith, as well as to mortgagees of the same character and description. xxx
Considering the foregoing, and bearing in mind that judicial notice is
taken of the standard practice for banks, before approving a loan, to send
representatives to the premises of the land ofered as collateral, [22] PDCPs
feigned ignorance of the road right-of-way, much less of the existence of the
road itself along the exterior lot, is simply ridiculous, to say the least, more
so in the light of the factual findings of the two courts below that PDCP,
contrary to its assertion, had indeed sent its personnel to inspect the land
when the same was mortgaged to it by the Narcisos. For sure, as found by
the appellate court, no less than PDCPs own Legal Officer, Virgilio Lagunilla,
admitted that an appraisal was conducted by the bank on the exterior
lot before accepting the mortgage thereof. Says the appellate court in this
respect:
We have the confirmation on cross examination of the PDCP Legal Officer,
Virgilio Lagunilla, in the matter of PDCPs practice of appraising the property,
being offered as collateral, which calls for an actual examination of the condition
of the property. He even admitted that an appraisal was conducted by the bank on
the exterior lot before the mortgage, the reason being that it is the Central Banks
requirement to limit the loans of commercial banks to only 70% of the appraise
value of the security being offered. As for PDCP, there was an uncharacteristic
silence on the result of the appraisal of the exterior lot which presupposes the
observation that the bank, at the time of the mortgage, knew about the existence
of the easement. The nature alone of the easement of right-of-way, which is ten
meters wide and open to the public for its use continuously supports the
observation that its easement was never overlooked by the bank at the time of the
propertys appraisal. We cannot allow actual notice of knowledge of the burden on
the property to be denied on the mere pretension alone that the title does not bear
any annotation of such burden.

Equally unworthy of belief is petitioner Villegas protestation of

innocence of the easement in question.
It is a matter of record that prior to his purchase of the exterior lot,
Villegas, through his attorney-in-fact, Benjamin Miranda, was very much
aware of the existence of a road over said lot since the 1960s. Again, to
quote from the assailed decision of the appellate court:
xxx His (Mirandas) other admission was that Villegas knew of the
easement before purchasing the property. He even added that he was consulted by
Villegas himself before the purchase and he told him (Villegas) that there was an
existing road from the hospital leading to the national highway.
In Lagandaon vs. CA,[23] we said:
As a general rule, every buyer of a registered land who takes a certificate
of title for value and in good faith shall hold the same free of all encumbrances
except those noted on said certificate. It has been held, however, that where the
party has knowledge of a prior existing interest which is unregistered at the time
he acquired a right to the same land, his knowledge of that prior unregistered
interest has the effect of registration as to him. xxx
WHEREFORE, the assailed issuances of the appellate
are AFFIRMED and this petition DISMISSED for lack of merit.
Costs against petitioners.
SO ORDERED.

court

EMILIO GANCAYCO,
Petitioner,
- versus -

G.R. No. 177807

CITY
GOVERNMENT
OF QUEZON
CITY AND
METRO MANILADEVELOPMENT
AUTHORITY,
Respondents.
x-----------------------------------------------x
METRO MANILA DEVELOPMENT
AUTHORITY,
Petitioner,

-versus-

JUSTICE EMILIO A. GANCAYCO

(Retired),
Respondent,
x-----------------------------------------x

G.R. No. 177933

Present:
CORONA, C.J.,
CARPIO,
VELASCO, JR.,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA,
SERENO,
REYES, and
PERLAS-BERNABE, JJ.
Promulgated:
October 11, 2011

x - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
DECISION
SERENO, J.:
Before us are consolidated Petitions for Review under Rule 45 of the Rules of Court
assailing the Decision[1] promulgated on 18 July 2006 and the Resolution[2] dated 10 May 2007 of
the Court of Appeals in CA-G.R. SP No. 84648.
The Facts
In the early 1950s, retired Justice Emilio A. Gancayco bought a parcel of land located at
746 Epifanio delos Santos Avenue (EDSA),[3] Quezon City with an area of 375 square meters and
covered by Transfer Certificate of Title (TCT) No. RT114558.
On 27 March 1956, the Quezon City Council issued Ordinance No. 2904, entitled An
Ordinance Requiring the Construction of Arcades, for Commercial Buildings to be Constructed
in Zones Designated as Business Zones in the Zoning Plan of Quezon City, and Providing
Penalties in Violation Thereof.[4]
An arcade is defined as any portion of a building above the first floor projecting over the
sidewalk beyond the first storey wall used as protection for pedestrians against rain or sun.[5]
Ordinance No. 2904 required the relevant property owner to construct an arcade with a
width of 4.50 meters and height of 5.00 meters along EDSA, from the north side ofSantolan
Road to one lot after Liberty Avenue, and from one lot before Central Boulevard to the Botocan
transmission line.
At the outset, it bears emphasis that at the time Ordinance No. 2904 was passed by the
city council, there was yet no building code passed by the national legislature. Thus, the
regulation of the construction of buildings was left to the discretion of local government
units. Under this particular ordinance, the city council required that the arcade is to be created by
constructing the wall of the ground floor facing the sidewalk a few meters away from the
property line. Thus, the building owner is not allowed to construct his wall up to the edge of the
property line, thereby creating a space or shelter under the first floor. In effect, property owners
relinquish the use of the space for use as an arcade for pedestrians, instead of using it for their
own purposes.
The ordinance was amended several times. On 8 August 1960, properties located at the
Quezon City-San Juan boundary were exempted by Ordinance No. 60-4477 from the
construction of arcades. This ordinance was further amended by Ordinance No. 60-4513,
extending the exemption to commercial buildings from Balete Street to Seattle Street. Ordinance
No. 6603 dated 1 March 1966 meanwhile reduced the width of the arcades to three meters for
buildings along V. Luna Road, Central District, Quezon City.
The ordinance covered the property of Justice Gancayco. Subsequently, sometime in
1965, Justice Gancayco sought the exemption of a two-storey building being constructed on his

property from the application of Ordinance No. 2904 that he be exempted from constructing an
arcade on his property.
On 2 February 1966, the City Council acted favorably on Justice Gancaycos request and
issued Resolution No. 7161, S-66, subject to the condition that upon notice by the City Engineer,
the owner shall, within reasonable time, demolish the enclosure of said arcade at his own
expense when public interest so demands.[6]
Decades after, in March 2003, the Metropolitan Manila Development Authority (MMDA)
conducted operations to clear obstructions along the sidewalk of EDSA in Quezon City pursuant
to Metro Manila Councils (MMC) Resolution No. 02-28, Series of 2002. [7] The resolution
authorized the MMDA and local government units to clear the sidewalks, streets, avenues, alleys,
bridges, parks and other public places in Metro Manila of all illegal structures and obstructions.[8]
On 28 April 2003, the MMDA sent a notice of demolition to Justice Gancayco alleging
that a portion of his building violated the National Building Code of the Philippines(Building
Code)[9] in relation to Ordinance No. 2904. The MMDA gave Justice Gancayco fifteen (15) days
to clear the portion of the building that was supposed to be an arcade along EDSA.[10]
Justice Gancayco did not comply with the notice. Soon after the lapse of the fifteen (15)
days, the MMDA proceeded to demolish the party wall, or what was referred to as the wing
walls, of the ground floor structure. The records of the present case are not entirely clear on the
extent of the demolition; nevertheless, the fact of demolition was not disputed. At the time of the
demolition, the affected portion of the building was being used as a restaurant.
On 29 May 2003, Justice Gancayco filed a Petition [11] with prayer for a temporary
restraining order and/or writ of preliminary injunction before the Regional Trial Court (RTC)
of Quezon City, docketed as Civil Case No. Q03-49693, seeking to prohibit the MMDA and the
City Government of Quezon City from demolishing his property. In his Petition, [12] he alleged
that the ordinance authorized the taking of private property without due process of law and just
compensation, because the construction of an arcade will require 67.5 square meters from the
375 square meter property. In addition, he claimed that the ordinance was selective and
discriminatory in its scope and application when it allowed the owners of the buildings located in
the Quezon City-San Juan boundary to Cubao Rotonda, and Balete to Seattle Streets to construct
arcades at their option. He thus sought the declaration of nullity of Ordinance No. 2904 and the
payment of damages. Alternately, he prayed for the payment of just compensation should the
court hold the ordinance valid.
The City Government of Quezon City claimed that the ordinance was a valid exercise of
police power, regulating the use of property in a business zone. In addition, it pointed out that
Justice Gancayco was already barred by estoppel, laches and prescription.
Similarly, the MMDA alleged that Justice Gancayco could not seek the nullification of an
ordinance that he had already violated, and that the ordinance enjoyed the presumption of
constitutionality. It further stated that the questioned property was a public nuisance impeding
the safe passage of pedestrians. Finally, the MMDA claimed that it was merely implementing the
legal easement established by Ordinance No. 2904.[13]

The RTC rendered its Decision on 30 September 2003 in favor of Justice Gancayco.[14] It
held that the questioned ordinance was unconstitutional, ruling that it allowed the taking of
private property for public use without just compensation. The RTC said that because 67.5
square meters out of Justice Gancaycos 375 square meters of property were being taken without
compensation for the publics benefit, the ordinance was confiscatory and oppressive. It likewise
held that the ordinance violated owners right to equal protection of laws. The dispositive portion
thus states:
WHEREFORE, the petition is hereby granted and the Court hereby
declares Quezon City Ordinance No. 2094,[15] Series of 1956 to be
unconstitutional, invalid and void ab initio. The respondents are hereby
permanently enjoined from enforcing and implementing the said ordinance, and
the respondent MMDA is hereby directed to immediately restore the portion of
the party wall or wing wall of the building of the petitioner it destroyed to its
original condition.
IT IS SO ORDERED.
The MMDA thereafter appealed from the Decision of the trial court. On 18 July 2006, the
Court of Appeals (CA) partly granted the appeal.[16] The CA upheld the validity of Ordinance No.
2904 and lifted the injunction against the enforcement and implementation of the ordinance. In
so doing, it held that the ordinance was a valid exercise of the right of the local government unit
to promote the general welfare of its constituents pursuant to its police powers. The CA also
ruled that the ordinance established a valid classification of property owners with regard to the
construction of arcades in their respective properties depending on the location. The CA further
stated that there was no taking of private property, since the owner still enjoyed the beneficial
ownership of the property, to wit:
Even with the requirement of the construction of arcaded sidewalks within
his commercial lot, appellee still retains the beneficial ownership of the said
property. Thus, there is no taking for public use which must be subject to just
compensation. While the arcaded sidewalks contribute to the public good, for
providing safety and comfort to passersby, the ultimate benefit from the same still
redounds to appellee, his commercial establishment being at the forefront of a
busy thoroughfare like EDSA. The arcaded sidewalks, by their nature, assure
clients of the commercial establishments thereat some kind of protection from
accidents and other hazards. Without doubt, this sense of protection can be a boon
to the business activity therein engaged. [17]
Nevertheless, the CA held that the MMDA went beyond its powers when it demolished
the subject property. It further found that Resolution No. 02-28 only refers to sidewalks, streets,
avenues, alleys, bridges, parks and other public places in Metro Manila, thus excluding Justice
Gancaycos private property. Lastly, the CA stated that the MMDA is not clothed with the
authority to declare, prevent or abate nuisances. Thus, the dispositive portion stated:

WHEREFORE,
the
appeals
are PARTLY
GRANTED.
The Decision dated September 30, 2003 of the Regional Trial Court, Branch
224, Quezon City, is MODIFIED, as follows:
1)
The validity and constitutionality of Ordinance No. 2094, [18] Series of 1956,
issued by the City Council of Quezon City, is UPHELD; and
2)
The injunction against the enforcement and implementation of the said
Ordinance is LIFTED.
SO ORDERED.
This ruling prompted the MMDA and Justice Gancayco to file their respective Motions
for Partial Reconsideration.[19]
On 10 May 2007, the CA denied the motions stating that the parties did not present new
issues nor offer grounds that would merit the reconsideration of the Court.[20]
Dissatisfied with the ruling of the CA, Justice Gancayco and the MMDA filed their
respective Petitions for Review before this Court. The issues raised by the parties are
summarized as follows:
I.
II.
III.
IV.

WHETHER OR NOT JUSTICE GANCAYCO WAS ESTOPPED FROM

ASSAILING THE VALIDITY OF ORDINANCE NO. 2904.
WHETHER OR NOT ORDINANCE NO. 2904 IS CONSTITUTIONAL.
WHETHER OR NOT THE WING WALL OF JUSTICE GANCAYCOS
BUILDING IS A PUBLIC NUISANCE.
WHETHER OR NOT THE MMDA LEGALLY DEMOLISHED THE
PROPERTY OF JUSTICE GANCAYCO.
The Courts Ruling

Estoppel
The MMDA and the City Government of Quezon City both claim that Justice Gancayco was
estopped from challenging the ordinance, because, in 1965, he asked for an exemption from the
application of the ordinance. According to them, Justice Gancayco thereby recognized the power
of the city government to regulate the construction of buildings.
To recall, Justice Gancayco questioned the constitutionality of the ordinance on two
grounds: (1) whether the ordinance takes private property without due process of law and just
compensation; and (2) whether the ordinance violates the equal protection of rights because it
allowed exemptions from its application.
On the first ground, we find that Justice Gancayco may still question the constitutionality
of the ordinance to determine whether or not the ordinance constitutes a taking of private
property without due process of law and just compensation. It was only in 2003 when he was
allegedly deprived of his property when the MMDA demolished a portion of the building.
Because he was granted an exemption in 1966, there was no taking yet to speak of.

Moreover, in Acebedo Optical Company, Inc. v. Court of Appeals,[21] we held:

It is therefore decisively clear that estoppel cannot apply in this case. The
fact that petitioner acquiesced in the special conditions imposed by the City
Mayor in subject business permit does not preclude it from challenging the said
imposition, which is ultra vires or beyond the ambit of authority of respondent
City Mayor. Ultra vires acts or acts which are clearly beyond the scope of
one's authority are null and void and cannot be given any effect. The
doctrine of estoppel cannot operate to give effect to an act which is otherwise
null and void or ultra vires. (Emphasis supplied.)
Recently, in British American Tobacco v. Camacho,[22] we likewise held:
We find that petitioner was not guilty of estoppel. When it made the
undertaking to comply with all issuances of the BIR, which at that time it
considered as valid, petitioner did not commit any false misrepresentation or
misleading act. Indeed, petitioner cannot be faulted for initially undertaking to
comply with, and subjecting itself to the operation of Section 145(C), and only
later on filing the subject case praying for the declaration of its unconstitutionality
when the circumstances change and the law results in what it perceives to be
unlawful discrimination.The mere fact that a law has been relied upon in the
past and all that time has not been attacked as unconstitutional is not a
ground for considering petitioner estopped from assailing its validity. For
courts will pass upon a constitutional question only when presented before it
in bona fide cases for determination, and the fact that the question has not
been raised before is not a valid reason for refusing to allow it to be raised
later. (Emphasis supplied.)
Anent the second ground, we find that Justice Gancayco may not question the ordinance
on the ground of equal protection when he also benefited from the exemption. It bears emphasis
that Justice Gancayco himself requested for an exemption from the application of the ordinance
in 1965 and was eventually granted one. Moreover, he was still enjoying the exemption at the
time of the demolition as there was yet no valid notice from the city engineer. Thus, while the
ordinance may be attacked with regard to its different treatment of properties that appears to be
similarly situated, Justice Gancayco is not the proper person to do so.
Zoning and the regulation of the
construction of buildings are valid
exercises of police power .
In MMDA v. Bel-Air Village Association, [23] we discussed the nature of police powers
exercised by local government units, to wit:
Police power is an inherent attribute of sovereignty. It has been defined as
the power vested by the Constitution in the legislature to make, ordain, and
establish all manner of wholesome and reasonable laws, statutes and ordinances,

either with penalties or without, not repugnant to the Constitution, as they shall
judge to be for the good and welfare of the commonwealth, and for the subjects of
the same. The power is plenary and its scope is vast and pervasive, reaching and
justifying measures for public health, public safety, public morals, and the general
welfare.
It bears stressing that police power is lodged primarily in the National
Legislature. It cannot be exercised by any group or body of individuals not
possessing legislative power. The National Legislature, however, may delegate
this power to the President and administrative boards as well as the lawmaking
bodies of municipal corporations or local government units. Once delegated, the
agents can exercise only such legislative powers as are conferred on them by the
national lawmaking body.
To resolve the issue on the constitutionality of the ordinance, we must first determine
whether there was a valid delegation of police power. Then we can determine whether the City
Government of Quezon City acted within the limits of the delegation.
It is clear that Congress expressly granted the city government, through the city council,
police power by virtue of Section 12(oo) of Republic Act No. 537, or the Revised Charter of
Quezon City,[24] which states:
To make such further ordinances and regulations not repugnant to law as
may be necessary to carry into effect and discharge the powers and duties
conferred by this Act and such as it shall deem necessary and proper to provide
for the health and safety, promote the prosperity, improve the morals, peace, good
order, comfort, and convenience of the city and the inhabitants thereof, and for the
protection of property therein; and enforce obedience thereto with such lawful
fines or penalties as the City Council may prescribe under the provisions of
subsection (jj) of this section.
Specifically, on the powers of the city government to regulate the construction of
buildings, the Charter also expressly provided that the city government had the power to regulate
the kinds of buildings and structures that may be erected within fire limits and the manner of
constructing and repairing them.[25]
With regard meanwhile to the power of the local government units to issue zoning
ordinances, we apply Social Justice Society v. Atienza.[26] In that case, the Sangguniang
Panlungsod of Manila City enacted an ordinance on 28 November 2001 reclassifying certain
areas of the city from industrial to commercial. As a result of the zoning ordinance, the oil
terminals located in those areas were no longer allowed. Though the oil companies contended
that they stood to lose billions of pesos, this Court upheld the power of the city government to
pass the assailed ordinance, stating:
In the exercise of police power, property rights of individuals may be
subjected to restraints and burdens in order to fulfil the objectives of the

government. Otherwise stated, the government may enact legislation that may
interfere with personal liberty, property, lawful businesses and occupations
to promote the general welfare. However, the interference must be reasonable
and not arbitrary. And to forestall arbitrariness, the methods or means used
to protect public health, morals, safety or welfare must have a reasonable
relation to the end in view.
The means adopted by the Sanggunian was the enactment of a zoning
ordinance which reclassified the area where the depot is situated from industrial to
commercial. A zoning ordinance is defined as a local city or municipal
legislation which logically arranges, prescribes, defines and apportions a
given political subdivision into specific land uses as present and future
projection of needs. As a result of the zoning, the continued operation of the
businesses of the oil companies in their present location will no longer be
permitted. The power to establish zones for industrial, commercial and
residential uses is derived from the police power itself and is exercised for the
protection and benefit of the residents of a locality.Consequently, the
enactment of Ordinance No. 8027 is within the power of the Sangguniang
Panlungsod of the City of Manila and any resulting burden on those affected
cannot be said to be unjust... (Emphasis supplied)
In Carlos Superdrug v. Department of Social Welfare and Development,[27] we also held:
For this reason, when the conditions so demand as determined by the
legislature, property rights must bow to the primacy of police power because
property rights, though sheltered by due process, must yield to general
welfare.
Police power as an attribute to promote the common good would be
diluted considerably if on the mere plea of petitioners that they will suffer
loss of earnings and capital, the questioned provision is invalidated.
Moreover, in the absence of evidence demonstrating the alleged confiscatory
effect of the provision in question, there is no basis for its nullification in view
of the presumption of validity which every law has in its favor. (Emphasis
supplied.)
In the case at bar, it is clear that the primary objectives of the city council of Quezon City
when it issued the questioned ordinance ordering the construction of arcades were the health and
safety of the city and its inhabitants; the promotion of their prosperity; and the improvement of
their morals, peace, good order, comfort, and the convenience. These arcades provide safe and
convenient passage along the sidewalk for commuters and pedestrians, not just the residents
of Quezon City. More especially so because the contested portion of the building is located on a
busy segment of the city, in a business zone along EDSA.
Corollarily, the policy of the Building Code, [28] which was passed after the Quezon City
Ordinance, supports the purpose for the enactment of Ordinance No. 2904. The Building Code
states:

Section 102. Declaration of Policy. It is hereby declared to be the policy of the

State to safeguard life, health, property, and public welfare, consistent with the
principles of sound environmental management and control; and to this end, make
it the purpose of this Code to provide for all buildings and structures, a framework
of minimum standards and requirements to regulate and control their location,
site, design quality of materials, construction, occupancy, and maintenance.
Section 1004 likewise requires the construction of arcades whenever existing or zoning
ordinances require it. Apparently, the law allows the local government units to determine
whether arcades are necessary within their respective jurisdictions.
Justice Gancayco argues that there is a three-meter sidewalk in front of his property line,
and the arcade should be constructed above that sidewalk rather than within his property line. We
do not need to address this argument inasmuch as it raises the issue of the wisdom of the city
ordinance, a matter we will not and need not delve into.
To reiterate, at the time that the ordinance was passed, there was no national building
code enforced to guide the city council; thus, there was no law of national application that
prohibited the city council from regulating the construction of buildings, arcades and sidewalks
in their jurisdiction.
The wing walls of the building are not
nuisances per se.
The MMDA claims that the portion of the building in question is a nuisance per se.
We disagree.
The fact that in 1966 the City Council gave Justice Gancayco an exemption from
constructing an arcade is an indication that the wing walls of the building are not nuisances per
se. The wing walls do not per se immediately and adversely affect the safety of persons and
property. The fact that an ordinance may declare a structure illegal does not necessarily make
that structure a nuisance.
Article 694 of the Civil Code defines nuisance as any act, omission, establishment,
business, condition or property, or anything else that (1) injures or endangers the health or safety
of others; (2) annoys or offends the senses; (3) shocks, defies or disregards decency or morality;
(4) obstructs or interferes with the free passage of any public highway or street, or any body of
water; or, (5) hinders or impairs the use of property. A nuisance may be per se or per accidens. A
nuisance per se is that which affects the immediate safety of persons and property and may
summarily be abated under the undefined law of necessity.[29]
Clearly, when Justice Gancayco was given a permit to construct the building, the city
council or the city engineer did not consider the building, or its demolished portion, to be a threat
to the safety of persons and property. This fact alone should have warned the MMDA against
summarily demolishing the structure.

Neither does the MMDA have the power to declare a thing a nuisance. Only courts of law
have the power to determine whether a thing is a nuisance. In AC Enterprises v. Frabelle
Properties Corp.,[30] we held:
We agree with petitioner's contention that, under Section 447(a)(3)(i) of
R.A. No. 7160, otherwise known as the Local Government Code,
the Sangguniang Panglungsod is empowered to enact ordinances declaring,
preventing or abating noise and other forms of nuisance. It bears stressing,
however, that the Sangguniang Bayan cannot declare a particular thing as a
nuisanceper se and order its condemnation. It does not have the power to find,
as a fact, that a particular thing is a nuisance when such thing is not a
nuisance per se; nor can it authorize the extrajudicial condemnation and
destruction of that as a nuisance which in its nature, situation or use is not
such. Those things must be determined and resolved in the ordinary courts of
law. If a thing be in fact, a nuisance due to the manner of its operation, that
question cannot be determined by a mere resolution of the Sangguniang Bayan.
(Emphasis supplied.)

MMDA illegally demolished

the property of Justice Gancayco.
MMDA alleges that by virtue of MMDA Resolution No. 02-28, Series of 2002, it is
empowered to demolish Justice Gancaycos property. It insists that the Metro Manila Council
authorized the MMDA and the local government units to clear the sidewalks, streets, avenues,
alleys, bridges, parks and other public places in Metro Manila of all illegal structures and
obstructions. It further alleges that it demolished the property pursuant to the Building Code in
relation to Ordinance No. 2904 as amended.
However, the Building Code clearly provides the process by which a building may be
demolished. The authority to order the demolition of any structure lies with the Building Official.
The pertinent provisions of the Building Code provide:
SECTION 205. Building Officials. Except as otherwise provided herein, the
Building Official shall be responsible for carrying out the provisions of this Code
in the field as well as the enforcement of orders and decisions made pursuant
thereto.
Due to the exigencies of the service, the Secretary may designate incumbent
Public Works District Engineers, City Engineers and Municipal Engineers act as
Building Officials in their respective areas of jurisdiction.

The designation made by the Secretary under this Section shall continue until
regular positions of Building Official are provided or unless sooner terminated for
causes provided by law or decree.
xxx xxx xxx
SECTION 207. Duties of a Building Official. In his respective territorial
jurisdiction, the Building Official shall be primarily responsible for the
enforcement of the provisions of this Code as well as of the implementing rules
and regulations issued therefor. He is the official charged with the duties of
issuing building permits.
In the performance of his duties, a Building Official may enter any building or its
premises at all reasonable times to inspect and determine compliance with the
requirements of this Code, and the terms and conditions provided for in the
building permit as issued.
When any building work is found to be contrary to the provisions of this
Code, the Building Official may order the work stopped and prescribe the
terms and/or conditions when the work will be allowed to resume. Likewise,
the Building Official is authorized to order the discontinuance of the
occupancy or use of any building or structure or portion thereof found to be
occupied or used contrary to the provisions of this Code.
xxx xxx xxx
SECTION 215. Abatement of Dangerous Buildings. When any building or
structure is found or declared to be dangerous or ruinous, the Building
Official shall order its repair, vacation or demolition depending upon the
degree of danger to life, health, or safety. This is without prejudice to further
action that may be taken under the provisions of Articles 482 and 694 to 707
of the Civil Code of the Philippines. (Emphasis supplied.)
MMDA v. Trackworks Rail Transit Advertising, Vending and Promotions, Inc. [31] is
applicable to the case at bar. In that case, MMDA, invoking its charter and the Building Code,
summarily dismantled the advertising media installed on the Metro Rail Transit (MRT) 3. This
Court held:
It is futile for MMDA to simply invoke its legal mandate to justify the
dismantling of Trackworks' billboards, signages and other advertising media.
MMDA simply had no power on its own to dismantle, remove, or destroy the
billboards, signages and other advertising media installed on the MRT3 structure
by Trackworks. In Metropolitan Manila Development Authority v. Bel-Air Village
Association, Inc., Metropolitan Manila Development Authority v. Viron
Transportation Co., Inc., and Metropolitan Manila Development Authority v.
Garin, the Court had the occasion to rule that MMDA's powers were limited
to the formulation, coordination, regulation, implementation, preparation,

management, monitoring, setting of policies, installing a system, and

administration. Nothing in Republic Act No. 7924 granted MMDA police
power, let alone legislative power.
Clarifying the real nature of MMDA, the Court held:
...The MMDA is, as termed in the charter itself, a "development
authority". It is an agency created for the purpose of laying down policies
and coordinating with the various national government agencies, people's
organizations, non-governmental organizations and the private sector for the
efficient and expeditious delivery of basic services in the vast metropolitan
area. All its functions are administrative in nature and these are actually
summed up in the charter itself, viz:
Sec.2. Creation of the Metropolitan Manila Development Authority.- xxx.
The MMDA shall perform planning, monitoring and coordinative
functions, and in the process exercise regulatory and supervisory authority
over the delivery of metro-wide services within Metro Manila, without
diminution of the autonomy of local government units concerning purely
local matters.
The Court also agrees with the CA's ruling that MMDA Regulation No.
96-009 and MMC Memorandum Circular No. 88-09 did not apply to Trackworks'
billboards, signages and other advertising media. The prohibition against posting,
installation and display of billboards, signages and other advertising media
applied only to public areas, but MRT3, being private property pursuant to the
BLT agreement between the Government and MRTC, was not one of the
areas as to which the prohibition applied. Moreover, MMC Memorandum
Circular No. 88-09 did not apply to Trackworks' billboards, signages and other
advertising media in MRT3, because it did not specifically cover MRT3, and
because it was issued a year prior to the construction of MRT3 on the center
island of EDSA. Clearly, MMC Memorandum Circular No. 88-09 could not have
included MRT3 in its prohibition.
MMDA's insistence that it was only implementing Presidential Decree No.
1096 (Building Code) and its implementing rules and regulations is not
persuasive. The power to enforce the provisions of the Building Code was
lodged in the Department of Public Works and Highways (DPWH), not in
MMDA, considering the law's following provision, thus:
Sec. 201. Responsibility for Administration and Enforcement. The administration and enforcement of the provisions of this Code
including the imposition of penalties for administrative violations thereof
is hereby vested in the Secretary of Public Works, Transportation and
Communications, hereinafter referred to as the "Secretary."

There is also no evidence showing that MMDA had been delegated by

DPWH to implement the Building Code. (Emphasis supplied.)
Additionally, the penalty prescribed by Ordinance No. 2904 itself does not include the
demolition of illegally constructed buildings in case of violations. Instead, it merely prescribes a
punishment of a fine of not more than two hundred pesos (P200.00) or by imprisonment of not
more than thirty (30) days, or by both such fine and imprisonment at the discretion of the
Court, Provided, that if the violation is committed by a corporation, partnership, or any juridical
entity, the Manager, managing partner, or any person charged with the management thereof shall
be held responsible therefor. The ordinance itself also clearly states that it is the regular courts
that will determine whether there was a violation of the ordinance.
As pointed out in Trackworks, the MMDA does not have the power to enact ordinances.
Thus, it cannot supplement the provisions of Quezon City Ordinance No. 2904 merely through
its Resolution No. 02-28.
Lastly, the MMDA claims that the City Government of Quezon City may be considered
to have approved the demolition of the structure, simply because then Quezon City Mayor
Feliciano R. Belmonte signed MMDA Resolution No. 02-28. In effect, the city government
delegated these powers to the MMDA. The powers referred to are those that include the power to
declare, prevent and abate a nuisance[32] and to further impose the penalty of removal or
demolition of the building or structure by the owner or by the city at the expense of the owner.[33]
MMDAs argument does not hold water. There was no valid delegation of powers to the
MMDA. Contrary to the claim of the MMDA, the City Government of Quezon City washed its
hands off the acts of the former. In its Answer,[34] the city government stated that the demolition
was undertaken by the MMDA only, without the participation and/or consent of Quezon City.
Therefore, the MMDA acted on its own and should be held solely liable for the destruction of the
portion of Justice Gancaycos building.
WHEREFORE, in view of the foregoing, the Decision of the Court of Appeals in CAG.R. SP No. 84648 is AFFIRMED.
SO ORDERED.

G.R. No. 97882 August 28, 1996

THE CITY OF ANGELES, Hon. ANTONIO ABAD SANTOS, in his capacity as

MAYOR of Angeles City, and the SANGGUNIANG PANLUNGSOD OF THE CITY OF
ANGELES, petitioners,
vs.
COURT OF APPEALS and TIMOG SILANGAN DEVELOPMENT
CORPORATION, respondents.

PANGANIBAN, J.:p
In resolving this petition, the Court addressed the questions of whether a donor of open
spaces in a residential subdivision can validly impose conditions on the said donation;
whether the city government as donee can build and operate a drug rehabilitation center
on the donated land intended for open space; and whether the said donation may be
validly rescinded by the donor.
Petitioners claim they have the right to construct and operate a drug rehabilitation
center on the donated land in question, contrary to the provisions stated in the amended
Deed of Donation.
On the other hand, private respondent, owner/developer of the Timog Park residential
subdivision in Angeles City, opposed the construction and now, the operation of the said
center on the donated land, which is located within said residential subdivision.
Before us is a petition for review on certiorari assailing the Decision 1 of the Court of
Appeals 2 dated October 31, 1990, which affirmed the decision 3 of the Regional Trial
Court of Angeles City Branch 56, 4 dated February 15, 1989.
The Antecedents
In a Deed of Donation dated March 9, 1984, subsequently superseded by a Deed of
Donation dated September 27, 1984, which in turn was superseded by an Amended
Deed of Donation dated November 26, 1984, private respondent donated to the City of
Angeles, 51 parcels of land situated in Barrio Pampang, City of Angeles, with an
aggregate area of 50,676 square meters, more or less, part of a bigger area also
belonging to private respondent. The amended deed 5 provided, among others, that:
2. The properties donated shall be devoted and utilized solely for the site
of the Angeles City Sports Center (which excludes cockfighting) pursuant
to the plans to be submitted within six (6) months by the DONEE to the
DONOR for the latter's approval, which approval shall not be

unreasonably withheld as long as entire properties donated are developed

as a Sports Complex. Any change or modification in the basic design or
concept of said Sports Center must have the prior written consent of the
DONOR.
3. No commercial building, commercial complex, market or any other
similar complex, mass or tenament (sic) housing/building(s) shall be
constructed in the properties donated nor shall cockfighting, be allowed in
the premises.
4. The construction of the Sports Center shall commence within a period
of one (1) year from March 9, 1984 and shall be completed within a period
of five (5) years from March 9, 1984.
xxx xxx xxx
6. The properties donated (which is more than five (5) percent of the total
land area of the DONOR's subdivision) shall constitute the entire open
space for DONOR's subdivision and all other lands or areas previously
reserved or designated, including Lot 1 and Lot 2A of Block 72 and the
whole Block 29 are dispensed with, and rendered free, as open spaces,
and the DONEE hereby agrees to execute and deliver all necessary
consents, approvals, endorsements, and authorizations to effect the
foregoing.
7. The properties donated are devoted and described as "open spaces" of
the DONOR's subdivision, and to this effect, the DONEE, upon
acceptance of this donation, releases the DONOR and/or assumes any
and all obligations and liabilities appertaining to the properties donated.
8. Any substantial breach of the foregoing provisos shall entitle the
DONOR to revoke or rescind this Deed of Donation, and in such
eventuality, the DONEE agrees to vacate and return the premises,
together with all improvements, to the DONOR peacefully without
necessity of judicial action.
On July 19, 1988, petitioners started the construction of a drug rehabilitation center on a
portion of the donated land. Upon learning thereof, private respondent protested such
action for being violative of the terms and conditions of the amended deed and
prejudicial to its interest and to those of its clients and residents. Private respondent
also offered another site for the rehabilitation center. However, petitioners ignored the

protest, maintaining that the construction was not violative of the terms of the donation.
The alternative site was rejected because, according to petitioners, the site was too
isolated and had no electric and water facilities.
On August 8, 1988, private respondent filed a complaint with the Regional Trial Court,
Branch 56, in Angeles City against the petitioners, alleging breach of the conditions
imposed in the amended deed of donation and seeking the revocation of the donation
and damages, with preliminary injunction and/or temporary restraining order to halt the
construction of the said center.
On August 10, 1988, the trial court issued a temporary restraining order to enjoin the
petitioners from further proceeding with the construction of the center, which at that time
was already 40% complete.
However, the trial court denied the prayer for preliminary injunction based on the
prohibition in Presidential Decree No. 1818.
In their Answer with counterclaim, petitioners admitted the commencement of the
construction but alleged inter aliathat the conditions imposed in the amended deed were
contrary to Municipal Ordinance No. 1, Series of 1962, otherwise known as the
Subdivision Ordinance of the Municipality of Angeles. 6
On October 15, 1988, private respondent filed a Motion for Partial Summary Judgment
on the ground that the main defense of the petitioners was anchored on a pure question
of law and that their legal position was untenable.
The petitioners opposed, contending that they had a meritorious defense as (1) private
respondents had no right to dictate upon petitioners what to do with the donated land
and how to do it so long as the purpose remains for public use; and (2) the cause of
action of the private respondent became moot and academic when the Angeles City
Council repealed the resolution providing for the construction of said drug rehabilitation
center and adopted a new resolution changing the purpose and usage of said center to
a "sports development and youth center" in order to conform with the sports complex
project constructed on the donated land.
On February 15, 1989, the trial court rendered its decision, in relevant part reading as
follows:
. . . the Court finds no inconsistency between the conditions imposed in
the Deeds of Donation and the provision of the Subdivision Ordinance of
the City of Angeles requiring subdivisions in Angeles City to reserve at

least one (1) hectare in the subdivision as suitable sites known as open
spaces for parks, playgrounds, playlots and/or other areas to be
rededicated to public use. On the contrary, the condition requiring the
defendant city of Angeles to devote and utilize the properties donated to it
by the plaintiff for the site of the Angeles City Sports Center conforms with
the requirement in the Subdivision Ordinance that the subdivision of the
plaintiff shall be provided with a playground or playlot, among others.
On the other hand the term "public use'" in the Subdivision Ordinance
should not be construed to include a Drug Rehabilitation Center as that
would be contrary to the primary purpose of the Subdivision Ordinance
requiring the setting aside of a portion known as "Open Space" for park,
playground and playlots, since these are intended primarily for the benefit
of the residents of the subdivision. While laudable to the general public, a
Drug Rehabilitation Center in a subdivision will be a cause of concern and
constant worry to its residents.
As to the third issue in paragraph (3), the passage of the Ordinance
changing the purpose of the building constructed in the donated properties
from a Drug Rehabilitation Center to a Sports Center comes too late. It
should have been passed upon the demand of the plaintiff to the
defendant City of Angeles to stop the construction of the Drug
Rehabilitation Center, not after the complaint was filed.
Besides, in seeking the revocation of the Amended Deed of Donation,
plaintiff also relies on the failure of the defendant City of Angeles to submit
the plan of the proposed Sports Center within six (6) months and
construction of the same within five years from March 9, 1984, which are
substantial violations of the conditions imposed in the Amended Deed of
Donation.
The dispositive portion of the RTC decision reads:
WHEREFORE, judgment is hereby rendered:
(1) Enjoining defendants, its officers, employees and all persons acting on
their behalf to perpetually cease and desist from constructing a Drug
Rehabilitation Center or any other building or improvement on the
Donated Land.

(2) Declaring the amended Deed of Donation revoked and rescinded and
ordering defendants to peacefully vacate and return the Donated Land to
plaintiff, together with all the improvements existing thereon. And,
(3) Denying the award of compensatory or actual and exemplary damages
including attorney's fees.
NO PRONOUNCEMENT AS TO COST.
In March 1989, petitioners fried their Notice of Appeal. On April 15, 1989 while the
appeal was pending, petitioners inaugurated the Drug Rehabilitation Center. 7
On April 26, 1991, the respondent Court rendered the assailed Decision affirming the
ruling of the trial court. Subsequently, the petitioners motion for re-consideration was
also denied for lack of merit.
Consequently, this Petition for Review.
The Issues
The key issues 8 raised by petitioners may be restated as follows:
I. Whether a subdivision owner/developer is legally bound under
Presidential Decree No. 1216 to donate to the city or municipality the
"open space" allocated exclusively for parks, playground and recreational
use.
II. Whether the percentage of the "open space" allocated exclusively for
parks, playgrounds and recreational use is to be based on the "gross
area" of the subdivision or on the total area reserved for "open space".
III. Whether private respondent as subdivision owner/developer may
validly impose conditions in the Amended Deed of Donation regarding the
use of the "open space" allocated exclusively for parks and playgrounds..
IV. Whether or not the construction of the Drug Rehabilitation Center on
the donated "open space" may be enjoined.
V. Whether the donation by respondents subdivision owner/developer of
the "open space" of its subdivision in favor of petitioner City of Angeles
may be revoked for alleged violation of the Amended Deed of Donation.

Central to this entire controversy is the question of whether the donation of the open
space may be revoked at all.
First Issue: Developer Legally Bound to Donate Open Space
The law involved in the instant case is Presidential Decree No. 1216, dated October 14,
1977, 9 which reads:
PRESIDENTIAL DECREE NO. 1216
Defining "Open Space" In Residential Subdivisions And Amending Section
31 Of Presidential Decree No. 957 Requiring Subdivision Owners To
Provide Roads, Alleys, Sidewalks And Reserve Open Space For Parks Or
Recreational Use.
WHEREAS, there is a compelling need to create and maintain a healthy
environment in human settlements by providing open spaces, roads,
alleys and sidewalks as may be deemed suitable to enhance the quality of
life of the residents therein;
WHEREAS, such open spaces, roads, alleys and sidewalks in residential
subdivisions are for public use and are, therefore, beyond the commerce
of men;
WHEREAS, pursuant to Presidential Decree No. 953 at least thirty percent
(30%) of the total area of a subdivision must be reserved, developed and
maintained as open space for parks and recreational areas, the cost of
which will ultimately be borne by the lot buyers which thereby increase the
acquisition price of subdivision lots beyond the reach of the common
mass;
WHEREAS, thirty percent (30%) required open space can be reduced to a
level that will make the subdivision industry viable and the price of
residential lots within the means of the low income group at the same time
preserve the environmental and ecological balance through rational
control of land use and proper design of space and facilities;
WHEREAS, pursuant to Presidential Decree No. 757, government efforts
in housing, including resources, functions and activities to maximize
results have been concentrated into one single agency, namely, the
National Housing Authority;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the

Philippines, by virtue of the powers vested in me by the Constitution, do
hereby order and decree:
Sec. 1. For purposes of this Decree, the term "open apace" shall mean an
area reserved exclusively for parks, playgrounds, recreational uses,
schools, roads, places of worship, hospitals, health centers, barangay
centers and other similar facilities and amenities.
Sec. 2. Section 31 of Presidential Decree No. 957 is hereby amended to
read as follows:
Sec. 31. Roads, Alleys, Sidewalks and Open Spaces The
owner as developer of a subdivision shall provide adequate
roads, alleys and sidewalks. For subdivision projects one (1)
hectare or more, the owner or developer shall reserve thirty
percent (30%) of the gross area for open space. Such open
space shall have the following standards allocated
exclusively for parks, playgrounds and recreational use:
a. 9% of gross area for high density or social housing (66 to
100 family lots per gross hectare).
b. 7% of gross area for medium-density or economic housing
(21 to 65 family lots per gross hectare).
c. 3.5% of gross area for low-density or open market housing
(20 family lots and below per gross hectare).
These areas reserved for parks, playgrounds and recreational use shall be
non-alienable public lands, and non-buildable. The plans of the
subdivision project shall include tree planting on such parts of the
subdivision as may be designated by the Authority.
Upon their completion certified to by the Authority, the roads, alleys,
sidewalks and playgrounds shall be donated by the owner or developer to
the city or municipality and it shall be mandatory for the local governments
to accept provided, however, that the parks and playgrounds maybe
donated to the Homeowners Association of the project with the consent of
the city or municipality concerned. No portion of the parks and

playgrounds donated thereafter shall be converted to any other purpose or

purposes.
Sec. Sections 2 and 5 of Presidential Decree No. 953 are hereby repealed
and other laws, decrees, executive orders, institutions, rules and
regulations or parts thereof inconsistent with these provisions are also
repealed or amended accordingly.
Sec. 4. This Decree shall take effect immediately.
Pursuant to the wording of Sec. 31 of P.D. 957 as above amended by the aforequoted
P.D. No. 1216, private respondent is under legal obligation to donate the open space
exclusively allocated for parks, playgrounds and recreational use to the petitioner.
This can be clearly established by referring to the original provision of Sec. 31 of P.D.
957, which reads as follows:
Sec. 31. Donation of roads and open spaces to local government The
registered owner developer of the subdivision or condominium project,
upon completion of the development of said project may, at his option,
convey by way of donation the roads and open spaces found within the
project to the city or municipality wherein the project is located. Upon
acceptance of he donation by the city or municipality concerned, no
portion of the area donated shall thereafter be converted to any other
purpose or purposes unless after hearing, the proposed conversion is
approved by the Authority. (Emphasis supplied)
It will be noted that under the aforequoted original provision, it was optional on the part
of the owner or developer to donate the roads and spaces found within the project to the
city or municipality where the project is located. Elsewise stated, there was no legal
obligation to make the donation.
However, said Sec. 31 as amended now states in its last paragraph:
Upon their completion . . ., the roads, alleys, sidewalks and
playgrounds shall be donated by the owner or developer to the city or
municipality and it shall be mandatory for the local government to
accept; provided, however, that the parks and playgrounds may be
donated to the Homeowners Association of the project with the consent of
the city or must concerned. . . .

It is clear from the aforequoted amendment that it is no longer optional on the

part of the subdivision owner/developer to donate the grounds; rather there is
now a legal obligation to donate the same. Although there is a proviso a proviso
that the donation of the parks and playgrounds may be made to the homeowners
association of the project with the consent of the city of municipality, concerned,
nonetheless, the owner/developer is still obligated under the law to donate. Such
option does not change the mandatory hectare of the provision. The donation
has to be made regardless of which donee is picked by the owner/developer. The
consent requirement before the same can be donated to the homeowners"
association emphasizes this point.
Second Issue: Percentage of Area for Parks and Playgrounds
Petitioners contend that the 3.5% to 9% allotted by Sec. 31 for parks, playgrounds and
recreational uses should be based on the gross area of the entire subdivision, and not
merely on the area of the open space alone, as contended by private respondent and
as decided by the respondent Court. 10
The petitioners are correct. The language of Section 31 of P.D. 957 as amended by
Section 2 of P.D. 1216 is wanting in clarity and exactitude, but it can be easily inferred
that the phrase "gross area" refers to the entire subdivision area. The said phrase was
used four times in the same section in two sentences, the first of which reads:
. . . For subdivision projects one (1) hectare or more, the owner or more,
the owner or developer shall reserve thirty percent (30%) of the gross
area for open space, . . .
Here, the phrase "30% of the gross area" refers to the total area of the subdivision, not
of the open space. Otherwise, the definition of "open space" would be circular. Thus,
logic dictates that the same basis be applied in the succeeding instances where the
phrase "open space" is used, i.e., "9% of gross area... 7% of gross area... 3.5% of gross
area..." Moreover, we agree with petitioners that construing the 3.5% to 9% as applying
to the totality of the open space would result in far too small an area being devoted for
parks, playgrounds, etc., thus rendering meaningless and defeating the purpose of the
statute. This becomes clear when viewed in the light of the original requirement of P.D.
953 ("Requiring the Planting of Trees in Certain Places, etc."), section 2 of which reads:
Sec. 2. Every owner of land subdivided into
commerce/residential/industrial lots after the effectivity of this Decree shall
reserve, develop and maintain not less than thirty percent (30%) of the

total area of the subdivision, exclusive of roads, service streets and alleys,
as open space for parks and recreational areas.
No plan for a subdivision shall be approved by the Land Registration
Commission or any office or agency of the government unless at least
thirty percent (30%) of the total area of the subdivision, exclusive, of
roads, service streets and alleys, is reserved as open space for parks and
recreational areas . . .
To our mind, it is clear that P.D. 1216 was an attempt to achieve a happy compromise
and a realistic balance between the imperatives of environmental planning and the need
to maintain economic feasibility in subdivision and housing development, by reducing
the required area for parks, playgrounds and recreational uses from thirty percent (30%)
to only 3.5% 9% of the entire area of the subdivision.
Third Issue: Imposition of Conditions in Donation of Open Space
Petitioners argue that since the private respondent is required by law to donate the
parks and playgrounds, it has no right to impose the condition in the Amended Deed of
Donation that "the properties donated shall be devoted and utilized solely for the site of
the Angeles City Sports Center." It cannot prescribe any condition as to the use of the
area donated because the use of the open spaces already governed by P.D. 1216. In
other words, the donation should be absolute. Consequently, the conditions in the
amended deed which were allegedly violated are deemed not written. Such being the
case, petitioners cannot be considered to have committed any violation of the terms and
conditions of the said amended deed, as the donation is deemed unconditional, and it
follows that there is no basis for revocation of the donation.
However, the general law on donations does not prohibit the imposition of conditions on
a donation so long as the conditions are not illegal or
impossible. 11
In regard to donations of open spaces, P.D. 1216 itself requires among other things that
the recreational areas to be donated be based, as aforementioned, on a percentage
(3.5% 7%, or 9%) of the total area of the subdivision depending on whether the division
is low , medium , or high-density. It further declares that such open space devoted
to parks, playgrounds and recreational areas are non-alienable public land and nonbuildable. However, there is no prohibition in either P.D. 957 or P.D. 1216 against
imposing conditions on such donation.

We hold that any condition may be imposed in the donation, so long as the same is not
contrary to law, morals, good customs, public order or public policy. The contention of
petitioners that the donation should be unconditional because it is mandatory has no
basis in law. P.D. 1216 does not provide that the donation the open space for parks and
playgrounds should be unconditional. To rule that it should be so is tantamount to
unlawfully expanding, the provisions of the decree. 12
In the case at bar, one of the conditions imposed in the Amended Deed of Donation is
that the donee should build a sports complex on the donated land. Since P.D. 1216
clearly requires that the 3.5% to 9% of the gross area alloted for parks and playgrounds
is "non-buildable", then the obvious question arises whether or not such condition was
validly imposed and is binding on the donee. It is clear that the "non-buildable"
character applies only to the 3.5% to 9% area set by law. If there is any excess land
over and above the 3.5% to 9% required by the decree, which is also used or allocated
for parks, playgrounds and recreational purposes, it is obvious that such excess area is
not covered by the non-buildability restriction. In the instant case, if there be an excess,
then the donee would not be barred from developing and operating a sports complex
thereon, and the condition in the amended deed would then be considered valid and
binding.
To determine if the over 50,000 square meter area donated pursuant to the amended
deed would yield an excess over the area required by the decree, it is necessary to
determine under which density category the Timog Park subdivision falls.
If the subdivision falls under the low density or open market housing category, with 20
family lots or below per gross hectare, the developer will need to allot only 3.5% of
gross area for parks and playgrounds, and since the donated land constitutes "more
than five (5) percent of the total land area of the subdivision 13 there would therefore be
an excess of over 1.5% of gross area which would not be non-buildable. Petitioners, on
the other hand, alleged (and private respondent did not controvert) that the subdivision
in question is a "medium-density or economic housing" subdivision based on the sizes
of the family lots donated in the amended deed, 14 for which category the decree
mandates that not less than 7% of gross area be set aside. Since the donated land
constitutes only a little more than 5% of the gross area of the subdivision, which is less
than the area required to be allocated for non-buildable open space, therefore there is
no "excess land" to speak of. This then means that the condition to build a sports
complex on the donated land is contrary to law and should be considered as not
imposed.
Fourth Issue: Injunction vs. Construction of the Drug
Rehabilitation Center

Petitioners argue that the court cannot enjoin the construction of the drug rehabilitation
center because the decision of the court came only after the construction of the center
was completed and, based on jurisprudence, there can be no injunction unction of
events that have already transpired. 15
Private respondent, on the other hand, counters that the operation of the center is a
continuing act which would clearly cause injury to private respondent, its clients, and
residents of the subdivision, and thus, a proper subject of injunction. 16 Equity should
move in to granting of the injunctive relief if persistent repetition of the wrong is
threatened.
In light of Sec. 31 of P.D. 957, as amended, declaring the open space for parks,
playgrounds and recreational area as non-buildable, it appears indubitable that the
construction and operation of a drug rehabilitation center on the land in question is a
continuing violation of the law and thus should be enjoined.
Furthermore, the factual background of this case warrants that this Court rule against
petitioners on this issue. We agree with and affirm the Court's finding that petitioners
committed acts mocking the judicial system. 18
. . . When a writ of preliminary injunction was sought for by the appellee
(private respondent) to enjoin the appellants [petitioners herein] from
further continuing with the construction of the appellants the said center,
the latter resisted and took refuge under the provisions of Presidential
Decree No. 1818 (which prohibits writs of preliminary injunction) to
continue with the construction of the building. Yet, the appellants also
presented "City Council Resolution No. 227 which allegedly repealed the
previous Resolution authorizing the City Government to construct a Drug
Rehabilitation Center on the donated property, by "changing the purpose
and usage of the Drug Rehabilitation Center to Sports Development and
Youth Center to make it conform to the Sports Complex Project therein".
Under this Resolution No. 227, the appellants claimed that they have
abandoned all plans for the construction of the Drug Rehabilitation
Nonetheless, when judgment was finally rendered on February 15, 1989,
the appellants were quick to state that they have not after all abandoned
their plans for the center as they have in fact inaugurated the same April
15, 1989. In plain and simple terms, this act is a mockery of our judicial
system perpetrated by the appellants. For them to argue that the court
deal on their Drug Rehabilitation Center is not only preposterous but also
ridiculous.

It is interesting to observe that under the appealed decision the appellants

and their officers, employees and all other persons acting on their behalf
were perpetually enjoined to cease and desist from constructing a Drug
Rehabilitation Center on the donated property. Under Section 4 of Rule 39
of the Rules of Court, it is provided that:
Sec. 4 A judgment in an action for injunction shall not be stayed after its
rendition and before an appeal is taken or during the tendency of an
appeal .
Accordingly, a judgment restraining a party from doing a certain act is
enforceable and shall remain in full force and effect appeal. In the case at
bar, the cease and desist order therefore still stands. Appellants
persistence and continued construction and, subsequent, operation of the
Drug Rehabilitation Center violate the express terms of the writ of
injunction lawfully issued by the lower court.
This Court finds no cogent reason to reverse the above mentioned findings of the
respondent court. The allegation of the petitioners that the construction of the center
was finished before the judgment of the trial court was rendered deserves scant
consideration because it is self-serving and is completely unsupported by other
evidence.
The fact remains that the trial court rendered judgment enjoining the construction of the
drug rehabilitation center, revoking the donation and ordering the return of the donated
land. In spite of such injunction, petitioners publicly flaunted their disregard thereof with
the subsequent inauguration of the center on August 15, 1989. The operation o the
center, after inauguration, is even more censurable
Fifth Issue: Revocation of a Mandatory Donation Because of Noncompliance With an Illegal Condition
The private respondent contends that the building of said drug rehabilitation center is
violative of the Amended Deed of Donation. Therefore, under Article 764 of the New
Civil Code and stipulation no. 8 of the amended deed, private respondent is empowered
to revoke the donation when the donee has failed to comply with any of the conditions
imposed in the deed.
We disagree. Article 1412 of the Civil Code which provides that:

If the act in which the unlawful or forbidden cause consists does not
constitute a criminal offense, the following rules shall be observed:
(1) When the fault is on the part of both contracting parties, neither may
recover what he has given by virtue of the contract, or demand the
performance of the other's undertaking;
comes into play here. Both petitioners and private respondents are in violation of
P.D. 957 as amended, for donating and accepting a donation of open space less
than that required by law, and for agreeing to build and operate a sports complex
on the non-buildable open space so donated; and petitioners, for constructing a
drug rehabilitation center on the same non-buildable area.
Moreover, since the condition to construct a sport complex on the donated land has
previously been shown to be contrary to law, therefore, stipulation no. 8 of the amended
deed cannot be implemented because (1) no validstipulation of the amended deed had
been breached, and (2) it is highly improbable that the decree would have allowed the
return of the donated land for open space under any circumstance, considering the nonalienable character of such open space, in the light of the second Whereas clause of
P.D. 1216 which declares that . . . such open spaces, roads, alleys and sidewalks in
residential subdivisions are for public use and are, therefore, beyond the commerce of
men.
Further, as a matter of public policy, private respondent cannot be allowed to evade its
statutory obligation to donate the required open space through the expediency of
invoking petitioners breach of the aforesaid condition. It is a familiar principle that the
courts will not aid either party to enforce an illegal contract, but will leave them both
where they find them. Neither party can recover damages from the other arising from
the act contrary to law, or plead the same as a cause of action or as a defense. Each
must bear the consequences of his own acts. 19
There is therefore no legal basis whatsoever to revoke the donation of the subject open
space and to return the donated land to private respondent. The donated land should
remain with the donee as the law clearly intended such open spaces to be perpetually
part of the public domain, non-alienable and permanently devoted to public use as such
parks, playgrounds or recreation areas.
Removal/Demolition of Drug Rehabilitation Center
Inasmuch as the construction and operation of the drug rehabilitation center has been
established to law, the said center should be removed or demolished. At this juncture,

we hasten to add that this Court is and has always been four-square behind the
government's efforts to eradicate the drug scourge in this country. But the end never
justifies the means, and however laudable the purpose of the construction in question,
this Court cannot and will not countenance an outright and continuing violation of the
laws of the land, especially when committed by public officials.
In theory, the cost of such demolition, and the reimbursement of the public funds
expended in the construction thereof, should be borne by the officials of the City
Angeles who ordered and directed such construction. This Court has time and again
ruled that public officials are not immune from damages in their personal capacities
arising from acts done in bad faith. Otherwise stated, a public official may be liable in his
personal capacity for whatever damage he may have caused by his act done with
malice and in bad faith or beyond the scope of his authority or jurisdiction. 20 In the
instant case, the public officials concerned deliberately violated the law and persisted in
their violations, going so far as attempting to deceive the courts by their pretended
change of purpose and usage for the enter, and "making a mockery of the judicial
system". Indisputably, said public officials acted beyond the scope of their authority and
jurisdiction and with evident bad faith. However, as noted by the trial court 21, the
petitioners mayor and members of the Sangguniang Panlungsod of Angeles City were
sued only in their official capacities, hence, they could not be held personally liable
without first giving them their day in court. Prevailing jurisprudence 22 holding that public
officials are personally liable for damages arising from illegal acts done in bad faith are
premised on said officials having been sued both in their official and personal
capacities.
After due consideration of the circumstances, we believe that the fairest and most
equitable solution is to have the City of Angeles, donee of the subject open space and,
ostensibly, the main beneficiary of the construction and operation of the proposed drug
rehabilitation center, undertake the demolition and removal of said center, and if
feasible, recover the cost thereof from the city officials concerned.
WHEREFORE, the assailed Decision of the Court of appeals hereby MODIFIED as
follows:
(1) Petitioners are hereby ENJOINED perpetually from operating the drug rehabilitation
center or any other such facility on the donated open space.
(2) Petitioner City of Angeles is ORDERED to undertake and removal of said drug
rehabilitation center within a period of three (3) months from finality of this Decision, and
thereafter, to devote public use as a park, playground or other recreational use.

(3) The Amended Deed of Donation dated November 26, 1984 is hereby declared valid
and subsisting, except that the stipulations or conditions therein concerning the
construction of the Sports Center or Complex are hereby declared void and as if not
imposed, and therefore of no force and effect.
No Costs.
SO ORDERED.

THE HEIRS OF MARCELINO G.R. No. 169454

DORONIO, NAMELY: REGINA
AND FLORA, BOTH SURNAMED
DORONIO, Present:
Petitioners,
YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
HEIRS OF FORTUNATO REYES, JJ.
DORONIO, NAMELY: TRINIDAD
ROSALINA DORONIO-BALMES,
MODING DORONIO, FLORENTINA
DORONIO, AND ANICETA Promulgated:
ALCANTARA-MANALO,
Respondents. December 27, 2007
x--------------------------------------------------x
DECISION
REYES, R.T., J.:
For Our review on certiorari is the Decision[1] of the Court of Appeals (CA) reversing
that[2] of the Regional Trial Court (RTC), Branch 45, Anonas, Urdaneta City, Pangasinan, in an
action for reconveyance and damages. The CA declared respondents as rightful owners of onehalf of the subject property and directed petitioners to execute a registerable document
conveying the same to respondents.

The Facts
Spouses Simeon Doronio and Cornelia Gante, now both deceased, were the registered
owners of a parcel of land located at Barangay Cabalitaan, Asingan, Pangasinan covered by
Original Certificate of Title (OCT) No. 352.[3] The courts below described it as follows:
Un terreno (Lote 1018), situada en el municipio de Asingan, Linda por el NE; con
propriedad de Gabriel Bernardino; con el SE con propriedad de Zacarias
Najorda y Alejandro Najorda; por el SO con propriedad de Geminiano Mendoza
y por el NO con el camino para Villasis; midiendo una extension superficial mil
ciento cincuenta y dos metros cuadrados.[4]
The spouses had children but the records fail to disclose their number. It is clear,
however, that Marcelino Doronio and Fortunato Doronio, now both deceased, were among them
and that the parties in this case are their heirs. Petitioners are the heirs of Marcelino Doronio,
while respondents are the heirs of Fortunato Doronio.
On April 24, 1919, a private deed of donation propter nuptias[5] was executed by spouses
Simeon Doronio and Cornelia Gante in favor of Marcelino Doronio and the latters wife, Veronica
Pico. One of the properties subject of said deed of donation is the one that it described as
follows:
Fourth A piece of residential land located in the barrio of Cabalitian but
we did not measure it, the area is bounded on the north by Gabriel Bernardino; on
the east by Fortunato Doronio; on the south by Geminiano Mendoza and on the
west by a road to Villasis. Constructed on said land is a house of light materials
also a part of the dowry. Value 200.00.[6]

It appears that the property described in the deed of donation is the one covered by OCT
No. 352. However, there is a significant discrepancy with respect to the identity of the owner of
adjacent property at the eastern side. Based on OCT No. 352, the adjacent owners are Zacarias
Najorda and Alejandro Najorda, whereas based on the deed of donation, the owner of the
adjacent property is Fortunato Doronio. Furthermore, said deed of donation remained a private
document as it was never notarized.[7]
Both parties have been occupying the subject land for several decades [8] although they
have different theories regarding its present ownership. According to petitioners, they are now
the owners of the entire property in view of the private deed of donation propter nuptias in favor
of their predecessors, Marcelino Doronio and Veronica Pico.
Respondents, on the other hand, claim that only half of the property was actually
incorporated in the said deed of donation because it stated that Fortunato Doronio, instead of
Zacarias Najorda and Alejandro Najorda, is the owner of the adjacent property at the eastern

side. Respondents posit that the donors respected and segregated the possession of Fortunato
Doronio of the eastern half of the land. They are the ones who have been possessing said land
occupied by their predecessor, Fortunato Doronio.
Eager to obtain the entire property, the heirs of Marcelino Doronio and Veronica Pico
filed, on January 11, 1993, before the RTC in Urdaneta, Pangasinan a petition For the
Registration of a Private Deed of Donation [9] docketed as Petition Case No. U-920. No
respondents were named in the said petition [10] although notices of hearing were posted on the
bulletin boards of Barangay Cabalitaan, Municipalities of Asingan and Lingayen.[11]
During the hearings, no one interposed an objection to the petition. [12] After
the RTC ordered a general default,[13] the petition was eventually granted on September 22,
1993. This led to the registration of the deed of donation, cancellation of OCT No. 352 and
issuance of a new Transfer Certificate of Title (TCT) No. 44481 in the names of Marcelino
Doronio and Veronica Pico.[14] Thus, the entire property was titled in the names of petitioners
predecessors.
On April 28, 1994, the heirs of Fortunato Doronio filed a pleading before the RTC in the
form of a petition in the same Petition Case No. U-920. The petition was for the reconsideration
of the decision of the RTC that ordered the registration of the subject deed of donation. It was
prayed in the petition that an order be issued declaring null and void the registration of the
private deed of donation and that TCT No. 44481 be cancelled. However, the petition was
dismissed on May 13, 1994 on the ground that the decision in Petition Case No. U-920 had
already become final as it was not appealed.
Determined to remain in their possessed property, respondent heirs of Fortunato Doronio
(as plaintiffs) filed an action for reconveyance and damages with prayer for preliminary
injunction[15] against petitioner heirs of Marcelino Doronio (as defendants) before the RTC,
Branch 45, Anonas, Urdaneta City, Pangasinan. Respondents contended, among others, that the
subject land is different from what was donated as the descriptions of the property under OCT
No. 352 and under the private deed of donation were different. They posited that spouses Simeon
Doronio and Cornelia Gante intended to donate only one-half of the property.
During the pre-trial conference, the parties stipulated, among others, that the property
was originally covered by OCT No. 352 which was cancelled by TCT No. 44481.They also
agreed that the issues are: (1) whether or not there was a variation in the description of the
property subject of the private deed of donation and OCT No. 352; (2) whether or not
respondents had acquired one-half of the property covered by OCT No. 352 by acquisitive
prescription; (3) whether or not the transfer of the whole property covered by OCT No. 352 on
the basis of the registration of the private deed of donation notwithstanding the discrepancy in
the description is valid; (4) whether or not respondents are entitled to damages; and (5) whether
or not TCT No. 44481 is valid.[16]
RTC Decision

After due proceedings, the RTC ruled in favor of petitioner heirs of Marcelino Doronio
(defendants). It concluded that the parties admitted the identity of the land which they all occupy;
[17]
that a title once registered under the torrens system cannot be defeated by adverse, open and
notorious possession or by prescription;[18] that the deed of donation in consideration of the
marriage of the parents of petitioners is valid, hence, it led to the eventual issuance of TCT No.
44481 in the names of said parents;[19] and that respondent heirs of Fortunato Doronio (plaintiffs)
are not entitled to damages as they are not the rightful owners of the portion of the property they
are claiming.[20]
The RTC disposed of the case, thus:
WHEREFORE, premises considered, the Court hereby renders judgment
DISMISSING the herein Complaint filed by plaintiffs against defendants.[21]

Disagreeing with the judgment of the RTC, respondents appealed to the CA. They argued
that the trial court erred in not finding that respondents predecessor-in-interest acquired one-half
of the property covered by OCT No. 352 by tradition and/or intestate succession; that the deed of
donation dated April 26, 1919 was null and void; that assuming that the deed of donation was
valid, only one-half of the property was actually donated to Marcelino Doronio and Veronica
Pico; and that respondents acquired ownership of the other half portion of the property by
acquisitive prescription.[22]
CA Disposition
In a Decision dated January 26, 2005, the CA reversed the RTC decision with the
following disposition:
WHEREFORE, the assailed Decision dated June 28, 2002 is REVERSED and
SET ASIDE. Declaring the appellants as rightful owners of one-half of the
property now covered by TCT No. 44481, the appellees are hereby directed to
execute a registerable document conveying the same to appellants.
SO ORDERED.[23]
The appellate court determined that (t)he intention to donate half of the disputed property
to appellees predecessors can be gleaned from the disparity of technical descriptions appearing in
the title (OCT No. 352) of spouses Simeon Doronio and Cornelia Gante and in the deed of
donation propter nuptias executed on April 24, 1919 in favor of appellees predecessors.[24]
The CA based its conclusion on the disparity of the following technical descriptions of
the property under OCT No. 352 and the deed of donation, to wit:
The court below described the property covered by OCT No. 352 as
follows:

Un terreno (Lote 1018), situada en el municipio de

Asingan, Linda por el NE; con propriedad de Gabriel Bernardino;
con el SE con propriedad de Zacarias Najorda y Alejandro
Najorda; por el SO con propriedad de Geminiano Mendoza y por
el NO con el camino para Villasis; midiendo una extension
superficial mil ciento cincuenta y dos metros cuadrados.
On the other hand, the property donated to appellees predecessors was
described in the deed of donation as:
Fourth A piece of residential land located in the barrio of
Cabalitian but we did not measure it, the area is bounded on the
north by Gabriel Bernardino; on the east by Fortunato Doronio;
on the south by Geminiano Mendoza and on the west by a road to
Villasis. Constructed on said land is a house of light materials also
a part of the dowry. Value 200.00.[25] (Emphasis ours)
Taking note that the boundaries of the lot donated to Marcelino Doronio and Veronica
Pico differ from the boundaries of the land owned by spouses Simeon Doronio and Cornelia
Gante, the CA concluded that spouses Simeon Doronio and Cornelia Gante donated only half of
the property covered by OCT No. 352.[26]
Regarding the allegation of petitioners that OCT No. 352 is inadmissible in evidence, the
CA pointed out that, while the OCT is written in the Spanish language, this document already
forms part of the records of this case for failure of appellees to interpose a timely objection when
it was offered as evidence in the proceedings a quo. It is a well-settled rule that any objection to
the admissibility of such evidence not raised will be considered waived and said evidence will
have to form part of the records of the case as competent and admitted evidence.[27]
The CA likewise ruled that the donation of the entire property in favor of petitioners
predecessors is invalid on the ground that it impairs the legitime of respondents predecessor,
Fortunato Doronio. On this aspect, the CA reasoned out:
Moreover, We find the donation of the entire property in favor of appellees
predecessors invalid as it impairs the legitime of appellants predecessor. Article
961 of the Civil Code is explicit. In default of testamentary heirs, the law vests
the inheritance, x x x, in the legitimate x x x relatives of the deceased, x x x. As
Spouses Simeon Doronio and Cornelia Gante died intestate, their property shall
pass to their lawful heirs, namely: Fortunato and Marcelino Doronio. Donating
the entire property to Marcelino Doronio and Veronica Pico and excluding another
heir, Fortunato, tantamounts to divesting the latter of his rightful share in his
parents inheritance. Besides, a persons prerogative to make donations is subject to
certain limitations, one of which is that he cannot give by donation more than
what he can give by will (Article 752, Civil Code). If he does, so much of what is

donated as exceeds what he can give by will is deemed inofficious and the
donation is reducible to the extent of such excess.[28]
Petitioners were not pleased with the decision of the CA. Hence, this petition under Rule
45.
Issues
Petitioners now contend that the CA erred in:
1.

DECLARING ADMISSIBILITY OF THE ORIGINAL CERTIFICATE

OF TITLE NO. 352 DESPITE OF LACK OF TRANSLATION THEREOF.

2.

(RULING THAT) ONLY HALF OF THE DISPUTED PROPERTY WAS

DONATED TO THE PREDECESSORS-IN-INTEREST OF THE HEREIN
APPELLANTS.

3.

(ITS) DECLARATION THAT THE DONATION PROPTER

NUPTIAS IS INNOFICIOUS, IS PREMATURE, AND THUS IT IS
ILLEGAL AND UNPROCEDURAL.[29]
Our Ruling

OCT No. 352 in Spanish Although Not

Translated into English or Filipino Is
Admissible For Lack of Timely Objection
Petitioners fault the CA for admitting OCT No. 352 in evidence on the ground that it is
written in Spanish language. They posit that (d)ocumentary evidence in an unofficial language
shall not be admitted as evidence, unless accompanied with a translation into English or Filipino.
[30]

The argument is untenable. The requirement that documents written in an unofficial

language must be accompanied with a translation in English or Filipino as a prerequisite for its
admission in evidence must be insisted upon by the parties at the trial to enable the court, where
a translation has been impugned as incorrect, to decide the issue. [31] Where such document, not so
accompanied with a translation in English or Filipino, is offered in evidence and not objected to,
either by the parties or the court, it must be presumed that the language in which the document is
written is understood by all, and the document is admissible in evidence.[32]
Moreover, Section 36, Rule 132 of the Revised Rules of Evidence provides:
SECTION 36. Objection. Objection to evidence offered orally must be
made immediately after the offer is made.

Objection to a question propounded in the course of the oral examination

of a witness shall be made as soon as the grounds therefor shall become
reasonably apparent.
An offer of evidence in writing shall be objected to within three (3)
days after notice of the offer unless a different period is allowed by the court.
In any case, the grounds for the objections must be specified. (Emphasis
ours)
Since petitioners did not object to the offer of said documentary evidence on time, it is
now too late in the day for them to question its admissibility. The rule is that evidence not
objected may be deemed admitted and may be validly considered by the court in arriving at its
judgment.[33] This is true even if by its nature, the evidence is inadmissible and would have surely
been rejected if it had been challenged at the proper time.[34]
As a matter of fact, instead of objecting, petitioners admitted the contents of Exhibit A,
that is, OCT No. 352 in their comment [35] on respondents formal offer of documentary
evidence. In the said comment, petitioners alleged, among others, that Exhibits A, B, C, D, E, F
and G, are admitted but not for the purpose they are offered becausethese exhibits being public
and official documents are the best evidence of that they contain and not for what a party
would like it to prove.[36] Said evidence was admitted by the RTC.[37] Once admitted without
objection, even though not admissible under an objection, We are not inclined now to reject it.
[38]
Consequently, the evidence that was not objected to became property of the case, and all
parties to the case are considered amenable to any favorable or unfavorable effects resulting from
the said evidence.[39]
Issues on Impairment of Legitime
Should Be Threshed Out in a Special
Proceeding, Not in Civil Action for
Reconveyance and Damages
On the other hand, petitioners are correct in alleging that the issue regarding the
impairment of legitime of Fortunato Doronio must be resolved in an action for the settlement of
estates of spouses Simeon Doronio and Cornelia Gante. It may not be passed upon in an action
for reconveyance and damages. A probate court, in the exercise of its limited jurisdiction, is the
best forum to ventilate and adjudge the issue of impairment of legitime as well as other related
matters involving the settlement of estate.[40]
An action for reconveyance with damages is a civil action, whereas matters relating to
settlement of the estate of a deceased person such as advancement of property made by the
decedent, partake of the nature of a special proceeding. Special proceedings require the
application of specific rules as provided for in the Rules of Court.[41]
As explained by the Court in Natcher v. Court of Appeals:[42]

Section 3, Rule 1 of the 1997 Rules of Civil Procedure defines civil action
and special proceedings, in this wise:
x x x a) A civil action is one by which a party sues another
for the enforcement or protection of a right, or the prevention or
redress of a wrong.
A civil action may either be ordinary or special. Both are
governed by the rules for ordinary civil actions, subject to specific
rules prescribed for a special civil action.
xxxx
c) A special proceeding is a remedy by which a party seeks
to establish a status, a right or a particular fact.
As could be gleaned from the foregoing, there lies a marked distinction
between an action and a special proceeding. An action is a formal demand of ones
right in a court of justice in the manner prescribed by the court or by the law. It is
the method of applying legal remedies according to definite established rules. The
term special proceeding may be defined as an application or proceeding to
establish the status or right of a party, or a particular fact. Usually, in special
proceedings, no formal pleadings are required unless the statute expressly so
provides. In special proceedings, the remedy is granted generally upon an
application or motion.
Citing American Jurisprudence, a noted authority in Remedial Law
expounds further:
It may accordingly be stated generally that actions include
those proceedings which are instituted and prosecuted according to
the ordinary rules and provisions relating to actions at law or suits
in equity, and that special proceedings include those proceedings
which are not ordinary in this sense, but is instituted and
prosecuted according to some special mode as in the case of
proceedings commenced without summons and prosecuted without
regular pleadings, which are characteristics of ordinary actions x x
x. A special proceeding must therefore be in the nature of a distinct
and independent proceeding for particular relief, such as may be
instituted independently of a pending action, by petition or motion
upon notice.
Applying these principles, an action for reconveyance and annulment of
title with damages is a civil action, whereas matters relating to settlement of the
estate of a deceased person such as advancement of property made by the

decedent, partake of the nature of a special proceeding, which concomitantly

requires the application of specific rules as provided for in the Rules of Court.
Clearly, matters which involve settlement and distribution of the estate of
the decedent fall within the exclusive province of the probate court in the exercise
of its limited jurisdiction.
Thus, under Section 2, Rule 90 of the Rules of Court, questions as to
advancement made or alleged to have been made by the deceased to any heir may
be heard and determined by the court having jurisdiction of the estate
proceedings, and the final order of the court thereon shall be binding on the
person raising the questions and on the heir.
While it may be true that the Rules used the word may, it is nevertheless
clear that the same provision contemplates a probate court when it speaks of the
court having jurisdiction of the estate proceedings.
Corollarily, the Regional Trial Court in the instant case, acting in its
general jurisdiction, is devoid of authority to render an adjudication and resolve
the issue of advancement of the real property in favor of herein petitioner Natcher,
inasmuch as Civil Case No. 71075 for reconveyance and annulment of title with
damages is not, to our mind, the proper vehicle to thresh out said
question. Moreover, under the present circumstances, the RTC of Manila, Branch
55, was not properly constituted as a probate court so as to validly pass upon the
question of advancement made by the decedent Graciano Del Rosario to his wife,
herein petitioner Natcher.
We likewise find merit in petitioners contention that before any conclusion about the
legal share due to a compulsory heir may be reached, it is necessary that certain steps be taken
first.[43] The net estate of the decedent must be ascertained, by deducting all payable obligations
and charges from the value of the property owned by the deceased at the time of his death; then,
all donations subject to collation would be added to it. With the partible estate thus determined,
the legitime of the compulsory heir or heirs can be established; and only then can it be
ascertained whether or not a donation had prejudiced the legitimes.[44]
Declaration of Validity of Donation
Can Be Challenged by an Interested
Party Not Impleaded in Petition for
Quieting of Title or Declaratory Relief
or Where There is No Res Judicata.
Moreover, This Court Can Consider
a Factual Matter or Unassigned Error
in the Interest of Substantial Justice.
Nevertheless, petitioners cannot preclude the determination of validity of the deed of donation on
the ground that (1) it has been impliedly admitted by respondents; (2) it has already been

determined with finality by the RTC in Petition Case No. U-920; or (3) the only issue in an
action for reconveyance is who has a better right over the land.[45]
The validity of the private deed of donation propter nuptias in favor of petitioners
predecessors was one of the issues in this case before the lower courts. The pre-trial order[46] of
the RTC stated that one of the issues before it is (w)hether or not the transfer of the whole
property covered by OCT No. 352 on the basis of the private deed of donation notwithstanding
the discrepancy in the description is valid. Before the CA, one of the errors assigned by
respondents is that THE TRIAL COURT ERRED IN NOT FINDING THAT THE PRIVATE
DEED OF DONATION DATED APRIL 26, 1919 WAS NULL AND VOID.[47]
The issue of the validity of donation is likewise brought to Us by petitioners as they
stated in their Memorandum[48] that one of the issues to be resolved is regarding the alleged fact
that THE HONORABLE COURT OF APPEALS ERRED IN FINDING THE DONATION
INVALID. We are thus poised to inspect the deed of donation and to determine its validity.
We cannot agree with petitioners contention that respondents may no longer question the validity
of the deed of donation on the ground that they already impliedly admitted it.Under the
provisions of the Civil Code, a void contract is inexistent from the beginning. The right to set up
the defense of its illegality cannot be waived. [49] The right to set up the nullity of a void or nonexistent contract is not limited to the parties as in the case of annullable or voidable contracts; it
is extended to third persons who are directly affected by the contract.[50]
Consequently, although respondents are not parties in the deed of donation, they can set
up its nullity because they are directly affected by the same. [51] The subject of the deed being the
land they are occupying, its enforcement will definitely affect them.
Petitioners cannot also use the finality of the RTC decision in Petition Case No. U920 as a shield against the verification of the validity of the deed of donation.According to
petitioners, the said final decision is one for quieting of title. [53] In other words, it is a case for
declaratory relief under Rule 64 (now Rule 63) of the Rules of Court, which provides:
[52]

SECTION 1. Who may file petition. Any person interested under a deed,
will, contract or other written instrument, or whose rights are affected by a statute,
executive order or regulation, or ordinance, may, before breach or violation
thereof, bring an action to determine any question of construction or validity
arising under the instrument or statute and for a declaration of his rights or duties
thereunder.

An action for the reformation of an instrument, to quiet title to real

property or remove clouds therefrom, or to consolidate ownership under Article
1607 of the Civil Code, may be brought under this rule.

SECTION 2. Parties. All persons shall be made parties who have or

claim any interest which would be affected by the declaration; and no
declaration shall, except as otherwise provided in these rules, prejudice the
rights of persons not parties to the action. (Emphasis ours)
However, respondents were not made parties in the said Petition Case No. U-920. Worse,
instead of issuing summons to interested parties, the RTC merely allowed the posting of notices
on the bulletin boards of Barangay Cabalitaan, Municipalities of Asingan and Lingayen,
Pangasinan. As pointed out by the CA, citing the ruling of the RTC:
x x x In the said case or Petition No. U-920, notices were posted on the bulletin
boards of barangay Cabalitaan, Municipalities of Asingan and Lingayen,
Pangasinan, so that there was a notice to the whole world and during the initial
hearing and/or hearings, no one interposed objection thereto.[54]
Suits to quiet title are not technically suits in rem, nor are they, strictly speaking, in
personam, but being against the person in respect of the res, these proceedings are characterized
as quasi in rem.[55] The judgment in such proceedings is conclusive only between the parties.
[56]
Thus, respondents are not bound by the decision in Petition Case No. U-920 as they were not
made parties in the said case.
The rules on quieting of title[57] expressly provide that any declaration in a suit to quiet
title shall not prejudice persons who are not parties to the action.

That respondents filed a subsequent pleading[58] in the same Petition Case No. U-920 after
the decision there had become final did not change the fact that said decision became final
without their being impleaded in the case. Said subsequent pleading was dismissed on the ground
of finality of the decision.[59]
Thus, the RTC totally failed to give respondents their day in court. As a result, they
cannot be bound by its orders. Generally accepted is the principle that no man shall be affected
by any proceeding to which he is a stranger, and strangers to a case are not bound by judgment
rendered by the court.[60]
Moreover, for the principle of res judicata to apply, the following must be present: (1) a
decision on the merits; (2) by a court of competent jurisdiction; (3) the decision is final; and (4)
the two actions involve identical parties, subject matter and causes of action. [61] The fourth
element is not present in this case. The parties are not identical because respondents were not
impleaded in Petition Case No. U-920. While the subject matter may be the same property
covered by OCT No. 352, the causes of action are different.Petition Case No. U-920 is an action
for declaratory relief while the case below is for recovery of property.

We are not persuaded by petitioners posture that the only issue in this action for
reconveyance is who has a better right over the land; and that the validity of the deed of donation
is beside the point.[62] It is precisely the validity and enforceability of the deed of donation that is
the determining factor in resolving the issue of who has a better right over the
property. Moreover, notwithstanding procedural lapses as to the appropriateness of the remedies
prayed for in the petition filed before Us, this Court can brush aside the technicalities in the
interest of justice. In some instances, this Court even suspended its own rules and excepted a
case from their operation whenever the higher interests of justice so demanded.[63]
Moreover, although respondents did not directly raise the issue of validity of the deed of
donation at the commencement of the case before the trial court, it was stipulated [64] by the
parties during the pre-trial conference. In any event, this Court has authority to inquire into any
question necessary in arriving at a just decision of a case before it. [65] Though not specifically
questioned by the parties, additional issues may also be included, if deemed important for
substantial justice to be rendered.[66]
Furthermore, this Court has held that although a factual issue is not squarely raised
below, still in the interest of substantial justice, this Court is not prevented from considering a
pivotal factual matter. The Supreme Court is clothed with ample authority to review palpable
errors not assigned as such if it finds that their consideration is necessary in arriving at a just
decision.[67]
A rudimentary doctrine on appealed cases is that this Court is clothed with ample
authority to review matters, even if they are not assigned as errors on appeal, if it finds that their
consideration is necessary at arriving at a just decision of the case. [68] Also, an unassigned error
closely related to an error properly assigned or upon which the determination of the question
raised by the error properly assigned is dependent, will be considered by the appellate court
notwithstanding the failure to assign it as an error.[69]
Donation Propter Nuptias of Real
Property Made in a Private Instrument
Before the New Civil Code Took Effect
on August 30, 1950 is Void
We now focus on the crux of the petition, which is the validity of the deed of donation. It
is settled that only laws existing at the time of the execution of a contract are applicable to it and
not the later statutes, unless the latter are specifically intended to have retroactive effect.
[70]
Accordingly, the Old Civil Code applies in this case as the donation propter nuptias was
executed in 1919, while the New Civil Code took effect only on August 30, 1950.
Under the Old Civil Code, donations propter nuptias must be made in a public instrument
in which the property donated must be specifically described.[71] Article 1328 of the Old Civil
Code provides that gifts propter nuptias are governed by the rules established in Title 2 of Book
3 of the same Code. Article 633 of that title provides that the gift of real property, in order to be
valid, must appear in a public document. [72] It is settled that a donation of real estate propter
nuptias is void unless made by public instrument.[73]

In the instant case, the donation propter nuptias did not become valid. Neither did it create any
right because it was not made in a public instrument.[74] Hence, it conveyed no title to the land in
question to petitioners predecessors.
Logically, then, the cancellation of OCT No. 352 and the issuance of a new TCT No. 44481 in
favor of petitioners predecessors have no legal basis. The title to the subject property should,
therefore, be restored to its original owners under OCT No. 352.
Direct reconveyance to any of the parties is not possible as it has not yet been determined in a
proper proceeding who among the heirs of spouses Simeon Doronio and Cornelia Gante is
entitled to it. It is still unproven whether or not the parties are the only ones entitled to the
properties of spouses Simeon Doronio and Cornelia Gante. As earlier intimated, there are still
things to be done before the legal share of all the heirs can be properly adjudicated.[75]
Titled Property Cannot Be Acquired
By Another By Adverse Possession
or Extinctive Prescription
Likewise, the claim of respondents that they became owners of the property by
acquisitive prescription has no merit. Truth to tell, respondents cannot successfully invoke the
argument of extinctive prescription. They cannot be deemed the owners by acquisitive
prescription of the portion of the property they have been possessing. The reason is that the
property was covered by OCT No. 352. A title once registered under the torrens system cannot
be defeated even by adverse, open and notorious possession; neither can it be defeated by
prescription.[76] It is notice to the whole world and as such all persons are bound by it and no one
can plead ignorance of the registration.[77]
The torrens system is intended to guarantee the integrity and conclusiveness of the
certificate of registration, but it cannot be used for the perpetration of fraud against the real
owner of the registered land.[78] The system merely confirms ownership and does not create
it. Certainly, it cannot be used to divest the lawful owner of his title for the purpose of
transferring it to another who has not acquired it by any of the modes allowed or recognized by
law. It cannot be used to protect a usurper from the true owner, nor can it be used as a shield for
the commission of fraud; neither does it permit one to enrich himself at the expense of another.
[79]
Where such an illegal transfer is made, as in the case at bar, the law presumes that no
registration has been made and so retains title in the real owner of the land.[80]
Although We confirm here the invalidity of the deed of donation and of its resulting TCT No.
44481, the controversy between the parties is yet to be fully settled. The issues as to who truly
are the present owners of the property and what is the extent of their ownership remain
unresolved. The same may be properly threshed out in the settlement of the estates of the
registered owners of the property, namely: spouses Simeon Doronio and Cornelia Gante.
WHEREFORE, the appealed Decision is REVERSED AND SET ASIDE. A new one
is entered:

(1) Declaring the private deed of donation propter nuptias in favor of petitioners
predecessors NULL AND VOID; and
(2) Ordering the Register of Deeds of Pangasinan to:
(a) CANCEL Transfer Certificate of Title No. 44481 in the names of
Marcelino Doronio and Veronica Pico; and
(b) RESTORE Original Certificate of Title No. 352 in the names of its
original owners, spouses Simeon Doronio and Cornelia Gante.
SO ORDERED.

ELVIRA T. ARANGOTE,

G.R. No. 178906

Petitioner,

Present:

QUISUMBING, J.,*
AUSTRIA-MARTINEZ,

- versus -

Acting Chairperson,
CHICO-NAZARIO,
NACHURA, and
SPS.
MARTIN
MAGLUNOBand LOURDES S.
MAGLUNOB, and ROMEO
SALIDO,

PERALTA, JJ.

Promulgated:

Respondents.

February 18, 2009

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

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the
1997 Revised Rules of Civil Procedure seeking to reverse and set aside the

Decision[1] dated 27 October 2006 and Resolution[2] dated 29 June 2007 of

the Court of Appeals in CA-G.R. SP No. 64970. In its assailed Decision, the
appellate court affirmed the Decision[3]dated 12 September 2000 of the
Regional Trial Court (RTC), 6th Judicial Region, Branch 1, Kalibo, Aklan, in Civil
Case No. 5511, which reversed the Decision [4] dated 6 April 1998 of the
7th Municipal Circuit Trial Court (MCTC) of Ibajay-Nabas, Ibajay, Aklan, in Civil
Case No. 156; and declared[5] the herein respondent-Spouses Martin and
Lourdes Maglunob (Spouses Maglunob) and respondent Romeo Salido
(Romeo) as the lawful owners and possessors of Lot 12897 with an area of
982 square meters, more or less, located in Maloco, Ibajay, Aklan (subject
property). In its assailed Resolution, the appellate court denied herein
petitioner Elvira T. Arangotes Motion for Reconsideration.

Elvira T. Arangote, herein petitioner married to Ray Mars E. Arangote, is the

registered owner of the subject property, as evidenced by Original Certificate
of Title (OCT) No. CLOA-1748.[6] Respondents Martin (Martin II) and Romeo
are first cousins and the grandnephews of Esperanza Maglunob-Dailisan
(Esperanza), from whom petitioner acquired the subject property.

The Petition stems from a Complaint[7] filed by petitioner and her husband
against the respondents for Quieting of Title, Declaration of Ownership and
Possession, Damages with Preliminary Injunction, and Issuance of Temporary
Restraining Order before the MCTC, docketed as Civil Case No. 156.

The Complaint alleged that Esperanza inherited the subject property from
her uncle Victorino Sorrosa by virtue of a notarized Partition
Agreement[8] dated 29 April 1985, executed by the latters heirs. Thereafter,
Esperanza declared the subject property in her name for real property tax
purposes, as evidenced by Tax Declaration No. 16218 (1985). [9]

The Complaint further stated that on 24 June 1985, Esperanza executed a

Last Will and Testament[10] bequeathing the subject property to petitioner and
her husband, but it was never probated. On 9 June 1986, Esperanza executed
another document, an Affidavit,[11] in which she renounced, relinquished,
waived and quitclaimed all her rights, share, interest and participation
whatsoever in the subject property in favor of petitioner and her husband. On
the basis thereof, Tax Declaration No. 16218 in the name of Esperanza was
cancelled and Tax Declaration No. 16666 [12] (1987) was issued in the name of
the petitioner and her husband.

In 1989, petitioner and her husband constructed a house on the subject

property. On 26 March 1993, OCT No. CLOA-1748 was issued by the
Secretary of the Department of Agrarian Reform (DAR) in the name of
petitioner, married to Ray Mars E. Arangote. However, respondents, together
with some hired persons, entered the subject property on 3 June 1994 and
built a hollow block wall behind and in front of petitioners house, which
efectively blocked the entrance to its main door.

As a consequence thereof, petitioner and her husband were compelled to

institute Civil Case No. 156.

In their Answer with Counterclaim in Civil Case No. 156, respondents averred
that they co-owned the subject property with Esperanza. Esperanza and her
siblings, Tomas and Inocencia, inherited the subject property, in equal
shares, from their father Martin Maglunob (Martin I). When Tomas and
Inocencia passed away, their shares passed on by inheritance to respondents
Martin II and Romeo, respectively. Hence, the subject property was co-owned
by Esperanza, respondent Martin II (together with his wife Lourdes), and
respondent Romeo, each holding a one-third pro-indiviso share therein. Thus,
Esperanza could not validly waive her rights and interest over the entire
subject property in favor of the petitioner.

Respondents also asserted in their Counterclaim that petitioner and

her husband, by means of fraud, undue influence and deceit were able to
make Esperanza, who was already old and illiterate, affix her thumbmark to
the Affidavit dated 9 June 1986, wherein she renounced all her rights and
interest over the subject property in favor of petitioner and her
husband. Respondents thus prayed that the OCT issued in petitioners name
be declared null and void insofar as their two-thirds shares are concerned.

After trial, the MCTC rendered its Decision dated 6 April 1998 in Civil Case
No. 156, declaring petitioner and her husband as the true and lawful owners
of the subject property.The decretal portion of the MCTC Decision reads:

WHEREFORE, judgment is hereby rendered:

A. Declaring the [herein petitioner and her husband] the true, lawful
and exclusive owners and entitled to the possession of the
[subject property] described and referred to under paragraph 2 of the
[C]omplaint and covered by Tax Declaration No. 16666 in the names of
the [petitioner and her husband];

B. Ordering the [herein respondents] and anyone hired by, acting or

working for them, to cease and desist from asserting or claiming
any right or interest in, or exercising any act of ownership or
possession over the [subject property];

C. Ordering the [respondents] to pay the [petitioner and her husband]

the amount of P10,000.00 as attorneys fee. With cost against the
[respondents].[13]

The respondents appealed the aforesaid MCTC Decision to the RTC. Their
appeal was docketed as Civil Case No. 5511.

Respondents argued in their appeal that the MCTC erred in not

dismissing the Complaint filed by the petitioner and her husband for failure
to identify the subject property therein. Respondents further faulted the
MCTC for not declaring Esperanzas Affidavit dated 9 June 1986 -relinquishing all her rights and interest over the subject property in favor of
petitioner and her husband -- as null and void insofar as respondents twothirds share in the subject property is concerned.

On 12 September 2000, the RTC rendered its Decision reversing the MCTC
Decision dated 6 April 1998. The RTC adjudged respondents, as well as the
other heirs of Martin Maglunob, as the lawful owners and possessors of the
entire subject property. The RTC decreed:

WHEREFORE, judgment is hereby rendered as follows:

1) The appealed [D]ecision is REVERSED;

2) [Herein respondents] and the other heirs of Martin Maglunob are
declared the lawful owners and possessors of the whole [subject
property] as described in Paragraph 2 of the [C]omplaint, as
against the [herein petitioner and her husband].

3) [Petitioner and her husband] are ordered to immediately turn over

possession of the [subject property] to the [respondents] and the
other heirs of Martin Maglunob; and

4) [Petitioner and her husband] are ordered to pay [respondents]

attorneys
fees
of P5,000.00,
other
litigation
expenses
of P5,000.00, moral damages of P10,000.00 and exemplary
damages of P5,000.00.[14]

Petitioner and her husband filed before the RTC, on 26 September 2000, a
Motion for New Trial or Reconsideration [15] on the ground of newly discovered
evidence consisting of a Deed of Acceptance[16] dated 23 September 2000,
and notice[17] of the same, which were both made by the petitioner, for
herself and in behalf of her husband, [18] during the lifetime of Esperanza. In
the RTC Order[19] dated 2 May 2001, however, the RTC denied the aforesaid
Motion for New Trial or Reconsideration.

The petitioner and her husband then filed a Petition for Review, under Rule
42 of the 1997 Revised Rules of Civil Procedure, before the Court of Appeals,
where the Petition was docketed as CA-G.R. SP No. 64970.

In their Petition before the appellate court, petitioner and her husband
raised the following errors committed by the RTC in its 12 September
2000 Decision:

I.

It erred in reversing the [D]ecision of the

[MCTC];

II.
It
erred
in
declaring
the
[herein
respondents] and the other heirs of Martin Maglunob as the
lawful owners and possessors of the whole [subject
property];

III.
It erred in declaring [OCT] No. CLOA-1748 in
the name of [herein petitioner] Elvie T. Arangote as null
and void;

IV.
It erred in denying [petitioner and her
husbands] [M]otion for [N]ew [T]rial or [R]econsideration
dated [26 September 2000; and

V.
It erred in not declaring the [petitioner and
her husband] as possessors in good faith.[20]

On 27 October 2006, the Court of Appeals rendered a Decision denying the

Petition for Review of petitioner and her husband and affirming the RTC
Decision dated 12 September 2000. Petitioner and her husbands subsequent
Motion for Reconsideration was similarly denied by the Court of Appeals in its
Resolution dated 29 June 2007.

Hence, petitioner[21] now comes before this Court raising in her Petition the
following issues:

I.
Whether the [RTC] acted with grave abuse
of discretion amounting to lack or excess of jurisdiction

when it declared the [petitioner and her husbands title to

the subject property] null and void;

II.
Whether the [RTC] acted with grave abuse
of discretion amounting to lack of jurisdiction when it
declared the Affidavit of Quitclaim null and void; and

III.

Whether the [RTC] and the Honorable Court

of Appeals acted with grave abuse of discretion amounting
to lack or excess of jurisdiction when it rejected petitioners
claim as possessors(sic) in good faith, hence, entitled to
the rights provided in [Article] 448 and [Article] 546 of the
Civil Code.[22]

Petitioner contends that the aforesaid OCT No. CLOA-1748 was issued
in her name on 26 March 1993 and was registered in the Registry of Deeds of
Aklan on 20 April 1993. From 20 April 1993 until the institution of Civil Case
No. 156 on 10 June 1994 before the MCTC, more than one year had already
elapsed. Considering that a Torrens title can only be attacked within one year
after the date of the issuance of the decree of registration on the ground of
fraud and that such attack must be through a direct proceeding, it was an
error on the part of the RTC and the Court of Appeals to declare OCT No.
CLOA-1748 null and void.

Petitioner additionally posits that both the RTC and the Court of Appeals
committed a mistake in declaring null and void the Affidavit dated 9 June
1986 executed by Esperanza, waiving all her rights and interest over the
subject property in favor of petitioner and her husband. Esperanzas Affidavit
is a valid and binding proof of the transfer of ownership of the subject
property in petitioners name, as it was also coupled with actual delivery of
possession of the subject property to petitioner and her husband. The
Affidavit is also proof of good faith on the part of petitioner and her husband.

Finally, petitioner argues that, assuming for the sake of argument, that
Esperanzas Affidavit is null and void, petitioner and her husband had no

knowledge of any flaw in Esperanzas title when the latter relinquished her
rights to and interest in the subject property in their favor. Hence, petitioner
and her husband can be considered as possessors in good faith and entitled
to the rights provided under Articles 448 and 546 of the Civil Code.

This present Petition is devoid of merit.

It is a hornbook doctrine that the findings of fact of the trial court are entitled
to great weight on appeal and should not be disturbed except for strong and
valid reasons, because the trial court is in a better position to examine the
demeanor of the witnesses while testifying. It is not a function of this Court
to analyze and weigh evidence by the parties all over again. This Courts
jurisdiction is, in principle, limited to reviewing errors of law that might have
been committed by the Court of Appeals. [23] This rule, however, is subject to
several exceptions,[24] one of which is present in this case, i.e., when the
factual findings of the Court of Appeals and the trial court are contradictory.

In this case, the findings of fact of the MCTC as regards the origin of the
subject property are in conflict with the findings of fact of both the RTC and
the Court of Appeals.Hence, this Court will have to examine the records to
determine first the true origin of the subject property and to settle whether
the respondents have the right over the same for being co-heirs and coowners, together with their grand aunt, Esperanza, before this Court can
resolve the issues raised by the petitioner in her Petition.
After a careful scrutiny of the records, this Court affirms the findings of
both the RTC and the Court of Appeals as regards the origin of the subject
property and the fact that respondents, with their grand aunt Esperanza,
were co-heirs and co-owners of the subject property.

The records disclosed that the subject property was part of a parcel of
land
situated in Maloco, Ibajay, Aklan, consisting of 7,176 square meters
and commonly owned in equal shares by the siblings Pantaleon Maglunob
(Pantaleon) and Placida Maglunob-Sorrosa (Placida). Upon the death of
Pantaleon and Placida, their surviving and legal heirs executed a Deed of
Extrajudicial Settlement and Partition of Estate in July 1981, [26] however, the
Deed was not notarized. Considering that Pantaleon died without issue, his
one-half share in the parcel of land he co-owned with Placida passed on to
his four siblings (or their respective heirs, if already deceased), namely:
Placida, Luis, Martin I, and Victoria, in equal shares.
[25]

According to the aforementioned Deed of Extrajudicial Settlement and

Partition of Estate, the surviving and legal heirs of Pantaleon and Placida
agreed to have the parcel of land commonly owned by the siblings declared
for real property tax purposes in the name of Victorino Sorrosa (Victorino),
Placidas husband. Thus, Tax Declarations No. 5988 (1942), [27] No. 6200
(1945)[28] and No. 7233 (1953)[29] were all issued in the name of Victorino.

Since Martin I already passed away when the Deed of Extrajudicial

Settlement and Partition of Estate was executed, his heirs [30] were
represented therein by Esperanza.By virtue of the said Deed, Martin I
received as inheritance a portion of the parcel of land measuring 897 square
meters.

After the death of Victorino, his heirs [31] executed another Partition
Agreement on 29 April 1985, which was notarized on the same date. The
Partition Agreement mentioned four parcels of land. The subject property,
consisting of a portion of the consolidated parcels 1, 2, and 3, and
measuring around 982 square meters, was allocated to Esperanza. In
comparison, the property given to Esperanza under the Partition
Agreement is bigger than the one originally allocated to her earlier under
the Deed of Extrajudicial Settlement and Partition of Estate dated July
1981, which had an area of only 897 square meters. It may be reasonably
assumed, however, that the subject property, measuring 982 square
meters, allocated to Esperanza under the Partition Agreement dated 29
April 1985, is already inclusive of the smaller parcel of 897 square meters
assigned to her under the Deed of Extrajudicial Settlement and Partition
of Estate dated July 1981. As explained by the RTC in its 12 September
2000 Decision:
The [subject property] which is claimed by the [herein petitioner
and her husband] and that which is claimed by the [herein
respondents] are one and the same, the diference in area and
technical description being due to the repartition and reallocation of the parcel of land originally co-owned by Pantaleon
Maglunob and his sister Placida Maglunob and subsequently
declared in the name of [Victorino] under Tax Declaration No.
5988 of 1949.[32]

It is clear from the records that the subject property was not
Esperanzas exclusive share, but also that of the other heirs of her father,
Martin I. Esperanza expressly affixed her thumbmark to the Deed of
Extrajudicial Settlement of July 1981 not only for herself, but also on behalf
of the other heirs of Martin I. Though in the Partition Agreement dated 29
April 1985 Esperanza affixed her thumbmark without stating that she was
doing so not only for herself, but also on behalf of the other heirs of Martin I,
this does not mean that Esperanza was already the exclusive owner
thereof. The evidence shows that the subject property is the share of the
heirs of Martin I. This is clear from the sketch[33]attached to the Partition
Agreement dated 29 April 1985, which reveals the proportionate areas given
to the heirs of the two siblings, Pantaleon and Placida, who were the original
owners of the whole parcel of land[34] from which the subject property was
taken.

Further, it bears emphasis that the Partition Agreement was executed

by and among the son, grandsons, granddaughters and cousins of
Victorino. Esperanza was neither the granddaughter nor the cousin of
Victorino, as she was only Victorinos grandniece. The cousin of Victorino is
Martin I, Esperanzas father. In efect, therefore, the subject property allotted
to Esperanza in the Partition Agreement was not her exclusive share, as she
holds the same for and on behalf of the other heirs of Martin I, who was
already deceased at the time the Partition Agreement was made.

To further bolster the truth that the subject property was not
exclusively owned by Esperanza, the Affidavit she executed in favor of
petitioner and her husband on 6 June 1985 was worded as follows:

That I hereby renounce, relinquish, waive and quitclaim all my

rights, share, interest and participation whatsoever in the
[subject property] unto the said Sps. Ray Mars Arangote and
Elvira T. Arangote, their heirs, successors, and assigns including
the improvement found thereon;[35]

Logically, if Esperanza fully owned the subject property, she would

have simply waived her rights to and interest in the subject property, without
mentioning her share and participation in the same. By including such words
in her Affidavit, Esperanza was aware of and was limiting her waiver,
renunciation, and quitclaim to her one-third share and participation in the
subject property.

Going to the issues raised by the petitioner in this Petition, this Court
will resolve the same concurrently as they are interrelated.

In this case, the petitioner derived her title to the subject property from
the notarized Affidavit executed by Esperanza, wherein the latter
relinquished her rights, share, interest and participation over the same in
favor of the petitioner and her husband.

A careful perusal of the said Affidavit reveals that it is not what it

purports to be. Esperanzas Affidavit is, in fact, a Donation. Esperanzas real
intent in executing the said Affidavit was to donate her share in the subject
property to petitioner and her husband.

As no onerous undertaking is required of petitioner and her husband

under the said Affidavit, the donation is regarded as a pure donation of an
interest in a real property covered by Article 749 of the Civil Code. [36] Article
749 of the Civil Code provides:

Art. 749. In order that the donation of an immovable may be valid, it must
be made in a public document, specifying therein the property donated and the
value of the charges which the donee must satisfy.

The acceptance may be made in the same deed of

donation or in a separate public document, but it shall not take
efect unless it is done during the lifetime of the donor.

If the acceptance is made in a separate instrument, the

donor shall be notified thereof in an authentic form, and this step
shall be noted in both instruments.

From the aforesaid provision, there are three requisites for the validity
of a simple donation of a real property, to wit: (1) it must be made in a public
instrument; (2) it must be accepted, which acceptance may be made either
in the same Deed of Donation or in a separate public instrument; and (3) if
the acceptance is made in a separate instrument, the donor must be notified
in an authentic form, and the same must be noted in both instruments.

This Court agrees with the RTC and the Court of Appeals that the Affidavit
executed by Esperanza relinquishing her rights, share, interest and
participation over the subject property in favor of the petitioner and her
husband sufered from legal infirmities, as it failed to comply with the
aforesaid requisites of the law.

In Sumipat v. Banga,[37] this Court declared that title to immovable

property does not pass from the donor to the donee by virtue of a Deed of
Donation until and unless it has been accepted in a public instrument
and the donor duly notified thereof. The acceptance may be made in the
very same instrument of donation. If the acceptance does not appear in the
same document, it must be made in another. Where the Deed of Donation
fails to show the acceptance, or where the formal notice of the acceptance,
made in a separate instrument, is either not given to the donor or else not
noted in the Deed of Donation and in the separate acceptance, the
donation is null and void.[38]

In the present case, the said Affidavit, which is tantamount to a Deed of

Donation, met the first requisite, as it was notarized; thus, it became a public
instrument. Nevertheless, it failed to meet the aforesaid second and third
requisites. The acceptance of the said donation was not made by the
petitioner and her husband either in the same Affidavit or in a separate
public instrument. As there was no acceptance made of the said donation,
there was also no notice of the said acceptance given to the donor,
Esperanza. Therefore, the Affidavit executed by Esperanza in favor of
petitioner and her husband is null and void.

The subsequent notarized Deed of Acceptance[39] dated 23 September

2000, as well as the notice [40] of such acceptance, executed by the petitioner
did not cure the defect. Moreover, it was only made by the petitioner several
years after the Complaint was filed in court, or when the RTC had already
rendered its Decision dated 12 September 2000, although it was still during
Esperanzas lifetime. Evidently, its execution was a mere afterthought, a
belated attempt to cure what was a defective donation.

It is true that the acceptance of a donation may be made at any

time during the lifetime of the donor. And granting arguendo that such
acceptance may still be admitted in evidence on appeal, there is still need
for proof that a formal notice of such acceptance was received by
the donor and noted in both the Deed of Donation and the separate
instrument embodying the acceptance.[41] At the very least, this last
legal requisite of annotation in both instruments of donation and acceptance
was not fulfilled by the petitioner. Neither the Affidavit nor the Deed of
Acceptance bears the fact that Esperanza received notice of the acceptance
of the donation by petitioner. For this reason, even Esperanzas one-third
share in the subject property cannot be adjudicated to the petitioner.

With the foregoing, this Court holds that the RTC and the Court of
Appeals did not err in declaring null and void Esperanzas Affidavit.

The next issue to be resolved then is whether the RTC, as well as the
Court of Appeals, erred in declaring OCT No. CLOA-1748 in the name of
petitioner and her husband null and void.

Again, this Court answers the said issue in the negative.

Section 48 of Presidential decree No. 1529 states:

SEC. 48. Certificate not subject to collateral attack. - A certificate

of title shall not be subject to collateral attack. It cannot be
altered, modified, or cancelled except in a direct proceeding in
accordance with law.

Such proscription has long been enshrined in Philippine jurisprudence. The

judicial action required to challenge the validity of title is a direct attack, not
a collateral attack.[42]

The attack is considered direct when the object of an action is to annul

or set aside such proceeding, or enjoin its enforcement. Conversely, an
attack is indirect or collateral when, in an action to obtain a diferent relief,
an attack on the proceeding is nevertheless made as an incident
thereof. Such action to attack a certificate of title may be an original
action or a counterclaim, in which a certificate of title is assailed as
void.[43]

A counterclaim is considered a new suit in which the defendant is the

plaintif and the plaintif in the complaint becomes the defendant. It stands
on the same footing as, and is to be tested by the same rules as if it were, an
independent action.[44]

In their Answer to the Complaint for Quieting of Title filed by the

petitioner and her husband before the MCTC, respondents included
therein a Counterclaim wherein they repleaded all the material allegations
in their affirmative defenses, the most essential of which was their claim
that petitioner and her husband -- by means of fraud, undue influence and
deceit -- were able to make their grand aunt, Esperanza, who was already
old and illiterate, affix her thumbmark to the Affidavit, wherein she
renounced, waived, and quitclaimed all her rights and interest over the
subject property in favor of petitioner and her husband. In addition,
respondents maintained in their Answer that as petitioner and her
husband were not tenants either of Esperanza or of the respondents, the
DAR could not have validly issued in favor of petitioner and her husband
OCT No. CLOA-1748.Thus, the respondents prayed, in their counterclaim
in Civil Case No. 156 before the MCTC, that OCT No. CLOA-1748 issued in
the name of petitioner, married to Ray Mars E. Arangote, be declared null
and void, insofar as their two-thirds shares in the subject property are
concerned.

It is clear, thus, that respondents Answer with Counterclaim was a

direct attack on petitioners certificate of title. Furthermore, since all the
essential facts of the case for the determination of the validity of the title are
now before this Court, to require respondents to institute a separate
cancellation proceeding would be pointlessly circuitous and against the best
interest of justice.

Esperanzas Affidavit, which was the sole basis of petitioners claim to

the subject property, has been declared null and void. Moreover, petitioner
and her husband were not tenants of the subject property. In fact, petitioner
herself admitted in her Complaint filed before the MCTC that her husband is
out of the country, rendering it impossible for him to work on the subject
property as a tenant. Instead of cultivating the subject property, petitioner
and her husband possessed the same by constructing a house thereon. Thus,
it is highly suspicious how the petitioner was able to secure from the DAR a
Certificate of Land Ownership Award (CLOA) over the subject property. The
DAR awards such certificates to the grantees only if they fulfill the
requirements of Republic Act No. 6657, otherwise known as the
Comprehensive Agrarian Reform Program (CARP). [45] Hence, the RTC and the
Court of Appeals did not err in declaring null and void OCT No. CLOA-1748 in
the name of the petitioner, married to Ray Mars E. Arangote.

Considering that Esperanza died without any compulsory heirs and that
the supposed donation of her one-third share in the subject property per her
Affidavit dated 9 June 1985 was already declared null and void, Esperanzas
one-third share in the subject property passed on to her legal heirs, the
respondents.
As petitioners last-ditch efort, she claims that she is a possessor in good
faith and, thus, entitled to the rights provided for under Articles 448 and 546
of the Civil Code.

This claim is untenable.

The Civil Code describes a possessor in good faith as follows:

Art. 526. He is deemed a possessor in good faith who is not
aware that there exists in his title or mode of acquisition any flaw
which invalidates it.

He is deemed a possessor in bad faith who possesses in

any case contrary to the foregoing.

Mistake upon a doubtful or difficult question of law may be

the basis of good faith.

Art. 1127. The good faith of the possessor consists in the

reasonable belief that the person from whom he received the
thing was the owner thereof, and could transmit his ownership.

Possession in good faith ceases from the moment defects in the title are
made known to the possessor by extraneous evidence or by a suit for
recovery of the property by the true owner. Every possessor in good faith
becomes a possessor in bad faith from the moment he becomes aware that
what he believed to be true is not so.[46]

In the present case, when respondents came to know that an OCT over the
subject property was issued and registered in petitioners name on 26 March
1993, respondents brought a Complaint on 7 August 1993 before
the Lupon of Barangay Maloco, Ibajay, Aklan, challenging the title of
petitioner to the subject property on the basis that said property constitutes
the inheritance of respondent, together with their grandaunt Esperanza, so
Esperanza had no authority to relinquish the entire subject property to
petitioner. From that moment, the good faith of the petitioner had ceased.

Petitioner cannot be entitled to the rights under Articles 448 and 546 of
the Civil Code, because the rights mentioned therein are applicable only to
builders in good faith and not to possessors in good faith.

Moreover, the petitioner cannot be considered a builder in good faith of

the house on the subject property. In the context that such term is used in
particular reference to Article 448 of the Civil Code, a builder in good faith
is one who, not being the owner of the land, builds on that land,

believing himself to be its owner and unaware of any defect in his

title or mode of acquisition.[47]

The various provisions of the Civil Code, pertinent to the subject, read:

Article 448. The owner of the land on which anything has

been built, sown, or planted in good faith, shall have the right to
appropriate as his own the works, sowing or planting, after
payment of the indemnity provided for in Articles 546 and 548,
or to oblige the one who built or planted to pay the price of the
land, and the one who sowed, the proper rent. However, the
builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such a
case, he shall pay reasonable rent, if the owner of the land does
not choose to appropriate the building or trees after proper
indemnity. The parties shall agree upon the terms of the lease
and in case of disagreement, the court shall fix the terms thereof.

Article 449. He who builds, plants, or sows in bad faith on

the land of another, loses what is built, planted or sown without
right to indemnity.

Article 450. The owner of the land on which anything has

been built, planted or sown in bad faith may demand the
demolition of the work, or that the planting or sowing be
removed, in order to replace things in their former condition at
the expense of the person who built, planted or sowed; or he
may compel the builder or planter to pay the price of the land,
and the sower the proper rent.

Under the foregoing provisions, the builder in good faith can compel
the landowner to make a choice between appropriating the building by
paying the proper indemnity or obliging the builder to pay the price of the

land. The choice belongs to the owner of the land, a rule that accords with
the principle of accession, i.e., that the accessory follows the principal and
not the other way around. Even as the option lies with the landowner, the
grant to him, nevertheless, is preclusive. He must choose one. He cannot, for
instance, compel the owner of the building to instead remove it from the
land. In order, however, that the builder can invoke that accruing benefit and
enjoy his corresponding right to demand that a choice be made by the
landowner, he should be able to prove good faith on his part.[48]

Good faith, here understood, is an intangible and abstract quality with

no technical meaning or statutory definition, and it encompasses, among
other things, an honest belief, the absence of malice and the absence of
design to defraud or to seek an unconscionable advantage. An individuals
personal good faith is a concept of his own mind and, therefore, may not
conclusively be determined by his protestations alone. It implies honesty of
intention, and freedom from knowledge of circumstances which ought to put
the holder upon inquiry. The essence of good faith lies in an honest belief in
the validity of ones right, ignorance of a superior claim, and absence of
intention to overreach another.Applied to possession, one is considered in
good faith if he is not aware that there exists in his title or mode of
acquisition any flaw which invalidates it.[49]

In this case, the subject property waived and quitclaimed by Esperanza

to the petitioner and her husband in the Affidavit was only covered by a tax
declaration in the name of Esperanza. Petitioner did not even bother to look
into the origin of the subject property and to probe into the right of
Esperanza to relinquish the same. Thus, when petitioner and her husband
built a house thereon in 1989 they cannot be considered to have acted in
good faith as they were fully aware that when Esperanza executed an
Affidavit relinquishing in their favor the subject property the only proof of
Esperanzas ownership over the same was a mere tax declaration. This fact or
circumstance alone was enough to put the petitioner and her husband under
inquiry. Settled is the rule that a tax declaration does not prove ownership. It
is merely an indicium of a claim of ownership. Payment of taxes is not proof
of ownership; it is, at best, an indicium of possession in the concept of
ownership. Neither tax receipts nor a declaration of ownership for taxation
purposes is evidence of ownership or of a right to possess realty when not
supported by other efective proofs.[50]

With the foregoing, the petitioner is not entitled to the rights under
Article 448 and 546 as the petitioner is not a builder and possessor in good
faith.

WHEREFORE,
premises
considered,
the
instant
Petition
is
hereby DENIED. The Decision and Resolution of the Court of Appeals in CAG.R. SP No. 64970, dated 27 October 2006 and 29 June 2007, respectively,
affirming the RTC Decision dated 12 September 2000 in Civil Case No. 5511
and declaring the respondents the lawful owners and possessors of the
subject property are hereby AFFIRMED. No costs.

SO ORDERED.

PILAR DEVELOPMENT CORPORATION, Petitioner, -versusRAMON DUMADAG,

EMMA BACABAC, RONALDO NAVARRO, JIMMY PAGDALIAN, PAY DELOS
SANTOS, ARMANDO TRILLOS, FELICISIMO TRILLOS, ARCANGEL FLORES,
EDDIE MARTIN, PRESILLA LA YOG, CONRADO CAGUYONG, GINA GONZALES,

ARLENE PEDROSA, JOCELYN ABELINO, ROQUE VILLARAZA, ROLANDO

VILLARAZA, CAMILO GENOVE, NILDA ROAYANA, SUSAN ROAYANA, JUANCHO
PANGANIBAN, BONG DE GUZMAN, ARNOLD ENVERSO, DONNA DELA RAZA,
EMELYN HAGNA YA, FREDDIE DE LEON, RONILLO DE LEON, MARIO MARTINEZ,
and PRECY LOPEZ, Respondents. G.R. No. 194336 Present: VELASCO, JR., J.,
Chairperson, PERALTA, ABAD, MENDOZA, and LEONEN,JJ. Promulgated: March
11, 2013 X-----------------------------------------------------------------------------------------X
Decision - 2 - G.R. No. 194336 DECISION PERALTA, J.: Challenged in this
petition for review on certiorari under Rule 45 of the Rules of Civil Procedure
are the March 5, 2010 Decision1 and October 29, 2010 Resolution2 of the
Court of Appeals (CA) in CA-G.R. CV No. 90254, which affirmed the May 30,
2007 Decision3 of the Las Pias Regional Trial Court, Branch 197 (trial court)
dismissing the complaint filed by petitioner. On July 1, 2002, petitioner filed a
Complaint4 for accion publiciana with damages against respondents for
allegedly building their shanties, without its knowledge and consent, in its
5,613-square-meter property located at Daisy Road, Phase V, Pilar Village
Subdivision, Almanza, Las Pias City. It claims that said parcel of land, which
is duly registered in its name under Transfer Certificate of Title No. 481436 of
the Register of Deeds for the Province of Rizal, was designated as an open
space of Pilar Village Subdivision intended for village recreational facilities
and amenities for subdivision residents.5 In their Answer with Counterclaim,6
respondents denied the material allegations of the Complaint and briefly
asserted that it is the local government, not petitioner, which has jurisdiction
and authority over them. Trial ensued. Both parties presented their
respective witnesses and the trial court additionally conducted an ocular
inspection of the subject property. On May 30, 2007, the trial court dismissed
petitioners complaint, finding that the land being occupied by respondents
are situated on the sloping area going down and leading towards the
Mahabang Ilog Creek, and within the three-meter legal easement; thus,
considered as public property and part of public dominion under Article 5027
of the New Civil Code (Code), which could not be owned by petitioner. The
court held: 1 Penned by Associate Justice Michael P. Elbinias, with Associate
Justices Rebecca De GuiaSalvador and Estela M. Perlas-Bernabe (now
Supreme Court Associate Justice) concurring; rollo, pp. 21- 28. 2 Id. at 3035. . 3 Id. at 46-52. 4 Id. at 36-39. 5 Id. at 11-12. 6 Id. at 40-44. 7 Art. 502 of
the New Civil Code provides: Art. 502. The following are of public dominion:
(1) Rivers and their natural beds; (2) Continuous or intermittent waters of
springs and brooks running in their natural beds and the beds themselves;
Decision - 3 - G.R. No. 194336 x x x The land title of [petitioner] only proves
that it is the owner in fee simple of the respective real properties described

therein, free from all liens and encumbrances, except such as may be
expressly noted thereon or otherwise reserved by law x x x. And in the
present case, what is expressly reserved is what is written in TCT No. T481436, to wit that the 3.00 meter strip of the lot described herein along
the Mahabang Ilog Creek is reserved for public easement purposes. (From
OCT 1873/A-50) and to the limitations imposed by Republic Act No. 440. x x
x8 The trial court opined that respondents have a better right to possess
the occupied lot, since they are in an area reserved for public easement
purposes and that only the local government of Las Pias City could institute
an action for recovery of possession or ownership. Petitioner filed a motion
for reconsideration, but the same was denied by the trial court in its Order
dated August 21, 2007.9 Consequently, petitioner elevated the matter to the
Court of Appeals which, on March 5, 2010, sustained the dismissal of the
case. Referring to Section 210 of Administrative Order (A.O.) No. 99-21 of the
Department of Environment and Natural Resources (DENR), the appellate
court ruled that the 3-meter area being disputed is located along the creek
which, in turn, is a form of a stream; therefore, belonging to the public
dominion. It said that petitioner could not close its eyes or ignore the fact,
which is glaring in its own title, that the 3-meter strip was indeed reserved
for public easement. By relying on the TCT, it is then estopped from claiming
ownership and enforcing its supposed right. Unlike the trial court, however,
the CA noted that the proper party entitled to seek recovery of (3) Waters
rising continuously or intermittently on lands of public dominion; (4) Lakes
and lagoons formed by Nature on public lands, and their beds; (5) Rain
waters running through ravines or sand beds, which are also of public
dominion; (6) Subterranean waters on public lands; (7) Waters found within
the zone of operation of public works, even if constructed by a contractor; (8)
Waters rising continuously or intermittently on lands belonging to private
persons, to the State, to a province, or to a city or a municipality from the
moment they leave such lands; (9) The waste waters of fountains, sewers
and public establishments. 8 Rollo, p. 51. 9 Id. at 13. 10 Sec. 2 of DENR A.O.
No. 99-21 states as follows: 2.1 Original Surveys: 2.1.a Public Lands: All
alienable and disposable (A and D) lands of the public domain shall be
surveyed pursuant to Section 1 Par. (1) of R.A. 1273 [C.A. No. 141, Section
90(i)] whereby a strip of forty (40) meters wide starting from the banks on
each side of any river or stream that may be found on the land shall be
demarcated and preserved as permanent timberland. Likewise, to be
demarcated are public lands along the banks of rivers and streams and the
shores of the seas and lakes throughout their entire length and within a zone
of three (3) meters in urban areas, twenty (20) meters in agricultural areas

and forty (40) meters in forest area, along their margins which are subject to
the easement for public use in the interest of recreation, navigation,
floatage, fishing and salvage. Decision - 4 - G.R. No. 194336 possession of
the contested portion is not the City of Las Pias, but the Republic of the
Philippines, through the Office of the Solicitor General (OSG), pursuant to
Section 10111 of Commonwealth Act (C.A.) No. 141 (otherwise known as The
Public Land Act). The motion for reconsideration filed by petitioner was
denied by the CA per Resolution dated October 29, 2010, hence, this
petition. Anchoring its pleadings on Article 63012 of the Code, petitioner
argues that although the portion of the subject property occupied by
respondents is within the 3-meter strip reserved for public easement, it still
retains ownership thereof since the strip does not form part of the public
dominion. As the owner of the subject parcel of land, it is entitled to its lawful
possession, hence, the proper party to file an action for recovery of
possession against respondents conformably with Articles 42813 and 53914
of Code. We deny. An easement or servitude is a real right on another's
property, corporeal and immovable, whereby the owner of the latter must
refrain from doing or allowing somebody else to do or something to be done
on his or her property, for the benefit of another person or tenement; it is jus
in re aliena, inseparable from the estate to which it actively or passively
belongs, indivisible, perpetual, and a continuing property right, unless
extinguished by causes provided by law.15 The Code defines easement as an
encumbrance imposed upon an immovable for the benefit of another
immovable belonging to a diferent owner or for the benefit of a community,
or of one or more persons to whom the encumbered estate does not
belong.16 There are two kinds of easement according to source: by law or by
will of the owners the 11 Sec. 101. All actions for the reversion to the
Government of lands of the public domain or improvements thereon shall be
instituted by the Solicitor-General or the officer acting in his stead, in the
proper courts, in the name of the [Republic] of the Philippines. 12 Art. 630.
The owner of the servient estate retains the ownership of the portion on
which the easement is established, and may use the same in such a manner
as not to afect the exercise of the easement. 13 Art. 428. The owner has the
right to enjoy and dispose of a thing, without other limitations than those
established by law. The owner has also a right of action against the holder
and possessor of the thing in order to recover it. 14 Art. 539. Every possessor
has a right to be respected in his possession; and should he be disturbed
therein he shall be protected in or restored to said possession by the means
established by the laws and the Rules of Court. A possessor deprived of his
possession through forcible entry may within ten days from the filing of the

complaint present a motion to secure from the competent court, in the action
for forcible entry, a writ of preliminary mandatory injunction to restore him in
his possession. The court shall decide the motion within thirty (30) days from
the filing thereof. 15 Villanueva v. Velasco, 399 Phil. 664, 672 (2000) and
Quimen v. Court of Appeals, 326 Phil. 969, 976-977 (1996). 16 CIVIL CODE,
Arts. 613 and 614. Decision - 5 - G.R. No. 194336 former are called legal and
the latter voluntary easement.17 A legal easement or compulsory easement,
or an easement by necessity constituted by law has for its object either
public use or the interest of private persons.18 While Article 630 of the Code
provides for the general rule that [t]he owner of the servient estate retains
the ownership of the portion on which the easement is established, and may
use the same in such a manner as not to afect the exercise of the
easement, Article 635 thereof is specific in saying that [a]ll matters
concerning easements established for public or communal use shall be
governed by the special laws and regulations relating thereto, and, in the
absence thereof, by the provisions of this Title [Title VII on Easements or
Servitudes]. In the case at bar, the applicability of DENR A.O. No. 99-21
dated June 11, 1999, which superseded DENR A.O. No. 97-0519 dated March
6, 1997 and prescribed the revised guidelines in the implementation of the
pertinent provisions of Republic Act (R.A.) No. 1273 and Presidential Decree
(P.D.) Nos. 705 and 1067, cannot be doubted. Inter alia, it was issued to
further the governments program of biodiversity preservation. Aside from
Section 2.1 above-quoted, Section 2.3 of which further mandates: 2.3 Survey
of Titled Lands: 2.3.1 Administratively Titled Lands: The provisions of item
2.1.a and 2.1.b shall be observed as the above. However, when these lands
are to be subdivided, consolidated or consolidated-subdivided, the strip of
three (3) meters which falls within urban areas shall be demarcated and
marked on the plan for easement and bank protection. The purpose of these
strips of land shall be noted in the technical description and annotated in the
title. x x x x 2.3.3 Complex Subdivision or Consolidation Subdivision Surveys
for Housing/Residential, Commercial or Industrial Purposes: When titled lands
are subdivided or consolidated-subdivided into lots for residential,
commercial or industrial purposes the 17 CIVIL CODE, Art. 619. See also
Castro v. Monsod, G.R. No. 183719, February 2, 2011, 641 SCRA 486, 493494. 18 CIVIL CODE, Art. 634, NCC. See also Woodridge School, Inc. v. ARB
Construction Co., Inc., G.R. No. 157285, February 16, 2007, 516 SCRA 176,
183; Villanueva v. Velasco, supra note 15; La Vista Association, Inc. v. Court
of Appeals, 311 Phil. 30, 46 (1997) and Quimen v. Court of Appeals, supra
note 15, at 977. 19 Entitled Procedures in the Retention of Areas Within
Certain Distances Along the Banks of Rivers, Streams, and Shores of Seas,

Lakes and Oceans for Environmental Protection. Decision - 6 - G.R. No.

194336 segregation of the three (3) meter wide strip along the banks of
rivers or streams shall be observed and be made part of the open space
requirement pursuant to P.D. 1216. The strip shall be preserved and shall not
be subject to subsequent subdivision. (Underscoring supplied) Certainly, in
the case of residential subdivisions, the allocation of the 3-meter strip along
the banks of a stream, like the Mahabang Ilog Creek in this case, is required
and shall be considered as forming part of the open space requirement
pursuant to P.D. 1216 dated October 14, 1977.20 Said law is explicit: open
spaces are for public use and are, therefore, beyond the commerce of men
and that [the] areas reserved for parks, playgrounds and recreational use
shall be non-alienable public lands, and non-buildable. Running in same vein
is P.D. 1067 or The Water Code of the Philippines21 which provides: Art. 51.
The banks of rivers and streams and the shores of the seas and lakes
throughout their entire length and within a zone of three (3) meters in urban
areas, twenty (20) meters in agricultural areas and forty (40) meters in forest
areas, along their margins, are subject to the easement of public use in the
interest of recreation, navigation, floatage, fishing and salvage. No person
shall be allowed to stay in this zone longer than what is necessary for
recreation, navigation, floatage, fishing or salvage or to build structures of
any kind. (Underscoring supplied) Thus, the above prove that petitioners
right of ownership and possession has been limited by law with respect to
the 3-meter strip/zone along the banks of Mahabang Ilog Creek. Despite this,
the Court cannot agree with the trial courts opinion, as to which the CA did
not pass upon, that respondents have a better right to possess the subject
portion of the land because they are occupying an area reserved for public
easement purposes. Similar to petitioner, respondents have no right or title
over it precisely because it is public land. Likewise, we repeatedly held that
squatters have no possessory rights over the land intruded upon.22 The
length of time that they may have physically occupied the land is immaterial;
they are deemed to have entered the same in bad faith, such that the nature
of their possession is presumed to have retained the same character
throughout their occupancy.23 20 P.D. 1216 is entitled Defining "Open
Space" in Residential Subdivisions and Amending Section 31 of Presidential
Decree No. 957 Requiring Subdivision Owners to Provide Roads, Alleys,
Sidewalks and Reserve Open Space for Parks or Recreational Use. 21 Entitled
A Decree Instituting a Water Code, thereby Revising and Consolidating the
Laws Governing the Ownership, Appropriation, Utilization, Exploitation,
Development, Conservation and Protection of Water Resources, dated
December 31, 1976. 22 D'Oro Land Realty and Development Corporation v.

Claunan, 545 Phil. 573, 583-584 (2007); De Vera-Cruz v. Miguel, 505 Phil.
591, 607 (2005); and Pendot v. Court of Appeals, 254 Phil. 19, 28 (1989). 23
D'Oro Land Realty and Development Corporation v. Claunan, supra note 22,
at 584. Decision - 7 - G.R. No. 194336 As to the issue of who is the proper
party entitled to institute a case with respect to the 3-meter strip/zone, We
find and so hold that both the Republic of the Philippines, through the OSG
and the local government of Las Pias City, may file an action depending on
the purpose sought to be achieved. The former shall be responsible in case
of action for reversion under C.A. 141, while the latter may also bring an
action to enforce the relevant provisions of Republic Act No. 7279 (otherwise
known as the Urban Development and Housing Act of 1992).24 Under R.A.
7279, which was enacted to uplift the living conditions in the poorer sections
of the communities in urban areas and was envisioned to be the antidote to
the pernicious problem of squatting in the metropolis,25 all local government
units (LGUs) are mandated to evict and demolish persons or entities
occupying danger areas such as esteros, railroad tracks, garbage dumps,
riverbanks, shorelines, waterways, and other public places such as
sidewalks, roads, parks, and playgrounds.26 Moreover, under pain of
administrative and criminal liability in case of non-compliance,27 it obliges
LGUs to strictly observe the following: Section 29. Resettlement. - Within two
(2) years from the efectivity of this Act, the local government units, in
coordination with the National Housing Authority, shall implement the
relocation and resettlement of persons living in danger areas such as
esteros, railroad tracks, garbage dumps, riverbanks, shorelines, waterways,
and in other public places such as sidewalks, roads, parks and playgrounds.
The local government unit, in coordination with the National Housing
Authority, shall provide relocation or resettlement sites with basic services
and facilities and access to employment and livelihood opportunities
sufficient to meet the basic needs of the afected families. Section 30.
Prohibition Against New Illegal Structures. - It shall be unlawful for any
person to construct any structure in areas mentioned in the preceding
section. After the efectivity of this Act, the barangay, municipal or city
government units shall prevent the construction of any kind or illegal
dwelling units or structures within their respective localities. The head of any
local government unit concerned who allows, abets or otherwise tolerates
the construction of any structure in violation of this section shall be liable to
administrative sanctions under existing laws and to penal sanctions provided
for in this Act. 24 Approved on March 24, 1992 and published in the May 4,
1992 issue of the Official Gazette. (Macasiano v. National Housing Authority,
G.R. No. 107921, July 1, 1993, 224 SCRA 236, 239). 25 Galay v. Court of

Appeals, 321 Phil. 224, 226 (1995). 26 R.A. 7279, Sec. 28 (a). 27 Dec. 45 of
R.A. No. 7279 provides: Section 45. Penalty Cause. - Any person who violates
any provision of this Act shall be imposed the penalty of not more than six
(6) years of imprisonment or a fine of not less than Five thousand pesos
(P5,000) but not more than One hundred thousand pesos (P100,000), or
both, at the discretion of the court: Provided, That, if the ofender is a
corporation, partnership, association or other juridical entity, the penalty
shall be imposed on the officer or officers of said corporation, partnership,
association or juridical entity who caused the violation. Decision - 8 - G.R. No.
194336 Yet all is not lost for petitioner. It may properly file an action for
mandamus to compel the local gpvernment of Las Pifias City to enforce with
reasonable dispatch the eviction, demolition, and relocation of respondents
and any other persons similarly situated in order to give flesh to one of the
avowed policies of R.A. 7279, which is to reduce urban dysfunctions,
particularly those that adversely afect public health, safety, and ecology. 28
Indeed, as one of the basic human needs, housing is a matter of state
concern as it directly and significantly afects the general welfare.29
WHEREFORE, the petition is DENIED. The March 5, 2010 Decision and
October 29, 2010 Resolution of the Court of Appeals in CAG.R. CV No. 90254,
which affirmed the May 30, 2007 Decision of the Las Pifias RTC, Branch 197,
dismissing petitioner's complaint, is hereby AFFIRMED. SO ORDERED.

SPOUSES EULOGIA MANILA and

RAMON MANILA,
Petitioners,

G.R. No. 163602

Present:

- versus -

CORONA, C.J.,
Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.

SPOUSES EDERLINDA GALLARDO- Promulgated:

MANZO and
DANIEL MANZO,
September 7, 2011
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
VILLARAMA, JR., J.:
This resolves the petition for review on certiorari under Rule 45 of the 1997 Rules of Civil
Procedure, as amended, assailing the Decision[1] dated February 27, 2004 and Resolution[2] dated
May 14, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 49998 which granted the petition
for annulment of judgment filed by the respondents.
The controversy stemmed from an action for ejectment [3] filed by the respondents, spouses
Ederlinda Gallardo-Manzo and Daniel Manzo, against the petitioners, spouses Ramon and
Eulogia Manila, before the Metropolitan Trial Court (MeTC) of Las Pias City, Branch 79 (Civil
Case No. 3537). The facts as summarized by the said court are as follows:
On June 30, 1982, Ederlinda Gallardo leased two (2) parcels of land
situated along Real St., Manuyo, Las Pias, Metro Manila, to Eulogia Manila for a
period of ten (10) years at a monthly rental(s) of P2,000.00 for the first two years,
and thereafter an increase of ten (10) percent every after two years. They also
agreed that the lessee shall have the option to buy the property within two (2)
years from the date of execution of the contract of lease at a fair market value of
One Hundred and Fifty Thousand Pesos (P150,000.00)
The contract of lease expired on July 1, 1992 but the lessee continued in
possession of the property despite a formal demand letter dated August 8, 1992, to
vacate the same and pay the rental arrearages. In a letter reply dated August 12,
1992, herein defendant claimed that no rental fee is due because she allegedly
became the owner of the property at the time she communicated to the plaintiff
her desire to exercise the option to buy the said property.
Their disagreement was later brought to the Barangay for conciliation but
the parties failed to reach a compromise, hence the present action.[4]
On July 14, 1993, the MeTC rendered its decision,[5] the dispositive portion of which reads:

WHEREFORE, a judgment is rendered in favor of the plaintiffs ordering

the defendants:
1)

To vacate the subject parcels of land and surrender possession

thereof upon the payment by the plaintiff of one-half of the value of
the building constructed by the lessee. Should the lessor refuse to
reimburse the aforesaid amount, the lessee shall have the option to
exercise her right under Article 1678 of the New Civil Code;

2)

To pay rental arrearages up to July 1, 1992 in the amount of Two

Hundred Twenty Eight Thousand and Forty Four 80/100 Pesos
(P228,044.80);

3)

To pay, as reasonable compensation for their continued withholding

of possession of the subject lots, the sum of Three Thousand Two
Hundred and Twenty One Pesos (P3,221.00) every month,
commencing July 2, 1992 up to such time that they finally yield
possession thereof to the plaintiffs, subject to an increase of ten
percent (10%) after every two (2) years from said date; and

4)

To pay plaintiffs attorneys fees in the sum of Five Thousand Pesos

(P5,000.00)

No pronouncement as to costs.
SO ORDERED.[6]
Petitioners appealed to the Regional Trial Court (RTC) of Makati City, Branch 63 (Civil
Case No. 93-3733) which reversed the MeTC. The RTC found that petitioners have in fact
exercised their option to buy the leased property but the respondents refused to honor the same. It
noted that respondents even informed the petitioners about foreclosure proceedings on their
property, whereupon the petitioners tried to intervene by tendering rental payments but the
respondents advised them to withhold such payments until the appeal of respondents in the case
they filed against the Rural Bank of Bombon (Camarines Sur), Inc. (Civil Case No. 6062) is
resolved. It further noted that respondents intention to sell the lot to petitioners is confirmed by the
fact that the former allowed the latter to construct a building of strong materials on the premises.
The RTC thus decreed:
IN THE LIGHT OF THE FOREGOING, judgment is hereby rendered
reversing the decision of the lower court dated July 14, 1993 and ordering as
follows:
1)

2)

That plaintiffs execute a deed of absolute sale over that parcel of

land subject of the Contract of Lease dated June 30, 1982 after full
payment of defendants of the purchase price of P150,000.00;
That plaintiffs pay the costs of suit.

SO ORDERED.[7]
Respondents filed a motion for reconsideration on December 23, 1994. In its Order dated March
24, 1995, the RTC denied the motion for having been filed beyond the fifteen (15)-day period
considering that respondents received a copy of the decision on December 7, 1994.
[8]
Consequently, the November 18, 1994 decision of the RTC became final and executory.[9]
On December 22, 1998, respondents filed a petition for annulment of the RTC decision in the
CA. Respondents assailed the RTC for ordering them to sell their property to petitioners arguing
that said courts appellate jurisdiction in ejectment cases is limited to the determination of who is
entitled to the physical possession of real property and the only judgment it can render in favor
of the defendant is to recover his costs, which judgment is conclusive only on the issue of
possession and does not affect the ownership of the land. They contended that the sale of real
property by one party to another may be ordered by the RTC only in a case for specific
performance falling under its original exclusive jurisdiction, not in the exercise of its appellate
jurisdiction in an ejectment case. Respondents also alleged that the petition for annulment is the
only remedy available to them because the ordinary remedies of new trial, appeal, petition for
relief or other appropriate remedies are no longer available through no fault on their part.
By Decision dated February 27, 2004, the CA granted the petition, annulled the November 18,
1994 RTC decision and reinstated the July 14, 1993 MeTC decision. On the issue of lack of
jurisdiction raised by the respondents, the CA ruled as follows:
It must be stressed that the main action before the Metropolitan Trial Court
is one for ejectment grounded on the expiration of the parties contract of
lease. And said court, finding that petitioners have a valid right to ask for the
ejectment of private respondents, ordered the latter to vacate the premises and to
pay their rentals in arrears. To Our mind, what the respondent court should have
done in the exercise of its appellate jurisdiction, was to confine itself to the
issue of whether or not petitioners have a valid cause of action for ejectment
against the private respondents.
Unfortunately, in the decision herein sought to be annulled, the respondent
court went further than what is required of it as an appellate court when it ordered
the petitioners to sell their properties to the private respondents. In a very real
sense, the respondent court materially changed the nature of petitioners
cause of action by deciding the question of ownership even as the appealed
case involves only the issue of prior physical possession which, in every
ejectment suit, is the only question to be resolved. As it were, the respondent
court converted the issue to one for specific performance which falls under
its original, not appellate jurisdiction. Sad to say, this cannot be done by the
respondent court in an appealed ejectment case because the essential criterion of
appellate jurisdiction is that it revises and corrects the proceedings in a cause
already instituted and does not create that cause (Marbury v. Madison, 1 Cranch
(U.S.), 137, 172, 2 L. edition 60, cited in 15 Corpus Juris 727).

It follows that the respondent Regional Trial Court clearly acted without
jurisdiction when it ordered the petitioners to sell their properties to the private
respondents. The order to sell can be made only by the respondent court in an
action for specific performance under its exclusive original jurisdiction, and not in
the exercise of its appellate jurisdiction in an appealed ejectment suit, as in this
case. Worse, the relief granted by the same court was not even prayed for by the
private respondents in their Answer and position paper before the MTC, whereat
they only asked for the dismissal of the complaint filed against them.
[10]
(Emphasis supplied.)
With the denial of their motion for reconsideration, petitioners filed the present petition raising
the following issues:
A
WHETHER THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN
ANNULLING THE JUDGMENT BY THE REGIONAL TRIAL COURT OF
MAKATI CITY NOTWITHSTANDING THE FINDING THAT THE
ORDINARY REMEDIES OF NEW TRIAL, APPEAL, PETITION FOR RELIEF
OR OTHER APPROPRIATE REMEDIES WERE LOST THROUGH THE
FAULT OF THE RESPONDENTS
B
WHETHER THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN
ANNULLING THE JUDGMENT BY THE REGIONAL TRIAL COURT OF
MAKATI CITY ON THE GROUND OF LACK OF JURISDICTION WHEN IT
HAS NOT BEEN SHOWN THAT THE REGIONAL TRIAL COURT OF
MAKATI CITY HAD NO JURISDICTION OVER THE PERSON OF THE
RESPONDENTS OR THE SUBJECT MATTER OF THE CLAIM[11]
The petition is meritorious.
A petition for annulment of judgments or final orders of a Regional Trial Court in civil
actions can only be availed of where the ordinary remedies of new trial, appeal, petition for relief
or other appropriate remedies are no longer available through no fault of the petitioner. [12] It is a
remedy granted only under exceptional circumstances and such action is never resorted to as a
substitute for a partys own neglect in not promptly availing of the ordinary or other appropriate
remedies.[13] The only grounds provided in Sec. 2, Rule 47 are extrinsic fraud and lack of
jurisdiction.
In this case, respondents alleged that the loss of remedies against the RTC decision was
attributable to their former counsels late filing of their motion for reconsideration and failure to file
any proper petition to set aside the said decision. They claimed that they had been constantly
following up the status of the case with their counsel, Atty. Jose Atienza, who repeatedly assured

them he was on top of the situation and would even get angry if repeatedly asked about the case.
Out of their long and close relationship with Atty. Atienza and due regard for his poor health due to
his numerous and chronic illnesses which required frequent prolonged confinement at the hospital,
respondents likewise desisted from hiring the services of another lawyer to assist Atty. Atienza,
until the latters death on September 10, 1998. Thus, it was only on November 1998 that
respondents engaged the services of their new counsel who filed the petition for annulment of
judgment in the CA.
We are not persuaded by respondents asseveration. They could have directly followed up
the status of their case with the RTC especially during the period of Atty. Atienzas hospital
confinement. As party litigants, they should have constantly monitored the progress of their case.
Having completely entrusted their case to their former counsel and believing his word that
everything is alright, they have no one to blame but themselves when it turned out that their
opportunity to appeal and other remedies from the adverse ruling of the RTC could no longer be
availed of due to their counsels neglect. That respondents continued to rely on the services of
their counsel notwithstanding his chronic ailments that had him confined for long periods at the
hospital is unthinkable. Such negligence of counsel is binding on the client, especially when the
latter offered no plausible explanation for his own inaction. The Court has held that when a party
retains the services of a lawyer, he is bound by his counsels actions and decisions regarding the
conduct of the case. This is true especially where he does not complain against the manner his
counsel handles the suit.[14] The oft-repeated principle is that an action for annulment of
judgment cannot and is not a substitute for the lost remedy of appeal.[15]
In any event, the petition for annulment was based not on fraudulent assurances or
negligent acts of their counsel, but on lack of jurisdiction.
Petitioners assail the CA in holding that the RTC decision is void because it granted a
relief inconsistent with the nature of an ejectment suit and not even prayed for by the respondents
in their answer. They contend that whatever maybe questionable in the decision is a ground for
assignment of errors on appeal or in certain cases, as ground for a special civil action for
certiorari under Rule 65 and not as ground for its annulment. On the other hand, respondents
assert that the CA, being a higher court, has the power to adopt, reverse or modify the findings of
the RTC in this case. They point out that the CA in the exercise of its sound discretion found the
RTCs findings unsupported by the evidence on record which also indicated that the loss of
ordinary remedies of appeal, new trial and petition for review was not due to the fault of the
respondents.
We agree with the petitioners.
Lack of jurisdiction as a ground for annulment of judgment refers to either lack of
jurisdiction over the person of the defending party or over the subject matter of the claim. [16] In a
petition for annulment of judgment based on lack of jurisdiction, petitioner must show not
merely an abuse of jurisdictional discretion but an absolute lack of jurisdiction. Lack of
jurisdiction means absence of or no jurisdiction, that is, the court should not have taken

cognizance of the petition because the law does not vest it with jurisdiction over the subject
matter. Jurisdiction over the nature of the action or subject matter is conferred by law.[17]
There is no dispute that the RTC is vested with appellate jurisdiction over ejectment cases
decided by the MeTC, MTC or MCTC. We note that petitioners attack on the validity of the RTC
decision pertains to a relief erroneously granted on appeal, and beyond the scope of judgment
provided in Section 6 (now Section 17) of Rule 70. [18] While the court in an ejectment case may
delve on the issue of ownership or possession de jure solely for the purpose of resolving the issue
of possession de facto, it has no jurisdiction to settle with finality the issue of ownership [19] and
any pronouncement made by it on the question of ownership is provisional in nature. [20] A
judgment in a forcible entry or detainer case disposes of no other issue than possession and
establishes only who has the right of possession, but by no means constitutes a bar to an action
for determination of who has the right or title of ownership. [21] We have held that although it was
proper for the RTC, on appeal in the ejectment suit, to delve on the issue of ownership and
receive evidence on possession de jure, it cannot adjudicate with semblance of finality the
ownership of the property to either party by ordering the cancellation of the TCT.[22]
In this case, the RTC acted in excess of its jurisdiction in deciding the appeal of
respondents when, instead of simply dismissing the complaint and awarding any counterclaim
for costs due to the defendants (petitioners), it ordered the respondents-lessors to execute a deed
of absolute sale in favor of the petitioners-lessees, on the basis of its own interpretation of the
Contract of Lease which granted petitioners the option to buy the leased premises within a
certain period (two years from date of execution) and for a fixed price (P150,000.00).[23] This
cannot be done in an ejectment case where the only issue for resolution is who between the
parties is entitled to the physical possession of the property.
Such erroneous grant of relief to the defendants on appeal, however, is but an exercise of
jurisdiction by the RTC. Jurisdiction is not the same as the exercise of jurisdiction. As
distinguished from the exercise of jurisdiction, jurisdiction is the authority to decide a cause, and
not the decision rendered therein.[24] The ground for annulment of the decision is absence of, or
no, jurisdiction; that is, the court should not have taken cognizance of the petition because the
law does not vest it with jurisdiction over the subject matter.[25]
Thus, while respondents assailed the content of the RTC decision, they failed to show that
the RTC did not have the authority to decide the case on appeal. As we held inYbaez v. Court of
Appeals:[26]
On the first issue, we feel that respondent court acted inadvertently when
it set aside the RTC ruling relative to the validity of the substituted service of
summons over the persons of the petitioners in the MTC level. We must not lose
sight of the fact that what was filed before respondent court is an action to annul
the RTC judgment and not a petition for review. Annulment of judgment may
either be based on the ground that a judgment is void for want of jurisdiction or
that the judgment was obtained by extrinsic fraud. There is nothing in the records
that could cogently show that the RTC lacked jurisdiction. Chiefly, Section 22 of

B.P. Blg. 129, otherwise known as the Judiciary Reorganization Act of 1980, vests
upon the RTC the exercise of an appellate jurisdiction over all cases decided by
the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial
Courts in their respective territorial jurisdictions. Clearly then,when the RTC
took cognizance of petitioners appeal from the adverse decision of the MTC
in the ejectment suit, it (RTC) was unquestionably exercising its appellate
jurisdiction as mandated by law. Perforce, its decision may not be annulled
on the basis of lack of jurisdiction as it has, beyond cavil, jurisdiction to
decide the appeal.[27] (Emphasis supplied.)
The CA therefore erred in annulling the November 18, 1994 RTC decision on the ground of lack
of jurisdiction as said court had jurisdiction to take cognizance of petitioners appeal.
On the timeliness of the petition for annulment of judgment filed with the CA, Section 3,
Rule 47 of the Rules of Court provides that a petition for annulment of judgment based on
extrinsic fraud must be filed within four years from its discovery; and if based on lack of
jurisdiction, before it is barred by laches or estoppel. The principle of laches or stale demands
ordains that 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 earliernegligence or omission
to assert a right within a reasonable time, warrants a presumption that the party entitled to assert
it has abandoned it or declined to assert it.[28]There is no absolute rule as to what constitutes
laches or staleness of demand; each case is to be determined according to its particular
circumstances.[29]
Here, respondents failure to assail the RTC ruling in a petition for review or certiorari
before the CA, rendered the same final and executory. Having lost these remedies due to their
lethargy for three and a half years, they cannot now be permitted to assail anew the said ruling
rendered by the RTC in the exercise of its appellate jurisdiction. Their inaction and neglect to
pursue available remedies to set aside the RTC decision for such length of time, without any
acceptable explanation other than the word of a former counsel who already passed away,
constitutes unreasonable delay warranting the presumption that they have declined to assert their
right over the leased premises which continued to be in the possession of the petitioners. Clearly,
respondents petition to annul the final RTC decision is barred under the equitable doctrine of
laches.
WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated
February 27, 2004 and Resolution dated May 14, 2004 of the Court of Appeals in CA-G.R. SP No.
49998 are SET ASIDE. The petition for annulment of judgment filed by herein respondents
is DISMISSED.
No costs.
SO ORDERED.
HEIRS OF BIENVENIDO
ARACELI TANYAG, namely:

AND

G.R. No. 175763

ARTURO
JOCSON
VELOSO,
Petitioners,

TANYAG, AIDA
AND
ZENAIDA

- versus -

T.
T.

Present:
CORONA, C.J.,
Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.

SALOME E. GABRIEL, NESTOR R.

GABRIEL, LUZ GABRIEL-ARNEDO
Promulgated:
married to ARTURO ARNEDO, NORA
GABRIEL-CALINGO
April 11, 2012
married to FELIX CALINGO, PILAR
M.
MENDIOLA,
MINERVA
GABRIEL-NATIVIDAD
marriedto
EUSTAQUIO
NATIVIDAD,
and
ERLINDA VELASQUEZ married to
HERMINIO VELASQUEZ,
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
VILLARAMA, JR., J.:
This is a petition for review under Rule 45 which seeks to reverse the Decision[1] dated August
18, 2006 and Resolution[2] dated December 8, 2006 of the Court of Appeals (CA) in CA-G.R. CV
No. 81224. The CA affirmed the Decision[3] dated November 19, 2003 of the Regional Trial
Court of Pasig City, Branch 267 in Civil Case No. 67846 dismissing petitioners complaint for
declaration of nullity of Original Certificate of Title (OCT) No. 1035, reconveyance and
damages, as well as respondents counterclaims for damages and attorneys fees.
Subject of controversy are two adjacent parcels of land located at Ruhale, Barangay Calzada,
Municipality of Taguig (now part of Pasig City, Metro Manila). The first parcel (Lot 1) with an
area of 686 square meters was originally declared in the name of Jose Gabriel under Tax
Declaration (TD) Nos. 1603 and 6425 issued for the years 1949 and 1966, while the second
parcel (Lot 2) consisting of 147 square meters was originally declared in the name of Agueda
Dinguinbayan under TD Nos. 6418 and 9676 issued for the years 1966 and 1967. [4] For several
years, these lands lined with bamboo plants remained undeveloped and uninhabited.
Petitioners claimed that Lot 1 was owned by Benita Gabriel, sister of Jose Gabriel, as part of her
inheritance as declared by her in a 1944 notarized instrument (Affidavit of Sale) whereby she
sold the said property to spouses Gabriel Sulit and Cornelia Sanga. Said document states:

DAPAT MALAMAN NG LAHAT NG MAKABABASA

Na, akong Benita Gabriel, balo sa nasirang Calixto Lontoc, Filipina may
karapatang gulang naninirahan sa nayon ng Palingon, Tagig, Rizal, x x x sa
pamamaguitan nitoy
ISINASAYSAY KO AT PINAGTITIBAY
1.) Na, sarili ko at tunay na pagaari ang isang lagay na lupang kawayanan na
sapagkat itoy kabahagui ko sa aking kapatid na [J]ose Gabriel, na itoy mana ko sa
aking nasirang ama Mateo Gabriel sa kami lamang dalawa ng aking kapatid na
binabanguit ko na Jose Gabriel siyang mga anak at tagapagmana ng aming amang
nasirang Mateo Gabriel, maliban sa amin ay wala nang iba, kayat kami ay naghati
sa mga ari-arian na na iwan sa amin ng nasirang ama namin na Mateo Gabriel, na
ang lupang kawayanang itoy may nakatanim na walong (8) punong kawayan at na
sa pook na kung pamagatan ay Ruhale nayon ng Calzada, Tagig, Rizal, at na sa
loob ng mga kahanganan at sukat na sumusunod[:]
Na, ang kahangan sa Hilagaan Sapang Ruhale at Vicente Bunye, sa
Amihanan Felipe Pagkalinawan, sa Timugan Juan Flores, at sa Habagatan
Apolonio Ocol may sukat na 6 areas at 85 centiareas may halagan amillarada na
P80.00) Pesos alinsunod sa Tax Blg. 20037, sa pangalan ng aking kapatid na Jose
Gabriel. Na, ang lupang itoy hindi natatala sa bisa ng batas Blg. 496 ni sa susog
gayon din sa Hipotecaria Espaola itoy may mga mojon bato ang mga panulok at
walang bakod.
2.) Na, alang-alang sa halagang SIYAMNAPO AT ANIM (P96.00) na
Pisong salaping guinagamit dito sa Filipinas na bago dumating ang mga sandaling
itoy tinaggap ko at ibinayad sa akin ng boong kasiyahang loob ko ng magasawang
GABRIEL SULIT AT CORNELIA SANGA, mga Filipinos may mga karapatang
gulang mga naninirahan sa nayon ng Calzada, Tagig, Rizal, ngayon ay inilipat ko
at ipinagbili ng bilihang tuluyan (Venta real soluta) ang isinasaysay kong lupang
kawayanan sa itaas nito ng nasabi halagang SIYAMNAPO AT ANIM (P96.00) na
Piso at sa nabanguit na magasawang GABRIEL SULIT AT CORNELIA SANGA,
gayon din sa lahat ng mga tagapagmana nila, ngayong mga arao na ito ay ang may
hawak at namamahala ng lupang itoy ang mga nakabili sa akin na magasawang
GABRIEL SULIT AT CORNELIA SANGA.
3.) Na, ang kasulatang itoy ng bilihan ay nais na itala sa bisa ng batas Blg.
3344.
NA SA KATUNAYAN NG LAHAT NG ITOY ako ay lumagda sa
kasulatang ito dito sa Tagig, Rizal, ngayong ika - 28 ng Junio 1944.
(Nilagdaan) BENITA GABRIEL[5]

Lot 1 allegedly came into the possession of Benita Gabriels own daughter, Florencia Gabriel
Sulit, when her father-in-law Gabriel Sulit gave it to her as part of inheritance of his son, Eliseo
Sulit who was Florencias husband. Florencia Sulit sold the same lot to Bienvenido S. Tanyag,
father of petitioners, as evidenced by a notarized deed of sale dated October 14, 1964.
[6]
Petitioners then took possession of the property, paid the real estate taxes due on the land and
declared the same for tax purposes, as shown by TD No. 11445 issued in 1969 in the name of
Bienvenidos wife, Araceli C. Tanyag; TD No. 11445 cancelled TD No. 6425 in the name of Jose
Gabriel. TD Nos. 3380 and 00486 also in the name of Araceli Tanyag were issued in the years
1974 and 1979.[7]
As to Lot 2, petitioners averred that it was sold by Agueda Dinguinbayan to Araceli
Tanyag under Deed of Sale executed on October 22, 1968. Thereupon, petitioners took
possession of said property and declared the same for tax purposes as shown by TD Nos. 11361,
3395, 120-014-00482, 120-00-014-20-002-000, C-014-00180 and D-014-00182 issued for the
years 1969, 1974, 1979, 1985, 1991 and 1994. [8] Petitioners claimed to have continuously,
publicly, notoriously and adversely occupied both Lots 1 and 2 through their caretaker Juana
Quinones[9]; they fenced the premises and introduced improvements on the land.[10]
Sometime in 1979, Jose Gabriel, father of respondents, secured TD No. 120-014-01013
in his name over Lot 1 indicating therein an increased area of 1,763 square meters.Said tax
declaration supposedly cancelled TD No. 6425 over Lot 1 and contained the following
inscription[11]:
Note: Portions of this Property is Also Declared
in the name of Araceli C. Tanyag under
T.D.#120-014-00858 686 sq. m.
Also inscribed on TD No. 120-014-00858[12] (1979) in the name of Araceli Tanyag
covering Lot 1 are the following:
This property is also covered by T.D. #120-014-01013
in the name of Jose P. Gabriel
1-8-80
which notation was carried into the 1985, 1990 and 1991 tax declarations, all in the name of
Araceli Tanyag.
On March 20, 2000, petitioners instituted Civil Case No. 67846 alleging that respondents never
occupied the whole 686 square meters of Lot 1 and fraudulently caused the inclusion of Lot 2 in
TD No. 120-014-01013 such that Lot 1 consisting of 686 square meters originally declared in the
name of Jose Gabriel was increased to 1,763 square meters.They contended that the issuance of
OCT No. 1035 on October 28, 1998 over the subject land in the name of respondents heirs of
Jose Gabriel was null and void from the beginning.[13]

On the other hand, respondents asserted that petitioners have no cause of action against
them for they have not established their ownership over the subject property covered by a
Torrens title in respondents name. They further argued that OCT No. 1035 had become
unassailable one year after its issuance and petitioners failed to establish that it was irregularly or
unlawfully procured.[14]
Respondents evidence showed that the subject land was among those properties included
in the Extrajudicial Settlement of Estate of Jose P. Gabriel [15] executed on October 5, 1988,
covered by TD No. B-014-00643 (1985) in the name of Jose Gabriel. Respondents declared the
property in their name but the tax declarations (1989, 1991 and 1994) carried the notation that
portions thereof (686 sq. ms.) are also declared in the name of Araceli Tanyag. On October 28,
1998, OCT No. 1035[16] was issued to respondents by the Register of Deeds of Pasig, Metro
Manila under Decree No. N-219177 pursuant to the Decision dated September 20, 1996 of the
Land Registration Court in LRC Case No. N-11260, covering Lot 1836 MCadm-590-D, Taguig
Cadastral Mapping, Plan Ap-04-002253, with an area of 1,560 square meters.
On the other hand, respondents TD Nos. D-014-00839 and D-014-01923 issued in 1993
and 1999 respectively, showed that respondents sold 468 square meters of Lot 1 to Jayson Sta.
Barbara.[17] The segregation of said 468 square meters pertaining to Jayson Sta. Barbara was
reflected in the approved survey plan of Lot 1836 prepared by respondents surveyor on March
18, 2000.[18]
At the trial, petitioners presented their witness Arturo Tanyag, son of Bienvenido Tanyag
and Araceli Tanyag who died on March 30, 1968 and October 30, 1993, respectively. He testified
that according to Florencia Sulit, Benita Gabriel-Lontoc and her family were the ones in
possession of Lot 1 since 1944; Benita Gabriel had executed an Affidavit of Sale declaring said
property as her inheritance and conveying the same to spouses Gabriel and Cornelia Sulit. He
affirmed that they had been in possession of Lot 1 from the time Bienvenido Tanyag bought the
land from Florencia Sulit in 1964. Based on the boundaries indicated in the tax declaration, they
fenced the property, installed Juana Quinones as their caretaker who also attended to the piggery,
put up an artesian well and planted some trees. From 1964 up to 1978, nobody disturbed them in
their possession or claimed ownership of the land; four years after acquiring Lot 1, they also
purchased the adjacent property (Lot 2) to expand their piggery. Lot 2 was also separately
declared for tax purposes after their mother purchased it from Agueda Dinguinbayan. He had
personally witnessed the execution of the 1968 deed of sale including its notarization, and was
also present during the physical turn over of Lot 2 by the seller. In fact, he was one of the
instrumental witnesses to the deed of sale and identified his signature therein. He further
described the place as inaccessible at that time as there were no roads yet and they had to
traverse muddy tracks to reach their property.[19]
Arturo further testified that the first time they met Jose Gabriel was when the latter
borrowed from their mother all the documents pertaining to their property. Jose Gabriel came
looking for a piece of property which he claims as his but he had no documents to prove it and so
they showed him their documents pertaining to the subject property; out of the goodness of her
mothers heart, she lent those documents to her brother Jose Gabriel. During the cadastral survey

conducted in 1976, they had both lots surveyed in preparation for their consolidation under one
tax declaration. However, they did not succeed in registering the consolidated lots as they
discovered that there was another tax declaration covering the same properties and these were
applied for titling under the name of Jose Gabriel sometime in 1978 or 1980, which was after the
time said Jose Gabriel borrowed the documents from their mother. No notice of the hearings for
application of title filed by Jose Gabriel was received by them. They never abandoned the
property and their caretaker never left the place except to report to the police when she was being
harassed by the respondents. He also recalled that respondents had filed a complaint against them
before the barangay but since no agreement was reached after several meetings, they filed the
present case.[20]
The next witness for petitioners was Juana Quinones, their caretaker who testified that
she had been staying on petitioners property since 1964 or for 35 years already. She had built a
nipa hut and artesian well, raised piggery and poultry and planted some root crops and vegetables
on the land. At first there was only one parcel but later the petitioners bought an additional lot;
Arturo Tanyag gave her money which she used for the fencing of the property. During all the
time she occupied the property there was nobody else claiming it and she also had not received
any notice for petitioners concerning the property, nor the conduct of survey on the land. On
cross-examination, she admitted that she was living alone and had no Voters ID or any document
evidencing that she had been a resident there since 1964. Although she was living alone, she asks
for help from other persons in tending her piggery.[21]
Angelita Sulit-delos Santos, cousin of petitioners and also of respondents, testified that
she came to know the subject property because according to her paternal grandfather Gabriel Sta.
Ana Sulit, her maternal grandmother Benita Gabriel-Lontoc mortgaged the property to him. It
was Benita Gabriel Lontoc who took care of her, her siblings and cousins; they lived with her
until her death. She identified the signature of Benita Gabriel in the 1944 Affidavit of Sale in
favor of Gabriel Sulit. Lot 1 consisting of 600 square meters was vacant property at that time but
her family was in possession thereof when it was sold to Gabriel Sulit; it was her father Eliseo
Sulit and uncle Hilario Sulit, who were incharge of their property. On cross-examination, she was
asked details regarding the supposed mortgage of Lot 1 to Gabriel Sulit but she admitted she
does not know anything as she was still very young then.[22]
Respondents first witness was Roberto Gabriel Arnedo, son of Luz Gabriel-Arnedo. He
testified that when he was about 5 or 6 years old (1953 or 1954), his grandfather Jose Gabriel
used to bring him along to visit the subject property consisting of 1,763 square meters based on
the tax declaration and OCT. They had picnics and celebrate his grandfathers birthday there. He
recalled accompanying his grandfather in overseeing the planting of gumamela which served as
the perimeter fence. Jose Gabriel had not mentioned anything about the claim of petitioners over
the same land; Jose Gabriel handed the documents pertaining to the land to his eldest aunt and
hence it now belongs to them.[23] On cross-examination, he claimed that during those years he
had visited the land together with his grandfather, he did not see Florencia Sulit and her family.
[24]

Virginia Villanueva, daughter of Salome Gabriel, testified that they acquired the subject
property from their grandfather Jose Gabriel who had a tax declaration in his name. Her mother
furnished them with documents such as tax declarations and the extrajudicial settlement of the
estate of Jose Gabriel; they also have an approved survey plan prepared for Salome Gabriel. She
does not know the petitioners in this case. [25] On cross-examination, she said that the subject
property was inherited by Jose Gabriel from his father Mateo Gabriel; Jose Gabriel was the sole
owner of the land while Benita Gabriel has separate properties in Palingon and Langkokak.
[26]
Though they are not actually occupying the property, they visit the place and she does not
know anybody occupying it, except for the portion (486 square meters) which petitioners sold to
Sta. Barbara. A nine-door apartment was built on the said portion without their permission. She
had talked to both Sta. Barbara and with Arturo Tanyag they had meetings before the barangay;
however, petitioners filed the present case in court. She insisted that there is nobody residing in
the subject property; there is still the remaining 901 square meters which is owned by their
mother. She admitted there were plants on the land but she does not know who actually planted
them; it was her grandfather who built a wooden fence and gumamela in the 1960s. As to the
hearings on the application for title, she had not attended the same; she does not know whether
the petitioners were notified of the said hearings. She also caused the preparation of the survey
plan for Salome Gabriel. On the increased area of the property indicated in the later tax
declarations, she admitted the discrepancy but said there were barangay roads being built at the
time.[27]
Esmeraldo Ramos, Municipal Assessor of Taguig, testified that he was formerly a Land
Appraiser in the Office of the Municipal Assessor of Taguig and in the course of his duties had
certified one of the tax declarations in the name of respondents (TD No. EL-014-10585). He
identified and verified said document and the other tax declarations submitted in court by the
respondents. He admitted that on January 10, 1980, they made the entry on TD No. 6425 in the
name of Jose Gabriel that the same was cancelled by TD No. 120-014-01013 also in the name of
Jose Gabriel who presented a supposed deed of sale in favor of Araceli Tanyag which caused the
earlier cancellation of TD No. 6425 in his name. However, upon investigation they found out that
the seller Florencia Sulit was not the owner because the declared owner was Jose Gabriel; even
the deed of sale recognized that the property was declared in the name of Jose Gabriel. They also
discovered from the cadastral survey and tax mapping of Taguig that the property is in the name
of Jose Gabriel both in the Bureau of Lands and Municipal Assessors Office. As far as he knows,
it was Jose Gabriel who owned the subject property which he usually visited; he recalled that
around the late 70s and 80s, he ordered the fencing of barbed wire and bamboo stalks on the land
which is just 3 lots away from his own property. As to the discrepancy in the area of the property
as originally declared by Jose Gabriel, he explained that the boundaries in the original tax
declaration do not change but after the land is surveyed, the boundaries naturally would be
different because the previous owner may have sold his property or the present owner inherits the
property from his parents. He admitted that the tax declaration is just for tax purposes and not
necessarily proof of ownership or possession of the property it covers.[28]
Respondents last witness was Antonio Argel who testified that he had resided for 52 years
on a land near the subject property and as far as he knows it was Jose Gabriel who owns it and
planted thereon. On cross-examination, he admitted that Jose Gabriel was not in physical
possession of the property. He just assumed that the present occupants of the property were

allowed by Jose Gabriel to stay therein because he is the owner. There is an apartment and three
small houses existing on the property, and about five families are living there. He confirmed that
there is a piggery being maintained by a certain Juana who had been residing there maybe for
fifteen years already.[29]
In rebuttal, petitioners presented two witnesses who are owners of properties adjoining
that of the subject land. Rodante Domingo testified that it was only now did he learn that the
property of Arturo Tanyag is already titled in the name of respondents. He was not aware of the
titling proceeding because he never received any notice as adjoining owner. His own property is
already titled in his name and he even asked Arturo Tanyag to act as a witness in his application
for titling.[30] On the other hand, Dado Dollado testified that he acquired his property in 1979. He
likewise affirmed that he did not receive any notice of the proceedings for application for titling
filed by respondents and it was only now that he learned from Arturo Tanyag that the subject
property was already titled in the names of respondents.[31]
The last rebuttal witness for petitioners was Dominador Dinguinbayan Ergueza, son of
Agueda Dinguinbayan. He testified that the subject property was formerly owned by his mother
and the present owner is Araceli Tanyag who bought the same from his mother in 1968. He
described the boundaries of the property in relation to the adjoining owners at that time;
presently, the left portion is already a street (Rujale St.) going towards the sea. He admitted that
his wife, Livina Ergueza was an instrumental witness in the 1968 deed of sale in favor of Araceli
Tanyag.[32]
In its decision, the trial court dismissed the complaint as well as the counterclaim,
holding that petitioners failed to establish ownership of the subject property and finding the
respondents to be the declared owners and legal possessors. It likewise ruled that petitioners
were unable to prove by preponderance of evidence that respondents acquired title over the
property through fraud and deceit.
Petitioners appealed to the CA which affirmed the trial courts ruling. The CA found that
apart from the Affidavit executed by Benita Gabriel in 1944 claiming that she inherited Lot 1
from their father, Mateo Gabriel, there is no evidence that she, not Jose Gabriel, was the true
owner thereof. It noted that just four years after Benita Gabriels sale of the subject property to
the Sulit spouses, Jose Gabriel declared the same under his name for tax purposes, paying the
corresponding taxes. The appellate court stressed that petitioners allegation of bad faith was not
proven.
Petitioners motion for reconsideration was likewise denied by the CA. Hence, this
petition.
Petitioners assail the CA in not finding that the respondents obtained OCT No. 1035 in
their names fraudulently and in bad faith. They also claim to have acquired ownership of the
subject lots by virtue of acquisitive prescription.

The issues presented are: (1) whether respondents committed fraud and bad faith in
registering the subject lots in their name; and (2) whether petitioners acquired the property
through acquisitive prescription.
Registration of a piece of land under the Torrens System does not create or vest title,
because it is not a mode of acquiring ownership. A certificate of title is merely an evidence of
ownership or title over the particular property described therein. [33] Thus, notwithstanding the
indefeasibility of the Torrens title, the registered owner may still be compelled to reconvey the
registered property to its true owners. The rationale for the rule is that reconveyance does not set
aside or re-subject to review the findings of fact of the Bureau of Lands. In an action for
reconveyance, the decree of registration is respected as incontrovertible. What is sought instead
is the transfer of the property or its title which has been wrongfully or erroneously registered in
another persons name, to its rightful or legal owner, or to the one with a better right.[34]
An action for annulment of title or reconveyance based on fraud is imprescriptible where
the plaintiff is in possession of the property subject of the acts. [35] The totality of the evidence on
record established that it was petitioners who are in actual possession of the subject property;
respondents merely insinuated at occasional visits to the land.However, for an action for
reconveyance based on fraud to prosper, this Court has held that the party seeking reconveyance
must prove by clear and convincing evidence his title to the property and the fact of fraud.[36]
The CA correctly observed that the only evidence of Benita Gabriels supposed title was the
1944 Affidavit of Sale whereby Benita Gabriel claimed sole ownership of Lot 1 as her inheritance
from their father, Mateo Gabriel. The property until 1949 was still declared in the name Jose
Gabriel despite the 1944 sale executed by Benita Gabriel in favor of spouses Gabriel and Cornelia
Sulit. As to the alleged fraud perpetrated by Jose Gabriel and respondents in securing OCT No.
1035 in their name, this was clearly not proven as Arturo Tanyag testified merely that Jose Gabriel
borrowed their documents pertaining to the property. No document or testimony was presented to
show that Jose Gabriel employed deceit or committed fraudulent acts in the proceedings for titling
of the property.
However, the CA did not address the issue of acquisitive prescription raised by the
petitioners. In their Complaint before the lower court, petitioners alleged
15. Defendants never occupied the whole area of the lot covered by Tax
Declaration No. 1603 (686 sq. m.) neither were they able to set foot on the
property covered by Tax Declaration No. 6542 [sic] for the reason that those lots
had been in actual, open continuous, adverse and notorious possession of the
plaintiffs against the whole world for more than thirty years which is equivalent to
title.
x x x x[37]
Such character and length of possession of a party over a parcel of land subject of controversy is
a factual issue. Settled is the rule that questions of fact are not reviewable in petitions for review

on certiorari under Rule 45 of the Rules of Court, as only questions of law shall be raised in such
petitions. While this Court is not a trier of facts, if the inference drawn by the appellate court
from the facts is manifestly mistaken, it may, in the interest of justice, review the evidence in
order to arrive at the correct factual conclusions based on the record.[38]
In this case, the CA was mistaken in concluding that petitioners have not acquired any right over
the subject property simply because they failed to establish Benita Gabriels title over said
property. The appellate court ignored petitioners evidence of possession that complies with the
legal requirements of acquiring ownership by prescription.
Acquisitive prescription is a mode of acquiring ownership by a possessor through the
requisite lapse of time. In order to ripen into ownership, possession must be in theconcept of an
owner, public, peaceful and uninterrupted.[39] Possession is open when it is patent, visible,
apparent, notorious and not clandestine.[40] It is continuous when uninterrupted, unbroken and not
intermittent or occasional; exclusive when the adverse possessor can show exclusive dominion
over the land and an appropriation of it to his own use and benefit; and notorious when it is so
conspicuous that it is generally known and talked of by the public or the people in the
neighborhood. The party who asserts ownership by adverse possession must prove the presence
of the essential elements of acquisitive prescription.[41]
On the matter of prescription, the Civil Code provides:
Art. 1117. Acquisitive prescription of dominion and other real rights may
be ordinary or extraordinary.
Ordinary acquisitive prescription requires possession of things in good
faith and with just title for the time fixed by law.
Art. 1134. Ownership and other real rights over immovable property are
acquired by ordinary prescription through possession of ten years.
Art. 1137. Ownership and other real rights over immovables also prescribe
through uninterrupted adverse possession thereof for thirty years, without need
of title or of good faith.(Emphasis supplied.)
Petitioners adverse possession is reckoned from 1969 with the issuance of TD No. 1145
in the name of Araceli Tanyag, which tax declaration cancelled TD No. 6425 in the name of Jose
Gabriel.[42] It is settled that tax receipts and declarations are prima facie proofs of ownership or
possession of the property for which such taxes have been paid. Coupled with proof of actual
possession of the property, they may become the basis of a claim for ownership.
[43]
Petitioners caretaker, Juana Quinones, has since lived in a nipa hut, planted vegetables and
tended a piggery on the land. Aside from paying taxes due on the property, petitioners also
exercised other acts of ownership such as selling the 468-square meter portion to Sta. Barbara
who had constructed thereon a nine-door apartment building.

It was only in 1979 that respondents began to assert a claim over the property by securing a tax
declaration in the name of Jose Gabriel albeit over a bigger area than that originally declared. In
1998, they finally obtained an original certificate of title covering the entire 1,763 square meters
which included Lot 1. Did these acts of respondents effectively interrupt the possession of
petitioners for purposes of prescription?
We answer in the negative.
In the case of Heirs of Marcelina Azardon-Crisologo v. Raon[44] this Court citing Article 1123 of
the Civil Code[45] held that civil interruption takes place with the service of judicial summons to
the possessor and not by filing of a mere Notice of Adverse Claim. Thus:
Article 1123 of the Civil Code is categorical. Civil interruption is
produced by judicial summons to the possessor. Moreover, even with the
presence of judicial summons, Article 1124 sets limitations as to when such
summons shall not be deemed to have been issued and shall not give rise to
interruption, to wit: 1) if it should be void for lack of legal solemnities; 2) if the
plaintiff should desist from the complaint or should allow the proceedings to
lapse; or 3) if the possessor should be absolved from the complaint.
Both Article 1123 and Article 1124 of the Civil Code underscore the
judicial character of civil interruption. For civil interruption to take place, the
possessor must have received judicial summons. None appears in the case at
bar. The Notice of Adverse Claim which was filed by petitioners in 1977 is
nothing more than a notice of claim which did not effectively interrupt
respondents possession. Such a notice could not have produced civil
interruption. We agree in the conclusion of the RTC, which was affirmed by the
Court of Appeals, that the execution of the Notice of Adverse Claim in 1977 did
not toll or interrupt the running of the prescriptive period because there remains,
as yet, a necessity for a judicial determination of its judicial validity. What existed
was merely a notice. There was no compliance with Article 1123 of the Civil
Code. What is striking is that no action was, in fact, filed by petitioners against
respondents. As a consequence, no judicial summons was received by
respondents. As aptly held by the Court of Appeals in its affirmance of the RTCs
ruling, the Notice of Adverse Claim cannot take the place of judicial summons
which produces the civil interruption provided for under the law. In the instant
case, petitioners were not able to interrupt respondents adverse possession since
1962. The period of acquisitive prescription from 1962 continued to run in
respondents favor despite the Notice of Adverse Claim. (Emphasis supplied.)
From 1969 until the filing of this complaint by the petitioners in March 2000, the latter
have been in continuous, public and adverse possession of the subject land for 31years. Having
possessed the property for the period and in the character required by law as sufficient for
extraordinary acquisitive prescription, petitioners have indeed acquired ownership over the
subject property. Such right cannot be defeated by respondents acts of declaring again the

property for tax purposes in 1979 and obtaining a Torrens certificate of title in their name in
1998.
This notwithstanding, we uphold petitioners right as owner only with respect to Lot 1
consisting of 686 square meters. Petitioners failed to substantiate their claim over Lot 2 by virtue
of a deed of sale from the original declared owner, Agueda Dinguinbayan. Respondents asserted
that the 147 square meters covered by the tax declarations of Dinguinbayan being claimed by
petitioners is not the same lot included in OCT No. 1035.
Under Article 434 of the Civil Code, to successfully maintain an action to recover the
ownership of a real property, the person who claims a better right to it must prove two (2)
things: first, the identity of the land claimed; and second, his title thereto. In regard to the first
requisite, in an accion reinvindicatoria, the person who claims that he has a better right to the
property must first fix the identity of the land he is claiming by describing the location, area and
boundaries thereof.[46] In this case, petitioners failed to identify Lot 2 by providing evidence of the
metes and bounds thereof, so that the same may be compared with the technical description
contained in OCT No. 1035, which would have shown whether Lot 2 consisting of 147 square
meters was erroneously included in respondents title. The testimony of Agueda Dinguinbayans son
would not suffice because said witness merely stated the boundary owners as indicated in the 1966
and 1967 tax declarations of his mother. On his part, Arturo Tayag claimed that he had the lots
surveyed in the 1970s in preparation for the consolidation of the two parcels. However, no such
plan was presented in court.
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated August 18,
2006 of the Court of Appeals in CA-G.R. CV No. 81224 is MODIFIED in that petitioners heirs
of Bienvenido and Araceli Tanyag are hereby declared the owners of 686 square meters
previously declared under Tax Declaration Nos. 11445, 120-014-00486, 120-014-0085, B-01400501, E-014-01446, C-014-00893 and D-014-00839 all in the name of Araceli Tanyag, which
lot is presently covered by OCT No. 1035 issued by the Register of Deeds of Pasig, Metro
Manila in the name of respondents Salome Gabriel, Nestor R. Gabriel, Luz Gabriel-Arnedo,
Nora Gabriel-Calingo, Pilar Gabriel-Mendiola, Minerva Gabriel-Natividad and Erlinda GabrielVelasquez. Respondents are ORDERED to RECONVEY the said 686-square meter portion to the
petitioners.
No pronouncement as to costs.
SO ORDERED.

JESUS VIRTUCIO, represented by ABDON VIRTUCIO, G.R. No. 187451

Petitioner, -versusJOSE ALEGARBES, Respondent. Present: PERALTA, J., Acting
Chairperson,* ABAD, VILLARAMA, JR.,** PEREZ,*** and MENDOZA, JJ.
Promulgated: 29 August 2012 . . f((Uo X
--------------------~-----------------------------------------------------------~ DECISION
MENDOZA, J.: This petition for review on certiorari under Rule 45 seeks to
reverse and set aside the February 25, 2009 Decision1 of the Court of
Appeals (CA), in CA-G.R. CV No. 72613, reversing and setting aside the
February 19, 2001 Decision 2 of the Regional Trial Court, Branch 1, Isabela,
Basi Ian (RTC), in Civil Case No. 685-627, an action for "Recovery of
Possession and Ownership with Preliminary Injunction." Per Special Order
No. 1290 dated August 28, 2012. Designated acting member, in lieu of
Associate Justice Presbitero J. Velasco, Jr., per Special Order No. 1291 dated
August 28,2012. Designated additional member, per Special Order No.
1299 dated August 28,2012. 1 Penned by Associate Justice Romulo V. Bo~ja,
with Associate Justice Mario V. Lopez and Associate Justice Elihu A. Ybanez,
concurring, rolla, pp. 22-34 and 93-105. 2 Penned by Judge Felisberto C.

Gonzales, CA ro!!o. on. 2'iR-/71 DECISION G.R. No. 187451 2 The Facts
Respondent Jose Alegarbes (Alegarbes) filed Homestead Application No. V33203 (E-V-49150) for a 24-hectare tract of unsurveyed land situated in
Baas, Lantawan, Basilan in 1949. His application was approved on January
23, 1952.3 In 1955, however, the land was subdivided into three (3) lots Lot
Nos. 138,139 and 140, Pls-19 - as a consequence of a public land
subdivision. Lot 139 was allocated to Ulpiano Custodio (Custodio), who filed
Homestead Application No. 18-4493 (E-18-2958). Lot 140 was allocated to
petitioner Jesus Virtucio (Virtucio), who filed Homestead Application No. 184421 (E-18-2924).4 Alegarbes opposed the homestead applications filed by
Custodio and Virtucio, claiming that his approved application covered the
whole area, including Lot Nos. 139 and 140.5 On October 30, 1961, the
Director of Lands rendered a decision denying Alegarbes' protest and
amending the latter's application to exclude Lots 139 and 140. Only Lot 138
was given due course. The applications of Custodio and Virtucio for Lots 139
and 140, respectively, were likewise given due course.6 Alegarbes then
appealed to the Secretary of Agriculture and Natural Resources, who
dismissed his appeal on July 28, 1967. He then sought relief from the Office
of the President (OP), which, however, affirmed the dismissal order of the
Secretary of Agriculture and Natural Resources in a decision, dated October
25, 1974. Alegarbes moved for a reconsideration, but the motion was
subsequently denied.7 3 Records, pp. 9 and 262. 4 Id. at 9. 5 Rollo, pp. 1112. 6 Id. at 12. 7 Id. DECISION G.R. No. 187451 3 On May 11, 1989, an order
of execution8 was issued by the Lands Management Bureau of the
Department of Environment and Natural Resources to enforce the decision of
the OP. It ordered Alegarbes and all those acting in his behalf to vacate the
subject lot, but he refused. On September 26, 1997, Virtucio then filed a
complaint9 for Recovery of Possession and Ownership with Preliminary
Injunction before the RTC. In his Answer,10 Alegarbes claimed that the
decision of the Bureau of Lands was void ab initio considering that the Acting
Director of Lands acted without jurisdiction and in violation of the provisions
of the Public Land Act. Alegarbes argued that the said decision conferred no
rights and imposed no duties and left the parties in the same position as
they were before its issuance. He further alleged that the patent issued in
favor of Virtucio was procured through fraud and deceit, thus, void ab initio.
Alegarbes further argued, by way of special and/or affirmative defenses, that
the approval of his homestead application on January 23, 1952 by the Bureau
of Lands had already attained finality and could not be reversed, modified or
set aside. His possession of Lot Nos. 138, 139 and 140 had been open,
continuous, peaceful and uninterrupted in the concept of an owner for more

than 30 years and had acquired such lots by acquisitive prescription. In his
Amended and Supplemental Answer,11 Alegarbes also averred that his now
deceased brother, Alejandro Alegarbes, and the latter's family helped him
develop Lot 140 in 1955. Alejandro and his family, as well as Alegarbes' wife
and children, had been permanently occupying the said lot and, introducing
permanent improvements thereon since 1960. 8 Records, pp. 16-17. 9 Id. at
1-15. 10 Id. at 42-52. 11 Id. at 67-69. DECISION G.R. No. 187451 4 The RTC
Ruling The RTC rendered its decision on February 19, 2001, favoring Virtucio.
The decretal portion of which reads: WHEREFORE, upon the merit of this
case, this court finds for the plaintif and against the defendant by: 1.
Ordering the defendant and all those acting in his behalf to vacate Lot No.
140, Pls-19, located at Lower Baas, Lantawan, Basilan and surrender the
possession and ownership thereof to plaintif; 2. Ordering the defendant to
pay the plaintif the amount of Fifteen Thousand Pesos (15,000.00) as
attorney's fees and another Ten Thousand Pesos (10,000.00) as expenses
for litigation; and 3. To pay the cost of the suit in the amount of Five Hundred
Pesos (500.00). SO ORDERED.12 Not in conformity, Alegarbes appealed his
case before the CA. The CA Ruling On February 25, 2009, the CA
promulgated its decision declaring Alegarbes as the owner of Lot No. 140,
Pls-19, thereby reversing and setting aside the decision of the RTC. The CA
ruled that Alegarbes became ipso jure owner of Lot 140 and, therefore,
entitled to retain possession of it. Consequently, the awards of attorney's
fees, litigation expenses and costs of suit were deleted. 12 CA rollo, pp. 270271. DECISION G.R. No. 187451 5 In so ruling, the CA explained that even if
the decision to approve Virtucio's homestead application over Lot 140 had
become final, Alegarbes could still acquire the said lot by acquisitive
prescription. The decisions on the issues of the approval of Virtucio's
homestead application and its validity were impertinent as Alegarbes had
earlier put in issue the matter of ownership of Lot 140 which he claimed by
virtue of adverse possession. The CA also found reversible error on the part
of the RTC in disregarding the evidence before it and relying entirely upon
the decisions of the administrative bodies, none of which touched upon the
issue of Alegarbes' open, continuous and exclusive possession of over thirty
(30) years of an alienable land. The CA held that the Director of Lands, the
Secretary of Agriculture and Natural Resources and the OP did not determine
whether Alegarbes' possession of the subject property had ipso jure
segregated Lot 140 from the mass of public land and, thus, was beyond their
jurisdiction. Aggrieved, Virtucio filed this petition. ISSUES Virtucio assigned
the following errors in seeking the reversal of the assailed decision of the CA,
to wit: 1. The Court of Appeals erred in setting aside the judgment of the trial

court, which awarded the lot in question to the respondent by virtue of

acquisitive prescription and ordered herein petitioner to surrender the
ownership and possession of the same to them.13 13 Rollo, p. 14. DECISION
G.R. No. 187451 6 2. The Court of Appeals gravely erred in disregarding the
decision in CA-G.R. CV-26286 for Recovery of Possession and Ownership,
Custodio vs. Alegarbes which contains same factual circumstances as in this
case and ruled against JOSE ALEGARBES. 14 3. The Court of Appeals erred in
deleting the award of attorney's fees to the petitioner.15 The lone issue in
this case is whether or not Alegarbes acquired ownership over the subject
property by acquisitive prescription. Ruling of the Court The petition must
fail. Indeed, it is fundamental that questions of fact are not reviewable in
petitions for review on certiorari under Rule 45 of the Rules of Court. Only
questions of law distinctly set forth shall be raised in the petition.16 Here,
the main issue is the alleged acquisition of ownership by Alegarbes through
acquisitive prescription and the character and length of possession of a party
over a parcel of land subject of controversy is a factual issue.17 The Court,
however, is not precluded from reviewing facts when the case falls within the
recognized exceptions, to wit: (a) When the findings are grounded entirely on
speculation, surmises, or conjectures; (b) When the inference made is
manifestly mistaken, absurd, or impossible; (c) When there is grave abuse of
discretion; 14 Id. at 16. 15 Id. at 17. 16 Sec. 1, Rule 45 of the Rules of Court.
17 Heirs of Bienvenido and Araceli Tanyag v. Gabriel, G.R. No. 175763, April
11, 2012. DECISION G.R. No. 187451 7 (d) When the judgment is based on a
misapprehension of facts; (e) When the findings of facts are conflicting; (f)
When in making its findings the CA went beyond the issues of the case, or its
findings are contrary to the admissions of both the appellant and the
appellee; (g) When the CAs findings are contrary to those by the trial court;
(h) When the findings are conclusions without citation of specific evidence on
which they are based; (i) When the facts set forth in the petition as well as in
the petitioners main and reply briefs are not disputed by the respondent; (j)
When the findings of fact are premised on the supposed absence of evidence
and contradicted by the evidence on record; or (k) When the CA manifestly
overlooked certain relevant facts not disputed by the parties, which, if
properly considered, would justify a diferent conclusion.18 [Emphasis
supplied] In the case at bench, the findings and conclusions of the CA are
apparently contrary to those of the RTC, hence, the need to review the facts
in order to arrive at the proper conclusion. On Acquisitive Prescription
Virtucio insists that the period of acquisitive prescription was interrupted on
October 30, 1961 (or in 1954 when Alegarbes filed the protest) when the
Director of Lands rendered a decision giving due course to his homestead

application and that of Ulpiano Custodio. Virtucio further claims that since
1954, several extrajudicial demands were also made upon Alegarbes
demanding that he vacate said lot. Those demands constitute the
extrajudicial demand contemplated in Article 1155, thus, tolling the period
of acquisitive prescription.19 18 Abalos and Sps. Salazar v. Heirs of Vicente
Torio, G.R. No. 175444, December 14, 2011, 662 SCRA 450, 456-457, citing
Spouses Andrada v. Pilhino Sales Corporation, G.R. No. 156448, February 23,
2011, 644 SCRA 1, 10. 19 Rollo, p. 152. DECISION G.R. No. 187451 8 Article
1106 of the New Civil Code, in relation to its Article 712, provides that
prescription is a mode of acquiring ownership through the lapse of time in
the manner and under the conditions laid down by law. Under the same law,
it states that acquisitive prescription may either be ordinary or
extraordinary.20 Ordinary acquisitive prescription requires possession of
things in good faith and with just title for a period of ten years, 21 while
extraordinary acquisitive prescription requires uninterrupted adverse
possession of thirty years, without need of title or of good faith.22 There are
two kinds of prescription provided in the Civil Code. One is acquisitive, that
is, the acquisition of a right by the lapse of time as expounded in par. 1,
Article 1106. Other names for acquisitive prescription are adverse possession
and usucapcion. The other kind is extinctive prescription whereby rights and
actions are lost by the lapse of time as defined in Article 1106 and par. 2,
Article 1139. Another name for extinctive prescription is litigation of
action.23 These two kinds of prescription should not be interchanged. Article
1155 of the New Civil Code refers to the interruption of prescription of
actions. Interruption of acquisitive prescription, on the other hand, is found in
Articles 1120-1125 of the same Code. Thus, Virtucios reliance on Article
1155 for purposes of tolling the period of acquisitive prescription is
misplaced. The only kinds of interruption that efectively toll the period of
acquisitive prescription are natural and civil interruption.24 20 Art. 1117,
New Civil Code. 21 Id., in relation to Art. 1134 of the New Civil Code. 22 Art.
1137, New Civil Code. 23 De Morales v. CFI, 186 Phil. 596, 598 (1980). 24 Art.
1120, New Civil Code. DECISION G.R. No. 187451 9 Civil interruption takes
place with the service of judicial summons to the possessor.25 When no
action is filed, then there is no occasion to issue a judicial summons against
the respondents. The period of acquisitive prescription continues to run. In
this case, Virtucio claims that the protest filed by Alegarbes against his
homestead application interrupted the thirty (30)-year period of acquisitive
prescription. The law, as well as jurisprudence, however, dictates that only a
judicial summons can efectively toll the said period. In the case of Heirs of
Marcelina Azardon-Crisologo v. Raon,26 the Court ruled that a mere Notice

of Adverse Claim did not constitute an efective interruption of possession. In

the case of Heirs of Bienvenido and Araceli Tanyag v. Gabriel,27 which also
cited the Raon Case, the Court stated that the acts of declaring again the
property for tax purposes and obtaining a Torrens certificate of title in one's
name cannot defeat another's right of ownership acquired through
acquisitive prescription.28 In the same vein, a protest filed before an
administrative agency and even the decision resulting from it cannot
efectively toll the running of the period of acquisitive prescription. In such
an instance, no civil interruption can take place. Only in cases filed before
the courts may judicial summons be issued and, thus, interrupt possession.
Records show that it was only in 1997 when Virtucio filed a case before the
RTC. The CA was, therefore, correct in ruling that Alegarbes became ipso jure
owner of Lot 140 entitling him to retain possession of it because he was in
open, continuous and exclusive possession for over thirty (30) years of
alienable public land. 25 Heirs of Bienvenido and Araceli Tanyag v. Gabriel,
supra note 17, citing Heirs of Marcelina AzardonCrisologo v. Raon, G.R. No.
171068, September 5, 2007, 532 SCRA 391, 406-407. 26 G.R. No. 171068,
September 5, 2007, 532 SCRA 391. 27 Supra note 17, citing Heirs of
Marcelina Azardon-Crisologo v. Raon, G.R. No. 171068, September 5, 2007,
532 SCRA 391, 406-407. 28 Id. DECISION G.R. No. 187451 10 Virtucio
emphasizes that the CA erred in disregarding the decisions of the
administrative agencies which amended Alegarbes' homestead application
excluding Lot 140 and gave due course to his own application for the said lot,
which decisions were affirmed by the RTC. Well-settled is the rule that factual
findings of the lower courts are entitled to great weight and respect on
appeal and, in fact, are accorded finality when supported by substantial
evidence on the record.29 It appears, however, that the conclusion made by
the RTC was not substantially supported. Even the RTC itself noted in its
decision: The approval of a Homestead Application merely authorizes the
applicant to take possession of the land so that he could comply with the
requirements prescribed by law before a final patent could be issued in his
favor what divests the government of title to the land is the issuance of a
patent and its subsequent registration with the Register of Deeds.30 A
perusal of the records would reveal that there was no issuance of any patent
in favor of either parties. This simply means that the land subject of the
controversy remains to be in the name of the State. Hence, neither Virtucio
nor Alegarbes can claim ownership. There was, therefore, no substantial and
legal basis for the RTC to declare that Virtucio was entitled to possession and
ownership of Lot 140. It can be argued that the lower court had the decisions
of the administrative agencies, which ultimately attained finality, as legal

bases in ruling that Virtucio had the right of possession and ownership. In
fact, the Department of Environment and Natural Resources (DENR) even
issued the Order of Execution31 on May 11, 1989 ordering Alegarbes to
vacate Lot 140 and 29 Spouses Patricio and Myrna Bernales v. Heirs of Julian
Sambaan, G..R. No. 163271, January 15, 2010, 610 SCRA 90, 104-105, citing
Xentrex Motors, Inc. v. Court of Appeals, 353 Phil. 258, 262 (1998). 30 CA
rollo, p. 268. 31 Records, pp. 16-17. DECISION G.R. No. 187451 11 place
Virtucio in peaceful possession of it. The CA, however, was correct in finding
that: But appellant had earlier put in issue the matter of ownership of Lot
140 which he claims by virtue of adverse possession. On this issue, the cited
decisions are impertinent. Even if the decision to approve appellee's
homestead application over Lot 140 had become final, appellant could still
acquire the said lot by acquisitive prescription.32 In the case of Heirs of
Gamos v. Heirs of Frando,33 the Court ruled that the mere application for a
patent, coupled with the fact of exclusive, open, continuous and notorious
possession for the required period, is sufficient to vest in the applicant the
grant applied for.34 It likewise cited the cases of Susi v. Razon35 and Pineda
v. CA,36 where the Court ruled that the possession of a parcel of agricultural
land of the public domain for the prescribed period of 30 years ipso jure
converts the lot into private property.37 In this case, Alegarbes had applied
for homestead patent as early as 1949. He had been in exclusive, open,
continuous and notorious possession of Lot 140 for at least 30 years. By the
time the DENR issued its order of execution in 1989, Alegarbes had Lot 140
in his possession for more than 30 years. Even more so when Virtucio filed
the complaint before the RTC in 1997, Alegarbes was already in possession of
the subject property for fortyeight (48) years. The CA correctly observed that
the RTC erred in disregarding the evidence before it and relying entirely upon
the decisions of the Director of Lands, the Secretary of Agriculture and
Natural Resources and the OP, which 32 Rollo, p. 29. 33 488 Phil. 140 (2004).
34 Id. at 153. 35 48 Phil. 424 (1925). 36 262 Phil. 658, 665 (1990). 37 Heirs
of Gamos v. Heirs of Frando, Supra note 33 at 152. DECISION G.R. No.
187451 12 never touched the issue of whether Alegarbes open, continuous
and exclusive possession of over thirty (30) years of alienable land had ipso
jure segregated Lot 140 from the mass of public land and beyond the
jurisdiction of these agencies.38 When the CA ruled that the RTC was correct
in relying on the abovementioned decisions, it merely recognized the primary
jurisdiction of these administrative agencies. It was of the view that the RTC
was not correct in the other aspects of the case. Thus, it declared Alegarbes
as owner ipso jure of Lot 140 and entitled to retain possession of it. There is
no reason for the Court to disturb these findings of the CA as they were

supported by substantial evidence, hence, are conclusive and binding upon

this Court.39 On the CA Decision involving a similar case Virtucio insists that
the CA gravely erred in disregarding its decision in Custodio v. Alegarbes, CAG.R. CV 26286, for Recovery of Possession and Ownership, which involved
the same factual circumstances and ruled against Alegarbes. It must be
noted that the subject property in the said case was Lot 139 allocated to
Custodio and that Virtucio was not a party to that case. The latter cannot
enjoy whatever benefits said favorable judgment may have had just because
it involved similar factual circumstances. The Court also found from the
records that the period of acquisitive prescription in that case was efectively
interrupted by Custodio's filing of a complaint, which is wanting in this case.
38 Rollo, p. 33. 39 Lynvil Fishing Enterprises, Inc. v. Ariola, G.R. No. 181974,
February 1, 2012, 664 SCRA 679. DECISION 13 GR. No. 187451 Moreover, it
is settled that a decision of the CA does not establish judicial precedent.40
"The principle of stare decisis enjoins adherence by lower courts to doctrinal
rules established by this Court in its final decisions. It is based on the
principle that once a question of law has been examined and decided, it
should be deemed settled and closed to further argument. " 41 The Court
agrees with the position of Alegarbes that by Virtucio's insistence that it was
erroneous for the CA to disregard its earlier decision in CA-G.R. CV 26286, he,
in efect, calls upon this Court to adhere to that decision by invoking the
stare decisis principle, which is not legally possible ~ because only final
decisions of this Court are considered precedents.42 In view of the foregoing,
the Court need not dwell on the complaint of Virtucio with regard to the
deletion of the award of attorney's fees in his favor. It is ludicrous for theCA
to order Alegarbes to pay attorney's fees, as a measure of damages, and
costs, after finding him to have acquired ownership over the property by
acquisitive prescription. WHEREFORE, the petition is DENIED. SO ORDERED.