ELNA MERCADO-FEHR, vs BRUNO FEHR

Whether the ownership of Suite 204 of LCG Condominium and how the properties acquired by
petitioner and respondent should be partitioned.

We give more credence to petitioners submission that Suite 204 was acquired during the
parties cohabitation. Accordingly, under Article 147 of the FC, said property should be governed
by the rules on co-ownership. In the absence of proof to the contrary, properties acquired while
they lived together shall be presumed to have been obtained by their joint efforts, work or
industry, and shall be owned by them in equal shares. Neither party can encumber or dispose
by acts inter vivos of his or her share in the property acquired during cohabitation and owned in
common, without the consent of the other, until after the termination of their cohabitation.

When only one of the parties to a void marriage is in good faith, the share of the party in bad
faith in the co-ownership shall be forfeited in favor of their common children. In case of default of
or waiver by any or all of the common children or their descendants, each vacant share shall
belong to the respective surviving descendants. Article 147 applies to unions of parties who are
legally capacitated and not barred by any impediment to contract marriage, but whose marriage
is nonetheless void, as in the case at bar. This provision creates a co-ownership with respect to
the properties they acquire during their cohabitation.

We held in Valdes vs. RTC, Br. 102, Quezon City:

This peculiar kind of co-ownership applies when a man and a woman, suffering no legal
impediment to marry each other, so exclusively live together as husband and wife under a void
marriage or without the benefit of marriage. Under this property regime, property acquired by
both spouses through their work and industry shall be governed by the rules on equal co-
ownership. Any property acquired during the union is prima facie presumed to have been
obtained through their joint efforts. A party who did not participate in the acquisition of the
property shall still be considered as having contributed thereto jointly if said partys "efforts
consisted in the care and maintenance of the family household."

As regards the settlement of the common properties of petitioner and respondent, we hold that
the Civil Code provisions on co-ownership should apply. There is nothing in the records that
support the pronouncement of the trial court that the parties have agreed to divide the properties
into three1/3 share each to the petitioner, the respondent and their children. Petitioner, in fact,
alleges in her petition before this Court that the parties have agreed on a four-way division of
the properties1/4 share each to the petitioner and the respondent, and 1/4 share each to their
two children.

In sum, we rule in favor of the petitioner. We hold that Suite 204 of LCG Condominium is a
common property of petitioner and respondent and the property regime of the parties should be
divided in accordance with the law on co-ownership.

SPOUSES SERAFIN SI vs CA

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In essence, this Court is asked to resolve whether private respondents are co-owners who are
legally entitled to redeem the lot under Article 1623 of the Civil Code;

These are the unblinkable facts that the portion sold to defendant spouses Si by defendants
Crisostomo Armada and Cresenciana Armada was concretely determined and identifiable. The
fact that the three portions are embraced in one certificate of title does not make said portions
less determinable or identifiable or distinguishable, one from the other, nor that dominion over
each portion less exclusive, in their respective owners. Hence, no right of redemption among
co-owners exists. The herein plaintiffs cannot deny the fact that they did not have knowledge
about the impending sale of this portion. The truth of the matter is that they were properly
notified. Reacting to such knowledge and notification they wrote defendant Dr. Crisostomo
Armada on February 22, 1979, a portion of said letter is revealing: 'Well you are the king of
yourselves, and you can sell your share of Levereza."

After the physical division of the lot among the brothers, the community ownership terminated,
and the right of preemption or redemption for each brother was no longer available.22

Under Art. 484 of the Civil Code, there is co-ownership whenever the ownership of an undivided
thing or right belongs to different persons. There is no co-ownership when the different portions
owned by different people are already concretely determined and separately identifiable, even if
not yet technically described. This situation makes inapplicable the provision on the right of
redemption of a co-owner in the Civil Code, as follows:

"Art. 1623. The right of legal pre-emption or redemption shall not be exercised except within
thirty days from the notice in writing by the prospective vendor, or by the vendor, as the case
may be. The deed of sale shall not be recorded in the Registry of Property, unless accompanied
by an affidavit of the vendor that he has given written notice thereof to all possible
redemptioners.

The right of redemption of co-owners excludes that of adjoining owners."

Moreover, we note that private respondent Jose Armada was well informed of the impending
sale of Crisostomo's share in the land. In a letter dated February 22, 1979, Jose told his brother
Crisostomo: "Well you are the king of yourselves, and you can sell your share of Leveriza." Co-
owners with actual notice of the sale are not entitled to written notice. A written notice is a formal
requisite to make certain that the co-owners have actual notice of the sale to enable them to
exercise their right of redemption within the limited period of thirty days. But where the co-
owners had actual notice of the sale at the time thereof and/or afterwards, a written notice of a
fact already known to them, would be superfluous. The statute does not demand what is
unnecessary.

APOLONIA OCAMPO, et al vs FIDELA OCAMPO, et al

Ownership of the Subject Property

Since the original Complaint was an action for partition, this Court cannot order a division of the
property, unless it first makes a determination as to the existence of a co-ownership. The
settlement of the issue of ownership is the first stage in an action for partition. This action will
not lie if the claimant has no rightful interest in the subject property.

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Basic is the rule that the party making an allegation in a civil case has the burden of proving it
by a preponderance of evidence. Petitioners chief evidence of co-ownership of the property in
question is simply the Acknowledgement of Co-ownership executed by Fidela. As mentioned
earlier, both the trial and the appellate courts were correct in finding that this piece of
documentary evidence could not prevail over the array of testimonial and documentary evidence
that were adduced by respondents, as will be expounded below.

It is axiomatic that no one can transfer to another a right greater than that which one has; thus,
the legal truism that the spring cannot rise higher than its source.

The Civil Code provides that an essential requisite of a contract of mortgage is that the
mortgagor be the absolute owner of the thing mortgaged. Co-ownership cannot be presumed
even if only a portion of the property was mortgaged to Apolonia, because a co-owner may
dispose only of ones interest in the ideal or abstract part of the undivided thing co-owned with
others. The effect of a mortgage by a co-owner shall be limited to the portion that may be
allotted to that person upon the termination of the co-ownership.

A donation as a mode of acquiring ownership results in an effective transfer of title to the

property from the donor to the donee.

Petitioners argue that the Acknowledgement of Co-ownership may be considered as a

declaration against interest. A statement may be admissible as such a declaration if it complies
with the following requisites: 1) the declarant is dead or unable to testify; 2) it relates to a fact
against the interest of the declarant; 3) at the time of the declaration, the declarant was aware
that it was contrary to his or her interest; and 4) the declarant had no motive to falsify and
believed the declaration to be true.

As correctly found by the trial court, however, the Acknowledgement of Co-ownership could not
be a fact against the interest of the declarant, since her right over the property had already been
extinguished by the prior act of donation. Thus, at the time of the declaration, Fidela could not
have acknowledged co-ownership, as she had no more property against which she had an
interest to declare.

Finally, Belen presented TCT No. 13654 as proof of her ownership of the property. To be sure,
the best proof of ownership of the land is the Certificate of Title (TCT). Hence, more than a bare
allegation is required to defeat the face value of respondents TCT, which enjoys a legal
presumption of regularity of issuance.

We are not unmindful of our ruling that the mere issuance of a certificate of title does not
foreclose the possibility that the real property may be under co-ownership with persons not
named therein. But given the circumstances of this case, the claim of co-ownership by
petitioners has no leg to stand on.

The appellate court correctly found that since the litigants in this case were blood relatives,
fraternal affection could have been a good motive that impelled either Belen or Fidela to allow
petitioners to use the property. Without any proof, however, co-ownership among the parties
cannot be presumed.

Petitioners clearly overlook the nature of a donation.

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Donation is an act of liberality whereby a person gratuitously disposes of a thing or a right in
favor of another who accepts it. Once perfected, a donation is final; its revocation or rescission
cannot be effected, absent any legal ground therefor. A donation may in fact comprehend the
entire property of the donor. At any rate, the law provides that donors should reserve, in full
ownership or in usufruct, sufficient means for their own support and that of all their relatives
who, at the time of the acceptance of the donation, are by law entitled to be supported by them.
The law is clear that when its terms have been reduced to writing, an agreement must be
presumed to contain all the terms agreed upon; and there can be, between the parties and their
successors in interest, no evidence of such terms other than the contents of the written
agreement.

LILIA SANCHEZ vs CA and VIRGINIA TERIA

This case overlooks a basic yet significant principle of civil law: co-ownership. Sanchez Roman
defines co-ownership as "the right of common dominion which two or more persons have in a
spiritual part of a thing, not materially or physically divided. Manresa defines it as the
"manifestation of the private right of ownership, which instead of being exercised by the owner
in an exclusive manner over the things subject to it, is exercised by two or more owners and the
undivided thing or right to which it refers is one and the same."

The characteristics of co-ownership are: (a) plurality of subjects, who are the co-owners, (b)
unity of or material indivision, which means that there is a single object which is not materially
divided, and which is the element which binds the subjects, and, (c) the recognition of ideal
shares, which determines the rights and obligations of the co-owners.

In co-ownership, the relationship of such co-owner to the other co-owners is fiduciary in

character and attribute. Whether established by law or by agreement of the co-owners, the
property or thing held pro-indiviso is impressed with a fiducial nature so that each co-owner
becomes a trustee for the benefit of his co-owners and he may not do any act prejudicial to the
interest of his co-owners.

Thus, the legal effect of an agreement to preserve the properties in co-ownership is to create an
express trust among the heirs as co-owners of the properties. Co-ownership is a form of trust
and every co-owner is a trustee for the others.

Before the partition of a land or thing held in common, no individual or co-owner can claim title
to any definite portion thereof. All that the co-owner has is an ideal or abstract quota or
proportionate share in the entire land or thing.

Article 493 of the Civil Code gives the owner of an undivided interest in the property the right to
freely sell and dispose of it, i.e., his undivided interest. He may validly lease his undivided
interest to a third party independently of the other co-owners. But he has no right to sell or
alienate a concrete, specific or determinate part of the thing owned in common because his right
over the thing is represented by a quota or ideal portion without any physical adjudication.

Although assigned an aliquot but abstract part of the property, the metes and bounds of
petitioners lot has not been designated. As she was not a party to the Deed of Absolute Sale
voluntarily entered into by the other co-owners, her right to 1/6 of the property must be
respected. Partition needs to be effected to protect her right to her definite share and determine

4
the boundaries of her property. Such partition must be done without prejudice to the rights of
private respondent Virginia Teria as buyer of the 5/6 portion of the lot under dispute.

MANUEL T. DE GUIA, vs CA and JOSE B. ABEJO

In essence, this Court is asked to resolve: (1) whether an action for recovery of possession and
turn-over of the undivided portion of a common property is proper before partition; and (2)
whether there is sufficient basis for the award of compensatory damages and attorneys fees.

First and Second Issues: Cause of Action and Turn-Over of Possession

Under Article 484 of the Civil Code, "there is co-ownership whenever the ownership of an
undivided thing or right belongs to different persons." A co-owner of an undivided parcel of land
is an "owner of the whole, and over the whole he exercises the right of dominion, but he is at the
same time the owner of a portion which is truly abstract." On the other hand, there is no co-
ownership when the different portions owned by different people are already concretely
determined and separately identifiable, even if not yet technically described.

Article 487 of the Civil Code provides, "any one of the co-owners may bring an action in
ejectment." This article covers all kinds of actions for the recovery of possession. Article 487
includes forcible entry and unlawful detainer (accion interdictal), recovery of possession (accion
publiciana), and recovery of ownership (accion de reivindicacion). The summary actions of
forcible entry and unlawful detainer seek the recovery of physical possession only. These
actions are brought before MTCs within one year from dispossession. However, accion
publiciana, which is a plenary action for recovery of the right to possess, falls under the
jurisdiction of the proper RTC when the dispossession has lasted for more than one
year. Accion de reivindicacion, which seeks the recovery of ownership, also falls under the
jurisdiction of the proper RTC.

Any co-owner may file an action under Article 487 not only against a third person, but also
against another co-owner who takes exclusive possession and asserts exclusive ownership of
the property. In the latter case, however, the only purpose of the action is to obtain recognition
of the co-ownership. The plaintiff cannot seek exclusion of the defendant from the property
because as co-owner he has a right of possession. The plaintiff cannot recover any material or
determinate part of the property.

In Spouses Engreso v. Spouses De La Cruz, we reiterated the rule that a co-owner cannot
recover a material or determinate part of a common property prior to partition as follows:

It is a basic principle in civil law that before a property owned in common is actually partitioned,
all that the co-owner has is an ideal or abstract quota or proportionate share in the entire
property. A co-owner has no right to demand a concrete, specific or determinate part of the
thing owned in common because until division is effected his right over the thing is represented
only by an ideal portion.

As such, the only effect of an action brought by a co-owner against a co-owner will be to obtain
recognition of the co-ownership; the defendant cannot be excluded from a specific portion of the
property because as a co-owner he has a right to possess and the plaintiff cannot recover any
material or determinate part of the property.

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Following the inherent and peculiar features of co-ownership, while ABEJO and DE GUIA have
equal shares in the FISHPOND quantitatively speaking, they have the same right in a qualitative
sense as co-owners. Simply stated, ABEJO and DE GUIA are owners of the whole and over the
whole, they exercise the right of dominion. However, they are at the same time individual
owners of a portion, which is truly abstract because until there is partition, such portion
remains indeterminate or unidentified. As co-owners, ABEJO and DE GUIA may jointly exercise
the right of dominion over the entire FISHPOND until they partition the FISHPOND by identifying
or segregating their respective portions.

Since a co-ownership subsists between ABEJO and DE GUIA, judicial or extra-judicial partition
is the proper recourse. An action to demand partition is imprescriptible and not subject to
laches. Each co-owner may demand at any time the partition of the common property unless a
co-owner has repudiated the co-ownership under certain conditions. Neither ABEJO nor DE
GUIA has repudiated the co-ownership under the conditions set by law.

To recapitulate, we rule that a co-owner may file an action for recovery of possession against a
co-owner who takes exclusive possession of the entire co-owned property. However, the only
effect of such action is a recognition of the co-ownership. The courts cannot proceed with the
actual partitioning of the co-owned property. Thus, judicial or extra-judicial partition is necessary
to effect physical division of the FISHPOND between ABEJO and DE GUIA. An action for
partition is also the proper forum for accounting the profits received by DE GUIA from the
FISHPOND. However, as a necessary consequence of such recognition, ABEJO shall exercise
an equal right to possess, use and enjoy the entire FISHPOND.

The right of enjoyment by each co-owner is limited by a similar right of the other co-owners. A
co-owner cannot devote common property to his exclusive use to the prejudice of the co-
ownership. Hence, if the subject is a residential house, all the co-owners may live there with
their respective families to the extent possible. However, if one co-owner alone occupies the
entire house without opposition from the other co-owners, and there is no lease agreement, the
other co-owners cannot demand the payment of rent. Conversely, if there is an agreement to
lease the house, the co-owners can demand rent from the co-owner who dwells in the
house.

The co-owners can either exercise an equal right to live in the house, or agree to lease it. If they
fail to exercise any of these options, they must bear the consequences. It would be unjust to
require the co-owner to pay rent after the co-owners by their silence have allowed him to use
the property.

In case the co-owners agree to lease a building owned in common, a co-owner cannot retain it
for his use without paying the proper rent. Moreover, where part of the property is occupied
exclusively by some co-owners for the exploitation of an industry, the other co-owners become
co-participants in the accessions of the property and should share in its net profits.

HEIRS OF BALITE vs RODRIGO N. LIM

A deed of sale that allegedly states a price lower than the true consideration is nonetheless
binding between the parties and their successors in interest. Furthermore, a deed of sale in
which the parties clearly intended to transfer ownership of the property cannot be presumed to
be an equitable mortgage under Article 1602 of the Civil Code. Finally, an agreement that

6
purports to sell in metes and bounds a specific portion of an unpartitioned co-owned property is
not void; it shall effectively transfer the sellers ideal share in the co-ownership.

Article 1345 of the Civil Code provides that the simulation of a contract may either be absolute
or relative. In absolute simulation, there is a colorable contract but without any substance,
because the parties have no intention to be bound by it. An absolutely simulated contract is
void, and the parties may recover from each other what they may have given under the
"contract." On the other hand, if the parties state a false cause in the contract to conceal their
real agreement, such a contract is relatively simulated. Here, the parties real agreement binds
them.

Since the Deed of Absolute Sale was merely relatively simulated, it remains valid and
enforceable. All the essential requisites prescribed by law for the validity and perfection of
contracts are present. The juridical nature of the Contract remained the same. What was
concealed was merely the actual price. Where the essential requisites are present and the
simulation refers only to the content or terms of the contract, the agreement is absolutely
binding and enforceable between the parties and their successors in interest.

Petitioners cannot be permitted to unmake the Contract voluntarily entered into by their
predecessor, even if the stated consideration was included therein for an unlawful purpose.
"The binding force of a contract must be recognized as far as it is legally possible to do so."
However, as properly held by the appellate court, the government has the right to collect the
proper taxes based on the correct purchase price.

Being onerous, the Contract had for its cause or consideration the price of P1,000,000. Both the
consideration as well as the subject matter of the contract is lawful. The motives of the
contracting parties for lowering the price of the sale -- in the present case, the reduction of
capital gains tax liability -- should not be confused with the consideration. Although illegal, the
motives neither determine nor take the place of the consideration.

Deed of Sale not an Equitable Mortgage

For Articles 1602 and 1604 to apply, two requisites must concur: one, the parties entered into a
contract denominated as a contract of sale; and, two, their intention was to secure an existing
debt by way of mortgage. Indeed, the existence of any of the circumstances enumerated in
Article 1602, not a concurrence or an overwhelming number thereof, suffices to give rise to the
presumption that a contract purporting to be an absolute sale is actually an equitable mortgage.
In the present case, however, the Contract does not merely purport to be an absolute sale. The
records and the documentary evidence introduced by the parties indubitably show that the
Contract is, indeed, one of absolute sale. There is no clear and convincing evidence that the
parties agreed upon a mortgage of the subject property. Furthermore, the voluntary, written and
unconditional acceptance of contractual commitments negates the theory of equitable
mortgage.

When the words of a contract are clear and readily understandable, there is no room for
construction. Contracts are to be interpreted according to their literal meaning and should not be
interpreted beyond their obvious intendment. The contract is the law between the parties.

Co-Ownership

7
Article 493 of the Civil Code gives the owner of an undivided interest in the property the right to
freely sell and dispose of such interest. The co-owner, however, has no right to sell or alienate a
specific or determinate part of the thing owned in common, because such right over the thing is
represented by an aliquot or ideal portion without any physical division. Nonetheless, the mere
fact that the deed purports to transfer a concrete portion does not per se render the sale void.
The sale is valid, but only with respect to the aliquot share of the selling co-owner. Furthermore,
the sale is subject to the results of the partition upon the termination of the co-ownership.

Transfer of Property

During her lifetime, Esperanza had already sold to respondent her share in the subject parcel;
hence her heirs could no longer inherit it. The property she had transferred or conveyed no
longer formed part of her estate to which her heirs may lay claim at the time of her death.

EPITACIO DELIMA, et al vs CA

The issue to be resolved in the instant case is whether or not petitioners' action for partition is
already barred by the statutory period provided by law which shall enable Galileo Delima to
perfect his claim of ownership by acquisitive prescription to the exclusion of petitioners from
their shares in the disputed property. Article 494 of the Civil Code expressly provides:

Art. 494. No co-owner shall be obliged to remain in the co-ownership. Each co-owner
may demand at any time the partition of the thing owned in common, insofar as his
share is concerned.

Nevertheless, an agreement to keep the thing undivided for a certain period of time, not
exceeding ten years, shall be valid. This term may be extended by a new agreement.

A donor or testator may prohibit partition for a period which shall not exceed twenty
years.

Neither shall there be any partition when it is prohibited by law.

No prescription shall run in favor of a co-owner or co-heir against his co-owners or co-
heirs so long as he expressly or impliedly recognizes the co-ownership.

As a rule, possession by a co-owner will not be presumed to be adverse to the others, but will
be held to benefit all. It is understood that the co-owner or co-heir who is in possession of an
inheritance pro-indiviso for himself and in representation of his co-owners or co-heirs, if, as such
owner, he administers or takes care of the rest thereof with the obligation of delivering it to his
co-owners or co-heirs, is under the same situation as a depository, a lessee or a trustee Thus,
an action to compel partition may be filed at any time by any of the co-owners against the actual
possessor. In other words, no prescription shall run in favor of a co-owner against his co-owners
or co-heirs so long as he expressly or impliedly recognizes the co-ownership.

However, from the moment one of the co-owners claims that he is the absolute and exclusive
owner of the properties and denies the others any share therein, the question involved is no
longer one of partition but of ownership. In such case, the imprescriptibility of the action for
partition can no longer be invoked or applied when one of the co-owners has adversely

8
possessed the property as exclusive owner for a period sufficient to vest ownership by
prescription.

It is settled that possession by a co-owner or co-heir is that of a trustee. In order that such
possession is considered adverse to the cestui que trust amounting to a repudiation of the co-
ownership, the following elements must concur: 1) that the trustee has performed unequivocal
acts amounting to an ouster of the cestui que trust; 2) that such positive acts of repudiation had
been made known to the cestui que trust; and 3) that the evidence thereon should be clear and
conclusive (Valdez v. Olorga,).

We have held that when a co-owner of the property in question executed a deed of partition and
on the strength thereof obtained the cancellation of the title in the name of their predecessor
and the issuance of a new one wherein he appears as the new owner of the property, thereby in
effect denying or repudiating the ownership of the other co-owners over their shares, the statute
of limitations started to run for the purposes of the action instituted by the latter seeking a
declaration of the existence of the co-ownership and of their rights thereunder. Since an action
for reconveyance of land based on implied or constructive trust prescribes after ten (10) years, it
is from the date of the issuance of such title that the effective assertion of adverse title for
purposes of the statute of limitations is counted.

TOMAS CLAUDIO MEMORIAL COLLEGE, INC vs CA

On the issue of prescription, we have ruled that even if a co-owner sells the whole property as
his, the sale will affect only his own share but not those of the other co-owners who did not
consent to the sale. Under Article 493 of the Civil Code, the sale or other disposition affects
only the seller's share pro indiviso, and the transferee gets only what corresponds to his
grantor's share in the partition of the property owned in common. Since a co-owner is entitled to
sell his undivided share, a sale of the entire property by one co-owner without the consent of the
other co-owners is not null and void. However, only the rights of the co-owner/seller are
transferred, thereby making the buyer a co-owner of the property. The proper action in a case
like this, is not for the nullification of the sale, or for the recovery of possession of the property
owned in common from the third person, but for division or partition of the entire property if it
continued to remain in the possession of the co-owners who possessed and administered
it. Such partition should result in segregating the portion belonging to the seller and its delivery
to the buyer.

In the light of the foregoing, petitioner's defense of prescription against an action for partition is
a vain proposition. Pursuant to Article 494 of the Civil Code, "no co-owner shall be obliged to
remain in the co-ownership. Such co-owner may demand at anytime the partition of the thing
owned in common, insofar as his share is concerned." In Budlong vs. Bondoc, this Court has
interpreted said provision of law to mean that the action for partition is imprescriptible. It cannot
be barred by prescription. For Article 494 of the Civil Code explicitly declares: "No prescription
shall lie in favor of a co-owner or co-heirs as long as he expressly or impliedly recognizes the
co-ownership."

ARTURIO TRINIDAD vs CA

Private respondents have not acquired ownership of the property in question by acquisitive
prescription. In a co-ownership, the act of one benefits all the other co-owners, unless the

9
former repudiates the co-ownership. Thus, no prescription runs in favor of a co-owner or co-heir
against his or her co-owners or co-heirs, so long as he or she expressly or impliedly recognizes
the co-ownership.

In this particular case, it is undisputed that, prior to the action for partition, petitioner, in the
concept of a co-owner, was receiving from private respondents his share of the produce of the
land in dispute. Until such time, recognition of the co-ownership by private respondents was
beyond question. There is no evidence, either, of their repudiation, if any, of the co-ownership of
petitioner's father Inocentes over the land. Further, the titles of these pieces of land were still in
their father's name. Although private respondents had possessed these parcels openly since
1940 and had not shared with petitioner the produce of the land during the pendency of this
case, still, they manifested no repudiation of the co-ownership. In Mariategui vs. CA, the Court
held: 44

. . . Corollarily, prescription does not run again private respondents with respect to the filing of
the action for partition so long as the heirs for whose benefit prescription is invoked, have not
expressly or impliedly repudiated the co-ownership. In the other words, prescription of an action
for partition does not lie except when the co-ownership is properly repudiated by the co-owner.

Otherwise stated, a co-owner cannot acquire by prescription the share of the other co-owners
absent a clear repudiation of co-ownership duly communicated to the other co-owners (Mariano
vs. De Vega, 148 SCRA 342 [1987]). Furthermore, an action to demand partition is
imprescriptible and cannot be barred by laches. On the other hand, an action for partition may
be seen to be at once an action for declaration of co-ownership and for segregation and
conveyance of a determinate portion of the property involved.

CONSOLACION AUSTRIA vs LICHAUCO, et al

There are two stages in every action for partition. The first phase is the determination of whether
a co-ownership in fact exists and a partition is proper, i.e., not otherwise legally proscribed, and
may be made by voluntary agreement of all the parties interested in the property. This phase
may end either: (a) with a declaration that plaintiff is not entitled to have a partition either
because a co-ownership does not exist, or partition is legally prohibited; or (b) with a
determination that a co-ownership does in truth exist, partition is proper in the premises, and an
accounting of rents and profits received by the defendant from the real estate in question is in
order. In the latter case, the parties may, if they are able to agree, make partition among
themselves by proper instruments of conveyance, and the court shall confirm the partition so
agreed upon.

The second phase commences when it appears that the parties are unable to agree upon the
partition directed by the court. In that event, partition shall be done for the parties by the court
with the assistance of not more than three (3) commissioners. This second stage may well also
deal with the rendition of the accounting itself and its approval by the court after the parties have
been accorded opportunity to be heard thereon, and an award for the recovery by the party or
parties thereto entitled of their just share in the rents and profits of the real estate in question.

There is no question that a co-ownership exists between petitioner and respondents. To this
extent, the trial court was correct in decreeing partition in line with the Civil Code provision that
no co-owner shall be obliged to remain in the co-ownership.

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However, the trial court went astray when it also authorized the sale of the subject properties to
a third party and the division of the proceeds thereof. What makes this portion of the decision all
the more objectionable is the fact that the trial court conditioned the sale upon the price and
terms acceptable to plaintiffs (respondents herein) only, and adjudicated the proceeds of the
sale again only to plaintiffs.

SPOUSES DELA ROSA, vs. SANTIAGO CARLOS and TEOFILA PACHECO

WON the CA gravely erred on the following grounds:

1. In allowing a collateral attack on the validity of the deed of absolute sale in an ejectment
proceeding and ruling that the same is void for lack of marital consent of Benita Carlos.
2. In declaring that petitioners failed to prove prior physical possession over the property
despite the overwhelming evidence to the contrary.
3. In applying the rules of co-ownership over the property.

We grant the petition.

In a forcible entry case, the principal issue for resolution is mere physical or material possession
(possession de facto) and not juridical possession (possession de jure) nor ownership of the
property involved. In the present case, both parties claim prior possession of the Property.

Even if the Spouses Dela Rosa were already residing in Manila, they could continue possessing
the Property in Bulacan. The fact of their residence in Manila, by itself, does not result in loss of
possession of the Property in Bulacan. The law does not require one in possession of a house
to reside in the house to maintain his possession.

In Somodio v. CA which the Spouses Dela Rosa cited, the petitioner there began construction of
a structure on his lot. His employment, however, took him to Kidapawan, North Cotabato, and
he left the unfinished structure to the care of his uncle. He would visit the property every three
months or on weekends when he had time. The Court ruled that possession in the eyes of the
law does not mean that a man has to have his feet on every square meter of the ground before
he is deemed in possession.

Santiago and Teofila likewise do not deny that the Spouses Dela Rosa renovated the house,
furnished the same and constructed a perimeter fence around the Property. It is quite
improbable to perform these acts without the Spouses Dela Rosa physically possessing the
Property.

Santiago and Teofila likewise challenged the validity of the sale between their father Leonardo
and the Spouses Dela Rosa. The sale transpired before Leonardos death. If Santiago and
Teofila truly believed that the Deed of Sale is void, they should have filed an action to annul the
same, but they did not. Santiago and Teofila questioned the validity of the Deed of Sale only
when the Spouses Dela Rosa filed the forcible entry case.

However, Santiago and Teofila cannot properly challenge the validity of the Deed of Sale in the
ejectment case because ejectment cases proceed independently of any claim of ownership.
Santiago and Teofila claim that the Deed of Sale was executed without the consent of Benita,
Leonardos spouse. They also claim that the Deed of Sale was executed through fraud and
undue influence. However, these issues cannot properly be addressed in the present action.

11
These issues can only be resolved in a separate action specifically for the annulment of the
Deed of Sale.

SOMODIOvs CA, EBENECER PURISIMA, and FELOMINO AYCO

In ejectment cases, the only issue for resolution is who is entitled to the physical or material
possession of the property involved, independent of any claim of ownership set forth by any of
the party-litigants. Anyone of them who can prove prior possession de facto may recover such
possession even from the owner himself. This rule holds true regardless of the character of a
party's possession, provided, that he has in his favor priority of time which entitles him to stay on
the property until he is lawfully ejected by a person having a better right by either accion
publiciana or accion reivindicatoria (De Luna v. CA)

Possession in the eyes of the law does not mean that a man has to have his feet on every
square meter of ground before it can be said that he is in possession (Ramos v. Director of
Lands). It is sufficient that petitioner was able to subject the property to the action of his will.

Article 531 of the Civil Code of the Philippines provides:

Possession is acquired by the material occupation of a thing or the exercise of a right, or by the
fact that it is subject to the action of our will, or by the proper acts and legal formalities
established for acquiring such right.

COLITO T. PAJUYO, petitioner, vs. CA and EDDIE GUEVARRA, respondents.

A party, who, after voluntarily submitting a dispute for resolution, receives an adverse decision
on the merits, is estopped from attacking the jurisdiction of the court. Estoppel sets in not
because the judgment of the court is a valid and conclusive adjudication, but because the
practice of attacking the courts jurisdiction after voluntarily submitting to it is against public
policy.

Settled is the rule that the defendants claim of ownership of the disputed property will not divest
the inferior court of its jurisdiction over the ejectment case. Even if the pleadings raise the issue
of ownership, the court may pass on such issue to determine only the question of possession,
especially if the ownership is inseparably linked with the possession. The adjudication on the
issue of ownership is only provisional and will not bar an action between the same parties
involving title to the land. This doctrine is a necessary consequence of the nature of the two
summary actions of ejectment, forcible entry and unlawful detainer, where the only issue for
adjudication is the physical or material possession over the real property.

Ownership or the right to possess arising from ownership is not at issue in an action for
recovery of possession. The parties cannot present evidence to prove ownership or right to
legal possession except to prove the nature of the possession when necessary to resolve
the issue of physical possession. The same is true when the defendant asserts the absence
of title over the property. The absence of title over the contested lot is not a ground for the
courts to withhold relief from the parties in an ejectment case.

12
The only question that the courts must resolve in ejectment proceedings is - who is entitled to
the physical possession of the premises, that is, to the possession de facto and not to the
possession de jure. It does not even matter if a partys title to the property is questionable, or
when both parties intruded into public land and their applications to own the land have yet to be
approved by the proper government agency. Regardless of the actual condition of the title to the
property, the party in peaceable quiet possession shall not be thrown out by a strong hand,
violence or terror. Neither is the unlawful withholding of property allowed. Courts will always
uphold respect for prior possession.

Thus, a party who can prove prior possession can recover such possession even against the
owner himself. Whatever may be the character of his possession, if he has in his favor prior
possession in time, he has the security that entitles him to remain on the property until a person
with a better right lawfully ejects him. To repeat, the only issue that the court has to settle in an
ejectment suit is the right to physical possession.

In Pitargue v. Sorilla, the government owned the land in dispute. The government did not
authorize either the plaintiff or the defendant in the case of forcible entry case to occupy the
land. The plaintiff had prior possession and had already introduced improvements on the public
land. The plaintiff had a pending application for the land with the Bureau of Lands when the
defendant ousted him from possession. The plaintiff filed the action of forcible entry against the
defendant. The government was not a party in the case of forcible entry.

The defendant questioned the jurisdiction of the courts to settle the issue of possession
because while the application of the plaintiff was still pending, title remained with the
government, and the Bureau of Public Lands had jurisdiction over the case. We disagreed with
the defendant. We ruled that courts have jurisdiction to entertain ejectment suits even before the
resolution of the application. The plaintiff, by priority of his application and of his entry, acquired
prior physical possession over the public land applied for as against other private claimants.
That prior physical possession enjoys legal protection against other private claimants because
only a court can take away such physical possession in an ejectment case.

It must be borne in mind that the action that would be used to solve conflicts of possession
between rivals or conflicting applicants or claimants would be no other than that of forcible entry.
This action, is a summary and expeditious remedy whereby one in peaceful and quiet
possession may recover the possession of which he has been deprived by a stronger hand, by
violence or terror; its ultimate object being to prevent breach of the peace and criminal disorder.
The basis of the remedy is mere possession as a fact, of physical possession, not a legal
possession. The title or right to possession is never in issue in an action of forcible entry; as a
matter of fact, evidence thereof is expressly banned, except to prove the nature of the
possession. With this nature of the action in mind, by no stretch of the imagination can
conclusion be arrived at that the use of the remedy in the courts of justice would constitute an
interference with the alienation, disposition, and control of public lands.

The Principle of Pari Delicto is not Applicable to Ejectment Cases. Articles 1411 and 1412 of the
Civil Code embody the principle of pari delicto. The rule of pari delicto is expressed in the
maxims ex dolo malo non eritur actio and in pari delicto potior est conditio defedentis. The law
will not aid either party to an illegal agreement. It leaves the parties where it finds them.

The application of the pari delicto principle is not absolute, as there are exceptions to its
application. One of these exceptions is where the application of the pari delicto rule would
violate well-established public policy.

13
In a contract of commodatum, one of the parties delivers to another something not consumable
so that the latter may use the same for a certain time and return it. An essential feature of
commodatum is that it is gratuitous. Another feature of commodatum is that the use of the thing
belonging to another is for a certain period. Thus, the bailor cannot demand the return of the
thing loaned until after expiration of the period stipulated, or after accomplishment of the use for
which the commodatum is constituted. If the bailor should have urgent need of the thing, he may
demand its return for temporary use. If the use of the thing is merely tolerated by the bailor, he
can demand the return of the thing at will, in which case the contractual relation is called a
precarium.Under the Civil Code, precarium is a kind of commodatum.

The Kasunduan reveals that the accommodation accorded by Pajuyo to Guevarra was not
essentially gratuitous. While the Kasunduan did not require Guevarra to pay rent, it obligated
him to maintain the property in good condition. The imposition of this obligation makes the
Kasunduan a contract different from a commodatum. The effects of the Kasunduan are also
different from that of a commodatum. Case law on ejectment has treated relationship based on
tolerance as one that is akin to a landlord-tenant relationship where the withdrawal of
permission would result in the termination of the lease.The tenants withholding of the property
would then be unlawful. This is settled jurisprudence.

Prior possession is not always a condition sine qua non in ejectment. This is one of the
distinctions between forcible entry and unlawful detainer. In forcible entry, the plaintiff is
deprived of physical possession of his land or building by means of force, intimidation, threat,
strategy or stealth. Thus, he must allege and prove prior possession. But in unlawful detainer,
the defendant unlawfully withholds possession after the expiration or termination of his right to
possess under any contract, express or implied. In such a case, prior physical possession is not
required.

Pajuyos withdrawal of his permission to Guevarra terminated the Kasunduan. Pajuyos absence
did not affect his actual possession of the disputed property. Possession in the eyes of the law
does not mean that a man has to have his feet on every square meter of the ground before he is
deemed in possession. One may acquire possession not only by physical occupation, but also
by the fact that a thing is subject to the action of ones will. Actual or physical occupation is not
always necessary.

Ruling on Possession Does not Bind Title to the Land in Dispute

In this case, the owner of the land, which is the government, is not a party to the ejectment
case. Since the party that has title or a better right over the property is not impleaded in this
case, we cannot evict on our own the parties.

Since Pajuyo has in his favor priority in time in holding the property, he is entitled to remain on
the property until a person who has title or a better right lawfully ejects him.

In no way should our ruling in this case be interpreted to condone squatting. The ruling on the
issue of physical possession does not affect title to the property nor constitute a binding and
conclusive adjudication on the merits on the issue of ownership. The owner can still go to court
to recover lawfully the property from the person who holds the property without legal title. Our
ruling here does not diminish the power of government agencies, including local governments,
to condemn, abate, remove or demolish illegal or unauthorized structures in accordance with
existing laws.

14
FERNANDA MENDOZA CEQUENA and RUPERTA MENDOZA LIRIO, vs. HONORATA
MENDOZA BOLANTE,

Tax receipts and declarations are prima facie proofs of ownership or possession of the property
for which such taxes have been paid. Coupled with proof of actual possession of the property,
they may become the basis of a claim for ownership. By acquisitive prescription, possession in
the concept of owner -- public, adverse, peaceful and uninterrupted -- may be converted to
ownership. On the other hand, mere possession and occupation of land cannot ripen into
ownership.

Petitioners dispute the CA's ruling that the affidavit was not the best evidence of their father's
ownership of the disputed land, because the "affiant was not placed on the witness stand." They
contend that it was unnecessary to present a witness to establish the authenticity of the affidavit
because it was a declaration against respondent's interest and was an ancient document. As a
declaration against interest, it was an exception to the hearsay rule. As a necessary and
trustworthy document, it was admissible in evidence. And because it was executed on March
24, 1953, it was a self-authenticating ancient document.

We quote below the pertinent portion of the appellate court's ruling:[7]

"While it is true that the affidavit was signed and subscribed before a notary public, the general
rule is that affidavits are classified as hearsay evidence, unless affiants are placed on the
witness stand (People's Bank and Trust Company vs. Leonidas, 207 SCRA 164). Affidavits are
not considered the best evidence, if affiants are available as witnesses (Vallarta vs. CA, 163
SCRA 587). The due execution of the affidavit was not sufficiently established. The notary
public or others who saw that the document was signed or at least [could] confirm its recitals
[were] not presented. There was no expert testimony or competent witness who attested to the
genuineness of the questioned signatures. Worse, [respondent] denied the genuineness of her
signature and that of her mother xxx. [Respondent] testified that her mother was an illiterate and
as far as she knew her mother could not write because she had not attended school (p. 7, ibid).
Her testimony was corroborated by Ma. Sales Bolante Basa, who said the [respondent's]
mother was illiterate."

The petitioners allegations are untenable. Before a private document offered as authentic can
be received in evidence, its due execution and authenticity must be proved first. And before a
document is admitted as an exception to the hearsay rule under the Dead Man's Statute, the
offeror must show (a) that the declarant is dead, insane or unable to testify; (b) that the
declaration concerns a fact cognizable by the declarant; (c) that at the time the declaration was
made, he was aware that the same was contrary to his interest; and (d) that circumstances
render improbable the existence of any motive to falsify.[9]Esmsc

In this case, one of the affiants happens to be the respondent, who is still alive and who testified
that the signature in the affidavit was not hers. A declaration against interest is not admissible if
the declarant is available to testify as a witness.[10] Such declarant should be confronted with
the statement against interest as a prior inconsistent statement.

The affidavit cannot be considered an ancient document either. An ancient document is one that
is (1) more than 30 years old, (2) found in the proper custody, and (3) unblemished by any
alteration or by any circumstance of suspicion.[11] It must on its face appear to be genuine. The

15
petitioners herein failed, however, to explain how the purported signature of Eduarda Apiado
could have been affixed to the subject affidavit if, according to the witness, she was an illiterate
woman who never had any formal schooling. This circumstance casts suspicion on its
authenticity.

Not all notarized documents are exempted from the rule on authentication. Thus, an affidavit
does not automatically become a public document just because it contains a notarial jurat.
Furthermore, the affidavit in question does not state how the ownership of the subject land was
transferred from Sinforoso Mendoza to Margarito Mendoza. By itself, an affidavit is not a mode
of acquiring ownership.

Second Issue: Preference of Possession

We concede that despite their dispossession in 1985, the petitioners did not lose legal
possession because possession cannot be acquired through force or violence. To all intents
and purposes, a possessor, even if physically ousted, is still deemed the legal possessor.
Indeed, anyone who can prove prior possession, regardless of its character, may recover such
possession.[14]

However, possession by the petitioners does not prevail over that of the respondent.
Possession by the former before 1985 was not exclusive, as the latter also acquired it before
1985. The records show that the petitioners father and brother, as well as the respondent and
her mother were simultaneously in adverse possession of the land. Es-mso

Before 1985, the subject land was occupied and cultivated by the respondent's father
(Sinforoso), who was the brother of petitioners' father (Margarito), as evidenced by Tax
Declaration No. 26425.[15] When Sinforoso died in 1930, Margarito took possession of the land
and cultivated it with his son Miguel. At the same time, respondent and her mother continued
residing on the lot.

When respondent came of age in 1948, she paid realty taxes for the years 1932-1948.[16]
Margarito declared the lot for taxation in his name in 1953[17] and paid its realty taxes
beginning 1952.[18] When he died, Miguel continued cultivating the land. As found by the CA,
the respondent and her mother were living on the land, which was being tilled by Miguel until
1985 when he was physically ousted by the respondent.[19]

Based on Article 538 of the Civil Code, the respondent is the preferred possessor because,
benefiting from her father's tax declaration of the subject lot since 1926, she has been in
possession thereof for a longer period. On the other hand, petitioners' father acquired joint
possession only in 1952. Ms-esm

Third Issue: Possession of Better Right

Finally, the petitioners challenge the CA ruling that "actual and physical coupled with the
exclusive and continuous possession [by respondent] of the land since 1985" proved her
ownership of the disputed land. The respondent argues that she was legally presumed to
possess the subject land with a just title since she possessed it in the concept of owner. Under
Article 541 of the Code, she could not be obliged to show or prove such title.

16
The respondent's contention is untenable. The presumption in Article 541 of the Civil Code is
merely disputable; it prevails until the contrary is proven.[20] That is, one who is disturbed in
one's possession shall, under this provision, be restored thereto by the means established by
law.[21] Article 538 settles only the question of possession, and possession is different from
ownership. Ownership in this case should be established in one of the ways provided by law. E-
xsm

To settle the issue of ownership, we need to determine who between the claimants has proven
acquisitive prescription.[22]

Ownership of immovable property is acquired by ordinary prescription through possession for

ten years.[23] Being the sole heir of her father, respondent showed through his tax receipt that
she had been in possession of the land for more than ten years since 1932. When her father
died in 1930, she continued to reside there with her mother. When she got married, she and her
husband engaged in kaingin inside the disputed lot for their livelihood.[24]

Respondent's possession was not disturbed until 1953 when the petitioners' father claimed the
land. But by then, her possession, which was in the concept of owner -- public, peaceful, and
uninterrupted[25] -- had already ripened into ownership. Furthermore she herself, after her
father's demise, declared and paid realty taxes for the disputed land. Tax receipts and
declarations of ownership for taxation, when coupled with proof of actual possession of the
property, can be the basis of a claim for ownership through prescription.[26]Ky-le

In contrast, the petitioners, despite thirty-two years of farming the subject land, did not acquire
ownership. It is settled that ownership cannot be acquired by mere occupation.[27] Unless
coupled with the element of hostility toward the true owner,[28] occupation and use, however
long, will not confer title by prescription or adverse possession. Moreover, the petitioners cannot
claim that their possession was public, peaceful and uninterrupted. Although their father and
brother arguably acquired ownership through extraordinary prescription because of their
adverse possession for thirty-two years (1953-1985),[29] this supposed ownership cannot
extend to the entire disputed lot, but must be limited to the portion that they actually farmed.

We cannot sustain the petitioners' contention that their ownership of the disputed land was
established before the trial court through the series of tax declarations and receipts issued in the
name of Margarito Mendoza. Such documents prove that the holder has a claim of title over the
property. Aside from manifesting a sincere desire to obtain title thereto, they announce the
holder's adverse claim against the state and other interested parties.[30]Ky-calr

However, tax declarations and receipts are not conclusive evidence of ownership.[31] At most,
they constitute mere prima facie proof of ownership or possession of the property for which
taxes have been paid.[32] In the absence of actual public and adverse possession, the
declaration of the land for tax purposes does not prove ownership.[33] In sum, the petitioners'
claim of ownership of the whole parcel has no legal basis.

WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution AFFIRMED.
Costs against petitioners.

HEIRS OF CERILA GAMOS vs HEIRS OF JULIANO FRANDO

A sales patent applicant who has complied with all the legal requirements is entitled to a grant of
the disposable land of the public domain applied for. The execution and formal delivery of the

17
patent becomes merely ministerial. Under these circumstances, the property applied for is, for
all purposes, considered segregated from the public domain. Hence, the subsequent issuance
to a third person of a free patent covering the same property is null and void. The government
can no longer convey the ownership of a parcel of land it no longer owns.

First Issue:

Perfection of Sales Patent

The Philippine Constitution provides that all lands of the public domain x x x are owned by the
State. They are classified into agricultural, forest or timber, mineral lands and national parks. x x
x. Alienable lands of the public domain shall be limited to agricultural lands.

As in ordinary ownership, dominium embraces the capacity to alienate the property owned. The
constitutional limitation on the States power to alienate agricultural lands of the public domain is
intended to prevent monopoly and foreign control of our natural resources, as well as to enable
the government to control the exploitation, development and utilization thereof for the benefit of
all.

Private persons gain title to agricultural lands of the public domain by virtue of a public grant,
adverse possession (or prescription), accretion and -- in certain cases -- reclamation. One who
seeks to register ones title has the burden of proving that it has been acquired through any of
the foregoing modes, by virtue of which the land has effectively been segregated from the public
domain.

A perusal of the Complaint filed by private respondents before the trial court shows that their
asserted claim over the disputed portion ostensibly rested on the Order/Award issued to their
predecessor-in-interest, Juliana Frando, in 1956. The issue is now narrowed down to whether
this piece of evidence sufficiently vested private respondents with an uncontroverted and
indefeasible title over the disputed property.

Acquisition of Public Land

Through a Sales Patent

Disposal of public agricultural land through a sales patent, as in the instant case, is governed by
Commonwealth Act No. 141, the Public Land Act. Under this law, a sales patent may be granted
to a Filipino citizen who may or may not be of lawful age, provided that one who is below the
age of majority is the head of a family. The law provides that after winning the bid and paying
the purchase price, the applicant must comply with the necessary requirements -- specifically
the cultivation, occupation and introduction of improvements over at least one fifth of the land
applied for.

After the applicant meets the legal requirements, the director of lands then orders the survey of
the land and the issuance of the sales patent in the applicants favor. Section 107 of
Commonwealth Act 141 further requires the registration of the patent under the Land
Registration Act by furnishing the registrar of deeds a certified copy thereof, after which the
corresponding certificate of title would accordingly be issued to the patentee.

In the present case, the Bureau of Lands did not issue the patent to Frando, because she had
allegedly failed to pay the P216 balance of the sale price. The Bureaus assertion is, however,

18
soundly disproved by evidence. Clearly appearing on the Order/Award[19] issued to Frando in
1956 is the following proviso:

That at the auction sale of the land held on April 22, 1955, the only bid received was that of the
applicant who offered P240.00 for the whole tract and deposited the amount of P24.00 under
O.R. No. 9654851 dated April 22, 1955 which is equivalent to 10% of the bid. Subsequently, the
applicant again paid the amount of P216.00 under O.R. No. A-2675530 dated April 6, 1956 to
complete the full purchase price of the land. (Emphasis supplied)

Given the full payment of the purchase price as well as the compliance with all the requirements
for the grant of a sales patent, the Bureau had no reason to deny the issuance of such patent to
Frando. Her compliance with all the requirements effectively vested in her and her successors-
in-interest an equitable title to the property applied for. Applicable to the instant case is our time-
honored pronouncement in Balboa v. Farrales, which we quote:

A party who has complied with all the terms and conditions which entitle him to a patent for a
particular tract of public land, acquires a vested interest therein, and is to be regarded as the
equitable owner thereof.

Where the right to a patent has once become vested in a purchaser of public lands, it is
equivalent, so far as the Government is concerned, to a patent actually issued. The execution
and delivery of the patent after the right to it has become complete are the mere ministerial acts
of the officers charged with that duty. x x x. Even without a patent, a perfected homestead is a
property right in the fullest sense, unaffected by the fact that the paramount title to the land is
still in the Government. Such land may be conveyed or inherited.[20] (Emphasis supplied)

Thus, when the cadastral survey was subsequently conducted in Sta. Magdalena in 1958, the
disputed property -- already held in private ownership -- was no longer part of the public domain.
The director of lands had no more authority to grant to a third person a patent covering the
same tract that had already passed to private ownership.[21] Thus, the issuance of the free
patent to Cerila Gamos, insofar as it encroached the portion already granted to Frando, had no
legal basis at all.

Open, Continuous, Exclusive and

Notorious Possession and Occupation
of Alienable and Disposable Lands

The denial of the sales patent notwithstanding, Juliana Frando is deemed to have acquired
equitable title to the property, because private respondents adequately proved during trial her
open, continuous, exclusive and notorious possession and occupation of alienable and
disposable land of the public domain.

Introduced in evidence was a Declaration of Real Property covering the same tract of land. The
Declaration had been issued to Basilio Frando, father of Juliana Frando, sometime in 1906.[22]
Witness accounts[23] of long time residents of the adjoining properties confirmed her
possession for a period not later than 1925; and her introduction thereon of various trees and
other plants, including bananas, cacao, pili and coconuts.

They also attested to the continued possession of the property by Frandos daughter, Salvacion
Gimpes; and subsequently by her children, herein private respondents. Aside from showing the

19
Order/Award, the children bolstered their claim by introducing in evidence several Tax
Declarations, sketch plans, survey returns and the reports of the court-appointed commissioner.

While asserting possession of the property as early as 1952, petitioners have not presented any
document or witness to prove their bare claim. Moreover, Ambrosio Guatno -- one of herein
petitioners -- testified that he had entered the property upon the permission of Ricardo Galag,
an heir of Gamos; later, he admitted that its true owner was Juliana Frando.[24]

In line with Susi v. Razon,[25] 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.[26] In that case,
the application of Valentin Susi for a free patent was denied by the Bureau of Lands, despite the
fact that he had been in possession of the property for a far longer period than the grantee. Still
true to this day is this Courts ruling on the matter, which we quote:

It clearly appears from the evidence that Valentin Susi has been in possession of the land in
question openly, continuously, adversely and publicly, personally and through his predecessors,
since the year 1880, that is, for about forty-five years. x x x. When on August 15, 1914, Angela
Razon applied for the purchase of the land, Valentin Susi had already been in possession
thereof personally and through his predecessors for thirty four years. x x x In favor of Valentin
Susi, there is, moreover, the presumption juris et de jure x x x that all the necessary
requirements for a grant by the Government were complied with, for he has been in actual and
physical possession personally and through his predecessors, of an agricultural land of the
public domain openly, continuously, exclusively and publicly since July 26, 1894, with a right to
a certificate of title to said land under the provisions of Chapter VIII of said Act. So that when
Angela Razon applied for a grant in her favor, Valentin Susi had already acquired, by operation
of law, not only a right to a grant, but a grant of the government, for it is not necessary that a
certificate of title should be issued in order that a grant may be sanctioned by the courts, an
application therefore is sufficient, under the provision of Section 47 of Act No. 2874. If by a legal
fiction, Valentin Susi had acquired the land in question by a grant of the State, it had already
ceased to be of the public domain and had become the private property, at least by presumption
of Valentin Susi, beyond the control of the Director of Lands. Consequently, in selling the land in
question to Angela Razon, the Director of Lands disposed of a land over which he no longer had
title or control, and the sale thus made was void and of no effect and Angela Razon did not
thereby acquire any right. (Emphasis supplied)

Clearly, 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. In sum, the application by Juliana Frando for a sales patent, coupled with her open,
exclusive, uninterrupted and notorious possession of the land applied for is, for all purposes,
equivalent to a patent already perfected and granted.

The subsequent entry of petitioners and their occupation of the property in question was in bad
faith,[27] given the prior possession thereof by private respondents. Thus, when the former were
ordered by the RTC to remove whatever improvements they might have introduced thereon, the
court committed no error.[28]

Evidentiary Matters and the

Attempt to Deceive this Court

The Complaint before the Sorsogon RTC prayed mainly for the cancellation of OCT No. P-
10548, which had allegedly been issued to Cerila Gamos by the Register of Deeds of Sorsogon

20
on October 27, 1969. An examination of the records shows that no copy of the said OCT was
ever presented in evidence at any stage of the proceedings. The complainants (herein
respondents) failed to present the document that was central to their action. That omission was
in no way alleviated by the ominous failure of the defendants themselves (herein petitioners) to
present the very evidence upon which they had based their claim of superior title. In fact, the
latter never presented any documentary evidence at all and merely adopted that of the former.

Inasmuch as neither party had presented the subject OCT in evidence and, hence, the
Sorsogon RTC never had the opportunity to examine it, there was no basis for trial courts
Decision (as affirmed by the appellate court) -- more particularly, the part ordering petitioners to
execute a deed of reconveyance of that portion of Lot No. 1855 under Original Certificate of
Title No. 10548.

As worded, the RTCs ruling may lead to mischievous consequences. For all we know, OCT No.
10548 may be in the name of a third person who is not a party to the present proceedings, or it
may cover a property different from that in dispute. On these grounds, the foregoing portion of
the trial courts Decision should be modified. The metes and bounds of the property in dispute --
the title to and possession of which is confirmed to belong properly to private respondents --
should in no way be defined by any reference to OCT No. 10548. Rather, such definition should
be based on the documentary evidence at hand; more particularly, the technical description in
the survey plan made -- pursuant to Frandos application for a sales patent -- as confirmed by
the survey later conducted by the court-appointed commissioner.

By subsequently attaching Free Patent No. 459501 (which was in the name of Gamos) as
Annex J to their Petition, petitioners are resorting to a belated remedy to a fatal omission. They
should have offered the document before the trial court, not -- as they have done -- in the last
stretch of the proceedings, when such document can no longer be considered. Time and time
again, we have pronounced that this Court is not a trier of facts.

Assuming arguendo that the patent is still admissible, it is nonetheless bereft of any evidentiary
value. While it refers to Lot No. 1855, it is -- unlike the Order/Award issued to Frando --
accompanied neither by a survey sketch duly approved by the Bureau of Lands, nor by a
technical description that would enable us to determine whether the patent refers to the property
in dispute. We also note that the said document was admittedly issued to Gamos on October
27, 1969, a mere seventeen years after she had allegedly entered into possession of the
property -- in 1952, according to herein petitioners. Clearly then, Free Patent No. 459501 was
issued despite the applicants possession of the property for a period shorter than the 30 years
required by law.[29]

Further compounding the procedural lapse committed by petitioners is their apparent attempt to
mislead this Court. Likewise attached to the Petition is a copy of an alleged Deed of Sale
executed between one Felipa Bongais and Cerila Gamos, as well as several copies of Tax
Declarations apparently showing that the Deed covers the contested property.

A perusal of the said documents shows that they involve a rice land situated in Adgao,
Poblacion, Sta. Magdalena, with an area of 11,300 square meters; not the property subject of
the present controversy, which covers 2.4969 to 4.0000 hectares. By introducing the alleged
Deed of Sale, petitioners obviously want to bolster their claim of ownership by impressing upon
this Court that they have purchased the property from Bongais. They are, however, thereby
contradicting their prior assertion of title on the basis of a free patent. These contradictory

21
assertions not only cast serious doubt on the veracity of their claim; they also constitute an
apparent attempt to mislead the Court.

Second Issue:
Fraud

Petitioners argue that the trial court erred in holding that the free patent issued to Cerila Gamos
had fraudulently been secured. Both parties failed, though, to present a copy of Free Patent No.
459501. This lapse resulted in the trial courts failure to examine the document and to appreciate
the circumstances under which it had allegedly been issued. Thus, any determination of
whether fraud indeed attended its issuance is not possible now.

Third Issue:
Prescription and Laches

In their last assignment of error, petitioners argue that private respondents action to annul the
free patent issued to Cerila Gamos has already prescribed and is barred by laches. We do not
agree.

As testified to by the Gilda Bongais -- one of Juliana Frandos heirs -- when petitioners first
invaded the property in 1979 by constructing a house thereon, her aunt (Paciencia Gallenosa)
filed an action contesting such intrusion. The action was later dropped due to the financial
burdens of the litigation, definitely not because of any concession of rights by private
respondents. Thus, the legal inaction on their part was due, not to their lack of vigilance, but
merely to their lack of resources to defend their property.

On the witness stand, Guatno himself recognized Juliana Frando and her heirs as the true
owners of the property, even as he admitted that it was Galag -- one of herein petitioners -- who
had given him permission to erect a house on the land in 1980. Petitioners possession of the
disputed property, based as it was on mere tolerance, could neither ripen into ownership nor
operate to bar any action by private respondents to recover absolute possession thereof.[30]

WHEREFORE, the Petition is DENIED. However, paragraph (b) of the RTC decision is
MODIFIED to read as follows:

b. Ordering the successors-in-interest of Cerila Gamos to execute a deed of reconveyance of

that portion of Lot No. 1855 with an area of 1,626 square meters as delineated and described in
Exhibit X-1, shaded by red lines.

Counsels for petitioners -- Attys. Arceli A. Rubin, Amelia C. Garchitorena, Marvin R. Osias and
Beatriz Teves de Guzman -- are hereby ordered to SHOW CAUSE, within ten days from receipt
hereof, why they should not be subjected to administrative sanction for their attempt to deceive
this Court through the introduction of misleading evidence.

SPOUSESRECTO, represented by their Attorney-in-fact, GENEROSO R. GENEROSO,

petitioners, vs. RP

This is a petition for review on certiorari challenging the January 16, 2003 decision[1] of the CA
in CA-G.R. CV No. 65407 which reversed the September 7, 1998 decision[2] of the RTC of
Tanauan, Batangas, Branch 6 in Land Registration Case No. T-320. Likewise assailed is the
appellate courts October 17, 2003 resolution[3] denying petitioners MR.

22
On February 19, 1997, petitioner spouses Philip Recto and Ester C. Recto, filed with the RTC of
Tanauan, Batangas, Branch 6, an application for registration of title over a 23,209 square meter
lot,[4] designated as Lot 806, Cad-424, Sto. Tomas Cadastre, Plan Ap-04-010485, situated in
Barangay San Rafael, Municipality of Sto. Tomas, Province of Batangas, under Presidential
Decree (P.D.) No. 1529, otherwise known as the Property Registration Decree. They also
prayed in the alternative that their petition for registration be granted pursuant to
Commonwealth Act (C.A.) No. 141, or the Public Land Act.[5]

Petitioners alleged that on June 4, 1996, they purchased Lot 806 from sisters Rosita Medrana
Guevarra and Maria Medrana Torres for the amount of P6,943,534.40.[6] The two, in turn,
inherited the lot from their deceased parents, Vicente and Eufemia Medrana. Maria, born on
October 22, 1917, declared that since 1945, her father was already the owner of Lot 806. She
became aware of her fathers possession of the subject lot in the concept of owner in 1930 when
she was 13 years of age. The possession of the subject lot by the Medrana family prior to 1945
was corroborated by Rosita,[7] who testified that in 1935 when she was 13 years of age, she
first came to know that her father was the owner of Lot 806. The sisters added that during the
lifetime of Vicente, he planted rice and corn on the lot with the help of their tenant. After his
demise, they continued to plant the same crops through hired farmers.[8]

Petitioners presented the following documentary evidences

(1) Blue Print Copy of the Plan[9] and Technical Description[10] of Lot 806, both certified by
Land Management Services (formerly the Bureau of Lands), of the Department of Environment
and Natural Resources (DENR);

(2) Tax Declarations[11] of the lot for the years 1948, 1955, 1968, 1974, 1980, 1987, 1989 and
1994 (in the name of Vicente Medrana); 1996 (in the name of Rosita Guevarra and Maria
Torres); and 1998 (in the name of Philip and Ester Recto).

(3) Certification of Non-Delinquency for the year 1998 from the Municipal Treasurer of Sto.
Tomas, Batangas;[12]

(4) Report[13] from the Community Environment and Natural Resources Office, Department of
Environment and Natural Resources (DENR) stating, among others, that

(a) the entire area is within the alienable and disposable zone as classified under Project No. 30
L.C. Map No. 582 and released and certified as such on December 31, 1925; (Emphasis,
supplied)

(b) the lot is not within a reservation area nor within the forest zone;

(c) the lot is not within a previously issued patent, decree or title.

(d) there is no public land application filed for the same land by the applicant or any other
person;

(e) the land is covered by Tax Declaration No. 021-02166-A in the name of the predecessor-in-
interest and that there is no difference in area;

(f) the lot is agricultural in nature; and

23
(g) the lot does not encroach upon an established watershed, riverbed and river bank
protection.

(5) Report from the Land Management Bureau that the land involved is not covered by any land
patent or by land application pending issuance of patent.[14]

(6) Report from the Forest Management Service, DENR that the subject lot falls within Alienable
and Disposable lands, Project No. 30 of Sto. Tomas, Batangas, per BFD LC Map No. 582
certified on December 31, 1925.[15]

(7) Report from the Land Management Sector, DENR that Plan Ap-04-010485, Lot 806, Cad-
424, Sto. Tomas Cadastre, situated in the Barangay of San Rafael, Municipality of Sto. Tomas,
Province of Batangas, is not a portion of nor identical to any previously approved isolated
survey.[16]

There being no opposition to the petition from any private individual, an Order of General
Default was issued by the trial court.[17]

On September 7, 1998, the court a quo rendered a decision granting the petition for registration.
The dispositive portion thereof, reads:

WHEREFORE, and upon previous confirmation of the Order of General Default, this Court
hereby adjudicates and decrees Lot 806, Cad-424, Sto. Tomas Cadastre on plan Ap-04-
010485, situated in San Rafael, Sto. Tomas, Batangas, with an area of 23,209 square meters,
in favor of and in the names of Spouses Philip Recto and Ester C. Recto, Filipino citizens and
residents of 1322 Palm Avenue, Dasmarias Village, Makati City.

Once this Decision shall have become final let the corresponding decree of registration be
issued.

SO ORDERED.[18]

The Republic, represented by the Solicitor General appealed to the CA contending that
petitioners failed to (1) offer in evidence the original tracing cloth plan of the land; (2) prove
possession of the lot for the period required by law; and (3) overthrow the presumption that
subject property forms part of the public domain.[19]

On January 16, 2003, the CA reversed the decision of the trial court on the sole ground of
failure to offer in evidence the original tracing cloth plan of the land.[20]

Petitioners filed a MRpraying that in view of their compliance with all the substantive and
procedural requirements for registration, save for the submission of the tracing cloth plan, the
case be remanded to the trial court for the presentation of the said tracing cloth plan. The
Solicitor General, on the other hand, interposed no objection to petitioners MR.[21]

On October 17, 2003, the CA denied petitioners MR.[22] Hence, the instant petition praying for
the remand of the case before the trial court.

In its Comment, the Solicitor General manifested that in the interest of justice, he will not to
oppose the petition.[23]

24
Section 14 (1) of Presidential Decree No. 1529 states:

SEC. 14. Who may apply. The following persons may file in the proper Court of First Instance
[now the RTC] an application for registration of title to land, whether personally or through their
duly authorized representatives:

(1) Those who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation of alienable and disposable
lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier.

On the other hand, Section 48 (b) of Commonwealth Act No. 141, as amended by Section 4 of
Presidential Decree No. 1073, provides:

The provisions of Section 48(b) and Section 48(c), Chapter VIII, of the Public Land Act are
hereby amended in the sense that these provisions shall apply only to alienable and disposable
lands of the public domain which have been in open, continuous, exclusive and notorious
possession and occupation by the applicant himself or thru his predecessor-in-interest, under a
bona fide claim of acquisition of ownership, since June 12, 1945.

Thus, before one can register his title over a parcel of land, the applicant must show that (a) he,
by himself or through his predecessors-in-interest, has been in open, continuous, exclusive and
notorious possession and occupation of the subject land under a bona fide claim of ownership
since June 12, 1945 or earlier; and (b) the land subject of the application is alienable and
disposable land of the public domain.[24]

In the instant case, Rosita and Maria the predecessors-in-interest of petitioners, categorically
testified that they, and prior to them their father, had been cultivating and possessing Lot 806 in
the concept of owners. Maria, having been born on October 22, 1917, and Rosita on October
29, 1922, were 13 years of age when they became aware of their familys possession of Lot 806
in 1930 and 1935, respectively. At 13, they were undoubtedly capable and competent to
perceive their fathers possession of Lot 806 in the concept of owner. Moreover, the trial court
found their testimonies to be worthy of belief and credence. Considering that the judge below is
in a better position to pass judgment on the issue, having personally heard the witnesses testify
and observed their deportment and manner of testifying, her findings deserve the highest
respect.[25]

The fact that the earliest Tax Declaration of the subject lot was for the year 1948 will not militate
against petitioners. Note that said 1948 Tax Declaration cancels a previous Tax Declaration
(No. 26472),[26] thus substantiating petitioners possession of Lot 806 through their
predecessor-in-interest even prior to said date. At any rate, in Republic v. CA,[27] it was held
that the belated declaration of the lot for tax purposes does not necessarily mean that
possession by the previous owners thereof did not commence in 1945 or earlier. As long as the
testimony supporting possession for the required period is credible, the court will grant the
petition for registration. Pertinent portion of the decision, reads

Petitioner questions the credibility of claimant Divinaflor who testified on the possession of
Marcial Listana for the period required by law. The issue of credibility is unavailing considering
that the judge below is in a better position to pass judgment on the issue having personally
heard the witnesses testify and observed their deportment and manner of testifying. Being in a

25
better position to observe the witnesses, the trial courts appreciation of the witness testimony,
truthfulness, honesty, and candor, deserves the highest respect.

xxxxxxxxx

[A] person is competent to be a witness if (a) he is capable of perceiving at the time of the
occurrence of the fact and (b) he can make his perception known. True, in 1939, Divinaflor was
not born yet, but in 1945, he was four years old, residing in Maramba, Oas, Albay, where the
subject lot is located. As his testimony goes, he and Marcial Listana were barrio mates, and that
he usually passes by the subject land. The fact that Divinaflor was only a child at the required
inception of possession does not render him incompetent to testify on the matter. It is well-
established that any child regardless of age, can be a competent witness if he can perceive, and
perceiving can make known his perception to others and that he is capable of relating truthfully
facts for which he is examined. The requirements of a childs competence as a witness are: (a)
capacity of observation; (b) capacity of recollection; and (c) capacity of communication. There is
no showing that as a child, claimant did not possess the foregoing qualifications. It is not
necessary that a witness knowledge of the fact to which he testifies was obtained in adulthood.
He may have first acquired knowledge of the fact during childhood, that is, at the age of four,
which knowledge was reinforced through the years, up until he testified in court in 1990. There
is reason to reject petitioners claim that Divinaflor is incompetent to testify regarding Listanas
possession since it appears undisputed that Divinaflor grew up in Maramba, Oas, Albay, and
had occasion to see Listana possessing the land.

Finally, we agree with the CA that the belated declaration of the property for tax purposes does
not necessarily lead to the conclusion that the predecessors were not in possession of the land
as required by law since 1945. Petitioner capitalizes on the fact that the earliest tax declaration
presented took effect only in 1980 while the certificate of tax payment is dated 1990. While this
Court has held in a long line of cases that tax declarations or tax receipts are good indicia of
possession in the concept of owner, it does not necessarily follow that belated declaration of the
same for tax purposes negates the fact of possession, especially in the instant case where there
are no other persons claiming any interest in Lot 10739.

So also, there is no doubt that Lot 806 is an alienable land of the public domain having been
released and certified as such on December 31, 1925. As further certified by the Community
Environment and Natural Resources Office of the DENR, the entire area of Lot 806 is an
agricultural land; within an alienable and disposable zone; not within a reservation area nor
within a forest zone; and does not encroach upon an established watershed, riverbed, and
riverbank protection.[28] Petitioners were thus able to successfully meet the requisite for original
registration of title, to wit: open, continuous, exclusive and notorious possession and occupation
of an alienable and disposable land under a bona fide claim of ownership since June 12, 1945
or earlier.

Nevertheless, the CA reversed the decision of the trial court granting the petition for registration
on the ground of petitioners failure to submit in evidence the original tracing cloth plan of Lot
806. Indeed, the submission of the tracing cloth is a mandatory requirement for registration.[29]
However, it was held that while the best evidence to identify a piece of land for registration
purposes is the original tracing cloth plan from the Bureau of Lands, blue print copies and other
evidence could also provide sufficient identification.[30] In Republic v. CA,[31] the Court ruled
that the blueprint copy of the cloth plan together with the lots technical description duly certified
as to their correctness by the Bureau of Lands (Now the Land Management Bureau of the
DENR)[32] are sufficient to identify the land applied for registration, thus

26
On the first challenge, the petitioner invokes the case of Director of Lands v. Reyes, where it
was held that the original tracing cloth plan of the land applied for which must be approved by
the Director of Lands was a statutory requirement of mandatory character for the identification of
the land sought to be registered. As what was submitted in the case at bar to identify the subject
property was not the tracing cloth plan but only the blueprint copy of the survey plan, the
respondent court should have rejected the same as insufficient.

We disagree with this contention. The CA was correct when it observed that in that case the
applicant in effect had not submitted anything at all to identify the subject property because the
blueprint presented lacked the approval of the Director of Lands. By contrast

In the present case, there was considerable compliance with the requirement of the law as the
subject property was sufficiently identified with the presentation of blueprint copy of Plan AS-06-
000002 (San Pedro v. Director of Lands, CA-G.R. No. 65332-R, May 28, 1981). It should be
noted in this connection that the Bureau of Lands has certified to the correctness of the blueprint
copy of the plan including the technical description that go with it. Hence, we cannot ignore the
fact, absent in the Reyes case, that applicant has provided ample evidence to establish the
identity of the subject property. (Emphasis supplied)

Such a view was affirmed by the Court in Republic of the Philippines v. Intermediate Appellate
Court, where we held that while the best evidence to identify a piece of land for registration
purposes was the original tracing cloth plan from the Bureau of Lands, blueprint copies and
other evidence could also provide sufficient identification. This rule was bolstered only recently
in the case of Director of Lands v. CA, where the Court declared through Chief Justice Marcelo
B. Fernan:

We affirm. No reversible error was committed by the appellate court in ruling that Exhibit O, the
true certified copy of the white paper plan, was sufficient for the purpose of identifying the land
in question. Exhibit O was found by the appellate court to reflect the land as surveyed by a
geodetic engineer. It bore the approval of the Land Registration Commission, and was re-
verified and approved by the Bureau of Lands on April 25, 1974 pursuant to the provisions of
P.D. No. 239 withdrawing from the Land Registration Commission the authority to approve
original survey plans. It contained the following material data: the barrio (poblacion), municipality
(Amadeo) and province (Cavite) where the subject land is located, its area of 379 square
meters, the land as plotted, its technical descriptions and its natural boundaries. Exhibit O was
further supported by the Technical Descriptions signed by a geodetic surveyor and attested by
the Land Registration Commission. In fine, Exhibit O contained all the details and information
necessary for a proper and definite identification of the land sought to be registered, thereby
serving the purpose for which the original tracing cloth plan is required. The fact therefore that
the original survey plan was recorded on white paper instead of a tracing cloth should not
detract from the probative value thereof. x x x.

In the case at bar, Lot 806 was sufficiently identified by the blue print copy of the plan (Exhibit
R)[33] and the technical description (Exhibit S)[34] thereof both approved by Land Management
Services, DENR. Also, per report of the Land Management Sector, Plan Ap-04-010485, Lot 806,
Cad-424, Sto. Tomas Cadastre, situated in the Barangay of San Rafael, Municipality of Sto.
Tomas, Province of Batangas, is not a portion of, nor identical to any previously approved
isolated survey.[35] Petitioners also submitted before the CA a certified true copy[36] of the
original tracing cloth plan as well as a certification[37] from the Land Registration Authority
attesting to the fact that the original plan of Plan-Ap-04-010485 in Diazo Polyester film is on file

27
with their office. Under the circumstances, therefore, the CA erred in reversing the decision of
the trial court solely on the ground that petitioners failed to present the original tracing cloth
plan.

Having met all the requirements for registration of title including the presentation of sufficient
evidence to identify the land sought to be registered, there is no more need to remand the case
before the trial court for the presentation of the tracing cloth plan.

WHEREFORE, the resolution of the CA in CA-G.R. CV No. 65407 are REVERSED and SET
ASIDE. The decision of the RTC of Tanauan, Batangasordering the issuance of a decree of
registration over Lot 806, in the name of petitioners is REINSTATED.

MARIO Z. TITONG, petitioner, vs. CA, VICTORICO LAURIO and ANGELES LAURIO,
respondents.

Like a priceless treasure coveted by many, but capable of ownership by only one, this 20,592
square-meter parcel of land located at Barrio Titong, Masbate, Masbate is claimed by two
contestants in this petition for review on certiorari. Unfortunately, legal title over the property can
be vested in only one of them.

The case originated from an action for quieting of title filed by petitioner Mario Titong. The RTC
of Masbate, Masbate, Branch 44[1] ruled in favor of private respondents, Victorico Laurio and
Angeles Laurio, adjudging them as the true and lawful owners of the disputed land. Affirmed on
appeal to the CA, petitioner comes to us for a favorable reversal.

Petitioner alleges that he is the owner of an unregistered parcel of land with an area of 3.2800
hectares, more or less, surveyed as Lot No. 3918, and declared for taxation purposes in his
name. He claims that on three separate occasions in September 1983, private respondents,
with their hired laborers, forcibly entered a portion of the land containing an area of
approximately two (2) hectares, and began plowing the same under pretext of ownership.
Private respondents denied this allegation, and averred that the disputed property formed part
of the 5.5-hectare agricultural land which they had purchased from their predecessor-in-
interest,[2] Pablo Espinosa on August 10, 1981.

In his testimony, petitioner identified Espinosa as his adjoining owner[3], asserting that no
controversy had sprouted between them for twenty years until the latter sold Lot No. 3479 to
private respondent Victorico Laurio.[4] This was corroborated by Ignacio Villamor, who had
worked on the land even before its sale to Espinosa in 1962. The boundary between the land
sold to Espinosa and what remained of petitioners property was the old Bugsayon river. When
petitioner employed Bienvenido Lerit as his tenant in 1962, he instructed Lerit to change the
course of the old river and direct the flow of water to the lowland at the southern portion of
petitioners property, thus converting the old river into a riceland.[5]

For his part, private respondent anchors his defense on the following facts:

He denied petitioners claim of ownership, recounting that the area and boundaries of the
disputed land remained unaltered during the series of conveyances prior to its coming into his
hands. According to him, petitioner first declared the land for taxation purposes under Tax
Declaration No. 2916,[6] which showed that the land had an area of 5.5 hectares and was
bounded on the North by the Bugsayon River; on the East by property under the ownership of
Lucio Lerit; on the South by property owner by Potenciano Zaragoza; and on the West by

28
property owned by Agapito de la Cruz.[7] Private Respondent then alleges that, on December
21, 1960, petitioner sold this property to Concepcion Verano vda. de Cabug, after which Tax
Declaration No. 5339[8] was issued in her favor. In compliance with their mutual agreement to
repurchase the same, petitioner reacquired the property by way of sale[9] on August 24, 1962
and then declared it for taxation purposes in his name under Tax Declaration No. 5720.[10]
However, the property remained in petitioners hands for only four (4) days because, on August
28, 1962, he sold it to Espinosa[11] who then declared it in his name under Tax Declaration No.
12311.[12] Consequently, the property became a part of the estate of Pablo Espinosas wife, the
late Segundina Liao Espinosa. On August 10, 1981, her heirs executed an instrument
denominated as Extrajudicial Settlement of Estate with Simultaneous Sale whereby the 5.5-
hectare property under Tax Declaration No. 12311 was sold to private respondent[13] in
consideration of the amount of P5,000.00. Thereafter, Tax Declaration No. 12738 was issued in
the name of private respondent. In all these conveyances, the area and boundaries of the
property remained exactly the same as those appearing in Tax Declaration No. 2916 under
petitioners name.

It was proved at the proceedings in the court a quo that two (2) surveys were made of the
disputed property. The first survey[14] was made for petitioner, while the second was the
relocation survey ordered by the lower court. As anticipated, certain discrepancies between the
two surveys surfaced. Thus, contrary to petitioners allegation in his complaint that he is the
owner of only 3.2800 hectares, he was actually claiming 5.9789 hectares, the total areas of Lot
Nos. 3918, 3918-A and 3606. On the other hand, Lot No. 3479 pertaining to Espinosa, was left
with only an area of 4.1841 hectares instead of the 5.5 hectares sold by petitioner to him.
Apprised of the discrepancy, private respondent filed a protest[15] before the Bureau of Lands
against the first survey, likewise filing a case for alteration of boundaries before the MTC, the
proceedings of which, however, were suspended because of the instant case.[16]

Private respondent testified that petitioner is one of the four heirs of his mother, Leonida
Zaragoza. In the Extrajudicial Settlement with Sale of Estate of the deceased Leonida
Zaragoza,[17] the heirs adjudicated unto themselves the 3.6-hectare property of the deceased.
The property involved is described in the instrument as having been declared under Tax
Declaration No. 3301[18] and as bounded on the North by Victor Verano, on the East by
Benigno Titong, on the South by the Bugsayon River and on the West by Benigno Titong. On
September 9, 1969, Tax Declaration No. 8723 was issued to petitioner for his corresponding
share in the estate.

However, instead of reflecting only .9000 hectare as his rightful share in the extrajudicial
settlement[19] petitioners share was bloated to 2.4 hectares. It therefore appeared to private
respondent that petitioner encroached upon his (Laurios) property and declared it a part of his
inheritance.[20] The boundaries were likewise altered so that it was bounded on the North by
Victor Verano, on the East by Benigno Titong, on the South by property owner Espinosa, and on
the West by property owner Adolfo Titong.[21] Private respondent accordingly denied that
petitioner had diverted the course of the Bugsayon River after he had repurchased the land from
Concepcion Verano vda. de Cabug[22] because the land was immediately sold to Espinosa
shortly thereafter.[23]

The lower court rendered a decision in favor of private respondents, declaring him as the true
and absolute owner of the litigated property and ordering petitioner to respect private
respondents title and ownership over the property and to pay attorneys fees, litigation expenses,
costs and moral damages.

29
Petitioner appealed to the CA, which affirmed the decision. On MR, the same was denied for
lack of merit. Hence, this petition for review on certiorari.

At the outset, we hold that the instant petition must be denied for the reason that the lower court
should have outrightly dismissed the complaint for quieting of title. The remedy of quieting of
title may be availed of under the circumstances enumerated in the Civil Code:

ART. 476. Whenever there is a cloud on title to real property or any interest therein, by reason
of any instrument, record, claim, encumbrance or proceeding which is apparently valid or
effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be
prejudicial to said title, an action may be brought to remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast upon title to real property or
any interest therein.

Under this provision, a claimant must show that there is an instrument, record, claim,
encumbrance or proceeding which constitutes or casts a cloud, doubt, question or shadow upon
the owners title to or interest in real property.[24] The ground or reason for filing a complaint for
quieting of title must therefore be an instrument, record, claim, encumbrance or proceeding.
Under the maxim expresio unius est exclusio alterius, these grounds are exclusive so that other
reasons outside of the purview of these reasons may not be considered valid for the same
action.[25]

Had the lower court thoroughly considered the complaint filed, it would have had no other
course of action under the law but to dismiss it. The complaint failed to allege that an
instrument, record, claim, encumbrance or proceeding beclouded the plaintiffs title over the
property involved. Petitioner merely alleged that the defendants (respondents herein), together
with their hired laborers and without legal justification, forcibly entered the southern portion of
the land of the plaintiff and plowed the same:

He then proceeded to claim damages and attorneys fees. He prayed that, aside from issuing a
writ or preliminary injunction enjoining private respondents and their hired laborers from
intruding into the land, the court should declare him the true and absolute owner thereof. Hence,
through his allegations, what petitioner imagined as clouds cast on his title to the property were
private respondents alleged acts of physical intrusion into his purported property. Clearly, the
acts alleged may be considered grounds for an action for forcible entry but definitely not one for
quieting of title.

When the issues were joined by the filing of the answer to the complaint, it would have become
apparent to the court that the case was a boundary dispute. The answer alleged, among other
matters, that petitioner, in bad faith, surreptitiously, maliciously and fraudulently had the land in
question included in the survey of his land which extends to the south only as far as the
Bugsayon River which is the visible and natural and common boundary between the
properties.[26] Moreover, during the hearing of the case, petitioner proved that it was actually a
boundary dispute by evidence showing what he considered as the boundary of his property
which private respondents perceived as actually encroaching on their property. In this regard,
the following pronouncements of the Court are apropos:

x x x (T)he trial court (and likewise the respondent Court) cannot, in an action for quieting of
title, order the determination of the boundaries of the claimed property, as that would be
tantamount to awarding to one or some of the parties the disputed property in an action where

30
the sole issue is limited to whether the instrument, record, claim, encumbrance or proceeding
involved constitutes a cloud upon the petitioners interest or title in and to said property. Such
determination of boundaries is appropriate in adversarial proceedings where possession or
ownership may properly be considered and where evidence aliunde, other than the `instrument,
record, claim, encumbrance or proceeding itself, may be introduced. An action for forcible entry,
whenever warranted by the period prescribed in Rule 70, or for recovery of possession de facto,
also within the prescribed period, may be availed of by the petitioners, in which proceeding the
boundary dispute may be fully threshed out.[27]

Nonetheless, even if the complaint below were to be considered as a valid one for quieting of
title, still, the instant petition for review on certiorari must fail.

As a general rule, findings of fact of the CA are binding and conclusive upon this Court. Such
factual findings shall not be disturbed normally unless the same are palpably unsupported by
the evidence on record or the judgment itself is based on a misapprehension of facts.[28] Upon
an examination of the records, the Court finds no evident reason to depart from the general rule.

The courts below correctly held that when petitioner sold, ceded, transferred and conveyed the
5.5-hectare land in favor of Pablo Espinosa, his rights of ownership and possession pertaining
thereto ceased and these were transferred to the latter. In the same manner, Espinosas rights
of ownership over the land ceased and were transferred to private respondent upon its sale to
the latter. This finds justification in the Civil Code, as follows:

ART. 1458. By the contract of sale one of the contracting parties obligates himself to transfer
the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain
in money or its equivalent.

A contract of sale may be absolute or conditional.

In other words, a sale is a contract transferring dominion and other real rights in the thing
sold.[29] In the case at bar, petitioners claim of ownership must of necessity fail because he has
long abdicated his rights over the land when he sold it to private respondents predecessor-in-
interest.

Petitioners claim that he acquired ownership over the disputed land through possession for
more than twenty (20) years is likewise unmeritorious. While Art. 1134 of the Civil Code
provides that (o)wnership and other real rights over immovable property are acquired by
ordinary prescription through possession of ten years, this provision of law must be read in
conjunction with Art. 1117 of the same Code. This article states that x x x (o)rdinary acquisitive
prescription of things requires possession in good faith and with just title for the time fixed by
law. Hence, a prescriptive title to real estate is not acquired by mere possession thereof under
claim of ownership for a period of ten years unless such possession was acquired con justo
titulo y buena fe (with color of title and good faith).[30] 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.[31] For purposes of prescription, there is just title when the
adverse claimant came into possession of the property through one of the modes recognized by
law for the acquisition of ownership or other real rights but the grantor was not the owner or
could not transmit any right.[32]

Petitioners have not satisfactorily met the requirements of good faith and just title. As aptly
observed by the trial court, the plaintiffs admitted acts of converting the boundary line

31
(Bugsayon River) into a ricefield and thereafter claiming ownership thereof were acts
constituting deprivation of the rights of others and therefore tantamount to bad faith.[33] To
allow petitioner to benefit from his own wrong would run counter to the maxim ex dolo malo non
oritur actio (no man can be allowed to found a claim upon his own wrongdoing). Extraordinary
acquisitive prescription cannot similarly vest ownership over the property upon petitioner. Art.
1137 of the Civil Code states that (o)wnership and other real rights over immovables prescribe
through uninterrupted adverse possession thereof for thirty years, without need of title or of
good faith. Petitioners alleged possession in 1962 up to September 1983 when private
respondents entered the property in question spanned twenty-one (21) years. This period of
time is short of the thirty-year requirement mandated by Art. 1137.

Petitioner basically anchors his claim over the property on the survey plan prepared upon his
request,[34] the tax declaration in his name,[35] the commissioners report on the relocation
survey,[36] and the survey plan.[37] Respondent court correctly held that these documents do
not conclusively demonstrate petitioner's title over Lot Nos. 3918-A and 3606.

A survey is the act by which the quantity of a parcel of land is ascertained and also a paper
containing a statement of courses, distances, and quantity of land.[38] A survey under a
proprietary title is not a conveyance. It is an instrument sui generis in the nature of a partition; a
customary mode in which a proprietor has set off to himself in severalty a part of the common
estate.[39] Therefore, a survey, not being a conveyance, is not a mode of acquiring ownership.
A fortiori, petitioner cannot found his claim on the survey plan reflecting a subdivision of land
because it is not conclusive as to ownership as it may refer only to a delineation of
possession.[40]

Furthermore, the plan was not verified and approved by the Bureau of Lands in accordance with
Sec. 28, paragraph 5 of Act No. 2259, the Cadastral Act, as amended by Sec. 1862 of Act No.
2711. Said law ordains that private surveyors send their original field notes, computations,
reports, surveys, maps and plots regarding a piece of property to the Bureau of Lands for
verification and approval.[41] A survey plan not verified and approved by said Bureau is nothing
more than a private writing, the due execution and authenticity of which must be proven in
accordance with Sec. 20 of Rule 132 of the Rules of Court. The circumstance that the plan was
admitted in evidence without any objection as to its due execution and authenticity does not
signify that the courts shall give probative value therefor. To admit evidence and not to believe it
subsequently are not contradictory to each other. This Court cannot alter the conclusions of the
CA on the credibility accorded to evidence presented by the parties.[42]

Similarly, petitioners tax declaration issued under his name is not even persuasive evidence of
his claimed ownership over the land in dispute. A tax declaration, by itself, is not considered
conclusive evidence of ownership.[43] It is merely an indicium of a claim of ownership.[44]
Because it does not by itself give title, it is of little value in proving ones ownership.[45]
Moreover, the incompatibility in petitioners tax declaration and the commissioners report as
regards the area of his claimed property is much too glaring to be ignored. Tax Declaration No.
8717 states that petitioners property has an area of 3.2800 hectares while the totality of his
claim according to the commissioned geodetic engineers survey amounts to 4.1385 hectares.
There is therefore a notable discrepancy of 8,585 square meters. On the other hand, private
respondents claimed property, as borne out by Tax Declaration No. 12738, totals 5.5 hectares,
a more proximate equivalent of the 5.2433-hectare property as shown by the commissioners
report.

32
There is also nothing in the commissioners report that substantiates petitioners claim that the
disputed land was inside his property. Petitioner capitalizes on the lower courts statement in its
decision[46] that as reflected in the commissioners report dated May 23, 1984 (Exhibit 3-3-A),
the area claimed is inside lot 3918 of the defendants (Exhibit 2)[47] or the private respondents.
A careful reading of the decision would show that this statement is found in the summary of
defendants (herein private respondents) evidence. Reference to Lot No. 3918 may, therefore,
be attributed to mere oversight as the lower court even continues to state the defendants
assertion that the 2-hectare land is part of their 5.5-hectare property. Hence, it is not amiss to
conclude that either petitioner misapprehended the lower courts decision or he is trying to
contumaciously mislead or worse, deceive this Court.

With respect to the awards of moral damages of P10,000.00 and attorneys fees of P2,000.00,
the Court finds no cogent reason to delete the same. Jurisprudence is replete with rulings to the
effect that where fraud and bad faith have been established, the award of moral damages is in
order.[48] This pronouncement finds support in Art. 2219 (10) of the Civil Code allowing the
recovery of moral damages for acts enumerated in Art.21 of the same Code. This article states
that (a)ny person who wilfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damage. The moral
damages are hereby increased to P30,000.00. We agree with the respondent court in holding
that the award of attorneys fees is justified because petitioner filed a clearly unfounded civil
action.[49]

WHEREFORE, the instant petition for review on certiorari is hereby DENIED and the questioned
Decision of the CA AFFIRMED. This Decision is immediately executory. Costs against
petitioner.

JOSE L. CHUA and CO SIO ENG, petitioners, vs. THE HONORABLE CA and RAMON
IBARRA, respondents.

This is a petition for review on certiorari of the decision,[1] dated October 8, 1992, of the CA
affirming the decision of the RTC, Branch 59 of Makati, Metro Manila, ordering the ejectment of
petitioners from the premises owned by private respondent.

Petitioners were lessees of a commercial unit at No. 3086 Redemptorist Street in Baclaran,
Paraaque, Metro Manila. The lease was for a period of five (5) years, from January 1, 1985 to
December 31, 1989. The contract expressly provided for the renewal of the lease at the option
of the lessees in accordance with the terms of agreement and conditions set by the lessor. Prior
to the expiration of the lease, the parties discussed the possibility of renewing it. They
exchanged proposal and counterproposal, but they failed to reach agreement. The dispute was
referred to the barangay captain for conciliation but still no settlement was reached by the
parties.

On July 24, 1990, private respondent filed a complaint for unlawful detainer against petitioners
in the MTCof Paraaque, Metro Manila, which on February 4, 1992 rendered a decision, the
dispositive portion of which reads:[2]

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. The defendants (herein petitioners) are hereby given a period of two (2) years extension of
occupancy of the subject premises starting the date of the filing of the instant complaint;

33
2. The defendants are hereby ordered to pay the plaintiff (herein private respondent) the sum of
P188,806.00 representing back rentals as of the year 1991 and a monthly rental of P10,000.00
thereafter until the expiration of the aforesaid extension of their occupancy or until the subject
premises is actually vacated.

3. Defendants are hereby ordered to pay the plaintiff the amount of P15,000.00 as attorneys
fees; and

4. Defendants are hereby ordered to pay the cost of suit.

SO ORDERED.

On appeal by both parties, the RTC, Branch 59 of Makati ruled that the lease was for a fixed
period of five (5) years and that, upon its expiration on January 1, 1990, petitioners continued
stay in the premises became illegal. As provided in Art. 1687 of the Civil Code, the power of the
courts to fix the period of lease is limited only to cases where the period has not been fixed by
the parties themselves. The dispositive portion of the decision[3] states:

Premises considered, judgment is hereby rendered modifying the appealed decision, as follows:

1. Ordering the defendants (herein petitioners) and all persons claiming and/or acting for and in
their behalf to vacate the premises known as door No. 3086 Redemptorist, corner G.C. Cruz
Streets, Baclaran, Paraaque, Metro Manila and turn over possession thereof to the plaintiff
(herein private respondent);

2. Ordering the defendants to pay the plaintiff the following:

a) the amount of P42,306.00 representing accrued or back rentals from January 1, 1987 to
December 31, 1989;
b) a monthly rental of P7,320.50 for the use or occupancy of the premises starting January 1,
1990 until July 24, 1990 and at Ten Thousand (P10,000.00) Pesos from July 24, 1990 until the
defendants shall have vacated the same;
c) the amount of P10,000.00 representing reasonable attorneys fees;

3. Dismissing defendants counterclaim for lack of merit; and

4. With costs against the defendants.

Petitioners appealed to the CA which affirmed the decision. In its decision, dated October 8,
1992, the CA ordered:

WHEREFORE, except for the modification that the monthly rental that petitioners should pay
private respondent from July 24, 1990 until the latter finally vacate the premises in question is
reduced to P7,320.00, the decision of the respondent court in this case is AFFIRMED in all
other respects, with costs against petitioners Jose L. Chua and Ko Sio Eng.[4]

Petitioners MRwas likewise denied. Hence, this petition for review on certiorari. Petitioners
assign several errors as having been allegedly committed by the CA.

First. Petitioners allege that the CA erred in affirming the lower courts finding that they owe
private respondent the amount of P42,306.00 as unpaid rentals from January 1, 1987 to

34
December 31, 1989 because neither the letter of demand nor the complaint for unlawful
detainer alleged a claim for unpaid rentals. As the CA pointed out, however, the issue of
arrearages was raised at the pre-trial by private respondent and evidence on this question was
presented without objection from petitioners:[5]

First of all, while it is true that there was no express demand in private respondents complaint
for unlawful detainer against petitioners for the latters payment of rental arrearages, private
respondent in a pleading dated December 17, 1990 filed with the MTC (by way of comment to
petitioners motion to admit amended answer) stated:

That moreover the unpaid rentals from January 1987 to December 31, 1989 amounts to FORTY
TWO THOUSAND THREE HUNDRED SIX PESOS (P42,306.00), exclusive of rentals from
January 1 to December 31, 1990 which would be one hundred eighty thousand pesos
(P180,000.00) or a total of TWO HUNDRED TWENTY TWO THOUSAND THREE HUNDRED
SIX PESOS (222,306.00)

Then, at the pre-trial of December 17, 1990, among the issues proposed by counsel for plaintiff
(now private respondent) was whether:

3. defendants are in arrears for the rentals from Dec. 31, 1987 to January 1989, in accordance
with the contract;

Counsel for defendants (herein petitioners) did not object to the statement of issues made by
plaintiffs counsel and instead simply stated as their own main issue whether plaintiff had a valid
cause of action for ejectment against them as he is not the sole owner of the leased premises,
and then averred that based on this premise, the other issues raised by plaintiff could be
dependent on the resolution of the stated issues (id., p. 88, Orig. Rec.). Later, at the hearing of
February 12, 1990, plaintiff Ramon Ibarra testified that although his lease contract (Exh. A) with
petitioners stipulated an annual ten percent (10%) additional rental starting in 1986 (i.e., the
monthly rental in 1986 was P5,500, in 1987, it was P6,050; in 1988, it was P6,655.00; and in
1989, it was P7,320.50), petitioners continued to pay only the original monthly rental of P5,000
stipulated in their contract (Exh. A), so that petitioners had incurred total rental arrearages at the
end of 1989 of P42,306.00 (pp. 6-8, tsn, op. cit.; pp. 113-115, Orig. Rec.). . . .

Obviously, then, petitioners rental arrearages from 1986 to 1989 was an issue raised at the pre-
trial and on which issue private respondent presented evidence without any objection from
petitioners. And considering that the petitioners incurred said rental arrearages because they
did not pay private respondent the automatic 10% increase in their monthly rental every year for
the years 1986 to 1989 as agreed upon and stipulated in their lease contract (Exh. A,) which
contract is the law between the parties, justice and good faith demand that petitioners should
pay said rental arrearages. As correctly ruled by the respondent court, to absolve the
defendants from paying rentals in arrears while they continue occupying and enjoying the
premises would be allowing the defendants to enrich themselves at the expense of the plaintiff.
(p. 55, Rollo).

Indeed, any objection to the admissibility of evidence should be made at the time such evidence
is offered or as soon thereafter as the objection to its admissibility becomes apparent,[6]
otherwise the objection will be considered waived and such evidence will form part of the
records of the case as competent and admissible evidence.[7] Rule 10, 5[8] of the Rules of Civil
Procedure allows the amendment of the pleadings in order to make them conform to the
evidence in the record.

35
Second. Petitioners claim that they are entitled to an extension of time to occupy the premises
in question. This, too, is without merit. After the lease terminated on January 1, 1990 and
without the parties thereafter reaching any agreement for its renewal, petitioners became
deforciants subject to ejectment from the premises.[9]

Neither did the CA err in ruling that petitioners are not entitled to a reasonable extension of time
to occupy the premises on account of the fact that the lease contract between the parties has
already expired. As there was no longer any lease to speak of which could be extended, the
MTCwas in effect making a contract for the parties which it obviously did not have the power to
do.[10] The potestative authority of the courts to fix a longer term for a lease under Art. 1687 of
the Civil Code[11] applies only to cases where there is no period fixed by the parties. To the
contrary, in this case, the contract of lease provided for a fixed period of five (5) years from
January 1, 1985 to December 31, 1989. As the Court held in Bacolod-Murcia Milling Co., Inc. v.
Banco Nacional Filipino:[12]

It is not the province of the court to alter a contract by construction or to make a new contract for
the parties; its duty is confined to the interpretation of the one which they have made for
themselves, without regard to its wisdom or folly, as the court cannot supply material
stipulations or read into contract words which it does not contain.

Indeed, Art. 1675 of the Civil Code excludes cases falling under Art. 1673 (which provides
among others, that the lessor may judicially eject the lessee when the period agreed upon or
that which is fixed has expired) from the cases wherein, pursuant to Art. 1687, courts may fix a
longer period of lease. For these reasons, we hold that the CA did not err in ruling that
petitioners were not entitled to an extension of the lease upon its expiration.

Third. The appellate court found petitioners guilty of bad faith in refusing to leave the premises.
But petitioners contend that they acted in good faith under the belief that they were entitled to an
extension of the lease because they had made repairs and improvements on the premises.

This contention is devoid of merit. The fact that petitioners allegedly made repairs on the
premises in question is not a reason for them to retain the possession of the premises. There is
no provision of law which grants the lessee a right of retention over the leased premises on that
ground. Art. 448 of the Civil Code, in relation to Art. 546, which provides for full reimbursement
of useful improvements and retention of the premises until reimbursement is made, applies only
to a possessor in good faith, i.e., one who builds on a land in the belief that he is the owner
thereof. In a number of cases, the Court has held that this right does not apply to a mere lessee,
like the petitioners, otherwise, it would always be in his power to improve his landlord out of the
latters property.[13] Art. 1678 merely grants to such a lessee making in good faith useful
improvements the right to be reimbursed one-half of the value of the improvements upon the
termination of the lease, or, in the alternative, to remove the improvements if the lessor refuses
to make reimbursement.

Petitioners were thus correctly ordered to pay attorneys fees considering that private
respondent had to go to court to protect his interest.[14] The award of P10,000.00 is reasonable
in view of the time it has taken this rather simple case for ejectment to be decided.

Fourth. Petitioners contend that the CA erred in affirming the denial of their counterclaim for
damages for their failure to enjoy the peaceful possession of the premises because private
respondent allowed vendors to ply their trade at the front portion of the leased premises.

36
Petitioners claim that, as a result, they suffered business losses and moral injuries. As both the
MTCand RTC held, however, there is no evidence to support this claim. As the CA said,
petitioners never complained before about the sidewalk vendors occupying a portion of the
leased property. It was only after negotiations for renewal of the lease had failed and private
respondent had filed a complaint for unlawful detainer against them did they complain about the
vendors.

WHEREFORE, the decision of the CA, dated October 8, 1992, is AFFIRMED.

CATHOLIC VICAR APOSTOLIC OF THE MOUNTAIN PROVINCE, petitioner,

vs.CA, HEIRS OF EGMIDIO OCTAVIANO AND JUAN VALDEZ, respondents.

The principal issue in this case is whether or not a decision of the CA promulgated a long time
ago can properly be considered res judicata by respondent CA in the present two cases
between petitioner and two private respondents.

Petitioner questions as allegedly erroneous the Decision dated August 31, 1987 of the Ninth
Division of Respondent CA 1 in CA-G.R. No. 05148 [Civil Case No. 3607 (419)] and CA-G.R.
No. 05149 [Civil Case No. 3655 (429)], both for Recovery of Possession, which affirmed the
Decision of the Honorable Nicodemo T. Ferrer, Judge of the RTC of Baguio and Benguet in Civil
Case No. 3607 (419) and Civil Case No. 3655 (429), with the dispositive portion as follows:

WHEREFORE, Judgment is hereby rendered ordering the defendant, Catholic Vicar Apostolic
of the Mountain Province to return and surrender Lot 2 of Plan Psu-194357 to the plaintiffs.
Heirs of Juan Valdez, and Lot 3 of the same Plan to the other set of plaintiffs, the Heirs of
Egmidio Octaviano (Leonardo Valdez, et al.). For lack or insufficiency of evidence, the plaintiffs'
claim or damages is hereby denied. Said defendant is ordered to pay costs. (p. 36, Rollo)

Respondent CA, in affirming the trial court's decision, sustained the trial court's conclusions that
the Decision of the CA, dated May 4,1977 in CA-G.R. No. 38830-R, in the two cases affirmed by
the SC, touched on the ownership of lots 2 and 3 in question; that the two lots were possessed
by the predecessors-in-interest of private respondents under claim of ownership in good faith
from 1906 to 1951; that petitioner had been in possession of the same lots as bailee in
commodatum up to 1951, when petitioner repudiated the trust and when it applied for
registration in 1962; that petitioner had just been in possession as owner for eleven years,
hence there is no possibility of acquisitive prescription which requires 10 years possession with
just title and 30 years of possession without; that the principle of res judicata on these findings
by the CA will bar a reopening of these questions of facts; and that those facts may no longer be
altered.

Petitioner's motion for reconsideation of the respondent appellate court's Decision in the two
aforementioned cases (CA G.R. No. CV-05418 and 05419) was denied.

The facts and background of these cases as narrated by the trail court are as follows

... The documents and records presented reveal that the whole controversy started when the
defendant Catholic Vicar Apostolic of the Mountain Province (VICAR for brevity) filed with the
Court of First Instance of Baguio Benguet on September 5, 1962 an application for registration
of title over Lots 1, 2, 3, and 4 in Psu-194357, situated at Poblacion Central, La Trinidad,
Benguet, docketed as LRC N-91, said Lots being the sites of the Catholic Church building,
convents, high school building, school gymnasium, school dormitories, social hall, stonewalls,

37
etc. On March 22, 1963 the Heirs of Juan Valdez and the Heirs of Egmidio Octaviano filed their
Answer/Opposition on Lots Nos. 2 and 3, respectively, asserting ownership and title thereto.
After trial on the merits, the land registration court promulgated its Decision, dated November
17, 1965, confirming the registrable title of VICAR to Lots 1, 2, 3, and 4.

The Heirs of Juan Valdez (plaintiffs in the herein Civil Case No. 3655) and the Heirs of Egmidio
Octaviano (plaintiffs in the herein Civil Case No. 3607) appealed the decision of the land
registration court to the then CA, docketed as CA-G.R. No. 38830-R. The CA rendered its
decision, dated May 9, 1977, reversing the decision of the land registration court and dismissing
the VICAR's application as to Lots 2 and 3, the lots claimed by the two sets of oppositors in the
land registration case (and two sets of plaintiffs in the two cases now at bar), the first lot being
presently occupied by the convent and the second by the women's dormitory and the sister's
convent.

On May 9, 1977, the Heirs of Octaviano filed a MRpraying the CA to order the registration of Lot
3 in the names of the Heirs of Egmidio Octaviano, and on May 17, 1977, the Heirs of Juan
Valdez and Pacita Valdez filed their MRpraying that both Lots 2 and 3 be ordered registered in
the names of the Heirs of Juan Valdez and Pacita Valdez. On August 12,1977, the CA denied
the MRfiled by the Heirs of Juan Valdez on the ground that there was "no sufficient merit to
justify reconsideration one way or the other ...," and likewise denied that of the Heirs of Egmidio
Octaviano.

Thereupon, the VICAR filed with the SC a petition for review on certiorari of the decision of the
CA dismissing his (its) application for registration of Lots 2 and 3, docketed as G.R. No. L-
46832, entitled 'Catholic Vicar Apostolic of the Mountain Province vs. CA and Heirs of Egmidio
Octaviano.'

From the denial by the CA of their MRthe Heirs of Juan Valdez and Pacita Valdez, on
September 8, 1977, filed with the SC a petition for review, docketed as G.R. No. L-46872,
entitled, Heirs of Juan Valdez and Pacita Valdez vs. CA, Vicar, Heirs of Egmidio Octaviano and
Annable O. Valdez.

On January 13, 1978, the SC denied in a minute resolution both petitions (of VICAR on the one
hand and the Heirs of Juan Valdez and Pacita Valdez on the other) for lack of merit. Upon the
finality of both SC resolutions in G.R. No.L-46832 and G.R. No. L- 46872, the Heirs of
Octaviano filed with the then Court of First Instance of Baguio, Branch II, a Motion For
Execution of Judgment praying that the Heirs of Octaviano be placed in possession of Lot 3.
The Court, presided over by Hon. Salvador J. Valdez, on December 7, 1978, denied the motion
on the ground that the CA decision in CA-G.R. No. 38870 did not grant the Heirs of Octaviano
any affirmative relief.

On February 7, 1979, the Heirs of Octaviano filed with the CA a petitioner for certiorari and
mandamus, docketed as CA-G.R. No. 08890-R, entitled Heirs of Egmidio Octaviano vs. Hon.
Salvador J. Valdez, Jr. and Vicar. In its decision dated May 16, 1979, the CA dismissed the
petition.

It was at that stage that the instant cases were filed. The Heirs of Egmidio Octaviano filed Civil
Case No. 3607 (419) on July 24, 1979, for recovery of possession of Lot 3; and the Heirs of
Juan Valdez filed Civil Case No. 3655 (429) on September 24, 1979, likewise for recovery of
possession of Lot 2 (Decision, pp. 199-201, Orig. Rec.).

38
In Civil Case No. 3607 (419) trial was held. The plaintiffs Heirs of Egmidio Octaviano presented
one (1) witness, Fructuoso Valdez, who testified on the alleged ownership of the land in
question (Lot 3) by their predecessor-in-interest, Egmidio Octaviano (Exh. C ); his written
demand (Exh. BB-4 ) to defendant Vicar for the return of the land to them; and the reasonable
rentals for the use of the land at P10,000.00 per month. On the other hand, defendant Vicar
presented the Register of Deeds for the Province of Benguet, Atty. Nicanor Sison, who testified
that the land in question is not covered by any title in the name of Egmidio Octaviano or any of
the plaintiffs (Exh. 8). The defendant dispensed with the testimony of Mons.William Brasseur
when the plaintiffs admitted that the witness if called to the witness stand, would testify that
defendant Vicar has been in possession of Lot 3, for seventy-five (75) years continuously and
peacefully and has constructed permanent structures thereon.

In Civil Case No. 3655, the parties admitting that the material facts are not in dispute, submitted
the case on the sole issue of whether or not the decisions of the CA and the SC touching on the
ownership of Lot 2, which in effect declared the plaintiffs the owners of the land constitute res
judicata.

In these two cases , the plaintiffs arque that the defendant Vicar is barred from setting up the
defense of ownership and/or long and continuous possession of the two lots in question since
this is barred by prior judgment of the CA in CA-G.R. No. 038830-R under the principle of res
judicata. Plaintiffs contend that the question of possession and ownership have already been
determined by the CA (Exh. C, Decision, CA-G.R. No. 038830-R) and affirmed by the SC (Exh.
1, Minute Resolution of the SC). On his part, defendant Vicar maintains that the principle of res
judicata would not prevent them from litigating the issues of long possession and ownership
because the dispositive portion of the prior judgment in CA-G.R. No. 038830-R merely
dismissed their application for registration and titling of lots 2 and 3. Defendant Vicar contends
that only the dispositive portion of the decision, and not its body, is the controlling
pronouncement of the CA. 2

The alleged errors committed by respondent CA according to petitioner are as follows:

1. ERROR IN APPLYING LAW OF THE CASE AND RES JUDICATA;

2. ERROR IN FINDING THAT THE TRIAL COURT RULED THAT LOTS 2 AND 3 WERE
ACQUIRED BY PURCHASE BUT WITHOUT DOCUMENTARY EVIDENCE PRESENTED;

3. ERROR IN FINDING THAT PETITIONERS' CLAIM IT PURCHASED LOTS 2 AND 3

FROM VALDEZ AND OCTAVIANO WAS AN IMPLIED ADMISSION THAT THE FORMER
OWNERS WERE VALDEZ AND OCTAVIANO;

4. ERROR IN FINDING THAT IT WAS PREDECESSORS OF PRIVATE RESPONDENTS

WHO WERE IN POSSESSION OF LOTS 2 AND 3 AT LEAST FROM 1906, AND NOT
PETITIONER;

5. ERROR IN FINDING THAT VALDEZ AND OCTAVIANO HAD FREE PATENT

APPLICATIONS AND THE PREDECESSORS OF PRIVATE RESPONDENTS ALREADY HAD
FREE PATENT APPLICATIONS SINCE 1906;

6. ERROR IN FINDING THAT PETITIONER DECLARED LOTS 2 AND 3 ONLY IN 1951

AND JUST TITLE IS A PRIME NECESSITY UNDER ARTICLE 1134 IN RELATION TO ART.
1129 OF THE CIVIL CODE FOR ORDINARY ACQUISITIVE PRESCRIPTION OF 10 YEARS;

39
7. ERROR IN FINDING THAT THE DECISION OF THE CA IN CA G.R. NO. 038830 WAS
AFFIRMED BY THE SC;

8. ERROR IN FINDING THAT THE DECISION IN CA G.R. NO. 038830 TOUCHED ON

OWNERSHIP OF LOTS 2 AND 3 AND THAT PRIVATE RESPONDENTS AND THEIR
PREDECESSORS WERE IN POSSESSION OF LOTS 2 AND 3 UNDER A CLAIM OF
OWNERSHIP IN GOOD FAITH FROM 1906 TO 1951;

9. ERROR IN FINDING THAT PETITIONER HAD BEEN IN POSSESSION OF LOTS 2

AND 3 MERELY AS BAILEE BOR ROWER) IN COMMODATUM, A GRATUITOUS LOAN FOR
USE;

10. ERROR IN FINDING THAT PETITIONER IS A POSSESSOR AND BUILDER IN GOOD

FAITH WITHOUT RIGHTS OF RETENTION AND REIMBURSEMENT AND IS BARRED BY
THE FINALITY AND CONCLUSIVENESS OF THE DECISION IN CA G.R. NO. 038830. 3

The petition is bereft of merit.

Petitioner questions the ruling of respondent CA in CA-G.R. Nos. 05148 and 05149, when it
clearly held that it was in agreement with the findings of the trial court that the Decision of the
CA dated May 4,1977 in CA-G.R. No. 38830-R, on the question of ownership of Lots 2 and 3,
declared that the said CA Decision CA-G.R. No. 38830-R) did not positively declare private
respondents as owners of the land, neither was it declared that they were not owners of the
land, but it held that the predecessors of private respondents were possessors of Lots 2 and 3,
with claim of ownership in good faith from 1906 to 1951. Petitioner was in possession as
borrower in commodatum up to 1951, when it repudiated the trust by declaring the properties in
its name for taxation purposes. When petitioner applied for registration of Lots 2 and 3 in 1962,
it had been in possession in concept of owner only for eleven years. Ordinary acquisitive
prescription requires possession for ten years, but always with just title. Extraordinary
acquisitive prescription requires 30 years. 4

On the above findings of facts supported by evidence and evaluated by the CA in CA-G.R. No.
38830-R, affirmed by this Court, We see no error in respondent appellate court's ruling that said
findings are res judicata between the parties. They can no longer be altered by presentation of
evidence because those issues were resolved with finality a long time ago. To ignore the
principle of res judicata would be to open the door to endless litigations by continuous
determination of issues without end.

An examination of the CA Decision dated May 4, 1977, First Division 5 in CA-G.R. No. 38830-R,
shows that it reversed the trial court's Decision 6 finding petitioner to be entitled to register the
lands in question under its ownership, on its evaluation of evidence and conclusion of facts.

The CA found that petitioner did not meet the requirement of 30 years possession for acquisitive
prescription over Lots 2 and 3. Neither did it satisfy the requirement of 10 years possession for
ordinary acquisitive prescription because of the absence of just title. The appellate court did not
believe the findings of the trial court that Lot 2 was acquired from Juan Valdez by purchase and
Lot 3 was acquired also by purchase from Egmidio Octaviano by petitioner Vicar because there
was absolutely no documentary evidence to support the same and the alleged purchases were
never mentioned in the application for registration.

40
By the very admission of petitioner Vicar, Lots 2 and 3 were owned by Valdez and Octaviano.
Both Valdez and Octaviano had Free Patent Application for those lots since 1906. The
predecessors of private respondents, not petitioner Vicar, were in possession of the questioned
lots since 1906.

There is evidence that petitioner Vicar occupied Lots 1 and 4, which are not in question, but not
Lots 2 and 3, because the buildings standing thereon were only constructed after liberation in
1945. Petitioner Vicar only declared Lots 2 and 3 for taxation purposes in 1951. The
improvements oil Lots 1, 2, 3, 4 were paid for by the Bishop but said Bishop was appointed only
in 1947, the church was constructed only in 1951 and the new convent only 2 years before the
trial in 1963.

When petitioner Vicar was notified of the oppositor's claims, the parish priest offered to buy the
lot from Fructuoso Valdez. Lots 2 and 3 were surveyed by request of petitioner Vicar only in
1962.

Private respondents were able to prove that their predecessors' house was borrowed by
petitioner Vicar after the church and the convent were destroyed. They never asked for the
return of the house, but when they allowed its free use, they became bailors in commodatum
and the petitioner the bailee. The bailees' failure to return the subject matter of commodatum to
the bailor did not mean adverse possession on the part of the borrower. The bailee held in trust
the property subject matter of commodatum. The adverse claim of petitioner came only in 1951
when it declared the lots for taxation purposes. The action of petitioner Vicar by such adverse
claim could not ripen into title by way of ordinary acquisitive prescription because of the
absence of just title.

The CA found that the predecessors-in-interest and private respondents were possessors under
claim of ownership in good faith from 1906; that petitioner Vicar was only a bailee in
commodatum; and that the adverse claim and repudiation of trust came only in 1951.

We find no reason to disregard or reverse the ruling of the CA in CA-G.R. No. 38830-R. Its
findings of fact have become incontestible. This Court declined to review said decision, thereby
in effect, affirming it. It has become final and executory a long time ago.

Respondent appellate court did not commit any reversible error, much less grave abuse of
discretion, when it held that the Decision of the CA in CA-G.R. No. 38830-R is governing, under
the principle of res judicata, hence the rule, in the present cases CA-G.R. No. 05148 and CA-
G.R. No. 05149. The facts as supported by evidence established in that decision may no longer
be altered.

WHEREFORE AND BY REASON OF THE FOREGOING, this petition is DENIED for lack of
merit, the Decision dated Aug. 31, 1987 in CA-G.R. Nos. 05148 and 05149, by respondent CA
is AFFIRMED, with costs against petitioner.

JAIME LEDESMA, Petitioner, v. THE HONORABLE CA and CITIWIDE MOTORS, INC.,

Respondents.

Ledesma, Saludo & Associates for Petitioner.

SYLLABUS

41
1. CIVIL LAW; POSSESSION; REQUISITES TO MAKE POSSESSION OF MOVABLE
PROPERTY EQUIVALENT TO TITLE. It is quite clear that a party who (a) has lost any
movable or (b) has been unlawfully deprived thereof can recover the same from the present
possessor even if the latter acquired it in good faith and has, therefore, title thereto for under the
first sentence of Article 559, such manner of acquisition is equivalent to a title. There are three
(3) requisites to make possession of movable property equivalent to title, namely: (a) the
possession should be in good faith; (b) the owner voluntarily parted with the possession of the
thing; and (c) the possession is in the concept of owner. (TOLENTINO, A.M., Civil Code of the
Philippines, Vol. II, 1983 ed., 275-276, citing 2-II Colin and Capitant 942; De Buen: Ibid., 1009, 2
Salvat 165; 4 Manresa 339). Undoubtedly, one who has lost a movable or who has been
unlawfully deprived of it cannot be said to have voluntarily parted with the possession thereof.
This is the justification for the exceptions found under the second sentence of Article 559 of the
Civil Code.

2. CIVIL LAW; SPECIAL CONTRACTS; CONTRACT OF SALE; ABSENCE OF

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

Petitioner impugns the Decision of 22 September 1988 of respondent CA 1 in C.A.-G.R. CV No.

05955 2 reversing the decision of then Branch XVIII-B (Quezon City) of the then Court of First
Instance (now RTC) of Rizal in a replevin case, Civil Case No. Q-24200, the dispositive portion
of which reads:chanroblesvirtualawlibrary

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

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

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

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

42
The MRof the judgment filed by the plaintiff is hereby DENIED for lack of merit. No costs at this
instance." 4

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

The antecedent facts as summarized by the respondent CA are as

follows:jgc:chanrobles.com.ph

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

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

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

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

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

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

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

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

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

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

43
After posting the necessary bond in the amount double the value of the subject motor vehicle,
plaintiff-appellant was able to recover possession of the 1977 Isuzu Gemini as evidenced by the
Sheriffs Return dated January 23, 1978." 6

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

"The trial court erred.

1. IN HOLDING THAT THE DEFENDANT IS ENTITLED TO THE POSSESSION OF THE

CAR;
2. IN HOLDING THAT THE DEFENDANT IS AN INNOCENT PURCHASER IN GOOD
FAITH AND FOR VALUE;
3. IN RULING THAT THE PLAINTIFF SHOULD RETURN THE CAR TO DEFENDANT,
DISMISSING ITS CLAIM FOR DAMAGES, AND GRANTING DEFENDANT P35,000.00
DAMAGES RECOVERABLE AGAINST THE REPLEVIN BOND AND P101,000.00
DAMAGES FOR ALLEGED WRONGFUL SEIZURE;
4. IN RENDERING THE DECISION DATED SEPTEMBER 3, 1979 AND THE FINAL
ORDER DATED JUNE 26, 1980." 7

In support of its first and second assigned errors, private respondent cites Article 559 of the Civil
Code which provides:
"ARTICLE 559. The possession of movable property acquired in good faith is equivalent
to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof,
may recover it from the person in possession of the same.

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

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

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

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

44
In the case of Dizon v. Suntay, 47 SCRA 160, the SC had occasion to define the phrase
unlawfully deprived, to wit:

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

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

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

His MRhaving been denied in the resolution of the respondent Court of 12 December 1988, 9
petitioner filed this petition alleging therein

A. THE HONORABLE CA ERRED IN APPLYING ARTICLE 559 OF THE NEW CIVIL

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

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

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

It is quite clear that a party who (a) has lost any movable or (b) has been unlawfully deprived
thereof can recover the same from the present possessor even if the latter acquired it in good

45
faith and has, therefore, title thereto for under the first sentence of Article 559, such manner of
acquisition is equivalent to a title. There are three (3) requisites to make possession of movable
property equivalent to title, namely: (a) the possession should be in good faith; (b) the owner
voluntarily parted with the possession of the thing; and (c) the possession is in the concept of
owner. 11

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

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

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

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

46
"The contract of sale is consensual and is perfected once agreement is reached between the
parties on the subject matter and the consideration. According to the Civil Code:

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

From that moment, the parties may reciprocally demand performance, subject to the provisions
of the law governing the form of contracts.
ART. 1477. The ownership of the thing sold shall be transferred to the vendee upon the
actual or constructive delivery thereof.

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

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

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

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

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

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

47
The failure of the buyer to make good the price does not, in law, cause the ownership to revest
in the seller until and unless the bilateral contract of sale is first rescinded or resolved pursuant
to Article 1191 of the new Civil Code.chanrobles lawlibrary : rednad

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

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

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

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

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

Agreeably to this provision, Article 1506 prescribes:chanrob1es virtual 1aw library

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

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

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

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

MERCEDES MORALIDAD,Petitioner,- versus SPS. DIOSDADO PERNES and ARLENE

PERNES,

With the CAs denial of her MRin its Resolution of February 28, 2002, petitioner is now before
this Court raising the following issues:

48
 A. WHETHER OR NOT THE CA ERRED IN DISMISSING THE UNLAWFUL DETAINER
CASE FOR BEING PREMATURE WHICH DECISION IS NOT IN ACCORDANCE WITH
LAW AND JURISPRUDENCE.
B. WHETHER OR NOT THE CA ERRED IN APPLYING ARTICLES 448 AND 546 AND
THE PROVISIONS OF THE CODE ON USUFRUCT INSTEAD OF ARTICLE 1678 OF
THE CIVIL CODE.

The Court rules for the petitioner.

The Court is inclined to agree with the CA that what was constituted between the parties herein
is one of usufruct over a piece of land, with the petitioner being the owner of the property upon
whom the naked title thereto remained and the respondents being two (2) among other
unnamed usufructuaries who were simply referred to as petitioners kin. The Court, however,
cannot go along with the CAs holding that the action for unlawful detainer must be dismissed on
ground of prematurity.
Usufruct is defined under Article 562 of the Civil Code in the following wise:

ART. 562. 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.

Usufruct, in essence, is nothing else but simply allowing one to enjoy anothers property.[9] It is
also defined as the right to enjoy the property of another temporarily, including both the jus
utendi and the jus fruendi,[10] with the owner retaining the jus disponendi or the power to
alienate the same.[11]

It is undisputed that petitioner, in a document dated July 21, 1986, supra, made known her
intention to give respondents and her other kins the right to use and to enjoy the fruits of her
property. There can also be no quibbling about the respondents being given the right to build
their own house on the property and to stay thereat as long as they like. Paragraph #5 of the
same document earmarks proceeds or income derived from the aforementioned properties for
the petitioners nearest kins who have less in life in greater percentage and lesser percentage to
those who are better of (sic) in standing. The established facts undoubtedly gave respondents
not only the right to use the property but also granted them, among the petitioners other kins,
the right to enjoy the fruits thereof. We have no quarrel, therefore, with the CAs ruling that
usufruct was constituted between petitioner and respondents. It is thus pointless to discuss why
there was no lease contract between the parties.
However, determinative of the outcome of the ejectment case is the resolution of the next issue,
i.e., whether the existing usufruct may be deemed to have been extinguished or terminated. If
the question is resolved in the affirmative, then the respondents right to possession, proceeding
as it did from their right of usufruct, likewise ceased. In that case, petitioners action for
ejectment in the unlawful detainer case could proceed and should prosper.

The CA disposed of this issue in this wise:

xxx Section 1, Rule 70 of the 1997 Rules of Civil Procedure, as amended, provides xxx

From the foregoing provision, it becomes apparent that for an action for unlawful detainer to
prosper, the plaintiff [petitioner] needs to prove that defendants [respondents] right to possess
already expired and terminated. Now, has respondents right to possess the subject portion of

49
petitioners property expired or terminated? Let us therefore examine respondents basis for
occupying the same.

It is undisputed that petitioner expressly authorized respondents o occupy portion of her

property on which their house may be built. Thus it is my desire that Mr. and Mrs. Diosdado M.
Pernes may build their house therein and stay as long as they like. From this statement, it
seems that petitioner had given the respondents the usufructuary rights over the portion that
may be occupied by the house that the latter would build, the duration of which being dependent
on how long respondents would like to occupy the property. While petitioner had already
demanded from the respondents the surrender of the premises, this Court is of the opinion that
the usufructuary rights of respondents had not been terminated by the said demand considering
the clear statement of petitioner that she is allowing respondents to occupy portion of her land
as long as the latter want to. Considering that respondents still want to occupy the premises,
petitioner clearly cannot eject respondents.[12]

We disagree with the CAs conclusion of law on the matter. The term or period of the usufruct
originally specified provides only one of the bases for the right of a usufructuary to hold and
retain possession of the thing given in usufruct. There are other modes or instances whereby
the usufruct shall be considered terminated or extinguished. For sure, the Civil Code
enumerates such other modes of extinguishment:

ART. 603. Usufruct is extinguished:

(1) By the death of the usufructuary, unless a contrary intention clearly appears;

(2) By expiration of the period for which it was constituted, or by the fulfilment of any
resolutory condition provided in the title creating the usufruct;

(3) By merger of the usufruct and ownership in the same person;

(4) By renunciation of the usufructuary;

(5) By the total loss of the thing in usufruct;

(6) By the termination of the right of the person constituting the usufruct;

(7) By prescription. (Emphasis supplied.)

The document executed by the petitioner dated July 21, 1986 constitutes the title creating, and
sets forth the conditions of, the usufruct. Paragraph #3 thereof states [T]hat anyone of my kins
may enjoy the privilege to stay therein and may avail the use thereof. Provided, however, that
the same is not inimical to the purpose thereof (Emphasis supplied). What may be inimical to
the purpose constituting the usufruct may be gleaned from the preceding paragraph wherein
petitioner made it abundantly clear that anybody of my kins who wishes to stay on the
aforementioned property should maintain an atmosphere of cooperation, live in harmony and
must avoid bickering with one another. That the maintenance of a peaceful and harmonious
relations between and among kin constitutes an indispensable condition for the continuance of
the usufruct is clearly deduced from the succeeding Paragraph #4 where petitioner stated [T]hat
anyone of my kins who cannot conform with the wishes of the undersigned may exercise the
freedom to look for his own. In fine, the occurrence of any of the following: the loss of the
atmosphere of cooperation, the bickering or the cessation of harmonious relationship

50
between/among kin constitutes a resolutory condition which, by express wish of the petitioner,
extinguishes the usufruct.
From the pleadings submitted by the parties, it is indubitable that there were indeed facts and
circumstances whereby the subject usufruct may be deemed terminated or extinguished by the
occurrence of the resolutory conditions provided for in the title creating the usufruct, namely, the
document adverted to which the petitioner executed on July 21, 1986.
As aptly pointed out by the petitioner in her Memorandum, respondents own evidence before
the MTCC indicated that the relations between the parties have deteriorated to almost an
irretrievable level.[13] There is no doubt then that what impelled petitioner to file complaints
before the local barangay lupon, the Office of the Ombudsman for Mindanao, and this instant
complaint for unlawful detainer before the MTCC is that she could not live peacefully and
harmoniously with the Pernes family and vice versa.

Thus, the Court rules that the continuing animosity between the petitioner and the Pernes family
and the violence and humiliation she was made to endure, despite her advanced age and frail
condition, are enough factual bases to consider the usufruct as having been terminated.

To reiterate, the relationship between the petitioner and respondents respecting the property in
question is one of owner and usufructuary. Accordingly, respondents claim for reimbursement of
the improvements they introduced on the property during the effectivity of the usufruct should be
governed by applicable statutory provisions and principles on usufruct. In this regard, we cite
with approval what Justice Edgardo Paras wrote on the matter:

If the builder is a usufructuary, his rights will be governed by Arts. 579 and 580. In case like this,
the terms of the contract and the pertinent provisions of law should govern (3 Manresa 215-216;
se also Montinola vs. Bantug, 71 Phil. 449).[14] (Emphasis ours.)

By express provision of law, respondents, as usufructuary, do not have the right to

reimbursement for the improvements they may have introduced on the property. We quote
Articles 579 and 580 of the Civil Code:

Art. 579. The usufructuary may make on the property held in usufruct such useful improvements
or expenses for mere pleasure as he may deem proper, provided he does not alter its form or
substance; but he shall have no right to be indemnified therefor. He may, however, remove such
improvements, should it be possible to do so without damage to the property. (Emphasis
supplied.)

Art. 580. The usufructuary may set off the improvements he may have made on the property
against any damage to the same.

Given the foregoing perspective, respondents will have to be ordered to vacate the premises
without any right of reimbursement. If the rule on reimbursement or indemnity were otherwise,
then the usufructuary might, as an author pointed out, improve the owner out of his property.[15]
The respondents may, however, remove or destroy the improvements they may have
introduced thereon without damaging the petitioners property.

Out of the generosity of her heart, the petitioner has allowed the respondent spouses to use and
enjoy the fruits of her property for quite a long period of time. They opted, however, to repay a
noble gesture with unkindness. At the end of the day, therefore, they really cannot begrudge
their aunt for putting an end to their right of usufruct. The disposition herein arrived is not only
legal and called for by the law and facts of the case. It is also right.

51
WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the CA are
REVERSED and SET ASIDE. Accordingly, the decision of the MTCC is REINSTATED with
MODIFICATION that all of respondents counterclaims are dismissed, including their claims for
reimbursement of useful and necessary expenses.

JACINTO DEL SAZ OROZCO y MORTERA and MARIA PAZ ALCANTARA, plaintiffs-
appellants,
vs.
SALVADOR ARANETA, FRANCISCO DEL SAZ OROZCO Y LOPEZ, DOLORES DEL SAZ
OROZCO Y LOPEZ, and the minors FELISA, EUGENIO, ANTONIO, JOSE, MARIA Y
CARLOS, all surnamed DEL SAZ OROZCO Y LOPEZ whose natural guardian is DOA
CONCEPCION LOPEZ VDA. DE DEL SAZ OROZCO, defendants-appellees.

Eugenio del Saz Orozco died on February 7, 1922, leaving a will which he had executed on
March 5, 1921, and was afterwards duly admitted to probate. The pertinent clause of that will
provided that certain properties should be given in life usufruct to his son Jacinto del Saz
Orozco y Mortera, with the obligation on his part to preserve said properties in favor of the other
heirs who were declared the naked owners thereof. Among these properties were 5,714 shares
of stock of the Benguet Consolidated Mining Company, according to the project of partition
executed pursuant to said will and duly approved by the court.

On September 11, 1934, the Benguet Consolidated Mining Company declared and distributed
stock dividends out of its surplus profits, the plaintiff receiving his proportionate portion of
11,428 shares. On November 17, 1939, said Mining Company again declared stock dividends
out of its surplus profits, of which the plaintiff received 17,142 shares, making a total of 28,570
shares.

The question at this issue is whether the stock dividend is part of the capital which should be
preserved in favor of the owners or an income of fruits of the capital which should be given to
and enjoyed by the life usufructuary, the plaintiff herein, as his own exclusive property.

The same question was raised in the Matter of the Testate Estate of Emil Maurice Bachrach, *
G.R. No. L-2659 the decision of which was promulgated on October 12, 1950. In that case, the
question raised was stated as follows:

Is a stock dividend fruit or income, which belongs to the usufructuary, or is it capital or part of
the corpus of the estate, which pertains to the remainderman. That is the question raised in this
appeal.

In said case, Emil Maurice Bachrach was the owner of 108,000 shares of stock of the Atok Big
Wedge Mining Co., Inc. He received 54,000 shares, representing 50 per cent stock dividend on
said original shares. On June 10, 1948, Mary MacDonald Bachrach as life tenant or
usufructuary of the estate filed a motion asking the Court of First Instance to authorize the
Peoples Bank and Trust Company, as administrator of the estate of Emil Maurice Bachrach, to
transfer to her the said 54,000 shares of stock dividend by indorsing and delivering to her the
corresponding certificates of stock, claiming that said dividend, although paid out in the form of
stock, was fruit or income and, therefore, belonged to her as usufructuary. The other heirs of
Bachrach opposed the motion on the ground that the stock dividend was part of the capital or
corpus of the estate and belonged to the remainderman. The court granted the motion and the
other heirs appealed.

52
Justice Ozaeta, with the unanimous concurrence of the other members of this Court, ruled that
a dividend, whether in the form of cash or stock, is income and, consequently, should go to the
usufructuary, taking into consideration that a stock dividend as well as a cash dividend can be
declared only out of profits of the corporation, for it were declared out of the capital it would be a
serious violation of the law.

For the reason sustaining the doctrine, we refer to that recent decision.

The appellees attempt to differentiate the present case from that case, contending that, while
the doctrine in that case effected a just and equitable distribution, the application of it in the
present case would cause an injustice, for, quoting Justice Holmes, "abstract propositions do
not decide concrete cases." We have examined the two cases carefully and we have not
perceived any difference which would justify a reversal or modification of the doctrine in the
Bachrach case.

One of the differences pointed out is that by the declaration of stock dividends the voting power
of the original shares of stock is considerably diminished, and, if the stock dividends are not
given to the remaindermen, the voting power of the latter would be greatly impaired. Bearing in
mind that the number of shares of stock of the Benguet Consolidated Mining company is so
large, the diminution of the voting power of the original shares of stock in this case cannot
possibly affect or influence the control of the policies of the corporation which is vested in the
owners of the great block of shares. This would not be a sufficient reason for modifying the
doctrine of the Bachrach case. These remarks are made in answer to the argument of the
appellees in this particular case, but they do not imply that if the diminution of the voting power
were considerable the doctrine should be modified.

With regard to the sum of P3,428.40 which is alleged to have been received by the plaintiff from
the Benguet Consolidated Mining Company, as a result of the reduction of its capital in January,
1926, it appears that it has not been proven that the plaintiff has received said sum; on the
contrary, it was denied by him as soon as he arrived in the Philippines from Spain. There is no
ground, therefore, for ordering the plaintiff to deliver such sum to the defendants.

In view of the foregoing, the judgment appealed from is reversed, and it is declared that the
stock dividends amounting to 28,570 shares, above mentioned, belongs to the plaintiff-appellant
Jacinto del Saz Orozco y Mortera exclusively and in absolute ownership. Without costs. It is so
ordered.

JOSE DE LUNA, vs CA and JUAN DIMAANO, JR. and GERINO DOBLE, respondents.

In his complaint for forcible entry filed on February 7, 1972 before the MTC, petitioner alleged
that he is the owner of an unregistered parcel of land with an area of 30,856 square meters,
located in Babon San Juan, Botolan, Zambales, since 1938; that on December 18 and 19, 1971,
defendants Octavio Daclison, Oscar Crispin, and private respondents Juan Dimaano, Jr. and
Gerino Doble entered the land and began plowing it; and that said defendants fenced the land
with barbed wire on January 15 and 16, 1972 and began planting sugar cane on February 5 and
6, 1972, despite his objections. Petitioners prayed that the defendants be ordered to vacate the
land and pay him the amount of P45.00 monthly per hectare until possession thereof would be
transferred to him, with litigation expenses and costs.

53
In their answer, the defendants denied the material allegations of the complaint. Declison,
Crispin and Doble alleged as a special and affirmative defense that they have not entered nor
occupied the disputed property.For his part, defendant Dimaano, Jr. raised as his defense that
petitioner was not the owner of the property, alleging instead that the owner thereof was Agustin
Dequia, Jr., Dimaano, Jr. contended that the property was originally owned by Agustin
Dequia, Sr., who had declared the property in his name for taxation purposes in 1906. Upon
the death of Agustin Dequia, Sr. in 1945, he was succeeded by his son Agustin Dequia, Jr.,
who possessed the property from 1945 up to February 1972, when the same was leased to
defendant Dimaano, Jr., Agustin Dequia, Sr. happens to be the uncle of petitioner, the former
being the elder brother of the latter's mother, Apolonia Dequia.

After trial on the merits, judgment was rendered in favor of petitioner, with the trial court ordering
the defendants or persons acting for and in their behalf to restore to petitioner possession of the
property. In addition, respondent Dimaano, Jr. was ordered to pay petitioner the amounts of
P12,312 representing actual damages and P5,000.00 as costs of the suit.

The defendants appealed to the RTC, which reversed the decision of the MTC. Petitioner
brought the case on a petition for review to the CA, which affirmed the judgment of the RTC.

Aggrieved, petitioner, elevated the case to Us, alleging that the CA and the RTC erred in
determining the ownership of the disputed property in an action for ejectment, and in concluding
that Agustin Dequia, Jr. is the owner of the property.

We find the petition impressed with merit.

Well-established is the rule in ejectment cases that the only issue to be resolved therein is who
is entitled to the physical or material possession of the premises, or possession de facto,
independent of any claim of ownership that either party may set forth in their pleadings. If
petitioner can prove prior possession in himself, he may recover such possession from even the
owner himself. Whatever may be the character of his prior possession, if he has in is favor
priority of time; he has the security that entitles him to stay on the property until he is lawfully
ejected by a person having a better right by either accion publiciana or accion reindivicatoria.

However, where the question of possession cannot be resolved without deciding the question of
ownership, an inferior court has the power to resolve the question of ownership but only insofar
as to determine the issue of possession.

In the case at bar, the inferior court acted correctly in receiving evidence regarding the
ownership of the disputed property, inasmuch as respondent Dimaano, Jr. claimed to possess
the property by virtue of a lease agreement with the alleged owner thereof, Agustin Dequia, Jr.

Be that as it may, the respondent Court erred in upholding the RTC regarding the conclusion
that the subject property is owned by Agustin Dequia, Jr. and therefore respondent Dimaano,
Jr. is entitled to possess the same.

First of all, petitioner has shown that he had prior possession of the property. The prior
possession of petitioner was established by the testimony of his witnesses, notably of his
tenants Dilag and dela Cruz. While petitioner admitted that he declared the property for taxation
purposes only in 1957, he had possessed the property beginning 1953, when he leased the
same to Dilag, who in turn possessed the same until respondent Dimaano, Jr. entered upon the

54
property in 1972. The possession of the property by Dilag since 1953 redounds to the benefit of
petitioner, since possession may be exercised in one's own name or in that of another.

Moreover, there is evidence to the effect that petitioner possessed the property even earlier
than 1953. Petitioner's witness, dela Cruz, who lived about 400 meters from the land in
controversy, testified that he had witnessed the delivery of the of property to the petitioner and
his mother Apolonia Dequia by Agustin Dequia, Sr. in 1938, when they and their brothers and
sisters petitioned among themselves the properties of their deceased parents. He further
testified that he saw petitioner and his mother cultivate the land from 1938 to 1941, and that he
leased the land from them from 1944 to 1952.

On the other hand, respondent Dimaano, Jr. had failed to prove that Agustin Dequia, Jr.
possessed the property prior to his possession, much less the ownership of the latter over said
property. While Agustin Dequia, Jr. testified that he is a co-owner of the disputed property,
there is nothing to support this self-serving claim; neither does his testimony support the
defense's theory that he had prior possession of the property. The mere fact that Agustin
Dequia, Sr. had declared the subject for taxation purposes from 1908 up to 1945 did not
constitute possession thereof, nor is it proof of ownership in the absence of Dequia, Jr.'s actual
possession of said property.

Therefore, the CA erred in ruling that Agustin Dequia, Jr. was the owner of the disputed
property since there is no evidence whatsoever to support such a conclusion.

However, it goes without saying that this case does not bar petitioner and Agustin Dequia, Jr.
from resolving the issue of ownership over the disputed property in an appropriate proceeding.

SERVANDO MANGAHAS, petitioner, vs. CA and SPOUSES SIMEON and LEONORA

CAYME, respondents.

1. WON RTC and CA erred in not holding that the land in question is no longer part of the
public domain for the reason that defendant is already, by operation of law, the owner
thereof by virtue of a government grant in accordance with the law and existing
jurisprudence.
2. WON the lower court erred in not finding plaintiff leonora cayme guilty of fraud and
misrepresentation in securing free patent no. 576411 from the bureau of lands.

The first issue is mainly predicated on the theory that the petitioner acquired ownership of the
disputed land by acquisitive prescription. Petitioner theorized that with the length of possession
of his predecessors-in-interest, the Spouses Rodil, tacked to his own possession, the total
period of possession in his favor would suffice to vest in him the ownership of the property
under the law on prescription. So also, citing the early case of Cario vs. Insular Government
up to and including the more recent cases of The Director of Lands vs. Bengzon, et al. and
The Director of Lands vs. Manila Electric Company, et al, petitioner stressed that by
prescription, he became the owner of subject property ipso jure, which land became a private
property by operation of law, and had been withdrawn and segregated from the alienable and
disposable part of the public domain. Consequently, the Bureau of Lands had no authority to
issue the Free Patent in question, which was then null and void; petitionerargued.

55
The factual milieu obtaining with respect to the petition under scrutiny has rendered petitioners
reliance on the applicability of the aforestated principles misplaced. The CA opinedxxx Even if
we were to disregard the need for a proper application, Article 1138 of the Civil Code provides,

In the computation of time necessary for prescription the following rules shall be observed:

(1) The present possessor may complete the period necessary for prescription by tacking his
possession to that of his grantor or predecessor in interest x x x.

The defendant-appellants grantor or predecessor in interest (Severo Rodil) took possession of

the property, subject matter of the litigation, on April 1955. Since the complaint in the case at
bar was filed on February 25, 1985, the requirement of at least thirty years continuous
possession has not been complied with even if we were to tack Rodils period of possession.
]

As found by the lower court below, petitioner had admitted, contrary to his disclaimer, that the
possession of the spouses Rodil, from whom he traces the origin of his supposed title,
commenced only in April 1955. Petitioner cannot now feign ignorance of such judicial admission
which he has resolutely repudiated in his present petition. Acquisition of ownership under the
law on prescription cannot be pleaded in support of petitioners submission that subject land has
ipso jure become his private property.

As regards the issue of fraud tainting the acquisition of the questioned Free Patent, the Court
discerns no basis for disturbing the finding by the lower court as affirmed by the CA. Findings of
fact by the trial court are not to be disturbed on appeal, except for cogent reasons, as when the
findings of fact are not duly supported by evidence. On the other hand, findings by the CA on
factual questions are conclusive and ought not to be disregarded. But the rule admits of some
exceptions as when such findings of fact are contrary to what the trial court found.

Petitioner has not adduced before the lower court a preponderance of evidence of fraud. It is
well settled that a party who alleges a fact has the burden of proving it. Thus, whoever alleges
fraud or mistake affecting a transaction must substantiate his allegation, since it is presumed
that a person takes ordinary care of his concerns and private transactions have been fair and
regular. The requirement that fraud must be established by clear and convincing evidence has
been reiterated in Cuizon vs. CA viz.:

We are not, however, inclined to toe the line of the trial courts finding that private respondents
are liable for fraud. Fraud is the deliberate or intentional evasion of the normal fulfilment of an
obligation. The mere failure of private respondents to execute a deed of sale because they
demanded first an accounting of the lots used as collaterals by petitioner and the amount of
loans secured could not be considered as fraud. Fraud is never presumed. It must be alleged
and proven.

In the petition under scrutiny, the fraud theorized upon by petitioner is belied by what the CA
found, to wit:

"This court has found that the defendant-appellant is a person whose credibility is much in
doubt. On the other hand, We have found the plaintiff-appellee Leonora Simeon Cayme to be
straightforward and credible. She has convincingly shown to this court, through her testimony
and the supporting documentary evidence, that she is in fact the rightful owner of the property in
dispute.

56
GAVINA MAGLUCOT-AW, et al, vs. LEOPOLDO MAGLUCOT, SEVERO MAGLUCOT,
WILFREDA MAGLUCOT-ALEJO and CONSTANCIO ALEJO, respondents.

The core issue in this case is whether a partition of Lot No. 1639 had been effected in 1952.
Petitioners contend that there was already a partition of said lot; hence, they are entitled to
exclusive possession and ownership of Lot No. 1639-D, which originally formed part of Lot No.
1639 until its partition. Private respondents, upon the other hand, claim that there was no
partition; hence, they are co-owners of Lot No. 1639-D. Notably, this case presents a unique
situation where there is an order for partition but there is no showing that the sketch/subdivision
plan was submitted to the then Court of First Instance for its approval or that a decree or order
was registered in the Register of Deeds.

Preliminarily, this Court recognizes that "the jurisdiction of this Court in cases brought before it
from the CA via Rule 45 of the Rules of Court is limited to reviewing errors of law. Findings of
fact of the latter are conclusive, except in the following instances: (1) when the findings are
grounded entirely on speculation, surmises, or conjectures; (2) when the inference made is
manifestly mistaken, absurd, or impossible; (3) when there is grave abuse of discretion; (4)
when the judgment is based on a misapprehension of facts; (5) when the findings of fact are
conflicting; (6) when in making its findings the CA went beyond the issues of the case, or its
findings are contrary to the admissions of both the appellant and the appellee; (7) when the
findings are contrary to those of the trial court; (8) when the findings are conclusions without
citation of specific evidence on which they are based; (9) when the facts set forth in the petition
as well as in the petitioners main and reply briefs are not disputed by the respondent; and (10)
when the findings of fact are premised on the supposed absence of evidence and contradicted
by the evidence on record.This case falls under exceptions (7), (8) and (10).

In this jurisdiction, an action for partition is comprised of two phases: first, an order for
partition which determines whether a co-ownership in fact exists, and whether partition is
proper; and, second, a decision confirming the sketch or subdivision submitted by the parties or
the commissioners appointed by the court, as the case may be. The first phase of a partition
and/or accounting suit is taken up with the determination of whether or not a co-ownership in
fact exists, and may be made by voluntary agreement of all the parties interested in the
property. This phase may end with a declaration that plaintiff is not entitled to have a partition
either because a co-ownership does not exist, or partition is legally prohibited. Or it may end,
upon the other hand, with an judgement that a co-ownership does in truth exist, partition is
proper in the premises and an accounting of rents and profits received by the defendant from
the real estate in question is in order. In the latter case, the parties may, if they are able to
agree, make partition among themselves by proper instruments of conveyance, and the court
shall confirm the partition so agreed upon. In either case i.e., either the action is dismissed or
partition and/or accounting is decreed the order is a final one, and may be appealed by any
party aggrieved thereby. The second phase commences when it appears that "the parties are
unable to agree upon the partition" directed by the court. In that event, partition shall be done for
the parties by the court with the assistance of not more than three (3) commissioners. This
second stage may well also deal with the rendition of the accounting itself and its approval by
the court after the parties have been accorded opportunity to be heard thereon, and an award
for the recovery by the party or parties thereto entitled of their just share in the rents and profits
of the real estate in question. Such an order is, to be sure, final and appealable.

The true test to ascertain whether or not an order or a judgment is interlocutory or final is: Does
it leave something to be done in the trial court with respect to the merits of the case? If it does, it

57
is interlocutory; if it does not, it is final. The key test to what is interlocutory is when there is
something more to be done on the merits of the case. An order for partition is final and not
interlocutory and, hence, appealable because it decides the rights of the parties upon the issue
submitted.

However, this Court notes that the order of partition was issued when the ruling in Fuentebella
vs. Carrascoso, which held that the order of partition is interlocutory, was controlling. In addition,
the reports of the commissioners not having been confirmed by the trial court are not binding. In
this case, both the order of partition and the unconfirmed sketch plan are, thus, interlocutory.
Nevertheless, where parties do not object to the interlocutory decree, but show by their conduct
that they have assented thereto, they cannot thereafter question the decree, especially, where,
by reason of their conduct, considerable expense has been incurred in the execution of the
commission. Respondents in this case have occupied their respective lots in accordance with
the sketch/subdivision plan. They cannot after acquiescing to the order for more than forty (40)
years be allowed to question the binding effect thereof.

This case is to be distinguished from the order in the action for partition in Arcenas vs. Cinco. In
that case, the order was clearly interlocutory since it required the parties "to submit the
corresponding deed of partition to the Court for its approval." Here, the order appointed two
commissioners and directed them merely to approve the sketch plan already existing and
tentatively followed by the parties.

Under the present rule, the proceedings of the commissioners without being confirmed by the
court are not binding upon the parties. However, this rule does not apply in case where the
parties themselves actualized the supposedly unconfirmed sketch/subdivision plan. The
purpose of court approval is to give effect to the sketch/subdivision plan. In this case, the parties
themselves or through their predecessors-in-interest implemented the sketch plan made
pursuant to a court order for partition by actually occupying specific portions of Lot No. 1639 in
1952 and continue to do so until the present until this case was filed, clearly, the purpose of the
court approval has been met. This statement is not to be taken to mean that confirmation of the
commissioners may be dispensed with but only that the parties herein are estopped from raising
this question by their own acts of ratification of the supposedly non-binding sketch/subdivision
plan. Kycalr

The records of the case show that sometime in 1946 there was a prior oral agreement to
tentatively partition Lot No. 1639. By virtue of this agreement, the original co-owners occupied
specific portions of Lot No. 1639. It was only in 1952 when the petition to subdivide Lot No.
1639 was filed because two of the co-owners, refused to have said lot subdivided and have
separate certificates of title. Significantly, after the 1952 proceedings, the parties in this case by
themselves and/or through their predecessors-in-interest occupied specific portions of Lot No.
1639 in accordance with the sketch plan. Such possession remained so until this case arose, or
about forty (40) years later.

It has been previously held that a co-owner, who, though not a party to a partition accepts the
partition allotted to him, and holds and conveys the same in severalty, will not be subsequently
permitted to avoid partition. It follows that a party to a partition is also barred from avoiding
partition when he has received and held a portion of the subdivided land especially in this case
where respondents have enjoyed ownership rights over their share for a long time.

Parties to a partition proceeding, who elected to take under partition, and who took possession
of the portion allotted to them, are estopped to question title to portion allotted to another party.

58
A person cannot claim both under and against the same instrument. In other words, they
accepted the lands awarded them by its provisions, and they cannot accept the decree in part,
and repudiate it in part. They must accept all or none. Parties who had received the property
assigned to them are precluded from subsequently attacking its validity of any part of it.

In technical estoppel, the party to be estopped must knowingly have acted so as to mislead his
adversary, and the adversary must have placed reliance on the action and acted as he would
otherwise not have done. Some authorities, however, hold that what is tantamount to estoppel
may arise without this reliance on the part of the adversary, and this is called, ratification or
election by acceptance of benefits, which arises when a party, knowing that he is not bound by
a defective proceeding, and is free to repudiate it if he will, upon knowledge, and while under no
disability, chooses to adopt such defective proceeding as his own. Ratification means that one
under no disability voluntarily adopts and gives sanction to some unauthorized act or defective
proceeding, which without his sanction would not be binding on him. It is this voluntary choice,
knowingly made, which amounts to a ratification of what was theretofore unauthorized, and
becomes the authorized act of the party so making the ratification.

The payment of rentals by respondents reveals that they are mere lessees. As such, the
possession of respondents over Lot No. 1639-D is that of a holder and not in the concept of an
owner. One who possesses as a mere holder acknowledges in another a superior right which
he believes to be ownership, whether his belief be right or wrong. Since the possession of
respondents were found to be that of lessors of petitioners, it goes without saying that the latter
were in possession of Lot No. 1639-D in the concept of an owner from 1952 up to the time the
present action was commenced. Msesm

Partition may be inferred from circumstances sufficiently strong to support the presumption.
Thus, after a long possession in severalty, a deed of partition may be presumed. It has been
held that recitals in deeds, possession and occupation of land, improvements made thereon for
a long series of years, and acquiescence for 60 years, furnish sufficient evidence that there was
an actual partition of land either by deed or by proceedings in the probate court, which had been
lost and were not recorded. And where a tract of land held in common has been subdivided into
lots, and one of the lots has long been known and called by the name of one of the tenants in
common, and there is no evidence of any subsequent claim of a tenancy in common, it may
fairly be inferred that there has been a partition and that such lot was set off to him whose name
it bears.

Again, we are not persuaded that unless partition is shown in the title of the subject property,
there can be no valid partition or that the annotation in the title is the sole evidence of partition.
The purpose of registration is to notify and protect the interests of strangers to a given
transaction, who may be ignorant thereof, but the non-registration of the deed evidencing such
transaction does not relieve the parties thereto of their obligations thereunder. As originally
conceived, registration is merely a species of notice. The act of registering a document is never
necessary in order to give it legal effect as between the parties. Requirements for the recording
of the instruments are designed to prevent frauds and to permit and require the public to act
with the presumption that recorded instruments exist and are genuine.

Given that the oral partition was initially tentative, the actual possession of specific portions of
Lot No. 1639 in accordance with the oral partition and the continuation of such possession for a
very long period indicate the permanency and ratification of such oral partition. The validity of an
oral partition is already well-settled in Espina vs. Abaya.

59
Thus, it has been held or stated in a number of cases involving an oral partition under which the
parties went into possession, exercised acts of ownership, or otherwise partly performed the
partition agreement, that equity will confirm such partition and in a proper case decree title in
accordance with the possession in severalty. In numerous cases it has been held or stated that
parol partition may be sustained on the ground of estoppel of the parties to assert the rights of a
tenant in common as to parts of land divided by parol partition as to which possession in
severalty was taken and acts of individual ownership were exercised. And a court of equity will
recognize the agreement and decree it to be valid and effectual for the purpose of concluding
the right of the parties as between each other to hold their respective parts in severalty.

A parol partition may also be sustained on the ground that the parties thereto have acquiesced
in and ratified the partition by taking possession in severalty, exercising acts of ownership with
respect thereto, or otherwise recognizing the existence of the partition.

A number of cases have specifically applied the doctrine of part performance, or have stated
that a part performance is necessary, to take a parol partition out of the operation of the statute
of frauds. It has been held that where there was a partition in fact between tenants in common,
and a part performance, a court of equity would have regard to enforce such partition agreed to
by the parties.

Tax Declarations are public documents. Unless their veracity is directly attacked, the contents
therein are presumed to be true and accurate.

DBP, petitioner, vs. CA and SPOUSES TIMOTEO and SELFIDA S. PIEDA, respondents.

The core issue in this case is whether DBP was in bad faith when it took possession of the
disputed lot.

We rule in the negative and find DBPs contentions meritorious.

A possessor in good faith is one who is not aware that there exists in his title or mode of
acquisition any flaw, which invalidates it. Good faith is always presumed, and upon him who
alleges bad faith on the part of a possessor rests the burden of proof. It was therefore
incumbent on the PIEDAS to prove that DBP was aware of the flaw in its title i.e. the nullity of
the foreclosure. This, they failed to do.

Respondent PIEDAS argue that DBPs bad faith stems from the fact that DBP consolidated title
over the disputed property despite the statement in the Sheriffs Certificate of Sale to the effect
that said land was subject to a five year redemption period. The period of redemption of
extrajudicially foreclosed land is provided under Section 6 of ACT No. 3135 where, if no
redemption is made within one year, the purchaser is entitled as a matter of right to consolidate
and to possess the property. Accordingly, DBPs act of consolidating its title and taking
possession of the subject property after the expiration of the period of redemption was in
accordance with law.

By law and jurisprudence, a mistake upon a doubtful or difficult question of law may properly be
the basis of good faith. It was held that when a contract of sale is void, the possessor is entitled
to keep the fruits during the period for which it held the property in good faith. Good faith of the
possessor ceases when an action to recover possession of the property is filed against him and
he is served summons therefore, is legally interrupted.

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G.R. No. 152809 August 3, 2006
MERCEDES MORALIDAD vs SPS DIOSDADO PERNES and ARLENE PERNES

This is a petition for review on certiorari under Rule 45 to nullify and set aside the following
issuances of the CA, to wit:
1. Decision dated September 27, 2001, affirming an earlier decision of the RTC (RTC) of
Davao City which reversed that of the MTC in Cities (MTCC), Davao City, Branch 1, in
an action for unlawful detainer thereat commenced by the petitioner against the herein
respondents; and
2. Resolution dated February 28, 2002, denying petitioners motion for reconsideration.

At the heart of this controversy is a parcel of land located in Davao City and registered in the
name of petitioner Mercedes Moralidad under TCT No T-123125 of the ROD of Davao City.

In her younger days, petitioner taught in Davao City, Quezon City and Manila. While teaching in
Manila, she had the good fortune of furthering her studies at the University of Pennsylvania,
U.S.A. While schooling, she was offered to teach at the Philadelphia Catholic Archdiocese,
which she did for seven (7) years. Thereafter, she worked at the Mental Health Department of
said University for the next seventeen (17) years.
During those years, she would come home to the Philippines to spend her two-month summer
vacation in her hometown in Davao City. Being single, she would usually stay in Mandug,
Davao City, in the house of her niece, respondent Arlene Pernes, a daughter of her younger
sister, Rosario.
Back in the U.S.A. sometime in 1986, she received news from Arlene that Mandug at the
outskirts of Davao City was infested by NPA rebels and many women and children were victims
of crossfire between government troops and the insurgents. Shocked and saddened about this
development, she immediately sent money to Araceli, Arlenes older sister, with instructions to
look for a lot in Davao City where Arlene and her family could transfer and settle down. This was
why she bought the parcel of land covered by TCT No T-123125.
Petitioner acquired the lot property initially for the purpose of letting Arlene move from Mandug
to Davao City proper but later she wanted the property to be also available to any of her kins
wishing to live and settle in Davao City. Petitioner made known this intention in a document she
executed on July 21, 1986. The document reads:

I, MERCEDES VIA MORALIDAD, of legal age, single, having been born on the 29th day of
January, 1923, now actually residing at 8021 Lindbergh Boulevard, Philadelphia, Pennsylvania,

61
U.S.A., wishes to convey my honest intention regarding my properties situated at Palm Village
Subdivision, Bajada, Davao City, 9501, and hereby declare:

1. That it is my desire that Mr. and Mrs. Diosdado M. Pernes may build their house therein
and stay as long as they like;
2. That anybody of my kins who wishes to stay on the aforementioned real property should
maintain an atmosphere of cooperation, live in harmony and must avoid bickering with
one another;
3. That anyone of my kins may enjoy the privilege to stay therein and may avail the use
thereof. Provided, however, that the same is not inimical to the purpose thereof;
4. That anyone of my kins who cannot conform with the wishes of the undersigned may
exercise the freedom to look for his own;
5. That any proceeds or income derived from the aforementioned properties shall be
allotted to my nearest kins who have less in life in greater percentage and lesser
percentage to those who are better of in standing.

Following her retirement in 1993, petitioner came back to the Philippines to stay with the
respondents on the house they build on the subject property. In the course of time, their
relations turned sour because members of the Pernes family were impervious to her
suggestions and attempts to change certain practices concerning matters of health and
sanitation within their compound. Petitioner brought the matter to the local barangay lupon
where she lodged a complaint for slander, harassment, threat and defamation against the
Pernes Family. Deciding for petitioner, the lupon apparently ordered the Pernes family to vacate
petitioners property but not after they are reimbursed for the value of the house they built
thereon. Unfortunately, the parties could not agree on the amount, thus prolonging the impasse
between them.
Other ugly incidents interspersed with violent confrontations meanwhile transpired, with the
petitioner narrating that, at one occasion in July 1998, she sustained cuts and wounds when
Arlene pulled her hair, hit her on the face, neck and back, while her husband Diosdado held her,
twisting her arms in the process.
Relations having deteriorated from worse to worst, petitioner, on July 29, 1998, lodged a formal
complaint before the Regional Office of the Ombudsman for Mindanao, charging the respondent
spouses, who were both government employees, with conduct unbecoming of public servants.
This administrative case, however, did not prosper.
Then, on August 3, 1998, petitioner filed with the MTCC of Davao City an unlawful detainer suit
against the respondent spouses. Petitioner alleged that she is the registered owner of the land
on which the respondents built their house; that through her counsel, she sent the respondent
spouses a letter demanding them to vacate the premises and to pay rentals therefor, which the
respondents refused to heed.

62
In their defense, the respondents alleged having entered the property in question, building their
house thereon and maintaining the same as their residence with petitioners full knowledge and
express consent. To prove their point, they invited attention to her written declaration of July 21,
1986, supra, wherein she expressly signified her desire for the spouses to build their house on
her property and stay thereat for as long as they like.
The MTCC, resolving the ejectment suit in petitioners favor, declared that the respondent
spouses, although builders in good faith vis--vis the house they built on her property, cannot
invoke their bona fides as a valid excuse for not complying with the demand to vacate. To the
MTCC, respondents continued possession of the premises turned unlawful upon their receipt of
the demand to vacate, such possession being merely at petitioners tolerance, and sans any
rental. Accordingly, in its decision dated November 17, 1999, the MTCC rendered judgment for
the petitioner, as plaintiff therein, to wit:
WHEREFORE, judgment is hereby rendered in favor of herein plaintiff and against the
defendants, as follows:
a) Directing the defendants, their agents and other persons acting on their behalf to vacate the
premises and to yield peaceful possession thereof to plaintiff;
b) Ordering defendants to pay P2, 000 a month from the filing of this complaint until they vacate
premises;
c) Sentencing defendants to pay the sum of P120, 000 as attorneys fees and to pay the cost of
suit.
Defendants counterclaim are hereby dismissed except with respect to the claim for
reimbursement of necessary and useful expenses which should be litigated in an ordinary civil
actions.
Dissatisfied, the respondent spouses appealed to the RTC of Davao City.
In the meantime, petitioner filed a Motion for Execution Pending Appeal. The motion was initially
granted by the RTC in its Order of February 29, 2000, but the Order was later withdrawn and
vacated by its subsequent Order dated May 9, 2000 6 on the ground that immediate execution
of the appealed decision was not the prudent course of action to take, considering that the
house the respondents constructed on the subject property might even be more valuable than
the land site.
Eventually, in a decision 7 dated September 30, 2000, the RTC reversed that of the MTCC,
holding that respondents possession of the property in question was not, as ruled by the latter
court, by mere tolerance of the petitioner but rather by her express consent. It further ruled that
Article 1678 of the Civil Code on reimbursement of improvements introduced is inapplicable
since said provision contemplates of a lessor-lessee arrangement, which was not the factual
milieu obtaining in the case. Instead, the RTC ruled that what governed the parties relationship
are Articles 448 and 546 of the Civil Code, explaining thus:
Since the defendants-appellees [respondents] are admittedly possessors of the property by
permission from plaintiff [petitioner], and builders in good faith, they have the right to retain

63
possession of the property subject of this case until they have been reimbursed the cost of the
improvements they have introduced on the property.
Indeed, this is a substantive right given to the defendants by law, and this right is superior to the
procedural right to [sic] plaintiff to immediately ask for their removal by a writ of execution by
virtue of a decision which as we have shown is erroneous, and therefore invalid. (Words in
brackets supplied),
and accordingly dismissed petitioners appeal, as follows:
WHEREFORE, in view of the foregoing, the Decision appealed from is REVERSED and
declared invalid. Consequently, the motion for execution pending appeal is likewise denied.
Counter-claims of moral and exemplary damages claimed by defendants are likewise
dismissed. However, attorneys fees in the amount of fifteen thousand pesos is hereby awarded
in favor of defendants-appellants, and against plaintiffs.
SO ORDERED. 8
Therefrom, petitioner went to the CA in CA-G.R. SP No. 61610.
On September 27, 2001, the CA, while conceding the applicability of Articles 448 and 546 of the
Civil Code to the case, ruled that it is still premature to apply the same considering that the
issue of whether respondents right to possess a portion of petitioners land had already expired
or was already terminated was not yet resolved. To the CA, the unlawful detainer suit
presupposes the cessation of respondents right to possess. The CA further ruled that what
governs the rights of the parties is the law on usufruct but petitioner failed to establish that
respondents right to possess had already ceased. On this premise, the CA concluded that the
ejectment suit instituted by the petitioner was premature. The appellate court thus affirmed the
appealed RTC decision, disposing:
WHEREFORE, premises considered, the instant petition for review is hereby denied for lack of
merit. Accordingly, the petitioners complaint for Unlawful Detainer is DISMISSED.
SO ORDERED.
With the CAs denial of her motion for reconsideration in its Resolution of February 28, 2002,
petitioner is now before this Court raising the following issues:
1. WHETHER OR NOT THE CA ERRED IN DISMISSING THE UNLAWFUL DETAINER
CASE FOR BEING PREMATURE WHICH DECISION IS NOT IN ACCORDANCE WITH
LAW AND JURISPRUDENCE.
2. WHETHER OR NOT THE CA ERRED IN APPLYING ARTICLES 448 AND 546 AND
THE PROVISIONS OF THE CODE ON USUFRUCT INSTEAD OF ARTICLE 1678 OF
THE CIVIL CODE.

The Court rules for the petitioner.

The Court is inclined to agree with the CA that what was constituted between the parties herein
is one of usufruct over a piece of land, with the petitioner being the owner of the property upon

64
whom the naked title thereto remained and the respondents being two (2) among other
unnamed usufructuaries who were simply referred to as petitioners kin. The Court, however,
cannot go along with the CAs holding that the action for unlawful detainer must be dismissed on
ground of prematurity.
Usufruct is defined under Article 562 of the Civil Code in the following wise:
ART. 562. 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.
Usufruct, in essence, is nothing else but simply allowing one to enjoy anothers property. 9 It is
also defined as the right to enjoy the property of another temporarily, including both the jus
utendi and the jus fruendi, with the owner retaining the jus disponendi or the power to alienate
the same.
It is undisputed that petitioner, in a document dated July 21, 1986, supra, made known her
intention to give respondents and her other kins the right to use and to enjoy the fruits of her
property. There can also be no quibbling about the respondents being given the right "to build
their own house" on the property and to stay thereat "as long as they like." Paragraph #5 of the
same document earmarks "proceeds or income derived from the aforementioned properties" for
the petitioners "nearest kins who have less in life in greater percentage and lesser percentage
to those who are better of (sic) in standing." The established facts undoubtedly gave
respondents not only the right to use the property but also granted them, among the petitioners
other kins, the right to enjoy the fruits thereof. We have no quarrel, therefore, with the CAs
ruling that usufruct was constituted between petitioner and respondents. It is thus pointless to
discuss why there was no lease contract between the parties.
However, determinative of the outcome of the ejectment case is the resolution of the next issue,
i.e., whether the existing usufruct may be deemed to have been extinguished or terminated. If
the question is resolved in the affirmative, then the respondents right to possession, proceeding
as it did from their right of usufruct, likewise ceased. In that case, petitioners action for
ejectment in the unlawful detainer case could proceed and should prosper.
The CA disposed of this issue in this wise:
xxx Section 1, Rule 70 of the 1997 Rules of Civil Procedure, as amended, provides xxx
From the foregoing provision, it becomes apparent that for an action for unlawful detainer to
prosper, the plaintiff [petitioner] needs to prove that defendants [respondents] right to possess
already expired and terminated. Now, has respondents right to possess the subject portion of
petitioners property expired or terminated? Let us therefore examine respondents basis for
occupying the same.
It is undisputed that petitioner expressly authorized respondents o occupy portion of her
property on which their house may be built. Thus "it is my desire that Mr. and Mrs. Diosdado
M. Pernes may build their house therein and stay as long as they like." From this statement, it
seems that petitioner had given the respondents the usufructuary rights over the portion that
may be occupied by the house that the latter would build, the duration of which being dependent

65
on how long respondents would like to occupy the property. While petitioner had already
demanded from the respondents the surrender of the premises, this Court is of the opinion that
the usufructuary rights of respondents had not been terminated by the said demand considering
the clear statement of petitioner that she is allowing respondents to occupy portion of her land
as long as the latter want to. Considering that respondents still want to occupy the premises,
petitioner clearly cannot eject respondents. 12
We disagree with the CAs conclusion of law on the matter. The term or period of the usufruct
originally specified provides only one of the bases for the right of a usufructuary to hold and
retain possession of the thing given in usufruct. There are other modes or instances whereby
the usufruct shall be considered terminated or extinguished. For sure, the Civil Code
enumerates such other modes of extinguishment:
ART. 603. Usufruct is extinguished:
1. By the death of the usufructuary, unless a contrary intention clearly appears;
2. By expiration of the period for which it was constituted, or by the fulfillment of any
resolutory condition provided in the title creating the usufruct;
3. By merger of the usufruct and ownership in the same person;
4. By renunciation of the usufructuary;
5. By the total loss of the thing in usufruct;
6. By the termination of the right of the person constituting the usufruct;
7. By prescription.

The document executed by the petitioner dated July 21, 1986 constitutes the title creating, and
sets forth the conditions of, the usufruct. Paragraph #3 thereof states "[T]hat anyone of my kins
may enjoy the privilege to stay therein and may avail the use thereof. Provided, however, that
the same is not inimical to the purpose thereof" (Emphasis supplied). What may be inimical to
the purpose constituting the usufruct may be gleaned from the preceding paragraph wherein
petitioner made it abundantly clear "that anybody of my kins who wishes to stay on the
aforementioned property should maintain an atmosphere of cooperation, live in harmony and
must avoid bickering with one another." That the maintenance of peaceful and harmonious
relations between and among kin constitutes an indispensable condition for the continuance of
the usufruct is clearly deduced from the succeeding Paragraph #4 where petitioner stated
"[T]hat anyone of my kins who cannot conform with the wishes of the undersigned may exercise
the freedom to look for his own." In fine, the occurrence of any of the following: the loss of the
atmosphere of cooperation, the bickering or the cessation of harmonious relationship
between/among kin constitutes a resolutory condition which, by express wish of the petitioner,
extinguishes the usufruct.
From the pleadings submitted by the parties, it is indubitable that there were indeed facts and
circumstances whereby the subject usufruct may be deemed terminated or extinguished by the

66
occurrence of the resolutory conditions provided for in the title creating the usufruct, namely, the
document adverted to which the petitioner executed on July 21, 1986.
As aptly pointed out by the petitioner in her Memorandum, respondents own evidence before
the MTCC indicated that the relations between the parties "have deteriorated to almost an
irretrievable level." 13 There is no doubt then that what impelled petitioner to file complaints
before the local barangay lupon, the Office of the Ombudsman for Mindanao, and this instant
complaint for unlawful detainer before the MTCC is that she could not live peacefully and
harmoniously with the Pernes family and vice versa.
Thus, the Court rules that the continuing animosity between the petitioner and the Pernes family
and the violence and humiliation she was made to endure, despite her advanced age and frail
condition, are enough factual bases to consider the usufruct as having been terminated.
To reiterate, the relationship between the petitioner and respondents respecting the property in
question is one of owner and usufructuary. Accordingly, respondents claim for reimbursement
of the improvements they introduced on the property during the effectivity of the usufruct should
be governed by applicable statutory provisions and principles on usufruct. In this regard, we cite
with approval what Justice Edgardo Paras wrote on the matter:
If the builder is a usufructuary, his rights will be governed by Arts 579 and 580. In case like this,
the terms of the contract and the pertinent provisions of law should govern. (Montinola vs.
Bantug, 71 Phil. 449)
By express provision of law, respondents, as usufructuary, do not have the right to
reimbursement for the improvements they may have introduced on the property. We quote
Articles 579 and 580 of the Civil Code:
Art. 579. The usufructuary may make on the property held in usufruct such useful improvements
or expenses for mere pleasure as he may deem proper, provided he does not alter its form or
substance; but he shall have no right to be indemnified therefor. He may, however, remove such
improvements, should it be possible to do so without damage to the property. (Emphasis
supplied.)
Art. 580. The usufructuary may set off the improvements he may have made on the property
against any damage to the same.
Given the foregoing perspective, respondents will have to be ordered to vacate the premises
without any right of reimbursement. If the rule on reimbursement or indemnity were otherwise,
then the usufructuary might, as an author pointed out, improve the owner out of his
property. 15 The respondents may, however, remove or destroy the improvements they may
have introduced thereon without damaging the petitioners property.
Out of the generosity of her heart, the petitioner has allowed the respondent spouses to use and
enjoy the fruits of her property for quite a long period of time. They opted, however, to repay a
noble gesture with unkindness. At the end of the day, therefore, they really cannot begrudge
their aunt for putting an end to their right of usufruct. The disposition herein arrived is not only
legal and called for by the law and facts of the case. It is also right.

67
WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the CA are
REVERSED and SET ASIDE. Accordingly, the decision of the MTCC is REINSTATED with
MODIFICATION that all of respondents counterclaims are dismissed, including their claims for
reimbursement of useful and necessary expenses.

[G.R No L-3691 November 21, 1951]

JACINTO DEL SAZ OROZCO y MORTERA and MARIA PAZ ALCANTARA, Plaintiffs-
Appellants, versus SALVADOR ARANETA, FRANCISCO DEL SAZ OROZCO Y LOPEZ,
DOLORES DEL SAZ OROZCO Y LOPEZ, and the minors FELISA, EUGENIO, ANTONIO,
JOSE, MARIA Y CARLOS, all surnamed DEL SAZ OROZCO Y LOPEZ whose natural
guardian is DOA CONCEPCION LOPEZ VDA. DE DEL SAZ OROZCO, Defendants-
Appellees.

Eugenio del Saz Orozco died on February 7, 1922, leaving a will which he had executed on
March 5, 1921, and was afterwards duly admitted to probate. The pertinent clause of that will
provided that certain properties should be given in life usufruct to his son Jacinto del Saz
Orozco y Mortera, with the obligation on his part to preserve said properties in favor of the other
heirs who were declared the naked owners thereof. Among these properties were 5,714 shares
of stock of the Benguet Consolidated Mining Company and 94 shares of stock of the Manila
Electric Company, according to the project of partition executed pursuant to said will and duly
approved by the court.

On September 11, 1934, the Benguet Consolidated Mining Company declared and distributed
stock dividends out of its surplus profits, the plaintiff receiving his proportionate portion of
11,428 shares. On November 17, 1939, said Mining Company again declared stock dividends
out of its surplus profits, of which the plaintiff received 17,142 shares, making a total of 28,570
shares.
The question at issue is whether the stock dividend is part of the capital which should be
preserved in favor of the owners or an income or fruits of the capital which should be given to
and enjoyed by the life usufructuary, the plaintiff herein, as his own exclusive property.

The same question was raised in the Matter of the Testate Estate of Emil Maurice Bachrach, G.
R. No. L-2659 the decision of which was promulgated on October 12, 1950. In that case, the
question raised was stated as follows:

"Is a stock dividend fruit or income, which belongs to the usufructuary, or is it capital or part of
the corpus of the estate, which pertains to the remainderman? That is the question raised in this
appeal."

68
Several thousand shares of stock in a corporation was, by will, given by the deceased to one of
his heirs in life usufruct, with the obligation to preserve paid shares in favor of the other heirs
who were declared the naked owners thereof. Later, the corporation declared stock dividends
and the usufructuary received, as his proportionate portion, over 28,000 additional shares of
stock. "Is a stock dividend fruit or income, which belongs to the usufructuary, or is it capital or
part of the corpus of the estate, which pertains to the remainderman?" Held: Justice Ozaeta,
with the unanimous concurrence of the other members of this Court, ruled that a dividend,
whether in the form of cash or stock, is income and, consequently, should go to the
usufructuary, taking into consideration that a stock dividend as well as a cash dividend can be
declared only out of profits of the corporation, for if it were declared out of the capital it would be
a serious violation of the law.

For the reasons sustaining the doctrine, we refer to that recent decision.

The appellees attempt to differentiate the present case from that case, contending that, while
the doctrine in that case effected a just and equitable distribution, the application of it in the
present case would cause an injustice, for, quoting Justice Holmes, "abstract propositions do
not decide concrete cases." We have examined the two cases carefully and we have not
perceived any difference which would justify a reversal or modification of the doctrine in the
Bachrach case.

One of the differences pointed out is that by the declaration of stock dividends the voting power
of the original shares of stock is considerably diminished, and, if the stock dividends are not
given to the remainderman, the voting power of the latter would be greatly impaired. Bearing in
mind that the number of shares of stock of the Benguet Consolidated Mining Company is so
large, the diminution of the voting power of the original shares of stock in this case cannot
possibly affect or influence the control of the policies of the corporation which is vested in the
owners of the great block of shares. This would not be a sufficient reason for modifying the
doctrine of the Bachrach case. These remarks are made in answer to the argument of the
appellees in this particular case, but they do not imply that if the diminution of the voting power
were considerable the doctrine should be modified.

With regard to the sum of P3,428.40 which is alleged to have been received by the plaintiff from
the Benguet Consolidated Mining Company, as a result of the reduction of its capital in January,
1926, it appears that it has not been proven that the plaintiff has received said sum; on the
contrary, it was denied by him as soon as he arrived in the Philippines from Spain. There is no
ground, therefore, for ordering the plaintiff to deliver such sum to the defendants.

69
In view of the foregoing, the judgment appealed from is reversed, and it is declared that the
stock dividends amounting to 28,570 shares, above mentioned, belongs to the plaintiff-appellant
Jacinto del Saz Orozco y Mortera exclusively and in absolute ownership. Without costs. It is so
ordered.

[G.R. No L-9023 November 13, 1956.]

BISLIG BAY LUMBER COMPANY. INC., Plaintiff-Appellee, vs. THE PROVINCIAL
GOVERNMENT OF SURIGAO, Defendant-Appellant.

Bislig Bay Lumber Co., Inc. is a timber concessionaire of a portion of public forest located in the
provinces of Agusan and Surigao. With a view to developing and exploiting its concession, the
company constructed at its expense a road from the barrio Mangagoy into the area of the
concession in Surigao, with a length of approximately 5.3 kilometers, a portion of which, or
about 580 linear meters, is on a private property of the company. The expenses incurred by the
company in the construction of said road amounted to P113, 370, upon which the provincial
assessor of Surigao assessed a tax in the amount of P669.33.
Of this amount, the sum of P595.92 corresponds to the road constructed within the area of the
concession. This was paid under protest. Later, the company filed an action for its refund in the
Court of First Instance of Manila alleging that the road is not subject to tax. Defendant filed a
motion to dismiss on two grounds (1) that the venue is improperly laid, and (2) that the
complaint states no cause of action; chan roblesvirtualawlibrarybut this motion was denied.
Thereafter, Defendant filed its answer invoking the same defenses it set up in its motions to
dismiss. In the meantime, Congress approved Republic Act No. 1125 creating the Court of Tax
Appeals, whereupon Plaintiff moved that the case be forwarded to the latter court as required by
said Act. This motion however, was denied and, after due trial, the court rendered decision
ordering Defendant to refund to Plaintiffthe amount claimed in the complaint. This is an appeal
from said decision.
The first error assigned refers to the jurisdiction of the lower court. It is contended that since the
present case involves an assessment of land tax the determination of which comes under the
exclusive jurisdiction of the Court of Tax Appeals under Republic Act No. 1125, the lower court
erred in assuming jurisdiction over the case.
It is true that under section 22 of said Act the only cases that are required to be certified and
remanded to the Court of Tax Appeals which upon its approval are pending determination
before a court of first instance are apparently confined to those involving disputed assessment
of internal revenue taxes or custom duties, and the present case admittedly refers to an
assessment of land tax, but it does not mean that because of that apparent omission or
oversight the instant case should not be remanded to the Court of Tax Appeals, for in
interpreting the context of the section above adverted to we should not ignore section 7 of the
same act which defines the extent and scope of the jurisdiction of said court. As we have held in

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a recent case, section 22 of Republic Act No. 1125 should be interpreted in such a manner as
to make it harmonize with section 7 of the same Act and that the primordial purpose behind the
approval of said Act by Congress is to give to the Court of Tax Appeals exclusive appellate
jurisdiction over all tax, customs, and real estate assessment cases through out the Philippines
and to hear and decide them as soon as possible (Ollada vs. The Court of Tax Appeals, 99
Phil., 604). Considering this interpretation of the law, it logically follows that the lower court did
not act properly in denying the motion to remand the instant case to the Court of Tax Appeals.
Considering, however, that it would be more expeditious to decide this case now than to remand
it to the Court of Tax Appeals because, even if this course is taken, it may ultimately be
appealed to this court, we will now proceed to discuss the case on the merits.
The Tax in question has been assessed under section 2 of Commonwealth Act No. 470 which
provides:chanroblesvirtuallawlibrary
SEC. 2. Incidence of real property tax. Except in chartered cities, there shall be levied,
assessed, and collected, an annual ad- valorem tax on real property, including land, buildings,
machinery, and other improvements not hereinafter specifically exempted.
Note that said section authorizes the levy of real tax not only on lands, buildings, or machinery
that may be erected thereon, but also on any other improvements, and considering the road
constructed by Appellee on the timber concession granted to it as an
improvement, Appellantassessed the tax now in dispute upon the authority of the above
provision of the law.
It is the theory of Appellant that, inasmuch as the road was constructed by Appellee for its own
use and benefit it is subject to real tax even if it was constructed on a public land. On the other
hand, it is the theory of Appellee that said road is exempt from real tax because (1) the road
belongs to the national government by right of accession, (2) the road cannot be removed or
separated from the land on which it is constructed and so it is part and parcel of the public land,
and (3), according to the evidence, the road was built not only for the use and benefit
of Appelleebut also of the public in general.
We are inclined to uphold the theory of Appellee. In the first place, it cannot be disputed that the
ownership of the road that was constructed by Appellee belongs to the government by right
accession not only because it is inherently incorporated or attached to the timber land leased
to Appellee but also because upon the expiration of the concession, said road would ultimately
pass to the national government (Articles 440 and 445, new Civil Code; chan
roblesvirtualawlibraryTabotabo vs. Molero, 22 Phil., 418). In the second place, while the road
was constructed by Appellee primarily for its use and benefit, the privilege is not exclusive, for,
under the lease contract entered into by the Appellee and the government and by public in by
the general. Thus, under said lease contract, Appellee cannot prevent the use of portions, of the
concession for homesteading purposes (clause 12). It is also in duty bound to allow the free use
of forest products within the concession for the personal use of individuals residing in or within
the vicinity of the land (clause 13). The government has reserved the right to set aside

71
communal forest for the use of the inhabitants of the region, and to set forest reserves for public
uses (clause 14). It can also grant licenses covering any portion of the territory for the cutting
and extraction of timber to be used in public works, for mining purposes, or for the construction
of railway lines (clause 15). And, if it so desires, it can provide for logging railroad, cable ways
timber chute os slide, telephone lines, pumping stations log landings, and other rights of way for
the use of forest licensees, concessionaires, permittees, or other lessees (clause 26). In other
words, the government has practically reserved the rights to use the road to promote its varied
activities. Since, as above shown, the road in question cannot be considered as an
improvement which belongs to Appellee, although in part is for its benefit, it is clear that the
same cannot be the subject of assessment within the meaning of section 2 of Commonwealth
Act No. 470.
We are not oblivious of the fact that the present assessment was made by Appellant on the
strength of an opinion rendered by the Secretary of Justice, but we find that the same is
predicated on authorities which are not in point, for they refer to improvements that belong to
the lessee although constructed on lands belonging to the government. It is well settled that a
real tax, being a burden upon the capital, should be paid by the owner of the land and not by a
usufructuary (Mercado vs. Rizal, 67 Phil., 608; chan roblesvirtualawlibraryArticle 597, new Civil
Code). Appellee is but a partial usufructuary of the road in question.
G.R. No. 107132 October 8, 1999
MAXIMA HEMEDES vs CA, DOMINIUM REALTY AND CONSTRUCTION CORPORATION,
ENRIQUE D. HEMEDES and R & B INSURANCE CORPORATION, respondents.

The primary issue to be resolved in these consolidated petitions is which of the two
conveyances by Justa Kausapin, the first in favor of Maxima Hemedes and the second in favor
of Enrique D. Hemedes, effectively transferred ownership over the subject land.

Although a comparison of Justa Kausapin's thumbmark with the thumbmark affixed upon the
deed of conveyance would have easily cleared any doubts as to whether or not the deed was
forged, the records do not show that such evidence was introduced by private respondents and
the lower court decisions do not make mention of any comparison having been made. 16 It is a
legal presumption that evidence willfully suppressed would be adverse if produced. 17 The
failure of private respondents to refute the due execution of the deed of conveyance by making
a comparison with Justa Kausapin's thumbmark necessarily leads one to conclude that she did
in fact affix her thumbmark upon the deed of donation in favor of her stepdaughter.
Moreover, public respondent's reliance upon Justa Kausapin's repudiation of the deed of
conveyance is misplaced for there are strong indications that she is a biased witness. The trial
court found that Justa Kausapin was dependent upon Enrique D. Hemedes for financial
assistance. 18 Justa Kausapin's own testimony attests to this.

72
Even Enrique Hemedes admitted that Justa Kausapin was dependent upon him for financial
support. The transcripts state as follows:
A witness is said to be biased when his relation to the cause or to the parties is such that he has
an incentive to exaggerate or give false color to his statements, or to suppress or to pervert the
truth, or to state what is false. 21 At the time the present case was filed in the trial court in 1981,
Justa Kausapin was already 80 years old, suffering from worsening physical infirmities and
completely dependent upon her stepson Enrique D. Hemedes for support. It is apparent that
Enrique D. Hemedes could easily have influenced his aging stepmother to donate the subject
property to him. Public respondent should not have given credence to a witness that was
obviously biased and partial to the cause of private respondents. Although it is a well-
established rule that the matter of credibility lies within the province of the trial court, such rule
does not apply when the witness' credibility has been put in serious doubt, such as when there
appears on the record some fact or circumstance of weight and influence, which has been
overlooked or the significance of which has been
misinterpreted. 22
Finally, public respondent was in error when it sustained the trial court's decision to nullify the
"Deed of Conveyance of Unregistered Real Property by Reversion" for failure of Maxima
Hemedes to comply with article 1332 of the Civil Code, which states:
When one of the parties is unable to read, or if the contract is in a language not understood by
him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms
thereof have been fully explained to the former.
Art. 1332 was intended for the protection of a party to a contract who is at a disadvantage due
to his illiteracy, ignorance, mental weakness or other handicap. 23 This article contemplates a
situation wherein a contract has been entered into, but the consent of one of the parties is
vitiated by mistake or fraud committed by the other contracting party. 24 This is apparent from
the ordering of the provisions under Book IV, Title II, Chapter 2, section 1 of the Civil Code, from
which article 1332 is taken. Article 1330 states that
A contract where consent is given through mistake, violence, intimidation, undue influence, or
fraud is voidable.
This is immediately followed by provisions explaining what constitutes mistake, violence,
intimidation, undue influence, or fraud sufficient to vitiate consent. 25 In order that mistake may
invalidate consent, it should refer to the substance of the thing which is the object of the
contract, or to those conditions which have principally moved one or both parties to enter into
the contract. 26 Fraud, on the other hand, is present when, through insidious words or
machinations of one of the contracting parties, the other is induced to enter into a contract
which, without them, he would not have agreed to. 27 Clearly, article 1332 assumes that the
consent of the contracting party imputing the mistake or fraud was given, although vitiated, and
does not cover a situation where there is a complete absence of consent.1wphi1.nt

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In this case, Justa Kausapin disclaims any knowledge of the "Deed of Conveyance of
Unregistered Real Property by Reversion" in favor of Maxima Hemedes. In fact, she asserts that
it was only during the hearing conducted on December 7, 1981 before the trial court that she
first caught a glimpse of the deed of conveyance and thus, she could not have possibly affixed
her thumbmark thereto. 28 It is private respondents' own allegations which render article 1332
inapplicable for it is useless to determine whether or not Justa Kausapin was induced to execute
said deed of conveyance by means of fraud employed by Maxima Hemedes, who allegedly took
advantage of the fact that the former could not understand English, when Justa Kausapin
denies even having seen the document before the present case was initiated in 1981.
It has been held by this Court that ". . . mere preponderance of evidence is not sufficient to
overthrow a certificate of a notary public to the effect that the grantor executed a certain
document and acknowledged the fact of its execution before him. To accomplish this result, the
evidence must be so clear, strong and convincing as to exclude all reasonable controversy as to
the falsity of the certificate, and when the evidence is conflicting, the certificate will be
upheld." 29 In the present case, we hold that private respondents have failed to produce clear,
strong, and convincing evidence to overcome the positive value of the "Deed Conveyance of
Unregistered Real Property by Reversion" a notarized document. The mere denial of its
execution by the donor will not suffice for the purpose.
In upholding the deed of conveyance in favor of Maxima Hemedes, we must concomitantly rule
that Enrique D. Hemedes and his transferee, Dominium, did not acquire any rights over the
subject property. Justa Kausapin sought to transfer to her stepson exactly what she had earlier
transferred to Maxima Hemedes the ownership of the subject property pursuant to the first
condition stipulated in the deed of donation executed by her husband. Thus, the donation in
favor of Enrique D. Hemedes is null and void for the purported object thereof did not exist at the
time of the transfer, having already been transferred to his sister. 30 Similarly, the sale of the
subject property by Enrique D. Hemedes to Dominium is also a nullity for the latter cannot
acquire more rights than its predecessor-in-interest and is definitely not an innocent purchaser
for value since Enrique D. Hemedes did not present any certificate of title upon which it relied.
The declarations of real property by Enrique D. Hemedes, his payment of realty taxes, and his
being designated as owner of the subject property in the cadastral survey of Cabuyao, Laguna
and in the records of the Ministry of Agrarian Reform office in Calamba, Laguna cannot defeat a
certificate of title, which is an absolute and indefeasible evidence of ownership of the property in
favor of the person whose name appears therein. 31 Particularly, with regard to tax declarations
and tax receipts, this Court has held on several occasions that the same do not by themselves
conclusively prove title to land. 32
It is a well-established principle that every person dealing with registered land may safely rely
on the correctness of the certificate of title issued and the law will in no way oblige him to go
behind the certificate to determine the condition of the property. An innocent purchaser for
value is one who buys the property of another without notice that some other person has a right

74
to or interest in such property and pays a full and fair price for the same at the time of such
purchase or before he has notice of the claim of another person.
The annotation of usufructuary rights in favor of Justa Kausapin upon Maxima Hemedes' OCT
does not impose upon R & B Insurance the obligation to investigate the validity of its
mortgagor's title. Usufruct gives a right to enjoy the property of another with the obligation of
preserving its form and substance. The usufructuary is entitled to all the natural, industrial and
civil fruits of the property and may personally enjoy the thing in usufruct, lease it to another, or
alienate his right of usufruct, even by a gratuitous title, but all the contracts he may enter into as
such usufructuary shall terminate upon the expiration of the usufruct.
Clearly, only the jus utendi and jus fruendi over the property is transferred to the
usufructuary. The owner of the property maintains the jus disponendi or the power to alienate,
encumber, transform, and even destroy the same. This right is embodied in the Civil Code,
which provides that the owner of property the usufruct of which is held by another, may alienate
it, although he cannot alter the property's form or substance, or do anything which may be
prejudicial to the usufructuary.
There is no doubt that the owner may validly mortgage the property in favor of a third person
and the law provides that, in such a case, the usufructuary shall not be obliged to pay the debt
of the mortgagor, and should the immovable be attached or sold judicially for the payment of the
debt, the owner shall be liable to the usufructuary for whatever the latter may lose by reason
thereof.
Based on the foregoing, the annotation of usufructuary rights in favor of Justa Kausapin is not
sufficient cause to require R & B Insurance to investigate Maxima Hemedes' title, contrary to
public respondent's ruling, for the reason that Maxima Hemedes' ownership over the property
remained unimpaired despite such encumbrance. R & B Insurance had a right to rely on the
certificate of title and was not in bad faith in accepting the property as a security for the loan it
extended to Maxima Hemedes.

Even assuming in gratia argumenti that R & B Insurance was obligated to look beyond the
certificate of title and investigate the title of its mortgagor, still, it would not have discovered any
better rights in favor of private respondents.

It is a well-settled principle that where innocent third persons rely upon the correctness of a
certificate of title and acquire rights over the property, the court cannot just disregard such
rights. Otherwise, public confidence in the certificate of title, and ultimately, the Torrens system,
would be impaired for everyone dealing with registered property would still have to inquire at
every instance whether the title has been regularly or irregularly issued. Being an innocent
mortgagee for value, R & B Insurance validly acquired ownership over the property, subject only
to the usufructuary rights of Justa Kausapin thereto, as this encumbrance was properly
annotated upon its certificate of title.

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The factual findings of the trial court, particularly when affirmed by the appellate court, carry
great weight and are entitled to respect on appeal, except under certain circumstances. One
such circumstance that would compel the Court to review the factual findings of the lower courts
is where the lower courts manifestly overlooked certain relevant facts not disputed by the parties
and which, if properly considered, would justify a different conclusion.

G.R. No. 3314 January 3, 1907

ANSELMO CHINGEN, vs. TOMAS ARGUELLES AND WIFE, ET AL.,Defendant-Appellees.

Article 837 of the Civil Code provides:

If the testator should have neither legitimate ascendants or descendants, the surviving spouse
shall be entitled to one half of the estate also in usufruct.
The object of the action brought by the plaintiff was to recover one half of the jewels mentioned
in his complaint and one half of the rent accruing from a certain property, which said property,
as well as the jewels in question, were delivered as part of their legacies to the legatees,
Carmen Reyes, Jose Reyes, and Pedro Reyes, under the will of the deceased Raymunda
Reyes.

The main reliance of the plaintiff is that his deceased wife, the testatrix, did not assign to him in
her will the entire portion which belonged to him; that is to say, one half of the estate in usufruct.

The property of the estate of his deceased wife having been divided in two equal parts, the
property to which the plaintiff was entitled as an heir under the will should have been taken out
of the one half, subject to the usufruct of the surviving spouse. This done, the usufruct, of
course, is extinguished ipso facto by the merger of such right of usufruct and ownership in the
same person, as provided in paragraph 3 of article 513 of the Civil Code.

It appears from the record that the property of the estate was liquidated, distributed, and
apportioned among the heirs and legatees under the will, the plaintiff, as the executor and heir
of his deceased wife, and attorney Nazario Constantino, guardian ad litem of the minor heir,
Lamberto Reyna, being the only ones who took part in the proceedings were duly approved by
the court.
Finally, it should be borne in mind that the legacy to which this action relates consists of a house
and certain jewels and is according to the will, an unconditional legacy without any fixed period,
and that the property thus bequeathed is specified in the said will and described as being of the
exclusive ownership of the testatrix, so that the legatees were entitled to the property thus
bequeathed to them from the death of the testatrix, and as owners of such property were also
entitled to the fruits and earnings and any increase thereof, as well as liable for any loss or
impairment thereof. (Arts. 881, 882, Civil Code.)

76
RAMONA R. LOCSIN vs JUDGE VALENZUELA, and SPOUSES SCHON,

In determining whether this Court has jurisdiction, necessarily, a determination should first be
made as to the nature of the lease rentals that were being paid to the defendants by the
tenants-lessees. There is no question that on May 30, 1977, the Provincial Chairman of
Operation Land Transfer rendered an opinion that the rentals as of October 21, 1972 was to be
considered as amortization payment to the land and as such should pertain to the land owners
and not to the usufructuary, the defendants herein. Section 12 of Presidential Decree No. 946
enumerates the case that falls under the original and exclusive jurisdiction of the Court of
Agrarian Relations. It could be seen from the above that the jurisdiction given to the Court of
Agrarian Relations is so broad and sweeping as to cover the issue involved in the present
case. ... the agricultural leasehold relation is not limited to that of a purely landlord and tenant
relationship. The agricultural leasehold relationship is established also with respect to the
person who furnished the landholding either as owner, civil lessee, usufructuary or legal
possessor and the person who cultivates the same. It might as well be asked whether the
opinion of the Provincial Chairman of Operation Land Transfer previously adverted to and which
is now one of the issues in this incident would involve the determination of the rights granted
and obligations imposed in relation to the agrarian reform program. The search for an answer
need not be deferred as reference to Par. (b) of Presidential Decree No. 49 provides such
answer-
xxxxxxxxx
Questions involving rights granted and obligations imposed by the law, presidential decrees,
orders, instructions, rules and regulations issued and promulgations in relation to the agrarian
reform program.
Clearly, the determination of the nature of the payment made by the tenants to the defendants
herein is a question which involved the right of the tenants in relation to the land reform program
of the government.

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