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[G.R. No. 156295.

September 23, 2003]


Ricardo Galit contracted a loan from Marcelo Soriano, in the total sum of P480,000.00,
evidenced by four promissory notes in the amount of P120,000.00 each. This loan was secured
by a real estate mortgage over a parcel of land covered by Original Certificate of Title No. 569.
After he failed to pay his obligation, Soriano filed a complaint for sum of money against him
with the RTC. The RTC rendered judgment in favor of Soriano.
The judgment became final and executory. Accordingly, the trial court issued a writ of execution
in due course, by virtue of which, the Sheriff levied on the following real properties of the Galit
spouses: 1.)A parcel of land covered by Original Certificate of Title No. T-569; 2.)
STORE/HOUSE CONSTRUCTED on Lot No. 1103; 3.) BODEGA constructed on Lot 1103.
Petitioner was the highest and only bidder. Accordingly, the Sheriff issued a Certificate of Sale of
Execution of Real Property. The period of redemption will expire One (1) year from and after the
registration of the Certificate of Sale with the Register of Deeds. The Certificate of Sheriffs Sale
is issued to the highest and lone bidder, Marcelo Soriano, under guarantees prescribed by law.
Petitioner caused the registration of the Certificate of Sale on Execution of Real Property with
the Registry of Deeds. The said Certificate of Sale registered with the Register of Deeds includes
at the dorsal portion thereof, not found in the Certificate of Sale on file with the Deputy Sheriff
On February 23, 2001, ten months from the time the Certificate of Sale on Execution was
registered with the Registry of Deeds, petitioner moved for the issuance of a writ of possession.
He averred that the one-year period of redemption had elapsed without the respondents having
redeemed the properties sold at public auction; thus, the sale of said properties had already
become final. He also argued that after the lapse of the redemption period, the titles to the
properties should be considered, for all legal intents and purposes, in his name and favor.
On June 4, 2001, the Regional Trial Court of Balanga City, Branch 1 granted the motion for
issuance of writ of possession.
WHEREFORE, you are hereby commanded to place the herein plaintiff Marcelo Soriano in
possession of the property involved in this case situated (sic) more particularly described as:
1. STORE HOUSE constructed on Lot No. 1103 situated at Centro 1, Orani, Bataan covered
by TCT No. 40785;
2. BODEGA constructed on Lot No. 1103 with an area of 42.75 square meters under Tax
Declaration No. 86 situated at Centro 1, Orani, Bataan;
3. Original Certificate of Title No. 40785 with an area of 134 square meters known as Lot
No. 1103 of the Cadastral Survey of Orani
against the mortgagor/former owners Sps. Ricardo and Rosalinda (sic) Galit, her (sic) heirs,
successors, assigns and all persons claiming rights and interests adverse to the petitioner and
make a return of this writ every thirty (30) days from receipt hereof together with all the
proceedings thereon until the same has been fully satisfied.
WITNESS THE HONORABLE BENJAMIN T. VIANZON, Presiding Judge, this 18th day of
July 2001, at Balanga City.
Respondents filed a petition for certiorari with the Court of Appeals, the Court of Appeals
GRANTED. Accordingly, the writ of possession issued by the Regional Trial Court of Balanga
City, Branch 1, on 18 July 2001 is declared NULL and VOID.
In the event that the questioned writ of possession has already been implemented, the Deputy
Sheriff of the Regional Trial Court of Balanga City, Branch 1, and private respondent Marcelo
Soriano are hereby ordered to cause the redelivery of Transfer Certificate of Title No. T-40785 to
the petitioners.
Aggrieved, petitioner now comes to this Court maintaining that

There is no question that petitioners were remiss in attending with dispatch to the protection of
their interests as regards the subject lots, and for that reason the case in the lower court was
dismissed on a technicality and no definitive pronouncement on the inadequacy of the price paid
for the levied properties was ever made. In this regard, it bears stressing that procedural rules are
not to be belittled or dismissed simply because their non-observance may have resulted in
prejudice to a partys substantive rights as in this case. Like all rules, they are required to be
followed except when only for the most persuasive of reasons they may be relaxed to relieve a
litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying
with the procedure prescribed. [29] (emphasis and italics supplied.)
In short, since rules of procedure are mere tools designed to facilitate the attainment of justice,
their strict and rigid application which would result in technicalities that tend to frustrate rather
than promote substantial justice must always be avoided. [30] Technicality should not be allowed
to stand in the way of equitably and completely resolving the rights and obligations of the
parties. [31]
Eschewing, therefore, the procedural objections raised by petitioner, it behooves us to address
the issue of whether or not the questioned writ of possession is in fact a nullity considering that it
includes real property not expressly mentioned in the Certificate of Sale of Real Property.
Petitioner, in sum, dwells on the general proposition that since the certificate of sale is a public
document, it enjoys the presumption of regularity and all entries therein are presumed to be done
in the performance of regular functions.
The argument is not persuasive.
There are actually two (2) copies of the Certificate of Sale on Execution of Real Properties
issued on February 4, 1999 involved, namely: (a) copy which is on file with the deputy sheriff;
and (b) copy registered with the Registry of Deeds. The object of scrutiny, however, is not the
copy of the Certificate of Sale on Execution of Real Properties issued by the deputy sheriff on
February 4, 1999, [32] but the copy thereof subsequently registered by petitioner with the
Registry of Deeds on April 23, 1999, [33] which included an entry on the dorsal portion of the
first page thereof describing a parcel of land covered by OCT No. T-40785 not found in the
Certificate of Sale of Real Properties on file with the sheriff.
True, public documents by themselves may be adequate to establish the presumption of their
validity. However, their probative weight must be evaluated not in isolation but in conjunction
with other evidence adduced by the parties in the controversy, much more so in this case where
the contents of a copy thereof subsequently registered for documentation purposes is being
contested. No reason has been offered how and why the questioned entry was subsequently
intercalated in the copy of the certificate of sale subsequently registered with the Registry of
Deeds. Absent any satisfactory explanation as to why said entry was belatedly inserted, the
surreptitiousness of its inclusion coupled with the furtive manner of its intercalation casts serious
doubt on the authenticity of petitioners copy of the Certificate of Sale. Thus, it has been held that
while a public document like a notarized deed of sale is vested with the presumption of
regularity, this is not a guarantee of the validity of its contents. [34]
It must be pointed out in this regard that the issuance of a Certificate of Sale is an end result of
judicial foreclosure where statutory requirements are strictly adhered to; where even the slightest
deviations therefrom will invalidate the proceeding [35] and the sale. [36] Among these
requirements is an explicit enumeration and correct description of what properties are to be sold
stated in the notice. The stringence in the observance of these requirements is such that an
incorrect title number together with a correct technical description of the property to be sold and
vice versa is deemed a substantial and fatal error which results in the invalidation of the sale.
The certificate of sale is an accurate record of what properties were actually sold to satisfy the
debt. The strictness in the observance of accuracy and correctness in the description of the
properties renders the enumeration in the certificate exclusive. Thus, subsequently including
properties which have not been explicitly mentioned therein for registration purposes under
suspicious circumstances smacks of fraud. The explanation that the land on which the properties
sold is necessarily included and, hence, was belatedly typed on the dorsal portion of the copy of
the certificate subsequently registered is at best a lame excuse unworthy of belief.
The appellate court correctly observed that there was a marked difference in the appearance of
the typewritten words appearing on the first page of the copy of the Certificate of Sale registered
with the Registry of Deeds [38] and those appearing at the dorsal portion thereof. Underscoring
the irregularity of the intercalation is the clearly devious attempt to let such an insertion pass
unnoticed by typing the same at the back of the first page instead of on the second page which
was merely half-filled and could accommodate the entry with room to spare.
The argument that the land on which the buildings levied upon in execution is necessarily
included is, likewise, tenuous. Article 415 of the Civil Code provides:
ART. 415. The following are immovable property:
(1) Land, buildings, roads and constructions of all kinds adhered to the soil.
xxx xxx xxx
(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be
separated therefrom without breaking them material or deterioration of the object;
(4) Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or
on lands by the owner of the immovable in such a manner that it reveals the intention to attach
them permanently to the tenements;
(5) Machinery, receptacles, instruments or implements intended by the owner of the
tenement for an industry or works which may be carried on in a building or on a piece of land,
and which tend directly to meet the needs of the said industry or works;
(6) Animal houses, pigeon houses, beehives, fish ponds or breeding places of similar nature,
in case their owner has placed them or preserves them with the intention to have them
permanently attached to the land, and forming a permanent part of it; the animals in these places
are also included;
xxx xxx xxx
(9) Docks and structures which, though floating, are intended by their nature and object to
remain at a fixed place on a river, lake or coast;
xxx xxx x x x.
The foregoing provision of the Civil Code enumerates land and buildings separately. This can
only mean that a building is, by itself, considered immovable. [39] Thus, it has been held that
. . . while it is true that a mortgage of land necessarily includes, in the absence of stipulation of
the improvements thereon, buildings, still a building by itself may be mortgaged apart from the
land on which it has been built. Such mortgage would be still a real estate mortgage for the
building would still be considered immovable property even if dealt with separately and apart
from the land. [40] (emphasis and italics supplied)
In this case, considering that what was sold by virtue of the writ of execution issued by the trial
court was merely the storehouse and bodega constructed on the parcel of land covered by
Transfer Certificate of Title No. T-40785, which by themselves are real properties of respondents
spouses, the same should be regarded as separate and distinct from the conveyance of the lot on
which they stand.
The petition is hereby DENIED.

G.R. No. L-11139 April 23, 1958

Gonzalo D. David for petitioner.
Raul A. Aristorenas and Benjamin Relova for respondent.
This is an appeal by certiorari from a decision of the Court of Appeals.
Briefly, the facts are: On June 4, 1949, petitioner herein, Santos Evangelista, instituted Civil
Case No. 8235 of the Court of First, Instance of Manila entitled " Santos Evangelista vs. Ricardo
Rivera," for a sum of money. On the same date, he obtained a writ of attachment, which levied
upon a house, built by Rivera on a land situated in Manila and leased to him, by filing copy of
said writ and the corresponding notice of attachment with the Office of the Register of Deeds of
Manila, on June 8, 1949. In due course, judgment was rendered in favor of Evangelista, who, on
October 8, 1951, bought the house at public auction held in compliance with the writ of
execution issued in said case. The corresponding definite deed of sale was issued to him on
October 22, 1952, upon expiration of the period of redemption. When Evangelista sought to take
possession of the house, Rivera refused to surrender it, upon the ground that he had leased the
property from the Alto Surety & Insurance Co., Inc. — respondent herein — and that the latter is
now the true owner of said property. It appears that on May 10, 1952, a definite deed of sale of
the same house had been issued to respondent, as the highest bidder at an auction sale held, on
September 29, 1950, in compliance with a writ of execution issued in Civil Case No. 6268 of the
same court, entitled "Alto Surety & Insurance Co., Inc. vs. Maximo Quiambao, Rosario Guevara
and Ricardo Rivera," in which judgment, for the sum of money, had been rendered in favor
respondent herein, as plaintiff therein. Hence, on June 13, 1953, Evangelista instituted the
present action against respondent and Ricardo Rivera, for the purpose of establishing his
(Evangelista) title over said house, securing possession thereof, apart from recovering damages.
In its answer, respondent alleged, in substance, that it has a better right to the house, because the
sale made, and the definite deed of sale executed, in its favor, on September 29, 1950 and May
10, 1952, respectively, precede the sale to Evangelista (October 8, 1951) and the definite deed of
sale in his favor (October 22, 1952). It, also, made some special defenses which are discussed
hereafter. Rivera, in effect, joined forces with respondent. After due trial, the Court of First
Instance of Manila rendered judgment for Evangelista, sentencing Rivera and respondent to
deliver the house in question to petitioner herein and to pay him, jointly and severally, forty
pesos (P40.00) a month from October, 1952, until said delivery, plus costs.
On appeal taken by respondent, this decision was reversed by the Court of Appeals, which
absolved said respondent from the complaint, upon the ground that, although the writ of
attachment in favor of Evangelista had been filed with the Register of Deeds of Manila prior to
the sale in favor of respondent, Evangelista did not acquire thereby a preferential lien, the
attachment having been levied as if the house in question were immovable property, although in
the opinion of the Court of Appeals, it is "ostensibly a personal property." As such, the Court of
Appeals held, "the order of attachment . . . should have been served in the manner provided in
subsection (e) of section 7 of Rule 59," of the Rules of Court, reading:
The property of the defendant shall be attached by the officer executing the order in the
following manner:
(e) Debts and credits, and other personal property not capable of manual delivery, by leaving
with the person owing such debts, or having in his possession or under his control, such credits
or other personal property, or with, his agent, a copy of the order, and a notice that the debts
owing by him to the defendant, and the credits and other personal property in his possession, or
under his control, belonging to the defendant, are attached in pursuance of such order. (Emphasis
However, the Court of Appeals seems to have been of the opinion, also, that the house of Rivera
should have been attached in accordance with subsection (c) of said section 7, as "personal
property capable of manual delivery, by taking and safely keeping in his custody", for it declared
that "Evangelists could not have . . . validly purchased Ricardo Rivera's house from the sheriff as
the latter was not in possession thereof at the time he sold it at a public auction."
Evangelista now seeks a review, by certiorari, of this decision of the Court of Appeals. In this
connection, it is not disputed that although the sale to the respondent preceded that made to
Evangelists, the latter would have a better right if the writ of attachment, issued in his favor
before the sale to the respondent, had been properly executed or enforced. This question, in turn,
depends upon whether the house of Ricardo Rivera is real property or not. In the affirmative
case, the applicable provision would be subsection (a) of section 7, Rule 59 of the Rules of
Court, pursuant to which the attachment should be made "by filing with the registrar of deeds a
copy of the order, together with a description of the property attached, and a notice that it is
attached, and by leaving a copy of such order, description, and notice with the occupant of the
property, if any there be."
Respondent maintains, however, and the Court of Appeals held, that Rivera's house is personal
property, the levy upon which must be made in conformity with subsections (c) and (e) of said
section 7 of Rule 59. Hence, the main issue before us is whether a house, constructed the lessee
of the land on which it is built, should be dealt with, for purpose, of attachment, as immovable
property, or as personal property.
It is, our considered opinion that said house is not personal property, much less a debt, credit or
other personal property not capable of manual delivery, but immovable property. As explicitly
held, in Laddera vs. Hodges (48 Off. Gaz., 5374), "a true building (not merely superimposed on
the soil) is immovable or real property, whether it is erected by the owner of the land or by
usufructuary or lessee. This is the doctrine of our Supreme Court in Leung Yee vs. Strong
Machinery Company, 37 Phil., 644. And it is amply supported by the rulings of the French Court.
. . ."
It is true that the parties to a deed of chattel mortgage may agree to consider a house as personal
property for purposes of said contract (Luna vs. Encarnacion, * 48 Off. Gaz., 2664; Standard Oil
Co. of New York vs. Jaramillo, 44 Phil., 630; De Jesus vs. Juan Dee Co., Inc., 72 Phil., 464).
However, this view is good only insofar as the contracting parties are concerned. It is based,
partly, upon the principle of estoppel. Neither this principle, nor said view, is applicable to
strangers to said contract. Much less is it in point where there has been no contract whatsoever,
with respect to the status of the house involved, as in the case at bar. Apart from this, in
Manarang vs. Ofilada (99 Phil., 108; 52 Off. Gaz., 3954), we held:
The question now before us, however, is: Does the fact that the parties entering into a contract
regarding a house gave said property the consideration of personal property in their contract,
bind the sheriff in advertising the property's sale at public auction as personal property? It is to
be remembered that in the case at bar the action was to collect a loan secured by a chattel
mortgage on the house. It is also to be remembered that in practice it is the judgment creditor
who points out to the sheriff the properties that the sheriff is to levy upon in execution, and the
judgment creditor in the case at bar is the party in whose favor the owner of the house had
conveyed it by way of chattel mortgage and, therefore, knew its consideration as personal
These considerations notwithstanding, we hold that the rules on execution do not allow, and, we
should not interpret them in such a way as to allow, the special consideration that parties to a
contract may have desired to impart to real estate, for example, as personal property, when they
are, not ordinarily so. Sales on execution affect the public and third persons. The regulation
governing sales on execution are for public officials to follow. The form of proceedings
prescribed for each kind of property is suited to its character, not to the character, which the
parties have given to it or desire to give it. When the rules speak of personal property, property
which is ordinarily so considered is meant; and when real property is spoken of, it means
property which is generally known as real property. The regulations were never intended to suit
the consideration that parties may have privately given to the property levied upon. Enforcement
of regulations would be difficult were the convenience or agreement of private parties to
determine or govern the nature of the proceedings. We therefore hold that the mere fact that a
house was the subject of the chattel mortgage and was considered as personal property by the
parties does not make said house personal property for purposes of the notice to be given for its
sale of public auction. This ruling is demanded by the need for a definite, orderly and well
defined regulation for official and public guidance and would prevent confusion and
We, therefore, declare that the house of mixed materials levied upon on execution, although
subject of a contract of chattel mortgage between the owner and a third person, is real property
within the purview of Rule 39, section 16, of the Rules of Court as it has become a permanent
fixture of the land, which, is real property. (42 Am. Jur. 199-200; Leung Yee vs. Strong
Machinery Co., 37 Phil., 644; Republic vs. Ceniza, et al., 90 Phil., 544; Ladera,, et al. vs.
Hodges, et al., [C.A.] Off. Gaz. 5374.)" (Emphasis ours.)
The foregoing considerations apply, with equal force, to the conditions for the levy of
attachment, for it similarly affects the public and third persons.
It is argued, however, that, even if the house in question were immovable property, its attachment
by Evangelista was void or ineffective, because, in the language of the Court of Appeals, "after
presenting a Copy of the order of attachment in the Office of the Register of Deeds, the person
who might then be in possession of the house, the sheriff took no pains to serve Ricardo Rivera,
or other copies thereof." This finding of the Court of Appeals is neither conclusive upon us, nor
The Record on Appeal, annexed to the petition for Certiorari, shows that petitioner alleged, in
paragraph 3 of the complaint, that he acquired the house in question "as a consequence of the
levy of an attachment and execution of the judgment in Civil Case No. 8235" of the Court of
First Instance of Manila. In his answer (paragraph 2), Ricardo Rivera admitted said attachment
execution of judgment. He alleged, however, by way a of special defense, that the title of
respondent "is superior to that of plaintiff because it is based on a public instrument," whereas
Evangelista relied upon a "promissory note" which "is only a private instrument"; that said
Public instrument in favor of respondent "is superior also to the judgment in Civil Case No.
8235"; and that plaintiff's claim against Rivera amounted only to P866, "which is much below
the real value" of said house, for which reason it would be "grossly unjust to acquire the property
for such an inadequate consideration." Thus, Rivera impliedly admitted that his house had been
attached, that the house had been sold to Evangelista in accordance with the requisite formalities,
and that said attachment was valid, although allegedly inferior to the rights of respondent, and
the consideration for the sale to Evangelista was claimed to be inadequate.
Respondent, in turn, denied the allegation in said paragraph 3 of the complaint, but only " for the
reasons stated in its special defenses" namely: (1) that by virtue of the sale at public auction, and
the final deed executed by the sheriff in favor of respondent, the same became the "legitimate
owner of the house" in question; (2) that respondent "is a buyer in good faith and for value"; (3)
that respondent "took possession and control of said house"; (4) that "there was no valid
attachment by the plaintiff and/or the Sheriff of Manila of the property in question as neither
took actual or constructive possession or control of the property at any time"; and (5) "that the
alleged registration of plaintiff's attachment, certificate of sale and final deed in the Office of
Register of Deeds, Manila, if there was any, is likewise, not valid as there is no registry of
transactions covering houses erected on land belonging to or leased from another." In this
manner, respondent claimed a better right, merely under the theory that, in case of double sale of
immovable property, the purchaser who first obtains possession in good faith, acquires title, if
the sale has not been "recorded . . . in the Registry of Property" (Art. 1544, Civil Code of the
Philippines), and that the writ of attachment and the notice of attachment in favor of Evangelista
should be considered unregistered, "as there is no registry of transactions covering houses
erected on land belonging to or leased from another." In fact, said article 1544 of the Civil Code
of the Philippines, governing double sales, was quoted on page 15 of the brief for respondent in
the Court of Appeals, in support of its fourth assignment of error therein, to the effect that it "has
preference or priority over the sale of the same property" to Evangelista.
In other words, there was no issue on whether copy of the writ and notice of attachment had been
served on Rivera. No evidence whatsoever, to the effect that Rivera had not been served with
copies of said writ and notice, was introduced in the Court of First Instance. In its brief in the
Court of Appeals, respondent did not aver, or even, intimate, that no such copies were served by
the sheriff upon Rivera. Service thereof on Rivera had been impliedly admitted by the
defendants, in their respective answers, and by their behaviour throughout the proceedings in the
Court of First Instance, and, as regards respondent, in the Court of Appeals. In fact, petitioner
asserts in his brief herein (p. 26) that copies of said writ and notice were delivered to Rivera,
simultaneously with copies of the complaint, upon service of summons, prior to the filing of
copies of said writ and notice with the register deeds, and the truth of this assertion has not been
directly and positively challenged or denied in the brief filed before us by respondent herein. The
latter did not dare therein to go beyond making a statement — for the first time in the course of
these proceedings, begun almost five (5) years ago (June 18, 1953) — reproducing substantially
the aforementioned finding of the Court of Appeals and then quoting the same.
Considering, therefore, that neither the pleadings, nor the briefs in the Court of Appeals, raised
an issue on whether or not copies of the writ of attachment and notice of attachment had been
served upon Rivera; that the defendants had impliedly admitted-in said pleadings and briefs, as
well as by their conduct during the entire proceedings, prior to the rendition of the decision of the
Court of Appeals — that Rivera had received copies of said documents; and that, for this reason,
evidently, no proof was introduced thereon, we, are of the opinion, and so hold that the finding of
the Court of Appeals to the effect that said copies had not been served upon Rivera is based upon
a misapprehension of the specific issues involved therein and goes beyond the range of such
issues, apart from being contrary to the aforementioned admission by the parties, and that,
accordingly, a grave abuse of discretion was committed in making said finding, which is,
furthermore, inaccurate.
Wherefore, the decision of the Court of Appeals is hereby reversed, and another one shall be
entered affirming that of the Court of First Instance of Manila, with the costs of this instance
against respondent, the Alto Surety and Insurance Co., Inc. It is so ordered.
Paras, C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Reyes, J.B.L.,
Endencia and Felix, JJ., concur.
[G.R. No. 129471. April 28, 2000]
CARLOS CAJES, respondents.
MENDOZA, J.: Misact
This is a petition for certiorari seeking to reverse the decision [1] and resolution [2] of the Court
of Appeals dated August 30, 1996 and April 23, 1997, respectively, declaring private respondent
Carlos Cajes the owner of 19.4 hectares of land embraced in TCT No. 10101 and ordering the
segregation and reconveyance of said portion to him.
The antecedent facts are as follows:
The land in dispute, consisting of 19.4 hectares located in San Miguel, Province of Bohol, was
originally owned by Ulpiano Mumar, whose ownership since 1917 was evidenced by Tax
Declaration No. 3840. [3] In 1950, [4] Mumar sold the land to private respondent who was
issued Tax Declaration No. R-1475 that same year. [5] The tax declaration was later superseded
by Tax Declaration Nos. R-799 issued in 1961 [6] and D-2247 issued in 1974. [7] Private
respondent occupied and cultivated the said land, [8] planting cassava and camote in certain
portions of the land. [9]
In 1969, unknown to private respondent, Jose Alvarez succeeded in obtaining the registration of
a parcel of land with an area of 1,512,468.00 square meters, [10] in his name for which he was
issued OCT No. 546 on June 16, 1969. [11] The parcel of land included the 19.4 hectares
occupied by private respondent. Alvarez never occupied nor introduced improvements on said
land. [12]
In 1972, Alvarez sold the land to the spouses Gaudencio and Rosario Beduya to whom TCT No.
10101 was issued. [13] That same year, the spouses Beduya obtained a loan from petitioner
Development Bank of the Philippines for P526,000.00 and, as security, mortgaged the land
covered by TCT No. 10101 to the bank. [14] In 1978, the SAAD Investment Corp., and the
SAAD Agro-Industries, Inc., represented by Gaudencio Beduya, and the spouses Beduya
personally executed another mortgage over the land in favor of petitioner to secure a loan of
P1,430,000.00. [15] Sdjad
The spouses Beduya later failed to pay their loans, as a result of which, the mortgage on the
property was foreclosed. [16] In the resulting foreclosure sale held on January 31, 1985,
petitioner was the highest bidder. [17] As the spouses Beduya failed to redeem the property,
petitioner consolidated its ownership. [18]
It appears that private respondent had also applied for a loan from petitioner in 1978, offering his
19.4 hectare property under Tax Declaration No. D-2247 as security for the loan. As part of the
processing of the application, a representative of petitioner, Patton R. Olano, inspected the land
and appraised its value.
Private respondents loan application was later approved by petitioner. [19] However after
releasing the amount of the loan to private respondent, petitioner found that the land mortgaged
by private respondent was included in the land covered by TCT No. 10101 in the name of the
spouses Beduya. Petitioner, therefore, cancelled the loan and demanded immediate payment of
the amount. [20] Private respondent paid the loan to petitioner for which the former was issued a
Cancellation of Mortgage, dated March 18, 1981, releasing the property in question from
encumbrance. [21]
Sometime in April of 1986, more than a year after the foreclosure sale, a re-appraisal of the
property covered by TCT No. 10101 was conducted by petitioners representatives. It was then
discovered that private respondent was occupying a portion of said land. Private respondent was
informed that petitioner had become the owner of the land he was occupying, and he was asked
to vacate the property. As private respondent refused to do so, [22] petitioner filed a complaint
for recovery of possession with damages against him. The case was assigned to Branch 1 of the
Regional Trial Court, Tagbilaran City, [23] which after trial, rendered a decision, dated August
22, 1989, declaring petitioner the lawful owner of the entire land covered by TCT No. 10101 on
the ground that the decree of registration was binding upon the land. [24] The dispositive portion
of the decision reads:
WHEREFORE, foregoing considered, the court renders judgment:
1.......Declaring plaintiff bank Development Bank of the Philippines the true and legal owner of
the land in question covered by TCT No. 10101 farm of Gaudencio Beduya;
2.......Dismissing defendants counterclaim; Sppedsc
3.......Ordering defendant to vacate from the land in question; the portion of which he claims to
belong to him for without basis in fact and law;
4.......Ordering defendant, his agents or any person representing him or those who may claim
substantial rights on the land to vacate therefrom, cease and desist from disturbing, molesting
and interfering plaintiffs possession of the land in question, and from committing any such act as
would tend to mitigate, deny or deprive plaintiff of its ownership and possession over said land.
On appeal, the Court of Appeals reversed and gave judgment for private respondent, declaring
him the owner of the 19.4 hectares of land erroneously included in TCT No. 10101. The
dispositive portion of the appellate courts decision reads:
WHEREFORE, the appealed decision is hereby REVERSED AND SET ASIDE. A new decision
is hereby rendered:
1. Dismissing the complaint.
2. Declaring the disputed 19.4000 hectares of land embraced in TCT 10101 as exclusively
belonging to defendant-appellant, ordering its segregation from plaintiff-appellees title and its
reconveyance to appellant.
No pronouncement as to costs.
Petitioner moved for a reconsideration but its motion was denied in a resolution dated April 23,
1997. [26] Hence this petition.
Petitioner contends that:
First. Petitioner invokes the ruling of this Court in Benin v. Tuason [28] in support of its claim
that its predecessor-in-interest, Jose Alvarez, became the owner of the land by virtue of the
decree of registration issued in his name. In Benin, three sets of plaintiffs filed separate
complaints against Mariano Severo Tuason and J.M. Tuason & Co., Inc., praying for the
cancellation of OCT No. 735 covering two parcels of land called the Sta. Mesa Estate, or Parcel
1, with an area of 8,798,617.00 square meters, and the Diliman Estate, or Parcel 2, with an area
of 15,961,246.00 square meters. They asked that they be declared the owners and lawful
possessors of said lands.
Benin is distinguished from this case. In the first place, Benin involved vast tracts of lands which
had already been subdivided and bought by innocent purchasers for value and in good faith at the
time the claimants obtained registration. Secondly, when the claimants ancestors occupied the
lands in question and declared them for tax purposes in 1944, the lands were already covered by
the tax declarations in the name of J. M. Tuason & Co., Inc. In 1914, OCT No. 735 was issued in
the name of Tuason so that, from that time on, no possession could defeat the title of the
registered owners of the land. Thirdly, the validity of OCT No. 735 had already been recognized
by this Court in several cases [29] and, as a result thereof, the transfer certificates of title
acquired by the innocent purchasers for value were also declared valid. It was held that neither
could the claimants file an action to annul these titles for not only had these actions prescribed,
but the fact was that the claimants were also barred from doing so by laches, having filed the
complaint only in 1955, or 41 years after the issuance of OCT No. 735 to J.M. Tuason & Co.,
Inc. Thus, it was not solely the decree of registration which was considered in resolving the
Benin case. What was considered decisive was the valid title or right of ownership of J. M.
Tuason & Co., Inc. and that of the other innocent purchasers for value and in good faith
compared to the failure of the claimants to show their right to own or possess the questioned
properties. Sccalr
Petitioner maintains that the possession by private respondent and his predecessor-in-interest of
the 19.4 hectares of land for more than 30 years cannot overcome the decree of registration
issued in favor of its predecessor-in-interest Jose Alvarez. Petitioner quotes the following
statement in the Benin case:
It follows also that the allegation of prescriptive title in favor of plaintiffs does not suffice to
establish a cause of action. If such prescription was completed before the registration of the land
in favor of the Tuasons, the resulting prescriptive title was cut off and extinguished by the decree
of registration. If, on the contrary, the prescription was either begun or completed after the decree
of registration, it conferred no title because, by express provision of law, prescription can not
operate against the registered owner (Act 496). [30]
Petitioner would thus insist that, by virtue of the decree of registration, Jose Alvarez and those
claiming title from him (i.e., the spouses Beduya) acquired ownership of the 19.4 hectares of
land, despite the fact that they neither possessed nor occupied these lands.
This view is mistaken. A consideration of the cases shows that a decree of registration cut off or
extinguished a right acquired by a person when such right refers to a lien or encumbrance on the
land not to the right of ownership thereof which was not annotated on the certificate of title
issued thereon. Thus, Act No. 496 provides:
Sec. 39. Every person receiving a certificate of title in pursuance of a decree of registration, and
every subsequent purchaser of registered land who takes a certificate of title for value in good
faith shall hold the same free of all encumbrances except those noted on said certificate, and any
of the following encumbrances which may be subsisting, namely: Calrspped
First. Liens, claims, or rights arising or existing under the laws of Constitution of the United
States or of the Philippine Islands which the statutes of the Philippine Islands cannot require to
appear of record in the Registry.
Second. Taxes within two years after the same became due and payable.
Third. Any public highway, way, private way established by law, or any Government irrigation
canal or lateral thereof, where the certificate of title does not state that the boundaries of such
highway, way, or irrigation canal or lateral thereof, have been determined.
But if there are easements or other rights appurtenant to a parcel of registered land which for any
reason have failed to be registered, such easements or rights shall remain so appurtenant
notwithstanding such failure, and shall be held to pass with the land until cut off or extinguished
by the registration of the servient estate, or in any other manner.
Hence, in Cid v. Javier, [31] it was helds:
. . . Consequently, even conceding arguendo that such an easement has been acquired, it had been
cut off and extinguished by the registration of the servient estate under the Torrens system
without the easement being annotated on the corresponding certificate of title, pursuant to
Section 39 of the Land Registration Act.
This principle was reiterated in Purugganan v. Paredes [32] which also involved an easement of
light and view that was not annotated on the certificate of title of the servient estate. Scedp
But to make this principle applicable to a situation wherein title acquired by a person through
acquisitive prescription would be considered cut off and extinguished by a decree of registration
would run counter to established jurisprudence before and after the ruling in Benin. Indeed,
registration has never been a mode of acquiring ownership over immovable property. As early as
1911, in the case of City of Manila v. Lack, [33] the Court already ruled on the purpose of
registration of lands, viz.:
The Court of Land Registration was created for a single purpose. The Act is entitled "An Act to
provide for the adjudication and registration of titles to lands in the Philippine Islands." The sole
purpose of the Legislature in its creation was to bring the land titles of the Philippine Islands
under one comprehensive and harmonious system, the cardinal features of which are
indefeasibility of title and the intervention of the State as a prerequisite to the creation and
transfer of titles and interest, with the resultant increase in the use of land as a business asset by
reason of the greater certainty and security of title. It does not create a title nor vest one. It
simply confirms a title already created and already vested, rendering it forever indefeasible. . .
Again, in the case of Angeles v. Samia [34] where land was erroneously registered in favor of
persons who neither possessed nor occupied the same, to the prejudice of the actual occupant, the
Court held:
. . . The purpose of the Land Registration Act, as this court has had occasion to so state more than
once, is not to create or vest title, but to confirm and register title already created and already
vested, and of course, said original certificate of title No. 8995 could not have vested in the
defendant more title than what was rightfully due her and her coowners. It appearing that said
certificate granted her much more than she expected, naturally to the prejudice of another, it is
but just that the error, which gave rise to said anomaly, be corrected (City of Manila vs. Lack, 19
Phil., 324). The defendant and her coowners knew or, at least, came to know that it was through
error that the original certificate of title in question was issued by the court which heard cadastral
case No. 11 of Bacolor, not only in or prior to March, 1933, but from the time said certificate was
issued in their favor, that is, from December 15, 1921. This is evidenced by the fact that, ever
since, they remained passive without even attempting to make the least showing of ownership
over the land in question until after the lapse of more than eleven years. The Land Registration
Act as well as the Cadastral Act protects only the holders of a title in good faith and does not
permit its provisions to be used as a shield for the commission of fraud, or that one should enrich
himself at the expense of another (Gustilo vs. Maravilla, 48 Phil., 442; Angelo vs. Director of
Lands, 49 Phil., 838). The above-stated Acts do not give anybody, who resorts to the provisions
thereof, a better title than he really and lawfully has. If he happened to obtain it by mistake or to
secure, to the prejudice of his neighbor, more land than he really owns, with or without bad faith
on his part, the certificate of title, which may have been issued to him under the circumstances,
may and should be cancelled or corrected (Legarda and Prieto vs. Saleeby, 31 Phil., 590). This is
permitted by section 112 of Act No. 496, which is applicable to the Cadastral Act because it is so
provided expressly by the provisions of section 11 of the latter Act. It cannot be otherwise
because, as stated in the case of Domingo vs. Santos, Ongsiako, Lim y Cia. (55 Phil., 361), errors
in the plans of lands sought to be registered in the registry and reproduced in the certificate of
title issued later, do not annul the decree of registration on the ground that it is not the plan but
the land itself which is registered in the registry. In other words, if the plan of an applicant for
registration or claimant in a cadastral case alleges that the land referred to in said plan is 100 or
1,000 hectares, and the land which he really owns and desires to register in the registry is only 80
ares, he cannot claim to be the owner of the existing difference if afterwards he is issued a
certificate of title granting him said area of 100 or 1,000 hectares. [35] Edpsc
The principle laid down in this 1938 case remains the prevailing doctrine, its latest application
being in the case of Reyes v. Court of Appeals [36] wherein we ruled that the fact that a party
was able to secure a title in his favor did not operate to vest ownership upon her of the property.
In the present case, private respondent has been in actual, open, peaceful and continuous
possession of the property since 1950. This fact was corroborated by the testimony of Eleuterio
Cambangay who personally knew that Ulpiano Mumar transferred the land covered by Tax
Declaration No. 3840 [37] in favor of private respondent in 1950. [38] Private respondents claim
based on actual occupation of the land is bolstered by Tax Declaration Nos. R-1475, R-799 and
D-2247 [39] which were issued in his name in 1950, 1961 and 1974, respectively. Together with
his actual possession of the land, these tax declarations constitute strong evidence of ownership
of the land occupied by him. As we said in the case of Republic vs. Court of Appeals: [40]
Although tax declarations or realty tax payments of property are not conclusive evidence of
ownership, nevertheless, they are good indicia of possession in the concept of owner for no one
in his right mind would be paying taxes for a property that is not in his actual or at least
constructive possession. They constitute at least proof that the holder has a claim of title over the
property. The voluntary declaration of a piece of property for taxation purposes manifests not
only ones sincere and honest desire to obtain title to the property and announces his adverse
claim against the State and all other interested parties, but also the intention to contribute needed
revenues to the Government. Such an act strengthens ones bona fide claim of acquisition of
More importantly, it was established that private respondent, having been in possession of the
land since 1950, was the owner of the property when it was registered by Jose Alvarez in 1969,
his possession tacked to that of his predecessor-in-interest, Ulpiano Mumar, which dates back to
1917. [41] Clearly, more than 30 years had elapsed before a decree of registration was issued in
favor of Jose Alvarez. This uninterrupted adverse possession of the land for more than 30 years
could only ripen into ownership of the land through acquisitive prescription which is a mode of
acquiring ownership and other real rights over immovable property. Prescription requires public,
peaceful, uninterrupted and adverse possession of the property in the concept of an owner for ten
(10) years, in case the possession is in good faith and with a just title. Such prescription is called
ordinary prescription, as distinguished from extraordinary prescription which requires possession
for 30 years in case possession is without just title or is not in good faith. [42] Edp
In contrast to private respondent, it has been shown that neither Jose Alvarez nor the spouses
Beduya were at any time in possession of the property in question. In fact, despite knowledge by
Gaudencio Beduya that private respondent occupied this 19.4 hectares included in the area
covered by TCT No. 10101, [43] he never instituted any action to eject or recover possession
from the latter. Hence, it can be concluded that neither Jose Alvarez nor the spouses Beduya ever
exercised any right of ownership over the land. The fact of registration in their favor never vested
in them the ownership of the land in dispute. "If a person obtains a title under the Torrens system,
which includes by mistake or oversight land which can no longer be registered under the system,
he does not, by virtue of the said certificate alone, become the owner of the lands illegally
included." [44]
Considering the circumstances pertaining in this case, therefore, we hold that ownership of the
19.4 hectares of land presently occupied by private respondent was already vested in him and
that its inclusion in OCT No. 546 and, subsequently, in TCT No. 10101, was erroneous.
Accordingly, the land in question must be reconveyed in favor of private respondent, the true and
actual owner thereof, reconveyance being clearly the proper remedy in this case.
"The true owner may bring an action to have the ownership or title to the land judicially settled
and the Court in the exercise of its equity jurisdiction, without ordering the cancellation of the
Torrens title issued upon the patent, may direct the defendants, the registered owner to reconvey
the parcel of land to the plaintiff who has been found to be the true owner thereof." (Vital vs.
Amore, 90 Phil. 955) "The reconveyance is just and proper in order to terminate the intolerable
anomaly that the patentees should have a torrens title for the land which they and their
predecessors never possessed which has been possessed by Novo in the concept of owner."
(Bustarga v. Novo, 129 SCRA 125) [45]
Second. Generally, an action for reconveyance based on an implied or constructive trust, such as
the instant case, prescribes in 10 years from the date of issuance of decree of registration. [46]
However, this rule does not apply when the plaintiff is in actual possession of the land. Thus, it
has been held: Misedp
. . . [A]n action for reconveyance of a parcel of land based on implied or constructive trust
prescribes in ten years, the point of reference being the date of registration of the deed or the date
of the issuance of the certificate of title over the property, but this rule applies only when the
plaintiff or the person enforcing the trust is not in possession of the property, since if a person
claiming to be the owner thereof is in actual possession of the property, as the defendants are in
the instant case, the right to seek reconveyance, which in effect seeks to quiet title to the
property, does not prescribe. The reason for this is that one who is in actual possession of a piece
of land claiming to be the owner thereof may wait until his possession is disturbed or his title is
attacked before taking steps to vindicate his right, the reason for the rule being, that his
undisturbed possession gives him a continuing right to seek the aid of a court of equity to
ascertain and determine the nature of the adverse claim of a third party and its effect on his own
title, which right can be claimed only by one who is in possession. [47]
Having been the sole occupant of the land in question, private respondent may seek
reconveyance of his property despite the lapse of more than 10 years.
Nor is there any obstacle to the determination of the validity of TCT No. 10101. It is true that the
indefeasibility of torrens titles cannot be collaterally attacked. In the instant case, the original
complaint is for recovery of possession filed by petitioner against private respondent, not an
original action filed by the latter to question the validity of TCT No. 10101 on which petitioner
bases its right. To rule on the issue of validity in a case for recovery of possession is tantamount
to a collateral attack. However, it should not be overlooked that private respondent filed a
counterclaim against petitioner, claiming ownership over the land and seeking damages. Hence,
we could rule on the question of the validity of TCT No. 10101 for the counterclaim can be
considered a direct attack on the same. "A counterclaim is considered a complaint, only this time,
it is the original defendant who becomes the plaintiff. . . . It stands on the same footing and is to
be tested by the same rules as if it were an independent action." [48] In an analogous case, [49]
we ruled on the validity of a certificate of title despite the fact that the original action instituted
before the lower court was a case for recovery of possession. The Court reasoned that since all
the facts of the case are before it, to direct the party to institute cancellation proceedings would
be needlessly circuitous and would unnecessarily delay the termination of the controversy which
has already dragged on for 20 years.
Third. Petitioner nonetheless contends that an action for reconveyance does not lie against it,
because it is an innocent purchaser for value in the foreclosure sale held in 1985.
This contention has no merit. Sec. 38 of Act No. 496, the Land Registration Act, provides:
If the court after hearing finds that the applicant or adverse claimant has title as stated in his
application or adverse claim and proper for registration, a decree of confirmation and registration
shall be entered. Every decree of registration shall bind the land, and quiet title thereto, subject
only to the exceptions stated in the following section. It shall be conclusive upon and against all
persons, including the Insular Government and all the branches thereof, whether mentioned by
name in the application, notice, or citation, or included in the general description "To all whom it
may concern." Such decree shall not be opened by reason of the absence, infancy, or other
disability of any person affected thereby, nor by any proceeding in any court for reversing
judgments or decrees; subject, however, to the right of any person deprived of land or of any
estate or interest therein by decree of registration obtained by fraud to file in the competent Court
of First Instance a petition for review within one year after entry of the decree, provided no
innocent purchaser for value has acquired an interest. Upon the expiration of said term of one
year, every decree or certificate of title issued in accordance with this section shall be
incontrovertible. If there is any such purchaser, the decree of registration shall not be opened, but
shall remain in full force and effect forever, subject only to the right of appeal hereinbefore
provided: Provided, however, That no decree or certificate of title issued to persons not parties to
the appeal shall be cancelled or annulled. But any person aggrieved by such decree in any case
may pursue his remedy by action for damages against the applicant or any other person for fraud
in procuring the decree. Whenever the phrase "innocent purchaser for value" or an equivalent
phrase occurs in this Act, it shall be deemed to include an innocent lessee, mortgagee, or other
encumbrancer for value. (As amended by Sec. 3, Act 3621; and Sec. 1, Act No. 3630.) Edpmis
Succinctly put, 38 provides that a certificate of title is conclusive and binding upon the whole
world. Consequently, a buyer need not look behind the certificate of title in order to determine
who is the actual owner of the land. However, this is subject to the right of a person deprived of
land through fraud to bring an action for reconveyance, provided that it does not prejudice the
rights of an innocent purchaser for value and in good faith. "It is a condition sine qua non for an
action for reconveyance to prosper that the property should not have passed to the hands of an
innocent purchaser for value." [50] The same rule applies to mortgagees, like petitioner. Thus,
we held:
Where the certificate of title is in the name of the mortgagor when the land is mortgaged, the
innocent mortgagee for value has the right to rely on what appears on the certificate of title. In
the absence of anything to excite suspicion, said mortgagee is under no obligation to look beyond
the certificate and investigate the title of the mortgagor appearing on the face of said certificate.
Although Article 2085 of the Civil Code provides that absolute ownership of the mortgaged
property by the mortgagor is essential, the subsequent declaration of a title as null and void is not
a ground for nullifying the mortgage right of a mortgagee in good faith. [51]
The evidence before us, however, indicates that petitioner is not a mortgagee in good faith. To be
sure, an innocent mortgagee is not expected to conduct an exhaustive investigation on the history
of the mortgagors title. Nonetheless, especially in the case of a banking institution, a mortgagee
must exercise due diligence before entering into said contract. Judicial notice is taken of the
standard practice for banks, before approving a loan, to send representatives to the premises of
the land offered as collateral and to investigate who are the real owners thereof. Banks, their
business being impressed with public interest, are expected to exercise more care and prudence
than private individuals in their dealings, even those involving registered lands. [52] Jjsc
In this case, petitioners representative, Patton R. Olano, admitted that he came to know of the
property for the first time in 1979 when he inspected it to determine whether the portion
occupied by private respondent and mortgaged by the latter to petitioner was included in TCT
No. 10101. This means that when the land was mortgaged by the spouses Beduya in 1972, no
investigation had been made by petitioner. It is clear, therefore, that petitioner failed to exercise
due care and diligence in establishing the condition of the land as regards its actual owners and
possessors before it entered into the mortgage contract in 1972 with the Beduyas. Had it done so,
it would not have failed to discover that private respondent was occupying the disputed portion
of 19.4 hectares. For this reason, petitioner cannot be considered an innocent purchaser for value
when it bought the land covered by TCT No. 10101 in 1985 at the foreclosure sale.
Indeed, two circumstances negate petitioners claim that it was an innocent purchaser for value
when it bought the land in question, including the portion occupied by private respondent: (1)
petitioner was already informed by Gaudencio Beduya that private respondent occupied a portion
of the property covered by TCT No. 10101; and (2) petitioners representative conducted an
investigation of the property in 1979 to ascertain whether the land mortgaged by private
respondent was included in TCT No. 10101. In other words, petitioner was already aware that a
person other than the registered owner was in actual possession of the land when it bought the
same at the foreclosure sale. A person who deliberately ignores a significant fact which would
create suspicion in an otherwise reasonable man is not an innocent purchaser for value. "It is a
well-settled rule that a purchaser cannot close his eyes to facts which should put a reasonable
man upon his guard, and then claim that he acted in good faith under the belief that there was no
defect in the title of the vendor." [53]
Petitioner deliberately disregarded both the fact that private respondent already occupied the
property and that he was claiming ownership over the same. It cannot feign ignorance of private
respondents claim to the land since the latter mortgaged the same land to petitioner as security
for the loan he contracted in 1978 on the strength of the tax declarations issued under his name.
Instead of inquiring into private respondents occupation over the land, petitioner simply
proceeded with the foreclosure sale, pretending that no doubts surround the ownership of the
land covered by TCT No. 10101. Considering these circumstances, petitioner cannot be deemed
an innocent mortgagee/purchaser for value. As we ruled: Scjj
"The failure of appellees to take the ordinary precautions which a prudent man would have taken
under the circumstances, specially in buying a piece of land in the actual, visible and public
possession of another person, other than the vendor, constitutes gross negligence amounting to
bad faith.
In this connection, it has been held that where, as in this case, the land sold is in the possession
of a person other than the vendor, the purchaser is required to go beyond the certificates of title
and ma[k]e inquiries concerning the rights of the actual possessor. (Citations omitted.)
One who purchases real property which is in the actual possession of another should, at least,
make some inquiry concerning the right of those in possession. The actual possession by other
than the vendor should, at least put the purchaser upon inquiry. He can scarcely, in the absence of
such inquiry, be regarded as a bona fide purchaser as against such possessors." [54]
Fourth. From the foregoing, we find that the resolution of the issue of estoppel will not affect the
outcome of this case. Petitioner claims that the fact that it approved a loan in favor of private
respondent and executed a mortgage contract covering the 19.4 hectares covered by tax
declarations issued under private respondents name does not mean that it is estopped from
questioning the latters title. Petitioner accuses private respondent of having made
misrepresentations which led it to believe in his valid title and ownership.
The claim has no basis. Private respondent made no misrepresentation with regard to the land
occupied by him as he is actually the real owner thereof. Moreover, when private respondent
entered into a mortgage contract with petitioner, his claim of ownership was supported not only
by the tax declarations but also by a certification of the Clerk of Court of the Court of First
Instance of Bohol that no civil, land registration or cadastral case has been filed or instituted
before the court affecting the validity of Tax Declaration No. D-2247 covering the land located in
Bugang, San Miguel, Bohol and declared in the name of Carlos Cajes. [55] These documents
were relied upon by private respondent in support of his claim of ownership. We cannot consider
the submission of these documents as misrepresentations by private respondent as to the actual
ownership of the land. Rather, private respondent believed in good faith and with good reason
that he was the owner of the 19.4 hectares occupied by him. Sjcj
As to the question of estoppel, we do not find petitioner to be estopped from questioning private
respondents title. "Estoppel in pais arises when one, by his acts, representations or admission, or
by his own silence when he ought to speak out, intentionally or through culpable negligence,
induces another to believe certain facts to exist and such other rightfully relies and acts on such
belief, so that he will be prejudiced if the former is permitted to deny the existence of such
facts." [56] In the case at bar, upon learning that the land occupied by private respondent was
also covered by TCT No. 10101, petitioner immediately demanded full payment of the loan and
thereafter cancelled the mortgage contract, a fact that is admitted by private respondent himself.
[57] Indeed, nothing in record indicates that petitioner impliedly acquiesced to the validity of
private respondents title when it found out that the latter was occupying a portion of the land
covered by TCT No. 10101.
However, for reasons aforestated, we uphold private respondents ownership of 19.4 hectares
occupied by him. As a necessary consequence thereof, such portion of land included in TCT No.
10101 must be segregated and reconveyed in his favor.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED in toto.
[G.R. No. 137705. August 22, 2000]
FINANCE, INC., respondent.
After agreeing to a contract stipulating that a real or immovable property be considered as
personal or movable, a party is estopped from subsequently claiming otherwise. Hence, such
property is a proper subject of a writ of replevin obtained by the other contracting party.
The Case
Before us is a Petition for Review on Certiorari assailing the January 6, 1999 Decision [1] of the
Court of Appeals (CA) [2] in CA-GR SP No. 47332 and its February 26, 1999 Resolution [3]
denying reconsideration. The decretal portion of the CA Decision reads as follows:
WHEREFORE, premises considered, the assailed Order dated February 18, 1998 and Resolution
dated March 31, 1998 in Civil Case No. Q-98-33500 are hereby AFFIRMED. The writ of
preliminary injunction issued on June 15, 1998 is hereby LIFTED. [4]
In its February 18, 1998 Order, [5] the Regional Trial Court (RTC) of Quezon City (Branch 218)
[6] issued a Writ of Seizure. [7] The March 18, 1998 Resolution [8] denied petitioners Motion
for Special Protective Order, praying that the deputy sheriff be enjoined from seizing
immobilized or other real properties in (petitioners) factory in Cainta, Rizal and to return to their
original place whatever immobilized machineries or equipments he may have removed. [9]
The Facts
The undisputed facts are summarized by the Court of Appeals as follows: [10]
On February 13, 1998, respondent PCI Leasing and Finance, Inc. (PCI Leasing for short) filed
with the RTC-QC a complaint for [a] sum of money (Annex E), with an application for a writ of
replevin docketed as Civil Case No. Q-98-33500.
On March 6, 1998, upon an ex-parte application of PCI Leasing, respondent judge issued a writ
of replevin (Annex B) directing its sheriff to seize and deliver the machineries and equipment to
PCI Leasing after 5 days and upon the payment of the necessary expenses.
On March 24, 1998, in implementation of said writ, the sheriff proceeded to petitioners factory,
seized one machinery with [the] word that he [would] return for the other machineries.
On March 25, 1998, petitioners filed a motion for special protective order (Annex C), invoking
the power of the court to control the conduct of its officers and amend and control its processes,
praying for a directive for the sheriff to defer enforcement of the writ of replevin.
This motion was opposed by PCI Leasing (Annex F), on the ground that the properties [were]
still personal and therefore still subject to seizure and a writ of replevin.
In their Reply, petitioners asserted that the properties sought to be seized [were] immovable as
defined in Article 415 of the Civil Code, the parties agreement to the contrary notwithstanding.
They argued that to give effect to the agreement would be prejudicial to innocent third parties.
They further stated that PCI Leasing [was] estopped from treating these machineries as personal
because the contracts in which the alleged agreement [were] embodied [were] totally sham and
On April 6, 1998, the sheriff again sought to enforce the writ of seizure and take possession of
the remaining properties. He was able to take two more, but was prevented by the workers from
taking the rest.
On April 7, 1998, they went to [the CA] via an original action for certiorari.
Ruling of the Court of Appeals
Citing the Agreement of the parties, the appellate court held that the subject machines were
personal property, and that they had only been leased, not owned, by petitioners. It also ruled that
the words of the contract are clear and leave no doubt upon the true intention of the contracting
parties. Observing that Petitioner Goquiolay was an experienced businessman who was not
unfamiliar with the ways of the trade, it ruled that he should have realized the import of the
document he signed. The CA further held:
Furthermore, to accord merit to this petition would be to preempt the trial court in ruling upon
the case below, since the merits of the whole matter are laid down before us via a petition whose
sole purpose is to inquire upon the existence of a grave abuse of discretion on the part of the
[RTC] in issuing the assailed Order and Resolution. The issues raised herein are proper subjects
of a full-blown trial, necessitating presentation of evidence by both parties. The contract is being
enforced by one, and [its] validity is attacked by the other a matter x x x which respondent court
is in the best position to determine.
Hence, this Petition. [11]
The Issues
In their Memorandum, petitioners submit the following issues for our consideration:
A. Whether or not the machineries purchased and imported by SERGS became real property by
virtue of immobilization.
B. Whether or not the contract between the parties is a loan or a lease. [12]
In the main, the Court will resolve whether the said machines are personal, not immovable,
property which may be a proper subject of a writ of replevin. As a preliminary matter, the Court
will also address briefly the procedural points raised by respondent.
The Courts Ruling
The Petition is not meritorious.
Preliminary Matter:Procedural Questions
Respondent contends that the Petition failed to indicate expressly whether it was being filed
under Rule 45 or Rule 65 of the Rules of Court. It further alleges that the Petition erroneously
impleaded Judge Hilario Laqui as respondent.
There is no question that the present recourse is under Rule 45. This conclusion finds support in
the very title of the Petition, which is Petition for Review on Certiorari. [13]
While Judge Laqui should not have been impleaded as a respondent, [14] substantial justice
requires that such lapse by itself should not warrant the dismissal of the present Petition. In this
light, the Court deems it proper to remove, motu proprio, the name of Judge Laqui from the
caption of the present case.
Main Issue: Nature of the Subject Machinery
Petitioners contend that the subject machines used in their factory were not proper subjects of the
Writ issued by the RTC, because they were in fact real property. Serious policy considerations,
they argue, militate against a contrary characterization.
Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of
personal property only. [15] Section 3 thereof reads:
SEC. 3. Order. -- Upon the filing of such affidavit and approval of the bond, the court shall issue
an order and the corresponding writ of replevin describing the personal property alleged to be
wrongfully detained and requiring the sheriff forthwith to take such property into his custody.
On the other hand, Article 415 of the Civil Code enumerates immovable or real property as
ART. 415. The following are immovable property:
x x x....................................x x x....................................x x x
(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for
an industry or works which may be carried on in a building or on a piece of land, and which tend
directly to meet the needs of the said industry or works;
x x x....................................x x x....................................x x x
In the present case, the machines that were the subjects of the Writ of Seizure were placed by
petitioners in the factory built on their own land. Indisputably, they were essential and principal
elements of their chocolate-making industry. Hence, although each of them was movable or
personal property on its own, all of them have become immobilized by destination because they
are essential and principal elements in the industry. [16] In that sense, petitioners are correct in
arguing that the said machines are real, not personal, property pursuant to Article 415 (5) of the
Civil Code. [17]
Be that as it may, we disagree with the submission of the petitioners that the said machines are
not proper subjects of the Writ of Seizure.
The Court has held that contracting parties may validly stipulate that a real property be
considered as personal. [18] After agreeing to such stipulation, they are consequently estopped
from claiming otherwise. Under the principle of estoppel, a party to a contract is ordinarily
precluded from denying the truth of any material fact found therein.
Hence, in Tumalad v. Vicencio, [19] the Court upheld the intention of the parties to treat a house
as a personal property because it had been made the subject of a chattel mortgage. The Court
x x x. Although there is no specific statement referring to the subject house as personal property,
yet by ceding, selling or transferring a property by way of chattel mortgage defendants-
appellants could only have meant to convey the house as chattel, or at least, intended to treat the
same as such, so that they should not now be allowed to make an inconsistent stand by claiming
Applying Tumalad, the Court in Makati Leasing and Finance Corp. v. Wearever Textile Mills
[20] also held that the machinery used in a factory and essential to the industry, as in the present
case, was a proper subject of a writ of replevin because it was treated as personal property in a
contract. Pertinent portions of the Courts ruling are reproduced hereunder:
x x x. If a house of strong materials, like what was involved in the above Tumalad case, may be
considered as personal property for purposes of executing a chattel mortgage thereon as long as
the parties to the contract so agree and no innocent third party will be prejudiced thereby, there is
absolutely no reason why a machinery, which is movable in its nature and becomes immobilized
only by destination or purpose, may not be likewise treated as such. This is really because one
who has so agreed is estopped from denying the existence of the chattel mortgage.
In the present case, the Lease Agreement clearly provides that the machines in question are to be
considered as personal property. Specifically, Section 12.1 of the Agreement reads as follows:
12.1 The PROPERTY is, and shall at all times be and remain, personal property notwithstanding
that the PROPERTY or any part thereof may now be, or hereafter become, in any manner affixed
or attached to or embedded in, or permanently resting upon, real property or any building
thereon, or attached in any manner to what is permanent.
Clearly then, petitioners are estopped from denying the characterization of the subject machines
as personal property. Under the circumstances, they are proper subjects of the Writ of Seizure.
It should be stressed, however, that our holding -- that the machines should be deemed personal
property pursuant to the Lease Agreement is good only insofar as the contracting parties are
concerned. [22] Hence, while the parties are bound by the Agreement, third persons acting in
good faith are not affected by its stipulation characterizing the subject machinery as personal.
[23] In any event, there is no showing that any specific third party would be adversely affected.
Validity of the Lease Agreement
In their Memorandum, petitioners contend that the Agreement is a loan and not a lease. [24]
Submitting documents supposedly showing that they own the subject machines, petitioners also
argue in their Petition that the Agreement suffers from intrinsic ambiguity which places in
serious doubt the intention of the parties and the validity of the lease agreement itself. [25] In
their Reply to respondents Comment, they further allege that the Agreement is invalid. [26]
These arguments are unconvincing. The validity and the nature of the contract are the lis mota of
the civil action pending before the RTC. A resolution of these questions, therefore, is effectively
a resolution of the merits of the case. Hence, they should be threshed out in the trial, not in the
proceedings involving the issuance of the Writ of Seizure.
Indeed, in La Tondea Distillers v. CA, [27] the Court explained that the policy under Rule 60 was
that questions involving title to the subject property questions which petitioners are now raising
-- should be determined in the trial. In that case, the Court noted that the remedy of defendants
under Rule 60 was either to post a counter-bond or to question the sufficiency of the plaintiffs
bond. They were not allowed, however, to invoke the title to the subject property. The Court
In other words, the law does not allow the defendant to file a motion to dissolve or discharge the
writ of seizure (or delivery) on ground of insufficiency of the complaint or of the grounds relied
upon therefor, as in proceedings on preliminary attachment or injunction, and thereby put at issue
the matter of the title or right of possession over the specific chattel being replevied, the policy
apparently being that said matter should be ventilated and determined only at the trial on the
merits. [28]
Besides, these questions require a determination of facts and a presentation of evidence, both of
which have no place in a petition for certiorari in the CA under Rule 65 or in a petition for
review in this Court under Rule 45. [29]
Reliance on the Lease Agreement
It should be pointed out that the Court in this case may rely on the Lease Agreement, for nothing
on record shows that it has been nullified or annulled. In fact, petitioners assailed it first only in
the RTC proceedings, which had ironically been instituted by respondent. Accordingly, it must be
presumed valid and binding as the law between the parties.
Makati Leasing and Finance Corporation [30] is also instructive on this point. In that case, the
Deed of Chattel Mortgage, which characterized the subject machinery as personal property, was
also assailed because respondent had allegedly been required to sign a printed form of chattel
mortgage which was in a blank form at the time of signing. The Court rejected the argument and
relied on the Deed, ruling as follows:
x x x. Moreover, even granting that the charge is true, such fact alone does not render a contract
void ab initio, but can only be a ground for rendering said contract voidable, or annullable
pursuant to Article 1390 of the new Civil Code, by a proper action in court. There is nothing on
record to show that the mortgage has been annulled. Neither is it disclosed that steps were taken
to nullify the same. x x x
Alleged Injustice Committed on the Part of Petitioners
Petitioners contend that if the Court allows these machineries to be seized, then its workers
would be out of work and thrown into the streets. [31] They also allege that the seizure would
nullify all efforts to rehabilitate the corporation.
Petitioners arguments do not preclude the implementation of the Writ. As earlier discussed, law
and jurisprudence support its propriety. Verily, the above-mentioned consequences, if they come
true, should not be blamed on this Court, but on the petitioners for failing to avail themselves of
the remedy under Section 5 of Rule 60, which allows the filing of a counter-bond. The provision
SEC. 5. Return of property. -- If the adverse party objects to the sufficiency of the applicants
bond, or of the surety or sureties thereon, he cannot immediately require the return of the
property, but if he does not so object, he may, at any time before the delivery of the property to
the applicant, require the return thereof, by filing with the court where the action is pending a
bond executed to the applicant, in double the value of the property as stated in the applicants
affidavit for the delivery thereof to the applicant, if such delivery be adjudged, and for the
payment of such sum to him as may be recovered against the adverse party, and by serving a
copy bond on the applicant.
WHEREFORE, the Petition is DENIED and the assailed Decision of the Court of Appeals
AFFIRMED. Costs against petitioners.
G.R. No. 116100 February 9, 1996
CRISTINA SANTOS, petitioners,
OF PASIG, METRO MANILA, BRANCH 181, respondents.
This petition for review on certiorari assails the decision of respondent Court of Appeals in CA-
G.R. CV No. 29115, promulgated on November 10, 1993, which affirmed with modification the
decision of the trial court, as well as its resolution dated July 8, 1994 denying petitioner's motion
for reconsideration.1
On August 26, 1982, Civil Case No. 47466 for the grant of an easement of right of way was filed
by Pacifico Mabasa against Cristino Custodio, Brigida R. Custodio, Rosalina R. Morato, Lito
Santos and Maria Cristina C. Santos before the Regional Trial Court of Pasig and assigned to
Branch 22 thereof.2
The generative facts of the case, as synthesized by the trial court and adopted by the Court of
Appeals, are as follows:
Perusing the record, this Court finds that the original plaintiff Pacifico Mabasa died during the
pendency of this case and was substituted by Ofelia Mabasa, his surviving spouse [and children].
The plaintiff owns a parcel of land with a two-door apartment erected thereon situated at Interior
P. Burgos St., Palingon, Tipas, Tagig, Metro Manila. The plaintiff was able to acquire said
property through a contract of sale with spouses Mamerto Rayos and Teodora Quintero as
vendors last September 1981. Said property may be described to be surrounded by other
immovables pertaining to defendants herein. Taking P. Burgos Street as the point of reference, on
the left side, going to plaintiff's property, the row of houses will be as follows: That of defendants
Cristino and Brigido Custodio, then that of Lito and Maria Cristina Santos and then that of Ofelia
Mabasa. On the right side (is) that of defendant Rosalina Morato and then a Septic Tank (Exhibit
"D"). As an access to P. Burgos Street from plaintiff's property, there are two possible
passageways. The first passageway is approximately one meter wide and is about 20 meters
distan(t) from Mabasa's residence to P. Burgos Street. Such path is passing in between the
previously mentioned row of houses. The second passageway is about 3 meters in width and
length from plaintiff Mabasa's residence to P. Burgos Street; it is about 26 meters. In passing thru
said passageway, a less than a meter wide path through the septic tank and with 5-6 meters in
length, has to be traversed.
When said property was purchased by Mabasa, there were tenants occupying the remises and
who were acknowledged by plaintiff Mabasa as tenants. However, sometime in February, 1982,
one of said tenants vacated the apartment and when plaintiff Mabasa went to see the premises, he
saw that there had been built an adobe fence in the first passageway making it narrower in width.
Said adobe fence was first constructed by defendants Santoses along their property which is also
along the first passageway. Defendant Morato constructed her adobe fence and even extended
said fence in such a way that the entire passageway was enclosed. (Exhibit "1-Santoses and
Custodios, Exh. "D" for plaintiff, Exhs. "1-C", "1-D" and "1-E") And it was then that the
remaining tenants of said apartment vacated the area. Defendant Ma. Cristina Santos testified
that she constructed said fence because there was an incident when her daughter was dragged by
a bicycle pedalled by a son of one of the tenants in said apartment along the first passageway.
She also mentioned some other inconveniences of having (at) the front of her house a pathway
such as when some of the tenants were drunk and would bang their doors and windows. Some of
their footwear were even lost. . . .3 (Emphasis in original text; corrections in parentheses
On February 27, 1990, a decision was rendered by the trial court, with this dispositive part:
Accordingly, judgment is hereby rendered as follows:
1) Ordering defendants Custodios and Santoses to give plaintiff permanent access ingress and
egress, to the public street;
2) Ordering the plaintiff to pay defendants Custodios and Santoses the sum of Eight Thousand
Pesos (P8,000) as indemnity for the permanent use of the passageway.
The parties to shoulder their respective litigation expenses.4
Not satisfied therewith, therein plaintiff represented by his heirs, herein private respondents,
went to the Court of Appeals raising the sole issue of whether or not the lower court erred in not
awarding damages in their favor. On November 10, 1993, as earlier stated, the Court of Appeals
rendered its decision affirming the judgment of the trial court with modification, the decretal
portion of which disposes as follows:
WHEREFORE, the appealed decision of the lower court is hereby AFFIRMED WITH
MODIFICATION only insofar as the herein grant of damages to plaintiffs-appellants. The Court
hereby orders defendants-appellees to pay plaintiffs-appellants the sum of Sixty Five Thousand
(P65,000) Pesos as Actual Damages, Thirty Thousand (P30,000) Pesos as Moral Damages, and
Ten Thousand (P10,000) Pesos as Exemplary Damages. The rest of the appealed decision is
affirmed to all respects.5
On July 8, 1994, the Court of Appeals denied petitioner's motion for reconsideration.6 Petitioners
then took the present recourse to us, raising two issues, namely, whether or not the grant of right
of way to herein private respondents is proper, and whether or not the award of damages is in
With respect to the first issue, herein petitioners are already barred from raising the same.
Petitioners did not appeal from the decision of the court a quo granting private respondents the
right of way, hence they are presumed to be satisfied with the adjudication therein. With the
finality of the judgment of the trial court as to petitioners, the issue of propriety of the grant of
right of way has already been laid to rest.
For failure to appeal the decision of the trial court to the Court of Appeals, petitioners cannot
obtain any affirmative relief other than those granted in the decision of the trial court. That
decision of the court below has become final as against them and can no longer be reviewed,
much less reversed, by this Court. The rule in this jurisdiction is that whenever an appeal is taken
in a civil case, an appellee who has not himself appealed may not obtain from the appellate court
any affirmative relief other than what was granted in the decision of the lower court. The
appellee can only advance any argument that he may deem necessary to defeat the appellant's
claim or to uphold the decision that is being disputed, and he can assign errors in his brief if such
is required to strengthen the views expressed by the court a quo. These assigned errors, in turn,
may be considered by the appellate court solely to maintain the appealed decision on other
grounds, but not for the purpose of reversing or modifying the judgment in the appellee's favor
and giving him other affirmative reliefs.7
However, with respect to the second issue, we agree with petitioners that the Court of Appeals
erred in awarding damages in favor of private respondents. The award of damages has no
substantial legal basis. A reading of the decision of the Court of Appeals will show that the award
of damages was based solely on the fact that the original plaintiff, Pacifico Mabasa, incurred
losses in the form of unrealized rentals when the tenants vacated the leased premises by reason of
the closure of the passageway.
However, the mere fact that the plaintiff suffered losses does not give rise to a right to recover
damages. To warrant the recovery of damages, there must be both a right of action for a legal
wrong inflicted by the defendant, and damage resulting to the plaintiff therefrom. Wrong without
damage, or damage without wrong, does not constitute a cause of action, since damages are
merely part of the remedy allowed for the injury caused by a breach or wrong.8
There is a material distinction between damages and injury. Injury is the illegal invasion of a
legal right; damage is the loss, hurt, or harm which results from the injury; and damages are the
recompense or compensation awarded for the damage suffered. Thus, there can be damage
without injury in those instances in which the loss or harm was not the result of a violation of a
legal duty. These situations are often called damnum absque injuria.9
In order that a plaintiff may maintain an action for the injuries of which he complains, he must
establish that such injuries resulted from a breach of duty which the defendant owed to the
plaintiff a concurrence of injury to the plaintiff and legal responsibility by the person causing
it.10 The underlying basis for the award of tort damages is the premise that an individual was
injured in contemplation of law. Thus, there must first be the breach of some duty and the
imposition of liability for that breach before damages may be awarded; it is not sufficient to state
that there should be tort liability merely because the plaintiff suffered some pain and suffering.11
Many accidents occur and many injuries are inflicted by acts or omissions which cause damage
or loss to another but which violate no legal duty to such other person, and consequently create
no cause of action in his favor. In such cases, the consequences must be borne by the injured
person alone. The law affords no remedy for damages resulting from an act which does not
amount to a legal injury or wrong.12
In other words, in order that the law will give redress for an act causing damage, that act must be
not only hurtful, but wrongful. There must be damnum et injuria.13 If, as may happen in many
cases, a person sustains actual damage, that is, harm or loss to his person or property, without
sustaining any legal injury, that is, an act or omission which the law does not deem an injury, the
damage is regarded as damnum absque injuria.14
In the case at bar, although there was damage, there was no legal injury. Contrary to the claim of
private respondents, petitioners could not be said to have violated the principle of abuse of right.
In order that the principle of abuse of right provided in Article 21 of the Civil Code can be
applied, it is essential that the following requisites concur: (1) The defendant should have acted
in a manner that is contrary to morals, good customs or public policy; (2) The acts should be
willful; and (3) There was damage or injury to the plaintiff.15
The act of petitioners in constructing a fence within their lot is a valid exercise of their right as
owners, hence not contrary to morals, good customs or public policy. The law recognizes in the
owner the right to enjoy and dispose of a thing, without other limitations than those established
by law.16 It is within the right of petitioners, as owners, to enclose and fence their property.
Article 430 of the Civil Code provides that "(e)very owner may enclose or fence his land or
tenements by means of walls, ditches, live or dead hedges, or by any other means without
detriment to servitudes constituted thereon."
At the time of the construction of the fence, the lot was not subject to any servitudes. There was
no easement of way existing in favor of private respondents, either by law or by contract. The
fact that private respondents had no existing right over the said passageway is confirmed by the
very decision of the trial court granting a compulsory right of way in their favor after payment of
just compensation. It was only that decision which gave private respondents the right to use the
said passageway after payment of the compensation and imposed a corresponding duty on
petitioners not to interfere in the exercise of said right.
Hence, prior to said decision, petitioners had an absolute right over their property and their act of
fencing and enclosing the same was an act which they may lawfully perform in the employment
and exercise of said right. To repeat, whatever injury or damage may have been sustained by
private respondents by reason of the rightful use of the said land by petitioners is damnum
absque injuria.17
A person has a right to the natural use and enjoyment of his own property, according to his
pleasure, for all the purposes to which such property is usually applied. As a general rule,
therefore, there is no cause of action for acts done by one person upon his own property in a
lawful and proper manner, although such acts incidentally cause damage or an unavoidable loss
to another, as such damage or loss is damnum absque injuria. 18 When the owner of property
makes use thereof in the general and ordinary manner in which the property is used, such as
fencing or enclosing the same as in this case, nobody can complain of having been injured,
because the incovenience arising from said use can be considered as a mere consequence of
community life. 19
The proper exercise of a lawful right cannot constitute a legal wrong for which an action will lie,
20 although the act may result in damage to another, for no legal right has been invaded. 21 One
may use any lawful means to accomplish a lawful purpose and though the means adopted may
cause damage to another, no cause of action arises in the latter's favor. An injury or damage
occasioned thereby is damnum absque injuria. The courts can give no redress for hardship to an
individual resulting from action reasonably calculated to achieve a lawful means. 22
WHEREFORE, under the compulsion of the foregoing premises, the appealed decision of
respondent Court of Appeals is hereby REVERSED and SET ASIDE and the judgment of the
trial court is correspondingly REINSTATED.
[G.R. No. 127549. January 28, 1998]
This is an appeal under Rule 45 of the Rules of Court from the decision [1] of 18 December 1996
of the Court of Appeals in CA-G.R. CV No. 48473, which affirmed with modification the 30
June 1994 Decision [2] of Branch 19 of the Regional Trial Court of Bulacan in Civil Case No.
77-M-92 granting the private respondents a right of way through the property of the petitioners.
The antecedent facts, as summarized by the Court of Appeals, are as follows:
Plaintiff spouses Arsenio and Roslynn Fajardo are the registered owners of a piece of land, Lot
No. 124 of the Obando Cadastre, containing an area of 1,043 square meters, located at Paco,
Obando, Bulacan, and covered by Transfer Certificate Title (TCT) No. T-147729 (M) of the
Registry of Deeds of Meycauayan, Bulacan (Exhibit B, p. 153 Orig. Rec.). They acquired said lot
under a Deed of Absolute Sale dated February 6, 1992 executed by the vendors Pedro M.
Sanchez, et al. (Annex A, Complaint; pp. 7-8 ibid.).
Plaintiffs aforesaid Lot 124 is surrounded by Lot 1 (Psd 45412), a fishpond (Exh. C-5; p. 154,
ibid.), on the northeast portion thereof; by Lot 126, owned by Florentino Cruz, on the southeast
portion; by Lot 6-a and a portion of Lot 6-b (both Psd-297786) owned respectively by Spouses
Cesar and Raquel Sta. Maria and Florcerfida Sta. Maria (Exhs. C-2 and C-3, ibid.), on the
southwest; and by Lot 122, owned by the Jacinto family, on the northwest.
On February 17, 1992, plaintiff spouses Fajardo filed a complaint against defendants Cesar and
Raquel Sta. Maria or Florcerfida Sta. Maria for the establishment of an easement of right of way.
Plaintiffs alleged that their lot, Lot 124, is surrounded by properties belonging to other persons,
including those of the defendants; that since plaintiffs have no adequate outlet to the provincial
road, an easement of a right of way passing through either of the alternative defendants
properties which are directly abutting the provincial road would be plaintiffs only convenient,
direct and shortest access to and from the provincial road; that plaintiffs predecessors-in-interest
have been passing through the properties of defendants in going to and from their lot; that
defendants mother even promised plaintiffs predecessors-in-interest to grant the latter an
easement of right of way as she acknowledged the absence of an access from their property to
the road; and that alternative defendants, despite plaintiffs request for a right of way and referral
of the dispute to the barangay officials, refused to grant them an easement. Thus, plaintiffs
prayed that an easement of right of way on the lots of defendants be established in their favor.
They also prayed for damages, attorneys fees and costs of suit.
Defendants, instead of filing an answer, filed a motion to dismiss (pp. 41-45, ibid.) on the ground
that the lower court has no jurisdiction to hear the case since plaintiffs failed to refer the matter
to the barangay lupon in accordance with Presidential Decree No. 1508. The lower court,
however, in its Order dated May 18, 1992, denied said motion on the premise that there was
substantial compliance with the law.
On May 25, 1992, defendants filed a Notice of Appeal to the Supreme Court of the questioned
order of the lower court denying their motion to dismiss, under Rule 45 of the Rules of Court (p.
54, ibid.). On June 24, 1992, the lower court denied the notice of appeal for lack of merit (p. 86,
In the meantime, defendants filed a petition for review on certiorari of the lower courts Order
dated May 18, 1992 (pp. 64-84, ibid.). In an Order dated July 8, 1992, the Third Division of the
Supreme Court denied said petition for failure to comply with Revised Circular Nos. 1-88 and
Circular No. 28-01 (p. 97, ibid.). Defendants motion for reconsideration was likewise denied
with finality on July 20, 1992 (p. 96, ibid.).
Consequently, defendants filed their answer to the court below where they alleged that the
granting of an easement in favor of plaintiffs would cause them great damage and inconvenience;
and that there is another access route from plaintiffs lot to the main road through the property of
Florentino Cruz which was likewise abutting the provincial road and was being offered for sale.
By way of counterclaim, defendants prayed for damages and attorneys fees.
The parties not having settled their dispute during the pre-trial (p.120, Orig. Record), the court
directed that an ocular inspection be conducted of the subject property, designating the branch
clerk of court as its commissioner. In time, an Ocular Inspection Report dated December 3, 1992
(Exhs. J and J-1) was submitted. After trial on the merits, the lower court rendered the assailed
decision granting plaintiffs prayer for an easement of right of way on defendants properties. [3]
The trial court found that based on the Ocular Inspection Report there was no other way through
which the private respondents could establish a right of way in order to reach the provincial road
except by traversing directly the property of the petitioners. It further found that (a) no
significant structure, save for a wall or fence about three feet high, would be adversely affected;
(b) there was sufficient vacant space of approximately 11 meters between petitioners houses; and
(c) petitioners property could provide the shortest route from the provincial road to the private
respondents property. Consequently, the trial court granted the easement prayed for by the private
respondents in a decision dated 30 June 1994, [4] whose decretal portion reads as follows:
WHEREFORE, premises considered the Court orders that a right-of-way be constructed on the
defendants property covered by TCT No. 0-6244 of about 75 sq. meters, 25 sq. meters shall be
taken from the lot of Florcerfida Sta. Maria and 50 sq. meters from the property of Cesar Sta.
Maria to be established along lines 1-2 of lot 6-c and along lines 3-4 of lot 6-b and to indemnify
the owners thereof in the total amount of P3, 750.00 (P1, 250.00 goes to Florcerfida Sta. Maria
and P2,500.00 to Cesar Sta. Maria) and to reconstruct the fence to be destroyed in the manner it
was at the time of the filing of this action.
The petitioners seasonably appealed from the aforementioned decision to the Court of Appeals,
which docketed the case as CA-G.R. CV No. 48473.
The Court of Appeals agreed with the trial court that the private respondents had sufficiently
established the existence of the four requisites for compulsory easement of right of way on
petitioners property, to wit: (1) private respondents property was, as revealed by the Ocular
Inspection Report, surrounded by other immovables owned by different individuals and was
without an adequate outlet to a public highway; (2) the isolation of private respondents property
was not due to their own acts, as it was already surrounded by other immovables when they
purchased it; (3) petitioners property would provide the shortest way from private respondents
property to the provincial road, and this way would cause the least prejudice because no
significant structure would be injured thereby; and (4) the private respondents were willing to
pay the corresponding damages provided for by law if the right of way would be granted.
Accordingly, in its decision [5] of 18 December 1996, the Court of Appeals affirmed the trial
courts decision, but modified the property valuation by increasing it from P50 to P2,000 per
square meter.
The petitioners forthwith filed this petition for review on certiorari based on the following
assignment of errors:
The first, second, and fourth assigned errors involve questions of fact. Settled is the rule that the
jurisdiction of this Court in cases brought before it from the Court of Appeals 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 Court of Appeals 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. [7]
A perusal of the pleadings and the assailed decision of the Court of Appeals, as well as of the
decision of the trial court, yields no ground for the application of any of the foregoing
exceptions. All told, the findings of fact of both courts satisfied the following requirements for an
estate to be entitled to a compulsory servitude of right of way under the Civil Code, to wit:
1. the dominant estate is surrounded by other immovables and has no adequate outlet to a public
highway (Art. 649, par. 1);
2. there is payment of proper indemnity (Art. 649, par. 1);
3. the isolation is not due to the acts of the proprietor of the dominant estate (Art. 649, last par.);
4. the right of way claimed is at the point least prejudicial to the servient estate; and insofar as
consistent with this rule, where the distance from the dominant estate to a public highway may
be the shortest (Art. 650). [8]
As to such requisites, the Court of Appeals made the following disquisitions:
Anent the first requisite, there is no dispute that the plaintiffs-appellees property is surrounded by
other immovables owned by different individuals. The ocular inspection report submitted to the
lower court reveals that:
The property of the plaintiffs, spouses Arsenio and Roslynn Fajardo, is completely surrounded
with adobe fence without any point of egress and ingress to the national road. Said plaintiffs
property containing an area of 1,043 square meters and covered by OCT No. 0-6244 of the
Registry of Deeds of Bulacan was situated directly behind defendants property which abuts the
national road. Defendants, spouses Cesar and Racquel Sta. Maria, are the absolute owners of the
parcel of land with an area of 537 square meters and embraced under TCT No. T-37.763(M)
situated on the left side abutting the national road with their house thereon made of wood and
hollow blocks, while defendant Florcerfida Sta. Maria is the absolute owner of a parcel of land
with a similar area of 537 square meters and covered by TCT No. T-37.762(M) situated on the
right side and likewise abutting the national road with an impressive house thereon of modern
vintage made of strong materials. As depicted in the rough sketch hereto attached, plaintiffs have
absolutely no means of ingress and egress to their property as the same is completely isolated by
properties owned by other persons. On the left side is the property of Florentino Cruz, on the
right side is the property reportedly owned by the Jacintos; and on the front portion are properties
owned by defendants. x x x
(Ocular Inspection Report, p. 135, Orig. Rec.)
Plaintiffs-appellees property is likewise without adequate outlet to a public highway. The
existing passage way for people (daang tao) at the back of plaintiffs-appellees property leading to
the provincial road (TSN, May 17, 1993, p. 12) cannot be considered an adequate outlet for
purposes of establishing an easement. Article 651 of the Code provides that (t)he width of the
easement of right of way shall be that which is sufficient for the needs of the dominant estate,
and may accordingly be changed from time to time. Thus in the case of Larracas vs. Del Rio (37
Official Gazette 287), this Court had occasion to rule that it is not necessary for a person, like his
neighbors, to content himself with a footpath and deny himself the use of an automobile. So in an
age when motor cars are a vital necessity, the dominant proprietor has a right to demand a
driveway for his automobile, and not a mere lane or pathway (Cited in Tolentino, ibid., p. 391).
The second requisite for the establishment of an easement of right way, i.e., payment of
indemnity, is likewise present in this case. Plaintiff-appellee spouse Roslynn Fajardo testified on
direct examination that they are willing to pay the corresponding damages provided for by law if
granted the right of way (TSN, November 5, 1992, p. 11).
The third requisite is that the isolation of plaintiffs-appellees property should not have been due
to their own acts. In the case under consideration, the isolation of their lot is not due to plaintiffs
acts. The property they purchased was already surrounded by other immovables leaving them no
adequate ingress or egress to a public highway.
Going now to the fourth requisite of least prejudice and shortest distance, We agree with the
lower court that this twin elements have been complied with in establishing the easement of right
of way on defendants-appellants properties.
It has been commented upon that where there are several tenements surrounding the dominant
estate, and the easement may be established on any of them, the one where the way is shortest
and will cause the least damage should be chosen. But if these two circumstances do not concur
in a single tenement, the way which will cause the least damage should be used, even if it will
not be the shortest. And if the conditions of the various tenements are the same, all the adjoining
owners should be cited and experts utilized to determine where the easement shall be established
(Tolentino, ibid., pp. 108-109, citing Casals Colldecarrera).
In the case at bar, the ocular inspection disclosed that there are three options open to the
plaintiffs-appellees as a route to reach the national road, to wit:
(1) To traverse directly through defendants property which is the shortest route of approximately
20 to 25 meters away from the national road;
(2) To purchase a right of way from the adjoining property of Florentino Cruz on the left side of
their property; and
(3) To negotiate with Jacinto family on the right side of their property.
In all instances, no significant structures would be adversely affected. There is sufficient vacant
space between defendants houses of approximately 11 meters. The distance of defendant
Florcerfidas house with the adjoining adobe wall separating that of the property of defendants
Cesar and Racquel Sta. Maria is about 4 meters, while the space between the adobe wall and that
of the latters house is about 7 meters or a total of 11 meters vacant space for purposes of a right
of way. On the other hand, plaintiffs may negotiate with a right of way with Florentino Cruz on
the left side of their property although the same is quite circuitous. Lastly, the option through the
property of the Jacinto on the right side is very circuitous and longer. The route involves a total
of about 50 yards as it has to go straight to the right of about 35 yards and turn left of about
another 15 yards before reaching the common right of way.
(Ocular Inspection report, pp. 135-136, ibis.)
Among the three (3) possible servient estates, it is clear that defendants-appellants property
would afford the shortest distance from plaintiffs-appellees property to the provincial road.
Moreover, it is the least prejudicial since as found by the lower court, (i)t appears that there
would be no significant structures to be injured in the defendants property and the right-of-way
to be constructed thereon would be the shortest of all the alternative routes pointed to by the
defendants (p. 4, RTC, Decision; p. 223, ibid.).
Petitioners reliance on Costabella Corporation v. Court of Appeals [9] to support their first
assigned error is misplaced. In said case we reversed the decision of the Court of Appeals
granting a compulsory easement of a right of way to the private respondents therein because of
the absence of any showing that the private respondents had established the existence of the four
requisites mandated by law. As to the third requisite, we explicitly pointed out; thus: Neither
have the private respondents been able to show that the isolation of their property was not due to
their personal or their predecessors-in-interest's own acts. In the instant case, the Court of
Appeals have found the existence of the requisites. The petitioners, however, insist that private
respondents predecessors-in-interest have, through their own acts of constructing concrete fences
at the back and on the right side of the property, isolated their property from the public highway.
The contention does not impress because even without the fences private respondents property
remains landlocked by neighboring estates belonging to different owners.
Under the second and fourth assigned errors, the petitioners try to convince us that there are two
other existing passage ways over the property of Cruz and over that of Jacinto, as well as a daang
tao, for private respondents use. Our examination of the records yields otherwise. Said lots of
Cruz and Jacinto do not have existing passage ways for the private respondents to use. Moreover,
the Ocular Inspection Report [10] reveals that the suggested alternative ways through Cruzs or
Jacintos properties are longer and circuitous than that through petitioners property. This is also
clear from the Sketch Plan [11] submitted by the private respondents wherein it is readily seen
that the lots of Cruz and Jacinto are only adjacent to that of private respondents unlike that of
petitioners which is directly in front of private respondents property in relation to the public
Under Article 650 of the Civil Code, the easement of right of way shall be established at the
point least prejudicial to the servient estate, and, insofar as consistent with this rule, where the
distance from the dominant estate to a public highway may be the shortest. Where there are
several tenements surrounding the dominant estate, and the easement may be established on any
of them, the one where the way is shortest and will cause the least damage should be chosen.
[12] The conditions of least damage and shortest distance are both established in one tenement --
petitioners property.
As to the daang tao at the back of private respondents property, it must be stressed that under
Article 651 the width of the easement of right of way shall be that which is sufficient for the
needs of the dominant estate, and may accordingly be changed from time to time. Therefore, the
needs of the dominant estate determine the width of the easement. [13] The needs of private
respondents property could hardly be served by this daang tao located at the back and which is
bordered by a fishpond. [14]
The third assigned error is without basis and is nothing but a misreading of the challenged
decision. The Court of Appeals did not declare as established facts the allegations of the
complaint referred to by the petitioner. It merely made a brief summary of what were alleged in
the complaint as part of its narration of the antecedents of the case on appeal.
WHEREFORE, the instant petition for review is DENIED and the challenged decision of the
Court of Appeals is AFFIRMED in toto.
Costs against petitioners.
[G.R. No. 144291. April 20, 2001]
This is an appeal by certiorari under Rule 45 of the Rules of Court of the decision of the Court of
Appeals dated August 3, 2000 in CA-G.R. CV No. 60292 affirming the summary judgment
rendered by the Regional Trial Court, Branch 88, Cavite City, in the case for accion
reinvidicatoria filed by herein respondents Antero and Virginia Soriano against petitioner Evadel
Realty and Development Corporation.
The pertinent facts from which the present petition proceeds are as follows:
On April 12, 1996, the spouses Antero and Virginia Soriano (respondent spouses), as sellers,
entered into a Contract to Sell with Evadel Realty and Development Corporation (petitioner), as
buyer, over a parcel of land denominated as Lot 5536-C of the Subdivision Plan of Lot 5536
covered by Transfer Certificate of Title No. 125062 which was part of a huge tract of land known
as the Imus Estate.
The pertinent portions of the Contract read:
WHEREAS : It is the desire of Party B to purchase a portion of a parcel of land owned by Party
A and which portion consist of 28,958 sq.m. and specifically described as lot 5536-C of the
Subdivision Plan of Lot 5536 of Imus Estate as surveyed for Antero Q. Soriano and covered by
TCT 125062 issued by the Register of Deeds of the Province of Cavite and which portion is
shown in Annex A hereof.
The subject of this agreement is the intended sale of 28,958 sq.m. which is a portion of TCT No.
125062 in the name of Party A to Party B and which portion is herewith shown in Annex A
III. Conditions to Govern Contract to Sell
1] The amount of Twenty Eight Million Nine Hundred Fifty Eight Thousand Pesos
(P28,958,000.00) representing the first installment of the purchase price of the property shall be
delivered by Party B to Party A upon the signing of this agreement.
2] The second and last installment of Twenty Eight Million Nine Hundred Fifty Eight
Thousand Pesos (P28,958,000.00) shall be delivered by Party B to Party A simultaneously with
the delivery of Party "A" to Party "B" of the Torrens Title to the lot specifically described as Lot
No. 5536-C containing an area of 28,958 sq. m. and herewith shown in Annex A hereof; still in
the name of Party A and the delivery of Party A to Party B of the Deed of Absolute Sale to the
property in favor of Party B. Responsibility of the transfer of the Torrens Title from the name of
Party A to Party B shall be the sole responsibility of Party B. Moreover, the balance in the
amount of Twenty Eight Million Nine Hundred Fifty Eight Thousand Pesos(P28,958,000.00)
shall be due and demandable immediately from the time Party B, thru its President or Vice-
President receives either verbal or written notice that the Torrens Title to the segregated property
and the Deed of Absolute Sale are already available for delivery to Party B. In the event of delay,
however, Party B shall be charged with interest and penalty in the amount of 6% per month,
compounded, for every month of delay or a fraction thereof in the event the delay does not
exceed one month.
xxx [1]
Upon payment of the first installment, petitioner introduced improvements thereon and fenced
off the property with concrete walls. Later, respondent spouses discovered that the area fenced
off by petitioner exceeded the area subject of the contract to sell by 2,450 square meters. Upon
verification by representatives of both parties, the area encroached upon was denominated as Lot
5536-D-1 of the subdivision plan of Lot 5536-D of Psd-04-092419 and was later on segregated
from the mother title and issued a new transfer certificate of title, TCT No. 769166, in the name
of respondent spouses.
Respondent spouses successively sent demand letters to petitioner on February 14, March 7, and
April 24, 1997, to vacate the encroached area. Petitioner admitted receiving the demand letters
but refused to vacate the said area.
Thus, on May 23, 1997, a complaint for accion reinvindicatoria was filed by respondent spouses
against petitioner with the Regional Trial Court, Branch 88 of Cavite City.
In its Answer, petitioner admitted the encroachment but claimed that it was a builder in good
faith since it merely relied on the boundaries pointed out by the representatives of respondent
spouses. Petitioner also argued that there was a novation of contract because of the encroachment
made by the national road on the property subject of the contract by 1,647 square meters.
On March 19, 1998, respondents filed a Motion for Summary Judgment, alleging that there
existed no genuine issue as to the material facts of the case due to the admissions made by
petitioner in its Answer.
The trial court granted the motion on June 11, 1998 and rendered judgment in favor of
respondent spouses, the dispositive portion of which reads:
WHEREFORE, in the light of the foregoing, this court hereby orders the defendant to remove
without right of indemnity and at its expense, any or all improvements that it has introduced on
the parcel of land covered by TCT No. T-769166 issued by the Register of Deeds of the Province
of Cavite with an area of 2,450 square meters, more or less, in the name of plaintiffs spouses and
to return to the plaintiffs the physical possession of the above-described parcel of land.
Plaintiffs' and defendants claim and counter-claim for damages and attorneys fees are dismissed.
No pronouncement as to costs.
This prompted petitioner to appeal the matter to the Court of Appeals. On August 3, 2000, the
Court of Appeals affirmed the order for summary judgment of the trial court. Hence, this petition
ascribing the following errors:
Summarizing the aforecited issues, the basic issue posed for resolution is whether or not the trial
court was in error in rendering summary judgment on the case.
Petitioner claims that a summary judgment cannot be rendered on the case as there are genuine
issues of fact which have to be threshed out during trial. It is alleged that in the original and
amended complaint, private respondent spouses sought recovery of two thousand four hundred
sixty two (2,462) square meters of land. This was, however, changed to 2,450 square meters in
the second amended complaint. It is also argued that when petitioner entered upon the property
in 1996, it relied on the metes and boundaries pointed out by respondents themselves and their
surveyors. Moreover, title over the said area was obtained only after the commencement of the
complaint so petitioner could not have possibly disputed such title earlier. Therefore, petitioner
maintains, the question of the exact area of the land allegedly encroached, whether 2,462 or
2,450 square meters; and the determination of whether its possession of the subject property was
in good or bad faith, are genuine triable issues.
Respondent spouses, on the other hand, maintain that there are no genuine issues of fact in the
present case in view of the admission by petitioner of (1) the existence of the title over the
subject property in the name of respondent spouses; and (2) its encroachment on the northern
side of sold Lot 5536-C which is the area in dispute. It is claimed that such admissions are
tantamount to an admission that respondents have a rightful claim of ownership to the subject
property warranting a summary judgment in their favor.
Prompt and expeditious resolution of cases have always been an underlying policy of the Court.
For this reason, certain rules under the Rules of Court are designed to shorten the procedure in
order to allow the speedy disposition of a case. Some of these are Rule 33 on Demurrer to
Evidence, Rule 34 on Judgment on the Pleadings and Rule 35 on Summary Judgments. In all
these instances, full-blown trial of a case is dispensed with and judgment is rendered on the basis
of the pleadings, supporting affidavits, depositions and admissions of the parties.
Under Rule 35 of the 1997 Rules of Civil Procedure, except as to the amount of damages, when
there is no genuine issue as to any material fact and the moving party is entitled to a judgment as
a matter of law, summary judgment may be allowed. [3] Summary or accelerated judgment is a
procedural technique aimed at weeding out sham claims or defenses at an early stage of the
litigation thereby avoiding the expense and loss of time involved in a trial. [4]
The law itself determines when a summary judgment is proper. Under the rules, summary
judgment is appropriate when there are no genuine issues of fact which call for the presentation
of evidence in a full-blown trial. Even if on their face the pleadings appear to raise issues, when
the affidavits, depositions and admissions show that such issues are not genuine, then summary
judgment as prescribed by the rules must ensue as a matter of law. What is crucial for
determination, therefore, is the presence or absence of a genuine issue as to any material fact. [5]
A genuine issue is an issue of fact which require the presentation of evidence as distinguished
from a sham, fictitious, contrived or false claim. When the facts as pleaded appear uncontested or
undisputed, then there is no real or genuine issue or question as to the facts, and summary
judgment is called for. The party who moves for summary judgment has the burden of
demonstrating clearly the absence of any genuine issue of fact, or that the issue posed in the
complaint is patently unsubstantial so as not to constitute a genuine issue for trial. [6] Trial courts
have limited authority to render summary judgments and may do so only when there is clearly no
genuine issue as to any material fact. When the facts as pleaded by the parties are disputed or
contested, proceedings for summary judgment cannot take the place of trial. [7]
Applying these principles to the present case, we hold that the CA did not commit any reversible
error in affirming the summary judgment rendered by the trial court. Hence, the instant petition
must be denied.
The case at bar is one for accion reinvindicatoria which is an action to recover ownership over
real property. Respondent spouses (plaintiffs below) seek to recover a certain portion of land
with a total area of 2,450 square meters from petitioner which portion was allegedly in excess of
the total area of the property actually sold by them to the latter. In a reinvindicatory action, the
basic issue for resolution is that of ownership and in the present case, the determination of
ownership of the subject property is hinged on the following questions of fact - first, what was
the total area of the lot sold to petitioner by respondent spouses as agreed upon and embodied in
the contract to sell; and second, whether or not the area being occupied by the petitioner is in
excess of the land which it actually bought from respondent spouses under the said contract.
In its Answer to the Amended Complaint, petitioner admitted the existence and due execution of
the Contract to Sell which contained the specific description of the property it bought from
respondent spouses, to wit:
WHEREAS : It is the desire of Party B to purchase a portion of a parcel of land owned by Party
A and which portion consist of 28,958 sq.m. and specifically described as lot 5536-C of the
Subdivision Plan of Lot 5536 of Imus Estate as surveyed for Antero Q. Soriano and covered by
TCT 125062 issued by the Register of Deeds of the Province of Cavite and which portion is
shown in Annex A hereof.
Equally significant is the fact that in the same Answer, petitioner likewise admitted that the
relocation survey conducted by geodetic engineers of both parties disclosed that indeed there
were two encroachments, i.e.
1) encroachment at the eastern frontage of Lot 5536-C by the national road; and
2) encroachment by defendant (petitioner) EVADEL on the northern side of sold Lot 5536-C. [8]
and that the second area encroached upon was denominated as Lot 5536-D-1 of the subdivision
plan of Lot 5536-D of Psd-04-092419 and later on segregated from the mother title and issued a
new transfer certificate of title, TCT No. 769166, during the pendency of the case before the trial
With the foregoing admissions by petitioner, clearly, there is no genuine issue of fact as to
ownership of the subject property because the said admissions made by petitioner in its Answer
are tantamount to an admission that respondent spouses owned the property in question. The CA
thus correctly affirmed the trial court as it summarily resolved the issue of ownership of the
subject property in favor of respondent spouses.
Petitioner, however, maintains that the issue of whether or not it was a builder in good faith
should not have been peremptorily disposed of by the trial court. Petitioner decries the fact that it
was not given an opportunity to submit evidence to establish good faith as regards the
improvements it introduced on respondent spouses property.
Petitioners contention is untenable. As correctly pointed out by the trial court and the CA,
petitioner already admitted in its Amended Answer that the lot in dispute is covered by TCT No.
T-769166 of respondent spouses. With this admission, petitioner can no longer claim that it was a
builder in good faith. Good faith consists in the belief of the builder that the land he is building
on is his and his ignorance of any defect or flaw in his title. [9] In this case, since petitioner, by
its own admission, had knowledge of respondent spouses title over the subject lot, it was clearly
in bad faith when it introduced improvements thereon.
Further, the contract to sell [10] between petitioner and respondent spouses, the genuineness and
due execution thereof was admitted by petitioner, clearly delineated the metes and bounds of the
lot subject thereof. Attached to the said contract was a graphic illustration of the lot purchased by
petitioner including a technical description thereof. Petitioner, as a real estate developer, is
presumed to be experienced in its business and ought to have sufficient technical expertise to
correctly determine the metes and bounds of the lands it acquires. Despite this, petitioner still
introduced improvements on the lot not covered by the contract to sell. Petitioners bad faith had
been duly established by the pleadings and there was thus no need to further conduct any trial on
the matter. Our ruling in Congregation of the Religious of the Virgin Mary vs. Court of Appeals
[11]is particularly instructive:
x x x As discussed earlier, petitioner has no right whatsoever to possess and construct permanent
structures on the questioned land owned by respondents-spouses. Petitioner admits in its answer
to the complaint that it introduced improvements on the subject lot without the consent and
knowledge of respondents-spouses. It is thus a builder in bad faith. Again, we find no reversible
error in the following ruling of the respondent court:
"Which leads us to a discussion of whether or not appellant was in bad faith in introducing
improvements on the subject land. It cannot be denied that appellant never gained title to the
subject land as it admits to not having purchased the said lot (TSN, p. 81, November 9, 1992).
Neither has appellant successfully shown any right to introduce improvements on the said land
(its claim of grant of perpetual use of the same as a road lot and its right to build on a right of
way both having been rejected above). This being so, it follows that appellant was a builder in
bad faith in that, knowing that the land did not belong to it and that it had no right to build
thereon, it nevertheless caused the improvements in question to be erected." [12]
Finally, petitioners claim that there was a novation of contract because there was a second
agreement between the parties due to the encroachment made by the national road on the
property subject of the contract by 1,647 square meters, is unavailing. Novation, one of the
modes of extinguishing an obligation, requires the concurrence of the following: (1) there is a
valid previous obligation; (2) the parties concerned agree to a new contract; (3) the old contract
is extinguished; and (4) there is valid new contract. [13] Novation may be express or implied. In
order that an obligation may be extinguished by another which substitutes the same, it is
imperative that it be so declared in unequivocal terms (express novation) or that the old and the
new obligations be on every point incompatible with each other (implied novation). [14]
In the instant case, there was no express novation because the second agreement was not even
put in writing. [15] Neither was there implied novation since it was not shown that the two
agreements were materially and substantially incompatible with each other. We quote with
approval the following findings of the trial court:
Since the alleged agreement between the plaintiffs [herein respondents] and defendant [herein
petitioner] is not in writing and the alleged agreement pertains to the novation of the conditions
of the contract to sell of the parcel of land subject of the instant litigation, ipso facto, novation is
not applicable in this case since, as stated above, novation must be clearly proven by the
proponent thereof and the defendant in this case is clearly barred by the Statute of Frauds from
proving its claim. [16]
In fine, the CA correctly affirmed the summary judgment rendered by the trial court. Considering
the parties allegations and admissions in their respective pleadings filed with the court a quo,
there existed no genuine issue as to any material fact so that respondent spouses as movants
therein were entitled to a judgment as a matter of law.
WHEREFORE, premises considered, the instant Petition is hereby DENIED for lack of merit.
The assailed Decision, dated August 3, 2000, of the Court of Appeals is AFFIRMED in toto.
G.R. No. 108894 February 10, 1997
UY, respondents.

The parties in this case are owners of adjoining lots in Parañaque, Metro Manila. It was
discovered in a survey, that a portion of a building of petitioner, which was presumably
constructed by its predecessor-in-interest, encroached on a portion of the lot owned by private
respondent. What are the rights and obligations of the parties? Is petitioner considered a builder
in bad faith because, as held by respondent Court, he is "presumed to know the metes and bounds
of his property as described in his certificate of title"? Does petitioner succeed into the good faith
or bad faith of his predecessor-in-interest which presumably constructed the building?
These are the questions raised in the petition for review of the Decision1 dated August 28, 1992,
in CA-G.R. CV No. 28293 of respondent Court2 where the disposition reads:3
WHEREFORE, premises considered, the Decision of the Regional Trial Court is hereby reversed
and set aside and another one entered —
1. Dismissing the complaint for lack of cause of action;
2. Ordering Tecnogas to pay the sum of P2,000.00 per month as reasonable rental from October
4, 1979 until appellee vacates the land;
3. To remove the structures and surrounding walls on the encroached area;
4. Ordering appellee to pay the value of the land occupied by the two-storey building;
5. Ordering appellee to pay the sum of P20,000.00 for and as attorney's fees;
6. Costs against appellee.
Acting on the motions for reconsideration of both petitioner and private respondent, respondent
Court ordered the deletion of paragraph 4 of
the dispositive portion in an Amended Decision dated February 9, 1993, as follows: 4
WHEREFORE, premises considered, our decision of August 28, 1992 is hereby modified
deleting paragraph 4 of the dispositive portion of our decision which reads:
4. Ordering appellee to pay the value of the land occupied by the two-storey building.
The motion for reconsideration of appellee is hereby DENIED for lack of merit.
The foregoing Amended Decision is also challenged in the instant petition.
The Facts
The facts are not disputed. Respondent Court merely reproduced the factual findings of the trial
court, as follows: 5
That plaintiff (herein petitioner) which is a corporation duly organized and existing under and by
virtue of Philippine laws is the registered owner of a parcel of land situated in Barrio San
Dionisio, Parañaque, Metro Manila known as Lot 4331-A (should be 4531-A) of Lot 4531 of the
Cadastral Survey of Parañaque, Metro Manila, covered by Transfer Certificate of Title No.
409316 of the Registry of Deeds of the Province of Rizal; that said land was purchased by
plaintiff from Pariz Industries, Inc. in 1970, together with all the buildings and improvements
including the wall existing thereon; that the defendant (herein private respondent) is the
registered owner of a parcel of land known as Lot No. 4531-B of Lot 4531 of the Cadastral
Survey of Parañaque, LRC (GLRO) Rec. No. 19645 covered by Transfer Certificate of Title No.
279838, of the Registry of Deeds for the Province of Rizal; that said land which adjoins
plaintiff's land was purchased by defendant from a certain Enrile Antonio also in 1970; that in
1971, defendant purchased another lot also adjoining plaintiffs land from a certain Miguel
Rodriguez and the same was registered in defendant's name under Transfer Certificate of Title
No. 31390, of the Registry of Deeds for the Province of Rizal; that portions of the buildings and
wall bought by plaintiff together with the land from Pariz Industries are occupying a portion of
defendant's adjoining land; that upon learning of the encroachment or occupation by its buildings
and wall of a portion of defendant's land, plaintiff offered to buy from defendant that particular
portion of defendant's land occupied by portions of its buildings and wall with an area of 770
square meters, more or less, but defendant, however, refused the offer. In 1973, the parties
entered into a private agreement before a certain Col. Rosales in Malacañang, wherein plaintiff
agreed to demolish the wall at the back portion of its land thus giving to defendant possession of
a portion of his land previously enclosed by plaintiff's wall; that defendant later filed a complaint
before the office of Municipal Engineer of Parañaque, Metro Manila as well as before the Office
of the Provincial Fiscal of Rizal against plaintiff in connection with the encroachment or
occupation by plaintiff's buildings and walls of a portion of its land but said complaint did not
prosper; that defendant dug or caused to be dug a canal along plaintiff's wall, a portion of which
collapsed in June, 1980, and led to the filing by plaintiff of the supplemental complaint in the
above-entitled case and a separate criminal complaint for malicious mischief against defendant
and his wife which ultimately resulted into the conviction in court of defendant's wife for the
crime of malicious mischief; that while trial of the case was in progress, plaintiff filed in Court a
formal proposal for settlement of the case but said proposal, however, was ignored by defendant.
After trial on the merits, the Regional Trial Court6 of Pasay City, Branch 117, in Civil Case No.
PQ-7631-P, rendered a decision dated December 4, 1989 in favor of petitioner who was the
plaintiff therein. The dispositive portion
reads: 7
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant and
ordering the latter to sell to plaintiff that portion of land owned by him and occupied by portions
of plaintiff's buildings and wall at the price of P2,000.00 per square meter and to pay the former:
1. The sum of P44,000.00 to compensate for the losses in materials and properties incurred by
plaintiff through thievery as a result of the destruction of its wall;
2. The sum of P7,500.00 as and by way of attorney's fees; and
3. The costs of this suit.
Appeal was duly interposed with respondent Court, which as previously stated, reversed and set
aside the decision of the Regional Trial Court and rendered the assailed Decision and Amended
Decision. Hence, this recourse under Rule 45 of the Rules of Court.
The Issues
The petition raises the following issues:8
Whether or not the respondent Court of Appeals erred in holding the petitioner a builder in bad
faith because it is "presumed to know the metes and bounds of his property."
Whether or not the respondent Court of Appeals erred when it used the amicable settlement
between the petitioner and the private respondent, where both parties agreed to the demolition of
the rear portion of the fence, as estoppel amounting to recognition by petitioner of respondent's
right over his property including the portions of the land where the other structures and the
building stand, which were not included in the settlement.
Whether or not the respondent Court of Appeals erred in ordering the removal of the "structures
and surrounding walls on the encroached area" and in withdrawing its earlier ruling in its August
28, 1992 decision for the petitioner "to pay for the value of the land occupied" by the building,
only because the private respondent has "manifested its choice to demolish" it despite the
absence of compulsory sale where the builder fails to pay for the land, and which "choice"
private respondent deliberately deleted from its September 1, 1980 answer to the supplemental
complaint in the Regional Trial Court.
In its Memorandum, petitioner poses the following issues:
The time when to determine the good faith of the builder under Article 448 of the New Civil
Code, is reckoned during the period when it was actually being built; and in a case where no
evidence was presented nor introduced as to the good faith or bad faith of the builder at that time,
as in this case, he must be presumed to be a "builder in good faith," since "bad faith cannot be
In a specific "boundary overlap situation" which involves a builder in good faith, as in this case,
it is now well settled that the lot owner, who builds on the adjacent lot is not charged with
"constructive notice" of the technical metes and bounds contained in their torrens titles to
determine the exact and precise extent of his boundary perimeter. 10
The respondent court's citation of the twin cases of Tuason & Co. v. Lumanlan and Tuason & Co.
v. Macalindong is not the "judicial authority" for a boundary dispute situation between adjacent
torrens titled lot owners, as the facts of the present case do not fall within nor square with the
involved principle of a dissimilar case. 11
Quite contrary to respondent Uy's reasoning, petitioner Tecnogas continues to be a builder in
good faith, even if it subsequently built/repaired the walls/other permanent structures thereon
while the case a quo was pending and even while respondent sent the petitioner many
letters/filed cases thereon. 12
The amicable settlement between the parties should be interpreted as a contract and enforced
only in accordance with its explicit terms, and not over and beyond that agreed upon; because the
courts do not have the power to create a contract nor expand its scope. 13
As a general rule, although the landowner has the option to choose between: (1) "buying the
building built in good faith", or (2) "selling the portion of his land on which stands the building"
under Article 448 of the Civil Code; the first option is not absolute, because an exception thereto,
once it would be impractical for the landowner to choose to exercise the first alternative, i.e. buy
that portion of the house standing on his land, for the whole building might be rendered useless.
The workable solution is for him to select the second alternative, namely, to sell to the builder
that part of his land on which was constructed a portion of the house. 14
Private respondent, on the other hand, argues that the petition is "suffering from the following
flaws: 15
1. It did not give the exact citations of cases decided by the Honorable Supreme Court that
allegedly contradicts the ruling of the Hon. Court of Appeals based on the doctrine laid down in
Tuason vs. Lumanlan case citing also Tuason vs. Macalindong case (Supra).
2. Assuming that the doctrine in the alleged Co Tao vs. Chico case is contradictory to the
doctrine in Tuason vs. Lumanlan and Tuason vs. Macalindong, the two cases being more current,
the same should prevail.
Further, private respondent contends that the following "unmistakably" point to the bad faith of
petitioner: (1) private respondent's purchase of the two lots, "was ahead of the purchase by
petitioner of the building and lot from Pariz Industries"; (2) the declaration of the General
Manager of Tecnogas that the sale between petitioner and Pariz Industries "was not registered"
because of some problems with China Banking Corporation; and (3) the Deed of Sale in favor of
petitioner was registered in its name only in "the month of May 1973." 16
The Court's Ru1ing
The petition should be granted.
Good Faith or Bad Faith
Respondent Court, citing the cases of J.M. Tuason & Co., Inc. vs. Vda. de Lumanlan 17 and J.M.
Tuason & Co., Inc. vs. Macalindong, 18 ruled that petitioner "cannot be considered in good
faith" because as a land owner, it is "presumed to know the metes and bounds of his own
property, specially if the same are reflected in a properly issued certificate of title. One who
erroneously builds on the adjoining lot should be considered a builder in (b)ad (f)aith, there
being presumptive knowledge of the Torrens title, the area, and the extent of the boundaries." 19
We disagree with respondent Court. The two cases it relied upon do not support its main
pronouncement that a registered owner of land has presumptive knowledge of the metes and
bounds of its own land, and is therefore in bad faith if he mistakenly builds on an adjoining land.
Aside from the fact that those cases had factual moorings radically different from those obtaining
here, there is nothing in those cases which would suggest, however remotely, that bad faith is
imputable to a registered owner of land when a part of his building encroaches upon a neighbor's
land, simply because he is supposedly presumed to know the boundaries of his land as described
in his certificate of title. No such doctrinal statement could have been made in those cases
because such issue was not before the Supreme Court. Quite the contrary, we have rejected such
a theory in Co Tao vs. Chico, 20 where we held that unless one is versed in the science of
surveying, "no one can determine the precise extent or location of his property by merely
examining his paper title."
There is no question that when petitioner purchased the land from Pariz Industries, the buildings
and other structures were already in existence. The record is not clear as to who actually built
those structures, but it may well be assumed that petitioner's predecessor-in-interest, Pariz
Industries, did so. Article 527 of the Civil Code presumes good faith, and since no proof exists to
show that the encroachment over a narrow, needle-shaped portion of private respondent's land
was done in bad faith by the builder of the encroaching structures, the latter should be presumed
to have built them in good faith. 21 It is presumed that possession continues to be enjoyed in the
same character in which it was acquired, until the contrary is proved. 22 Good faith consists in
the belief of the builder that the land he is building on is his, and his ignorance of any defect or
flaw in his title. 23 Hence, such good faith, by law, passed on to Pariz's successor, petitioner in
this case. Further, "(w)here one derives title to property from another, the act, declaration, or
omission of the latter, while holding the title, in relation to the property, is evidence against the
former." 24 And possession acquired in good faith does not lose this character except in case and
from the moment facts exist which show that the possessor is not unaware that he possesses the
thing improperly or wrongfully. 25 The good faith ceases from the moment defects in the title are
made known to the possessor, by extraneous evidence or by suit for recovery of the property by
the true owner. 26
Recall that the encroachment in the present case was caused by a very slight deviation of the
erected wall (as fence) which was supposed to run in a straight line from point 9 to point 1 of
petitioner's lot. It was an error which, in the context of the attendant facts, was consistent with
good faith. Consequently, the builder, if sued by the aggrieved landowner for recovery of
possession, could have invoked the provisions of Art. 448 of the Civil Code, which reads:
The owner of the land on which anything has been built, sown or planted in good faith, shall
have the right to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay
the price of the land, and the one who sowed, the proper rent. However, the builder or planter
cannot be obliged to buy the land if its value is considerably more than that of the building or
trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to
appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of
the lease and in case of disagreement, the court shall fix the terms thereof.
The obvious benefit to the builder under this article is that, instead of being outrightly ejected
from the land, he can compel the landowner to make a choice between the two options: (1) to
appropriate the building by paying the indemnity required by law, or (2) sell the land to the
builder. The landowner cannot refuse to exercise either option and compel instead the owner of
the building to remove it from the land. 27
The question, however, is whether the same benefit can be invoked by petitioner who, as earlier
stated, is not the builder of the offending structures but possesses them as buyer.
We answer such question in the affirmative.
In the first place, there is no sufficient showing that petitioner was aware of the encroachment at
the time it acquired the property from Pariz Industries. We agree with the trial court that various
factors in evidence adequately show petitioner's lack of awareness thereof. In any case, contrary
proof has not overthrown the presumption of good faith under Article 527 of the Civil Code, as
already stated, taken together with the disputable presumptions of the law on evidence. These
presumptions state, under Section 3 (a) of Rule 131 of the Rules of Court, that the person is
innocent of a crime or wrong; and under Section 3 (ff) of Rule 131, that the law has been obeyed.
In fact, private respondent Eduardo Uy himself was unaware of such intrusion into his property
until after 1971 when he hired a surveyor, following his purchase of another adjoining lot, to
survey all his newly acquired lots. Upon being apprised of the encroachment, petitioner
immediately offered to buy the area occupied by its building — a species of conduct consistent
with good faith.
In the second place, upon delivery of the property by Pariz Industries, as seller, to the petitioner,
as buyer, the latter acquired ownership of the property. Consequently and as earlier discussed,
petitioner is deemed to have stepped into the shoes of the seller in regard to all rights of
ownership over the immovable sold, including the right to compel the private respondent to
exercise either of the two options provided under Article 448 of the Civil Code.
Respondent Court ruled that the amicable settlement entered into between petitioner and private
respondent estops the former from questioning the private respondent's "right" over the disputed
property. It held that by undertaking to demolish the fence under said settlement, petitioner
recognized private respondent's right over the property, and "cannot later on compel" private
respondent "to sell to it the land since" private respondent "is under no obligation to sell." 28
We do not agree. Petitioner cannot be held in estoppel for entering into the amicable settlement,
the pertinent portions of which read: 29
That the parties hereto have agreed that the rear portion of the fence that separates the property
of the complainant and respondent shall be demolished up to the back of the building housing the
machineries which demolision (sic) shall be undertaken by the complainant at anytime.
That the fence which serve(s) as a wall housing the electroplating machineries shall not be
demolished in the mean time which portion shall be subject to negotiation by herein parties.
From the foregoing, it is clear that petitioner agreed only to the demolition of a portion of the
wall separating the adjoining properties of the parties — i.e. "up to the back of the building
housing the machineries." But that portion of the fence which served as the wall housing the
electroplating machineries was not to be demolished. Rather, it was to "be subject to negotiation
by herein parties." The settlement may have recognized the ownership of private respondent but
such admission cannot be equated with bad faith. Petitioner was only trying to avoid a litigation,
one reason for entering into an amicable settlement.
As was ruled in Osmeña vs. Commission on Audit, 30
A compromise is a bilateral act or transaction that is expressly acknowledged as a juridical
agreement by the Civil Code and is therein dealt with in some detail. "A compromise," declares
Article 2208 of said Code, "is a contract whereby the parties, by making reciprocal concessions,
avoid a litigation or put an end to one already commenced."
xxx xxx xxx
The Civil Code not only defines and authorizes compromises, it in fact encourages them in civil
actions. Art. 2029 states that "The Court shall endeavor to persuade the litigants in a civil case to
agree upon some fair compromise." . . .
In the context of the established facts, we hold that petitioner did not lose its rights under Article
448 of the Civil Code on the basis merely of the fact that some years after acquiring the property
in good faith, it learned about — and aptly recognized — the right of private respondent to a
portion of the land occupied by its building. The supervening awareness of the encroachment by
petitioner does not militate against its right to claim the status of a builder in good faith. In fact, a
judicious reading of said Article 448 will readily show that the landowner's exercise of his option
can only take place after the builder shall have come to know of the intrusion — in short, when
both parties shall have become aware of it. Only then will the occasion for exercising the option
arise, for it is only then that both parties will have been aware that a problem exists in regard to
their property rights.
Options of Private Respondent
What then is the applicable provision in this case which private respondent may invoke as his
remedy: Article 448 or Article 450 31 of the Civil Code?
In view of the good faith of both petitioner and private respondent, their rights and obligations
are to be governed by Art. 448. The essential fairness of this codal provision has been pointed out
by Mme. Justice Ameurfina Melencio-Herrera, citing Manresa and applicable precedents, in the
case of Depra vs. Dumlao, 32 to wit:
Where the builder, planter or sower has acted in good faith, a conflict of rights arises between the
owners, and it becomes necessary to protect the owner of the improvements without causing
injustice to the owner of the land. In view of the impracticality of creating a state of forced co-
ownership, the law has provided a just solution by giving the owner of the land the option to
acquire the improvements after payment of the proper indemnity, or to oblige the builder or
planter to pay for the land and the sower to pay the proper rent. It is the owner of the land who is
authorized to exercise the option, because his right is older, and because, by the principle of
accession, he is entitled to the ownership of the accessory thing. (3 Manresa 213; Bernardo vs.
Bataclan, 37 Off. Gaz. 1382; Co Tao vs. Chan Chico, G.R. No. 49167, April 30, 1949; Article
applied; see Cabral, et al. vs. Ibanez [S.C.] 52 Off. Gaz. 217; Marfori vs. Velasco, [C.A.] 52 Off.
Gaz. 2050).
The private respondent's insistence on the removal of the encroaching structures as the proper
remedy, which respondent Court sustained in its assailed Decisions, is thus legally flawed. This
is not one of the remedies bestowed upon him by law. It would be available only if and when he
chooses to compel the petitioner to buy the land at a reasonable price but the latter fails to pay
such price. 33 This has not taken place. Hence, his options are limited to: (1) appropriating the
encroaching portion of petitioner's building after payment of proper indemnity, or (2) obliging
the latter to buy the lot occupied by the structure. He cannot exercise a remedy of his own liking.
Neither is petitioner's prayer that private respondent be ordered to sell the land 34 the proper
remedy. While that was dubbed as the "more workable solution" in Grana and Torralba vs. The
Court of Appeals, et al., 35 it was not the relief granted in that case as the landowners were
directed to exercise "within 30 days from this decision their option to either buy the portion of
the petitioners' house on their land or sell to said petitioners the portion of their land on which it
stands." 36 Moreover, in Grana and Torralba, the area involved was only 87 square meters while
this case involves 520 square meters 37. In line with the case of Depra vs. Dumlao, 38 this case
will have to be remanded to the trial court for further proceedings to fully implement the
mandate of Art. 448. It is a rule of procedure for the Supreme Court to strive to settle the entire
controversy in a single proceeding leaving no root or branch to bear the seeds of future
litigation. 39
Petitioner, however, must also pay the rent for the property occupied by its building as prescribed
by respondent Court from October 4, 1979, but only up to the date private respondent serves
notice of its option upon petitioner and the trial court; that is, if such option is for private
respondent to appropriate the encroaching structure. In such event, petitioner would have a right
of retention which negates the obligation to pay rent. 40 The rent should however continue if the
option chosen is compulsory sale, but only up to the actual transfer of ownership.
The award of attorney's fees by respondent Court against petitioner is unwarranted since the
action appears to have been filed in good faith. Besides, there should be no penalty on the right
to litigate. 41
WHEREFORE, premises considered, the petition is hereby GRANTED and the assailed
Decision and the Amended Decision are REVERSED and SET ASIDE. In accordance with the
case of Depra vs. Dumlao, 42 this case is REMANDED to the Regional Trial Court of Pasay
City, Branch 117, for further proceedings consistent with Articles 448 and 546 43 of the Civil
Code, as follows:
The trial court shall determine:
a) the present fair price of private respondent's 520 square-meter area of land;
b) the increase in value ("plus value") which the said area of 520 square meters may have
acquired by reason of the existence of the portion of the building on the area;
c) the fair market value of the encroaching portion of the building; and
d) whether the value of said area of land is considerably more than the fair market value of the
portion of the building thereon.
2. After said amounts shall have been determined by competent evidence, the regional trial court
shall render judgment as follows:
a) The private respondent shall be granted a period of fifteen (15) days within which to exercise
his option under the law (Article 448, Civil Code), whether to appropriate the portion of the
building as his own by paying to petitioner its fair market value, or to oblige petitioner to pay the
price of said area. The amounts to be respectively paid by petitioner and private respondent, in
accordance with the option thus exercised by written notice of the other party and to the court,
shall be paid by the obligor within fifteen (15) days from such notice of the option by tendering
the amount to the trial court in favor of the party entitled to receive it;
b) If private respondent exercises the option to oblige petitioner to pay the price of the land but
the latter rejects such purchase because, as found by the trial court, the value of the land is
considerably more than that of the portion of the building, petitioner shall give written notice of
such rejection to private respondent and to the trial court within fifteen (15) days from notice of
private respondent's option to sell the land. In that event, the parties shall be given a period of
fifteen (15) days from such notice of rejection within which to agree upon the terms of the lease,
and give the trial court formal written notice of the agreement and its provisos. If no agreement is
reached by the parties, the trial court, within fifteen (15) days from and after the termination of
the said period fixed for negotiation, shall then fix the terms of the lease provided that the
monthly rental to be fixed by the Court shall not be less than two thousand pesos (P2,000.00) per
month, payable within the first five (5) days of each calendar month. The period for the forced
lease shall not be more than two (2) years, counted from the finality of the judgment, considering
the long period of time since 1970 that petitioner has occupied the subject area. The rental thus
fixed shall be increased by ten percent (10%) for the second year of the forced lease. Petitioner
shall not make any further constructions or improvements on the building. Upon expiration of
the two-year period, or upon default by petitioner in the payment of rentals for two (2)
consecutive months, private respondent shall be entitled to terminate the forced lease, to recover
his land, and to have the portion of the building removed by petitioner or at latter's expense. The
rentals herein provided shall be tendered by petitioner to the trial court for payment to private
respondent, and such tender shall constitute evidence of whether or not compliance was made
within the period fixed by the said court.
c) In any event, petitioner shall pay private respondent an amount computed at two thousand
pesos (P2,000.00) per month as reasonable compensation for the occupancy of private
respondent's land for the period counted from October 4, 1979, up to the date private respondent
serves notice of its option to appropriate the encroaching structures, otherwise up to the actual
transfer of ownership to petitioner or, in case a forced lease has to be imposed, up to the
commencement date of the forced lease referred to in the preceding paragraph;
d) The periods to be fixed by the trial court in its decision shall be non-extendible, and upon
failure of the party obliged to tender to the trial court the amount due to the obligee, the party
entitled to such payment shall be entitled to an order of execution for the enforcement of
payment of the amount due and for compliance with such other acts as may be required by the
prestation due the obligee.
No costs.
G.R. No. L-36837 August 17, 1983
ATAL MOSLEM and AMADO MOSLEM, petitioners,
DAVAO DEL NORTE, Branch VIII, SALA I, respondents.


This is a petition for certiorari and mandamus with preliminary injunction to annul the orders and
proceedings for contempt before the Court of First Instance of Davao, Branch I at Tagum, in
Civil Case No. 5788 for recovery of possession and damages. The prayer that a writ of
mandamus be issued directing the respondent court to order the release of the petitioners appears
premature because the petitioners were not under detention at the time. Our temporary
restraining order also prevents the court's order of arrest from being implemented.
Antonio M. Soriano filed Civil Case No. 5788 against Atal Moslem and Amado Moslem to
recover possession of four (4) hectares of land plus damages. In their answer, the defendants
specifically denied the material averments of the complaint and contended that they entered and
peacefully possessed for more than twenty (20) years the area which was known as public land.
The defendants filed a counterclaim for P2,000.00 moral damages, P2,000.00 exemplary
damages, and P1,000.00 attomey's fees.
The records show that the following transpired during the pre-trial hearings:
xxx xxx xxx
During the pre-trial that followed, Atty. Pangilan who represents the defendants, and Atty.
Fernando Contreras, who represents the plaintiff, agreed to have Surveyor Jose Vidua appointed
Commissioner for the purpose of relocating the boundaries of the land, subject matter of this
complaint, the expenses to be borne by them share and share alike. They also agreed that before
relocation, they will deposit with the Deputy Clerk of Court their share of the costs of the survey,
The defendants, through Atty. Pangilan also agreed that should the defendants be found within
the land, subject matter of this complaint, they will leave.
WHEREFORE, surveyor Jose Vidua is hereby appointed Commissioner for the purpose of
Before entering into the performance of his duties, he shall take an oath that he win faithfully
perform his duties.
xxx xxx xxx
After the commissioner submitted his report, it was found that the defendants were within the
land titled in the name of Soriano. It appears that Atal Moslem and Amado Moslem interposed
no objection to the report. The court, therefore, rendered a decision ordering the petitioners to
vacate the disputed land and pay the costs.
When the judgment was being executed, the petitioners refused to vacate the land. Soriano filed
a motion to declare them in contempt of court.
The petitioners, assisted by a new counsel filed an opposition to the motion. Resolving the
motion after taking into account the opposition, the respondent court issued an order, the
dispositive portion of which reads:
WHEREFORE, the defendants are hereby found guilty of contempt and ordered arrested and
imprisoned until they obey the order aforementioned.
A motion for reconsideration of the order was denied.
The petitioners are now raising two issues for resolution, namely —
l. Whether petitioners can be declared in contempt of court in a case for delivery of possession of
real property.
2. Whether petitioners can be declared in contempt of court pending payments of the
improvements in the land under Articles 448 and 546 of the New Civil Code.
The arguments of the parties on whether or not the contempt order is valid revolve around the
question as to what section of Rule 39 of the Rules of Court applies in this case.
The petitioners contend that Section 8(d) of Rule 39 is appropriate because the judgment requires
delivery of real property. According to them, the refusal to vacate the disputed land is not
contempt of court because the judgment is not a special judgment enforceable under Section 9 of
Rule 39. The respondents, however, argue that the order of the court is not to deliver possession
of land but to vacate it and to pay costs. They would apply Section 9, Rule 39. The respondents'
arguments are sophistic
A writ of execution under Section 8(d) requires the sheriff or other proper officer to whom it is
xxx xxx xxx
(d) If it be for the delivery of the possession of real or personal property, to deliver the
possession of the same, describing it, to the party entitled thereto, and to satisfy any costs,
damages, rents, or profits covered by the judgment out of the personal property of the person
against whom it was rendered, and if sufficient personal property cannot be found, then out of
the real property.
On the other hand, Section 9 which the lower court ruled as applicable, provides:
Writ of execution of special judgment. —When a judgment requires the performance of any
other act than the payment of money, or the sale or delivery of real or personal property, a
certified copy of the judgment shall be attached to the writ of execution and shall be served by
the officer upon the party against whom the same is rendered, or upon any other person required
thereby, or by law, to obey the same, and such party or person may be punished for contempt if
he disobeys such judgment.
It is plain from the records that the judgment being enforced is an ordinary one. It is not a special
judgment. The case filed by Antonio M. Soriano is an ordinary civil action for the recovery of
possession of a parcel of land and damages. The judgment directing the petitioners to vacate the
land is nothing but a judgment to deliver possession of real property. A special judgment under
Section 9, Rule 39 is one which "requires the performance of any other act than the payment of
money, or the sale or delivery of real or personal property. "
How is an ordinary judgment enforced? Section 13 of Rule 39 provides:
How execution for the delivery or restitution of property enforced — The officer must enforce an
execution for the delivery or restitution of property by ousting therefrom the person against
whom the judgment is rendered and placing the judgment creditorr in possession of such
property, and by levying as hereinafter provided upon so much of the property of the judgment
debtor as will satisfy the amount of the judgment and costs included in the writ of execution.
We applied the above rule in Rom vs. Cobadora (128 SCRA 758) and declared that the mere
refusal or unwillingness on the part of the defeated party to relinquish the property would not
constitute contempt. The proper procedure must be followed in the execution of the judgment.
Chinese Commercial Company v. Martinez, et al (6 SCRA 848) is clear that:
... Under Section 8(d) of Rule 39, if the judgment be for the delivery of the possession of real
property, the writ of execution must require the sheriff or other officer to whom it must be to
deliver the possession of the property, describing it, to the party entitled thereto. This means his
means that the sheyiff must dispossess or eject the losing party from the premises and deliver the
possession thereof to the winning party. If subsequent to such dispossession or ejectment the
losing party enters or attempts to enter into or upon the real property, for the purpose of
executing acts of ownership or possession or in any manner disturbs the possession of the person
adjudged to be entitled thereto, then and only then may be loser be charged with and punished
for contempt under paragraph (h) of Section 3, Rule 64. "
A similar ruling was rendered in Fuentes, et al vs. Leviste, et al (117 SCRA 958), where this
Court held —
Under Sec. 13, Rule 39 of the Rules of Court, it is not enough for the sheriff, in the enforcement
of a judgment for delivery or restitution of property, to merely direct the defeated party to effect
such delivery or restitution. The refusal of the defeated party to surrender the property to the
winning party upon the order of the sheriff does not constitute contempt. The sheriff himself
must oust the defeated party from the property and effect the delivery or restitution by placing
the winning party in possession of the property (U.S. vs. Ramayat 22 PhiL 183) ...
Under the second issue in this petition, the petitioners allege that they have entered, occupied,
and were in peaceful possession of the land in question which according to them was public land,
for more than twenty (20) years, and that their legal possession is evidenced by Tax Declaration
No. 3068 issued by the Office of the Provincial Assessor on October 1 1, 1960. Having
introduced considerable improvements on the land in question before anybody laid claim to it,
the petitioners state that they are builders and planters in good faith and are thus entitled to the
retention of the improvements pending payment under Articles 448 and 546 of the Civil Code.
With this right of retention, the petitioners contend that their refusal to vacate the premises
cannot be punished as contempt.
The lower court did not find this explanation satisfactory. The respondents have not discussed the
builder in good faith argument but have limited themselves to insisting that the refusal to vacate
and to pay costs is contemptuous defiance of the court orders.
The records of this case are rather sketchy. The petitioners did not submit any evidence to prove
their assertions of being builders and planters in good faith. The matter was not mentioned in
their answer. Only after they were required to show cause why they should not be hold in
contempt did their new counsel explain that the petitioners had been in possession of the land
since before World War II, that under the Civil Code they are entitled to reimbursement of all
their improvements and that pending payment of said improvements, they cannot be held in
contempt of court. Without explaining the basis of its ruling on this point, the lower court found
it unsatisfactory.
Under ordinary circumstances, the petitioners' contentions on the second issue they raised would
not receive serious consideration. During pre-trial, their first counsel agreed that a court
commissioner would survey the land and if they are found within the property of the private
respondent, they would leave.
There are special reasons, however, why the builder in good faith issue should not be ignored or
considered closed in spite of the finality of the decision in the recovery of possession case.
In the first place, the petitioners have the presumption of good faith under Article 527 of the
Civil Code in their favor. In the drafting of the answer and during pre-trial the petitioners do not
seem to have had the benefit of counsel in the real meaning of its availability. The petitioners'
first counsel limited the issues to ascertaining whether or not the two defendants were inside the
titled property of the paintiff. Atal and Amado are members of a cultural minority group. They
appear not even to have any surname. Their family name "Moslem" appears to be more of a
descriptive applation than a surname. There is nothing in the records before us to show whether
or not Atal and Amado were mere squatters who entered land already titled in someone else's
name. It is not also shown whether the two were already working and cultivating land which they
thought was public land when the same was titled by a person more knowledgeable in
acquisition of real estate. The builder in good faith argument is, therefore, a valid one insofar as
this contempt case is concerned. The petitioners are not precluded from pursuing further legal
steps to be reimbursed for their improvements if their claim is supported by satisfactory proof.
WHEREFORE, the orders of the respondent court finding the petitioners guilty of contempt and
ordering their arrest and detention are hereby REVERSED and SET ASIDE. The temporary
restraining order earlier issued is made PERMANENT. Costs against the private respondent.
G.R. No. 85469 March 18, 1992
DIOSDADO RAMIREZ, petitioners,

This appeal by certiorari seeks the reversal of the decision of respondent court in C.A.-G.R. No.
14435 promulgated on August 29, 1988, dismissing petitioners' original action for certiorari
which sought the nullification of the order of the Secretary of Agriculture and Foods dated
August 26, 1986 holding in abeyance the execution of judgment and implementation of the order
of the Director of the Bureau of Fisheries and Aquatic Resources dated October 11, 1973.
The fact adduced by the respondent court show that on October 11, 1973, Irene Vda. de Ramirez,
now substituted by her heirs, herein petitioners, was granted a lease over a fishing area under Fp.
A. No. 31471 covering 9.5040 hectares, situated at Masinloc, Zambales by the Acting Director,
Bureau of Fisheries. The pertinent portion of said order 1 is quoted, thus:
WHEREFORE, premises considered, FLA. No. 540 of Vicente Tecson should be as hereby it is
declared TERMINATED, it being issued on December 8, 1953 and had already expired on
December 31, 1964; that Valentina Vda. de Montero, be ordered to vacate the portion of the area
she is occupying and should remove whatever existing improvements she has introduced therein,
inasmuch as her occupation of a public land is without proper authority of the authorities
concerned; Fp. A. No. 31471 of Mrs. Irene VDA. de Ramirez, should be as hereby it is, GIVEN
DUE COURSE, to cover the whole area of 9.5040 hectares formerly under Ord. Fp. Permit No.
F-564-C (Cancelled) of the late Catalino Ramirez.
On February 29, 1974 private respondent Valentina vda. de Montero filed a protest against the
application of Irene vda. de Ramirez, alleging that the failure of the latter to disclose to the
authorities concerned the transfer to said Valentina of a 4-hectare portion of the area under the
permit, constituted fraud, and that the director's order of October 11, 1973 would unjustly enrich
the said Irene vda. de Ramirez. The said protest of the private respondent was dismissed by the
Director of Fisheries on August 12, 1975 and was again dismissed by the Minister of Natural
Resources on November 21, 1978 upon appeal. It met the same fate on August 11, 1981 when
the same protest was appealed to the Office of the President. On September 27, 1984, private
respondent then filed a complaint before the Court of First Instance of Zambales to annul the
aforesaid decision of the Office of the President. This was, however dismissed on September 27,
1984, and upon appeal therefrom, the Court of Appeals dismissed the appeal in its resolution of
August 12, 1985.
When the dismissal resolution of the Court of Appeals became final and executory, herein
petitioners, on July 21, 1986, filed with the Bureau of Fisheries and Aquatic Resources (BFAR) a
motion for the execution of its order of October 11, 1973. The OIC, BFAR issued a
memorandum order dated August 5, 1986 to the Regional Director, MAF, San Fernando,
Pampanga, for the immediate implementation of the said October 11, 1973 order. In compliance
therewith, the provincial Fisheries Officer, served notices to private respondents, et al. and
Candido delos Santos, et al. directing them to vacate the fishpond area they are occupying.
Instead of complying with the order, private respondent on August 13, 1986, filed with the
respondent Secretary (then Minister of Agriculture and Foods, MAF for short) an opposition to
the motion for execution and acting on the said opposition, the respondent Secretary issued an
order dated August 26, 1986, holding in abeyance action on the motion for execution "[i]n order
that this office may act on the OPPOSITION TO THE MOTION FOR EXECUTION OF
JUDGMENT . . ." 2
On October 2, 1986, petitioners filed a motion for reconsideration of the August 26, 1986 order.
Instead of acting on the motion, the respondent Secretary ordered that an investigation and ocular
inspection of the area in dispute be conducted as it stated, to wit:
The order dated October 11, 1973 of the Director of Fisheries, subject of implementation, refers
to the adjudication of past facts, namely:
1. That the area in question consists of two (2) lots, separated by a creek; Lot 1 (northern portion)
consisting of 5.9412 hectares, and Lot 2 (southern portion) consisting of 3.6528 hectares.
(Relocation Plan, records page 51)
2. That Valentina Montero was ordered to vacate the portion of the area she was occupying and
to remove the residential house in the north eastern portion of Lot 1. (Order dated October 11,
1973 and Report dated September 20, 1973 of Moises L. Matriano)
3. That Valentina Montero has no fishpond improvements in 1973, since the improvements
existing on the area per report of Moises L. Matriano, were those introduced in 1947.
4. That the two (2) deeds of sale dated March 10, 1966 and April 19, 1966 executed by spouses
Catalino Ramirez and Irene Bermudez Ramirez in favor of Valentina Montero were null and void
for not having been approved by authorities concerned, pursuant to Fisheries Administrative
Order No. 60-2 dated February 15, 1968. (Resolution, Aug. 11, 1981, Office of the President).
5. That Fp. A. No. 31471 of Irene Vda. de Ramirez was given due course covering an area of
9.5040 hectares, formerly under OFP No. F-564-C (Cancelled) of the late Catalino Ramirez.
During the pendency of the case for a period of twelve (12) years from October 11, 1973 to
October 25, 1985, there were supervening the events, happenings of which necessarily affect the
implementation of the order dated October 11, 1973:
1. That Irene Vda. de Ramirez and children, Jose B. Ramirez, Diosdado Ramirez, Bienvenido
Ramirez, Josefina R. Cines, Erlinda R. Almandres, executed a Deed of Quitclaim (Records, p.
720-721) on February 18 1982 in favor of Col. Florentino Cuaresma (Ret.) over a portion of the
area in despute, bounded on the North by Juan Arbizo, on the East by a Provincial Road, on the
South by Irene Vda. de Ramirez (visible by dike), and on the West by the China Sea, containing
an area of 3.0 hectares.
2. That on March 17, 1982, Florentino Cuaresma filed with BFAR his Fp. A. No. 38736 covering
3.0 hectares.
3. That Irene Vda. de Ramirez died on February 22, 1983 as evidenced by a certificate issued by
the Office of the Local Civil Registrar, Masinloc, Zambales.
4. That on August 15, 1984, the Heirs of Catalino Ramirez filed an application covering an area
of 6.5940 hectares, stating that the area applied for is the same area covered by OFP No. F-564-C
and FP. A. No. 31471 of the late Catalino Ramirez and Irene Vda de Ramirez.
5. That there are extensive improvements on the area subsequently introduced by Jose T. Reyes
and Montero, worth about P200,000.00, as alleged in the protest dated August 25, 1986 of Jose
T. Reyes.; 3
Petitioner's motion for reconsideration was denied by the respondent Secretary in his order dated
December 17, 1986.
In sustaining the view of the respondent Secretary, the Court of Appeals stressed that the said
Secretary has not refused to implement the October 11, 1973 order, "rather, he had merely held in
abeyance implementation of the said order and directed that an investigation be conducted in
view of 'supervening events, the happening of which necessarily affect the implementation of the
order dated October 11, 1973.' " 4
The Court of Appeals opined that in as much as the subjects area is still part of the public domain
— petitioners' claim was still in the application stage and no fishpond lease agreement having
been as yet issued by the BFAR — an investigation was necessary in order to determine "(1) the
effect of the death of Irene Vda. de Ramirez on her Fp. A. No. 31471; (2) the effect of the Deed
of Quitclaim dated February 18, 1982 executed by Irene Vda. de Ramirez and children in favor
of Florentino Cuaresma over a portion of 3.0 hectares of area in dispute; and (3) the claim of
Jose T. Reyes and Montero on the subsequent introduction of improvements on the area in
dispute which are not considered in the Order sought to be implemented. 5 The appellate court
further agreed with the respondent Secretary that holding in abeyance the implementation of the
October 11, 1973 order would prevent complication that may arise had said order been
immediately executed without determining the effects and ramifications of the aforesaid
supervening events.
The only issue raised by the petitioners is whether a judgment that had long become final and
executory can still be reconsidered and set aside.
It is the oft-repeated rule that once a judgment has become final, the issues therein should be laid
to rest. 6 It is likewise equally settled that once a judgment becomes final, the prevailing party is
entitled as a matter of right, to a writ of execution and the issuance thereof is the court's
ministerial duty. In fact it has been fittingly said that "an execution is the fruit and end of the suit
and is aptly called the life of the law." 7
The rule nevertheless admits of exceptions. Specifically, when facts and events transpired after a
judgment had become final and executory, which on equitable grounds render its execution
impossible or unjust. In which case a stay or preclusion of execution may properly be sought. 8
A suspension or refusal of execution of judgment or order on equitable grounds can only be
justified upon facts and events transpiring after the judgment or order had become executory,
materially affecting the judgment obligation.
Conversely, any attempt to frustrate enforcement of an executory judgment on the basis of facts
or event happening prior to the finality of judgment cannot be sanctioned or allowed.
Justice Narvasa, now Chief Justice, could not have put it more aptly when he said:
. . . Facts or events bearing on the substance of the obligation subject of the action should
ordinarily be alleged during the issue-formulation stage or otherwise by proper amendment, and
proved at the trial; if discovered after the case has been submitted but before decision is
rendered, proved after obtaining a reopening of the case; and if discovered a reopening of the
case; and if discovered after judgment has been rendered but before it become final,
substantiated at a new trial which the court in its discretion may grant on the ground of newly
discovered evidence pursuant to Rule 37, Rules of Court. Once the judgment becomes executory,
the only remedy left to attempt a material alteration thereof is that provided in Rule 38 of the
Rules of Court (governing petitions for relief from judgment), or an action to set aside the
judgment on account of extrinsic, collateral fraud. There is no other permissible mode of
preventing or delaying execution
on equitable grounds predicated on facts occurring before finality of judgment. 9
All the alleged supervening events transpired prior to 1986 when the judgment of the Court of
Appeals became final and executory. Relying on the cited jurisprudence, said supervening events
should have been raised before the judgment became final and executory, otherwise, their only
remedy is to ask for relief from judgment or to have the judgment set aside based on extrinsic
and collateral fraud. The latter was not pursued by private respondent obviously because she
clearly has no basis to have the judgment set aside.
The fact is that the questioned order dated August 26, 198610 of the Secretary of Agriculture and
Foods was premised on the protest filed on August 13, 1986 by Jose T. Reyes (not by Valentina
Vda. de Montero herself) against the issuance of the notice to vacate to private respondents and
Candido delos Santos, alleging: 11
1. That the original case involving the fishpond . . . was between Catalino Ramirez and on
Vicente Tecson . . .
2. The investigation failed to disclose that Valentina Montero had previously bought the Ramirez
fishpond on April 19, 1966 . . . Mrs. Montero filed her own application for fishpond permit on
June 10, 1968 . . .
3. Of the land bought by Mrs. Montero from the Ramirezes, a two-hectare portion thereof was
sold to me sometime in December 1973.
4. That the Ramirezes have never been on the fishponds in question since their execution of the
deed of sale of 1966, as shown by the extensive improvements introduced thereon worth about
P200,000.00 more or less by Mrs. Montero and myself.
5. Mrs. Irene Ramirez filed her application for the same fishponds on June 25, 1973, at a time
when she had nothing more to apply
. . . and the prior application of Mrs. Montero had been rejected on the flimsy ground that the
transfer was not with the previous approval of the Commissioner.
6. That to give currency to this . . . would sanction undue enrichment of the Ramirezes at the
expense of Mrs. Montero and myself, because then the former would just pre-empt the vast
improvements we have so far introduced on the fishponds in question . . .
Items 1, 2, 4 and 5 have long been resolved since the Order dated August 12, 1975, 12 of the then
Director of BFAR was handed down. Said Order reads:
The allegations of protestant Montero that her entry over the area was based on the "Deed of
Sale" executed by the late Catalino Ramirez, for which she filed a proposed application on
August 1, 1968 covering the area, was however denied by Protestee Irene Vda. de Ramirez,
during the ex-parte investigation. It appears that the only documentary evidences submitted by
counsel for protestant during the investigation were the following, namely: the alleged Deed of
Sale; a tax declaration and the receipts of payments to the municipality.
xxx xxx xxx
The alleged "Deed of Sale" cannot be the basis of the protestant to occupy the area for it is not
duly approved pursuant to existing rules and regulations governing the lease of fishponds; hence
the same is without force and effect, as far as this office is concerned. Neither the tax declaration
or the receipt of payments to the municipality, constitute a valid ground for the occupation of the
area in controversy, for the law is explicit, that no person shall occupy public land for fishpond
purposes unless a permit or lease agreement is duly issued in his favor.
This was affirmed in the decision 13 of the then Minister of Natural Resources, the dispositive
portion of which states:
All told, appellant's entry into and occupation of the area is without legal basis. And the fact that
she described the area for taxation purposes and paid the taxes thereon does not warrant said
entry and occupation because the area is a forest land, the occupancy of which, without permit or
authority, is prohibited under section 2 of the Fisheries Administrative Order (FAO) No. 60 dated
June 29, 1960, the pertinent portion of which reads as follows:
Use of Forest Lands — No person shall occupy or use any portion of the public forest land,
including tidal, mangrove and other swamps . . . for fishpond purposes, without first securing
thereof a permit or lease in accordance with the provisions of the Order.
This was again upheld by the Office of the President. It is quite evident from the records that as
far as Valentina Vda. de Montero is concerned, she has no right over the fishpond in dispute and
her entry/occupation therein was found to be unlawful. 14 Her status has long been determined
and it is about time that We write finis to her claim.
Neither can Jose Reyes claim any right over a portion of the said area. Records show that he is a
mere assignee of respondent Montero and not, as alleged by the Solicitor General, a new party
who has introduced improvements, and who would be summarily ousted without the opportunity
to be heard. 15 A purchaser of property cannot close his eyes and claim that he acted in good
faith under the belief that there was no defect in the vendor's title. 16 A person buying can
acquire no more than what she seller can legally transfer, because the latter can only sell what he
owns or is authorized to sell. Reyes was very much aware of the defect in Mrs. Montero's title as
he admitted that the prior application of Mrs. Montero for fishpond permit had been rejected as
early as 1968. Considering such, he cannot claim to be a builder in good faith.
The general rule is that a builder in bad faith loses what the built without right to indemnity.17
Moreover, Fisheries Administrative Order No. 60-2 dated 15 February 1968 specifically
That any transfer or sublease without the previous approval of Commissioner or by the Secretary,
as the case may be, shall be considered null and void and deemed sufficient cause for the
cancellation of the permit or lease, and the forfeiture of the improvement, and bond in
connection therewith, in favor of the Government. 18
As to the death of Irene Vda. de Ramirez, this is not such a supervening event as to warrant re-
investigation of her application. She can simply be substituted by her heirs.
It appears then that the only legitimate supervening event which need to be determined is the
effect of the quitclaim executed by Irene Vda. de Ramirez and her heirs in favor of Col.
Florentino Cuaresma. Should it be found that the same is in order, the application of Irene Vda.
de Ramirez, now substituted by her heirs, under Fp. A. No. 31471 covering 6.5940 (area which
was not conveyed to Cuaresma) should finally be given due course.
WHEREFORE, the judgment of the Court of Appeals is set aside. Another judgment is hereby
rendered: (1) ordering Valentina Vda. de Montero and/or her assigns to vacate the fishpond area
they are occupying; (2) to remand this case to BFAR only for the purpose of determining the
effect of the quitclaim executed by Irene Vda. de Ramirez and her heirs in favor of Col.
Florentino Cuaresma (Ret.): and (3) to allow the heirs of Irene Vda. de Ramirez to substitute her
in her lease application.