Part 1 Property Cases 2014 Llb 2a

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THIRD DIVISION

[G.R. No. 134692. August 1, 2000]

ELISEO FAJARDO, JR., and MARISSA FAJARDO, petitioners,vs. FREEDOM TO BUILD, INC., respondent.

D E C I S I O N

VITUG, J .:

Freedom To Build, Incorporated, an owner-developer and seller oflow-cost housing, sold to petitioner-spouses, a house and lotdesignated Lot No. 33, Block 14, of the De la Costa Homes in

Barangka, Marikina, Metro Manila. The Contract to Sell executedbetween the parties, contained a Restrictive Covenant providingcertain prohibitions, to wit:[1]

"Easements. For the good of the entire community, thehomeowner must observe a two-meter easement in front. Nostructure of any kind (store, garage, bodega, etc.) may be builton the front easement.

"x x x.............................x x x.............................x x x

"Upward expansion. A second storey is not prohibited. But thesecond storey expansion must be placed above the back portionof the house and should not extend forward beyond the apex ofthe original building.

"x x x.............................x x x.............................x x x

"Front expansion: 2nd Storey: No unit may be extended in thefront beyond the line as designed and implemented by thedeveloper in the 60 sq. m. unit. In other words, the 2nd floorexpansion, in front, is 6 meters back from the front propertyline and 4 meters back from the front wall of the house, just asprovided in the 60 sq. m. units."[2]

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The above restrictions were also contained in Transfer Certificate ofTitle No. N-115384 covering the lot issued in the name of petitioner-spouses.

The controversy arose when petitioners, despite repeated warningsfrom respondent, extended the roof of their house to the propertyline and expanded the second floor of their house to a point directlyabove the original front wall.[3] Respondent filed before the RegionalTrial Court, National Capital Judicial Region, Branch 261, Pasig City,an action to demolish the unauthorized structures.

After trial, judgment was rendered against petitioners; thus:

"WHEREFORE, premises considered, defendant spouses EliseoB. Fajardo, Jr., and Marissa F. Fajardo are hereby directed toimmediately demolish and remove the extension of theirexpanded housing unit that exceeds the limitations imposed bythe Restrictive Covenant, otherwise the Branch Sheriff of thisCourt shall execute this decision at the expense of thedefendants.

"As to damages and attorney's fees, it appearing from the

records of this case that no evidence to sustain the same wasadduced by either of the parties, the Court deems it proper notto award any.

"SO ORDERED."[4]

On appeal to it, the Court of Appeals affirmed the decision of the trialcourt.

In their petition for review to this Court, the spouses contest the

judgment of the courts below. Adjacent owners reportedly have noobjection to the construction, and have even expressed interest inundertaking a similar expansion in their respective residences.Moreover, the couple's two children, a son and a daughter, mightsoon get married and then share, with their families, living quarterswith petitioners. The latter also assail the personality of private











respondent to question the construction which have effectivelyrelinquished its ownership, right or interest over the subdivisionupon the execution of the Deed of Absolute Sale in favor of theindividual homeowners. Per the contract between Freedom to Build

Incorporated and the De la Costa Low Income Project Homeowners'Association (hereinafter homeowners' association), petitioners aver,the enforcement of the prohibitions contained in the "RestrictiveCovenant" originally residing on respondent is now lodged in thehomeowners' association. Petitioners maintain that it is incumbentupon the homeowners' association, not on respondent, to enforcecompliance with the provisions of the covenant.

A perusal of the provisions of the covenant would show that the

restrictions therein imposed were intended -

"For the protection and benefit of the De La Costa Low IncomeHousing Project, and of all the persons who may now, orhereafter become owners of any part of the project, and as partof the consideration for the conveyance of the housing unit,these restrictions are promulgated in order that; the intents andpurposes for which the project was designed shall be upheld; towit: subsequent duly approved sale and assignments of

housing units shall be made only to low income families; acertain level of privacy shall be observed; a community spiritshall be fostered; and an undisturbed possession andoccupancy at the homeowners shall be maintained."[5]

Restrictive covenants are not, strictly speaking, synonymous witheasements. While it may be correct to state that restrictive covenantson the use of land or the location or character of buildings or otherstructures thereon may broadly be said to create easements or rights,

it can also be contended that such covenants, being limitations on themanner in which one may use his own property,[6] do not result intrue easements,[7] but a case of servitudes (burden), sometimescharacterized to be negative easements or reciprocal negativeeasements. Negative easement is the most common easement createdby covenant or agreement whose effect is to preclude the owner of














the land from doing an act, which, if no easement existed, he wouldbe entitled to do.[8]

Courts which generally view restrictive covenants with disfavor for

being a restriction on the use of one's property, have, nevertheless,sustained them[9] where the covenants are reasonable,[10] not contraryto public policy,[11] or to law,[12] and not in restraint of trade.[13]Subjectto these limitations, courts enforce restrictions to the same extent thatwill lend judicial sanction to any other valid contractualrelationship.[14] In general, frontline restrictions on constructions havebeen held to be valid stipulations.[15]

The provisions in a restrictive covenant prescribing the type of the

building to be erected are crafted not solely for the purpose ofcreating easements, generally of light and view, nor as a restriction asto the type of construction,[16] but may also be aimed as a check on thesubsequent uses of the building[17] conformably with what thedeveloper originally might have intended the stipulations to be. In itsMemorandum, respondent states in arguing for the validity of therestrictive covenant that the -

"x x x restrictions are not without specific purpose. In a low

cost-socialized housing, it is of public knowledge that owners-developers are constrained to build as many number of houseson a limited land area precisely to accommodate marginalizedlot buyers, providing as much as possible the safety, aestheticand decent living condition by controlling overcrowding. Suchproject has been designed to accommodate at least 100 familiesper hectare."[18]

There appears to be no cogent reasons for not upholding restrictive

covenants aimed to promote aesthetics, health, and privacy or toprevent overcrowding.

Viewed accordingly, the statement of petitioners that their immediateneighbors have not opposed the construction is unavailing to theircause, the subject restrictive covenant not being intended for thebenefit of adjacent owners but to prescribe the uses of the building,












































i.e., to ensure, among other things, that the structures built on De laCosta Homes Subdivision would prevent overcrowding and promoteprivacy among subdivision dwellers. The argument then ofpetitioners that expansion is necessary in order to accommodate the

individual families of their two children must fail for like reason. Norcan petitioners claim good faith; the restrictive covenants areexplicitly written in the Contract To Sell and annotated at the back ofthe Transfer Certificate of Title.

Petitioners raise the issue of the personality of respondent to enforcethe provisions of the covenant. Broadly speaking, a suit for equitableenforcement of a restrictive covenant can only be made by one forwhose benefit it is intended.[19] It is not thus normally enforceable by

one who has no right nor interest in the land for the benefit of whichthe restriction has been imposed.[20] Thus, a developer of asubdivision can enforce restrictions, even as against remote granteesof lots, only if he retains part of the land.[21] There would have beenmerit in the argument of petitioners - that respondent, havingrelinquished ownership of the subdivision to the homeowners, isprecluded from claiming any right or interest on the same property -had not the homeowners' association, confirmed by its board ofdirectors, allowed respondent to enforce the provisions of the

restrictive covenant.

Finally, petitioners argue that for lack of a specific provision,prescribing the penalty of demolition in the "Restrictive Covenant" inthe event of a breach thereof, the prayer of respondent to demolishthe structure should fail. This argument has no merit; Article 1168 ofthe New Civil Code states:

"When the obligation consists in not doing and the obligor does

what has been forbidden him, it shall be undone at hisexpense."

This Court is not unaware of its ruling in Ayala Corporation vs. RayBurton Development Corporation ,[22] which has merely adjudged thepayment of damages in lieu of demolition. In the aforementionedcase, however, the elaborate mathematical formula for the



















determination of compensatory damages which takes into accountthe current construction cost index during the immediately preceding5 years based on the weighted average of wholesale price and wageindices of the National Census and Statistics Office and the Bureau of

Labor Statistics is explicitly provided for in the Deed of Restrictionsentered into by the parties. This unique and peculiar circumstance,among other strong justifications therein mentioned, is not extant inthe case at bar.

In sum, the Court holds that -

(1)....The provisions of the Restrictive Covenant are valid;

(2)....Petitioners must be held to be bound thereby; and

(3)....Since the extension constructed exceeds the floor arealimits of the Restrictive Covenant, petitioner-spouses can berequired to demolish the structure to the extent that it exceedsthe prescribed floor area limits.

WHEREFORE, the assailed decision, dated 13 July 1998, of the Courtof Appeals in CA-G.R. CV No. 50085, sustaining that of the courtaquo, is AFFIRMED. No costs.

SO ORDERED.



FIRST DIVISION

[G.R. No. 149295. September 23, 2003]

PHILIPPINE NATIONAL BANK, petitioner, vs. GENEROSO DE JESUS,represented by his Attorney-in-Fact, CHRISTIAN DE

JESUS, respondent .

D E C I S I O N

VITUG, J .:

Petitioner Philippine National Bank disputes the decision handed downby the Court of Appeals promulgated on 23 March 2001 in CA-G.R. CV No.56001, entitled ―Generoso De Jesus, represented by his Attorney-in-Fact,Christian De Jesus, versus Philippine National Bank.‖ The assaileddecision has affirmed the judgment rendered by the Regional Trial Court,Branch 44, of Mamburao, Occidental Mindoro, declaring respondentGeneroso de Jesus as being the true and lawful owner of the 124-square-meter portion of the land covered by Transfer Certificate of Title (TCT) No.T-17197 and ordering petitioner bank to vacate the premises, to deliverpossession thereof to respondent, and to remove the improvement thereon.

It would appear that on 10 June 1995, respondent filed a complaintagainst petitioner before the Regional Trial Court of Occidental Mindorofor recovery of ownership and possession, with damages, over thequestioned property. In his complaint, respondent stated that he hadacquired a parcel of land situated in Mamburao, Occidental Mindoro, withan area of 1,144 square meters covered by TCT No. T-17197, and that on 26March 1993, he had caused a verification survey of the property and

discovered that the northern portion of the lot was being encroached uponby a building of petitioner to the extent of 124 square meters. Despite twoletters of demand sent by respondent, petitioner failed and refused tovacate the area.

Petitioner, in its answer, asserted that when it acquired the lot and thebuilding sometime in 1981 from then Mayor Bienvenido Ignacio, the



encroachment already was in existence and to remedy the situation, MayorIgnacio offered to sell the area in question (which then also belonged toIgnacio) to petitioner at P100.00 per square meter which offer the latterclaimed to have accepted. The sale, however, did not materialize when,

without the knowledge and consent of petitioner, Mayor Ignacio latermortgaged the lot to the Development Bank of the Philippines.

The trial court decided the case in favor of respondent declaring him tobe the rightful owner of the disputed 124-square-meter portion of the lotand ordering petitioner to surrender possession of the property torespondent and to cause, at its expense, the removal of any improvementthereon.

The Court of Appeals, on appeal, sustained the trial court but it ordered

to be deleted the award to respondent of attorney‘s fees, as well as moraland exemplary damages, and litigation expenses.

Petitioner went to this Court, via a petition for review, after theappellate court had denied the bank‘s motion for reconsideration, here nowcontending that -

―1. THE COURT OF APPEALS GRAVELY ERRED IN LAW INADJUDGING PNB A BUILDER IN BAD FAITH OVER THEENCROACHED PROPERTY IN QUESTION;

―2. THE COURT OF APPEALS GRAVELY ERRED IN LAW IN NOTAPPLYING IN FAVOR OF PNB THE PROVISION OF ARTICLE 448 OFTHE CIVIL CODE AND THE RULING IN TECNOGAS PHILIPPINESMANUFACTURING CORP. VS. COURT OF APPEALS, G.R. No. 108894,February 10, 1997, 268 SCRA 7.‖[1]

The Regional Trial Court and the Court of Appeals have both rejectedthe idea that petitioner can be considered a builder in good faith. In the

context that such term is used in particular reference to Article 448, et seq.,of the Civil Code, a builder in good faith is one who, not being the ownerof the land, builds on that land believing himself to be its owner andunaware of any defect in his title or mode of acquisition.

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

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―Article 448. The owner of the land on which anything has been built,sown, or planted in good faith, shall have the right to appropriate as hisown the works, sowing or planting, after payment of the indemnityprovided 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 properrent. However, the builder or planter cannot be obliged to buy the land ifits value is considerably more than that of the building or trees. In such acase, he shall pay reasonable rent, if the owner of the land does not chooseto appropriate the building or trees after proper indemnity. The partiesshall agree upon the terms of the lease and in case of disagreement, thecourt shall fix the terms thereof.‖

―Article 449. He who builds, plants, or sows in bad faith on the land of

another, loses what is built, planted or sown without right to indemnity.‖

―Article 450. The owner of the land on which anything has been built,planted or sown in bad faith may demand the demolition of the work, orthat the planting or sowing be removed, in order to replace things in theirformer condition at the expense of the person who built, planted or sowed;or he may compel the builder or planter to pay the price of the land, andthe sower the proper rent.‖

A builder in good faith can, under the foregoing provisions, compel thelandowner to make a choice between appropriating the building by payingthe proper indemnity or obliging the builder to pay the price of theland. The choice belongs to the owner of the land, a rule that accords withthe principle of accession, i.e., that the accessory follows the principal andnot the other way around.[2] Even as the option lies with the landowner, thegrant to him, nevertheless, is preclusive. He much choose one. He cannot,for instance, compel the owner of the building to instead remove it fromthe land.[3] In order, however, that the builder can invoke that accruing

benefit and enjoy his corresponding right to demand that a choice be madeby the landowner, he should be able to prove good faith on his part.

Good faith, here understood, is an intangible and abstract quality withno technical meaning or statutory definition, and it encompasses, amongother things, an honest belief, the absence of malice and the absence ofdesign to defraud or to seek an unconscionable advantage. An individual‘s











personal good faith is a concept of his own mind and, therefore, may notconclusively be determined by his protestations alone. It implies honestyof intention, and freedom from knowledge of circumstances which oughtto put the holder upon inquiry.[4] The essence of good faith lies in an honest

belief in the validity of one‘s right, ignorance of a superior claim, andabsence of intention to overreach another.[5] Applied to possession, one isconsidered in good faith if he is not aware that there exists in his title ormode of acquisition any flaw which invalidates it.[6]

Given the findings of both the trial court and the appellate court, itshould be evident enough that petitioner would fall much too short fromits claim of good faith. Evidently, petitioner was quite aware, and indeedadvised, prior to its acquisition of the land and building from Ignacio that apart of the building sold to it stood on the land not covered by the landconveyed to it.

Equally significant is the fact that the building, constructed on the landby Ignacio, has in actuality been part of the property transferred topetitioner. Article 448, of the Civil Code refers to a piece of land whoseownership is claimed by two or more parties, one of whom has built someworks (or sown or planted something) and not to a case where the ownerof the land is the builder, sower, or planter who then later losesownership of the land by sale or otherwise for, elsewise stated, “where

the true owner himself is the builder of works on his own land, the issueof good faith or bad faith is entirely irrelevant.” [7]

In fine, petitioner is not in a valid position to invoke the provisions ofArticle 448 of the Civil Code. The Court commiserates with petitioner in itspresent predicament; upon the other hand, respondent, too, is entitled tohis rights under the law, particularly after having long been deprived ofthe enjoyment of his property. Nevertheless, the Court expresses hope thatthe parties will still be able to come up with an arrangement that can be

mutually suitable and acceptable to them. WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No.

56001 is AFFIRMED. No costs.

SO ORDERED.



















Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. L-26694 December 18, 1973

NELITA MORENO VDA. DE BACALING, petitioner,vs.HECTOR LAGUNA, HON. VALERION ROVIRA, Judge, Court of FirstInstance and HON. JUDGE ROSENDO BALTAZAR, Judge, City Court

of Iloilo, respondents.

Nicanor D. Sorongon for petitioner.

Apeles L. Padilla for respondents.

ESGUERRA, J.:

I.

Nature of the Case

The petitioner seeks a writ of certiorari with preliminary injunction to annulan Order of Hon. Rosendo Baltazar, as Judge of the City Court of Iloilo,dated June 30, 1966, ordering the demolition of the residential house ofpetitioner.1 Assailed likewise is an Order, dated August 25, 1966, of Hon.Valerio V. Rovira, as Judge of the Court of First Instance of Iloilo, stationed

at Iloilo City, approving said demolition. 2

II.

Facts of the Case

The record of this case discloses the following facts:



Private respondent Hector Laguda is the registered owner of a residentialland known as lot No. 3508 situated at La Paz, Iloilo City 3 many yearsback, petitioner and her late husband, Dr. Ramon Bacaling, with theacquiescence of private respondent Laguda, constructed a residential house

on a portion of said lot fronting Huevana Street, paying a monthly rental ofP80.00. 4 Unable to pay the lease rental from July 1959 to September 1961,totalling P2,160.00, an action for ejectment (Civil Case No. 6823) was filedby private respondent Laguda against petitioner in her capacity as judicialadministratrix of the estate of her late husband, Dr. Bacaling, in the CityCourt of Iloilo City. 5 The filing of said case spawned various court suits.

Petitioner on July 23, 1962, filed certiorari proceedings in this Court (G.R.No.

L-20061) but was dismissed for lack of merit on August 3, 1962. 6 With thissetback, petitioner on November 12, 1962, filed with the Court of FirstInstance of Iloilo a petition for certiorari with preliminary injunction (CivilCase No. 6162) but the same was dismissed on December 1,1962. 7 Unsuccessful in her motion for reconsideration, petitioner went tothe Court of Appeals by way of certiorari (CA-G.R. No. 31882-R) but herpetition was dismissed by that Court on March 7, 1967. 8

Suffering from these series of legal reverses, the petitioner entered into a

compromise agreement on July 29, 1964, with private respondent Lagudarelative to Civil Case No. 6823. 9 Said agreement inter alia, provides asfollows:

1. Defendant (petitioner herein) agreed to vacate the premisesand remove ... the residential house therefrom ... beforeDecember 31, 1966;

2. For the use and occupation ... of the said premises ... from

June 1964 to December 31, 1969, the said defendant will payplaintiff a monthly rent ... of Eighty (P80.00) Pesos per calendarmonth ...;

3. Upon failure of defendant to comply with any ... provision ofthe amicable settlement within ... fifty (50) days ... the plaintiffshall be entitled to "immediate execution to restore plaintiff in



possession of the premises and to recover all the unpaidmonthly rents from June 1, 1964 until said premises arevacated" by defendant;

4. Defendant "waive her right, under Sec. 6, Rule 39, Rules ofCourt, to bar enforcement of the execution of the judgment inthe case at anytime within one year from December 31, 1969".

In a decision dated July 30, 1964, the City Court of Iloilo City approved theamicable settlement and enjoined the parties to comply with its terms. Forfailure of the petitioner to satisfy the conditions of the settlement within the50-day period, private respondent Laguda moved for execution which theCourt granted on July 7, 1965. 10

On July 14, 1965, petitioner moved for reconsideration to quash the writ ofexecution, but before the Court could resolve the motion, petitioner on July19, 1965, served notice of her intention to take the case to the Court ofAppeals. 11 Meanwhile on July 23, 1965, respondent Laguda filed anopposition to the petitioner's July 14, 1965, motion, alleging that as judicialadministratrix as of July 29, 1964, she was legally authorized to enter intothe amicable settlement which was the basis of the decision dated July 30,1964, of the City Court of Iloilo sought to be executed and, therefore, her

act was binding upon the present judicial administrator, Atty. RobertoDineros, who replaced petitioner upon her discharge as such on November28, 1964. 12

Denying the petitioner's motion for reconsideration and to quash writ ofexecution on September 30, 1965, the City Court however, held in abeyancethe enforcement of the alias writ of execution until the Court of FirstInstance of Iloilo stamped its imprimatur considering the pendency ofSpecial Proceedings No. 1469 and of the fact that the properties involved

therein are in custodia legis.13

Thereafter, on October 25, 1965, privaterespondent Laguda moved the Court of First Instance of Iloilo in SpecialProceedings No. 1469 for the approval of the City Court's order ofexecution which was granted despite petitioner's opposition. 14 With thedenial of petitioner's motion for reconsideration on December 4, 1965, apetition for certiorari with preliminary injunction was brought before the



Court of Appeals (CA-G.R. No. 36939-R) which dismissed the same on January 18, 1966. 15

On April 14, 1966, the respondent City Judge of Iloilo City issued

an alias writ of execution upon representations of private respondentLaguda, copies of which were served sheriff upon the petitioner and Atty.Roberto Dineros in his capacity as judicial administrator of the estate of thedeceased, Dr. Ramon Bacaling, in Special Proceedings No. 1469. 16

On June 30, 1966, a Special Order of Demolition was issued by therespondent City Judge upon motion of private respondent Laguda andover petitioner's opposition, subject, however, to the approval of the Courtof First Instance of Iloilo in Special Proceedings No. 1469. 17 Upon the

denial of petitioner's motion for reconsideration, respondent Laguda on July 12, 1966, filed a manifestation in the Court of First Instance of Iloilo inSpecial Proceedings No. 1469, praying for the confirmation of the Order todemolish the house under custodia legis. 18

On August 4, 1966, petitioner interposed an opposition alleging:

1. That she was no longer in control of the estate funds whenthe stipulated obligations in the amicable settlement became

due and payable;2. That the residential house to be demolished is worthP35,000.00 for which she is entitled to reimbursement as abuilder in good faith, in addition to reasonable expenses theymay incur in transferring the same to another place; and

3. That the guardian ad litem of the minor children was notnotified of the motion for the issuance of an order ofdemolition; 19

On August 25, 1966, respondent Laguda by way of reply disputedpetitioner's claim and supported the legality of the court's ruling. 20 On thesame date, the probate court in Special Proceedings No. 1469 approved theorder of demolition of the house in controversy. 21 Impugning the saidOrder as violative of the provisions of Sec. 14, Rule 39, of the Rules of



Court, and of the constitutional mandate on due process, petitioner movedto reconsider the same but the motion was denied by the Court onSeptember 26, 1966. 22 Frustrated in her effort to set aside the Order ofDemolition, petitioner brought this present action of certiorari with

preliminary injunction. Upon giving due course to the petition, this Courtissued a temporary restraining order on October 21, 1966, to prevent theenforcement of the order of demolition in Special Proceedings No. 1469 ofthe Court of First Instance of Iloilo, but when served upon the respondents,the building in question was already partially demolished. 23 Uponpetitioner's posting a bond of P1,000.00, this Court on November 10, 1966,issued a writ of preliminary injunction restraining the herein respondentsfrom proceeding with the order of demolition, until further orders. 24

III.

Issues of the Case

The issues raised in the instant petition boil down to the following:

1. Whether or not the acts of the petitioner as judicialadministratrix prior to her discharge or removal are valid andbinding upon her successor;

2. Whether or not petitioner is a builder in good faith and,therefore, entitled to reimbursement, and/or reasonableexpenses that may be incurred in transferring the house toanother place;

3. Whether or not due process was denied to the minor childrenof deceased Ramon Bacaling, and petitioner in connection withthe motion for the issuance of the order of demolition.

IV.

Discussion

Petitioner claims before this Court that since she was no longer the judicialadministratrix of the estate of her late husband, Dr. Ramon Bacaling, andwas no longer in control of estate funds when the stipulated obligations in



the amicable settlement became due and payable, the special order ofdemolition could not be enforced.

Such a view is not tenable. Under Section 3, Rule 82 of the Rules of Court,

petitioner's lawful acts before the revocation of her letters of administrationor before her removal shall have the same validity as if there was no suchrevocation or removal. It is elementary that the effect of revocation ofletters testamentary or of administration is to terminate the authority of theexecutor or administrator, but the acts of the executor or administrator,done in good faith prior to the revocation of the letters, will be protected,and a similar protection will be extended to rights acquired under aprevious grant of administration. 25

In connection with the petitioner's contention that she be considered abuilder in good faith and, therefore, entitled to reimbursement in additionto reasonable expenses that may be incurred in transferring the house toanother place, the same cannot stand legal scrutiny. The rule is well-settledthat lessees, like petitioner, are not possessors in good faith, because theyknew that their occupancy of the premises continues only during the life ofthe lease, and they cannot as a matter of right, recover the value of theirimprovements from the lessor, much less retain the premises until they arereimbursed. Their rights are governed by Article 1678 of the Civil Code

which allows reimbursement of lessees up to one-half of the value of theirimprovements if the lessor so elects. 26

It is next urged by petitioner that there was a denial of process for failure ofprivate respondent to notify the guardian ad litem of the minor children ofthe deceased Ramon Bacaling, of the motion for execution.

A perusal of the pleadings yields the conclusion that petitioner failed tomeet the burden of demonstrating that there was denial of due process. On

the contrary, there is evidence to show that Acting Fiscal AlfonsoIllemberger guardian ad litem of the minor children of the late RamonBacaling, has been duly apprised of the issuance of the assailed specialorder to demolish, as shown by the certification of the counsel forpetitioner at the foot of his opposition dated August 4, 1966, 27 filed withthe Court of First Instance of Iloilo, and as also shown by the certification of



private respondent's counsel at the foot of his opposition dated September15, 1966, 28 likewise filed with the same Court.

V.

Conclusion

The petitioner is not entitled to the writ of certiorari. In the case at bar, thereis absolutely no showing that the respondent courts acted so "arbitrarily","despotically" or "capriciously" as to amount to lack of jurisdiction inissuing the questioned orders.

"Grave abuse of discretion" which is a ground for certiorari means "suchcapricious and arbitrary exercise of judgment as is equivalent, in the eyes

of the law, to lack of jurisdiction." 29 Even mere abuse of discretion is notsufficient by itself to justify the issuance of a writ of certiorari. For thatpurpose the abuse of discretion must be grave and patent, and it must beshown that it was exercised arbitrarily or despotically, which is not the casemade out by the present petition. 30

There is something more to be said about the nature and apparent purposeof this case which has its genesis in the case for illegal detainer (Civil CaseNo. 6823) brought before the Iloilo City Court. What transpired thereinpresents a glaring example of a summary proceeding which wasdeliberately protracted and made to suffer undue delay in its disposal. Itwas originally filed on September 13, 1960; 31 it reached the appellate courtsfive (5) times, twice before the Court of Appeals 32, Once before the Courtof First Instance of Iloilo 33, and twice before this Court. 34 The presentpetition smacks of a dilatory tactic and a frivolous attempt resorted to bypetitioner to frustrate the prompt termination of the ejectment case and toprolong litigation unnecessarily. Such conduct on the part of petitioner and

her counsel deserves the vigorous condemnation of this Court,35

because itevinces a flagrant misuse of the remedy of certiorariwhich should only beresorted to in case of lack of jurisdiction or grave abuse of discretion by ainferior court. A recourse of this kind unduly taxes the energy and patienceof courts and simply wastes the precious time that they could well devoteto really meritorious cases.



VI.

Judgment

IN THE LIGHT OF THE FOREGOING CONSIDERATIONS, the instantpetition should be, as it is hereby, dismissed.

The writ of preliminary injunction issued by this Court on November 10,1966, is immediately set aside. 36

Treble costs against the petitioner for the reasons above set forth. 37




Manila

SECOND DIVISION

G.R. No. 144635 June 26, 2006

PROGRAMME INCORPORATED, Petitioner,vs.PROVINCE OF BATAAN ,1 Respondent.

D E C I S I O N

CORONA, J.:

In this petition filed under Rule 45 of the Rules of Court, petitionerProgramme Incorporated contests the Court of Appeals (CA) decision2 andresolution3 upholding respondent Province of Bataan‘s ownership ofPiazza Hotel and the land on which it stands. The assailed decision in CA-G.R. CV No. 49135 affirmed the decision of the Regional Trial Court (RTC),Branch 4, Balanga, Bataan in a suit for preliminary injunction and sum ofmoney filed by petitioner against Bataan Shipyard and Engineering Co.,

Inc. (BASECO). The case was docketed as Civil Case No. 129-ML. Thedispositive portion of the trial court decision read:

WHEREFORE, in view of all the foregoing considerations, judgment ishereby rendered dismissing the complaint, without pronouncement as tocosts.

Similarly, [BASECO‘s] counterclaim is dismissed.

On the complaint in intervention, judgment is hereby rendered ordering[petitioner] to pay [respondent] the rentals for the leased premises inquestion, namely, the Piazza Hotel and the Mariveles Lodge, situated at theBataan Export Processing Zone (BEPZ) Compound in Mariveles, Bataan, atthe rate of six thousand five hundred pesos (P6,500.00) per month for bothestablishments, starting in August 1989 with legal interest at 6% per

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annum, up to and until the legal arrearages shall have been fully paid, andto pay the succeeding rentals therefor at the same rate.

SO ORDERED.4

The controversy arose from the following facts.

BASECO was the owner of Piazza Hotel and Mariveles Lodge, both locatedin Mariveles, Bataan.

On May 14, 1986, BASECO granted petitioner a contract of lease overPiazza Hotel at a monthly rental of P6,500 for three years, i.e., from January1, 1986 to January 1, 1989, subject to renewal by mutual agreement of theparties. After the expiration of the three-year lease period, petitioner was

allowed to continue operating the hotel on monthly extensions of the lease.

In April 1989, however, the Presidential Commission on Good Government(PCGG) issued a sequestration order against BASECO pursuant toExecutive Order No. 1 of former President Corazon C. Aquino.5 Among theproperties provisionally seized and taken over was the lot on which PiazzaHotel stood.

On July 19, 1989, however, Piazza Hotel was sold at a public auction for

non-payment of taxes to respondent Province of Bataan. The title of theproperty was transferred to respondent. BASECO‘s Transfer Certificate ofTitle (TCT) No. T-59631 was cancelled and a new one, TCT No. T-128456,was issued to the Province of Bataan.

On July 21, 1989, petitioner filed a complaint for preliminary injunction andcollection of sum of money against BASECO (Civil Case No. 129-ML).6 Respondent, as the new owner of the property, filed a motion forleave to intervene on November 22, 1990. After its motion was granted,

respondent filed a complaint-in-intervention praying, inter alia, thatpetitioner be ordered to vacate Piazza Hotel and Mariveles Lodge for lackof legal interest.

During the pre-trial of the complaint-in-intervention, the parties agreedthat the case7 be tried on the sole issue of whether respondent province, as


















complainant-intervenor, was the legitimate owner of the Piazza Hotel andMariveles Lodge.

On February 3, 1995, after trial on the merits, the trial court rendered

judgment in favor of respondent.1avvphil.net

On appeal, the CA addressed the issue of ownership of Piazza Hotel andMariveles Lodge as follows:

[W]e affirm the trial court’s ruling that [respondent] Province of Bataanhas established by preponderance of evidence its claim of ownership ofPiazza Hotel and Mariveles Lodge. In fact, [petitioner] has not presentedevidence proving its ownership of the said buildings[, whereasrespondent presented] a tax declaration and certificate of title over thesame properties, over which it now exercises full control anddominion. The fact that the subject properties were placed undersequestration is of no moment for the PCGG is not an owner but aconservator who can exercise only powers of administration over propertysequestered, frozen or provisionally taken over. As the owner of saidproperties, [respondent-intervenor] is entitled to the payment of themonthly rental in the sum of P6,500.00 as ruled by the trialcourt.8 (emphasis ours)

We agree with the appellate court.

Time and again, we have ruled that factual matters are best evaluated bytrial courts which can scrutinize evidence and hear testimony presentedand offered by the parties (in this case, on the issue of ownership of thesubject property). All the more does this principle ring true in this petitionsince such factual determination by the RTC was upheld by the CA.9 Onlyquestions of law are the proper subject of a petition for review on certiorariin this Court, unless any of the known exceptions is extant in thiscase.10 There is none.

The evidence clearly established respondent‘s ownership of PiazzaHotel.11 First, the title of the land on which Piazza Hotel stands was in thename of respondent.12 Second, Tax Declaration No. 12782 was in the name























of respondent as owner of Piazza Hotel.13 A note at the back of the taxdeclaration read:

Transferred by virtue of a final bill of sale executed by the Provincial

[Treasurer] of Bataan in favor of the Provincial Government on Feb. 13,1989[, a] year after the expiration of the redemption period from date ofauction sale held on Feb. 12, 1988 of all real property declared in the nameof [BASECO].14 (emphasis ours)

Third, petitioner was doubtlessly just a lessee. In the lease contract annexedto the complaint, petitioner in fact admitted BASECO‘s (respondent‘spredecessor-in-interest) ownership then of the subject property. Astipulation in the contract read:

WHEREAS, the lessor (BASECO) is the owner of the building PIAZZAHOTEL and its outlet MARIVELES LODGE located at BASECO, Mariveles,Bataan xxx15 (emphasis ours)

The Rules of Court states that "[a]n admission, verbal or written, made by aparty in the course of the proceedings in the same case, does not requireproof. The admission may be contradicted only by showing that it wasmade through palpable mistake or that no such admission was made."16

[Such admissions] may be made in (a) the pleadings filed by the parties,(b) in the course of the trial either by verbal or written manifestations orstipulations, or (c) in other stages of the judicial proceeding, as in thepre-trial of the case. Admissions obtained through depositions, writteninterrogatories or requests for admission are also considered judicialadmissions.17 (emphasis ours)

"To be considered as a judicial admission, the same must be made in thesame case in which it is offered."18

In its own complaint19 for preliminary injunction and sum of money,petitioner acknowledged that it was not the owner of the property when itstated that "[BASECO] lease[d] to [petitioner] the building Piazza Hoteland its outlet Mariveles Lodge xxx for monthly rentals





























of P6,500.00."20 Petitioner could not possibly be the owner of a buildingmerely leased to it.21

Furthermore, petitioner‘s reference to Article 44822 of the

Civil Code to justify its supposed rights as "possessor in good faith" waserroneous.

The benefits granted to a possessor in good faith cannot be maintained bythe lessee against the lessor because, such benefits are intended to applyonly to a case where one builds or sows or plants on land which he believeshimself to have a claim of title and not to lands wherein one‘s only interestis that of a tenant under a rental contract, otherwise, it would always be inthe power of a tenant to improve his landlord out of his property. Besides,as between lessor and lessee, the Code applies specific provisions designedto cover their rights.

Hence, the lessee cannot claim reimbursement, as a matter of right, foruseful improvements he has made on the property, nor can he assert aright of retention until reimbursed. His only remedy is to remove theimprovement if the lessor does not choose to pay its value; but the courtcannot give him the right to buy the land.23

Petitioner‘s assertion that Piazza Hotel was constructed "at (its) expense"found no support in the records. Neither did any document or testimonyprove this claim. At best, what was confirmed was that petitioner managedand operated the hotel. There was no evidence that petitioner was the onewhich spent for the construction or renovation of the property. And sincepetitioner‘s alleged expenditures were never proven, it could not even seekreimbursement of one-half of the value of the improvements upontermination of the lease under Article 167824 of the Civil Code.

Finally, both the trial and appellate courts declared that the land as well asthe improvement thereon (Piazza Hotel) belonged to respondent. We findno reason to overturn this factual conclusion.

Since this petition for review on certiorari was clearly without legal andfactual basis, petitioner‘s counsel should not have even filed this appeal. It





















is obvious that the intention was merely to delay the disposition of thecase.

WHEREFORE, the petition is hereby DENIED. The decision and

resolution of the Court of Appeals in CA-G.R. CV No. 49135are AFFIRMED.

Costs against petitioner. Same costs against Atty. Benito R. Cuesta I,petitioner‘s counsel, for filing this flimsy appeal, payable within ten (10)days from finality of this decision.

SO ORDERED.



FIRST DIVISION

SULO SA NAYON, INC. and/or

PHILIPPINE VILLAGE HOTEL, INC.and JOSE MARCEL E. PANLILIO,

Petitioners,

- versus -

NAYONG PILIPINO FOUNDATION, Respondent.

G.R. No. 170923

Present:

PUNO, C.J., Chairperson,CARPIO,CORONA,AZCUNA, andLEONARDO-DECASTRO, JJ.

Promulgated: January 20, 2009

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

D E C I S I O N

PUNO, C.J.:

On appeal are the Court of Appeals‘ (CA‘s) October 4, 2005

Decision[1] in CA-G.R. SP No. 74631 and December 22, 2005

Resolution,[2] reversing the November 29, 2002 Decision[3] of the Regional

Trial Court (RTC) of Pasay City in Civil Case No. 02-0133. The RTC

modified the Decision[4]

of the Metropolitan Trial Court (MeTC)of Pasay City which ruled against petitioners and ordered them to vacate

the premises and pay their arrears. The RTC declared petitioners as

builders in good faith and upheld their right to indemnity.

The facts are as follows:

http://sc.judiciary.gov.ph/jurisprudence/2009/jan2009/170923.htm#_ftn1















Respondent Nayong Pilipino Foundation, a government-owned and

controlled corporation, is the owner of a parcel of land inPasay City,

known as the Nayong Pilipino Complex. Petitioner Philippine Village

Hotel, Inc. (PVHI), formerly called Sulo sa Nayon, Inc., is a domestic

corporation duly organized and existing under Philippine laws. Petitioner Jose Marcel E. Panlilio is its Senior Executive Vice President.

On June 1, 1975, respondent leased a portion of the Nayong Pilipino

Complex, consisting of 36,289 square meters, to petitioner Sulo sa Nayon,

Inc. for the construction and operation of a hotel building, to be known as

the Philippine Village Hotel. The lease was for an initial period of 21 years,

or until May 1996. It is renewable for a period of 25 years under the same

terms and conditions upon due notice in writing to respondent of theintention to renew at least 6 months before its expiration. Thus, on March

7, 1995, petitioners sent respondent a letter notifying the latter of their

intention to renew the contract for another 25 years. On July 4, 1995, the

parties executed a Voluntary Addendum to the Lease Agreement. The

addendum was signed by petitioner Jose Marcel E. Panlilio in his official

capacity as Senior Executive Vice President of the PVHI and by Chairman

Alberto A. Lim of the Nayong Pilipino Foundation. They agreed to the

renewal of the contract for another 25 years, or until 2021. Under the new

agreement, petitioner PVHI was bound to pay the monthly rental on a persquare meter basis at the rate of P20.00 per square meter, which shall be

subject to an increase of 20% at the end of every 3-year period. At the time

of the renewal of the lease contract, the monthly rental amounted

to P725,780.00.

Beginning January 2001, petitioners defaulted in the payment of their

monthly rental. Respondent repeatedly demanded petitioners to pay the

arrears and vacate the premises. The last demand letter was sent on March26, 2001.

On September 5, 2001, respondent filed a complaint for unlawful

detainer before the MeTC of Pasay City. The complaint was docketed as

Civil Case No. 708-01. Respondent computed the arrears of petitioners in

the amount of twenty-six million one hundred eighty-three thousand two



hundred twenty-five pesos and fourteen centavos (P26,183,225.14), as of

July 31, 2001.

On February 26, 2002, the MeTC rendered its decision in favor of

respondent. It ruled, thus:

. . . . The court is convinced by the evidence that indeed,defendants defaulted in the payment of their rentals. It is basicthat the lessee is obliged to pay the price of the lease accordingto the terms stipulated (Art. 1657, Civil Code). Upon the failureof the lessee to pay the stipulated rentals, the lessor mayeject (sic) and treat the lease as rescinded and sue to eject thelessee (C. Vda[.] De Pamintuan v. Tiglao, 53 Phil. 1). For non-

payment of rentals, the lessor may rescind the lease, recover theback rentals and recover possession of the leased premises. . .

x x x

. . . . Improvements made by a lessee such as thedefendants herein on leased premises are not valid reasons fortheir retention thereof. The Supreme Court has occasion toaddress a similar issue in which it ruled that: “The fact that

petitioners allegedly made repairs on the premises in question is not areason for them to retain the possession of the premises. There is no provision of law which grants the lessee a right of retention over theleased premises on that ground. Article 448 of the Civil Code, inrelation to Article 546, which provides for full reimbursement ofuseful improvements and retention of the premises untilreimbursement is made, applies only to a possessor in good faith, i.e.,one who builds on a land in the belief that he is the ownerthereof. This right of retention does not apply to a mere lessee, like the petitioners, otherwise, it would always be in his power to “improve”his landlord out of the latter’s property (Jose L. Chua and Co Sio Engvs. Court of Appeals and Ramon Ibarra, G.R. No. 109840, January21, 1999).”

Although the Contract of Lease stipulates that thebuilding and all the improvements in the leased premises



belong to the defendants herein, such will not defeat the rightof the plaintiff to its property as the defendants failed to paytheir rentals in violation of the terms of the contract. At most,defendants can only invoke [their] right under Article 1678 of

the New Civil Code which grants them the right to bereimbursed one-half of the value of the building upon thetermination of the lease, or, in the alternative, to remove theimprovements if the lessor refuses to make reimbursement.



The dispositive portion of the decision reads as follows:WHEREFORE, premises considered, judgment is hereby

rendered in favor of Nayong Pilipino Foundation, and against

the defendant Philippine Village Hotel, Inc[.], and all personsclaiming rights under it, ordering the latter to:

1. VACATE the subject premises and surrenderpossession thereof to plaintiff;

2. PAY plaintiff its rental arrearages in the sumof TWENTY SIX MILLION ONE HUNDREDEIGHTY THREE THOUSAND TWO HUNDREDTWENTY FIVE PESOS AND 14/100

(P26,183,225.14) incurred as of July 31, 2001;

3. PAY plaintiff the sum of SEVEN HUNDREDTWENTY FIVE THOUSAND SEVEN HUNDREDEIGHTY PESOS (P725,780.00) per month startingfrom August 2001 and every month thereafter byway of reasonable compensation for the use andoccupation of the premises;

4. PAY plaintiff the sum of FIFTY THOUSAND

PESOS (P50,000.00) by way of attorney‘s fees[; and]

5. PAY the costs of suit.

The complaint against defendant Jose Marcel E. Panlilio ishereby dismissed for lack of cause of action. The saiddefendant‘s counterclaim however is likewise dismissed as thecomplaint does not appear to be frivolous or maliciouslyinstituted.

SO ORDERED.[5]

Petitioners appealed to the RTC which modified the ruling of the

MeTC. It held that:. . . it is clear and undisputed that appellants-lessees were

expressly required to construct a first-class hotel with complete







facilities. The appellants were also unequivocally declared inthe Lease Agreement as the owner of the improvements soconstructed. They were even explicitly allowed to use theimprovements and building as security or collateral on loans

and credit accommodations that the Lessee may secure for thepurpose of financing the construction of the building and otherimprovements (Section 2; pars. ―A‖ to ―B,‖ LeaseAgreement). Moreover, a time frame was setforth (sic) withrespect to the duration of the lease initially for 21 years andrenewable for another 25 years in order to enable theappellants-lessees to recoup their huge money investmentsrelative to the construction and maintenance of theimprovements.

x x x

Considering therefore, the elements of permanency of theconstruction and substantial value of the improvements as wellas the undispute[d] ownership over the land improvements,these, immensely engender the application of Art. 448 of theCivil Code. The only remaining and most crucial issue to beresolved is whether or not the appellants as builders have actedin good faith in order for Art. 448 in relation to Art. 546 of the

Civil Code may apply with respect to their rights overimprovements.

x x x

. . . it is undeniable that the improvement of the hotelbuilding of appellants (sic) PVHI was constructed with thewritten consent and knowledge of appellee. In fact, it wasprecisely the primary purpose for which they entered into anagreement. Thus, it could not be denied that appellants

were builders in good faith.Accordingly, and pursuant to Article 448 in relation to

Art. 546 of the Civil Code, plaintiff-appellee has the sole optionor choice, either to appropriate the building, upon payment ofproper indemnity consonant to Art. 546 or compel theappellants to purchase the land whereon the building was



erected. Until such time that plaintiff-appellee has elected anoption or choice,it has no right of removal or demolition against appellantsunless after having selected a compulsory sale, appellants fail

to pay for the land (Ignacio vs. Hilario; 76 Phil. 605). This,however, is without prejudice from the parties agreeing toadjust their rights in some other way as they may mutuallydeem fit and proper.

The dispositive portion of the decision of the RTC reads as follows:WHEREFORE, and in view of the foregoing, judgment is

hereby rendered modifying the decision of [the] MTC, Branch

45 of Pasay City rendered on February 26, 2002 as follows:1. Ordering plaintiff-appellee to submit within thirty

(30) days from receipt of a copy of this decision awritten manifestation of the option or choice itselected, i.e., to appropriate the improvements uponpayment of proper indemnity or compulsory sale ofthe land whereon the hotel building of PVHI andrelated improvements or facilities were erected;

2. Directing the plaintiff-appellee to desist and/orrefrain from doing acts in the furtherance or exercise ofits rights and demolition against appellants unless andafter having selected the option of compulsory saleand appellants failed to pay [and] purchase the landwithin a reasonable time or at such time as this courtwill direct;

3. Ordering defendants-appellants to pay plaintiff-appellee [their] arrears in rent incurred as of July 31,2001 in the amount of P26,183,225.14;

4. Ordering defendants-appellants to pay to plaintiff-appellee the unpaid monthly rentals for the use andoccupation of the premises pending this appeal from

July to November 2002 only at P725,780.00 per month;



5. The fourth and fifth directives in the dispositiveportion of the trial court‘s decision including that thelast paragraph thereof JME Panlilio‘s complaint ishereby affirmed;

6. The parties are directed to adjust their respectiverights in the interest of justice as they may deem fitand proper if necessary.

SO ORDERED.[6]

Respondent appealed to the CA which held that the RTC erroneously

applied the rules on accession, as found in Articles 448 and 546 of the Civil

Code when it held that petitioners were builders in good faith and, thus,

have the right to indemnity. The CA held:

By and large, respondents are admittedly mere lessees ofthe subject premises and as such, cannot validly claim that theyare builders in good faith in order to solicit the application ofArticles 448 and 546 of the Civil Code in their favor. As it is, itis glaring error on the part of the RTC to apply the aforesaidlegal provisions on the supposition that the improvements,which are of substantial value, had been introduced on the

leased premises with the permission of the petitioner. To grantthe respondents the right of retention and reimbursement asbuilders in good faith merely because of the valuable andsubstantial improvements that they introduced to the leasedpremises plainly contravenes the law and settled

jurisprudential doctrines and would, as stated, allow the lesseeto easily ―improve‖ the lessor out of its property.

. . . . Introduction of valuable improvements on the

leased premises does not strip the petitioner of its right to availof recourses under the law and the lease contract itself in caseof breach thereof. Neither does it deprive the petitioner of itsright under Article 1678 to exercise its option to acquire theimprovements or to let the respondents remove the same.







Petitioners‘ Motion for Reconsideration was denied.

Hence, this appeal.[7]

Petitioners assign the following errors:

I

THE HONORABLE COURT OF APPEALS COMMITTEDA GRAVE REVERSIBLE ERROR IN NOT HOLDING THATPETITIONERS WERE BUILDERS IN GOOD FAITH OVERTHE SUBSTANTIAL AND VALUABLE IMPROVEMENTSWHICH THEY HAD INTRODUCED ON THE SUBJECT

PROPERTY, THUS COMPELLING THE APPLICATION OFARTICLE 448 OF THE CIVIL CODE IN RELATION TOARTICLE 546 OF THE SAME CODE, INSTEAD OF ARTICLE1678 OF THE CIVIL CODE.

II

THE HONORABLE COURT OF APPEALS COMMITTEDA SERIOUS REVERSIBLE ERROR WHEN IT DISREGARDEDTHE FACT THAT THE LEASE CONTRACT GOVERNS THE

RELATIONSHIP OF THE PARTIES AND CONSEQUENTLYTHE PARTIES MAY BE CONSIDERED TO HAVE IMPLIEDLYWAIVED THE APPLICATION OF ARTICLE 1678 OF THECIVIL CODE TO THE INSTANT CASE.

III

ASSUMING ARGUENDO THAT THE PETITIONERSARE NOT BUILDERS IN GOOD FAITH, THE HONORABLECOURT OF APPEALS COMMITTED A GRAVE REVERSIBLE

ERROR WHEN IT OVERLOOKED THE FACT THATRESPONDENT ALSO ACTED IN BAD FAITH WHEN IT DIDNOT HONOR AND INSTEAD BREACHED THE LEASECONTRACT BETWEEN THE PARTIES, THUS BOTH PARTIESACTED AS IF THEY ARE IN GOOD FAITH.







IV

TO SANCTION THE APPLICATION OF ARTICLE 1678OF THE CIVIL CODE INSTEAD OF ARTICLE 448 OF THECIVIL CODE IN RELATION TO ARTICLE 546 OF THE SAME

CODE WOULD NOT ONLY WREAK HAVOC AND CAUSESUBSTANTIAL INJURY TO THE RIGHTS AND INTERESTSOF PETITIONER PHILIPPINE VILLAGE HOTEL, INC. WHILERESPONDENT NAYONG PILIPINO FOUNDATION, INCOMPARISON THERETO, WOULD SUFFER ONLY SLIGHTOR INCONSEQUENTIAL INJURY OR LOSS, BUT ALSOWOULD CONSTITUTE UNJUST ENRICHMENT ON THEPART OF RESPONDENT AT GREAT EXPENSE AND GRAVEPREJUDICE OF PETITIONERS.

V

THE HONORABLE COURT OF APPEALS COMMITTEDA GRAVE REVERSIBLE ERROR IN NOT HOLDING THATTHE COURTS A QUO DID NOT ACQUIRE JURISDICTIONOVER THE UNLAWFUL DETAINER CASE FOR NON-COMPLIANCE WITH JURISDICTIONAL REQUIREMENTSDUE TO THE ABSENCE OF A NOTICE TO VACATE UPON

PETITIONERS.[8]

First, we settle the issue of jurisdiction. Petitioners argue that the

MeTC did not acquire jurisdiction to hear and decide the ejectment case

because they never received any demand from respondent to pay rentals

and vacate the premises, since such demand is a jurisdictional

requisite. We reiterate the ruling of the MeTC, RTC and CA. Contrary to

the claim of petitioners, documentary evidence proved that a demand letter

dated March 26, 2001 was sent by respondent through registered mail topetitioners, requesting them ―to pay the rental arrears or else it will be

constrained to file the appropriate legal action and possess the leased

premises.‖







Further, petitioners‘ argument that the demand letter is ―inadequate‖

because it contained no demand to vacate the leased premises does not

persuade. We have ruled that:

. . . . The word ―vacate‖ is not a talismanic word that mustbe employed in all notices. The alternatives in this case areclear cut. The tenants must pay rentals which are fixed andwhich became payable in the past, failing which they mustmove out. There can be no other interpretation of the noticegiven to them. Hence, when the petitioners demanded thateither he pays P18,000 in five days or a case of ejectment wouldbe filed against him, he was placed on notice to move out if hedoes not pay. There was, in effect, a notice or demand to

vacate.[9]

In the case at bar, the language of the demand letter is plain and

simple: respondent demanded payment of the rental arrears amounting

to P26,183,225.14 within ten days from receipt by petitioners, or respondent

will be constrained to file an appropriate legal action against petitioners to

recover the said amount. The demand letter further stated that respondent

will possess the leased premises in case of petitioners‘ failure to pay the

rental arrears within ten days. Thus, it is clear that the demand letter is

intended as a notice to petitioners to pay the rental arrears, and a notice to

vacate the premises in case of failure of petitioners to perform their

obligation to pay.

Second, we resolve the main issue of whether the rules on accession,

as found in Articles 448 and 546 of the Civil Code, apply to the instant case.

Article 448 and Article 546 provide:

Art. 448. The owner of the land on which anything hasbeen built, sown or planted in good faith, shall have the right toappropriate as his own the works, sowing or planting, afterpayment of the indemnity provided for in Articles 546 and 548,or to oblige the one who built or planted to pay the price of theland, and the one who sowed, the proper rent. However, the







builder or planter cannot be obliged to buy the land if its valueis considerably more than that of the building or trees. In suchcase, he shall pay reasonable rent, if the owner of the land doesnot choose to appropriate the building or trees after proper

indemnity. The parties shall agree upon the terms of the leaseand in case of disagreement, the court shall fix the termsthereof.

Art. 546. Necessary expenses shall be refunded to everypossessor; but only the possessor in good faith may retain thething until he has been reimbursed therefor.

Useful expenses shall be refunded only to the possessorin good faith with the same right of retention, the person whohas defeated him in the possession having the option ofrefunding the amount of the expenses or of paying the increasein value which the thing may have acquired by reason thereof.

We uphold the ruling of the CA.

The late Senator Arturo M. Tolentino, a leading expert in Civil Law,

explains:

This article [Article 448] is manifestly intended to applyonly to a case where one builds, plants, or sows on land inwhich he believes himself to have a claim of title,[10] and not tolands where the only interest of the builder, planter or sower isthat of a holder, such as a tenant.[11]

In the case at bar, petitioners have no adverse claim or title to the

land. In fact, as lessees, they recognize that the respondent is the owner of

the land. What petitioners insist is that because of the improvements,which are of substantial value, that they have introduced on the leased

premises with the permission of respondent, they should be considered

builders in good faith who have the right to retain possession of the

property until reimbursement by respondent.











We affirm the ruling of the CA that introduction of valuable

improvements on the leased premises does not give the petitioners the

right of retention and reimbursement which rightfully belongs to a builder

in good faith. Otherwise, such a situation would allow the lessee to easily

―improve‖ the lessor out of its property. We reiterate the doctrine that alessee is neither a builder in good faith nor in bad faith[12] that would call

for the application of Articles 448 and 546 of the Civil Code. His rights are

governed by Article 1678 of the Civil Code, which reads:

Art. 1678. If the lessee makes, in good faith, usefulimprovements which are suitable to the use for which the leaseis intended, without altering the form or substance of theproperty leased, the lessor upon the termination of the lease

shall pay the lessee one-half of the value of the improvementsat that time. Should the lessor refuse to reimburse said amount,the lessee may remove the improvements, even though theprincipal thing may suffer damage thereby. He shall not,however, cause any more impairment upon the property leasedthan is necessary.

With regard to ornamental expenses, the lessee shall notbe entitled to any reimbursement, but he may remove the

ornamental objects, provided no damage is caused to theprincipal thing, and the lessor does not choose to retain themby paying their value at the time the lease is extinguished.

Under Article 1678, the lessor has the option of paying one-half of the value

of the improvements which the lessee made in good faith, which are

suitable for the use for which the lease is intended, and which have not

altered the form and substance of the land. On the other hand, the lessee

may remove the improvements should the lessor refuse to reimburse.

Petitioners argue that to apply Article 1678 to their case would result

to sheer injustice, as it would amount to giving away the hotel and its other

structures at virtually bargain prices. They allege that the value of the

hotel and its appurtenant facilities amounts to more than two billion pesos,

while the monetary claim of respondent against them only amounts to a



little more than twenty six-million pesos. Thus, they contend that it is the

lease contract that governs the relationship of the parties, and

consequently, the parties may be considered to have impliedly waived the

application of Article 1678.

We cannot sustain this line of argument by petitioners. Basic is the

doctrine that laws are deemed incorporated in each and every

contract. Existing laws always form part of any contract. Further, the lease

contract in



the case at bar shows no special kind of agreement between the parties as

to how to proceed in cases of default or breach of the contract. Petitioners

maintain that the lease contract contains a default provision which does not

give respondent the right to appropriate the improvements nor evict

petitioners in cases of cancellation or termination of the contract due todefault or breach of its terms. They cite paragraph 10 of the lease contract,

which provides that:

10. DEFAULT. - . . . Default shall automatically take placeupon the failure of the LESSEE to pay or perform its obligationduring the time fixed herein for such obligations withoutnecessity of demand, or, if no time is fixed, after 90 days fromthe receipt of notice or demand from the LESSOR. . .

In case of cancellation or termination of this contract dueto the default or breach of its terms, the LESSEE will pay allreasonable attorney‘s fees, costs and expenses of litigation thatmay be incurred by the LESSOR in enforcing its rights underthis contract or any of its provisions, as well as all unpaid rents,fees, charges, taxes, assessment and others which the LESSORmay be entitled to.

Petitioners assert that respondent committed a breach of the lease

contract when it filed the ejectment suit against them. However, we find

nothing in the above quoted provision that prohibits respondent to

proceed the way it did in enforcing its rights as lessor. It can rightfully filefor ejectment to evict petitioners, as it did before the court a quo.

IN VIEW WHEREOF, petitioners‘ appeal is DENIED. The October

4, 2005 Decision of the Court of Appeals in CA-G.R. SP No. 74631 and its

December 22, 2005 Resolution are AFFIRMED. Costs against petitioners.

SO ORDERED.




Manila

FIRST DIVISION

G.R. No. L-25462 February 21, 1980

MARIANO FLOREZA, petitioner,vs.MARIA D. de EVANGELISTA and SERGIOEVANGELISTA, respondents.

R.D. Hipolito & B. P. Fabir for petitioner.

E.G. Tanjuatco & Associates for respondents.

MELENCIO-HERRERA, J:

This is a Petition for Review on certiorari of the Decision of the Court ofAppeals (CA-G.R. No. 23516-R) promulgated on November 4, 1965,

entitled "Maria de Evangelista and Sergio Evangelists, (now therespondents) vs. Mariano Floreza (petitioner herein)," reversing the judgment of the Court of First Instance of Rizal rendered on July 17, 1957,and instead ordering petitioner to vacate respondents' residential lot, toremove his house at his own expenses and to pay rental from May 5, 1956.

Plaintiffs Maria de Evangelista and Sergio Evangelista, who are mother andson, (the EVANGELISTAS, for short) are the owners of a residential lotlocated at Sumilang St., Tanay, Rizal, with an area of 204.08 sq. ms.,

assessed at P410.00. In May 1945, the EVANGELISTAS borrowed fromFLOREZA the amount of P100.00. On or about November 1945, with theconsent of the EVANGELISTAS, FLOREZA occupied the above residentiallot and built thereon a house of light materials (barong- barong) withoutany agreement as to payment for the use of said residential lot owing to thefact that the EVANGELISTAS has then a standing loan of P100.00 in favorof FLOREZA. 1



On the following dates, the EVANGELISTAS again borrowed the indicatedamounts: September 16, 1946 — P100.00; 2 August 17, 1947 — P200,00; 3 January 30, 1949 — P200.00; 4 April 1, 1949 — P140.00, 5 or a totalof P740.00 including the first loan. The last three items are evidenced by

private documents stating that the residential lot stands as security thereforand that the amounts covered thereunder are payable within six years fromdate, without mention of interest. The document executed on September16, 1946 stated specifically that the loan was without interest "walanganumang patubo."

On January 10, 1949, FLOREZA demolished this house of light materialsand in its place constructed one of strong materials assessed in his name atP1,410.00 under Tax Declaration No. 4448. FLOREZA paid no rental as

before. 6

On August 1, 1949, the EVANGELISTAS, for and in consideration ofP1,000.00 representing the total outstanding loan of P740.00 plus P260.00 incash, sold their residential lot to FLOREZA, with a right to repurchasewithin a period of 6 years from date, or up to August 1, 1955, as evidencedby a notarial document, Exh. B, registered under Act 3344 on December 6,1949, as Inscription No. 2147. 7

On January 2, 1955, or seven months before the expiry of the repurchaseperiod, the EVANGELISTAS paid in full the repurchase price of P1,000.00.

On April 25, 1956, the EVANGELISTAS, through their counsel, wroteFLOREZA a letter 8 asking him to vacate the premises as they wanted tomake use of their residential lot besides the fact that FLOREZA had alreadybeen given by them more than one year within which to move his house toanother site. On May 4, 1956, the EVANGELISTAS made a formal writtendemand to vacate, within five days from notice, explaining that they had

already fully paid the consideration for the repurchase of thelot. 9 FLOREZA refused to vacate unless he was first reimbursed the valueof his house. Hence, the filing of this Complaint on May 18, 1956 by theEVANGELISTAS.

The EVANGELISTAS prayed that: 1) they be declared the owners of thehouse of strong materials built by FLOREZA on their residential lot,



without payment of indemnity; or, in the alternative to order FLOREZA toremove said house; 2) that FLOREZA pay them the sum of P10.00 permonth as the reasonable value for the use and occupation of the same from

January 2, 1955 (the date the repurchase price was paid) until FLOREZA

removes the house and delivers the lot to them; and 3) to declare thetransaction between them and FLOREZA as one of mortgage and notof pacto de retro.

In his Answer, FLOREZA admitted the repurchase but controverted bystating that he would execute a deed of repurchase and leave the premisesupon payment to him of the reasonable value of the house worth P7,000.00.

In a Decision dated July 17, 1957, the Court of First Instance of Rizal opined

that the question of whether the transaction between the parties is one ofmortgage or pacto de retro is no longer material as the indebtedness ofP1,000.00 of the EVANGELISTAS to FLOREZA had already been fullypaid. And, applying Article 448 of the Civil Code, 10 it rendered a decisiondispositively decreeing:

FOR ALL THE FOREGOING CONSIDERATIONS, the Courthereby renders judgment granting the plaintiffs the right toelect, as owners of the land, to purchase the house built, on the

said lot in question by the defendant for P2,500 or to sell theirsaid land to e defendant for P1,500. In the event that theplaintiffs shall decide not to purchase the house in question thedefendant should be allowed to remain in plaintiffs' premisesby, paying a monthly rental of P10.00 which is the reasonablevalue for the use of the same per month as alleged by plaintiffsin their complaint. The Court also orders the defendant to pay amonthly rental of P10.00 for the use of the land in questionfrom May 18, 1956, the date of the commencement of this

action. The counterclaim of the defendant is hereby ordereddismissed. Without pronouncement as to costs.

SO ORDERED. 11

Both parties appealed to the Court of Appeals.



On November 4, 1965, the Court of Appeals concluded that Article 448 ofthe Civil Code, supra, was inapplicable; that FLOREZA was not entitled toreimbursement for his house but that he could remove the same at hisexpense; and accordingly rendered judgment thus:

WHEREFORE, judgment is hereby rendered: (1) adjudging thedefendant-appellant Mariano Floreza to vacate plaintiffs'residential lot described in the complaint and to pay rental ofP10.00 a month from May 5, 1956, until he (defendant) shallhave vacated the premises; (2) ordering defendant to removehis house from the land in question within 30 days from thetime this decision becomes final and executory; (3) ordering theRegister of Deeds of Rizal to cancel inscription No. 2147, Page

210, Vol. 36, in the Registration Book under Act 3344 uponpayment of his lawful fees; and (4) taxing the costs in bothinstances against defendant-appellant Mariano Floreza. 12

Hence, this Petition for Review on certiorari by FLOREZA, seeking areversal of the aforestated judgment and ascribing the following errors:

1) That the Court of Appeals erred in holding that petitionerFloreza was a builder in bad faith without likewise holding that

respondents as owners of the land in dispute, were likewise inbad faith and therefore both parties should in accordance withArt. 453 of the New Civil Code be considered as having acted ingood faith.

2) That the Court of Appeals erred in completely ignoring theissue raised on appeal as to whether or not respondents asowners of the questioned lot, were in bad faith in the sense thatthey had knowledge of and acquiseced to the construction of

the house of petitioner on their lot.

3) That the Court of Appeals erred in not applying Art. 448 ofthe New Civil Code in the adjudication of the rights ofpetitioner and respondent.



4) That the Court of Appeals erred in declaring that petitioner isnot entitled to reimbursement for the value of his house andthat he should instead remove the same at his expense.

5) That the Court of Appeals erred in adjudging petitioner tovacate respondents' lot in question and to pay rentalscommencing from May 5, 1956, until he shall have vacated thepremises, notwithstanding that petitioner is entitled underArts. 448 and 546 of the New Civil Code, to retention withoutpayment of rental while the corresponding indemnity of hishouse had not been paid.

6) That the Court of Appeals erred in taxing costs against

petitioner.

7) That the Court of Appeals erred in not awarding petitioner'scounterclaim.

During the pendency of this appeal, petitioner Maria D. de Evangelistadied and was ordered substituted by her son, petitioner Sergio, as her legalrepresentative, in a Resolution dated May 14, 1976.

On October 20, 1978. the EVANGELISTAS filed a Motion to Dismiss statingthat FLOREZA had since died and that his heirs had voluntarily vacatedthe residential lot in question. The date FLOREZA passed away and thedate his heirs had voluntarily vacated the property has not been stated.Required to comment, "petitioner (represented by his heirs)", throughcounsel, confirmed his death and the removal of the house and manifestedthat thereby the question of reimbursement had moot and academic. Heobjected to the dismissal of the case, however, on the ground that the issueof rentals still pends. On January 21, 1980, complying with a Resolution of

'his Court, the EVANGELISTAS clarified that the dismissal they werepraying for was not of the entire case but only of this Petition for Reviewon Certiorari.

We are not in agreement that the question of reimbursement of the value ofthe improvement erected on the subject property has become moot.Petitioner's right of retention of subject property until he is reimbursed for



the value of his house, as he had demanded, is inextricably linked with thequestion of rentals. For if petitioner has the right to indemnity, he has theright of retention and no rentals need be paid. Conversely, if no right ofretention exists, damages in the form of rentals for the continued use and

occupation of the property should be allowed.

We uphold the Court of Appeals in its conclusion that Article 448 of theCivil Code is inapplicable to the factual milieu herein. Said codal provisionapplies only when the builder, planter, or sower believes he had the rightso to build, plant or sow because he thinks he owns the land or believeshimself to have a claim of title. 13 In this case, petitioner makes nopretensions of ownership whatsoever.

Petitioner concedes that he was a builder in bad faith but maintains that'the EVANGELISTAS should also be held in bad faith, so that both of thembeing in bad faith, Article 453 of the Civil Code 14 should apply. By thesame token, however, that Article 448 of the same Code is not applicable,neither is Article 453 under the ambiance of this case.

Would petitioner, as vendee a retro, then be entitled to the rights granted iiiArticle 1616 of the Civil Code (Art. 1518 of the old Code)? To quote:

Art. 1616. The vendor cannot avail himself of the right ofrepurchase without returning to the vendee the price of thesale, and in addition:

(1) The expenses of the contract, and any other legitimatepayments made by reason of the sale;

(2) The necessary and useful expenses made on the thing sold.

The question again calls for a negative answer. It should be noted that

petitioner did not construct his house as a vendee a retro. The house hadalready been constructed as far back as 1949 (1945 for the house of lightmaterials) even before the pacto de retro sale in 1949. Petitioner incurred nouseful expense, therefore, after that sale. The house was already there at thetolerance of the EVANGELISTAS in consideration of the several loansextended to them. Since petitioner cannot be classified as a builder in good



faith within the purview of Article 448 of the Civil Code, nor as a vendee aretro, who made useful improvements during the lifetime of the pacto deretro, petitioner has no right to reimbursement of the value of the housewhich he had erected on the residential lot of the EVANGELISTAS, much

less to retention of the premises until he is reimbursed.The rights ofpetitioner are more akin to those of a usufructuary who, under Article 579of the Civil (Art. 487 of the old Code), may make on the property usefulimprovements but with no right to be indemnified therefor. He may,however, remove such improvements should it be possible to do sowithout damage to the property: For if the improvements made by theusufructuary were subject to indemnity, we would have a dangerous andunjust situation in which the usufructuary could dispose of the owner'sfunds by compelling him to pay for improvements which perhaps he

would not have made. 15

We come now to the issue of rentals. It is clear that from the date that theredemption price had been paid by the EVANGELISTAS on January 2,1955, petitioner's right to the use of the residential lot without charge hadceased. Having retained the property although a redemption had beenmade, he should be held liable for damages in the form of rentals for thecontinued use of the subject residential lot 16 at the rate of P10.00 monthlyfrom January 3, 1955, and not merely from the date of demand on May 4,

1956, as held by the Court of Appeals, until the house was removed and theproperty vacated by petitioner or his heirs.

WHEREFORE, the judgment appealed from is hereby affirmed, with themodification that payment of rentals by the heir, of Mariano Floreza, whoare hereby ordered substituted for him, shall commence on January 3, 1955until the date that the residential lot in question was vacated.

Costs against petitioner.

SO ORDERED.




Manila

THIRD DIVISION

G.R. No. 169129 March 28, 2007

SPS. VIRGILIO F. SANTOS & ESPERANZA LATI SANTOS,SPS.VICTORINO F. SANTOS, & LAGRIMAS SANTOS, ERNESTO F.SANTOS, and TADEO F. SANTOS, Petitioners,vs.SPS. JOSE LUMBAO and PROSERFINA LUMBAO, Respondents.

D E C I S I O N

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the1997 Revised Rules of Civil Procedure seeking to annul and set aside theDecision1 and Resolution2 of the Court of Appeals in CA-G.R. CV No.60450 entitled, Spouses Jose Lumbao and Proserfina Lumbao v. SpousesVirgilio F. Santos and Esperanza Lati, Spouses Victorino F. Santos and

Lagrimas F. Santos, Ernesto F. Santos and Tadeo F. Santos, dated 8 June2005 and 29 July 2005, respectively, which granted the appeal filed byherein respondents Spouses Jose Lumbao and Proserfina Lumbao (SpousesLumbao) and ordered herein petitioners Spouses Virgilio F. Santos andEsperanza Lati, Spouses Victorino F. Santos and Lagrimas F. Santos,Ernesto F. Santos and Tadeo F. Santos to reconvey to respondents SpousesLumbao the subject property and to pay the latter attorney‘s fees andlitigation expenses, thus, reversing the Decision3 of the Regional TrialCourt (RTC) of Pasig City, dated 17 June 1998 which dismissed the

Complaint for Reconveyance with Damages filed by respondents SpousesLumbao for lack of merit.

Herein petitioners Virgilio, Victorino, Ernesto and Tadeo, all surnamedSantos, are the legitimate and surviving heirs of the late Rita Catoc Santos

http://www.lawphil.net/judjuris/juri2007/mar2007/gr_169129_2007.html#fnt1











(Rita), who died on 20 October 1985. The other petitioners Esperanza Latiand Lagrimas Santos are the daughters-in-law of Rita.

Herein respondents Spouses Jose Lumbao and Proserfina Lumbao are the

alleged owners of the 107-square meter lot (subject property), which theypurportedly bought from Rita during her lifetime.

The facts of the present case are as follows:

On two separate occasions during her lifetime, Rita sold to respondentsSpouses Lumbao the subject property which is a part of her share in theestate of her deceased mother, Maria Catoc (Maria), who died intestate on19 September 1978. On the first occasion, Rita sold 100 square meters of herinchoate share in her mother‘s estate through a document denominated as"Bilihan ng Lupa," dated 17 August 1979.4 Respondents Spouses Lumbaoclaimed the execution of the aforesaid document was witnessed bypetitioners Virgilio and Tadeo, as shown by their signatures affixed therein.On the second occasion, an additional seven square meters was added tothe land as evidenced by a document also denominated as "Bilihan ngLupa," dated 9 January 1981.5

After acquiring the subject property, respondents Spouses Lumbao took

actual possession thereof and erected thereon a house which they havebeen occupying as exclusive owners up to the present. As the exclusiveowners of the subject property, respondents Spouses Lumbao made severalverbal demands upon Rita, during her lifetime, and thereafter upon hereinpetitioners, for them to execute the necessary documents to effect theissuance of a separate title in favor of respondents Spouses Lumbao insofaras the subject property is concerned. Respondents Spouses Lumbao allegedthat prior to her death, Rita informed respondent Proserfina Lumbao shecould not deliver the title to the subject property because the entire

property inherited by her and her co-heirs from Maria had not yet beenpartitioned.

On 2 May 1986, the Spouses Lumbao claimed that petitioners, actingfraudulently and in conspiracy with one another, executed a Deed ofExtrajudicial Settlement,6 adjudicating and partitioning among themselvesand the other heirs, the estate left by Maria, which included the subject















property already sold to respondents Spouses Lumbao and now coveredby TCT No. 817297 of the Registry of Deeds of Pasig City.

On 15 June 1992, respondents Spouses Lumbao, through counsel, sent a

formal demand letter8

to petitioners but despite receipt of such demandletter, petitioners still failed and refused to reconvey the subject property tothe respondents Spouses Lumbao. Consequently, the latter filed aComplaint for Reconveyance with Damages9before the RTC of Pasig City.

Petitioners filed their Answer denying the allegations that the subjectproperty had been sold to the respondents Spouses Lumbao. They likewisedenied that the Deed of Extrajudicial Settlement had been fraudulentlyexecuted because the same was duly published as required by law. On the

contrary, they prayed for the dismissal of the Complaint for lack of cause ofaction because respondents Spouses Lumbao failed to comply with theRevised Katarungang Pambarangay Law under Republic Act No. 7160,otherwise known as the Local Government Code of 1991, which repealedPresidential Decree No. 150810 requiring first resort to barangayconciliation.

Respondents Spouses Lumbao, with leave of court, amended theirComplaint because they discovered that on 16 February 1990, without their

knowledge, petitioners executed a Deed of Real Estate Mortgage in favor of Julieta S. Esplana for the sum of P30,000.00. The said Deed of Real EstateMortgage was annotated at the back of TCT No. PT-81729 on 26 April 1991.Also, in answer to the allegation of the petitioners that they failed tocomply with the mandate of the Revised Katarungang Pambarangay Law,respondents Spouses Lumbao said that the Complaint was filed directly incourt in order that prescription or the Statute of Limitations may not set in.

During the trial, respondents Spouses Lumbao presented Proserfina

Lumbao and Carolina Morales as their witnesses, while the petitionerspresented only the testimony of petitioner Virgilio.

The trial court rendered a Decision on 17 June 1998, the dispositive portionof which reads as follows:















Premises considered, the instant complaint is hereby denied for lack ofmerit.

Considering that [petitioners] have incurred expenses in order to protect

their interest, [respondents spouses Lumbao] are hereby directed to pay[petitioners], to wit: 1) the amount of P30,000.00 as attorney‘s fees andlitigation expenses, and 2) costs of the suit.11

Aggrieved, respondents Spouses Lumbao appealed to the Court ofAppeals. On 8 June 2005, the appellate court rendered a Decision, thus:

WHEREFORE, premises considered, the present appeal is herebyGRANTED. The appealed Decision dated June 17, 1998 of the RegionalTrial Court of Pasig City, Branch 69 in Civil Case No. 62175 is herebyREVERSED and SET ASIDE. A new judgment is hereby entered ordering[petitioners] to reconvey 107 square meters of the subject [property]covered by TCT No. PT-81729 of the Registry of Deeds of Pasig City, MetroManila, and to pay to [respondents spouses Lumbao] the sum of P30,000.00for attorney‘s fees and litigation expenses.

No pronouncement as to costs.12

Dissatisfied, petitioners filed a Motion for Reconsideration of the aforesaidDecision but it was denied in the Resolution of the appellate court dated 29

July 2005 for lack of merit.

Hence, this Petition.

The grounds relied upon by the petitioners are the following:

I. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR INREVERSING THE DECISION OF THE TRIAL COURT, THEREBY

CREATING A VARIANCE ON THE FINDINGS OF FACTS OF TWOCOURTS.

II. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR INORDERING THE PETITIONERS TO RECONVEY THE SUBJECT[PROPERTY] TO THE RESPONDENTS [SPOUSES LUMBAO] AND IN











NOT RULING THAT THEY ARE GUILTY OF LACHES, HENCE THEYCANNOT RECOVER THE LOT ALLEGEDLY SOLD TO THEM.

III. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR IN

NOT FINDING HEREIN PETITIONER[S] TO BE IN GOOD FAITH INEXECUTING THE "DEED OF EXTRAJUDICIAL SETTLEMENT" DATED[2 MAY 1986].

IV. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR INNOT FINDING THAT PETITIONERS ARE NOT LEGALLY BOUND TOCOMPLY WITH THE SUPPOSED BILIHAN NG LUPA DATED [17AUGUST 1979] AND [9 JANUARY 1981] THAT WERE SUPPOSEDLYEXECUTED BY THE LATE RITA CATOC.

V. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR INNOT FINDING THAT RESPONDENTS [SPOUSES LUMBAO‘S] ACTIONFOR RECONVEYANCE WITH DAMAGES CANNOT BE SUPPORTEDWITH AN UNENFORCEABLE DOCUMENTS, SUCH AS THE BILIHANNG LUPA DATED [17 AUGUST 1979] AND [9 JANUARY 1981].

VI. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR INNOT FINDING THAT RESPONDENTS [SPOUSES LUMBAO‘S]

COMPLAINT FOR RECONVEYANCE IS DISMISSABLE (SIC) FOR NONCOMPLIANCE OF THE MANDATE OF [P.D. NO.] 1508, AS AMENDEDBY Republic Act No. 7160.

VII. THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR INNOT FINDING THAT RESPONDENTS [SPOUSES LUMBAO] SHOULDBE HELD LIABLE FOR PETITIONERS‘ CLAIM FOR DAMAGES ANDATTORNEY[‗]S FEES.

Petitioners ask this Court to scrutinize the evidence presented in this case,because they claim that the factual findings of the trial court and theappellate court are conflicting. They allege that the findings of fact by thetrial court revealed that petitioners Virgilio and Tadeo did not witness theexecution of the documents known as "Bilihan ng Lupa"; hence, thisfinding runs counter to the conclusion made by the appellate court. Andeven assuming that they were witnesses to the aforesaid documents, still,



respondents Spouses Lumbao were not entitled to the reconveyance of thesubject property because they were guilty of laches for their failure toassert their rights for an unreasonable length of time. Since respondentsSpouses Lumbao had slept on their rights for a period of more than 12

years reckoned from the date of execution of the second "Bilihan ng Lupa,"it would be unjust and unfair to the petitioners if the respondents will beallowed to recover the subject property.

Petitioners allege they are in good faith in executing the Deed ofExtrajudicial Settlement because even respondents Spouses Lumbao‘switness, Carolina Morales, testified that neither petitioner Virgilio norpetitioner Tadeo was present during the execution of the "Bilihan ng Lupa,"dated 17 August 1979 and 9 January 1981. Petitioners affirm that the Deed

of Extrajudicial Settlement was published in a newspaper of generalcirculation to give notice to all creditors of the estate subject of partition tocontest the same within the period prescribed by law. Since no claimantappeared to interpose a claim within the period allowed by law, a title tothe subject property was then issued in favor of the petitioners; hence, theyare considered as holders in good faith and therefore cannot be barredfrom entering into any subsequent transactions involving the subjectproperty.

Petitioners also contend that they are not bound by the documentsdenominated as "Bilihan ng Lupa" because the same were null and void forthe following reasons: 1) for being falsified documents because one of thosedocuments made it appear that petitioners Virgilio and Tadeo werewitnesses to its execution and that they appeared personally before thenotary public, when in truth and in fact they did not; 2) the identities of theproperties in the "Bilihan ng Lupa," dated 17 August 1979 and 9 January1981 in relation to the subject property in litigation were not established bythe evidence presented by the respondents Spouses Lumbao; 3) the right of

the respondents Spouses Lumbao to lay their claim over the subjectproperty had already been barred through estoppel by laches; and 4) therespondents Spouses Lumbao‘s claim over the subject property hadalready prescribed.



Finally, petitioners claim that the Complaint for Reconveyance withDamages filed by respondents Spouses Lumbao was dismissible becausethey failed to comply with the mandate of Presidential Decree No. 1508, asamended by Republic Act No. 7160, particularly Section 412 of Republic

Act No. 7160.

Given the foregoing, the issues presented by the petitioners may berestated as follows:

I. Whether or not the Complaint for Reconveyance with Damagesfiled by respondents spouses Lumbao is dismissible for their failureto comply with the mandate of the Revised KatarungangPambarangay Law under R.A. No. 7160.

II. Whether or not the documents known as "Bilihan ng Lupa" arevalid and enforceable, thus, they can be the bases of the respondentsspouses Lumbao‘s action for reconveyance with damages.

III. Whether or not herein petitioners are legally bound to complywith the "Bilihan ng Lupa" dated 17 August 1979 and 9 January 1981and consequently, reconvey the subject property to hereinrespondents spouses Lumbao.

It is well-settled that in the exercise of the Supreme Court‘s power ofreview, the court is not a trier of facts and does not normally undertake there-examination of the evidence presented by the contending parties duringthe trial of the case considering that the findings of fact of the Court ofAppeals are conclusive and binding on the Court.13 But, the rule is notwithout exceptions. There are several recognized exceptions14 in whichfactual issues may be resolved by this Court. One of these exceptions iswhen the findings of the appellate court are contrary to those of the trial

court. This exception is present in the case at bar.Going to the first issue presented in this case, it is the argument of thepetitioners that the Complaint for Reconveyance with Damages filed byrespondents Spouses Lumbao should be dismissed for failure to complywith the barangay conciliation proceedings as mandated by the Revised











Katarungang Pambarangay Law under Republic Act No. 7160. Thisargument cannot be sustained.

Section 408 of the aforesaid law and Administrative Circular No. 14-

9315

provide that all disputes between parties actually residing in the samecity or municipality are subject to barangay conciliation. A prior recoursethereto is a pre-condition before filing a complaint in court or anygovernment offices. Non-compliance with the said condition precedentcould affect the sufficiency of the plaintiff‘s cause of action and make hiscomplaint vulnerable to dismissal on ground of lack of cause of action orprematurity; but the same would not prevent a court of competent

jurisdiction from exercising its power of adjudication over the case beforeit, where the defendants failed to object to such exercise of jurisdiction.16

While it is true that the present case should first be referred to the BarangayLupon for conciliation because the parties involved herein actually residein the same city (Pasig City) and the dispute between them involves a realproperty, hence, the said dispute should have been brought in the city inwhich the real property, subject matter of the controversy, is located, whichhappens to be the same city where the contending parties reside. In theevent that respondents Spouses Lumbao failed to comply with the saidcondition precedent, their Complaint for Reconveyance with Damages can

be dismissed. In this case, however, respondents Spouses Lumbao‘s non-compliance with the aforesaid condition precedent cannot be consideredfatal. Although petitioners alleged in their answer that the Complaint forReconveyance with Damages filed by respondents spouses Lumbao shouldbe dismissed for their failure to comply with the condition precedent,which in effect, made the complaint prematurely instituted and the trialcourt acquired no jurisdiction to hear the case, yet, they did not file aMotion to Dismiss the said complaint.

Emphasis must be given to the fact that the petitioners could haveprevented the trial court from exercising jurisdiction over the case had theyfiled a Motion to Dismiss. However, instead of doing so, they invoked thevery same jurisdiction by filing an answer seeking an affirmative relieffrom it. Worse, petitioners actively participated in the trial of the case bypresenting their own witness and by cross-examining the witnesses












"Bilihan ng Lupa," petitioner Virgilio, in his cross-examination, deniedhaving knowledge of the sale transaction and claimed that he could notremember the same as well as his appearance before the notary public dueto the length of time that had passed. Noticeably, petitioner Virgilio did not

categorically deny having signed the "Bilihan ng Lupa," dated 17 August1979 and in support thereof, his testimony in the cross-examinationpropounded by the counsel of the respondents Spouses Lumbao is quotedhereunder:

ATTY. CHIU:

Q. Now, you said, Mr. Witness…Virgilio Santos, that you don‘t knowabout this document which was marked as Exhibit "A" for the [respondents

spouses Lumbao]?

ATTY. BUGARING:

The question is misleading, your Honor. Counsel premised the questionthat he does not have any knowledge but not that he does not know.

ATTY. CHIU:

Q. Being… you are one of the witnesses of this document? [I]s it not?

WITNESS:

A. No, sir.

Q. I am showing to you this document, there is a signature at the left handmargin of this document Virgilio Santos, will you please go over the sameand tell the court whose signature is this?

A. I don‘t remember, sir, because of the length of time that had passed.

Q. But that is your signature?

A. I don‘t have eyeglasses… My signature is different.

Q. You never appeared before this notary public Apolinario Mangahas?



A. I don‘t remember.20

As a general rule, facts alleged in a party‘s pleading are deemedadmissions of that party and are binding upon him, but this is not an

absolute and inflexible rule. An answer is a mere statement of fact whichthe party filing it expects to prove, but it is not evidence.21 And in spite ofthe presence of judicial admissions in a party‘s pleading, the trial court isstill given leeway to consider other evidence presented.22 However, in thecase at bar, as the Court of Appeals mentioned in its Decision, "[hereinpetitioners] had not adduced any other evidence to override the admissionmade in their [A]nswer that [petitioners Virgilio and Tadeo] actuallysigned the [Bilihan ng Lupa dated 17 August 1979] except that they were

just misled as to the purpose of the document, x x x."23 Virgilio‘s answers

were unsure and quibbled. Hence, the general rule that the admissionsmade by a party in a pleading are binding and conclusive upon himapplies in this case.

On the testimony of respondents Spouses Lumbao‘s witness CarolinaMorales, this Court adopts the findings made by the appellate court. Thus -

[T]he trial court gave singular focus on her reply to a question duringcross-examination if the [petitioners Virgilio and Tadeo] were not with her

and the vendor [Rita] during the transaction. It must be pointed out thatearlier in the direct examination of said witness, she confirmed that[respondents spouses Lumbao] actually bought the lot from [Rita]("nagkabilihan"). Said witness positively identified and confirmed the two(2) documents evidencing the sale in favor of [respondents spouseLumbao]. Thus, her subsequent statement that the [petitioners Virgilio andTadeo] were not with them during the transaction does not automaticallyimply that [petitioners Virgilio and Tadeo] did not at any time sign aswitnesses as to the deed of sale attesting to their mother‘s voluntary act of

selling a portion of her share in her deceased mother‘s property. The rule isthat testimony of a witness must be considered and calibrated in itsentirety and not by truncated portions thereof or isolated passagestherein.24

Furthermore, both "Bilihan ng Lupa" documents dated 17 August 1979 and9 January 1981 were duly notarized before a notary public. It is well-settled






















that a document acknowledged before a notary public is a publicdocument25 that enjoys the presumption of regularity. It is a prima facieevidence of the truth of the facts stated therein and a conclusivepresumption of its existence and due execution.26 To overcome this

presumption, there must be presented evidence that is clear andconvincing. Absent such evidence, the presumption must be upheld.27 Inaddition, one who denies the due execution of a deed where one‘ssignature appears has the burden of proving that contrary to the recital inthe jurat, one never appeared before the notary public and acknowledgedthe deed to be a voluntary act. Nonetheless, in the present case petitioners‘denials without clear and convincing evidence to support their claim offraud and falsity were not sufficient to overthrow the above-mentionedpresumption; hence, the authenticity, due execution and the truth of the

facts stated in the aforesaid "Bilihan ng Lupa" are upheld.

The defense of petitioners that the identities of the properties described inthe "Bilihan ng Lupa," dated 17 August 1979 and 9 January 1981 in relationto the subject property were not established by respondents SpousesLumbao‘s evidence is likewise not acceptable.

It is noteworthy that at the time of the execution of the documentsdenominated as "Bilihan ng Lupa," the entire property owned by Maria, the

mother of Rita, was not yet divided among her and her co-heirs and so thedescription of the entire estate is the only description that can be placed inthe "Bilihan ng Lupa, dated 17 August 1979 and 9 January 1981" becausethe exact metes and bounds of the subject property sold to respondentsSpouses Lumbao could not be possibly determined at that time.Nevertheless, that does not make the contract of sale between Rita andrespondents Spouses Lumbao invalid because both the law and

jurisprudence have categorically held that even while an estate remainsundivided, co-owners have each full ownership of their respective aliquots

or undivided shares and may therefore alienate, assign or mortgagethem.28 The co-owner, however, has no right to sell or alienate a specific ordeterminate part of the thing owned in common, because such right overthe thing is represented by an aliquot or ideal portion without any physicaldivision. In any case, the mere fact that the deed purports to transfer aconcrete portion does not per se render the sale void. The sale is valid, but



















only with respect to the aliquot share of the selling co-owner. Furthermore,the sale is subject to the results of the partition upon the termination of theco-ownership.29

In the case at bar, when the estate left by Maria had been partitioned on 2May 1986 by virtue of a Deed of Extrajudicial Settlement, the 107- squaremeter lot sold by the mother of the petitioners to respondents SpousesLumbao should be deducted from the total lot, inherited by them inrepresentation of their deceased mother, which in this case measures 467square meters. The 107-square meter lot already sold to respondentsSpouses Lumbao can no longer be inherited by the petitioners because thesame was no longer part of their inheritance as it was already sold duringthe lifetime of their mother.

Likewise, the fact that the property mentioned in the two "Bilihan ng Lupa"documents was described as "a portion of a parcel of land covered in TaxDeclarations No. A-018-01674," while the subject matter of the Deed ofExtrajudicial Settlement was the property described in Transfer Certificateof Title (TCT) No. 3216 of the Registry of Deeds of the Province of Rizal inthe name of Maria is of no moment because in the "Bilihan ng Lupa," dated17 August 1979 and 9 January 1981, it is clear that there was only one estateleft by Maria upon her death. And this fact was not refuted by the

petitioners. Besides, the property described in Tax Declaration No. A-018-01674 and the property mentioned in TCT No. 3216 are both located inBarrio Rosario, Municipality of Pasig, Province of Rizal, and almost havethe same boundaries. It is, thus, safe to state that the property mentioned inTax Declaration No. A-018-01674 and in TCT No. 3216 are one and thesame.

The defense of prescription of action and laches is likewise unjustifiable. Inan action for reconveyance, the decree of registration is respected as

incontrovertible. What is sought instead is the transfer of the property or itstitle which has been wrongfully or erroneously registered in anotherperson‘s name to its rightful or legal owner, or to the one with a betterright. It is, indeed, true that the right to seek reconveyance of registeredproperty is not absolute because it is subject to extinctive prescription.However, when the plaintiff is in possession of the land to be reconveyed,







prescription cannot set in. Such an exception is based on the theory thatregistration proceedings could not be used as a shield for fraud or forenriching a person at the expense of another.30

In the case at bar, the right of the respondents Spouses Lumbao to seekreconveyance does not prescribe because the latter have been and are stillin actual possession and occupation as owners of the property sought to bereconveyed, which fact has not been refuted nor denied by the petitioners.Furthermore, respondents Spouses Lumbao cannot be held guilty of lachesbecause from the very start that they bought the 107-square meter lot fromthe mother of the petitioners, they have constantly asked for the transfer ofthe certificate of title into their names but Rita, during her lifetime, and thepetitioners, after the death of Rita, failed to do so on the flimsy excuse that

the lot had not been partitioned yet. Inexplicably, after the partition of theentire estate of Maria, petitioners still included the 107-square meter lot intheir inheritance which they divided among themselves despite theirknowledge of the contracts of sale between their mother and therespondents Spouses Lumbao.

Under the above premises, this Court holds that the "Bilihan ng Lupa"documents dated 17 August 1979 and 9 January 1981 are valid andenforceable and can be made the basis of the respondents Spouses

Lumbao‘s action for reconveyance. The failure of respondents SpousesLumbao to have the said documents registered does not affect its validityand enforceability. It must be remembered that registration is not arequirement for validity of the contract as between the parties, for the effectof registration serves chiefly to bind third persons. The principal purposeof registration is merely to notify other persons not parties to a contractthat a transaction involving the property had been entered into. Where theparty has knowledge of a prior existing interest which is unregistered atthe time he acquired a right to the same land, his knowledge of that prior

unregistered interest has the effect of registration as to him.31 Hence, the"Bilihan ng Lupa" documents dated 17 August 1979 and 9 January 1981,being valid and enforceable, herein petitioners are bound to comply withtheir provisions. In short, such documents are absolutely valid betweenand among the parties thereto.











Finally, the general rule that heirs are bound by contracts entered into bytheir predecessors-in-interest applies in the present case. Article 131132 ofthe NCC is the basis of this rule. It is clear from the said provision thatwhatever rights and obligations the decedent have over the property were

transmitted to the heirs by way of succession, a mode of acquiring theproperty, rights and obligations of the decedent to the extent of the value ofthe inheritance of the heirs.33 Thus, the heirs cannot escape the legalconsequence of a transaction entered into by their predecessor-in-interestbecause they have inherited the property subject to the liability affectingtheir common ancestor. Being heirs, there is privity of interest betweenthem and their deceased mother. They only succeed to what rights theirmother had and what is valid and binding against her is also valid andbinding as against them. The death of a party does not excuse

nonperformance of a contract which involves a property right and therights and obligations thereunder pass to the personal representatives ofthe deceased. Similarly, nonperformance is not excused by the death of theparty when the other party has a property interest in the subject matter ofthe contract.34

In the end, despite the death of the petitioners‘ mother, they are still boundto comply with the provisions of the "Bilihan ng Lupa," dated 17 August1979 and 9 January 1981. Consequently, they must reconvey to herein

respondents Spouses Lumbao the 107-square meter lot which they boughtfrom Rita, petitioners‘ mother. And as correctly ruled by the appellatecourt, petitioners must pay respondents Spouses Lumbao attorney‘s feesand litigation expenses for having been compelled to litigate and incurexpenses to protect their interest.35 On this matter, we do not find reasonsto reverse the said findings.

WHEREFORE, premises considered, the instant Petition is herebyDENIED. The Decision and Resolution of the Court of Appeals dated 8

June 2005 and 29 July 2005, respectively, are hereby AFFIRMED. Hereinpetitioners are ordered to reconvey to respondents Spouses Lumbao thesubject property and to pay the latter attorney‘s fees and litigationexpenses. Costs against petitioners.

SO ORDERED.


















SECOND DIVISION

WILFREDO T. VAGILIDAD G.R. No. 161136and LOLITA A. VAGILIDAD,Petitioners,

Present:

PUNO, J ., Chairperson,- versus - SANDOVAL -GUTIERREZ,

CORONA,AZCUNA, and

GARCIA, JJ .

GABINO VAGILIDAD, JR. Promulgated:and DOROTHY VAGILIDAD,

Respondents. November 16, 2006x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

PUNO, J .:

This is a Petition for Review on Certiorari of the Decision[1] andResolution[2] of the Court of Appeals in CA-G.R. No. CV-68318dated March 19, 2003 and November 13, 2003, respectively, reversing andsetting aside the decision of the Regional Trial Court of Antique, Sixth

Judicial Region, Branch II, in Civil Case No. 2825 dated January 26,

1999.

The facts are stated in the assailed Decision[3] of the appellatecourt, viz.:

http://sc.judiciary.gov.ph/jurisprudence/2006/november2006/161136.htm#_ftn1











A parcel of land, Lot No. 1253, situated in Atabay, San Jose, Antique, measuring 4,280 square meters, was ownedby Zoilo [Labiao] (hereafter ZOILO) as per Original Certificateof Title No. RO-2301 issued on March 3, 1931. Sometime in

1931, ZOILO died. Subsequently, on May 12, 1986,Loreto Labiao (hereafter LORETO), son of ZOILO, soldto Gabino Vagilidad Jr. (hereafter GABINO JR.) a portion of LotNo. 1253 (hereafter Lot 1253-B), measuring 1,604 square metersas evidenced by the Deed of Absolute Sale executed byLORETO.

In view of the death of ZOILO, his children,LORETO, Efren Labiao (hereafter EFREN) and

Priscilla Espanueva (hereafter PRISCILLA) executed anExtrajudicial x x x Settlement of Estate dated January 20, 1987,adjudicating the entire Lot No. 1253, covering 4,280 squaremeters, to LORETO. On January 29, 1987, Transfer Certificate ofTitle (TCT) No. T-16693 was issued in favor of LORETO,EFREN and PRISCILLA, but on even date, TCT No. T-16693was cancelled and TCT No. T-16694, covering the saidproperty, was issued in the name of LORETO alone.

On July 31, 1987, GABINO JR., as petitioner, filed aPetition for the Surrender of TCT No. T-16694, covering Lot No.1253, with theRegional Trial Court of San Jose City, Sixth

Judicial Region, against LORETO, docketed as Cadastral CaseNo. 87-731-A. The plaintiff alleged that, being the owner ofx x x Lot No. 1253-B, under TCT No. T-16694, by virtue of thesale that took place on May 12, 1986, he is entitled to ask for thesurrender of the owner‘s copy of TCT No. T-16694 to the

Register of Deeds of Antique in order to effect the transfer oftitle to the name of the petitioner. However, as per motion ofboth counsels[,] since the parties seemed to have alreadyreached an amicable settlement without the knowledge of theircounsels, the trial court issued an Order dated March 21,1994 sending the case to the archives.



On September 21, 1988, [GABINO JR.] paid real estatetaxes on the land he bought from LORETO as per TaxDeclaration No. 1038 where the property was specified as LotNo. 1253-B. GABINO JR. thereafter sold the same lot to

Wilfredo Vagilidad (hereafter WILFREDO) as per Deed ofAbsolute Sale dated December 7, 1989. On even date, Deed ofAbsolute Sale of a Portion of Land involving the opt-describedproperty was also executed by LORETO in favor ofWILFREDO. The aforementioned deeds, which were bothexecuted on December 7, 1989 [and] notarized by Atty. WarlooCardenal[,] [appear] to have been given the same entry numberin his notarial books as both contained the designation―Document No. 236, Page No. 49, Book No. XI, Series of

1989[.‖]

Corollarily, on February 14, 1990, the sale of Lot No. 1253-B to WILFREDO was registered with the Registry of Deeds ofthe Province ofAntique under Entry No. 180425. Consequently,TCT No. T-18023, cancelling TCT No. 16694, was issued infavor of WILFREDO pursuant to the Deed of Absolute Saledated December 7, 1989.

On October 24, 1991, spouses WILFREDO and LOLITAobtained a loan from the Philippine National Bank (PNB forbrevity) in the amount of P150,000.00 and mortgaged Lot No.1253-B as collateral of the said loan and the transaction wasinscribed at the back of TCT No. 18023 as Entry No. 186876.Subsequently, the xxx real estate mortgage was cancelled underEntry No. 191053 as per inscription dated November 17, 1992 inxxx TCT No. 18023.

Subsequently, WILFREDO obtained another loan fromDevelopment Bank of the Philippines (DBP for brevity) in theamount ofP200,000.00 and mortgaged Lot No. 1253-B ascollateral of the xxx loan and the transaction was inscribed atthe back of TCT No. 18023 as Entry No. 196268. The said loan



was paid and, consequently, the mortgage was cancelled asEntry No. 202500.

On September 29, 1995, spouses GABINO and Ma.

Dorothy Vagilidad (hereafter DOROTHY), as plaintiffs, filed aComplaint for Annulment of Document, Reconveyance andDamages, with the Regional Trial Court of Antique, Sixth

Judicial Region, Branch 11, against spouses WILFREDO andLolita Vagilidad (hereafter LOLITA), docketed as Civil CaseNo. 2825. The plaintiffs claimed that they are the lawful ownersof Lot No. 1253-B which was sold to him by LORETO in 1986.They alleged that [GABINO JR.] is a nephew of defendantWILFREDO. They likewise raised that when GABINO SR. died,

defendant WILFREDO requested GABINO JR. to transfer theownership of Lot No. 1253-B in defendant WILFREDO‘s namefor loaning purposes with the agreement that the land will bereturned when the plaintiffs need the same. They added that,pursuant to the mentioned agreement, plaintiff GABINO JR.,without the knowledge and consent of his spouse, DOROTHY,executed the Deed of Sale dated December 7, 1989 in favor ofdefendant WILFREDO receiving nothing as payment therefor.They pointed out that after defendant WILFREDO was able tomortgage the property, plaintiffs demanded the return of theproperty but the defendants refused to return the same. Theplaintiffs claimed that the same document is null and void forwant of consideration and the same does not bind the non-consenting spouse. They likewise prayed that the defendant beordered to pay the plaintiffs not less than P100,000.00 as actualand moral damages, P10,000.00 as attorney‘s fees and P5,000.00as litigation expenses.

For their part, the defendants, on January 15, 1996, filedtheir Answer, denying the material allegations of the plaintiffs.Defendants claimed that they are the lawful owners of Lot No.1253-B. They alleged that LORETO, with conformity of his wife,sold to them Lot No. 1253 on December 7, 1989 for P5,000.00and the transaction was registered with the Register of Deeds of



the Province of Antique under Entry No. 180425. They addedthat, subsequently, TCT No. T-18023, covering Lot No. 1253-B,was issued in favor of the defendants. Hence, they claimed thatthe plaintiffs be directed to pay the defendants P200,000.00 as

moral damages, P50,000.00 as exemplary damages, P20,000.00as attorney‘s fees and P30,000.00 for litigation expenses.[4]

The trial court ruled in favor of petitioners WILFREDO and LOLITAand held that LORETO did not validly convey Lot No. 1253-B to GABINO,

JR. on May 12, 1986 since at that time, the heirs of ZOILO had notpartitioned Lot No. 1253.[5] It ruled that LORETO could only sell at thattime his aliquot share in the inheritance. He could not have sold a dividedpart thereof designated by metes and bounds. Thus, it held that LORETO

remained the owner of the subject lot when he sold it to WILFREDOon December 7, 1989. It further found that there was no proof thatWILFREDO knew of the sale that took place between LORETO andGABINO, JR. on May 12, 1986. The dispositive portion of the decisionstates:

WHEREFORE, in view of the foregoing pronouncementsand a preponderance of evidence, judgment is hereby rendered:

1. FINDING the defendants WILFREDOVAGILIDAD and LOLITA VAGILIDAD to have duly acquiredownership of Lot No. 1253-B containing an area of 1,604 squaremeters, more or less, situated in San Jose, Antique;

2. SUSTAINING the validity of Transfer Certificateof Title No. T-18023 covering the subject Lot No. 1253-B andissued in the name of the defendant WILFREDO VAGILIDAD,married to the defendant LOLITA VAGILIDAD;

3. DISMISSING the complaint of the plaintiffsGABINO VAGILIDAD, JR. and MA. DOROTHY VAGILIDAD,as well as the counterclaims of the defendants WILFREDOVAGILIDAD and LOLITA VAGILIDAD and of the defendantsLORETO LABIAO and FRANCISCA LABIAO; and











4. PRONOUNCING no cost.[6]

GABINO, JR. and DOROTHY filed an appeal with the Court ofAppeals. The appellate court reversed and set aside the decision of thecourt a quo, viz.:

WHEREFORE, premises considered, the Decision dated January 26, 1999 of the Regional Trial Court of Antique, Sixth Judicial Region, Branch 11, in Civil Case No. 2825, is herebyREVERSED and SET ASIDE and a new one is entered: (1)declaring the Deed of Absolute Sale [of Portion of Land] dated

December 7, 1989 executed by appellee LORETO in favor ofappellee WILFREDO null and void; (2) ordering thedefendants-appellees WILFREDO and LOLITA to reconvey LotNo. 1253-B to plaintiffs-appellants GABINO, JR. andDOROTHY; and(3) ordering the defendants-appellees to paythe plaintiffs-appellants P100,000.00 as moraldamages, P10,000.00 as attorney‘s fees and P5,000.00 aslitigation expenses.[7]

The appellate court ruled that the sale made by LORETO in favor ofGABINO, JR. on May 12, 1986 is valid. The rights of LORETO to successionare transmitted from the moment of ZOILO‘s death in 1931. Thus, whenLORETO sold the 1,604-square meter portion of Lot No. 1253 to GABINO

JR., he already had the right as co-owner to his share to Lot No. 1253, evenif at that time the property had not yet been partitioned. Consequently, thesale made by LORETO in favor of WILFREDO on December 7, 1989 is voidbecause LORETO and FRANCISCA were no longer the owners of Lot No.

1253-B as of that time. The appellate court also held WILFREDO andLOLITA liable for moral damages for falsifying the fictitious deeds of saleon December 7, 1989.











WILFREDO and LOLITA moved for reconsideration but the motionwas denied in the questioned Resolution datedNovember 13, 2003. Hence,this petition for review on certiorari raising the following errors:

I

THE HONORABLE COURT OF APPEALS ERRED IN NOTAPPLYING ARTICLE 1349 AND ARTICLE 1460 OF THE NEWCIVIL CODE IN THE CASE AT BAR.

II

THE HONORABLE COURT OF APPEALS ERRED IN NOT

APPLYING THE PROVISION OF ARTICLE 1544 OF THENEW CIVIL CODE AND THE DOCTRINE OFDOUBLE SALE THAT THE BUYER WHO IS IN POSSESSIONOF THE TORRENS TITLE AND HAD THE DEEDOF SALE REGISTERED MUST PREVAIL.

III

THE HONORABLE COURT OF APPEALS ERRED IN NOTAPPLYING ARTICLE 1391 OF THE NEW CIVIL CODE ANDTHE DOCTRINE THAT IN CASE OF FRAUD, ACTION FORRECONVEYANCE MUST BE BROUGHT WITHIN FOUR (4)YEARS FROM THE DISCOVERY OF THE FRAUD.

IV

THE HONORABLE COURT OF APPEALS ERRED INAWARDING PRIVATE RESPONDENT MORAL DAMAGES,

ATTORNEY‘S FEES AND LITIGATION EXPENSES.[8]

We deny the petition.

I

First, petitioners contend that the Deed of Absolute Sale betweenLORETO and GABINO, JR. does not have a determinate object. They







anchor their claim on the following discrepancies: (1) the object of the Deedof Absolute Sale between LORETO and GABINO, JR. is Lot No. 1253 withan area of 1,604 square meters; (2) the object of the Deed of Absolute Sale ofPortion of Land between LORETO and WILFREDO is a portion of Lot No.

1253, known as Lot No. 1253-B, also with an area of 1,604 squaremeters;[9] (3) the Deed of Absolute Sale between LORETO and GABINO, JR.shows that its object, Lot No. 1253, is not registered under the LandRegistration Act nor under the Spanish Mortgage Law; and (4) the propertysubject of this action, Lot No. 1253-B, was taken from Lot No. 1253containing an area of 4,280 square meters previously registered in thename of ZOILO under Original Certificate of Title (OCT) No. RO-2301.[10] With these discrepancies, petitioners contend that either the Deedof Absolute Sale between LORETO and GABINO, JR. does not have a

determinate object or that Lot No. 1253-B, the subject parcel, is not theobject thereof. Hence, absent a determinate object, the contract is void.They rely on Articles 1349 and 1460 of the Civil Code, viz.:

Art. 1349. The object of every contract must bedeterminate, as to its kind. The fact that the quantity is notdeterminate shall not be an obstacle to the existence of thecontract, provided it is possible to determine the same, withoutthe need of a new contract between the parties.

Art. 1460. A thing is determinate when it isparticularly designated or physically segregated from all othersof the same class.

The requisite that a thing be determinate is satisfied if atthe time the contract is entered into, the thing is capable ofbeing made determinate without the necessity of a new or

further agreement between the parties.

Petitioners err. The evidence on record shows that Lot No. 1253-B, thesubject parcel, and the lot described as Lot No. 1253 in the Deed of











Absolute Sale of May 12, 1986 between LORETO and GABINO, JR., are thesame. In the Deed of Absolute Sale, Lot No. 1253 is described, viz.:

A parcel of land (Lot No. 1253 of the Cadastral Survey of

San Jose), with the improvements thereon. Bounded on theNorth [by] 1254 and 1255; on the South by road; on the East by1253 and road on the West by 1240-Angel Salazar; containingan area of 1,604 square meters more or less declared under TaxDeclaration No. 4159.[11]

In the Deed of Absolute Sale of Portion of Land of December 7, 1989between LORETO and WILFREDO, the subject parcel is described, viz.:

A parcel of land (Lot No. 1253. Ap-06-00271)of the Cadastral Survey of San Jose, LRC Cad. Rec.No. 936), situated atAtabay, San Jose, Antique.Bounded on the N. and E. along lines 1-2-3 by lot1255; San Jose Cadastre; on the S. along line 3-4 byRoad; on the W. along line 4-5 by Lot 1240; San JoseCadastre; and on the N. along line 5-1 by Lot 1254,San Jose Cadastre containing an area of [Four]Thousand Two Hundred Eighty (4,280) squaremeters, more or less.

of which a portion of land subject of this saleis hereinbelow (sic) particularly described as follows, to wit:

A portion of Lot No. 1253-B of the CadastralSurvey of San Jose, situated at Atabay, San Jose,Antique. Bounded on the North by Lot No. 1254;

South by Road; West by Lot 1253-A; and on the Eastby Lot No. 1253-C; containing an area of 1,604square meters, more or less.[12]

The description of Lot No. 1253, the object of the Deed of AbsoluteSale, as ―not registered under Act No. 196[,] otherwise known as the Land











Registration Act, nor under the Spanish Mortgage Law‖ [13] is a straydescription of the subject parcel. It is uncorroborated by any evidence inthe records. This description solely appears on the Deed of Absolute Saleand the discrepancy was not explained by LORETO who signed the Deed

of Absolute Sale as vendor. LORETO does not, in fact, deny the existence ofthe Deed of Absolute Sale. He merely counters that the Deed of AbsoluteSale was purportedly a mortgage. However, LORETO‘sclaim that it wasone of mortgage is clearly negated by a Certification[14] issued by theBureau of Internal Revenue dated May 12, 1986. It certified that LORETOwas not required to pay the capital gains tax on the transfer of Lot No. 1253to GABINO, JR. because the property was classified as an ordinary asset.

To be sure, petitioners could have easily shown that LORETO owned

properties other than Lot No. 1253 to bolster their claim that the object ofthe Deed of Absolute Sale was different from Lot No. 1253-B which is theobject described in the Deed of Absolute Sale of Portion of Land. They didnot proffer any evidence.

The trial court itself comprehensively traced the origin of Lot No.1253-B. It clearly demonstrated that the subject parcel was originally part ofthe registered lot of ZOILO. It also showed how the subject parcel was

eventually bounded by Lot No. 1253-A on the West and by Lot No. 1253-Con the East, as the lot would be later described in the Deed of Absolute Saleof Portion of Land.

The trial court found that ZOILO previously owned Lot No. 1253under OCT No. RO-2301 issued on March 3, 1931. OnNovember 14, 1986,Entry No. 167922 was inscribed in the certificate of title, per Orderdated March 30, 1978 of Judge Noli Ma. Cortes of the then Court of FirstInstance of Antique, stating that it was a reconstituted certificate of

title.[15] Lot No. 1253 was subdivided by virtue of a subdivision plandated June 19, 1987. On January 20, 1987, an Extrajudicial Settlement ofEstate executed by LORETO, EFREN and PRISCILLA was entered as EntryNo. 170722. The OCT of ZOILO was cancelled by TCT No. T-16693 in thenames of LORETO, EFREN and PRISCILLA on January 29, 1987. TCT No.T-16693 was cancelled on the same day by TCT No. T-16694 in the name of













LORETO alone. The TCT was partially cancelled by the issuanceof TCTs covering Lot Nos. 1253-A, 1253-C and 1253-D. The TCT of Lot No.1253-B was issued in the name of WILFREDO married to LOLITAon February 15, 1990. WILFREDO‘s TCT No. T-18023 appears to be a

transfer from LORETO‘s TCT No. T-16694.

II

Next, petitioners contend that the appellate court should have upheldthe title of WILFREDO under Article 1544 of the Civil Code and thedoctrine of double sale where the buyer who is in possession of the TorrensTitle must prevail.[16] First, petitioners‘ title was issued pursuant to thepurported Deed of Absolute Sale of Portion of Land dated December 7,

1989. Second, WILFREDO did not see any encumbrance at the back of thetitle of the subject lot when he purchased it from LORETO on December 7,1989. Thus, since he is not bound to go beyond the certificate of title, he hasacquired the subject property in due course and in good faith.

We disagree. Article 1544 of the Civil Code states, viz.:Art. 1544. If the same thing should have been sold to

different vendees, the ownership shall be transferred to the

person who may have first taken possession thereof in goodfaith, if it should be movable property.

Should it be immovable property, the ownership shallbelong to the person acquiring it who in good faith recorded itin the Registry of Property.

Should there be no inscription, the ownership shallpertain to the person who in good faith was first in the

possession; and, in the absence thereof, to the person whopresents the oldest title, provided there is good faith.

Petitioners‘ reliance on Article 1544 is misplaced. While title to theproperty was issued in WILFREDO‘s name on February 15, 1990, the







following circumstances show that he registered the subject parcel withevident bad faith.

First, the Deed of Absolute Sale of Portion of Land dated December 7,

1989 between LORETO and WILFREDO is tainted with blatantirregularities. It is a fact that the Deed of Absolute Sale of Portion of Landand the Deed of Absolute Sale between GABINO, JR. and WILFREDO areof even date. Both Deeds had the same object – Lot No. 1253-B. Both deedswere notarized by Atty. Warloo Cardenal and bear the same entry in hisnotarial register: Document No. 236, Page No. 49, Book No. XI, Series of1989.

Second, the testimony of a disinterested witness, Febe Mabuhay,

established the irregularity. Mabuhay used to work as secretary for Atty.Cardenal and co-signed as witness in both Deeds. She stated that Atty.Cardenal instructed her to prepare the two documents in the last week ofNovember 1989. She was present when GABINO, JR. signed the Deed ofAbsolute Sale. She testified that after GABINO, JR. left, LORETO and hiswife FRANCISCA arrived and signed the Deed of Absolute Sale of Portionof Land.[17] The Decision of the court a quo further states, viz.:

[Mabuhay testified that when she prepared the two

documents, she] noticed the similarity of Lot No. 1253 astechnically described in both documents but she did not call theattention of Atty. Warlo[o] Cardenal. [She likewise stated thatAtty. Cardenal] specifically instructed her to assign the samedocument number to the two documents notarizedon December 7, 1989.[18]

Third, the testimony of Atty. Ernesto Estoya, then Clerk of Court of

the Regional Trial Court of Antique, supports the claim that there was badfaith in the execution of the Deed of Absolute Sale of Portion of Land. Atty.Estoya brought the notarial record of Atty. Cardenal for the year 1989pursuant to a subpoena. He stated that he had not brought both Deeds asrequired in the subpoena because ―Doc. No. 236; Page No. 49; Book No. XI;Series of 1989‖ as entered in the notarial register of Atty. Cardenal couldnot be found in the files. He further explained that the last document on











page 48 of the notarial register of Atty. Cardenal is Document No. 235,while the first document on page 49 is Document No. 239, leaving threeunexplained gaps for document numbers 236, 237 and 238. Atty. Estoyastated that he was not the one who received the 1989 notarial register of

Atty. Cardenal when the latter surrendered it since he assumed office onlyin 1994.[19]

Fourth, we give credence to the testimony of GABINO, JR. thatLORETO and WILFREDO had employed the scheme to deprive him andhis wife of their lawful title to the subject property. The facts speak forthemselves. WILFREDO knew that he could not use the Deed of AbsoluteSale executed in his favor by GABINO, JR. because the latter had no title totransfer. Without a title, WILFREDO could not use the subject property as

collateral for a bank loan. Hence, LORETO, who had refused to surrenderthe title to GABINO, JR. and in whose name the land remained registered,had to execute the Deed of Absolute Sale of Portion of Land in favor ofWILFREDO. Hence, it was convenient for WILFREDO to deny theexistence of the Deed of Absolute Sale of December 7, 1989 between himand GABINO, JR. But the evidence on record shows that after he was ableto register the subject property in his name on February 15, 1990,WILFREDO used the title as collateral in the loans that he contracted withthe Philippine National Bank on October 24, 1991 and the DevelopmentBank of the Philippines on December 1, 1993. This supports the claim ofGABINO, JR. that WILFREDO needed the lot for loaning purposes.

With these corroborating circumstances and the followingirrefragable documents on record, the evidence preponderates in favor ofGABINO, JR. One, he acquired Lot No.1253-B from LORETO on May 12,1986[20] by virtue of the Deed of Absolute Sale. Two, the Bureau of InternalRevenue issued a Certification, also on May 12, 1986, for the exemption

from the payment of capital gains tax when LORETO sold to him thesubject parcel. Three, GABINO, JR. paid the real estate tax on the subjectparcel in 1987. Four, he filed a Petition for the Surrender of LORETO‘s titleon July 31, 1987 so he could transfer the title of the property in hisname.










Petitioners likewise err in their argument that the contract of salebetween LORETO and GABINO, JR. is void on the ground that at the timeof the sale on May 12, 1986, LORETO had a right to dispose only an aliquotpart of the yet undivided property of ZOILO. The subject parcel, being an

inherited property, is subject to the rules of co-ownership under the CivilCode.

Co-ownership is the right of common dominion which two or morepersons have in a spiritual part of a thing, not materially or physicallydivided.[21] Before the partition of the property held in common, noindividual or co-owner can claim title to any definite portion thereof. Allthat the co-owner has is an ideal or abstract quota or proportionate share inthe entire property.[22]

LORETO sold the subject property to GABINO, JR. on May 12,1986 as a co-owner. LORETO had a right, even before the partition of theproperty on January 19, 1987,[23] to transfer in whole or in part hisundivided interest in the lot even without the consent of his co-heirs. Thisright is absolute in accordance with the well-settled doctrine that a co-owner has full ownership of his pro-indiviso share and has the right toalienate, assign or mortgage it, and substitute another person for its

enjoyment.[24]

Thus, what GABINO, JR. obtained by virtue of the saleon May 12, 1986 were the same rights as the vendor LORETO had as co-owner, in an ideal share equivalent to the consideration given under theirtransaction.[25]

LORETO sold some 1,604 square meters of Lot No. 1253 to GABINO, JR. Consequently, when LORETO purportedly sold to WILFREDO onDecember 7, 1989 the same portion of the lot, he was no longer the ownerof Lot No. 1253-B. Based on the principle that ―no one can give what he

does not have,‖[26] LORETO could not have validly sold to WILFREDO onDecember 7, 1989 what he no longer had. As correctly pointed out by theappellate court, the sale made by LORETO in favor of WILFREDO is voidas LORETO did not have the right to transfer the ownership of the subjectproperty at the time of sale.


























III

Petitioners contend that since the subdivision plan of Lot No. 1253was only approved on January 19, 1987, the appellate court can not

presumethat the aliquot part of LORETO was the parcel designated as Lot 1253-B.[27]

Petitioners err. The mere fact that LORETO sold a definite portion ofthe co-owned lot by metes and bounds before partition does not, per se,render the sale a nullity. We held in Lopez v. Vda. De Cuaycong [28] that thefact that an agreement purported to sell a concrete portion of a co-ownedproperty does not render the sale void, for it is well-established that thebinding force of a contract must be recognized as far as it is legally possible

to do so.[29]

In the case at bar, the contract of sale between LORETO andGABINO, JR. on May 12, 1986 could be legally recognized. At the time ofsale, LORETO had an aliquot share of one-third of the 4,280-square meterproperty or some 1,426[30] square meters but sold some 1,604 square metersto GABINO, JR. We have ruled that if a co-owner sells more than hisaliquot share in the property, the sale will affect only his share but notthose of the other co-owners who did not consent to the sale.[31] Be that as it

may, the co-heirs of LORETO waived all their rights and interests over LotNo. 1253 in favor of LORETO in an Extrajudicial Settlement of Estatedated January 20, 1987. They declared that they have previously receivedtheir respective shares from the other estate of their parents ZOILO andPURIFICACION.[32] The rights of GABINO, JR. as owner over Lot No. 1253-B are thus preserved. These rights were not effectively transferred byLORETO to WILFREDO in the Deed of Absolute Sale of Portion of Land.Nor were these rights alienated from GABINO, JR. upon the issuance of thetitle to the subject property in the name of WILFREDO. Registration ofproperty is not a means of acquiring ownership.[33] Its allegedincontrovertibility cannot be successfully invoked by WILFREDO becausecertificates of title cannot be used to protect a usurper from the true owneror be used as a shield for the commission of fraud.[34]

































IV

On the issue of prescription, petitioners contend that the appellatecourt failed to apply the rule that an action for reconveyance based onfraud prescribes after the lapse of four years.[35] They cite Article 1391[36] ofthe Civil Code and the case of Gerona v. De Guzman.[37]

We disagree. This Court explained in Salvatierra v. Court ofAppeals,[38] viz.:

An action for reconveyance based on an implied orconstructive trust must perforce prescribe in ten years and nototherwise. A long line of decisions of this Court, and of veryrecent vintage at that, illustrates this rule. Undoubtedly, it isnow well-settled that an action for reconveyance based on animplied or constructive trust prescribes in ten years from theissuance of the Torrens title over the property. The onlydiscordant note, it seems, is Balbin v. Medalla, which statesthat the prescriptive period for a reconveyance action is fouryears. However, this variance can be explained by theerroneous reliance on Gerona v. de Guzman. But in Gerona,

the fraud was discovered on June 25, 1948, hence Section 43(3)of Act No. 190 was applied, the New Civil Code not cominginto effect until August 30, 1950 xxx. It must be stressed, atthis juncture, that Article 1144 and Article 1456 are newprovisions. They have no counterparts in the old Civil Codeor in the old Code of Civil Procedure, the latter being thenresorted to as legal basis of the four-year prescriptive periodfor an action for reconveyance of title of real propertyacquired under false pretenses.[39]

[Thus,] under the present Civil Code, xxx just as animplied or constructive trust is an offspring of xxx Art. 1456,xxx so is the corresponding obligation to reconvey the propertyand the title thereto in favor of the true owner. In this context,and vis-á-vis prescription, Article 1144 of the Civil Code isapplicable[, viz.:]






















Art. 1144. The following actions must be brought

within ten years from the time the right of actionaccrues: 1) Upon a written contract;

2) Upon an obligation created by law; 3) Upon a judgment.[40] (emphases supplied)

Thus, in the case at bar, although the TCT of WILFREDO becameindefeasible after the lapse of one year from the date of registration, theattendance of fraud in its issuance created an implied trust in favor ofGABINO, JR. under Article 1456[41] of the Civil Code. Being an impliedtrust, the action for reconveyance of the subject property therefore

prescribes within a period of ten years from February 15, 1990. Thus, whenrespondents filed the instant case with the court a quo on September 26,1995, it was well within the prescriptive period.

V

On the issue of damages, petitioners contend that the grant iserroneous and the alleged connivance between Atty. Cardenal andWILFREDO lacks basis.

We disagree. The evidence on record is clear that petitionerscommitted bad faith in the execution of the purported Deed of AbsoluteSale of Portion of Land dated December 7, 1989 between LORETO andWILFREDO. As stated by the appellate court,viz.:

xxxx From the series of events, it can be reasonablyinferred that appellees WILFREDO, LORETO and Atty.Cardenal connived in attempting to deprive appellants of Lot

No. 1253-B, hence, the appellants‘ entitlement to moraldamages. Further, it is a well-settled rule that attorney‘s feesare allowed to be awarded if the claimant is compelled tolitigate with third persons or to incur expenses to protect hisinterest by reason of an unjustified act or omission of the partyfor whom it is sought. xxxx To protect themselves, the










appellants engaged the services of counsel and incurredexpenses in the course of litigation. Hence, we deem itequitable to award attorney‘s fees to the appellant xxx.[42] IN VIEW WHEREOF, the petition is DENIED. The assailed Decision

and Resolution of the Court of Appeals in CA-G.R. No. CV-68318dated March 19, 2003 and November 13, 2003, respectively, areAFFIRMED in toto. Costs against petitioners.

SO ORDERED.







SECOND DIVISION

REYNALDO BALOLOY and G.R. No. 157767

ADELINA BALOLOY-HIJE, Petitioners,

Present:

PUNO, J., Chairman, - versus - AUSTRIA-MARTINEZ,*

CALLEJO, SR.,TINGA, and

CHICO-NAZARIO, JJ .

Promulgated:ALFREDO HULAR,

Respondent. September 9, 2004x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

CALLEJO, SR., J .:

Before us is a petition for review on certiorari under Rule 45 of

the Revised Rules of Court, as amended, of the Decision [1]of the Court of

Appeals in CA-G.R. CV No. 51081, which affirmed the Decision[2] of the

Regional Trial Court of Sorsogon, Branch 51, in Civil Case No. 93-

5871. The antecedents are as follows:On May 11, 1993, respondent Alfredo Hular filed a complaint for

quieting of title of real property with damages against the children and

heirs of Iluminado Baloloy, namely, Anacorita, Antonio, and petitioners








Reynaldo and Adelina, all surnamed Baloloy. The respondent alleged, inter

alia, in his complaint that his father, Astrologo Hular, was the owner of a

parcel of residential land located in Sitio Pagñe, Biriran, Juban, Sorsogon,

with an area of 287 square meters, and that such lot was part of Lot No.

3347 of the Juban Cadastre. The respondent alleged that Iluminado Baloloy,

the petitioners‘ predecessor-in-interest, was able to secure a Free Patent

over the property through fraud on March 1, 1968, on the basis of which

the Register of Deeds issued Original Certificate of Title (OCT) No. P-16540

in his name. The respondent later discovered that in the cadastral survey of

lands in Juban, the property of his father, which actually consisted of 1,405

square meters was made to form part of Lot No. 3353, the property of

Iluminado Baloloy. According to the respondent, even if the residentialland was made to form part of Lot No. 3353 registered under the name of

Iluminado Baloloy, he had acquired ownership of the property by

acquisitive prescription, as he and his predecessors had been in

continuous, uninterrupted and open possession of the property in the

concept of owners for more than 60 years.

The respondent prayed for alternative reliefs that, after due hearing,

judgment be rendered in his favor, thus:a) Declaring the plaintiff as the absolute owner of the land in

question;

b) Ordering the defendants to perpetually refrain from

disturbing plaintiff in his peaceful possession in the land in

question;

c) Ordering the defendants to remove their houses in the

land in question, and to declare OCT No. P-16540, and

whatever paper, form, document or proceeding the

defendants may have, as null and void and without any

effect whatsoever as far as the land in question is concerned

as they cast cloud upon the title of the plaintiff;



d) In the alternative, defendants be ordered to reconvey the

title in favor of the plaintiff as far as the land in question is

concerned;

e) Ordering the defendants to jointly and severally pay the

plaintiff the amount of P50,000.00 as moral

damages; P5,000.00 as attorney‘s fee plusP500.00 for every

appearance or hearing of his lawyer in court; P1,500.00 as

consultation fee; P5,000.00 as incidental litigation

expenses;P20,000.00 as exemplary damages; and to pay the

costs.

Plaintiff further prays for such other relief [as are] just and

equitable in the premises.[3]

The Evidence of the Respondent

The respondent adduced evidence that the Spouses Lino and

Victoriana Estopin were the original owners of a parcel of land located in

Barangay Biriran, Juban, Sorsogon, designated as Lot No. 3347 of the JubanCadastre. A major portion of the property, where a house of strong

materials was constructed, was agricultural, while the rest was residential.

The respondent also averred that the Spouses Estopin declared the

property in their names under Tax Declaration No. 4790. On the north of

the agricultural portion of the property was the road leading to Biriran,

while north of the residential portion was a creek (canal) and the property

of Iluminado.

When Lino Estopin died intestate, his widow, Victoriana Lagata, executed

a Deed of Absolute Sale[4] on November 11, 1961 over the agricultural

portion of Lot No. 3347, which had an area of 15,906 square meters, more

or less, in favor of Astrologo Hular, married to Lorenza Hular. Shortly

thereafter, on November 25, 1961, Lagata executed a Deed of Absolute










Sale[5] over the residential portion of the property with an area of 287

square meters, including the house constructed thereon, in favor of

Hular. Hular and his family, including his son, the respondent, then

resided in the property. In 1961 or thereabouts, Iluminado asked Hular‘s

permission to construct a house on a portion of Lot No. 3347 near the road,

and the latter agreed. In l977, Lorenza Hular, wife of Astrologo, declared

the residential land in the latter‘s name under Tax Declaration No. 6841.[6]

Earlier, or on August 14, 1945, Irene Griarte had executed a Deed of

Absolute Sale over a coconut land located in Barangay Biriran, Juban, with

an area of 6,666 square meters in favor of Martiniano Balbedina, with the

following boundaries: North, Alejandro Gruta; South, Lino Estopin; East,

River Pagñe; West, Pedro Grepal and Esteban Grepal.[7] Subsequently,

after a cadastral survey was conducted on lands in Juban, the property of

Balbedina was designated as Lot No. 3353, with the following

boundaries: North: Lot No. 3353 (portion), Alejandro Gruta; South: Lino

Estopin; West: Lot No. 3349; East: creek. A trail was then established

between Lot No. 3353 and Lot No. 3347 resulting in the decrease of Lot No.

3353 owned by Balbedina to 4,651 square meters. He declared the property

under his name under Tax Declaration No. 191 with the followingboundaries: North: Lot No. 3353 (portion) Alejandro Gruta; South: trail;

East: creek; West: Lot No. 3349.[8]

On June 4, 1951, Balbedina executed a Deed of Absolute Sale over Lot

No. 3353 with an area of only 4,651 square meters in favor of

Iluminado.[9] The latter declared the property in his name under Tax

Declaration No. 5359.[10] Iluminado filed an application with the Bureau of

Lands for a free patent over the entirety of Lot No. 3353 on January 5,1960.[11] He indicated in his application that the property was not occupied

by any person and was disposable or alienable public land. In support

thereof, he executed an affidavit wherein he declared that he purchased

about one-half portion of the property in 1951 based on a deed of absolute

sale attached to said affidavit; that in 1957, he purchased the other one-half






























portion, but ―for economic reasons,‖ no deed of sale was executed by the

parties. He also alleged that the improvements on the land consisted of

coconut trees.[12] The Bureau of Lands processed the application in due

course.

In the meantime, Iluminado constructed his house on a portion of Lot

No. 3353 near the trail (road) leading to Biriran. He and his family,

including his children, forthwith resided in said house.

On March 1, 1968, the Secretary of Agricultural and Natural

Resources approved Iluminado‘s application and issued Free Patent No.

384019 covering Lot No. 3353 with an area of 9,302 square meters, on the

basis of which OCT No. P-16540 was thereafter issued by the Register ofDeeds on March 1, 1968.[13]

On August 2, 1975, Alejandro Gruta had executed a deed of absolute

sale over a portion of Lot No. 3353 with an area of 4,651 square meters in

favor of Estelito Hije, the husband of petitioner Adelina Baloloy, one of

Iluminado‘s children.[14]

Before he left for employment in Saudi Arabia in 1979, respondent

Hular had his house constructed near the trail (road) on Lot No. 3347,

which, however, occupied a big portion of Lot No. 3353.[15]

Iluminado died intestate on November 29, 1985. His widow and their

children continued residing in the property, while petitioner Reynaldo

Baloloy, one of Iluminado‘s children, later constructed his house near that

of his deceased father. When Astrologo died intestate on December 25,

1989, he was survived by his children, Jose, Romeo, Anacleto, Elena, Leo,

Teresita, and the respondent, among others,[16] who continued to reside intheir house.[17]

Sometime in l991, the respondent‘s house helper was

cleaning the backyard, but was prevented from doing so by petitioner

Adelina Baloloy who claimed that their father Iluminado owned the land



























where the respondent‘s house was located. To determine the veracity of

the claim, the respondent had Lot No. 3353 surveyed by Geodetic Engineer

Rodolfo Cunanan on February 16, 1993, in the presence of Balbedina,

Antonio Baloloy and petitioner Reynaldo Baloloy. Cunanan prepared a

Special Sketch Plan of Lot No. 3353[18] showing that the house of Iluminado

was constructed on Lot No. 3353[19] near the road behind the houses owned

by Astrologo and Alfredo.[20] The engineer discovered that the residential

area deeded by Lagata to Hular had an area of 1,405 square meters, instead

of 287 square meters only.[21]

In their Answer to the complaint, the heirs of Iluminado Baloloy

averred that Iluminado‘s house was built in 1962 on a portion of Lot No.

3353, which the latter purchased from Balbedina, and not on a portion of

Lot No. 3347 which Hular purchased from Lagata. They alleged that Hular

constructed his house on a portion of Lot No. 3353 after securing the

permission of their father Iluminado, and that the respondent had no cause

of action for the nullification of Free Patent No. 384019 and OCT No. P-

16540 because only the State, through the Office of the Solicitor General,

may file a direct action to annul the said patent and title; and even if the

respondent was the real party in interest to file the action, such actions hadlong since prescribed. The heirs of Baloloy prayed that judgment be

rendered in their favor, thus:

WHEREFORE, it is most respectfully prayed of the

Honorable Court to DISMISS this case pursuant to paragraph

15, et seq., hereof, and/or DECIDE it in favor of the defendants

by UPHOLDING the sanctity of OCT No. P-16540 and ordering

plaintiff to:

1. RESPECT defendants‘ proprietary rights and interests on

the property in question covered by OCT No. P-16540;

2. VACATE it at his sole and exclusive expense, and never to

set foot on it ever again;

















3. PAY defendants:

a) MORAL DAMAGES at P50,000.00 EACH;

b) ACTUAL DAMAGES and UNREALIZED

PROFITS at P1,000.00/MONTH COMPUTED UP

TO THE TIME OF PAYMENT PLUS LEGAL

RATE OF INTEREST;

c) EXEMPLARY DAMAGES of P50,000.00

d) ATTY‘S FEES and LITIGATION EXPENSES

of P100,000.00; and

e) THE COSTS OF THIS SUIT.

DEFENDANTS pray for all other reliefs and remedies

consistent with law and equity.[22]

The Evidence for the Petitioners

Sometime in 1982, Hular asked permission from Iluminado to

construct his house on Lot No. 3353 near the road leading to

Biriran. Iluminado agreed, in the presence of his daughter, petitioner

Adelina Baloloy. As per the plan of Lot No. 3353 certified by a Director of

the Bureau of Lands on November 6, 1961, Lot No. 3353 had an area of

9,302 square meters.[23]

As gleaned from the Sketch Plan of Lot Nos. 3347 and 3353 prepared

on February 7, 1991 by Geodetic Engineer Salvador Balilo, the houses of the

Baloloy siblings and those of Astrologo and Alfredo were located in Lot

No. 3353.[24] In the said sketch plan, Lot No. 3353 had an area of 9,302square meters, while Lot No. 3347 had an area of 15,905 square meters.

When apprised of Hular‘s claim over the property, the petitioners and their

co-heirs filed a complaint for unlawful detainer with the Municipal Trial















Court of Juban, docketed as Civil Case No. 331. The case was, however,

dismissed for lack of jurisdiction.

On December 4, 1995, the trial court rendered judgment in favor of

the respondent. The fallo of the decision reads:

a/ Declaring plaintiff the absolute owner of the land in

question, consisting of 1,405 square meters, more or less,

and entitled to the peaceful possession thereof;

b/ Ordering the defendants to reconvey the title to the

plaintiff as far as the land in question is concerned within

fifteen (15) days counted from the finality of the decision,

failing in which, the Clerk of Court is hereby ordered to

execute the necessary document of reconveyance of the

title in favor of the plaintiff after an approved survey plan

is made;

c/ Ordering defendants to remove their houses from the

land in question at their own expense within fifteen (15)

days after the decision has become final;

d/ Ordering the defendants to pay jointly and severally

plaintiff the amount of P5,000.00 as attorney‘s

fees. P5,000.00 as incidental litigation expenses;

e/ To pay the costs.

SO ORDERED.[25]

The trial court ruled that the property subject of the complaint, withan area of 1,405 square meters, was part of Lot No. 3347 which the Spouses

Estopin owned, and which they later sold to Astrologo Hular. The trial

court also held that Iluminado committed fraud in securing the free patent

and the title for the property in question, and that when Victoriana Lagata

executed the deed of absolute sale on the residential portion of Lot No.







3347, she did not know that it formed part of Lot No. 3353. It further held

that the action of the plaintiff to nullify the title and patent was

imprescriptible.

The petitioners filed on December 8, 1995 a motion to reopen the caseto admit Tax Declaration Nos. 6957 and 4790 covering Lot No. 3347, under

the names of Astrologo Hular and Victoriana Lagata, respectively, in which

it was declared that Lot No. 3347 was coconut land. The trial court ruled

that the motion had been mooted by its decision.

On appeal, the Court of Appeals rendered judgment affirming the

decision of the trial court, and thereafter denied the motion for

reconsideration thereof.

The Present Petition

The petitioners, who are still residing on the subject property, filed

their petition for review on certiorari for the reversal of the decision and

resolution of the Court of Appeals.

The issues for resolution are:

(1) whether all the indispensable parties had been impleaded by the

respondent in the trial court;

(2) whether the said respondent had a cause of action against the

petitioners for the nullification of Free Patent No. 384019 and OCT No. P-

16540; for reconveyance and for possession of the subject property; and for

damages; and

(3) whether the respondent had acquired ownership over theproperty through acquisitive prescription.

The first issue, while not raised by the parties in the trial court and in

the Court of Appeals, is so interwoven with the other issues raised therein



and is even decisive of the outcome of this case; hence, such issue must be

delved into and resolved by this Court.[26]

We note that the action of the respondent in the trial court is for:

(a) reinvidicatoria, to declare the respondent the absolute owner of thesubject property and its reconveyance to him as a consequence of the

nullification of Free Patent No. 384019 and OCT No. P-16540;

(b) publiciana, to order the petitioners and the other heirs of Iluminado

Baloloy to vacate the property and deliver possession thereof to him; and

(c) damages and attorney‘s fees.

It is the contention of the respondent that the subject property was

sold by Lagata to his father, Astrologo Hular, in 1961. He adducedevidence that when his parents died intestate, they were survived by their

children, the respondent and his siblings Elena, Jose, Romeo, Anacleto,

Leo, and Teresita. Article 1078 of the Civil Code provides that where there

are two or more heirs, the whole estate of the decedent is, before partition,

owned in common by such heirs, subject to the payment of the debts of the

deceased. Until a division is made, the respective share of each cannot be

determined and every co-owner exercises, together with his co-

participants, joint ownership over the pro indiviso property, in addition to

the use and enjoyment of the same.

Under Article 487 of the New Civil Code, any of the co-owners may

bring an action in ejectment. This article covers all kinds of actions for the

recovery of possession, including an accion publiciana and a reinvidicatory

action. A co-owner may bring such an action without the necessity of

joining all the other co-owners as co-plaintiffs because the suit is deemed to

be instituted for the benefit of all.[27] Any judgment of the court in favor ofthe co-owner will benefit the others but if such judgment is adverse, the

same cannot prejudice the rights of the unimpleaded co-owners. If the

action is for the benefit of the plaintiff alone who claims to be the sole











owner and entitled to the possession thereof, the action will not prosper

unless he impleads the other co-owners who are indispensable parties.

In this case, the respondent alone filed the complaint, claiming sole

ownership over the subject property and praying that he be declared thesole owner thereof. There is no proof that the other co-owners had waived

their rights over the subject property or conveyed the same to the

respondent or such co-owners were aware of the case in the trial court. The

trial court rendered judgment declaring the respondent as the sole owner

of the property and entitled to its possession, to the prejudice of the latter‘s

siblings. Patently then, the decision of the trial court is erroneous.

Under Section 7, Rule 3 of the Rules of Court, the respondent wasmandated to implead his siblings, being co-owners of the property, as

parties. The respondent failed to comply with the rule. It must, likewise,

be stressed that the Republic of the Philippines is also an indispensable

party as defendant because the respondent sought the nullification of OCT

No. P-16540 which was issued based on Free Patent No. 384019. Unless the

State is impleaded as party-defendant, any decision of the Court would not

be binding on it. It has been held that the absence of an indispensable

party in a case renders ineffective all the proceedings subsequent to the

filing of the complaint including the judgment.[28] The absence of the

respondent‘s siblings, as parties, rendered all proceedings subsequent to

the filing thereof, including the judgment of the court, ineffective for want

of authority to act, not only as to the absent parties but even as to those

present.[29]

Even if we glossed over the procedural lapses of the respondent, we

rule that he failed to prove the material allegations of his complaint againstthe petitioners; and that he is not entitled to the reliefs prayed for.

The burden of proof is on the plaintiff to establish his case by the

requisite quantum of evidence. If he claims a right granted as created by

law or under a contract of sale, he must prove his claim by competent











evidence. He must rely on the strength of his own evidence and not on the

weakness or absence of the evidence of that of his opponent.[30] He who

claims a better right to real estate property must prove not only his

ownership of the same but also the identity thereof.[31] In Huy v. Huy ,[32] we

held that where a property subject of controversy is duly registered under

the Torrens system, the presumptive conclusiveness of such title should be

given weight and in the absence of strong and compelling evidence to the

contrary, the holder thereof should be considered as the owner of the

property until his title is nullified or modified in an appropriate ordinary

action. A Torrens Certificate is evidence of an indefeasible title to property

in favor of the person in whose name appears therein.[33] Such holder is

entitled to the possession of the property until his title is nullified.

The petitioners aver that Lot No. 3347 owned by the Spouses Estopin

was coconut, and not residential, land. The petitioners contend that, under

the deed of absolute sale, Victoriana Lagata executed on November 25,

1961 in favor of Astrologo Hular, she sold the residential portion of Lot No.

3347; however, the latter constructed his house on a portion of Lot No. 3353

which Iluminado had purchased from Balbedina, now covered by OCT No.

P-16540. The petitioners assert that along with their mother Anacorita andtheir brother Antonio Baloloy, they constructed their houses on a part of

Lot No. 3353, titled in the name of their father Iluminado; hence, they could

not be dispossessed of the said property. The petitioners posit that,

whether the house of Hular was constructed on a portion of Lot No. 3353 of

the property of Balbedina or Gruta is irrelevant because both properties are

now covered by OCT No. P-16540 under the name of Iluminado, their

predecessor-in-interest.

The Court of Appeals ruled that Victoriana Lagata owned the subject

property, which turned out to be 1,405 square meters, and sold the same to

Hular. In contrast, the RTC declared in its decision that while under the

deed of absolute sale executed by Irene Griarte in favor of Balbedina, Lot

No. 3353 had an area of 6,666 square meters, Griarte actually owned only



















4,651 square meters; a portion of the lot was actually owned by Lino

Estopin. Hence, Balbedina sold only 4,651 square meters to

Iluminado[34]because he was aware that he owned only 4,651 square meters

of the land. It also held that, unknown to Lagata, a portion of Lot No. 3347

was declared as part of Lot No. 3353 when the lands in Juban were

surveyed. The trial court concluded that Lagata erroneously declared,

under the deed of absolute sale executed on November 25, 1961 in favor of

Hular, that the property was part of Lot No. 3347.

The trial and appellate courts erred in their decisions.

The evidence on record shows that Irene Griarte owned a parcel of

land with an area of 6,666 square meters, more or less.[35] When she soldthe property to Martiniano Balbedina on August 14, 1945, it was bounded

on the south by the property of Lino Estopin. There was no trail yet

between the property of Griarte on the south and of Lino Estopin on the

north. In the meantime, however, a road (trail) leading to Biriran was

established between the property of Balbedina on the south and that of

Lino Estopin on the north. Thereafter, a cadastral survey of the lands in

Juban was conducted by the Bureau of Lands. The property of Balbedina

was designated as a portion of Lot No. 3353, while that of Estopin was

designated as Lot No. 3347. The other portion of Lot No. 3353, with an area

of 4,561 square meters, belonged to Alejandro Gruta. Because of the

construction of the road, the property of Balbedina, which was a part of Lot

No. 3353, was reduced to 4,651 square meters. Balbedina declared, under

Tax Declaration No. 391, that Lot No. 3353 had an area of 4,651 square

meters and was coconut land[36] and that his property was bounded on the

south by a trail (road). Lino Estopin declared Lot No. 3347 under his namefor taxation purposes, in which he stated that his property was bounded on

the north by the trail going to Biriran.[37] Clearly, then, Lot No. 3353 and

Lot No. 3347 had a common boundary – the trail (road) going to Biriran.


















Q And you said that Lino Estopin was able to acquire the

land by purchase?

A That was very long time when Lino Estopin sold the

property.

Q My question is whether you know because you testified

earlier that Lino Estopin was able to acquire the land by

purchase; do you confirm that?

A Yes, Sir.

Q From whom?

A From Irene Griarte.

Q Were you present when that sale was consummated?

A I was not there.

Q So you do not know how much was it bought by Lino

Estopin from Irene Griarte?A No, Sir.

Q You do not know whether a document to that effect was

actually drafted and executed?

A There was.

Q Have you seen the document?

A I did not see but there was a document.

Q You maintain there was a document but you did not see

a document, is that it?

A In my belief there was a document.



Q In your belief, how did you organize that belief when

you did not see a document?

A I insist there was a document.

Q That is why, why are you insisting when you did not see

a document?

A Well, during the sale that document was used.

Q How was it used when you did not see that document?

A When the deed of sale was executed I did not see thedocument, but I insist there was a document.

Q That‘s why, how were you able to say before the court

that there was a document when you contend that you

did not see any?

A There was basis in the sale … the sale was based on a

document. You cannot sell a property without

document? (sic)

Q Is that your belief?

A Yes, Sir.

Q But you did not see any document?

Atty. Diesta:

Already answered.

Witness:

A I did not see

Atty. Dealca:



Q You said that that document was used when the

property was sold by Lino Estopin to Alfredo Hular. . .

A In 1961. Yes.[41]

However, the respondent failed to adduce in evidence the said deed

or even an authentic copy thereof. The respondent did not offer any

justification for his failure to adduce the same in evidence. As against the

respondent‘s verbal claim that his father acquired the property from

Lagata, the Torrens title of Iluminado Baloloy must prevail.[42]

Second. The respondent even failed to adduce in evidence any tax

declarations over the disputed property under the name of Irene Griarte

and/or Lino Estopin, or realty tax payment receipts in their names from

1941 to November 1961. The documents are circumstantial evidence to

prove that Irene Griarte claimed ownership over the disputed property and

that Lino Estopin acquired the same from her. After all, such tax

declarations and tax receipts can be strong evidence of ownership of land

when accompanied by possession for a period sufficient for acquisitive

prescription.[43]

Third. The respondent even failed to adduce in evidence Tax

Declaration No. 4790 covering the two parcels of land under the name of

Lino Estopin to prove his claim that Lot No. 3347 consisted of agricultural

and residential lands. We note that the petitioners appended a certified

true copy of Tax Declaration No. 4790 under the name of Victoriana Lagata

over Lot No. 3347 to their Motion to Reopen the Case. In the said

declaration, Lot No. 3347 was described as coconut land; this is contrary to

the respondent‘s claim that the said lot was then residential, and that theboundary of the property on the north was the road to Biriran which, in

turn, is consistent with the petitioners‘ claim.[44] Unfortunately, the trial

court denied the said motion on the ground that it was mooted by its

decision.



















Fourth. During the cadastral survey of lands in Juban, the lot of

Gruta and that of Balbedina, inclusive of the subject property, were

designated as Lot No. 3353 with a total area of 9,302 square meters under

their names, while that of Lino Estopin was designated as Lot No. 3347

with an area of 15,906 square meters. Iluminado Baloloy applied for a free

patent over Lot No. 3353, including the disputed property, under his

name. The respondent failed to adduce any evidence that the Spouses

Estopin and/or Astrologo Hular opposed Balbedina and/or Iluminado‘s

claim of ownership of Lot No. 3353 during the survey and after the filing of

the application. A propos is our ruling in Urquiaga v. Court of Appeals: [45]

As succinctly observed by respondent Court of Appeals

in assessing the totality of the evidence –

We do not agree with defendants that they are also the

occupants and possessors of the subject lot just because it ―is

adjacent to their titled property.‖ Precisely, the boundaries of

defendants‘ titled property were determined, delineated and

surveyed during the cadastral survey of Dipolog and thereafter

indicated in their certificate of title in order that the extent of

their property will be known and fixed. Since the subject lotwas already found to be outside their titled property,

defendants have no basis in claiming it or other adjacent lots for

that matter. Otherwise, the very purpose of the cadastral

survey as a process of determining the exact boundaries of

adjoining properties will be defeated.

Defendants‘ own title, O.C.T. No. 0-357 (in the names of

Jose Aguirre and Cristina Gonzales), in fact belies their claim ofoccupation and possession over the adjacent subject

lot. Examining said title, we note that: (1) the cadastral survey

of Dipolog was conducted from January, 1923 to November

1925; (2) defendants‘ titled property was one of those lots

surveyed and this was designated as Lot No. 2623; (3) during







the survey, it was already determined and known that Lot No.

2623 is bounded on the northeast, southeast, southwest and

west by Lot No. 4443 (as we have seen in our narration of facts,

the subject lot is a subdivision lot of Lot No. 6552 which was

originally identified as Lot No. 4443-B-1, Dipolog Cadastre 85

Ext.: hence, the subject lot is a portion of Lot No. 4443); and (4)

O.C.T. No. 0-357 was issued on October 11, 1965 on the strength

of the judgment rendered on July 31 (sic), 1941 by the then

Court of First Instance of Zamboanga del Norte in Cadastral

Case No. 6, LRC Cadastral Record No. 756.

From the foregoing facts, we find that as early as

January, 1923 when the cadastral survey was started, the

boundaries of Lot Nos. 2623 and 4443 were already determined

and delineated. Since the subject lot was surveyed to be part of

Lot No. 4443, it means that during that time defendants‘

predecessors-in-interest never claimed ownership or possession

over the subject lot. Otherwise, they would have complained

so that the subject lot could be excluded from Lot No. 4443 and

included in Lot No. 2623, they being adjacent lots. It is obviousthen that defendants‘ predecessors only claimed Lot No. 2623

and they pursued their claim in Cadastral Case No. 6, LRC

Cadastral Record No. 756 until O.C.T. No. 0-357 was issued to

them. The contention of defendants that they and their

predecessors-in-interest occupied and possessed the subject lot

since time immemorial therefore is not true.[46]

Fifth. Under the deed of absolute sale dated November 25, 1961,Lagata sold to Astrologo Hular Lot No. 3347, and not Lot No.

3353. In Veterans Federation of the Philippines v. Court of Appeals ,[47] we ruled

that:











Petitioner VFP maintains that the deed of sale was valid

and enforceable and that it was perfected at the very moment

that the parties agreed upon the thing which was the object of

the sale and upon the price. The parties herein had agreed on

the parcel of land that petitioner would purchase from

respondent PNR, and the same was described therein; thus,

petitioner VFP cannot conveniently set aside the technical

description in this agreement and insist that it is the legal

owner of the property erroneously described in the certificate of

title. Petitioner can only claim right of ownership over the

parcel of land that was the object of the deed of sale and

nothing else.[48]

Sixth. Under the said deed of sale dated November 11, 1961,

Victoriana Lagata sold Lot No. 3347 which had an area of 15,906 square

meters and covered by Tax Declaration No. 4790. The deed does not state

that what was sold was only a portion of Lot No. 3347, excluding therefrom

the disputed property. This is understandable, since the subject property is

a portion of Lot No. 3353 owned by Alejandro Gruta and Iluminado

Baloloy, and not of Lino Estopin and/or Victoriana Lagata. Lagata couldnot have sold a portion of Lot No. 3353 which she does not own. As the

Latin adage goes: ―NEMO DAT QUOD NON HABET.”

Seventh. The Balbedina‘s Affidavit dated May 8, 1993 offered by the

respondent to prove the contents thereof is inadmissible in evidence

against the petitioners. Balbedina did not testify; as such, the petitioners

were deprived of their right to cross-examine him. The said affidavit is thus

hearsay and barren of probative weight. The affidavit varies the contentsof the deed of absolute sale which he (Balbedina) executed in favor

of Iluminado more than forty years earlier. In the said affidavit, it was

made to appear that Balbedina sold to Iluminado on June 4, 1951 only a

portion of Lot 3353 with an area of 3,333 square meters, when under the

said deed of absolute sale, the property that was sold consisted of 4,651



square meters. The affidavit is proscribed by Section 9, Rule 130 of the

Rules of Court, which provides:

Section 9. Evidence of written agreements. - When the

terms of an agreement have been reduced to writing, it isconsidered as containing all the terms agreed upon and there

can be, between the parties and their successors in interest, no

evidence of such terms other than the contents of the written

agreement.

. . .

It bears stressing that the deed of absolute sale executed by

Balbedina in favor of Baloloy was notarized by the Justice of the Peace who

was an Ex-Officio Notary Public; hence, entitled to full probative weight.

Eighth. The Special Sketch Plan of Lot No. 3353 prepared by

Geodetic Engineer Rodolfo P. Cunanan[49] cannot prevail over OCT No. P-

16540. In fact, the plan even buttressed the case for the petitioners because

it shows that the subject property is a portion of Lot No. 3353, and not of

Lot No. 3347, covered by OCT No. P-16540 under the name of Iluminado

Baloloy, the deceased father of the petitioners.

Ninth. The conclusion of the RTC that Lagata in fact sold a portion of

Lot No. 3347 under the deed of absolute sale dated November 25, 1961,

unaware that the property was a part of Lot No. 3353, is based on mere

speculations and surmises.

Iluminado Baloloy included in his application for a free patent the

property of Alejandro Gruta, and was able to secure a free patent over saidproperty in addition to his own. As such, Gruta, not the respondent, is the

proper party to assail such free patent, as well as OCT No. P-16540 which

was issued based thereon.






IN LIGHT OF ALL THE FOREGOING, the petition

is GRANTED. The decisions of the Regional Trial Court and the Court

of Appeals are REVERSED and SET ASIDE. The complaint of the

respondent is DISMISSED. No costs.

SO ORDERED.



FIRST DIVISION

ARNELITO ADLAWAN, G.R. No. 161916

Petitioner,

Present:

Panganiban, C.J . (Chairman),

- versus - Ynares-Santiago,

Austria-Martinez,

Callejo, Sr., and

Chico-Nazario, JJ.

EMETERIO M. ADLAWAN and

NARCISA M. ADLAWAN, Promulgated:

Respondents.

January 20, 2006

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

DECISION YNARES-SANTIAGO, J .:

Assailed in this petition for review is the September 23, 2003Decision[1] of the Court of Appeals in CA-G.R. SP No. 74921 which set aside

the September 13, 2002 Decision[2] of the Regional Trial Court (RTC) of

Cebu City, Branch 7, in Civil Case No. CEB-27806, and reinstated the

February 12, 2002 Judgment[3] of the Municipal Trial Court (MTC) of

Minglanilla, Metro Cebu, in Civil Case No. 392, dismissing petitioner













Arnelito Adlawan‘s unlawful detainer suit against respondents Emeterio

and Narcisa Adlawan. Likewise questioned is the January 8, 2004

Resolution[4] of the Court of Appeals which denied petitioner‘s motion for

reconsideration.

The instant ejectment suit stemmed from the parties‘ dispute over Lot

7226 and the house built thereon, covered by Transfer Certificate of Title

No. 8842,[5] registered in the name of the late Dominador Adlawan and

located at Barrio Lipata, Municipality of Minglanilla, Cebu. In his

complaint, petitioner claimed that he is an acknowledged illegitimate

child[6] of Dominador who died on May 28, 1987 without any other issue.

Claiming to be the sole heir of Dominador, he executed an

affidavit adjudicating to himself Lot 7226 and the house built thereon.[7]

Out of respect and generosity to respondents who are the siblings of hisfather, he granted their plea to occupy the subject property provided they

would vacate the same should his need for the property arise. Sometime in

January 1999, he verbally requested respondents to vacate the house and

lot, but they refused and filed instead an action for quieting of title [8] with

the RTC. Finally, upon respondents‘ refusal to heed the last demand letter

to vacate dated August 2, 2000, petitioner filed the instant case on August

9, 2000.[9]

On the other hand, respondents Narcisa and Emeterio, 70 and 59years of age, respectively,[10] denied that they begged petitioner to allow

them to stay on the questioned property and stressed that they have been

occupying Lot 7226 and the house standing thereon since birth. They

alleged that Lot 7226 was originally registered in the name of their

deceased father, Ramon Adlawan[11] and the ancestral house standing

thereon was owned by Ramon and their mother, Oligia Mañacap

Adlawan. The spouses had nine[12] children including the late Dominador

and herein surviving respondents Emeterio and Narcisa. During thelifetime of their parents and deceased siblings, all of them lived on the said

property. Dominador and his wife, Graciana Ramas Adlawan, who died

without issue, also occupied the same.[13] Petitioner, on the other hand, is a

stranger who never had possession of Lot 7226.






































Sometime in 1961, spouses Ramon and Oligia needed money to

finance the renovation of their house. Since they were not qualified to

obtain a loan, they transferred ownership of Lot 7226 in the name of their

son Dominador who was the only one in the family who had a college

education. By virtue of a January 31, 1962 simulated deed of sale,[14] a titlewas issued to Dominador which enabled him to secure a loan with Lot

7226 as collateral. Notwithstanding the execution of the simulated deed,

Dominador, then single, never disputed his parents‘ ownership of the lot.

He and his wife, Graciana, did not disturb respondents‘ possession of the

property until they died on May 28, 1987 and May 6, 1997, respectively.

Respondents also contended that Dominador‘s signature at the back

of petitioner‘s birth certificate was forged, hence, the latter is not an heir of

Dominador and has no right to claim ownership of Lot 7226.[15] Theyargued that even if petitioner is indeed Dominador‘s acknowledged

illegitimate son, his right to succeed is doubtful because Dominador was

survived by his wife, Graciana.[16]

On February 12, 2002, the MTC dismissed the complaint holding that

the establishment of petitioner‘s filiation and the settlement of the estate of

Dominador are conditions precedent to the accrual of petitioner‘s action for

ejectment. It added that since Dominador was survived by his wife,

Graciana, who died 10 years thereafter, her legal heirs are also entitled totheir share in Lot 7226. The dispositive portion thereof, reads:

In View of the foregoing, for failure to prove by

preponderance of evidence, the plaintiff‘s cause of action, the

above-entitled case is hereby Ordered DISMISSED.

SO ORDERED.[17]

On appeal by petitioner, the RTC reversed the decision of the MTCholding that the title of Dominador over Lot 7226 cannot be collaterally

attacked. It thus ordered respondents to turn over possession of the

controverted lot to petitioner and to pay compensation for the use and

occupation of the premises. The decretal portion thereof, provides:



















Wherefore, the Judgment, dated February 12, 2002, of the

Municipal Trial Court of Minglanilla, Cebu, in Civil Case No.

392, is reversed. Defendants-appellees are directed to restore to

plaintiff-appellant possession of Lot 7226 and the house

thereon, and to pay plaintiff-appellant, beginning in August

2000, compensation for their use and occupation of the

property in the amount of P500.00 a month.

So ordered.[18]

Meanwhile, the RTC granted petitioner‘s motion for execution

pending appeal[19] which was opposed by the alleged nephew and nieces of

Graciana in their motion for leave to intervene and to file an answer inintervention.[20] They contended that as heirs of Graciana, they have a share

in Lot 7226 and that intervention is necessary to protect their right over the

property. In addition, they declared that as co-owners of the property,

they are allowing respondents to stay in Lot 7226 until a formal partition of

the property is made.

The RTC denied the motion for leave to intervene.[21] It, however,

recalled the order granting the execution pending appeal having lost

jurisdiction over the case in view of the petition filed by respondents withthe Court of Appeals.[22]

On September 23, 2003, the Court of Appeals set aside the decision of

the RTC and reinstated the judgment of the MTC. It ratiocinated that

petitioner and the heirs of Graciana are co-owners of Lot 7226. As such,

petitioner cannot eject respondents from the property via an unlawful

detainer suit filed in his own name and as the sole owner of the property.

Thus –

WHEEFORE, premises considered, the appealed Decision

dated September 13, 2002 of the Regional Trial Court of Cebu

City, Branch 7, in Civil Case No. CEB-27806 is REVERSED and

SET ASIDE, and the Judgment dated February 12, 2002 of the























Municipal Trial Court of Minglanilla, Metro Cebu, in Civil Case

No. 392 is REINSTATED. Costs against the respondent.

SO ORDERED.[23]

Petitioner‘s motion for reconsideration was denied. Hence, the

instant petition.

The decisive issue to be resolved is whether or not petitioner can

validly maintain the instant case for ejectment.

Petitioner averred that he is an acknowledged illegitimate son and

the sole heir of Dominador. He in fact executed an affidavit adjudicating to

himself the controverted property. In ruling for the petitioner, the RTC

held that the questioned January 31, 1962 deed of sale validly transferredtitle to Dominador and that petitioner is his acknowledged illegitimate son

who inherited ownership of the questioned lot. The Court notes, however,

that the RTC lost sight of the fact that the theory of succession invoked by

petitioner would end up proving that he is not the sole owner of Lot 7226.

This is so because Dominador was survived not only by petitioner but also

by his legal wife, Graciana, who died 10 years after the demise of

Dominador on May 28, 1987.[24] By intestate succession, Graciana and

petitioner became co-owners of Lot 7226.[25]

The death of Graciana on May6, 1997, did not make petitioner the absolute owner of Lot 7226 because the

share of Graciana passed to her relatives by consanguinity and not to

petitioner with whom she had no blood relations. The Court of Appeals

thus correctly held that petitioner has no authority to institute the instant

action as the sole owner of Lot 7226.

Petitioner contends that even granting that he has co-owners over Lot

7226, he can on his own file the instant case pursuant to Article 487 of the

Civil Code which provides:ART. 487. Any one of the co-owners may bring an action

in ejectment.

This article covers all kinds of actions for the recovery of possession.

Article 487 includes forcible entry and unlawful detainer (accion interdictal),















recovery of possession (accion publiciana), and recovery of ownership (accion

de reivindicacion).[26] A co-owner may bring such an action without the

necessity of joining all the other co-owners as co-plaintiffs because the suit

is presumed to have been filed to benefit his co-owners. It should be

stressed, however, that where the suit is for the benefit of the plaintiff alonewho claims to be the sole owner and entitled to the possession of the

litigated property, the action should be dismissed.[27]

The renowned civilist, Professor Arturo M. Tolentino, explained –

A co-owner may bring such an action, without the necessity of

joining all the other co-owners as co-plaintiffs, because the suit

is deemed to be instituted for the benefit of all. If the action is

for the benefit of the plaintiff alone, such that he claimspossession for himself and not for the co-ownership, the

action will not prosper. (Emphasis added)[28]

In Baloloy v. Hular ,[29] respondent filed a complaint for quieting of title

claiming exclusive ownership of the property, but the evidence showed

that respondent has co-owners over the property. In dismissing the

complaint for want of respondent‘s authority to file the case, the Court held

that –

Under Article 487 of the New Civil Code, any of the co-

owners may bring an action in ejectment. This article covers all

kinds of actions for the recovery of possession, including

an accion publiciana and a reinvidicatory action. A co-owner

may bring such an action without the necessity of joining all the

other co-owners as co-plaintiffs because the suit is deemed to

be instituted for the benefit of all. Any judgment of the court in

favor of the co-owner will benefit the others but if such judgment is adverse, the same cannot prejudice the rights of the

unimpleaded co-owners. If the action is for the benefit of the

plaintiff alone who claims to be the sole owner and entitled to



















the possession thereof, the action will not prosper unless he

impleads the other co-owners who are indispensable parties.

In this case, the respondent alone filed the complaint,

claiming sole ownership over the subject property and prayingthat he be declared the sole owner thereof. There is no proof

that the other co-owners had waived their rights over the

subject property or conveyed the same to the respondent or

such co-owners were aware of the case in the trial court. The

trial court rendered judgment declaring the respondent as the

sole owner of the property and entitled to its possession, to the

prejudice of the latter‘s siblings. Patently then, the decision of

the trial court is erroneous.

Under Section 7, Rule 3 of the Rules of Court, the

respondent was mandated to implead his siblings, being co-

owners of the property, as parties. The respondent failed to

comply with the rule. It must, likewise, be stressed that the

Republic of the Philippines is also an indispensable party as

defendant because the respondent sought the nullification of

OCT No. P-16540 which was issued based on Free Patent No.384019. Unless the State is impleaded as party-defendant, any

decision of the Court would not be binding on it. It has been

held that the absence of an indispensable party in a case

renders ineffective all the proceedings subsequent to the filing

of the complaint including the judgment. The absence of the

respondent‘s siblings, as parties, rendered all proceedings

subsequent to the filing thereof, including the judgment of the

court, ineffective for want of authority to act, not only as to the

absent parties but even as to those present.[30]

In the instant case, it is not disputed that petitioner brought the suit

for unlawful detainer in his name alone and for his own benefit to the

exclusion of the heirs of Graciana as he even executed an affidavit of self-







adjudication over the disputed property. It is clear therefore that petitioner

cannot validly maintain the instant action considering that he does not

recognize the co-ownership that necessarily flows from his theory of

succession to the property of his father, Dominador.

In the same vein, there is no merit in petitioner‘s claim that he has the

legal personality to file the present unlawful detainer suit because the

ejectment of respondents would benefit not only him but also his alleged

co-owners. However, petitioner forgets that he filed the instant case to

acquire possession of the property and to recover damages. If granted, he

alone will gain possession of the lot and benefit from the proceeds of the

award of damages to the exclusion of the heirs of Graciana. Hence,

petitioner cannot successfully capitalize on the alleged benefit to his co-

owners. Incidentally, it should be pointed out that in default of the saidheirs of Graciana, whom petitioner labeled as ―fictitious heirs,‖ the State

will inherit her share[31] and will thus be petitioner‘s co-owner entitled to

possession and enjoyment of the property.

The present controversy should be differentiated from the cases

where the Court upheld the right of a co-owner to file a suit pursuant to

Article 487 of the Civil Code. In Resuena v. Court of Appeals ,[32] and Sering v.

Plazo,[33] the co-owners who filed the ejectment case did not represent

themselves as the exclusive owner of the property. In Celino v. Heirs of Alejoand Teresa Santiago,[34] the complaint for quieting of title was brought in

behalf of the co-owners precisely to recover lots owned in common.[35] Similarly in Vencilao v. Camarenta,[36] the amended complaint specified that

the plaintiff is one of the heirs who co-owns the controverted properties.

In the foregoing cases, the plaintiff never disputed the existence of a

co-ownership nor claimed to be the sole or exclusive owner of the litigated

lot. A favorable decision therein would of course inure to the benefit not

only of the plaintiff but to his co-owners as well. The instant case,however, presents an entirely different backdrop as petitioner vigorously

asserted absolute and sole ownership of the questioned lot. In his

complaint, petitioner made the following allegations, to wit:


























3. The plaintiff was the only son (illegitimate)

and sole heir of the late DOMINADOR ADLAWAN who died

intestate on 28 May 1987 without any other descendant nor

ascendant x x x.

5. Being the only child/descendant and,

therefore, sole heir of the deceased Dominador Adlawan, the

plaintiff became the absolute owner, and automatically took

POSSESSION, of the aforementioned house and lot x x x.

(Emphasis added)[37]

Clearly, the said cases find no application here because petitioner‘s

action operates as a complete repudiation of the existence of co-ownershipand not in representation or recognition thereof. Dismissal of the

complaint is therefore proper. As noted by Former Supreme Court

Associate Justice Edgrado L. Paras ―[i]t is understood, of course, that the

action [under Article 487 of the Civil Code] is being instituted for all.

Hence, if the co-owner expressly states that he is bringing the case only for

himself, the action should not be allowed to prosper.‖[38]

Indeed, respondents‘ not less than four decade actual physical

possession of the questioned ancestral house and lot deserves to berespected especially so that petitioner failed to show that he has the

requisite personality and authority as co-owner to file the instant case.

Justice dictates that respondents who are now in the twilight years of their

life be granted possession of their ancestral property where their parents

and siblings lived during their lifetime, and where they, will probably

spend the remaining days of their life.

WHEREFORE, the petition is DENIED. The September 23, 2003

Decision of the Court of Appeals in CA-G.R. SP No. 74921 which reinstatedthe February 12, 2002 Judgment of the Municipal Trial Court of

Minglanilla, Metro Cebu, dismissing petitioner‘s complaint in Civil Case

No. 392, and its January 8, 2004 Resolution, are AFFIRMED.

SO ORDERED.











Manila

FIRST DIVISION

G.R. No. 168943 October 27, 2006

IGLESIA NI CRISTO, petitioner,vs.HON. THELMA A. PONFERRADA, in her capacity as Presiding Judge,Regional Trial Court, Br. 104, Quezon City, and HEIRS OF ENRIQUE G.SANTOS, respondents.

D E C I S I O N

CALLEJO, SR , J.:

This is a Petition for Review on Certiorari of the Decision1 of the Court ofAppeals (CA) in CA-G.R. SP No. 72686 and its Resolution2 denying themotion for reconsideration of the said decision.

On October 24, 2001, Alicia, Alfredo, Roberto, Enrique and Susan, allsurnamed Santos, and Sonia Santos-Wallin, represented by Enrique G.Santos, filed a complaint3 for Quieting of Title and/or AccionReinvindicatoria before the Regional Trial Court (RTC) of Quezon City

against the Iglesia Ni Cristo (INC), defendant therein.

Plaintiffs alleged therein that, during his lifetime, Enrique Santos was theowner of a 936-square-meter parcel of land located in Tandang Sora,Quezon City covered by Transfer Certificate of Title (TCT) No. 57272issued by the Register of Deeds on July 27, 1961 which cancelled TCT No.57193-289. He had been in possession of the owner‘s duplicate of said title

http://www.lawphil.net/judjuris/juri2006/oct2006/gr_168943_2006.html#fnt1












and had been in continuous, open, adverse and peaceful possession of theproperty. He died on February 9, 1970 and was survived by his wife, AliciaSantos, and other plaintiffs, who were their children. Thereafter, plaintiffstook peaceful and adverse possession of the property, and of the owner‘s

duplicate of said title. When the Office of the Register of Deeds of QuezonCity was burned on June 11, 1988, the original copy of said title was burnedas well. The Register of Deeds had the title reconstituted as TCT No. RT-110323, based on the owner‘s duplicate of TCT No. 57272. Sometime inFebruary 1996, plaintiffs learned that defendant was claiming ownershipover the property based on TCT No. 321744 issued on September 18, 1984which, on its face, cancelled TCT No. 320898, under the name of thePhilippine National Bank, which allegedly cancelled TCT No. 252070 in thenames of the spouses Marcos and Romana dela Cruz. They insisted that

TCT Nos. 321744, 320898 and 252070 were not among the titles issued bythe Register of Deeds of Quezon City and even if the Register of Deedsissued said titles, it was contrary to law. Enrique Santos, during hislifetime, and his heirs, after his death, never encumbered or disposed theproperty. In 1996, plaintiffs had the property fenced but defendantdeprived them of the final use and enjoyment of their property.

Plaintiffs prayed that, after due proceedings, judgment be rendered in theirfavor, thus:

WHEREFORE, it is respectfully prayed that, after due hearing, judgment be rendered quieting the title of plaintiffs over and/orrecover possession of their said property in the name of deceasedEnrique Santos, covered by said TCT No. RT-110323(57272) of theRegister of Deeds at Quezon City and that:

1. The title of defendant, TCT No. 321744 be ordered cancelledby the Register of Deeds of Quezon City;

2. The defendant be ordered to pay plaintiffs‘ claims for actualdamages in the sum of P100,000.00;

3. The defendant be ordered to pay plaintiffs‘ claims forcompensatory damages in the sum of at leastP1,000,000.00;



4. The defendant be ordered to pay plaintiffs‘ claims forreimbursement of the lawyer‘s professional fees consisting ofthe aforesaid P50,000.00 acceptance fee and reimbursement ofthe said success fee in par. 10 above; and lawyer‘s expenses

of P2,000.00 for each hearing in this case;

5. The defendant be ordered to pay expenses and costs oflitigation in the sum of at leastP200,000.00.

Other reliefs that are just and equitable in the premises are, likewise,prayed for.4

As gleaned from the caption of the complaint, plaintiffs appear to be theheirs of Enrique Santos, represented by Enrique G. Santos. The lattersigned the Verification and Certificate of Non-Forum Shopping whichreads:

I, ENRIQUE G. SANTOS, of legal age, under oath, state that I am oneof the children of the late Enrique Santos and I represent the heirs ofsaid Enrique Santos who are my co-plaintiffs in the above-captionedcase and that I directed the preparation of the instant complaint, thecontents of which are true and correct to the best of my knowledge

and the attachments are faithful reproductions of the official copies inmy possession.

I hereby certify that I have not commenced any other action orproceeding involving the same issues in the Supreme Court, theCourt of Appeals, or different Divisions thereof, or any other tribunalor agency, and to the best of my knowledge, no such action orproceeding is pending in the Supreme Court, the Court of Appeals,or different Divisions thereof, or any other tribunal or agency, and

that I shall notify this Commission within three days from notice thata similar action or proceeding has been filed or is pending thereat.

IN WITNESS WHEREOF, I hereby affix my signature this 23rd day ofOctober 2001 at Pasig City, Metro Manila.

(Sgd.)







ENRIQUE G. SANTOS

SUBSCRIBED AND SWORN to before me this 23rd day of October2001 at Pasig City, affiant exhibiting to me his CTC No. 07303074

issued at Sta. Cruz, Laguna on April 16, 2001.

(Sgd.)

PETER FRANCIS G. ZAGALANotary PublicUntil December 31, 2002PTR No. 0287069Issued on 1-10-01At Pasig City5

Defendant moved to dismiss plaintiffs‘ complaint on the followinggrounds: (1) plaintiffs failed to faithfully comply with the proceduralrequirements set forth in Section 5, Rule 7 of the 1997 Rules of CivilProcedure; (2) the action (either Quieting of Title or Accion Reinvindicatoria)had prescribed, the same having been filed only on October 24, 2001beyond the statutory ten-year period therefor; and (3) that the complaint isdefective in many respects.6

Defendant asserted that the case involved more than one plaintiff but theverification and certification against forum shopping incorporated in thecomplaint was signed only by Enrique Santos. Although the complaintalleges that plaintiffs are represented by Enrique Santos, there is noshowing that he was, indeed, authorized to so represent the other plaintiffsto file the complaint and to sign the verification and certification of non-forum shopping.7 Thus, plaintiffs failed to comply with Section 5, Rule 7 ofthe Rules of Court. Defendant cited the ruling of this Court in Loquias v.

Office of the Ombudsman.8

Defendant maintained that the complaint is defective in that, althoughthere is an allegation that Enrique Santos represents the other heirs, there isnothing in the pleading to show the latter‘s authority to that effect; thecomplaint fails to aver with particularity the facts showing the capacity ofdefendant corporation to sue and be sued; and the pleading does not state


















the address of plaintiffs. Defendant likewise averred that the complaintshould be dismissed on the ground of prescription. It argued that plaintiffsanchor their claim on quieting of title and considering that they are not inpossession of the land in question, their cause of action prescribed after ten

years. On the other hand, if the supposed right of plaintiffs is basedon accion reinvindicatoria, prescription would set in after 10 years fromdispossession. In both cases, defendant asserts, the reckoning point is 1984when defendant acquired TCT No. 321744 and possession of the land inquestion.

In their Comment9 on the motion, plaintiffs averred that the relationship ofa co-owner to the other co-owners is fiduciary in character; thus, anyone ofthem could effectively act for another for the benefit of the property

without need for an authorization. Consequently, Enrique Santos had theauthority to represent the other heirs as plaintiffs and to sign theverification and certification against forum shopping.10 On the issue ofprescription, plaintiffs argued that the prescriptive period for the actionsshould be reckoned from 1996, when defendant claimed ownership overthe property and barred plaintiffs from fencing their property, not in 1984when TCT No. 321744 was issued by the Register of Deeds in the name ofdefendant as owner.

In its reply, defendant averred that absent any authority from his co-heirs,Enrique Santos must implead them as plaintiffs as they are indispensableparties. In response, plaintiffs aver that a co-owner of a property canexecute an action for quieting of title without impleading the other co-owners.

The trial court issued an Order11 denying defendant‘s motion to dismiss. Itdeclared that since Enrique Santos was one of the heirs, his signature in theverification and certification constitutes substantial compliance with the

Rules. The court cited the ruling of this Court in Dar v. Alonzo-Legasto.12 Thecourt, likewise, held that prescription had not set in and that failure to statethe address of plaintiffs in the complaint does not warrant the dismissal ofthe complaint.

Defendant filed a motion for reconsideration, which the court likewisedenied in an Order13 dated July 10, 2002.






















Unsatisfied, defendant, as petitioner, filed a Petition for Certiorari andProhibition with Prayer for the Issuance of a Temporary Restraining Orderand/or Preliminary Injunction14 before the CA, raising the following issues:

I.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERREDAND ABUSED HER DISCRETION WHEN SHE HELD THAT THECERTIFICATION OF NON-FORUM SHOPPING SIGNED BYENRIQUE G. SANTOS ALONE IS A SUBSTANTIAL COMPLIANCEWITH SECTION 5, RULE 7 OF THE 1997 RULES OF CIVILPROCEDURE, IN CLEAR CONTRAVENTION OF THE RULES OFCOURT, AND THE RULING IN LOQUIAS V. OFFICE OF THE

OMBUDSMAN , G.R. NO. 1399396 (SIC ), AUGUST 16, 2000, 338SCRA 62, AND ORTIZ V. COURT OF APPEALS, G.R. NO. 127393,299 SCRA 708 (DECEMBER 4, 1998).

II.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERREDAND ABUSED HER DISCRETION IN APPLYING THE RULING INDAR, ET. AL. V. HON. ROSE MARIE ALONZO-LEGASTO, ET. AL.,

G.R. NO. 143016, AUGUST 30, 2000 TO THE INSTANT CASE.III.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERREDAND ABUSED HER DISCRETION WHEN SHE HELD THAT THEAUTHORITY OF ENRIQUE G. SANTOS TO REPRESENT HIS CO-HEIRS IN THE FILING OF THE COMPLAINT AGAINST THE "INC"IS A MATTER OF EVIDENCE.

IV.

WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERREDAND ABUSED HER DISCRETION WHEN SHE HELD THAT THEACTION FOR QUIETING OF TITLE AND/OR ACCION






REINVINDICATORIA (CIVIL CASE NO. Q-01-45415) HAS NOTYET PRESCRIBED.15

Petitioner averred that, of the plaintiffs below, only plaintiff Enrique Santos

signed the verification and certification of non-forum shopping. UnderSection 5, Rule 7 of the 1997 Rules of Civil Procedure, all the plaintiffs mustsign, unless one of them is authorized by a special power of attorney tosign for and in behalf of the others. Petitioner argues that the bare claim ofEnrique Santos that he signed the verification and certification in his behalfand of the other plaintiffs who are his co-heirs/co-owners of the propertydoes not even constitute substantial compliance of the rule. Contrary to theruling of the trial court, the absence or existence of an authority of EnriqueSantos to sign the verification and certification for and in behalf of his co-

plaintiffs is not a matter of evidence. The defect is fatal to the complaint ofrespondents and cannot be cured by an amendment of the complaint. Thetrial court erred in applying the ruling of this Court in Dar v. Alonzo-Legasto.16

Petitioner maintained that the action of respondents, whether it be one forquieting of title or an accion reinvindicatoria, had prescribed when thecomplaint was filed on October 24, 2001. Petitioner asserts that this isbecause when respondents filed their complaint, they were not in actual or

physical possession of the property, as it (petitioner) has been in actualpossession of the property since 1984 when TCT No. 321744 was issued toit by the Register of Deeds. This is evident from the nature of areinvindicatory action itself – which is an action whereby plaintiff allegesownership over the subject parcel of land and seeks recovery of its fullpossession. By their action, respondents thereby admitted that petitionerwas in actual possession of the property, and as such, respondents‘ actionfor quieting of title or accion reinvindicatoria may prescribe in ten (10)years from 1984 or in 1994, it appearing that it acted in good faith when it

acquired the property from the registered owner, conformably with Article555(4) of the New Civil Code.

On April 7, 2005, the CA rendered the assailed decision17 dismissing thepetition, holding that the RTC did not commit grave abuse of its discretionamounting to lack or excess of jurisdiction in denying petitioner‘s motion














to dismiss. As the Court held in DAR v. Alonzo-Legasto18 and in Gudoy v.Guadalquiver,19 the certification signed by one with respect to a propertyover which he shares a common interest with the rest of the plaintiffs(respondents herein) substantially complied with the Rules. As to the issue

of prescription, the appellate court held that the prescriptive period shouldbe reckoned from 1996, when petitioner claimed ownership and barredrespondents from fencing the property.

Petitioner is now before this Court on petition for review on certiorari,raising the following issues:

I.

WHETHER OR NOT THE COURT OF APPEALS ERRED INRULING THAT THE CERTIFICATION OF NON-FORUMSHOPPING SIGNED BY RESPONDENT ENRIQUE G. SANTOSALONE IS A SUBSTANTIAL COMPLIANCE WITH SECTION 5,RULE 7 OF THE 1997 RULES OF CIVIL PROCEDURE AND INAPPLYING THE CASE OF GUDOY V. GUADALQUIVER, 429 SCRA723, WITHOUT REGARD TO MORE RECENT JURISPRUDENCE.

II.

WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN ITHELD THAT THE AUTHORITY OF RESPONDENT ENRIQUE G.SANTOS TO REPRESENT HIS CO-HEIRS IN THE FILING OF THECOMPLAINT AGAINST THE PETITIONER IS A MATTER OFEVIDENCE.

III.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN

HOLDING THAT THE ACTION FOR QUIETING OF TITLEAND/OR ACCION REINVINDICATORIA (CIVIL CASE NO. Q-01-45415) HAS NOT YET PRESCRIBED.20

Petitioner reiterated its arguments in support of its petition in the CA as itsarguments in support of its petition in the present case.














Sections 4 and 5, Rule 7 of the Revised Rules of Court on verification andcertification against forum shopping read:

Sec. 4. Verification. – Except when otherwise specifically required by

law or rule, pleadings need not be under oath, verified oraccompanied by affidavit.

A pleading is verified by an affidavit that the affiant has read thepleading and that the allegations therein are true and correct of hispersonal knowledge or based on authentic records.

A pleading required to be verified which contains a verificationbased on "information and belief" or upon "knowledge, informationand belief," or lacks a proper verification, shall be treated as anunsigned pleading.

Sec. 5. Certification against forum shopping. – The plaintiff or principalparty shall certify under oath in the complaint or other initiatorypleading asserting a claim for relief, or in a sworn certificationannexed thereto and simultaneously filed therewith: (a) that he hasnot theretofore commenced any action or filed any claim involvingthe same issues in any court, tribunal or quasi-judicial agency and, to

the best of his knowledge, no such other action or claim is pendingtherein; (b) if there is such other pending action or claim, a completestatement of the present status thereof; and (c) if he should thereafterlearn that the same or similar action or claim has been filed or ispending, he shall report that fact within five (5) days therefrom to thecourt wherein his aforesaid complaint or initiatory pleading has beenfiled.

Failure to comply with the foregoing requirements shall not be

curable by mere amendment of the complaint or other initiatorypleading but shall be cause for the dismissal of the case withoutprejudice, unless otherwise provided, upon motion and after hearing.The submission of a false certification or non-compliance with any ofthe undertakings therein shall constitute indirect contempt of court,without prejudice to the corresponding administrative and criminalactions. If the acts of the party or his counsel clearly constitute willful



and deliberate forum shopping, the same shall be ground forsummary dismissal with prejudice and shall constitute directcontempt, as well as a cause for administrative sanctions.

The purpose of verification is simply to secure an assurance that theallegations of the petition (or complaint) have been made in good faith; orare true and correct, not merely speculative. This requirement is simply acondition affecting the form of pleadings, and noncompliance therewithdoes not necessarily render it fatally defective. Indeed, verification is only aformal, not a jurisdictional requirement.21

The issue in the present case is not the lack of verification but thesufficiency of one executed by only one of plaintiffs. This Court held

in Ateneo de Naga University v. Manalo,22

that the verification requirement isdeemed substantially complied with when, as in the present case, only oneof the heirs-plaintiffs, who has sufficient knowledge and belief to swear tothe truth of the allegations in the petition (complaint), signed theverification attached to it. Such verification is deemed sufficient assurancethat the matters alleged in the petition have been made in good faith or aretrue and correct, not merely speculative.

The same liberality should likewise be applied to the certification against

forum shopping. The general rule is that the certification must be signed byall plaintiffs in a case and the signature of only one of them is insufficient.However, the Court has also stressed in a number of cases that the rules onforum shopping were designed to promote and facilitate the orderlyadministration of justice and thus should not be interpreted with suchabsolute literalness as to subvert its own ultimate and legitimate objective.The rule of substantial compliance may be availed of with respect to thecontents of the certification. This is because the requirement of strictcompliance with the provisions merely underscores its mandatory nature

in that the certification cannot be altogether dispensed with or itsrequirements completely disregarded.23

The substantial compliance rule has been applied by this Court in anumber of cases: Cavile v. Heirs of Cavile,24where the Court sustained thevalidity of the certification signed by only one of petitioners because he is arelative of the other petitioners and co-owner of the properties in


















dispute; Heirs of Agapito T. Olarte v. Office of the President of thePhilippines,25 where the Court allowed a certification signed by only twopetitioners because the case involved a family home in which all thepetitioners shared a common interest; Gudoy v. Guadalquiver ,26where the

Court considered as valid the certification signed by only four of the ninepetitioners because all petitioners filed as co-owners pro indiviso acomplaint against respondents for quieting of title and damages, as such,they all have joint interest in the undivided whole; and Dar v. Alonzo-Legasto,27 where the Court sustained the certification signed by only one ofthe spouses as they were sued jointly involving a property in which theyhad a common interest.

It is noteworthy that in all of the above cases, the Court applied the rule on

substantial compliance because of the commonality of interest of all theparties with respect to the subject of the controversy.

Applying the doctrines laid down in the above cases, we find and so holdthat the CA did not err in affirming the application of the rule onsubstantial compliance. In the instant case, the property involved is a 936-square-meter real property. Both parties have their respective TCTs overthe property. Respondents herein who are plaintiffs in the case below havea common interest over the property being the heirs of the late Enrique

Santos, the alleged registered owner of the subject property as shown inone of the TCTs. As such heirs, they are considered co-owners proindiviso of the whole property since no specific portion yet has beenadjudicated to any of the heirs. Consequently, as one of the heirs andprincipal party, the lone signature of Enrique G. Santos in the verificationand certification is sufficient for the RTC to take cognizance of the case. Thecommonality of their interest gave Enrique G. Santos the authority toinform the RTC on behalf of the other plaintiffs therein that they have notcommenced any action or claim involving the same issues in another court

or tribunal, and that there is no other pending action or claim in anothercourt or tribunal involving the same issues. Hence, the RTC correctlydenied the motion to dismiss filed by petitioner.

Considering that at stake in the present case is the ownership andpossession over a prime property in Quezon City, the apparent merit of the














substantive aspects of the case should be deemed as a special circumstanceor compelling reason to allow the relaxation of the rule.

Time and again, this Court has held that rules of procedure are established

to secure substantial justice. Being instruments for the speedy and efficientadministration of justice, they may be used to achieve such end, not toderail it. In particular, when a strict and literal application of the rules onnon-forum shopping and verification will result in a patent denial ofsubstantial justice, these may be liberally construed.28 The ends of justiceare better served when cases are determined on the merits – after all partiesare given full opportunity to ventilate their causes and defenses – ratherthan on technicality or some procedural imperfections.29

Indeed, this Court strictly applied the rules on verification and certificationagainst forum shopping as in the cases of Loquias v. Office of theOmbudsman30 and Tolentino v. Rivera.31 However, in both cases, thecommonality of interest between or among the parties is wanting. InLoquias, the co-parties were being sued in their individual capacities asmayor, vice mayor and members of the municipal board. In Tolentino, thelone signature of Tolentino was held insufficient because he had noauthority to sign in behalf of the Francisco spouses. In such case, the Courtconcluded that Tolentino merely used the spouses‘ names for whatever

mileage he thought he could gain. It is thus clear from these cases that thecommonality of interest is material in the relaxation of the Rules.

Anent the issue of the authority of Enrique G. Santos to represent his co-heirs/co-plaintiffs, we find no necessity to show such authority.Respondents herein are co-owners of the subject property. As such co-owners, each of the heirs may properly bring an action for ejectment,forcible entry and detainer, or any kind of action for the recovery ofpossession of the subject properties. Thus, a co-owner may bring such an

action, even without joining all the other co-owners as co-plaintiffs,because the suit is deemed to be instituted for the benefit of all.32

We uphold the validity of the complaint because of the followingcircumstances: (1) the caption of the instant case is Heirs of Enrique Santos v.Iglesia ni Cristo;33 (2) the opening statement of the complaint states thatplaintiffs are the heirs of Enrique Santos and likewise names the particular


























heirs of the latter who instituted the complaint below;34 (3) the caseinvolves a property owned by the predecessor-in-interest of plaintiffstherein;35 and (4) the verification signed by Enrique G. Santos clearly statesthat he is one of the children of the late Enrique Santos and that he

represents the heirs of said Enrique Santos.36

On the issue of prescription of action, petitioner avers that the action ofrespondents is one to quiet title and/or accion reinvindicatoria, and thatrespondents asserted ownership over the property and sought the recoveryof possession of the subject parcel of land. It insists that the very nature ofthe action presupposes that respondents had not been in actual andmaterial possession of the property, and that it was petitioner which hadbeen in possession of the property since 1984 when it acquired title thereon.

The action of respondent prescribed in ten years from 1984 when petitionerallegedly dispossessed respondents, in accordance with Article 555(4) ofthe New Civil Code.

The contention of petitioner has no merit. The nature of an action isdetermined by the material allegations of the complaint and the characterof the relief sought by plaintiff, and the law in effect when the action wasfiled irrespective of whether he is entitled to all or only some of suchrelief.37 As gleaned from the averments of the complaint, the action of

respondents was one for quieting of title under Rule 64 of the Rules ofCourt, in relation to Article 476 of the New Civil Code. The latter provisionreads:

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

remove such cloud or to quiet the title.

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

A cloud is said to be a semblance of a title, either legal or equitable, or acloud of an interest in land appearing in some legal form but which is, in



















fact, unfounded, or which it would be inequitable to enforce.38 An actionfor quieting of title is imprescriptible until the claimant is ousted of hispossession.39

The owner of a real property, as plaintiff, is entitled to the relief of quietingof title even if, at the time of the commencement of his action, he was not inactual possession of real property. After all, under Article 477 of the NewCivil Code, the owner need not be in possession of the property. If on theface of TCT No. 321744 under the name of plaintiff, its invalidity does notappear but rests partly in pais, an action for quieting of title is proper.40

In the present case, respondents herein, as plaintiffs below, alleged in theircomplaint, that their father, Enrique Santos, was the owner of the property

based on TCT No. 57272 issued on July 27, 1961; and that, after his death onFebruary 9, 1970, they inherited the property; Enrique Santos, during hislifetime, and respondents, after the death of the former, had been in actual,continuous and peaceful possession of the property until 1994 whenpetitioner claimed ownership based on TCT No. 321744 issued onSeptember 18, 1984 and barred respondents from fencing their property.

Petitioner‘s claim that it had been in actual or material possession of theproperty since 1984 when TCT No. 321744 was issued in its favor is belied

by the allegations in the complaint that respondents had been in actual andmaterial possession of the property since 1961 up to the time they filedtheir complaint on October 24, 2001.

Admittedly, respondents interposed the alternative reinvindicatory actionagainst petitioner. An accion reinvindicatoria does not necessarilypresuppose that the actual and material possession of the property is ondefendant and that plaintiff seeks the recovery of such possession fromdefendant. It bears stressing that anaccion reinvindicatoria is a remedy

seeking the recovery of ownership and includes jus possidendi, jus utendi,and jus fruendi as well. It is an action whereby a party claims ownershipover a parcel of land and seeks recovery of its full possession.41 Thus, theowner of real property in actual and material possession thereof may filean accion reinvindicatoria against another seeking ownership over a parcel ofland including jus vindicandi, or the right to exclude defendants from thepossession thereof. In this case, respondents filed an alternative



















reinvindicatory action claiming ownership over the property and thecancellation of TCT No. 321744 under the name of petitioner. In fine, theysought to enforce their jus utendi and jus vindicandi when petitionerclaimed ownership and prevented them from fencing the property.

Since respondents were in actual or physical possession of the propertywhen they filed their complaint against petitioner on October 24, 2001, theprescriptive period for the reinvindicatory action had not even commencedto run, even if petitioner was able to secure TCT No. 321744 over theproperty in 1984. The reason for this is that

x x x one who is in actual possession of a piece of land claiming to bethe owner thereof may wait until his possession is disturbed or his

title is attacked before taking steps to vindicate his right, the reasonfor the rule being, that his undisturbed possession gives him acontinuing right to seek the aid of a court of equity to ascertain anddetermine the nature of the adverse claim of a third party and itseffect on his own title, which right can be claimed only by one who isin possession.42

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. Thedecision of the Court of Appeals in CA-G.R. SP No. 72686 is AFFIRMED.

Costs against petitioner.

SO ORDERED.








Manila

THIRD DIVISION

G.R. No. 168747 October 19, 2007

VICTORIA REGNER, Petitioner,vs.CYNTHIA R. LOGARTA, TERESA R. TORMIS and CEBU COUNTRYCLUB, Inc., Respondents.

D E C I S I O N

CHICO-NAZARIO, J.:

This Petition for Review on Certiorari seeks to reverse the Decision1 dated 6May 2005 of the Court of Appeals in CA-G.R. CV No. 71028 entitled,"Victoria Regner v. Cynthia Logarta, Teresa R. Tormis and Cebu CountryClub, Inc.," which affirmed the Order dated 9 November 2000 of theRegional Trial Court (RTC) of Cebu, granting herein respondents‘ motionto dismiss Civil Case No. CEB 23927. The Order dated 9 November 2000 of

the RTC dismissed herein petitioner‘s complaint for declaration of nullityof a deed of donation, for failure to serve summons on Cynthia Logarta, anindispensable party therein.

Civil Case No. CEB. 23927 arose from the following factual antecedents:

Luis Regner (Luis) had three daughters with his first wife, Anicita C.Regner, namely, Cynthia Logarta (Cynthia) and Teresa Tormis (Teresa), therespondents herein, and Melinda Regner-Borja (Melinda).

Herein petitioner Victoria Regner (Victoria) is the second wife of Luis.

During the lifetime of Luis, he acquired several properties, among which isa share at Cebu Country Club Inc., evidenced by Proprietary OwnershipCertificate No. 0272. On 15 May 1998, Luis executed a Deed2 of Donation in









favor of respondents Cynthia and Teresa covering Proprietary OwnershipCertificate No. 0272 of the Cebu Country Club, Inc.

Luis passed away on 11 February 1999.

On 15 June 1999, Victoria filed a Complaint3 for Declaration of Nullity ofthe Deed of Donation with Prayer for Issuance of a Writ of PreliminaryInjunction and Temporary Restraining Order against Cynthia and Teresawith the RTC, docketed as Civil Case No. CEB. 23927. Victoria alleged inher complaint that: on 17 March 1997, Luis made a written declarationwherein he stated that due to his illness and forgetfulness, he would notsign any document without the knowledge of his lawyer, Atty. FrancisZosa; on 15 May 1998, when Luis was already very ill and no longer of

sound and disposing mind, Cynthia and Teresa , conspiring andconfederating with each other, fraudulently made or caused to befraudulently made a Deed of Donation whereby they made it appear thatLuis donated to them Proprietary Ownership Certificate No. 0272; sinceLuis no longer had the ability to write or affix his signature, Melinda,acting under the influence of her sisters, Cynthia and Teresa, fraudulentlymanipulated the hand of Luis so that he could affix his thumbmark on theassailed Deed of Donation; on 8 February 1998, or three days before thedeath of Luis, and when he was already in comatose condition at the Cebu

Doctors‘ Hospital, Melinda, Teresa, and Cynthia caused the preparation ofan affidavit to the effect that Luis affirmed the Deed of Donation heallegedly executed earlier by lifting his hand to affix his thumbmark on thesaid affidavit.

Sheriff Melchor A. Solon served the summonses on Cynthia and Teresa atthe Borja Family Clinic in Tagbilaran City wherein Melinda worked as adoctor, but Melinda refused to receive the summonses for her sisters andinformed the sheriff that their lawyer, Atty. Francis Zosa, would be the one

to receive the same.

Upon her arrival in the Philippines, on 1 June 2000, Teresa was personallyserved the summons at Room 304, Regency Crest Condominium, Banilad,Cebu City. She filed her Answer4 with counterclaim with the RTC on 6

June 2000.











Subsequently, on 12 September 2002, Teresa filed a motion to dismiss CivilCase No. CEB 23927 because of petitioner‘s failure to prosecute her actionfor an unreasonable length of time.

Petitioner opposed5

the motion and filed her own motion to set the case forpre-trial, to which Teresa filed her rejoinder on the ground that their sister,Cynthia, an indispensable party, had not yet been served a summons.Thus, Teresa prayed for the dismissal of petitioner‘s complaint, as the casewould not proceed without Cynthia‘s presence.

On 9 November 2000, the RTC issued an Order6 granting respondentTeresa‘s motion to dismiss, pertinent portions of which read:

Considering that the donees in the Deed of Donation are Cynthia R.Logarta and Teresa R. Tormis, they are therefore an (sic) indispensableparty (sic). In the case of Quisumbing vs. Court of Appeals, 189 SCRA 325,indispensable parties are those with such an interest in the controversy thata final decree would necessarily affect their rights so that the court couldnot proceed without their presence

Wherefore, in view of the foregoing, the instant case is hereby dismissedwithout prejudice.

A motion for reconsideration was filed by petitioner, but the same wasdenied in an Order dated 14 February 2001.

Aggrieved, petitioner appealed to the Court of Appeals. On 6 May 2005,the Court of Appeals rendered a Decision denying the appeal andaffirming in toto the order of dismissal of the complaint by the RTC and thedenial of the motion for reconsideration thereof. The Court of Appealsratiocinated that petitioner‘s failure to move for an extraterritorial serviceof summons constitutes failure to prosecute for an unreasonable length oftime, thus:

[T]he plaintiff-appellant [Victoria Regner] should have moved for theextraterritorial service of summons for both defendants-appellees Teresa R.Tormis and Cynthia R. Logarta as they were not residing and were notfound in the Philippines when plaintiff-appellant [Victoria Regner] filed









this case below. Although defendant-appellant Teresa Tormis waspersonally served with summons on June 1, 2000 when she came to thePhilippines but the same was only effected after a long wait or after thelapse of almost one year from the date the complaint was filed on June 15,

1999. To allow this practice would be to make the continuation of likeproceedings before the courts dependent on when the defendants would bepersonally served with summons by the time they would come to thePhilippines, which would only unnecessarily delay the proceedings andclog the court dockets as well. The afore-cited rule was precisely crafted tomeet situations similar to the present case to avoid unnecessary delays.

It has to be emphasized that it is incumbent upon the plaintiff [VictoriaRegner] to move with leave of court for the extraterritorial service of

summons. Taking into account the considerable time that had elapsed fromthe filing of the complaint on June 15, 1999 until defendant-appellee TeresaR. Tormis, through counsel, filed a motion to dismiss on September 12,2000, or approximately fifteen (15) months, without any act on the part ofplaintiff-appellant [Victoria Regner] to move for extraterritorial service ofsummons upon the person of defendant-appellee Cynthia Logarta rendersplaintiff-appellant‘s [Victoria Regner] complaint dismissible for failure toprosecute her action for unreasonable length of time under Section 3, Rule17, Revised Rules of Court, x x x.7

Hence, this appeal via petition8 for review on certiorari filed by petitionerraising the following assignment of errors:

THE COURT OF APPEALS ERRED IN HOLDING THAT THE DELAY INSERVING SUMMONS ON ONE OF THE DEFENDANTS CONSTITUTESA FAILURE TO PROSECUTE NOTWITHSTANDING THAT THE RESTOF THE CO-DEFENDANTS WERE DULY SERVED WITH SUMMONSES

THE COURT OF APPEALS ERRED IN NOT CONSIDERING THAT THEANSWER FILED BY ONE INDIVIDUAL DEFENDANT REDOUNDS TOTHE BENEFIT OF THE OTHER DEFENDANT WHO HAS NOT BEENSERVED WITH SUMMONS, THE NATURE OF ACTION BEINGADMITTEDLY COMMON AMONG ALL DEFENDANTS.9














From the foregoing, this Court identifies the issues to be resolved in thispetition as: (1) Whether a co-donee is an indispensable party in an action todeclare the nullity of the deed of donation, and (2) whether delay in theservice of summons upon one of the defendants constitutes failure to

prosecute that would warrant dismissal of the complaint.

A Court must acquire jurisdiction over the persons of indispensable partiesbefore it can validly pronounce judgments personal to the parties. Courtsacquire jurisdiction over a party plaintiff upon the filing of the complaint.On the other hand, jurisdiction over the person of a party defendant isassured upon the service of summons in the manner required by law orotherwise by his voluntary appearance. As a rule, if a defendant has notbeen summoned, the court acquires no jurisdiction over his person, and a

personal judgment rendered against such defendant is null and void.10 Adecision that is null and void for want of jurisdiction on the part of the trialcourt is not a decision in the contemplation of law and, hence, it can neverbecome final and executory.11

Rule 3, Section 7 of the Rules of Court, defines indispensable parties asparties-in-interest without whom there can be no final determination of anaction. As such, they must be joined either as plaintiffs or as defendants.The general rule with reference to the making of parties in a civil action

requires, of course, the joinder of all necessary parties where possible, andthe joinder of all indispensable parties under any and all conditions, theirpresence being a sine qua non for the exercise of judicial power.12 It isprecisely "when an indispensable party is not before the court [that] theaction should be dismissed."13 The absence of an indispensable partyrenders all subsequent actions of the court null and void for want ofauthority to act, not only as to the absent parties but even as to thosepresent.14

As we ruled in Alberto v. Mananghala15 :

In an action for recovery of property against a person who purchased itfrom another who in turn acquired it from others by the same means or bydonation or otherwise, the predecessors of defendants are indispensableparties if the transfers, if not voided, may bind plaintiff. (Garcia vs. Reyes,17 Phil. 127.) In the latter case, this Court held:




























An indispensable party has been defined as follows:

An indispensable party is a party who has such an interest in thecontroversy or subject matter that a final adjudication cannot be made, in

his absence, without injuring or affecting that interest, a party who has notonly an interest in the subject matter of the controversy, but also has aninterest of such nature that a final decree cannot be made without affectinghis interest or leaving the controversy in such a condition that its finaldetermination may be wholly inconsistent with equity and goodconscience. It has also been considered that an indispensable party is aperson in whose absence there cannot be a determination between theparties already before the court which is effective, complete, or equitable.Further, an indispensable party is one who must be included in an action

before it may properly go forward.

A person is not an indispensable party, however, if his interest in thecontroversy or subject matter is separable from the interest of the otherparties, so that it will not necessarily be directly or injuriously affected by adecree which does complete justice between them. Also, a person is not anindispensable party if his presence would merely permit complete reliefbetween him and those already parties to the action, or if he has no interestin the subject matter of the action. It is not a sufficient reason to declare a

person to be an indispensable party that his presence will avoid multiplelitigation.16

In Servicewide Specialists, Incorporated v. Court of Appeals,17 this Courtheld that no final determination of a case could be made if an indispensableparty is not legally present therein:

An indispensable party is one whose interest will be affected by the court‘saction in the litigation, and without whom no final determination of the

case can be had. The party‘s interest in the subject matter of the suit and inthe relief sought are so inextricably intertwined with the other parties thathis legal presence as a party to the proceeding is an absolute necessity. Inhis absence there cannot be a resolution of the dispute of the parties beforethe court which is effective, complete, or equitable.











The rationale for treating all the co-owners of a property as indispensableparties in a suit involving the co-owned property is explained in Arcelonav. Court of Appeals18 :

As held by the Supreme Court, were the courts to permit an action inejectment to be maintained by a person having merely an undividedinterest in any given tract of land, a judgment in favor of the defendantswould not be conclusive as against the other co-owners not parties to thesuit, and thus the defendant in possession of the property might beharassed by as many succeeding actions of ejectment, as there might be co-owners of the title asserted against him. The purpose of this provision wasto prevent multiplicity of suits by requiring the person asserting a rightagainst the defendant to include with him, either as co-plaintiffs or as co-

defendants, all persons standing in the same position, so that the wholematter in dispute may be determined once and for all in one litigation.

Applying the foregoing definitions and principles to the present case, thisCourt finds that any decision in Civil Case No. CEB 23927 cannot bindCynthia, and the Court cannot nullify the donation of the property she nowco-owns with Teresa, even if limited only to the portion belonging toTeresa, to whom summons was properly served, since ownership of theproperty is still pro indiviso. Obviously, Cynthia is an indispensable party

in Civil Case No. CEB 23927 without whom the lower court is barred frommaking a final adjudication as to the validity of the entire donation.Without the presence of indispensable parties to a suit or proceeding, a

judgment therein cannot attain finality.19

Being an indispensable party in Civil Case No. CEB 23927, the trial courtmust also acquire jurisdiction over Cynthia‘s person through the properservice of summons.

Based on the foregoing disquisitions, the issue of whether the answer filedby Teresa should benefit Cynthia who was not served summons need notbe discussed.

As to determine whether Cynthia was properly served a summons, it willbe helpful to determine first the nature of the action filed against Cynthiaand Teresa by petitioner Victoria, whether it is an action in personam, in










rem or quasi in rem. This is because the rules on service of summonsembodied in Rule 14 apply according to whether an action is one or theother of these actions.

In a personal action, the plaintiff seeks the recovery of personal property,the enforcement of a contract or the recovery of damages.20 In contrast, in areal action, the plaintiff seeks the recovery of real property; or, as indicatedin Section 2(a), Rule 4 of the then Rules of Court, a real action is an actionaffecting title to real property or for the recovery of possession, or forpartition or condemnation of, or foreclosure of mortgage on, real property.An action in personam is an action against a person on the basis of hispersonal liability, while an action in rem is an action against the thing itself,instead of against the person.21

In an action in personam, personal service of summons or, if this is notpossible and he cannot be personally served, substituted service, asprovided in Section 7, Rule 14 of the Rules of Court,22 is essential for theacquisition by the court of jurisdiction over the person of a defendant whodoes not voluntarily submit himself to the authority of the court.23 Ifdefendant cannot be served a summons because he is temporarily abroad,but is otherwise a Philippine resident, service of summons may, by leave ofcourt, be made by publication.24 Otherwise stated, a resident defendant in

an action in personam, who cannot be personally served a summons, maybe summoned either by means of substituted service in accordance withSection 7, Rule 14 of the Rules of Court, or by publication as provided inSections 15 and 16 of the same Rule.

In all of these cases, it should be noted, defendant must be a resident of thePhilippines; otherwise an action in personam cannot be brought because

jurisdiction over his person is essential to make a binding decision.

On the other hand, if the action is in rem or quasi in rem, jurisdiction overthe person of the defendant is not essential for giving the court jurisdictionso long as the court acquires jurisdiction over the res. If the defendant is anonresident and he is not found in the country, summons may be servedextraterritorially in accordance with Section 15, Rule 14 of the Rules ofCourt, which provides:























Section 15. Extraterritorial service. - When the defendant does not resideand is not found in the Philippines, and the action affects the personalstatus of the plaintiff or relates to, or the subject of which is, propertywithin the Philippines, in which the defendant has or claims a lien or

interest, actual or contingent, or in which the relief demanded consists,wholly or in part, in excluding the defendant from any interest therein, orthe property of the defendant has been attached within the Philippines,service may, by leave of court, be effected out of the Philippines bypersonal service as under Section 6; or by publication in a newspaper ofgeneral circulation in such places and for such time as the court may order,in which case a copy of the summons and order of the court shall be sentby registered mail to the last known address of the defendant, or in anyother manner the court may deem sufficient. Any order granting such

leave shall specify a reasonable time, which shall not be less than sixty (60)days after notice, within which the defendant must answer.

As stated above, there are only four instances wherein a defendant who is anon-resident and is not found in the country may be served a summons byextraterritorial service, to wit: (1) when the action affects the personalstatus of the plaintiff; (2) when the action relates to, or the subject of whichis property within the Philippines, on which the defendant claims a lien oran interest, actual or contingent; (3) when the relief demanded in such

action consists, wholly or in part, in excluding the defendant from anyinterest in property located in the Philippines; and (4) when the defendantnon-resident‘s property has been attached within the Philippines. In theseinstances, service of summons may be effected by (a) personal service outof the country, with leave of court; (b) publication, also with leave of court;or (c) any other manner the court may deem sufficient.25

In such cases, what gives the court jurisdiction in an action in rem or quasiin rem is that it has jurisdiction over the res, i.e., the personal status of the

plaintiff who is domiciled in the Philippines or the property litigated orattached. Service of summons in the manner provided in Section 15, Rule14 of the Rules of Court is not for the purpose of vesting the court with

jurisdiction, but for complying with the requirements of fair play or dueprocess, so that the defendant will be informed of the pendency of theaction against him; and the possibility that property in the Philippines







belonging to him, or in which he has an interest, might be subjected to a judgment in favor of the plaintiff and he can thereby take steps to protecthis interest if he is so minded.26

In petitioner‘s Complaint in Civil Case No. CEB No. 23427, she alleged thatCynthia is residing at 462 West Vine No. 201, Glendale, California, 912041,U.S.A.; while Teresa is residing at 2408 South Hacienda Boulevard,Hacienda Heights, California, but they usually visit here in the Philippinesand can be served summonses and other processes at the Borja FamilyClinic, Bohol. Pertinent portions of the Complaint read:

2. Defendant Cynthia R. Logarta is a Filipino, of legal age, married toRamon Logarta, resident (sic) 463 West Vine No.201, Glendale,

California, 912041, USA. She however usually visits in thePhilippines and can be served with summons and other processes ofthis Honorable Court at Borja Family Clinic, Tagbilaran, Bohol;

3. Defendant Teresa R. Tormis is likewise a Filipino, of legal age,married to Antonio Tormis, and a resident of 2408 South HaciendaHeights, California, 19745, U.S.A. She however usually visits in thePhilippines and can be served with summons and other processes ofthis Honorable Court at Borja Family Clinic, Tagbilaran, Bohol.27

Petitioner prayed for a declaration of nullity of the deed of donation, torestrain Cebu Country Club, Inc. from transferring title and ownership ofProprietary Ownership Certificate No. 0272 to Cynthia and Teresa, and formoral and exemplary damages. Civil Case No. CEB 23927 is evidently anaction against Cynthia and Teresa on the basis of their personal liability forthe alleged fraudulent transfer of the subject Country Club membershipfrom Luis to their name. In this sense, petitioner questions the participationand shares of Cynthia and Teresa in the transferred Country Club

membership. Moreover, the membership certificate from the Cebu CountryClub, Inc. is a personal property. Thus, the action instituted by petitionerbefore the RTC is in personam.

Being an action in personam, the general rule requires the personal serviceof summons on Cynthia within the Philippines, but this is not possible in











the present case because Cynthia is a non-resident and is not found withinthe Philippines.

As Cynthia is a nonresident who is not found in the Philippines, service of

summons on her must be in accordance with Section 15, Rule 14 of theRules of Court. Such service, to be effective outside the Philippines, mustbe made either (1) by personal service; (2) by publication in a newspaper ofgeneral circulation in such places and for such time as the court may order,in which case a copy of the summons and order of the court should be sentby registered mail to the last known address of the defendant; or (3) in anyother manner which the court may deem sufficient. The third mode, likethe first two, must be made outside the Philippines, such as through thePhilippine Embassy in the foreign country where Cynthia resides.

Since in the case at bar, the service of summons upon Cynthia was notdone by any of the authorized modes, the trial court was correct indismissing petitioner‘s complaint.

Section 3, Rule 17 of the 1997 Rules of Civil Procedure, states –

SEC. 3. Dismissal due to fault of plaintiff. – If, for no justifiable cause, theplaintiff fails to appear on the date of the presentation of his evidence in

chief on the complaint, or to prosecute his action for an unreasonablelength of time, or to comply with these Rules or any order of the court, thecomplaint may be dismissed upon motion of the defendant or upon thecourt's own motion, without prejudice to the right of the defendant toprosecute his counterclaim in the same or in a separate action. Thisdismissal shall have the effect of an adjudication upon the merits, unlessotherwise declared by the court.

As can be gleaned from the rule, there are three instances when the

complaint may be dismissed due to the plaintiff's fault: (1) if he fails toappear during a scheduled trial, especially on the date for the presentationof his evidence in chief; (2) if he fails to prosecute his action for anunreasonable length of time; and (3) if he fails to comply with the rules orany order of the court.28







Considering the circumstances of the case, it can be concluded that thepetitioner failed to prosecute the case for an unreasonable length of time.There is failure to prosecute when the plaintiff, being present, is not readyor is unwilling to proceed with the scheduled trial or when postponements

in the past were due to the plaintiff's own making, intended to be dilatoryor caused substantial prejudice on the part of the defendant.29

While a court can dismiss a case on the ground of failure to prosecute, thetrue test for the exercise of such power is whether, under the prevailingcircumstances, the plaintiff is culpable for want of due diligence in failingto proceed with reasonable promptitude.30 As to what constitutes an"unreasonable length of time," within the purview of the above-quotedprovision, the Court has ruled that it "depends upon the circumstances of

each particular case," and that "the sound discretion of the court" in thedetermination of said question "will not be disturbed, in the absence ofpatent abuse"; and that "the burden of showing abuse of judicial discretionis upon the appellant since every presumption is in favor of the correctnessof the court's action."31 Likewise, the concept of promptness is a relativeterm and must not unnecessarily be an inflexible one. It connotes an actionwithout hesitation and loss of time. As to what constitutes the term isaddressed to the consideration of the trial court, bearing in mind that whileactions must be disposed of with dispatch, the essential ingredient is the

administration of justice and not mere speed.32

It is well to quote the doctrine laid in Padua v. Ericta,33 as accentuated inthe subsequent case Marahay v. Melicor34 :

Courts should not brook undue delays in the ventilation and determinationof causes. It should be their constant effort to assure that litigations areprosecuted and resolved with dispatch. Postponements of trials andhearings should not be allowed except on meritorious grounds; and the

grant or refusal thereof rests entirely in the sound discretion of the Judge. Itgoes without saying, however, that discretion must be reasonably andwisely exercised, in the light of the attendant circumstances. Somereasonable deferment of the proceedings may be allowed or tolerated to theend that cases may be adjudged only after full and free presentation ofevidence by all the parties, especially where the deferment would cause no


























substantial prejudice to any part. The desideratum of a speedy dispositionof cases should not, if at all possible, result in the precipitate loss of aparty‘s right to present evidence and either in plaintiff's being non-suitedor the defendant's being pronounced liable under an ex parte judgment.

"[T]rial courts have x x x the duty to dispose of controversies after trial onthe merits whenever possible. It is deemed an abuse of discretion for them,on their own motion, ‗to enter a dismissal which is not warranted by thecircumstances of the case‘ (Municipality of Dingras v. Bonoan, 85 Phil. 458-59 [1950]). While it is true that the dismissal of an action on groundsspecified under Section 3, Rule 17 of the Revised Rules of Court isaddressed to their discretion (Flores v. Phil. Alien Property Administrator,107 Phil. 778 [1960]; Montelibano v. Benares, 103 Phil. 110 [1958]; Adorable

v. Bonifacio, 105 Phil. 1269 [1959]; Inter-Island Gas Service, Inc. v. De laGerna, L-17631, October 19, 1966, 18 SCRA 390), such discretion must beexercised soundly with a view to the circumstances surrounding eachparticular case (Vernus-Sanciangco v. Sanciangco, L-12619, April 28, 1962, 4SCRA 1209). If facts obtain that serve as mitigating circumstances for thedelay, the same should be considered and dismissal denied or set aside(Rudd v. Rogerson, 15 ALR 2d 672; Cervi v. Greenwood, 147 Colo. 190, 362P.2d 1050 [1961]), especially where the suit appears to be meritorious andthe plaintiff was not culpably negligent and no injury results to defendant

(27 C.J.S. 235-36; 15 ALR 3rd 680)." (Abinales vs. Court of First Instance ofZamboanga City, Br. I, 70 SCRA 590, 595).

"It is true that the allowance or denial of petitions for postponement andthe setting aside of orders previously issued, rest principally upon thesound discretion of the judge to whom they are addressed, but alwayspredicated on the consideration that more than the mere convenience of thecourts or of the parties of the case, the ends of justice and fairness would beserved thereby (Camara Vda. de Zubiri v. Zubiri, et al., L-16745, December

17, 1966). When no substantial rights are affected and the intention to delayis not manifest, the corresponding motion to transfer the hearing havingbeen filed accordingly, it is sound judicial discretion to allow them(Rexwell Corp. v. Canlas, L-16746, December 30, 1961)." x x x.



This Court recalls that the complaint herein was filed on 15 June 1999. Thesummonses for Cynthia and Teresa were served on their sister Melinda atthe Borja Family Clinic in Tagbilaran City, but the latter refused to receivethe same. It was only on 1 June 2000 that summons was served on Teresa at

Room 304, Regency Crest Condominium, Banilad, Cebu City, when shewas in the Philippines for a visit. However, the summons for Cynthia wasnever served upon her.1âwphi1

Although Section 1, Rule 14 of the Rules, imposes upon the clerk of courtthe duty to serve summons, this does not relieve the petitioner of her ownduty as the plaintiff in a civil case to prosecute the case diligently. If theclerk had been negligent, it was petitioner‘s duty to call the court‘sattention to that fact. It must be noted that it was not even petitioner who

called the court‘s attention that summons had not been served on Cynthia,but Teresa. This despite the fact that petitioner was aware, as early as 15

June 1999, when she filed her complaint, that the summonses could not beserved on Teresa and Cynthia, as she admitted therein that Teresa andCynthia were residing abroad. Petitioner as plaintiff should have askedthat Cynthia and Teresa be summoned by publication at the earliestpossible time. She cannot idly sit by and wait till this is done. She cannotafterwards wash her hands and say that the delay was not her fault. Shecannot simply "fold [her] hands" and say that it is the duty of the clerk of

court to have the summonses served on Cynthia and Teresa for the promptdisposition of her case. If there were no means of summoning any of thedefendants, petitioner should have so informed the court within areasonable period of time, so that the case could be disposed of one way oranother and the administration of justice would not suffer delay. The non-performance of that duty by petitioner as plaintiff is an express ground fordismissing an action. For, indeed, this duty imposed upon her wasprecisely to spur on the slothful.

For failure to diligently pursue the complaint, petitioner trifled with theright of the respondents to speedy trial. It also sorely tried the patience ofthe court and wasted its precious time and attention. To allow petitioner towait until such time that summonses were served on respondents wouldfrustrate the protection against unreasonable delay in the prosecution ofcases and violate the constitutional mandate of speedy dispensation of



justice which would in time erode the people‘s confidence in the judiciary.We take a dim view of petitioner‘s complacent attitude. Ex nihilo nihil fit.35

Likewise, petitioner‘s counsel inexplicably failed to diligently pursue the

service of summonses on respondents. These were acts of negligence, laxityand truancy which the court could have very easily avoided or timelyremedied. Petitioner and her counsel could not avail themselves of thisCourt‘s sympathy, considering their apparent complacency, if notdelinquency, in the conduct of their litigation.

Considering the foregoing, we sustain the dismissal by the trial court of thepetitioner‘s complaint for failure to prosecute for a period of more than oneyear (from the time of filing thereof on 15 June 1997 until Teresa‘s filing of

a motion to dismiss).

WHEREFORE, premises considered, the instant petition is DENIED forlack of merit and the assailed Decision dated 6 May 2005 of the Court ofAppeals in CA-G.R. CV No. 71028 is hereby AFFIRMED. Costs againstpetitioner.

SO ORDERED.







SECOND DIVISION

LEONOR B. CRUZ,

Petitioner,

- versus -

TEOFILA M. CATAPANG,

Respondent.

G.R. No. 164110

Present:

QUISUMBING, J.,

Chairperson,

CARPIO,

CARPIO MORALES,

TINGA, and

VELASCO, JR., JJ .

Promulgated:

February 12, 2008

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

DECISION

QUISUMBING, J.:

This petition for review seeks the reversal of theDecision[1] dated September 16, 2003 and the Resolution[2] dated June 11,2004 of the Court of Appeals in CA-G.R. SP No. 69250. The Court ofAppeals reversed the Decision[3] dated October 22, 2001 of the Regional Trial

http://sc.judiciary.gov.ph/jurisprudence/2008/feb2008/164110.htm#_ftn1











Court (RTC), Branch 86, Taal, Batangas, which had earlier affirmed theDecision[4] dated September 20, 1999 of the 7th Municipal Circuit Trial Court(MCTC) of Taal, Batangas ordering respondent to vacate and deliverpossession of a portion of the lot co-owned by petitioner, Luz Cruz and

Norma Maligaya.

The antecedent facts of the case are as follows.

Petitioner Leonor B. Cruz, Luz Cruz and Norma Maligaya are the co-owners of a parcel of land covering an area of 1,435 square meters locatedat Barangay Mahabang Ludlod, Taal, Batangas.[5] With the consent ofNorma Maligaya, one of the aforementioned co-owners, respondent TeofilaM. Catapang built a house on a lot adjacent to the abovementioned parcelof land sometime in 1992. The house intruded, however, on a portion ofthe co-owned property.[6]

In the first week of September 1995, petitioner Leonor B. Cruz visitedthe property and was surprised to see a part of respondent‘s houseintruding unto a portion of the co-owned property. She then made severaldemands upon respondent to demolish the intruding structure and tovacate the portion encroaching on their property. The respondent,however, refused and disregarded her demands.[7]

On January 25, 1996, the petitioner filed a complaint[8] for forcibleentry against respondent before the 7th MCTC of Taal, Batangas. TheMCTC decided in favor of petitioner, ruling that consent of only one of theco-owners is not sufficient to justify defendant‘s construction of the houseand possession of the portion of the lot in question.[9] The dispositiveportion of the MCTC decision reads:

WHEREFORE, judgment is hereby rendered ordering the

defendant or any person acting in her behalf to vacate and

deliver the possession of the area illegally occupied to theplaintiff; ordering the defendant to pay plaintiff reasonable

attorney‘s fees of P10,000.00, plus costs of suit.

SO ORDERED.[10]






























On appeal, the RTC, Branch 86, Taal, Batangas, affirmed the MCTC‘sruling in a Decision dated October 22, 2001, the dispositive portion ofwhich states:

Wherefore, premises considered, the decision [appealed]

from is hereby affirmed in toto.

SO ORDERED.[11]

After her motion for reconsideration was denied by the RTC,respondent filed a petition for review with the Court of Appeals, whichreversed the RTC‘s decision. The Court of Appeals held that there is no causeof action for forcible entry in this case because respondent‘s entry into theproperty, considering the consent given by co-owner Norma Maligaya,cannot be characterized as one made through strategy or stealth which givesrise to a cause of action for forcible entry.[12] The Court of Appeals‘ decisionfurther held that petitioner‘s remedy is not an action for e jectment but anentirely different recourse with the appropriate forum. The Court of Appealsdisposed, thus:

WHEREFORE, premises considered, the instant Petition

is hereby GRANTED. The challenged Decision dated 22

October 2001 as well as the Order dated 07 January 2002 of theRegional Trial Court of Taal, Batangas, Branch 86, are

hereby REVERSED and SET ASIDE and, in lieu thereof,

another is entered DISMISSING the complaint for forcible

entry docketed as Civil Case No. 71-T.

SO ORDERED.[13]

After petitioner‘s motion for reconsideration was denied by the Courtof Appeals in a Resolution dated June 11, 2004, she filed the instantpetition.

Raised before us for consideration are the following issues:

I.















WHETHER OR NOT THE KNOWLEDGE AND CONSENT OF

CO-OWNER NORMA MALIGAYA IS A VALID LICENSE FOR

THE RESPONDENT TO ERECT THE BUNGALOW HOUSE

ON THE PREMISES OWNED PRO-INDIVISO SANS

CONSENT FROM THE PETITIONER AND OTHE[R] CO-

OWNER[.]

II.

WHETHER OR NOT RESPONDENT, BY HER ACTS, HAS

ACQUIRED EXCLUSIVE OWNERSHIP OVER THE PORTION

OF THE LOTSUBJECT OF THE PREMISES PURSUANT TO THE

CONSENT GRANTED UNTO HER BY CO-OWNER NORMAMALIGAYA TO THE EXCLUSION OF THE PETITIONER AND

THE OTHER CO-OWNER.[14]

III.

. . . WHETHER OR NOT RESPONDENT IN FACT OBTAINED

POSSESSION OF THE PROPERTY IN QUESTION BY MEANS

OF SIMPLE STRATEGY.[15]

Petitioner prays in her petition that we effectively reverse the Courtof Appeals‘ decision.

Simply put, the main issue before us is whether consent given by aco-owner of a parcel of land to a person to construct a house on the co-owned property warrants the dismissal of a forcible entry case filed byanother co-owner against that person.

In her memorandum,[16] petitioner contends that the consent andknowledge of co-owner Norma Maligaya cannot defeat the action forforcible entry since it is a basic principle in the law of co-ownership that noindividual co-owner can claim title to any definite portion of the land orthing owned in common until partition.















On the other hand, respondent in her memorandum[17] counters thatthe complaint for forcible entry cannot prosper because her entry into theproperty was not through strategy or stealth due to the consent of one of theco-owners. She further argues that since Norma Maligaya is residing in the

house she built, the issue is not just possession de facto but also oneof possession de jure since it involves rights of co-owners to enjoy theproperty.

As to the issue of whether or not the consent of one co-owner willwarrant the dismissal of a forcible entry case filed by another co-owneragainst the person who was given the consent to construct a house on theco-owned property, we have held that a co-owner cannot devote commonproperty to his or her exclusive use to the prejudice of the co-

ownership.[18]

In our view, a co-owner cannot give valid consent to anotherto build a house on the co-owned property, which is an act tantamount todevoting the property to his or her exclusive use.

Furthermore, Articles 486 and 491 of the Civil Code provide:

Art. 486. Each co-owner may use the thing owned in

common, provided he does so in accordance with the purpose

for which it is intended and in such a way as not to injure the

interest of the co-ownership or prevent the other co-owners fromusing it according to their rights. The purpose of the co-

ownership may be changed by agreement, express or implied.

Art. 491. None of the co-owners shall, without the

consent of the others, make alterations in the thing owned in

common, even though benefits for all would result

therefrom. However, if the withholding of the consent by one

or more of the co-owners is clearly prejudicial to the commoninterest, the courts may afford adequate relief.

Article 486 states each co-owner may use the thing owned incommon provided he does so in accordance with the purpose for which itis intended and in such a way as not to injure the interest of the co-









ownership or prevent the other co-owners from using it according to theirrights. Giving consent to a third person to construct a house on the co-owned property will injure the interest of the co-ownership and preventother co-owners from using the property in accordance with their rights.

Under Article 491, none of the co-owners shall, without the consent ofthe others, make alterations in the thing owned in common. It necessarilyfollows that none of the co-owners can, without the consent of the other co-owners, validly consent to the making of an alteration by another person,such as respondent, in the thing owned in common. Alterations include anyact of strict dominion or ownership and any encumbrance or disposition hasbeen held implicitly to be an act of alteration.[19] The construction of a houseon the co-owned property is an act of dominion. Therefore, it is an alteration

falling under Article 491 of the Civil Code. There being no consent from allco-owners, respondent had no right to construct her house on the co-ownedproperty.

Consent of only one co-owner will not warrant the dismissal of thecomplaint for forcible entry filed against the builder. The consent given byNorma Maligaya in the absence of the consent of petitioner and Luz Cruz didnot vest upon respondent any right to enter into the co-owned property. Herentry into the property still falls under the classification ―through strategy or

stealth.‖

The Court of Appeals held that there is no forcible entry becauserespondent‘s entry into the property was not through strategy or stealthdue to the consent given to her by one of the co-owners. We cannot giveour imprimatur to this sweeping conclusion. Respondent‘s entry into theproperty without the permission of petitioner could appear to be a secretand clandestine act done in connivance with co-owner Norma Maligayawhom respondent allowed to stay in her house. Entry into the land

effected clandestinely without the knowledge of the other co-owners couldbe categorized as possession by stealth.[20] Moreover, respondent‘s act ofgetting only the consent of one co-owner, her sister Norma Maligaya, andallowing the latter to stay in the constructed house, can in fact beconsidered as a strategy which she utilized in order to enter into the co-owned property. As such, respondent‘s acts constitute forcible entry.











Petitioner‘s filing of a complaint for forcible entry, in our view, waswithin the one-year period for filing the complaint. The one-year periodwithin which to bring an action for forcible entry is generally counted fromthe date of actual entry to the land. However, when entry is made through

stealth, then the one-year period is counted from the time the petitionerlearned about it.[21] Although respondent constructed her house in 1992, itwas only in September 1995 that petitioner learned of it when she visited theproperty. Accordingly, she then made demands on respondent to vacate thepremises. Failing to get a favorable response, petitioner filed the complainton January 25, 1996, which is within the one-year period from the timepetitioner learned of the construction.

WHEREFORE, the petition is GRANTED. The Decision dated

September 16, 2003 and the Resolution dated June 11, 2004 of the Court ofAppeals in CA-G.R. SP No. 69250 are REVERSED and SET ASIDE. TheDecision dated October 22, 2001of the Regional Trial Court, Branch86, Taal, Batangas is REINSTATED. Costs against respondent.

SO ORDERED.




Documents

Part 1 Property Cases 2014 Llb 2a