Property Cases 1-10

7/18/2019 Property Cases 1-10

http://slidepdf.com/reader/full/property-cases-1-10 1/65

G.R. No. L-30173 September 30, 1971

GAVINO A. TUMALAD an G!N!ROSA R. TUMALAD, plaintiffs-appellees,

vs.

AL"!RTA VI#!N#IO an !MILIANO SIM!ON, defendants-appellants.

Castillo & Suck for plaintiffs-appellees.

Jose Q. Calingo for defendants-appellants.

R!$!S, %.".L., J.:

Case certified to this Court by the Court of Appeals (CA-G.R. No. 2782-R! for the reason that only

"uestions of la# are involved.

$his case #as ori%inally co&&enced by defendants-appellants in the &unicipal court of 'anila inCivil Case No. )7, for e*ect&ent. +avin% lost therein, defendants-appellants appealed to the

court a "uo (Civil Case No. )! #hich also rendered a decision a%ainst the&, the dispositive

portion of #hich follo#s

+/R/01R/, the court hereby renders *ud%&ent in favor of the plaintiffs and

a%ainst the defendants, orderin% the latter to pay *ointly and severally the for&er a

&onthly rent of 2)).)) on the house, sub*ect-&atter of this action, fro& 'arch 27,

345, to 6anuary 3, 357, #ith interest at the le%al rate fro& April 38, 345, the filin%

of the co&plaint, until fully paid, plus attorneys fees in the su& of )).)) and to

pay the costs.

t appears on the records that on 3 9epte&ber 344 defendants-appellants e:ecuted a chattel

&ort%a%e in favor of plaintiffs-appellees over their house of stron% &aterials located at No. 44) nt.

, ;ue<on =oulevard, ;uiapo, 'anila, over >ot Nos. 5-= and 7-=, =loc? No. 244, #hich #ere bein%

rented fro& 'adri%al @ Co&pany, nc. $he &ort%a%e #as re%istered in the Re%istry of eeds of

'anila on 2 9epte&ber 344. $he herein &ort%a%e #as e:ecuted to %uarantee a loan of ,8)).))

received fro& plaintiffs-appellees, payable #ithin one year at 32B per annu&. $he &ode of pay&ent

#as 34).)) &onthly, startin% 9epte&ber, 344, up to 6uly 345, and the lu&p su& of ,34) #as

payable on or before Au%ust, 345. t #as also a%reed that default in the pay&ent of any of the

a&orti<ations, #ould cause the re&ainin% unpaid balance to beco&ei&&ediately due and ayable

and

the Chattel 'ort%a%e #ill be enforceable in accordance #ith the provisions of 9pecial

Act No. 34, and for this purpose, the 9heriff of the City of 'anila or any of his

deputies is hereby e&po#ered and authori<ed to sell all the 'ort%a%ors property

after the necessary publication in order to settle the financial debts of ,8)).)), plus

32B yearly interest, and attorneys fees... &

hen defendants-appellants defaulted in payin%, the &ort%a%e #as e:tra*udicially foreclosed, and

on 27 'arch 345, the house #as sold at public auction pursuant to the said contract. As hi%hest

bidder, plaintiffs-appellees #ere issued the correspondin% certificate of sale. 3 $hereafter, on 38 April



345, plaintiffs-appellant co&&enced Civil Case No. )7 in the &unicipal court of 'anila, prayin%,

a&on% other thin%s, that the house be vacated and its possession surrendered to the&, and for

defendants-appellants to pay rent of 2)).)) &onthly fro& 27 'arch 345 up to the ti&e the

possession is surrendered. ' 1n 23 9epte&ber 345, the &unicipal court rendered its decision

... orderin% the defendants to vacate the pre&ises described in the co&plaintD

orderin% further to pay &onthly the a&ount of 2)).)) fro& 'arch 27, 345, until

such (ti&e that! the pre&ises is (sic! co&pletely vacatedD plus attorneys fees of

3)).)) and the costs of the suit. (

efendants-appellants, in their ans#ers in both the &unicipal court and court a quo i&pu%ned the

le%ality of the chattel &ort%a%e, clai&in% that they are still the o#ners of the houseD but they #aived

the ri%ht to introduce evidence, oral or docu&entary. nstead, they relied on their &e&oranda in

support of their &otion to dis&iss, predicated &ainly on the %rounds that (a! the &unicipal court did

not have *urisdiction to try and decide the case because (3! the issue involved, is o#nership, and (2!

there #as no alle%ation of prior possessionD and (b! failure to prove prior de&and pursuant to

9ection 2, Rule 72, of the Rules of Court. )

urin% the pendency of the appeal to the Court of 0irst nstance, defendants-appellants failed to

deposit the rent for Nove&ber, 345 #ithin the first 3) days of ece&ber, 345 as ordered in the

decision of the &unicipal court. As a result, the court %ranted plaintiffs-appellees &otion for

e:ecution, and it #as actually issued on 2 6anuary 347. +o#ever, the *ud%&ent re%ardin% the

surrender of possession to plaintiffs-appellees could not be e:ecuted because the sub*ect house had

been already de&olished on 3 6anuary 347 pursuant to the order of the court in a separate civil

case (No. 24835! for e*ect&ent a%ainst the present defendants for non-pay&ent of rentals on the

land on #hich the house #as constructed.

$he &otion of plaintiffs for dis&issal of the appeal, e:ecution of the supersedeas bond and

#ithdra#al of deposited rentals #as denied for the reason that the liability therefor #as disclai&ed

and #as still bein% liti%ated, and under 9ection 8, Rule 72, rentals deposited had to be held until finaldisposition of the appeal. 7

1n 7 1ctober 347, the appellate court of 0irst nstance rendered its decision, the dispositive portion

of #hich is "uoted earlier. $he said decision #as appealed by defendants to the Court of Appeals

#hich, in turn, certified the appeal to this Court. laintiffs-appellees failed to file a brief and this

appeal #as sub&itted for decision #ithout it.

efendants-appellants sub&itted nu&erous assi%n&ents of error #hich can be condensed into t#o

"uestions, na&ely .

(a! hether the &unicipal court fro& #hich the case ori%inated had *urisdiction to

ad*udicate the sa&eD

(b! hether the defendants are, under the la#, le%ally bound to pay rentals to the

plaintiffs durin% the period of one (3! year provided by la# for the rede&ption of the

e:tra*udicially foreclosed house.

e #ill consider these "uestions seriatim.



(a! efendants-appellants &ort%a%ors "uestion the *urisdiction of the &unicipal court fro& #hich the

case ori%inated, and conse"uently, the appellate *urisdiction of the Court of 0irst nstance a quo, on

the theory that the chattel &ort%a%e is void ab initioD #hence it #ould follo# that the e:tra*udicial

foreclosure, and necessarily the conse"uent auction sale, are also void. $hus, the o#nership of the

house still re&ained #ith defendants-appellants #ho are entitled to possession and not plaintiffs-

appellees. $herefore, it is ar%ued by defendants-appellants, the issue of o#nership #ill have to be

ad*udicated first in order to deter&ine possession. lt is contended further that o#nership bein% inissue, it is the Court of 0irst nstance #hich has *urisdiction and not the &unicipal court.

efendants-appellants predicate their theory of nullity of the chattel &ort%a%e on t#o %rounds, #hich

are (a! that, their si%natures on the chattel &ort%a%e #ere obtained throu%h fraud, deceit, or

tric?eryD and (b! that the sub*ect &atter of the &ort%a%e is a house of stron% &aterials, and, bein% an

i&&ovable, it can only be the sub*ect of a real estate &ort%a%e and not a chattel &ort%a%e.

1n the char%e of fraud, deceit or tric?ery, the Court of 0irst nstance found defendants-appellants

contentions as not supported by evidence and accordin%ly dis&issed the char%e, * confir&in% the

earlier findin% of the &unicipal court that Ethe defense of o#nership as #ell as the alle%ations of

fraud and deceit ... are &ere alle%ations.E 9

t has been held in 9upia and Batiaco vs. Quintero and Ayala 10 that Ethe ans#er is a &ere state&ent

of the facts #hich the party filin% it e:pects to prove, but it is not evidenceD 11 and further, that #hen

the "uestion to be deter&ined is one of title, the Court is %iven the authority to proceed #ith the

hearin% of the cause until this fact is clearly established. n the case of Sy vs. alman, 1& #herein the

defendant #as also a successful bidder in an auction sale, it #as li?e#ise held by this Court that in

detainer cases the ai& of o#nership Eis a &atter of defense and raises an issue of fact #hich should

be deter&ined fro& the evidence at the trial.E hat deter&ines *urisdiction are the alle%ations or

aver&ents in the co&plaint and the relief as?ed for. 13

'oreover, even %rantin% that the char%e is true, fraud or deceit does not render a contract void ab

initio, and can only be a %round for renderin% the contract voidable or annullable pursuant to Article3) of the Ne# Civil Code, by a proper action in court. 1' $here is nothin% on record to sho# that

the &ort%a%e has been annulled. Neither is it disclosed that steps #ere ta?en to nullify the sa&e.

+ence, defendants-appellants clai& of o#nership on the basis of a voidable contract #hich has not

been voided fails.

t is clai&ed in the alternative by defendants-appellants that even if there #as no fraud, deceit or

tric?ery, the chattel &ort%a%e #as still null and void ab initio because only personal properties can be

sub*ect of a chattel &ort%a%e. $he rule about the status of buildin%s as i&&ovable property is stated

in !ope" vs. #rosa$ Jr . and la<a $heatre nc., 1( cited in Associated %nsurance Surety Co.$ %nc. vs.

%ya$ et al . 1) to the effect that

... it is obvious that the inclusion of the buildin%, separate and distinct fro& the land,in the enu&eration of #hat &ay constitute real properties (art. 34, Ne# Civil Code!

could only &ean one thin% that a building is by itself an immovable

property irrespective of #hether or not said structure and the land on #hich it is

adhered to belon% to the sa&e o#ner.

Certain deviations, ho#ever, have been allo#ed for various reasons. n the case of anarang and

anarang vs. #filada, 17 this Court stated that Eit is undeniable that the parties to a contract &ay by



a%ree&ent treat as personal property that #hich by nature #ould be real propertyE, citin% Standard

#il Company of 'e( )ork vs. Jaramillo. 1* n the latter case, the &ort%a%or conveyed and transferred

to the &ort%a%ee by #ay of &ort%a%e Ethe follo#in% described personal property .E19 $he Epersonal

propertyE consisted of leasehold ri%hts and a buildin%. A%ain, in the case of !una vs.

*ncarnacion, &0 the sub*ect of the contract desi%nated as Chattel 'ort%a%e #as a house of &i:ed

&aterials, and this Court hold therein that it #as a valid Chattel &ort%a%e because it #as

so e+pressly designated and specifically that the property %iven as security Eis a house of &i:ed&aterials, #hich by its very nature is considered personal property.E n the later case of 'avarro vs.

,ineda, &1 this Court stated that

$he vie# that parties to a deed of chattel &ort%a%e &ay a%ree to consider a house

as personal property for the purposes of said contract, Eis %ood only insofar as the

contractin% parties are concerned. t is based, partly, upon the principle of estoppelE

(/van%elista vs. Alto 9urety, No. >-333, 2 April 348!. n a case, a &ort%a%ed

house built on a rented land #as held to be a personal property, not only because the

deed of &ort%a%e considered it as such, but also because it did not for& part of the

land (/van%elists vs. Abad, FCAD 5 1.G. 23!, for it is no# settled that an ob*ect

placed on land by one #ho had only a te&porary ri%ht to the sa&e, such as the

lessee or usufructuary, does not beco&e i&&obili<ed by attach&ent (Halde< vs.

Central Alta%racia, 222 I.9. 48, cited in avao 9a#&ill Co., nc. vs. Castillo, et al .,

53 hil. 7)!. +ence, if a house belon%in% to a person stands on a rented land

belon%in% to another person, it &ay be &ort%a%ed as a personal property as so

stipulated in the docu&ent of &ort%a%e. (/van%elista vs. Abad, Supra.! %t sould be

noted$ o(ever tat te principle is predicated on statements by te o(ner declaring

is ouse to be a cattel$ a conduct tat may conceivably estop im from

subsequently claiming oter(ise. (>adera vs. C.N. +od%es, FCA 8 1.G. 47! &&

n the contract no# before Is, the house on rented land is not only e:pressly desi%nated as Chattel

'ort%a%eD it specifically provides that Ethe &ort%a%or ... voluntarily C//9, 9/>>9 and

$RAN90/R9 by (ay of Cattel ortgage &3

the property to%ether #ith its leasehold ri%hts over thelot on #hich it is constructed and participation ...E &' Althou%h there is no specific state&ent referrin%

to the sub*ect house as personal property, yet by cedin%, sellin% or transferrin% a property by (ay of

cattel mortgage defendants-appellants could only have &eant to convey the house as chattel, or at

least, intended to treat the sa&e as such, so that they should not no# be allo#ed to &a?e an

inconsistent stand by clai&in% other#ise. 'oreover, the sub*ect house stood on a rented lot to #hich

defendats-appellants &erely had a te&porary ri%ht as lessee, and althou%h this can not in itself

alone deter&ine the status of the property, it does so #hen co&bined #ith other factors to sustain

the interpretation that the parties, particularly the &ort%a%ors, intended to treat the house as

personalty. 0inally unli?e in the ya cases, !ope" vs. #rosa$ Jr. and ,la"a eatre$ %nc . &( and !eung

)ee vs. /. !. Strong acinery and 0illiamson, &) #herein tird persons assailed the validity of the

chattel &ort%a%e, &7 it is the defendants-appellants the&selves, as debtors-&ort%a%ors, #ho are

attac?in% the validity of the chattel &ort%a%e in this case. $he doctrine of estoppel therefore appliesto the herein defendants-appellants, havin% treated the sub*ect house as personalty.

(b! $urnin% to the "uestion of possession and rentals of the pre&ises in "uestion. $he Court of 0irst

nstance noted in its decision that nearly a year after the foreclosure sale the &ort%a%ed house had

been de&olished on 3 and 34 6anuary 347 by virtue of a decision obtained by the lessor of the

land on #hich the house stood. 0or this reason, the said court li&ited itself to sentencin% the

erst#hile &ort%a%ors to pay plaintiffs a &onthly rent of 2)).)) fro& 27 'arch 345 (#hen the



chattel &ort%a%e #as foreclosed and the house sold! until 3 6anuary 347 (#hen it #as torn do#n

by the 9heriff!, plus )).)) attorneys fees.

Appellants &ort%a%ors "uestion this a#ard, clai&in% that they #ere entitled to re&ain in possession

#ithout any obli%ation to pay rent durin% the one year rede&ption period after the foreclosure sale,

i.e., until 27 'arch 347. 1n this issue, e &ust rule for the appellants.

Chattel &ort%a%es are covered and re%ulated by the Chattel 'ort%a%e >a#, Act No. 34)8. &* 9ection

3 of this Act allo#s the &ort%a%ee to have the property &ort%a%ed sold at public auction throu%h a

public officer in al&ost the sa&e &anner as that allo#ed by Act No. 34, as a&ended by Act No.

338, provided that the re"uire&ents of the la# relative to notice and re%istration are co&plied

#ith. &9 n the instant case, the parties specifically stipulated that Ethe chattel &ort%a%e #ill

be enforceable in accordance (it te provisions of Special Act 'o. 1213 ... .E 30 (/&phasis

supplied!.

9ection 5 of the Act referred to 31 provides that the debtor-&ort%a%or (defendants-appellants herein!

&ay, at any ti&e #ithin one year fro& and after the date of the auction sale, redee& the property

sold at the e:tra *udicial foreclosure sale. 9ection 7 of the sa&e Act

3&

allo#s the purchaser of theproperty to obtain fro& the court the possession durin% the period of rede&ption but the sa&e

provision e:pressly re"uires the filin% of a petition #ith the proper Court of 0irst nstance and the

furnishin% of a bond. t is only upon filin% of the proper &otion and the approval of the correspondin%

bond that the order for a #rit of possession issues as a &atter of course. No discretion is left to the

court. 33 n the absence of such a co&pliance, as in the instant case, the purchaser can not clai&

possession durin% the period of rede&ption as a &atter of ri%ht. n such a case, the %overnin%

provision is 9ection , Rule , of the Revised Rules of Court 3' (ic also applies to properties

purcased in e+tra4udicial foreclosure proceedings. 3( Construin% the said section, this Court stated in

the aforestated case of 5eyes vs. 6amada.

n other #ords, before the e:piration of the 3-year period #ithin #hich the *ud%&ent-

debtor or &ort%a%or &ay redee& the property, the purchaser thereof is not entitled,as a &atter of ri%ht, to possession of the sa&e. $hus, #hile it is true that the Rules of

Court allo# the purchaser to receive the rentals if the purchased property is occupied

by tenants, he is, nevertheless, accountable to the *ud%&ent-debtor or mortgagor as

te case may be, for the a&ount so received and the sa&e #ill be duly credited

a%ainst the rede&ption price #hen the said debtor or &ort%a%or effects the

rede&ption.ifferently stated$ te rentals receivable from tenants$ altoug tey may

be collected by te purcaser during te redemption period$ do not belong to te

latter but still pertain to te debtor of mortgagor . $he rationale for the Rule, it see&s,

is to secure for the benefit of the debtor or &ort%a%or, the pay&ent of the rede&ption

a&ount and the conse"uent return to hi& of his properties sold at public auction.

(/&phasis supplied!

$he +a&ada case reiterates the previous rulin% in Can vs. *spe. 3)

9ince the defendants-appellants #ere occupyin% the house at the ti&e of the auction sale, they are

entitled to re&ain in possession durin% the period of rede&ption or #ithin one year fro& and after 27

'arch 345, the date of the auction sale, and to collect the rents or profits durin% the said period.



t #ill be noted further that in the case at bar the period of rede&ption had not yet e:pired #hen

action #as instituted in the court of ori%in, and that plaintiffs-appellees did not choose to ta?e

possession under 9ection 7, Act No. 34, as a&ended, #hich is the la# selected by the parties to

%overn the e:tra*udicial foreclosure of the chattel &ort%a%e. Neither #as there an alle%ation to that

effect. 9ince plaintiffs-appellees ri%ht to possess #as not yet born at the filin% of the co&plaint, there

could be no violation or breach thereof. herefore, the ori%inal co&plaint stated no cause of action

and #as pre&aturely filed. 0or this reason, the sa&e should be ordered dis&issed, even if there #asno assi%n&ent of error to that effect. $he 9upre&e Court is clothed #ith a&ple authority to revie#

palpable errors not assi%ned as such if it finds that their consideration is necessary in arrivin% at a

*ust decision of the cases. 37

t follo#s that the court belo# erred in re"uirin% the &ort%a%ors to pay rents for the year follo#in% the

foreclosure sale, as #ell as attorneys fees.

01R $+/ 01R/G1NG R/A91N9, the decision appealed fro& is reversed and another one

entered, dis&issin% the co&plaint. ith costs a%ainst plaintiffs-appellees.

Concepcion$ C.J.$ i"on$ akalintal$ 7aldivar$ Castro$ /ernando$ eeankee$ Barredo$ 8illamor andakasiar$ JJ.$ concur.



G.R. No. L-17*70 September &9, 19)&

MINDANAO "US #OM+AN$, petitioner,vs.

T! #IT$ ASS!SSOR TR!ASUR!R an te "OARD O/ TA A++!ALS o #a2aan e Oro#4t,respondents.

Binamira$ Barria and %rabagon for petitioner.8icente *. Sabellina for respondents.

LA"RADOR, J.:

$his is a petition for the revie# of the decision of the Court of $a: Appeals in C.$.A. Case No. 73)holdin% that the petitioner 'indanao =us Co&pany is liable to the pay&ent of the realty ta: on its

&aintenance and repair e"uip&ent hereunder referred to.

Respondent City Assessor of Ca%ayan de 1ro City assessed at ,)) petitioners above-&entioned e"uip&ent. etitioner appealed the assess&ent to the respondent =oard of $a: Appealson the %round that the sa&e are not realty. $he =oard of $a: Appeals of the City sustained the cityassessor, so petitioner herein filed #ith the Court of $a: Appeals a petition for the revie# of theassess&ent.

n the Court of $a: Appeals the parties sub&itted the follo#in% stipulation of facts

etitioner and respondents, thru their respective counsels a%reed to the follo#in% stipulationof facts

3. $hat petitioner is a public utility solely en%a%ed in transportin% passen%ers and car%oes by&otor truc?s, over its authori<ed lines in the sland of 'indanao, collectin% rates approved bythe ublic 9ervice Co&&issionD

2. $hat petitioner has its &ain office and shop at Ca%ayan de 1ro City. t &aintains =ranch1ffices andJor stations at li%an City, >anaoD a%adian, Ka&boan%a del 9urD avao City andLiba#e, =u?idnon rovinceD

. $hat the &achineries sou%ht to be assessed by the respondent as real properties are thefollo#in%

(a! +obart /lectric elder 'achine, appearin% in the attached photo%raph, &ar?ed Anne: EAED

(b! 9tor& =orin% 'achine, appearin% in the attached photo%raph, &ar?ed Anne: E=ED

(c! >athe &achine #ith &otor, appearin% in the attached photo%raph, &ar?ed Anne:ECED



(d! =lac? and ec?er Grinder, appearin% in the attached photo%raph, &ar?ed Anne:EED

(e! /'C1 +ydraulic ress, appearin% in the attached photo%raph, &ar?ed Anne:E/ED

(f! =attery char%er ($un%ar char%e &achine! appearin% in the attached photo%raph,&ar?ed Anne: E0ED and

(%! -/n%ine au?esha-'-0uel, appearin% in the attached photo%raph, &ar?ed Anne: EGE.

. $hat these &achineries are sittin% on ce&ent or #ooden platfor&s as &ay be seen in theattached photo%raphs #hich for& part of this a%reed stipulation of factsD

4. $hat petitioner is the o#ner of the land #here it &aintains and operates a %ara%e for its$I &otor truc?sD a repair shopD blac?s&ith and carpentry shops, and #ith these&achineries #hich are placed therein, its $I truc?s are &adeD body constructedD and sa&e

are repaired in a condition to be serviceable in the $I land transportation business itoperatesD

5. $hat these &achineries have never been or #ere never used as industrial e"uip&ents toproduce finished products for sale, nor to repair &achineries, parts and the li?e offered to the%eneral public indiscri&inately for business or co&&ercial purposes for #hich petitioner hasnever en%a%ed in, to date.2a(p9l.n:t

$he Court of $a: Appeals havin% sustained the respondent city assessors rulin%, and havin% denieda &otion for reconsideration, petitioner brou%ht the case to this Court assi%nin% the follo#in% errors

3. $he +onorable Court of $a: Appeals erred in upholdin% respondents contention that the

"uestioned assess&ents are validD and that said tools, e"uip&ents or &achineries arei&&ovable ta:able real properties.

2. $he $a: Court erred in its interpretation of para%raph 4 of Article 34 of the Ne# CivilCode, and holdin% that pursuant thereto the &ovable e"uip&ents are ta:able realties, byreason of their bein% intended or destined for use in an industry.

. $he Court of $a: Appeals erred in denyin% petitioners contention that the respondent City Assessors po#er to assess and levy real estate ta:es on &achineries is further restricted bysection 3, para%raph (c! of Republic Act No. 423D and

. $he $a: Court erred in denyin% petitioners &otion for reconsideration.

Respondents contend that said e"uip&ents, tho &ovable, are i&&obili<ed by destination, inaccordance #ith para%raph 4 of Article 34 of the Ne# Civil Code #hich provides

Art. 34. $he follo#in% are i&&ovable properties

: : : : : : : : :



(4! 'achinery, receptacles, instru&ents or i&ple&ents intended by the o#ner of thetene&ent for an industry or #or?s #hich &ay be carried on in a buildin% or on a piece ofland, and (ic tend directly to meet te needs of te said industry or (orks. (/&phasisours.!

Note that the stipulation e:pressly states that the e"uip&ent are placed on #ooden or ce&ent

platfor&s. $hey can be &oved around and about in petitioners repair shop. n the case of B. 6.Berkenkotter vs. Cu ;n4ieng , 53 hil. 55, the 9upre&e Court said

Article (No# Art. 34!, para%raph (4! of the Civil Code, %ives the character of realproperty to E&achinery, li"uid containers, instru&ents or i&ple&ents intended by the o#nerof any buildin% or land for use in connection #ith any industry or trade bein% carried ontherein and #hich are e+pressly adapted to meet te requirements of suc trade or industry .E

f the installation of the &achinery and e"uip&ent in "uestion in the central of the 'abalacat9u%ar Co., nc., in lieu of the other of less capacity e:istin% therein, for its su%ar and industry,converted the& into real property by reason of their purpose, it cannot be said that theirincorporation there#ith #as not per&anent in character because, as essential and principle

elements of a sugar central$ (itout tem te sugar central (ould be unable to function orcarry on te industrial purpose for (ic it (as establised . nas&uch as the central isper&anent in character, the necessary &achinery and e"uip&ent installed for carryin% on thesu%ar industry for #hich it has been established &ust necessarily be per&anent. (/&phasisours.!

9o that &ovable e"uip&ents to be i&&obili<ed in conte&plation of the la# &ust first be Eessentialand principal ele&entsE of an industry or #or?s #ithout #hich such industry or #or?s #ould beEunable to function or carry on the industrial purpose for #hich it #as established.E e &ay heredistin%uish, therefore, those &ovable #hich beco&e i&&obili<ed by destination because theyare essential and principal elements in the industry for those #hich &ay not be so consideredi&&obili<ed because they are merely incidental , not essential and principal. $hus, cash re%isters,type#riters, etc., usually found and used in hotels, restaurants, theaters, etc. are &erely incidentals

and are not and should not be considered i&&obili<ed by destination, for these businesses cancontinue or carry on their functions #ithout these e"uity co&&ents. Airline co&panies use for?lifts,

*eep-#a%ons, pressure pu&ps, =' &achines, etc. #hich are incidentals, not essentials, and thusretain their &ovable nature. 1n the other hand, &achineries of bre#eries used in the &anufacture of li"uor and soft drin?s, thou%h &ovable in nature, are i&&obili<ed because they are essential to saidindustriesD but the delivery truc?s and addin% &achines #hich they usually o#n and use and arefound #ithin their industrial co&pounds are &erely incidental and retain their &ovable nature.

9i&ilarly, the tools and e"uip&ents in "uestion in this instant case are, by their nature, not essentialand principle &unicipal ele&ents of petitioners business of transportin% passen%ers and car%oes by&otor truc?s. $hey are &erely incidentals ac"uired as &ovables and used only for e:pediency tofacilitate andJor i&prove its service. /ven #ithout such tools and e"uip&ents, its business &ay be

carried on, as petitioner has carried on, #ithout such e"uip&ents, before the #ar. $he transportationbusiness could be carried on #ithout the repair or service shop if its rollin% e"uip&ent is repaired orserviced in another shop belon%in% to another.

$he la# that %overns the deter&ination of the "uestion at issue is as follo#s

Art. 34. $he follo#in% are i&&ovable property

: : : : : : : : :



(4! 'achinery, receptacles, instru&ents or i&ple&ents intended by the o#ner of thetene&ent for an industry or #or?s #hich &ay be carried on in a buildin% or on a piece ofland, and #hich tend directly to &eet the needs of the said industry or #or?sD (Civil Code ofthe hil.!

Aside fro& the ele&ent of essentiality the above-"uoted provision also re"uires that the industry or

#or?s be carried on in a building or on a piece of land . $hus in the case of Berkenkotter vs. Cu;n4ieng , supra, the E&achinery, li"uid containers, and instru&ents or i&ple&entsE are found in abuildin% constructed on the land. A sa#&ill #ould also be installed in a buildin% on land &ore or lessper&anently, and the sa#in% is conducted in the land or buildin%.

=ut in the case at bar the e"uip&ents in "uestion are destined only to repair or service thetransportation business, (ic is not carried on in a building or permanently on a piece of land , asde&anded by the la#. 9aid e"uip&ents &ay not, therefore, be dee&ed real property.

Resu&in% #hat #e have set forth above, #e hold that the e"uip&ents in "uestion are not absolutelyessential to the petitioners transportation business, and petitioners business is not carried on in abuildin%, tene&ent or on a specified land, so said e"uip&ent &ay not be considered real estate

#ithin the &eanin% of Article 34 (c! of the Civil Code.

+/R/01R/, the decision sub*ect of the petition for revie# is hereby set aside and the e"uip&entin "uestion declared not sub*ect to assess&ent as real estate for the purposes of the real estate ta:.ithout costs.

9o ordered.

Beng"on$ C.J.$ ,adilla$ Bautista Angelo$ 5eyes$ J.B.!.$ ,aredes$ i"on and akalintal$ JJ.$ concur.5egala$ Concepcion and Barrera JJ.$ took no part.





Ma5at4 Lea64n2 an /4nane #orp. 86. eare8er Te:t4;e M4;;6, In., No. L-(*')9, 1&& S#RA&9) , Ma 1), 19*3

G.R. No. L-(*')9 Ma 1), 19*3MA<ATI L!ASING an /INAN#! #OR+ORATION, petitioner,vs.

!AR!V!R T!TIL! MILLS, IN#., an ONORA"L! #OURT O/ A++!ALS, respondents.!oreto C. Baduan for petitioner.5amon . Bagatsing & Assoc. <collaborating counsel= for petitioner.Jose 8. ancella for respondent.

D! #ASTRO, J.:

etition for revie# on certiorari of the decision of the Court of Appeals (no# nter&ediate AppellateCourt! pro&ul%ated on Au%ust 27, 383 in CA-G.R. No. 9-3273, settin% aside certain 1rders laterspecified herein, of 6ud%e Ricardo 6. 0rancisco, as residin% 6ud%e of the Court of 0irst instance ofRi<al =ranch H, issued in Civil Case No. 5)), as #en as the resolution dated 9epte&ber 22, 383of the said appellate court, denyin% petitioners &otion for reconsideration.t appears that in order to obtain financial acco&&odations fro& herein petitioner 'a?ati >easin%and 0inance Corporation, the private respondent earever $e:tile 'ills, nc., discounted and

assi%ned several receivables #ith the for&er under a Receivable urchase A%ree&ent. $o securethe collection of the receivables assi%ned, private respondent e:ecuted a Chattel 'ort%a%e overcertain ra# &aterials inventory as #ell as a &achinery described as an Artos Aero ryer 9tenterin%Ran%e.Ipon private respondents default, petitioner filed a petition for e:tra*udicial foreclosure of theproperties &ort%a%e to it. +o#ever, the eputy 9heriff assi%ned to i&ple&ent the foreclosure failedto %ain entry into private respondents pre&ises and #as not able to effect the sei<ure of theaforedescribed &achinery. etitioner thereafter filed a co&plaint for *udicial foreclosure #ith theCourt of 0irst nstance of Ri<al, =ranch H, doc?eted as Civil Case No. 5)), the case before thelo#er court.

Actin% on petitioners application for replevin, the lo#er court issued a #rit of sei<ure, theenforce&ent of #hich #as ho#ever subse"uently restrained upon private respondents filin% of a

&otion for reconsideration. After several incidents, the lo#er court finally issued on 0ebruary 33,383, an order liftin% the restrainin% order for the enforce&ent of the #rit of sei<ure and an order tobrea? open the pre&ises of private respondent to enforce said #rit. $he lo#er court reaffir&ed itsstand upon private respondents filin% of a further &otion for reconsideration.1n 6uly 3, 383, the sheriff enforcin% the sei<ure order, repaired to the pre&ises of privaterespondent and re&oved the &ain drive &otor of the sub*ect &achinery.$he Court of Appeals, in certiorari and prohibition proceedin%s subse"uently filed by herein privaterespondent, set aside the 1rders of the lo#er court and ordered the return of the drive &otor sei<edby the sheriff pursuant to said 1rders, after rulin% that the &achinery in suit cannot be the sub*ect ofreplevin, &uch less of a chattel &ort%a%e, because it is a real property pursuant to Article 34 of thene# Civil Code, the sa&e bein% attached to the %round by &eans of bolts and the only #ay tore&ove it fro& respondents plant #ould be to drill out or destroy the concrete floor, the reason #hyall that the sheriff could do to enfore the #rit #as to ta?e the &ain drive &otor of said &achinery. $he

appellate court re*ected petitioners ar%u&ent that private respondent is estopped fro& clai&in% thatthe &achine is real property by constitutin% a chattel &ort%a%e thereon.

A &otion for reconsideration of this decision of the Court of Appeals havin% been denied, petitionerhas brou%ht the case to this Court for revie# by #rit of certiorari. t is contended by privaterespondent, ho#ever, that the instant petition #as rendered &oot and acade&ic by petitioners act of returnin% the sub*ect &otor drive of respondents &achinery after the Court of Appeals decision #aspro&ul%ated.$he contention of private respondent is #ithout &erit. hen petitioner returned the sub*ect &otordrive, it &ade itself une"uivocably clear that said action #as #ithout pre*udice to a &otion for



reconsideration of the Court of Appeals decision, as sho#n by the receipt duly si%ned byrespondents representative. 1 Considerin% that petitioner has reserved its ri%ht to "uestion thepropriety of the Court of Appeals decision, the contention of private respondent that this petition hasbeen &ooted by such return &ay not be sustained.$he ne:t and the &ore crucial "uestion to be resolved in this etition is #hether the &achinery insuit is real or personal property fro& the point of vie# of the parties, #ith petitioner ar%uin% that it is a

personality, #hile the respondent clai&in% the contrary, and #as sustained by the appellate court,#hich accordin%ly held that the chattel &ort%a%e constituted thereon is null and void, as contendedby said respondent.

A si&ilar, if not dentical issue #as raised in umalad v. 8icencio$ 3 9CRA 3 #here this Court,spea?in% throu%h 6ustice 6.=.>. Reyes, ruled

Althou%h there is no specific state&ent referrin% to the sub*ect house as personal property, yet bycedin%, sellin% or transferrin% a property by #ay of chattel &ort%a%e defendants-appellants couldonly have &eant to convey the house as chattel, or at least, intended to treat the sa&e as such, sothat they should not no# be allo#ed to &a?e an inconsistent stand by clai&in% other#ise. 'oreover,the sub*ect house stood on a rented lot to #hich defendants-appellants &erely had a te&porary ri%htas lessee, and althou%h this can not in itself alone deter&ine the status of the property, it does so#hen co&bined #ith other factors to sustain the interpretation that the parties, particularly the&ort%a%ors, intended to treat the house as personality. 0inally, unli?e in the ya cases, !ope" vs.

#rosa$ Jr. & ,la"a eatre$ %nc. & !eung )ee vs. /.!. Strong acinery & 0illiamson$ #herein thirdpersons assailed the validity of the chattel &ort%a%e, it is the defendants-appellants the&selves, asdebtors-&ort%a%ors, #ho are attac?in% the validity of the chattel &ort%a%e in this case. $he doctrineof estoppel therefore applies to the herein defendants-appellants, havin% treated the sub*ect houseas personality./:a&inin% the records of the instant case, e find no lo%ical *ustification to e:clude the rule out, asthe appellate court did, the present case fro& the application of the above"uoted pronounce&ent. fa house of stron% &aterials, li?e #hat #as involved in the above $u&alad case, &ay be consideredas personal property for purposes of e:ecutin% a chattel &ort%a%e thereon as lon% as the parties tothe contract so a%ree and no innocent third party #ill be pre*udiced thereby, there is absolutely noreason #hy a &achinery, #hich is &ovable in its nature and beco&es i&&obili<ed only bydestination or purpose, &ay not be li?e#ise treated as such. $his is really because one #ho has so

a%reed is estopped fro& denyin% the e:istence of the chattel &ort%a%e.n re*ectin% petitioners assertion on the applicability of the $u&alad doctrine, the Court of Appealslays stress on the fact that the house involved therein #as built on a land that did not belon% to theo#ner of such house. =ut the la# &a?es no distinction #ith respect to the o#nership of the land on#hich the house is built and e should not lay do#n distinctions not conte&plated by la#.t &ust be pointed out that the characteri<ation of the sub*ect &achinery as chattel by the privaterespondent is indicative of intention and i&presses upon the property the character deter&ined bythe parties. As stated in Standard #il Co. of 'e( )ork v. Jaramillo, hil. 5), it is undeniable thatthe parties to a contract &ay by a%ree&ent treat as personal property that #hich by nature #ould bereal property, as lon% as no interest of third parties #ould be pre*udiced thereby.rivate respondent contends that estoppel cannot apply a%ainst it because it had never representednor a%reed that the &achinery in suit be considered as personal property but #as &erely re"uiredand dictated on by herein petitioner to si%n a printed for& of chattel &ort%a%e #hich #as in a blan?

for& at the ti&e of si%nin%. $his contention lac?s persuasiveness. As aptly pointed out by petitionerand not denied by the respondent, the status of the sub*ect &achinery as &ovable or i&&ovable#as never placed in issue before the lo#er court and the Court of Appeals e:cept in a supple&ental&e&orandu& in support of the petition filed in the appellate court. 'oreover, even %rantin% that thechar%e is true, such fact alone does not render a contract void ab initio, but can only be a %round forrenderin% said contract voidable, or annullable pursuant to Article 3) of the ne# Civil Code, by aproper action in court. $here is nothin% on record to sho# that the &ort%a%e has been annulled.Neither is it disclosed that steps #ere ta?en to nullify the sa&e. 1n the other hand, as pointed out bypetitioner and a%ain not refuted by respondent, the latter has indubitably benefited fro& said



contract. /"uity dictates that one should not benefit at the e:pense of another. rivate respondentcould not no# therefore, be allo#ed to i&pu%n the efficacy of the chattel &ort%a%e after it hasbenefited therefro&,0ro& #hat has been said above, the error of the appellate court in rulin% that the "uestioned&achinery is real, not personal property, beco&es very apparent. 'oreover, the case of acineryand *ngineering Supplies$ %nc. v. CA, 5 hil. 7), heavily relied upon by said court is not applicable

to the case at bar, the nature of the &achinery and e"uip&ent involved therein as real propertiesnever havin% been disputed nor in issue, and they #ere not the sub*ect of a Chattel 'ort%a%e.Indoubtedly, the $u&alad case bears &ore nearly perfect parity #ith the instant case to be the &orecontrollin% *urisprudential authority.+/R/01R/, the "uestioned decision and resolution of the Court of Appeals are hereby reversedand set aside, and the 1rders of the lo#er court are hereby reinstated, #ith costs a%ainst the privaterespondent.91 1R/R/.akasiar <Cairman=$ Aquino$ Concepcion Jr.$ >uerrero and *scolin JJ.$ concur.

Abad Santos$ J.$ concurs in te result



G.R. No. L-11139 Apr4; &3, 19(*

SANTOS !VANG!LISTA, petitioner,

vs.

ALTO SUR!T$ INSURAN#! #O., IN#., respondent.

>on"alo . avid for petitioner.

5aul A. Aristorenas and Ben4amin 5elova for respondent.

#ON#!+#ION, J.=

$his is an appeal by certiorari fro& a decision of the Court of Appeals.

=riefly, the facts are 1n 6une , 3, petitioner herein, 9antos /van%elista, instituted Civil Case

No. 824 of the Court of 0irst, nstance of 'anila entitled E 9antos /van%elista vs. Ricardo Rivera,E

for a su& of &oney. 1n the sa&e date, he obtained a #rit of attach&ent, #hich levied upon a house,

built by Rivera on a land situated in 'anila and leased to hi&, by filin% copy of said #rit and the

correspondin% notice of attach&ent #ith the 1ffice of the Re%ister of eeds of 'anila, on 6une 8,3. n due course, *ud%&ent #as rendered in favor of /van%elista, #ho, on 1ctober 8, 343,

bou%ht the house at public auction held in co&pliance #ith the #rit of e:ecution issued in said case.

$he correspondin% definite deed of sale #as issued to hi& on 1ctober 22, 342, upon e:piration of

the period of rede&ption. hen /van%elista sou%ht to ta?e possession of the house, Rivera refused

to surrender it, upon the %round that he had leased the property fro& the Alto 9urety @ nsurance

Co., nc. respondent herein and that the latter is no# the true o#ner of said property. t appears

that on 'ay 3), 342, a definite deed of sale of the sa&e house had been issued to respondent, as

the hi%hest bidder at an auction sale held, on 9epte&ber 2, 34), in co&pliance #ith a #rit of

e:ecution issued in Civil Case No. 5258 of the sa&e court, entitled EAlto 9urety @ nsurance Co.,

nc. vs. 'a:i&o ;uia&bao, Rosario Guevara and Ricardo Rivera,E in #hich *ud%&ent, for the su& of

&oney, had been rendered in favor respondent herein, as plaintiff therein. +ence, on 6une 3, 34,

/van%elista instituted the present action a%ainst respondent and Ricardo Rivera, for the purpose ofestablishin% his (/van%elista! title over said house, securin% possession thereof, apart fro&

recoverin% da&a%es.

n its ans#er, respondent alle%ed, in substance, that it has a better ri%ht to the house, because the

sale &ade, and the definite deed of sale e:ecuted, in its favor, on 9epte&ber 2, 34) and 'ay 3),

342, respectively, precede the sale to /van%elista (1ctober 8, 343! and the definite deed of sale in

his favor (1ctober 22, 342!. t, also, &ade so&e special defenses #hich are discussed hereafter.

Rivera, in effect, *oined forces #ith respondent. After due trial, the Court of 0irst nstance of 'anila

rendered *ud%&ent for /van%elista, sentencin% Rivera and respondent to deliver the house in

"uestion to petitioner herein and to pay hi&, *ointly and severally, forty pesos ().))! a &onth fro&

1ctober, 342, until said delivery, plus costs.

1n appeal ta?en by respondent, this decision #as reversed by the Court of Appeals, #hich absolved

said respondent fro& the co&plaint, upon the %round that, althou%h the #rit of attach&ent in favor of

/van%elista had been filed #ith the Re%ister of eeds of 'anila prior to the sale in favor of

respondent, /van%elista did not ac"uire thereby a preferential lien, the attach&ent havin% been

levied as if the house in "uestion #ere i&&ovable property, althou%h in the opinion of the Court of

Appeals, it is Eostensibly a personal property.E As such, the Court of Appeals held, Ethe order of



attach&ent . . . should have been served in the &anner provided in subsection (e! of section 7 of

Rule 4,E of the Rules of Court, readin%

$he property of the defendant shall be attached by the officer e:ecutin% the order in the

follo#in% &anner

(e! ebts and credits, and other personal property not capable of &anual delivery, by leaving

(it te person o(ing suc debts$ or aving in is possession or under is control$ suc

credits or oter personal property$ or (it$ is agent$ a copy of te order$ and a notice tat

te debts o(ing by im to te defendant , and the credits and other personal property in his

possession, or under his control, belon%in% to the defendant, are attached in pursuance of

such order. (/&phasis ours.!

+o#ever, the Court of Appeals see&s to have been of the opinion, also, that the house of Rivera

should have been attached in accordance #ith subsection (c! of said section 7, as Epersonal

property capable of &anual delivery, by taking and safely keeping in is custody E, for it declared that

E/van%elists could not have . . . validly purchased Ricardo Riveras house fro& the sheriff as the

latter #as not in possession thereof at the ti&e he sold it at a public auction.E

/van%elista no# see?s a revie#, by certiorari, of this decision of the Court of Appeals. n this

connection, it is not disputed that althou%h the sale to the respondent preceded that &ade to

/van%elists, the latter #ould have a better ri%ht if the #rit of attach&ent, issued in his

favor before the sale to the respondent, had been properly e:ecuted or enforced. $his "uestion, in

turn, depends upon #hether the house of Ricardo Rivera is real property or not. n the affir&ative

case, the applicable provision #ould be subsection (a! of section 7, Rule 4 of the Rules of Court,

pursuant to #hich the attach&ent should be &ade Eby filin% #ith the re%istrar of deeds a copy of the

order, to%ether #ith a description of the property attached, and a notice that it is attached, and by

leavin% a copy of such order, description, and notice #ith the occupant of the property, if any there

be.E

Respondent &aintains, ho#ever, and the Court of Appeals held, that Riveras house is personal

property, the levy upon #hich &ust be &ade in confor&ity #ith subsections (c ! and (e! of said

section 7 of Rule 4. +ence, the &ain issue before us is #hether a house, constructed the lessee of

the land on #hich it is built, should be dealt #ith, for purpose, of attach&ent, as i&&ovable property,

or as personal property.

t is, our considered opinion that said house is not personal property, &uch less a debt, credit or

other personal property not capable of &anual delivery, but i&&ovable property. As e:plicitly held, in

>addera vs. +od%es (8 1ff. Ga<., 47!, Ea true buildin% (not &erely superi&posed on the soil! is

immovable or real property , #hether it is erected by the o#ner of the land or by usufructuary

or lessee. $his is the doctrine of our 9upre&e Court in >eun% Mee vs. 9tron% 'achinery Co&pany,

7 hil., 5. And it is a&ply supported by the rulin%s of the 0rench Court. . . .E

t is true that the parties to a deed of chattel &ort%a%e &ay a%ree to consider a house as personal

property for purposes of said contract (>una vs. /ncarnacion, > 8 1ff. Ga<., 255D 9tandard 1il Co.

of Ne# Mor? vs.6ara&illo, hil., 5)D e 6esus vs. 6uan ee Co., nc., 72 hil., 5!. +o#ever,

this vie# is %ood only insofar as the contracting parties are concerned. t is based, partly, upon the

principle of estoppel. Neither this principle, nor said vie#, is applicable to stran%ers to said contract.

'uch less is it in point #here there has been no contract #hatsoever, #ith respect to the status of the



house involved, as in the case at bar. Apart fro& this, in anarang vs. #filada ( hil., 3)8D 42 1ff.

Ga<., 4!, #e held

$he "uestion no# before us, ho#ever, is oes the fact that the parties enterin% into a

contract re%ardin% a house %ave said property the consideration of personal property in their

contract, bind the sheriff in advertisin% the propertys sale at public auction as personal

property t is to be re&e&bered that in the case at bar the action #as to collect a loan

secured by a chattel &ort%a%e on the house. t is also to be re&e&bered that in practice it is

the *ud%&ent creditor #ho points out to the sheriff the properties that the sheriff is to levy

upon in e:ecution, and the *ud%&ent creditor in the case at bar is the party in #hose favor

the o#ner of the house had conveyed it by #ay of chattel &ort%a%e and, therefore, ?ne# its

consideration as personal property.

$hese considerations not#ithstandin%, #e hold that the rules on e:ecution do not allo#, and,

#e should not interpret the& in such a #ay as to allo#, the special consideration that parties

to a contract &ay have desired to i&part to real estate, for e:a&ple, as personal property,

#hen they are, not ordinarily so. Sales on e+ecution affect te public and tird persons. e

regulation governing sales on e+ecution are for public officials to follo( . $he for& of

proceedin%s prescribed for each ?ind of property is suited to its character, not to the

character, #hich the parties have %iven to it or desire to %ive it. hen the rules spea? of

personal property, property #hich is ordinarily so considered is &eantD and #hen real

property is spo?en of, it means property (ic is generally kno(n as real property. e

regulations (ere never intended to suit te consideration tat parties may ave privately

given to te property levied upon. /nforce&ent of re%ulations #ould be difficult #ere the

convenience or a%ree&ent of private parties to deter&ine or %overn the nature of the

proceedin%s. e therefore hold that te mere fact tat a ouse (as te sub4ect of te cattel

mortgage and (as considered as personal property by te parties does not make said ouse

personal property for purposes of te notice to be given for its sale of public auction. $his

rulin% is de&anded by the need for a definite, orderly and #ell defined re%ulation for official

and public %uidance and #ould prevent confusion and &isunderstandin%.

e, therefore, declare that te ouse of mi+ed materials levied upon on e+ecution, althou%h

sub*ect of a contract of chattel &ort%a%e bet#een the o#ner and a third person, is real

property (itin te purvie( of 5ule 1?$ section 2@$ of te 5ules of Court as it as become a

permanent fi+ture of te land$ (ic$ is real property . (2 A&. 6ur. 3-2))D >eun%

Mee vs. 9tron% 'achinery Co., 7 hil., 5D Republic vs. Ceni<a, et al., ) hil., 4D

>adera,, et al. vs. +od%es, et al., FC.A. 1ff. Ga<. 47.!E (/&phasis ours.!

$he fore%oin% considerations apply, #ith e"ual force, to the conditions for the levy of attach&ent, for

it si&ilarly affects the public and third persons.

t is ar%ued, ho#ever, that, even if the house in "uestion #ere i&&ovable property, its attach&ent by/van%elista #as void or ineffective, because, in the lan%ua%e of the Court of Appeals, Eafter

presentin% a Copy of the order of attach&ent in the 1ffice of the Re%ister of eeds, te person (o

migt ten be in possession of te ouse$ te seriff took no pains to serve 5icardo 5ivera$ or oter

copies tereof .E $his findin% of the Court of Appeals is neither conclusive upon us, nor accurate.

$he Record on Appeal, anne:ed to the petition for Certiorari, sho#s that petitioner alle%ed, in

para%raph of the co&plaint, that he ac"uired the house in "uestion Eas a conse"uence of the levy





teir conduct during te entire proceedings$ prior to te rendition of te decision of te Court of

Appeals tat 5ivera ad received copies of said documentsD and that, for this reason, evidently,

no proof #as introduced thereon, #e, are of the opinion, and so hold that the findin% of the Court of

Appeals to the effect that said copies had not been served upon Rivera is based upon a

&isapprehension of the specific issues involved therein and %oes beyond the ran%e of such issues,

apart fro& bein% contrary to the afore&entioned ad&ission by the parties, and that, accordin%ly, a

%rave abuse of discretion #as co&&itted in &a?in% said findin%, #hich is, further&ore, inaccurate.

herefore, the decision of the Court of Appeals is hereby reversed, and another one shall be

entered affir&in% that of the Court of 0irst nstance of 'anila, #ith the costs of this instance a%ainst

respondent, the Alto 9urety and nsurance Co., nc. t is so ordered.

,aras$ C.J.$ Beng"on$ ontemayor$ 5eyes$ A.$ Bautista Angelo$ !abrador$ 5eyes$ J.B.!.$ *ndencia

and /eli+$ JJ.$concur.



G.R. No. 1'0707 Apr4; &&, &003

NORG!N! +OT!N#IANO an Spo?6e6 MANU!L %A$M! an NATIVIDAD @A/RA-

%A$M!, petitioners,

vs.

DIGT I<! ". R!$NOSO, #ARLOS ". R!$NOSO, MA. LOURD!S ". R!$NOSO, /!LI+! ".

R!$NOSO, #LAR!"!LO ". R!$NOSO, V!RONI#A ". N!"R!S an te #OURT O/

A++!ALS, respondents.

+ANGANI"AN, J .=

$he basic issue in this case revolves around the authenticity of the si%natures of the alle%ed vendor.

Ipholdin% the re%ional trial court, the Court of Appeals opted to %ive credence to the testi&onies of

the hand#ritin% e:pert and other #itnesses presented by private respondents, as a%ainst the

testi&ony of the attorney #ho had notari<ed the eeds of 9ale. After due deliberation, this Court

finds no co%ent reason to reverse the t#o lo#er courtsO findin% of fact.

e Case

=efore us is a etition for Revie# on Certiorari under Rule 4 of the Rules of Court, assailin% the

'ay 7, 3 ecision3 and the 1ctober 2), 3 Resolution2 of the Court of Appeals (CA! in CA-GR

CH No. 323. $he decretal portion of the ecision reads as follo#s

E+/R/01R/, Fthere bein% no error in the decision appealed fro&, the sa&e is

A00R'/.E

$he assailed Resolution denied petitionersO 'otion for Reconsideration.

e /acts

$he facts of the case are su&&ari<ed by the CA in this #ise

E9o&eti&e in 353, the late 0elipe =. are*a for&er Cebu City $reasurer #as convicted of

the cri&e of &urder and sentenced to life i&prison&ent #ith the accessory penalties

attendant thereto includin% civil interdiction. 0elipe are*a #as %ranted a conditional pardon

by then resident 0erdinand /. 'arcos on 2 Au%ust 373. 1n 3 1ctober 37, 0elipe

are*a e:ecuted a eed of Absolute 9ale coverin% a parcel of land and all i&prove&ents

thereon situated at 6uana 1s&ePa /:t., Capitol 9ite, Cebu City containin% an area of four

hundred ninety three (! s"uare &eters in favor of his ille%iti&ate son herein defendant-

appellant 'anuel 6ay&e #ho later clai&ed that the said sale #as &ade to cover the

pay&ents he had &ade for the hospitali<ation e:penses of his father, he havin% been

constrained to borro# &oney fro& several people for the purpose. =efore 0elipe are*a died

on Au%ust 5, 383, he e:ecuted a >ast ill and $esta&ent dated 6une 2, 375 #herein he

be"ueathed to herein appellees and appellant 'anuel 6ay&e the lot in "uestion #hile at the

sa&e ti&e reco%ni<in% the& as his ille%iti&ate children. 1n 2 1ctober 37 or ten (3)! days

after the e:ecution of the eed of Absolute 9ale in their favor by 0elipe are*a, spouses

'anuel and Natividad 6ay&e e:ecuted a eed of Absolute 9ale coverin% the property in

favor of defendant-appellant Nor%ene otenciano #ho eventually filed an e*ect&ent case

a%ainst plaintiff-appellee #i%ht Reynoso.





E. hether or not the ecision of the Court of Appeals is contrary to Article of the Ne#

Civil Code.

EH. hether or not the +onorable Court of Appeals %ravely erred in i%norin% the clear, direct

and personal testi&ony of the notary public, Atty. Ronald uterte, #ho cate%orically testified

that 0elipe are*a si%ned the docu&ents of sale in his presence and #ho i%nored the #ell-

settled *urisprudence that a notary public is presu&ed to have perfor&ed his duties

accordin% to la#.

EH. hether or not the Court of Appeals %ravely erred in %ivin% credence to the findin%s of

'r. Ro&eo Harona, alle%ed docu&ent e:pert, #hen his testi&ony and co&petence has been

thorou%hly i&pu%ned.

EH. hether or not the Court of Appeals %ravely erred in concludin% that etitioner Nor%ene

otenciano is a buyer in bad faith.

EH. hether or not the Court of Appeals %ravely erred in a#ardin% da&a%es to private

respondents for the si&ple reason that private respondents &iserably failed to prove theirclai&s as alle%ed in their Co&plaint.E3

9i&ply stated, the issues to be resolved are as follo#s (3! #hether the sale of the sub*ect property

by are*a to the 6ay&e spouses and, in turn, by the spouses to otenciano #as valid and bindin%D

(2! #hether otenciano #as a buyer in %ood faithD (! #hether private respondents have the

personality to de&and the reconveyance of the property in "uestionD and (! #hether private

respondents are entitled to da&a%es.

e Courts 5uling

$he etition is un&eritorious.

/irst %ssue

8alidity of te eeds of Sale

etitioners ar%ue that the eed of 9ale dated 1ctober 3, 37,34 bet#een are*a and the 6ay&e

spousesD and that #hich #as dated 1ctober 2, 37,35 this ti&e bet#een the 6ay&e spouses and

otenciano, are both valid and enforceable. $hey contend that are*a, bein% the absolute o#ner,

had the ri%ht to dispose of the house and lot in "uestion. $hey dispute the findin% of for%ery, clai&in%

that the notary public is &ore credible than the e:pert #itness. 0urther, at the ti&e of the disposition,

are*a #as supposedly no lon%er sufferin% the accessory penalty of civil interdiction, because he

had already served the full ter& of his co&&uted sentence.

/orgery of ,are4as Signature

on te eeds of Sale

$he &ost crucial "uestion to be resolved in this case is the authenticity of are*aOs alle%ed si%nature

on the eed of 9ale transferrin% the sub*ect property to the 6ay&e spouses. 1nce the validity of this

transfer is established, then the succeedin% one -- this ti&e fro& the 6ay&e spouses to otenciano,

in #hich are*a alle%edly si%ned as a #itness -- can also be evaluated.



reli&inarily, #e should stress that the re&edy of appeal by certiorari under Rule 4 of the Rules of

Court conte&plates only "uestions of la#, not of fact.37 A "uestion of la# e:ists #hen there is doubt

or controversy as to #hat the la# is on a certain state of facts. 1n the other hand, there is a "uestion

of fact #hen the doubt or difference arises as to the truth or the falsity of the state&ent of facts.38

t is not the function of this Court to analy<e or #ei%h evidence all over a%ain, unless there is a

sho#in% that the findin%s of the lo#er court are totally devoid of support or are %larin%ly erroneous as

to constitute palpable error or %rave abuse of discretion.3

$he theory of for%ery advanced by petitioners involves a "uestion of fact previously raised and

satisfactorily ruled upon by the t#o lo#er courts. As a rule, the findin%s of fact of the CA, affir&in%

those of the R$C, are final and conclusive. $he 9upre&e Court cannot revie# those findin%s on

appeal, especially #hen they are borne out by the records or are based on substantial evidence.2)

$his application of this rule can be controverted only by the e:ceptions set forth in a lon% line of

*urisprudence,23none of #hich is available in the instant case. $he CA co&petently ruled upon the

issues raised by petitioners and laid do#n the proper le%al as #ell as factual bases for its ecision.

etitioners have not %iven any co%ent reason to "uestion its findin%s that the si%natures #ere for%ed.

Althou%h Atty. Ronald uterte, the notary public, testified to the %enuineness of the si%natures of

are*a on the "uestioned eeds of 9ale, both the trial and the appellate courts still ruled a%ainst

petitioners. Generally, a notari<ed docu&ent carries the evidentiary #ei%ht conferred upon it #ith

respect to its due e:ecution. $hus, a docu&ent ac?no#led%ed before a notary public has in its favor

the presu&ption of re%ularity.22

+o#ever, this presu&ption is not absolute and &ay be rebutted by clear and convincin% evidence to

the contrary.2 $o sho# that the si%natures of are*a #ere for%ed on the "uestioned eeds of 9ale,

petitioners presented #i%ht Reynoso, #ho #as fa&iliar #ith his hand#ritin%D and Ro&eo Harona, a

hand#ritin% e:pert of the National =ureau of nvesti%ation.

Harona reported funda&ental diver%encies bet#een the t#o sets of sa&ple si%natures as follo#s

ECo&parative e:a&ination and analysis of the "uestioned si%natures &ar?ed Q;-3,O Q;-2,O Q;-

O and the standard speci&en si%natures &ar?ed Q9-3O to Q9-3)O inclusive reveal funda&ental

diver%encies in letter for&ation, construction, s?ill and other individual hand#ritin%

characteristics.E2

0ro& these findin%s, he concluded that the Esi%natures of 0elipe are*a appearin% on the eed of

Absolute 9ale &ar?ed Q;-3,O Q;-2O and ;- #ere for%ed.E24

+o#ever, #e are not un&indful of the rule that a findin% of for%ery does not depend entirely on the

testi&onies of hand#ritin% e:pertsD the *ud%e is still re"uired to conduct an independent e:a&ination

of the "uestioned si%nature.25 $he CA did e:actly this. t conducted its o#n independent e:a&ination

of the si%natures and concluded that the stri?in% differences bet#een the "uestioned si%natures and

those ad&itted as %enuine #ere readily noticeable upon inspection.27

1n the other hand, Atty. uterte testified that are*a had personally appeared before hi& and si%ned

the t#o instru&ents hi&self. $he for&er &ade these cate%orical state&ents on the si%nature of the



latter, both as the vendor in the 1ctober 3, 37 eed and as a #itness in that #hich #as dated

1ctober 2, 37.

+o#ever, Atty. uterteOs testi&ony as to the latter eed of 9ale #as co&pletely belied by the other

#itnesses, #ho testified that are*a had si%ned as a #itness in the latterOs o#n residence and not in

the presence of the notary public. etitioner otenciano hi&self ad&itted that are*a -- bein% already

sic?ly at the ti&e -- had si%ned in the latterOs o#n house and not in the presence of Notary ublic

uterte.28

/"ually tellin% is the doubt e:pressed by the R$C on the notary publicOs &otives

E: : :. +o#ever, the Court is inclined to %ive &ore #ei%ht Fto the testi&ony of the e:pert

#itness, not only because the latter e:plained the for%ery scientifically but also for the reason

that the notary public #ho notari<ed the "uestioned docu&ents #as the for&er counsel of

defendant otenciano.E2

$hus, considerin% the testi&onies of the various #itnesses and a plain co&parison of the "uestioned

si%natures #ith ad&ittedly %enuine ones, the Court finds no reason to reverse the findin%s of the t#olo#er courts. Althou%h the eeds of 9ale #ere public docu&ents havin% in their favor the

presu&ption of re%ularity, such presu&ption #as ade"uately refuted by co&petent #itnesses and

the appellate courtOs visual analysis of the docu&ents.

9ince the si%nature of the alle%ed vendor #as a for%ery, no ri%hts #ere transferred fro& hi& to the

alle%ed vendees. n turn, the 6ay&e spouses could not have conveyed o#nership of the property to

etitioner otenciano. t is a #ell-settled principle that no one can %ive #hat one does not

have.) Accordin%ly, one can sell only #hat one o#ns or is authori<ed to sell, and the buyer can

ac"uire no &ore than #hat the seller can transfer le%ally.3

Civil %nterdiction

+avin% ruled that the si%natures of are*a on the "uestioned eeds of 9ale #ere for%ed, #e hold

that the "uestion of #hether he #as still sufferin% civil interdiction at the ti&e he alle%edly sold the

property no# beco&es irrelevant to the deter&ination of the validity of the transactions.

arenthetically, this Court notes that in their narration of facts, both the R$C and the CA

auto&atically ascribed the accessory penalty of civil interdiction to are*a as a result of his

conviction for &urder and the conse"uent life i&prison&ent i&posed upon hi& by the Court of 0irst

nstance of Cebu.2 e shall not rule on the correctness of the penalty, since the cri&inal case in

#hich it #as i&posed is not the sub*ect of this appeal. +o#ever, #e re&ind the lo#er courts that life

i&prison&ent and reclusion perpetua are distinct penalties.

5eclusion perpetua entails an i&prison&ent of at least thirty years, after #hich the convict beco&es

eli%ible for pardon. t carries accessory penalties includin% civil interdiction. >ife i&prison&ent, on

the other hand, has no fi:ed duration and carries no accessory penalties.4 +ence, to say that are*a

#as civilly interdicted by reason of the life i&prison&ent i&posed on hi& #ould be inaccurate.

Second %ssue

Buyer in >ood /ait



etitioners also ar%ue that otenciano #as an innocent purchaser in %ood faith and for value. +e

#as alle%edly approached by etitioner 'anuel 6ay&e, #ho #anted to sell the property in

"uestion.5 =efore buyin% it, the for&er supposedly e:hausted efforts to verify the &uni&ents of the

latterOs title.7 Also, even if it #as still in the na&e of its ori%inal o#ners Fthe Cuencos, 6ay&e #as

able to sho# to otenciano the eed of 9ale that had transferred the property fro& the Cuencos to

are*a and, subse"uently, fro& are*a to the 6ay&e spouses. $hese circu&stances alle%edly

sho#ed otencianoOs %ood faith.

e disa%ree. $he burden of provin% the status of a purchaser in %ood faith lies upon one #ho

asserts that status.8 n dischar%in% the burden, it is not enou%h to invo?e the ordinary presu&ption

of %ood faith.

A purchaser in %ood faith and for value is one #ho buys the property of another #ithout notice that

so&e other person has a ri%ht to or interest in it, and #ho pays therefor a full and fair price at the

ti&e of the purchase or before receivin% such notice.)

$he #hole evidence in this case points to the absolute lac? of %ood faith on the part of otenciano.

At the ti&e he alle%edly bou%ht the property in "uestion, no certificate of title #as ever presented tohi&. f #e are to believe petitionersO position, there #ere t#o transfers before the alle%ed sale to hi&.

$he first #as fro& the Cuencos to are*a, #hile the second #as fro& are*a to the 6ay&e spouses.

As otenciano hi&self stated in his testi&ony, #hen they e:ecuted the eed of 9ale on 1ctober 2,

37, there #as no certificate of title in the na&e of the 6ay&e spouses or of are*a3 or of the

alle%ed ori%inal o#ners, the Cuencos.2 $here #as si&ply a lot to be sold, and an ocular inspection

thereof conducted.

$he %larin% lac? of %ood faith on the part of otenciano is &ore than apparent in his testi&ony, #hich

#e reproduce in part hereunder

EA$$M. GI/RR/R1

; n other #ords, you relied only on the eed of 9ale fro& Rosa and 'ila%ros Cuenco

to 0elipe =. are*a and fro& 0elipe are*a to 'anuel 6ay&e, a duly notari<ed deed of sale

$N/99

A Mes, sir.E

: : : : : : : : :

EA$$M. GI/RR/R1

; 9o you only based it on the three deeds of sale

$N/99

A Mes, sir.

A$$M. GI/RR/R1



; No#, in your deed of sale dated 1ctober 2, 37 you also bou%ht a house of stron%

&aterials #hich #as included in the sale

$N/99

A Mes, sir.

A$$M. GI/RR/R1

; No#, #hen you ?ne# that there #as no certificate of title in the na&e of 'anuel

6ay&e or #hen you #ere not sho#n a certificate of title in the na&e of 'anuel 6ay&e did

you verify fro& the Re%ister of eeds about it

$N/99

A No, sir.

A$$M. GI/RR/R1

; =efore 1ctober 2, 37, you did not verify about it in the office of the Re%ister of

eeds

$N/99

A No.

A$$M. GI/RR/R1

; After 1ctober 2, 37 did you %o to the Re%ister of eeds

$N/99

A did not %o to the Re%ister of eeds also.

A$$M. GI/RR/R1

; No#, #hat did you rely as a basis in buyin% the house

$N/99

A =ecause trusted Ronie uterte. +e #as the one #ho facilitated everythin%, on thetransaction.

A$$M. GI/RR/R1

; =ecause you relied on those three deeds of sale of Cuenco to are*a and are*a to

6ay&e, you bou%ht the property on install&ent basis



$N/99

A Mes, sir.

A$$M. GI/RR/R1

; hen did you fully pay the consideration, the price of the eed of 9ale

$N/99

A do not ?no# #hether it #as fully paid because they #ere the ones #ho co&puted it.

A$$M. GI/RR/R1

; ho are you referrin% to #hen you said they

$N/99

A 'y father.

A$$M. GI/RR/R1

; n other #ords 'r. itness, the &oney used to pay the land ca&e fro& your father

$N/99

A Mes. f 'r. 6ay&e transact business #ith &y father, then &y father #ill be the one to

pay.

A$$M. GI/RR/R1

; Mou said 'r. itness that #hen you filed your ans#er to the co&plaint in this case, in

para%raph 2 thereof, you caused to be verified the e:istence of the certificates of title in the

1ffice of the Re%ister of eeds, that is in para%raph 2 of your ans#er to the co&plaint.

hich is true no#, did you verify or did you not verify about it

$N/99

A t is only no#.

A$$M. GI/RR/R1

; hat particular date

$N/99

A could not re&e&ber the e:act date.



A$$M. GI/RR/R1

; =ut only this year

$N/99

A No.

A$$M. GI/RR/R1

; as it after the price #as fully paid

$N/99

A After #e received Fthe title of the land #e discovered that there #as so&ebody #ho is

occupyin% the lot.

A$$M. GI/RR/R1

; 9o, you verified in the 1ffice of the Re%ister of eeds only after you #ere %iven the

title

$N/99

A Mes, sir.E

1bviously, otenciano #as sho#n no &uni&ent of title coverin% the property he #as buyin%, but

&erely three eeds of 9ale tracin% its transfer fro& three alle%ed o#ners, #ho& he did not even

?no#. Neither did he verify its o#nership #ith the Re%ister of eeds. hat utterly a%%ravated thesituation #as the fact that he did not even care #ho& he #as dealin% #ith. +e si&ply trusted a

certain Ronie uterte, #ho facilitated Eeverythin%E #ithout ascertainin% the authority or le%al ri%ht of

the persons he #as dealin% #ith.

/"ually si%nificant is the fact that even before e:ecutin% the alle%ed eed of 9ale, otenciano never

chec?ed #ho #as in possession of the property. +e testified as follo#s

EA$$M. GI/RR/R1

; No#, after you e:ecuted the eed of 9ale or after 1ctober 2, 37, you #ere

infor&ed by 'r. 'anuel 6ay&e that the property #hich you bou%ht #as possessed by third

persons, one of #ho& #as ?e Reynoso and his fa&ily, is that correct

$N/99

A Mes, sir.

A$$M. GI/RR/R1



; t #as only after the si%nin% of the deed of sale

$N/99

A Mes, sir, after the e:ecution of the deed of sale.

A$$M. GI/RR/R1

; hat did you do upon learnin% of the fact that it #as possessed by third persons, one

of #ho& #as ?e Reynoso and his fa&ily

$N/99

A 'r. 6ay&e said to &e that there is nothin% #ron% #ith it because the occupants there

#ill *ust vacate the pre&ises.

A$$M. GI/RR/R1

; n other #ords, you did not pay attention to the infor&ation %iven to you by 'r. 6ay&e

that the property #as possessed by third persons

$N/99

A Mes, because he said that the occupants #ill *ust vacate the pre&ises, so did not

&ind. trusted the&.

A$$M. GI/RR/R1

; hen 'anuel 6ay&e told you that the occupants of the property #ill *ust vacate, youdid not have a certificate of title in your na&e yet

$N/99

A Not yet.

A$$M. GI/RR/R1

; Neither #as there any title in the na&e of 6ay&e yet

$N/99

A Mes, sir.E4

9ettled is the rule that a buyer of real property that is in the possession of a person other than the

seller &ust be #ary. A buyer #ho does not investi%ate the ri%hts of the one in possession5 can

hardly be re%arded as a buyer in %ood faith.



$o be sure, #e cannot ascribe %ood faith to those #ho have not sho#n any dili%ence in protectin%

their ri%hts. +avin% ruled thus, #e also hold that otencianoOs ri%ht to the property he alle%edly

bou%ht &ust fail. +e cannot ta?e cover under the protection the la# accords to purchasers in %ood

faith and for value.

otenciano cannot no# clai& that he has already ac"uired a valid title to the property. $o be

effective, the inscription in the re%istry &ust have been &ade in %ood faith.7 $he defense of

indefeasibility of a $orrens title does not e:tend to a transferee #ho ta?es it #ith notice of a fla#.8 A

holder in bad faith of a certificate of title is not entitled to the protection of the la#, for the la# cannot

be used as a shield for fraud.

ird %ssue

,ersonality to Sue

etitioners ar%ue that the suit a%ainst the& cannot be &aintained by private respondents, because

the latter have not established their filiation to are*a as their father. etitioners further contend that

0elipe =. are*aOs unprobated >ast ill and $esta&ent,4) dated 6une 2, 375, cannot be used to

establish respondentsO filiation.

A%ain, #e disa%ree #ith this contention. $he #ay to prove the filiation of ille%iti&ate children is

provided by the 0a&ily Code thus

EArt. 374. lle%iti&ate children &ay establish their ille%iti&ate filiation in the sa&e #ay and on

the sa&e evidence as le%iti&ate children.E43

n turn, Article 372 of the 0a&ily Code states

EArt. 372. $he filiation of le%iti&ate children is established by any of the follo#in%

(3! $he record of birth appearin% in the civil re%ister or a final *ud%&entD or

(2! An ad&ission of le%iti&ate filiation in a public docu&ent or a private hand#ritten

instru&ent and si%ned by the parent concerned.

n the absence of the fore%oin% evidence, the le%iti&ate filiation shall be proved by

(3! $he open and continuous possession of the status of a le%iti&ate child, or

(2! Any other &eans allo#ed by the Rules of Court and special la#s.E42

$hese provisions in relation to those in the Civil Code have been e:plained by this Court as follo#s

E$he due reco%nition of an ille%iti&ate child in a record of birth, a #ill, a state&ent before a

court of record, or in any authentic #ritin% is, in itself, a consu&&ated act of

ac?no#led%&ent of the child, and no further court action is re"uired.E4

6ustice 6ose C. Hitu% clarifies in une"uivocal ter&s the process of provin% filiation Eunder this

F0a&ily Code, filiation &ay li?e#ise be established by holo%raphic as #ell as notarial #ills, e:cept



that tey no longer need to be probated or to be strictly in confor&ity #ith the for&alities thereof for

purposes of establishin% filiation.E4

etitionersO ar%u&ent on the need for probate loses force #hen #ei%hed a%ainst its purpose. n

probate proceedin%s, all that the la# re"uires is the courtOs declaration that the e:ternal for&alities

have been co&plied #ith. $he #ill is then dee&ed valid and effective in the eyes of the la#.44 $hus,

probate proceedin%s &erely deter&ine the e:trinsic validity of the #ill45 and do not affect its contents.

'oreover, the appellate court correctly noted the follo#in%

E: : : Flaintiff #i%ht Reynoso and defendant 'anuel 6ay&e had e:ecuted a *oint affidavit

declarin% that they to%ether #ith the other plaintiffs F#ere reco%ni<ed ille%iti&ate children of

0elipe =. are*a as e&bodied in the latterOs ill. $his affidavit #hich binds 6ay&e as affiant

is proof of the e:istence of are*aOs ill and effectively de&olishes 6ay&eOs posture that the

plaintiffs have no personality to institute the instant suit. : : :E47

etitioners are &ista?en in assu&in% that this 6oint Affidavit48 is bein% used by private respondents

to prove the latterOs filiation as ille%iti&ate children of are*a. $he docu&ent cannot be used for thatpurpose, because the children #ere the ones #ho reco%ni<ed their father and not the other #ay

around. +o#ever, its i&portance lies in the fact that it prevents petitioners fro& denyin% private

respondentsO standin% to institute the case a%ainst the&.

+avin% ad&itted that rivate Respondent Reynoso #as indeed an ille%iti&ate son of are*a *ust li?e

hi&, 'anuel 6ay&e cannot no# clai& other#ise. An ad&ission is rendered conclusive upon the

person &a?in% it and cannot be denied as a%ainst the person relyin% on it.4 Neither can petitioners

ar%ue that such ac?no#led%&ent applies only to 6ay&e. 9ince otenciano clai&s to have derived

his ri%ht fro& the 6ay&e spouses, then he is bound by 6ay&eOs ad&ission.

/inal %ssue

amages

0inally, petitioners contend that private respondents have no cause of action a%ainst the&.

$herefore, the latter are not entitled to any a#ard of da&a%es.

e rule other#ise. 9ince the eeds of 9ale upon #hich petitioners based their o#nership of the

"uestioned property are invalid, private respondents have a cause of action for &oral and e:e&plary

da&a%es. >i?e#ise, they are entitled to attorneyOs fees and liti%ation e:penses for havin% %one

throu%h this process to protect their ri%hts fro& petitionersO #ron%ful clai& of o#nership of the

sub*ect property. e find that the a&ounts a#arded by the R$C and subse"uently affir&ed by the

CA are reasonable and *ustified under the circu&stances obtainin% in this case.

+/R/01R/, the etition is hereby *'%* and the assailed ecision A//%5*. Costs a%ainst

petitioners.

91 1R/R/.

,uno$ <Cairman=$ Sandoval->utierre"$ Corona$ and Carpio-orales$ JJ.$ concur.



G.R. No. 1(*1&1 Deember 1&, &007

!IRS O/ VAL!RIANO S. #ON#A, SR. NAM!L$= T!R!SITA #ON#A-+ARAN, VAL!RIANO+. #ON#A, %R., RAMON +. #ON#A, !DUARDO +. #ON#A, R!+R!S!NT!D "$ IS L!GALGUARDIAN, R!$NALDO +. #ON#A, AL"!RTO +. #ON#A, "!RNARDO +. #ON#A an

GLORIA, petitioners,vs.S+OUS!S GR!GORIO %. LUMO#SO1 an "I!NV!NIDA GU$A, #RISTITA %. LUMO#SO VDA.D! DAAN, AND S+OUS!S %A#INTO %. LUMO#SO an "AL"INA T. LUMO#SO,& respondents.

D ! # I S I O N

+UNO, #.J.=

1n appeal by certiorari under Rule 4 of the Rules of Court are the decision and resolution of theCourt of Appeals (CA! in CA-G.R. 9 No. 4, annullin% the resolutions4 and order 5 of theRe%ional $rial Court (R$C! of ipolo% City, =ranch , in Civil Case Nos. 4388, 4 and 4 #hich

denied the separate &otions to dis&iss and 6oint 'otion for Reconsideration filed by therespondents.

$he relevant facts are undisputed.

etitioners, heirs of spouses orotea and Haleriano Concha, 9r., clai& to be the ri%htful o#ners of>ot No. 534 (Civil Case No. 4388!, a one-hectare portion of >ot No. 535-A (Civil Case No. 4!,and a one-hectare portion of >ot Nos. 535-= and 742-A (Civil Case No. 4!, all situated inCo%on, ipolo% City, under 9ection 8(b! of Co&&on#ealth Act No. 33 (C.A. No. 33!, other#ise?no#n as the ublic >and Act. Respondent siblin%s Gre%orio >u&ocso (Civil Case No. 4388!,Cristita >u&ocso Hda. de aan (Civil Case No. 4! and 6acinto >u&ocso (Civil Case No. 4!,are the patent holders and re%istered o#ners of the sub*ect lots.

$he records sho# that on Au%ust 5, 37, Haleriano 9r.7 and his children, petitioners Haleriano 6r.,Ra&on, /duardo, Alberto, =ernardo, $eresita, Reynaldo, and Gloria, all surna&ed Concha, filed aco&plaint for Reconveyance andJor Annul&ent of $itle #ith a&a%es a%ainst E9pouses Gre%orio>o&ocso and =ienvenida Guya.E $hey sou%ht to annul 0ree atent No. (-8!84 and thecorrespondin% 1ri%inal Certificate of $itle (1C$! No. -22445 issued in the na&e of EGre%orio>u&ocsoE coverin% >ot No. 534. $he case #as raffled to the R$C of ipolo% City, =ranch , anddoc?eted as Civil Case No. 4388. n their A&ended Co&plaint, petitioners prayed that *ud%&ent berendered

3. eclarin% 0ree atent No. (-8!84 and 1ri%inal Certificate of $itle No. 22445 issued todefendants as null and void ab initioD

2. eclarin% >ot No. 534 or 3.3322-hectare as private property of the plaintiffs under 9ec.8(b! of CA No. 33 other#ise ?no#n as the ublic >and Act as a&ended by RA 32D

. 1rderin% the defendant >o&ocsos to reconvey the properties (sic! in "uestion >ot No.534 or the 3.3322 hectares in favor of the plaintiffs #ithin ) days fro& the finality of thedecision in this case and if they refuse, orderin% the Cler? of Court of this +onorable Court toe:ecute the deed of reconveyance #ith li?e force and effect as if e:ecuted by thedefendantFs the&selvesD

http://www.lawphil.net/judjuris/juri2007/dec2007/gr_158121_2007.html#fnt1

















. 1rderin% defendant >o&ocsos to pay 5),))).)) for the 23 forest trees ille%allycutD 4),))).)) for &oral da&a%esD 2),))).)) for AttorneyOs feesD 2),))).)) for liti%atione:pensesD and to pay the cost of the proceedin%sD

4. eclarin% the confiscated three (sic! flitches ?ept in the area of the plaintiffs at a&palan9an 6ose, ipolo% #ith a total volu&e of 2))) board feet aFs property of the plaintiff Fthey

bein% cut, collected and ta?en fro& the land possessed, preserved, and o#ned by theplaintiffsD

5. $he plaintiffs further pray for such other reliefs and re&edies #hich this +onorable Court&ay dee& *ust and e"uitable in the pre&ises.8

1n 9epte&ber , 3, t#o separate co&plaints for Reconveyance #ith a&a%es #ere filed bypetitioners, this ti&e a%ainst ECristita >o&ocso Hda. de aanE for a one-hectare portion of >ot No.535-A and E9pouses 6acinto >o&ocso and =albina $. >o&ocsoE for a one-hectare portion of >otNos. 535-= and 742-A. $he t#o co&plaints #ere also raffled to =ranch of the R$C of ipolo%City and doc?eted as Civil Case Nos. 4 and 4, respectively. n Civil Case No. 4,petitioners prayed that *ud%&ent be rendered

3. eclarin% Fa portion of >ot 535-A titled under 1C$ (2427! 888 e"uivalent to onehectare located at the #estern portion of >ot 888 as private property of the plaintiffs under9ec. 8(=! CA 33 other#ise ?no#n as ublic >and 1C$ (sic! as a&ended by RA No. 32D

2. 1rderin% the defendant to reconvey the e"uivalent of one (3! hectare forested portion ofher property in "uestion in favor of the plaintiffs #ithin ) days fro& the finality of thedecision in this case se%re%atin% one hectare fro& 1C$ (2427! 888, located at itsestern portion and if she refuse (sic!, orderin% the Cler? of Court of this +onorable Court toe:ecute the deed of reconveyance #ith li?e force and effect, as if e:ecuted by thedefendaFnt herselfD

. 1rderin% defendant to pay ),))).)) for the 22 forest trees ille%ally cutD 2),))).)) for&oral da&a%esD 2),))).)) for Attorneys feesD 2),))).)) for liti%ation e:pensesD and topay the cost of the proceedin%s.3)

n Civil Case No. 4, petitioners prayed that *ud%&ent be rendered

3. eclarin% Fa portion of >ot 742-A under 1C$ (-22)7! 3287) and >ot 535-= 1C$ (-2)84! 88 e"uivalent to one hectare located as (sic! the #estern portion of said lots asprivate property of the plaintiffs under 9ec. 8(b! of FC.A. No. 33 other#ise ?no#Fn as theFublic F>and FAct as a&ended by RA 32D

2. 1rderin% the defendants to reconvey the e"uivalent of one (3! hectare forested portion oftheir properties in "uestion in favor of the plaintiffs #ithin ) days fro& the finality of thedecision in this case se%re%atin% one hectare fro& 1C$ (-22)7! 3287) and 1C$ ($-2)84!-88 all of defendants, located at its estern portion and if they refuse, orderin% theCler? of Court of this +onorable Court to e:ecute the deed of reconveyance #ith li?e forceand effect as if e:ecuted by the defendants the&selvesFD

. 1rderin% defendants to pay 2),))).)) for the si: (5! forest trees ille%ally cutD 2),))).))for &oral da&a%esD 2),))).)) for Attorneys feesD 2),))).)) for liti%ation e:pensesD andto pay the cost of the proceedin%s.33













$he three co&plaints32 co&&only alle%ed a! that on 'ay 23, 348, petitioners parents (spousesHaleriano 9r. and orotea Concha! ac"uired by ho&estead a 2-hectare parcel of land situated inCo%on, ipolo% CityD b! that since 33, spouses Concha Epainsta?in%ly preservedE the forest in the2-hectare land, includin% the e:cess four (! hectares Euntitled forest landE located at its easternportionD c! that they possessed this e:cess hectares of land (#hich consisted of >ot No. 534, one-hectare portion of >ot No. 535-A and one-hectare portion of >ot Nos. 535-= and 742-A!

Econtinuously, publicly, notoriously, adversely, peacefully, in %ood faith and in concept of the (sic !o#ner since 33DE d! that they continued possession and occupation of the -hectare land after thedeath of orotea Concha on ece&ber 2, 32 and Haleriano 9r. on 'ay 32, 3D e! that theConcha spouses Ehave preserved the forest trees standin% in Fthe sub*ect lots to the e:clusion of thedefendants (respondents! or other persons fro& 33E up to Nove&ber 32, 35 (for Civil Case No.4388! or 6anuary 37 (for Civil Case Nos. 4 and 4! #hen respondents, Eby force,inti&idation, Fand stealth forcibly entered the pre&ises, ille%ally cut, collected, Fand disposedE of 23trees (for Civil Case No. 4388!, 22 trees (for Civil Case No. 4! or 5 trees (for Civil Case No.4!D f! that Ethe land is private land or that even assu&in% it #as part of the public do&ain,plaintiffs had already ac"uired i&perfect title theretoE under 9ec. 8(b! of C.A. No. 33, as a&endedby Republic Act (R.A.! No. 32D %! that respondents alle%edly cut into flitches the trees felled in >otNo. 534 (Civil Case No. 4388! #hile the lo%s ta?en fro& the sub*ect lots in Civil Case Nos. 4and 4 #ere sold to a ti&ber dealer in Latipunan, Ka&boan%a del NorteD h! that respondents

EsurreptitiouslyE filed free patent applications over the lots despite their full ?no#led%e that petitionerso#ned the lotsD i! that the %eodetic en%ineers #ho conducted the ori%inal survey over the lots neverinfor&ed the& of the survey to %ive the& an opportunity to oppose respondents applicationsD *! thatrespondents free patents and the correspondin% 1C$s #ere issued Eon account of fraud, deceit, badfaith and &isrepresentationED and ?! that the lots in "uestion have not been transferred to aninnocent purchaser.

1n separate occasions, respondents &oved for the dis&issal of the respective cases a%ainst the&on the sa&e %rounds of (a! lac? of *urisdiction of the R$C over the sub*ect &atters of theco&plaintsD (b! failure to state causes of action for reconveyanceD (c! prescriptionD and (d! #aiver,abandon&ent, laches and estoppel.3 1n the issue of *urisdiction, respondents contended that theR$C has no *urisdiction over the co&plaints pursuant to 9ection 3(2! of =atas a&bansa =l%. (=..!

32, as a&ended by R.A. No. 753, as in each case, the assessed values of the sub*ect lots areless than 2),))).)).

etitioners opposed,3 contendin% that the instant cases involve actions the sub*ect &atters of #hichare incapable of pecuniary esti&ation #hich, under 9ection 3(3! of =.. 32, as a&ended by R.A.753, fall #ithin the e:clusive ori%inal *urisdiction of the R$Cs. $hey also contended that they havet#o &ain causes of action for reconveyance and for recovery of the value of the trees felled byrespondents. +ence, the totality of the clai&s &ust be considered #hich, if co&puted, alle%edly falls#ithin the e:clusive ori%inal *urisdiction of the R$C.

$he trial court denied the respective &otions to dis&iss of respondents.34 $he respondents filed a6oint 'otion for Reconsideration,35 to no avail.37

issatisfied, respondents *ointly filed a etition for Certiorari , rohibition and reli&inary n*unction#ith rayer for ssuance of Restrainin% 1rder *+ ,arte38 #ith the CA, doc?eted as CA-G.R. 9 No.4. n its ecision,3 the CA reversed the resolutions and order of the trial court. t held that evenassu&in% that the co&plaints state a cause of action, the sa&e have been barred by the statute ofli&itations. $he CA ruled that an action for reconveyance based on fraud prescribes in ten (3)!years, hence, the instant co&plaints &ust be dis&issed as they involve titles issued for at leastt#enty-t#o (22! years prior to the filin% of the co&plaints. $he CA found it unnecessary to resolve theother issues.






















+ence, this appeal in #hich petitioners raise the follo#in% issues, vi<

0R9$ - +/$+/R 1R N1$ R/91N/N$ C1IR$ 10 A/A>9 (01R'/R 0R9$H91N! /RR/ N R/H/R9NG $+/ 1R/R 10 $+/ C1IR$ A ;I1 /NMNG $+/'1$1N 01R 9'99A>, C1N9/RNG $+/ 9'99A> 10 A AR$M C1'>AN$ 9R/'A$IR/ AN $RA> 1N $+/ '/R$9 9+1I> =/ C1NIC$/ $1 $+R/9+ 1I$

/H/N$ARM 'A$$/R9.

9/C1N - +/$+/R 1R N1$ $+/ R/91N/N$ C1IR$ 10 A/A>9 (01R'/R0R9$ H91N! /RR/ N 9'99NG $+/ /$$1N/R9 C1'>AN$9 1N F$+/GR1IN 10 R/9CR$1N.

$+R - +/$+/R 1R N1$ $+/ R/91N/N$ C1IR$ 10 A/A>9 (01R'/R 0R9$H91N! /RR/ N C1NC>ING $+A$ $+/R/ 9 N1 1CI'/N$ARM /H/NC/1N R/C1R $1 9+1 $+A$ /$$1N/R9 1N $+/ 9I=6/C$ 01R/9$ 1R$1N10 $+/ R1/R$/9 /RR1N/1I9>M NC>I/ N $+/ $$>/9 10 RHA$/R/91N/N$9.

01IR$+ - +/$+/R 1R N1$ $+/ /$$1N 10 +/R/N RHA$/ R/91N/N$90>/ $+ $+/ R/91N/N$ C1IR$ 10 A/A>9 (01R'/R 0R9$ H91N!9+1I> +AH/ =//N 9'99/ 1I$RG+$>M 01R RHA$/ R/91N/N$9$+/R/N 0A>IR/ $1 C1'>M $+ $+/ 'ANA$1RM R/;IR/'/N$ 10 9/C$1N3 RI>/ 54 10 $+/ RI>/9 10 C1IR$ $1 9I='$ C/R$0/ $RI/ C1/9 10 $+/

A99A>/ 1R/R9 10 $+/ $RA> C1IR$ +C+ R/N/R/ $+/R /$$1N (CAG.R. 4! /0C/N$ N 01R' AN 9I=9$ANC/ C$NG $+/ CA9/ 10 CA$IRAH9. C1IR$ 10 A/A>9 (372 9CRA 35!.2)

n their &e&orandu&,23 respondents reiterated their ar%u&ents in the courts belo# that a! theco&plaints of the petitioners in the trial court do not state causes of action for reconveyanceD b!assu&in% the co&plaints state causes of action for reconveyance, the sa&e have already beenbarred by prescriptionD c! the R$C does not have *urisdiction over the sub*ect &atter of the instantcasesD d! the clai&s for reconveyance in the co&plaints are barred by #aiver, abandon&ent, orother#ise e:tin%uished by laches and estoppelD and e! there is no special reason #arrantin% arevie# by this Court.

9ince the issue of *urisdiction is deter&inative of the resolution of the instant case yet the CA s?irtedthe "uestion, #e resolved to re"uire the parties to sub&it their respective 9upple&ental 'e&orandaon the issue of *urisdiction.22

n their 9upple&ental 'e&orandu&,2 petitioners contend that the nature of their co&plaints, asdeno&inated therein and as borne by their alle%ations, are suits for reconveyance, or annul&ent orcancellation of 1C$s and da&a%es. $he cases alle%edly involve &ore than *ust the issue of title andpossession since the nullity of the 1C$s issued to respondents and the reconveyance of the sub*ect

properties #ere also raised as issues. $hus, the R$C has *urisdiction under 9ection 3(3! of =..32, #hich provides that the R$C has *urisdiction EFin all civil actions in #hich the sub*ect of theliti%ation is incapable of pecuniary esti&ation.E etitioners cited a! Ram?no 8. #A2 #hich set thecriteria for deter&inin% #hether an action is one not capable of pecuniary esti&ationD b!SBan 8.#A24 #here it #as held that an action for annul&ent of title is under the *urisdiction of the R$CDc!Santo6 8. #A25 #here it #as si&ilarly held that an action for annul&ent of title, reversion andda&a%es #as #ithin the *urisdiction of the R$CD and d! #ommo4t4e6 Stora2e an I#! +;ant#orporat4on 8. #A27 #here it #as held that EF#here the action affects title to the property, it shouldbe filed in the R$C #here the property is located.E etitioners also contend that #hile it &ay be




















ar%ued that the assessed values of the sub*ect properties are #ithin the ori%inal *urisdiction of the&unicipal trial court ('$C!, they have included in their prayers Eany interest included thereinEconsistin% of felled natural %ro#n trees ille%ally cut by respondents. Co&binin% the assessedvalues of the properties as sho#n by their respective ta: declarations and the esti&ated value of thetrees cut, the total a&ount prayed by petitioners e:ceeds t#enty thousand pesos (2),))).))!.+ence, they contend that the R$C has *urisdiction under 9ection 3(2! of =.. 32.

6urisdiction over the sub*ect &atter is the po#er to hear and deter&ine cases of the %eneral class to#hich the proceedin%s in "uestion belon%.28 t is conferred by la# and an ob*ection based on this%round cannot be #aived by the parties.2 $o deter&ine #hether a court has *urisdiction over thesub*ect &atter of a case, it is i&portant to deter&ine the nature of the cause of action and of therelief sou%ht.)

$he trial court correctly held that the instant cases involve actions for reconveyance.3 An action forreconveyance respects the decree of re%istration as incontrovertible but see?s the transfer ofproperty, #hich has been #ron%fully or erroneously re%istered in other persons na&es, to its ri%htfuland le%al o#ners, or to those #ho clai& to have a better ri%ht.2 $here is no special %round for anaction for reconveyance. t is enou%h that the a%%rieved party has a le%al clai& on the property

superior to that of the re%istered o#ner

and that the property has not yet passed to the hands of aninnocent purchaser for value.

$he reliefs sou%ht by the petitioners in the instant cases typify an action for reconveyance. $hefollo#in% are also the co&&on alle%ations in the three co&plaints that are sufficient to constitutecauses of action for reconveyance, vi<

(a! $hat plaintiff Haleriano 9. Concha, 9r. to%ether #ith his spouse orotea Concha havepainsta?in%ly preserveFd the forest standin% in the area Fof their 2-hectare ho&esteadincludin% the four hectares untitled forest land located at the eastern portion of the forestfro& 33 #hen they #ere ne#ly &arried, the date they ac"uired this property by occupationor possessionD4

(b! $hat spouses Haleriano 9. Concha 9r. and orotea . Concha have preserved the foresttrees standin% in Fthese parcels of land to the e:clusion of the defendants >o&ocsos orother persons fro& 33 up to Nove&ber 32, 35 Ffor Civil Case No. 4388 and 6anuary37 Ffor Civil Case Nos. 4 and 4 #hen defendantsF, by force, inti&idation, FandstealthF, forcibly entered the pre&ises, ille%alFly cut, collected, disposed a total of Ft#enty-one (23! trees for Civil Case No. 4388, t#enty-t#o (22! trees for Civil Case No. 4 and si:(5! trees for Civil Case No. 4 of various si<esD5

(c! $hat this clai& is an assertion that the land is private land or that even assu&in% it #aspart of the public do&ain, plaintiff had already ac"uired i&perfect title thereto under 9ec.8(b! of FC.A. No. 33F, other#ise ?no#n as the ublic >and ActF, as a&ended by FR.A.No. F753D7

(d! $hat Frespondents and their predecessors-in-interest ?ne# #hen they surreptitiouslyfiled8 Ftheir respective patent applications and #ere issued their respective free patents andori%inal certificates of title Fthat the sub*ect lots belon%ed to the petitionersD

(e! F$hat respondents free patents and the correspondin% ori%inal certificates of titles #ereissued on account of fraud, deceit, bad faith and &isrepresentationD) and

(f! $he land in "uestion has not been transferred to an innocent purchaser .3




































$hese cases &ay also be considered as actions to re&ove cloud on ones title as they are intendedto procure the cancellation of an instru&ent constitutin% a clai& on petitioners alle%ed title #hich#as used to in*ure or ve: the& in the en*oy&ent of their alle%ed title.2

=ein% in the nature of actions for reconveyance or actions to re&ove cloud on ones title, theapplicable la# to deter&ine #hich court has *urisdiction is 9ection 3(2! of =.. 32, as a&ended by

R.A. No. 753, vi"

9ection 3. 6urisdiction in Civil Cases.-- Re%ional $rial Courts shall e:ercise e:clusiveori%inal *urisdiction : : :

(2! n all civil actions #hich involve the title to, or possession of, real property, or any interesttherein, #here the assessed value of the property involved e:ceeds $#enty thousand pesos(2),))).))! or for civil actions in 'etro 'anila, #here such value e:ceeds 0ifty thousandpesos (4),))).))! e:cept actions for forcible entry into and unla#ful detainer of lands orbuildin%s, ori%inal *urisdiction over #hich is conferred upon the 'etropolitan $rial Courts,'unicipal $rial Courts, and 'unicipal Circuit $rial CourtsD

: : :.

n the cases at bar, it is undisputed that the sub*ect lots are situated in Co%on, ipolo% City and theirassessed values are less than 2),))).)), to #it

Civil Case No. >ot No. Assessed Halue

4388 534 3,)).))

4 535-A ,4)).))

4 535-= ,).))

742-A 3,88).)).

+ence, the '$C clearly has *urisdiction over the instant cases.

etitioners contention that this case is one that is incapable of pecuniary esti&ation under thee:clusive ori%inal *urisdiction of the R$C pursuant to 9ection 3(3! of =.. 32 is erroneous.








n a nu&ber of cases, #e have held that actions for reconveyance of or for cancellation of title4 toor to "uiet title5 over real property are actions that fall under the classification of cases that involveEtitle to, or possession of, real property, or any interest therein.E

$he ori%inal te:t of 9ection 3(2! of =.. 32 as #ell as its forerunner, 9ection (b! of R.A. 25,7 asa&ended, %ave the R$Cs (for&erly courts of first instance! e:;?648e or424na; C?r464t4on 4En a;;

484; at4on6 B4 4n8o;8e te t4t;e to, or po66e664on o, rea; propert, or an 4ntere6t tere4n,e:cept actions for forcible entry into and unla#ful detainer of lands or buildin%s, ori%inal *urisdictionover #hich is conferred upon 'etropolitan $rial Courts, F'$Cs, and 'unicipal Circuit $rial Courts(conferred upon the city and &unicipal courts under R.A. 25, as a&ended!.E $hus, under the oldla#, there #as no substantial effect on *urisdiction #hether a case is one, the sub*ect &atter of #hich#as incapable of pecuniary esti&ation, under 9ection 3(3! of =.. 32 or one involvin% title toproperty under 9ection 3(2!. $he distinction bet#een the t#o classes beca&e crucial #ith thea&end&ent introduced by R.A. No. 7538 in 3 #hich e:panded the e:clusive ori%inal *urisdictionof the first level courts to include Eall civil actions #hich involve title to, or possession of, realproperty, or any interest thereinBere te a66e66e 8a;?e o te propert or 4ntere6t tere4noe6 not e:ee TBent to?6an pe6o6 F+&0,000.00 or, 4n 484; at4on6 4n Metro Man4;a,Bere 6? a66e66e 8a;?e oe6 not e:ee /4t to?6an pe6o6 F+(0,000.00 e:;?648e o4ntere6t, ama2e6 o Bate8er 54n, attorneH6 ee6, ;4t42at4on e:pen6e6 an o6t6. $hus,under the present la#, ori%inal *urisdiction over cases the sub*ect &atter of #hich involves Etitle to,possession of, real property or any interest thereinE under 9ection 3(2! of =.. 32 is dividedbet#een the first and second level courts, #ith the assessed value of the real property involved asthe bench&ar?. $his a&end&ent #as introduced to Eunclo% the overloaded doc?ets of the R$Cs#hich #ould result in the speedier ad&inistration of *ustice.E

$he cases of Ram?no 8. #A4) and #ommo4t4e6 Stora2e an I#! +;ant #orporat4on 8.#A,43 relied upon by the petitioners, are inapplicable to the cases at bar. Ram?no involved aco&plaint for &andatory in*unction, not one for reconveyance or annul&ent of title. $he bone ofcontention #as #hether the case #as incapable of pecuniary esti&ation considerin% petitionerscontention that the pecuniary clai& of the co&plaint #as only attorneys fees of 3),))), hence, the'$C had *urisdiction. $he Court defined the criterion for deter&inin% #hether an action is one that is

incapable of pecuniary esti&ation and held that the issue of #hether petitioner violated theprovisions of the 'aster eed and eclaration of Restriction of the Corporation is one that isincapable of pecuniary esti&ation. $he clai& for attorneys fees #as &erely incidental to the principalaction, hence, said a&ount #as not deter&inative of the courts *urisdiction. Nor can #ommo4t4e6Stora2e an I#! +;ant #orporat4on provide any co&fort to petitioners for the issue resolved by theCourt in said case #as venue and not *urisdiction. $he action therein #as for da&a%es, accountin%and fi:in% of rede&ption period #hich #as filed on 1ctober 28, 3, before the passa%e of R.A. No.753. n resolvin% the issue of venue, the Court held that EF#here the action affects title to property,it should be instituted in the FR$C #here the property is situated. $he 9ta. 'aria ce lant @ Cold9tora%e is located in 9ta. 'aria, =ulacan. $he venue in Civil Case No. -727)75 #as thereforei&properly laid.E

orse, the cases of SBan 8. #A42 and Santo6 8. #A4 cited by the petitioners, contradict their o#nposition that the nature of the instant cases falls under 9ection 3(3! of =.. 32. $he co&plaintsin SBan and Santo6 #ere filed prior to the enact&ent of R.A. No. 753. n SBan, the Court held thatthe action bein% one for annul&ent of title, the R$C had ori%inal *urisdiction under 9ection 3(2! of=.. 32. n Santo6, the Court si&ilarly held that the co&plaint for cancellation of title, reversion andda&a%es is also one that involves title to and possession of real property under 9ection 3(2! of =..32. $hus, #hile the Court held that the R$C had *urisdiction, the Court classified actions forEannul&ent of titleE and Ecancellation of title, reversion and da&a%esE as civil actions that involveEtitle to, or possession of, real property, or any interest thereinE under 9ection 3(2! of =.. 32.























etitioners contention that the value of the trees cut in the sub*ect properties constitutes Eanyinterest therein (in the sub*ect properties!E that should be co&puted in addition to the respectiveassessed values of the sub*ect properties is unavailin%. 9ection 3(2! of =.. 32, as a&ended byR.A. No. 753, is clear that the R$C shall e:ercise *urisdiction Ein all civil actions #hich involve thetitle to, or possession of, real property, or any interest therein, Bere te a66e66e 8a;?e o tepropert 4n8o;8e e:ee6 TBent to?6an pe6o6 F+&0,000.00 or or 484; at4on6 4n Metro

Man4;a, Bere 6? 8a;?e e:ee6 /4t to?6an pe6o6 F+(0,000.00.E t is true that therecovery of the value of the trees cut fro& the sub*ect properties &ay be included in the ter& Eanyinterest therein.E +o#ever, the la# is e&phatic that in deter&inin% #hich court has *urisdiction, it isonly the assessed value of the realty involved that should be co&puted.4 n this case, there is nodispute that the assessed values of the sub*ect properties as sho#n by their ta: declarations areless than 2),))).)). Clearly, *urisdiction over the instant cases belon%s not to the R$C but to the'$C.

IN VI! !R!O/, the decision of the Court of Appeals is hereby A00R'/ that the R$C ofipolo% City, =ranch , has no *urisdiction in Civil Case Nos. 4388, 4 and 4.

SO ORD!R!D.

)nares-Santiago$ Sandoval->utierre"$ Corona$ A"cuna$ JJ.$ concur.





G.R. No6. L-10*17-1* /ebr?ar &*, 19(*

!NRIU! LO+!@, petitioner,

vs.

VI#!NT! OROSA, %R., an +LA@A T!ATR!, IN#., respondents.

'icolas Belmonte and Ben4amin . de ,eralta for petitioner.

olentino & >arcia and . 5. Cru" for respondent !u"on Surety Co.$ %nc. Jose B. acatangay for

respondent ,la"a eatre$ %nc.

/!LI, J.=

/nri"ue >ope< is a resident of =alayan, =atan%as, doin% business under the trade na&e of >ope<-

Castelo 9a#&ill. 9o&eti&e in 'ay, 35, Hicente 1rosa, 6r., also a resident of the sa&e province,

dropped at >ope< house and invited hi& to &a?e an invest&ent in the theatre business. t #as

inti&ated that 1rosa, his fa&ily and close friends #ere or%ani<in% a corporation to be ?no#n as

la<a $heatre, nc., that #ould en%a%e in such venture. Althou%h >ope< e:pressed his un#illin%ness

to invest of the sa&e, he a%reed to supply the lu&ber necessary for the construction of the proposedtheatre, and at 1rosas behest and assurance that the latter #ould be personally liable for any

account that the said construction &i%ht incur, >ope< further a%reed that pay&ent therefor #ould be

on de&and and not cash on delivery basis. ursuant to said verbal a%ree&ent, >ope< delivered the

lu&ber #hich #as used for the construction of the la<a $heatre on 'ay 37, 35, up to ece&ber

of the sa&e year. =ut of the total cost of the &aterials a&ountin% to 52,244.84, >ope< #as paid

only 2),88.4), thus leavin% a balance of 3,773.4.

e &ay state at this *uncture that the la<a $heatre #as erected on a piece of land #ith an area of

57.37 s"uare &eters for&erly o#ned by Hicente 1rosa, 6r., and #as ac"uired by the corporation on

9epte&ber 24, 35, for 5,))). As >ope< #as pressin% 1rosa for pay&ent of the re&ainin% unpaid

obli%ation, the latter and =elar&ino Rustia, the president of the corporation, pro&ised to obtain a

ban? loan by &ort%a%in% the properties of the la<a $heatre., out of #hich said a&ount of3,773.4 #ould be satisfied, to #hich assurance >ope< had to accede. In?no#n to hi&, ho#ever,

as early as Nove&ber, 35, the corporation already %ot a loan for ),))) fro& the hilippine

National =an? #ith the >u<on 9urety Co&pany as surety, and the corporation in turn e:ecuted a

&ort%a%e on the land and buildin% in favor of said co&pany as counter-security. As the land at that

ti&e #as not yet brou%ht under the operation of the $orrens 9yste&, the &ort%a%e on the sa&e #as

re%istered on Nove&ber 35, 35, under Act No. . 9ubse"uently, #hen the corporation applied

for the re%istration of the land under Act 5, such &ort%a%e #as not revealed and thus 1ri%inal

Certificate of $itle No. 1-3 #as correspondin%ly issued on 1ctober 24, 37, #ithout any

encu&brance appearin% thereon.

ersistent de&and fro& >ope< for the pay&ent of the a&ount due hi& caused Hicente 1rosa, 6r. to

e:ecute on 'arch 37, 37, an alle%ed Edeed of assi%n&entE of his 2) shares of stoc? of the la<a$heater, nc., at 3)) per share or #ith a total value of 2,))) in favor of the creditor, and as the

obli%ation still re&ained unsettled, >ope< filed on Nove&ber 32, 37, a co&plaint #ith the Court of

0irst nstance of =atan%as (Civil Case No. 4)3 #hich later beca&e R-47! a%ainst Hicente 1rosa, 6r.

and la<a $heater, nc., prayin% that defendants be sentenced to pay hi& *ointly and severally the

su& of 3,773.4, #ith le%al interest fro& the firin% of the actionD that in case defendants fail to pay

the sa&e, that the buildin% and the land covered by 1C$ No. 1-3 o#ned by the corporation be

sold at public auction and the proceeds thereof be applied to said indebtednessD or that the 2)



shares of the capital stoc? of the la<a $heatre, nc., assi%ned by Hicente 1rosa, 6r., to said plaintiff

be sold at public auction for the sa&e purposeD and for such other re&edies as &ay be #arranted by

the circu&stances. laintiff also caused the annotation of a notice of lis pendens on said properties

#ith the Re%ister of eeds.

efendants Hicente 1rosa, 6r. and la<a $heatre, nc., filed separate ans#ers, the first denyin% that

the &aterials #ere delivered to hi& as a pro&oter and later treasurer of the corporation, because he

had purchased and received the sa&e on his personal accountD that the land on #hich the &ovie

house #as constructed #as not char%ed #ith a lien to secure the pay&ent of the afore&entioned

unpaid obli%ationD and that the 2) shares of stoc? of the la<a $heatre, nc., #as not assi%ned to

plaintiff as collaterals but as direct security for the pay&ent of his indebtedness. As special defense,

this defendant contended that as the 2) shares of stoc? assi%ned and conveyed by the assi%nor

and accepted by >ope< as direct security for the pay&ent of the a&ount of 3,773.4 #ere

personal properties, plaintiff #as barred fro& recoverin% any deficiency if the proceeds of the sale

thereof at public auction #ould not be sufficient to cover and satisfy the obli%ation. t #as thus

prayed that he be declared e:e&pted fro& the pay&ent of any deficiency in case the proceeds fro&

the sale of said personal properties #ould not be enou%h to cover the a&ount sou%ht to be collected.

efendant la<a $heatre, nc., on the other hand, practically set up the sa&e line of defense by

alle%in% that the buildin% &aterials delivered to 1rosa #ere on the latters personal accountD and that

there #as no understandin% that said &aterials #ould be paid *ointly and severally by 1rosa and the

corporation, nor #as a lien char%ed on the properties of the latter to secure pay&ent of the sa&e

obli%ation. As special defense, defendant corporation averred that #hile it #as true that the &aterials

purchased by 1rosa #ere sold by the latter to the corporation, such transactions #ere in %ood faith

and for valuable consideration thus #hen plaintiff failed to clai& said &aterials #ithin ) days fro&

the ti&e of re&oval thereof fro& 1rosa, lu&ber beca&e a different and distinct specie and plaintiff

lost #hatever ri%hts he &i%ht have in the sa&e and conse"uently had no recourse a%ainst the la<a

$heatre, nc., that the clai& could not have been refectionary credit, for such ?ind of obli%ation

referred to an indebtedness incurred in the repair or reconstruction of so&ethin% already e:istin%

and this concept did not include an entirely ne# #or?D and that the la<a $heatre, nc., havin% beenincorporated on 1ctober 3, 35, it could not have contracted any obli%ation prior to said date. t

#as, therefore, prayed that the co&plaint be dis&issedD that said defendant be a#arded the su&

4,))) for da&a%es, and such other relief as &ay be *ust and proper in the pre&ises.

$he surety co&pany, in the &eanti&e, upon discovery that the land #as already re%istered under

the $orrens 9yste& and that there #as a notice of lis pendens thereon, filed on Au%ust 37, 38, or

#ithin the 3-year period after the issuance of the certificate of title, a petition for revie# of the decree

of the land re%istration court dated 1ctober 38, 37, #hich #as &ade the basis of 1C$ No. 1-3,

in order to annotate the ri%hts and interests of the surety co&pany over said properties (>and

Re%istration Case No. 37 G>R1 Rec. No. 25!. 1pposition thereto #as offered by /nri"ue >ope<,

assertin% that the a&ount de&anded by hi& constituted a preferred lien over the properties of the

obli%orsD that the surety co&pany #as %uilty of ne%li%ence #hen it failed to present an opposition tothe application for re%istration of the propertyD and that if any violation of the ri%hts and interest of

said surety #ould ever be &ade, sa&e &ust be sub*ect to the lien in his favor.

$he t#o cases #ere heard *ointly and in a decision dated 1ctober ), 342, the lo#er Court, after

&a?in% an e:haustive and detailed analysis of the respective stands of the parties and the evidence

adduced at the trial, held that defendants Hicente 1rosa, 6r., and the la<a $heatre, nc.,

#ere 4ointly liable for the unpaid balance of the cost of lu&ber used in the construction of



the building and the plaintiff thus ac"uired the &aterial&ans lien over the sa&e. n &a?in% the

pronounce&ent that the lien #as &erely confined to the buildin% and did not e:tend to the land on

#hich the construction #as &ade, the trial *ud%e too? into consideration the fact that #hen plaintiff

started the delivery of lu&ber in 'ay, 35, the land #as not yet o#ned by the corporationD that the

&ort%a%e in favor of >u<on 9urety Co&pany #as previously re%istered under Act No. D that the

codal provision (Art. 32 of the old 9panish Civil Code! specifyin% that refection credits are

preferred could refer only to buildin%s #hich are also classified as real properties, upon #hich saidrefection #as &ade. t #as, ho#ever, declared that plaintiffs lien on the buildin% #as superior to the

ri%ht of the surety co&pany. And findin% that the la<a $heatre, nc., had no ob*ection to the revie#

of the decree issued in its favor by the land re%istration court and the inclusion in the title of the

encu&brance in favor of the surety co&pany, the court a quo %ranted the petition filed by the latter

co&pany. efendants 1rosa and the la<a $heatre, nc., #ere thus re"uired to pay 4ointly the

a&ount of 3,773.4 #ith le%al interest and costs #ithin ) days fro& notice of said decisionD that

in case of default, the 2) shares of stoc? assi%ned by 1rosa to plaintiff be sold at public auction

and the proceeds thereof be applied to the pay&ent of the a&ount due the plaintiff, plus interest and

costsD and that the encu&brance in favor of the surety co&pany be endorsed at the bac? of 1C$ No.

1-3, #ith notation that #ith respect to the buildin%, said &ort%a%e #as sub*ect to the

&aterial&ans lien in favor of /nri"ue >ope<.

laintiff tried to secure a &odification of the decision in so far as it declared that the obli%ation of

therein defendants #as *oint instead of solidary, and that the lien did not e:tend to the land, but

sa&e #as denied by order the court of ece&ber 2, 342. $he &atter #as thus appealed to the

Court of appeals, #hich affir&ed the lo#er courts rulin%, and then to this $ribunal. n this instance,

plaintiff-appellant raises 2 issues (3! #hether a &aterial&ans lien for the value of the &aterials used

in the construction of a buildin% attaches to said structure alone and does not e:tend to the land on

#hich the buildin% is adhered toD and (2! #hether the lo#er court and the Court of Appeals erred in

not providin% that the &aterial &ans liens is superior to the &ort%a%e e:ecuted in favor surety

co&pany not only on the buildin% but also on the land.

t is to be noted in this appeal that /nri"ue >ope< has not raised any "uestion a%ainst the part of thedecision sentencin% defendants 1rosa and la<a $heatre, nc., to pay 4ointly the su& of 3,773.4,

so e #ill not ta?e up or consider anythin% on that point. Appellant, ho#ever, contends that the lien

created in favor of the furnisher of the &aterials used for the construction, repair or refection of a

buildin%, is also e:tended to the land #hich the construction #as &ade, and in support thereof he

relies on Article 32 of the 9panish Civil Code, pertinent la# on the &atter, #hich reads as follo#s

AR$. 32. ith respect to deter&inate real property and real ri%hts of the debtor, the

follo#in% are preferred

: : : : : : : : :

4. Credits for refection, not entered or recorded, (it respect to te estate upon (ic terefection (as made, and only #ith respect to other credits different fro& those &entioned in

four precedin% para%raphs.

t is ar%ued that in vie# of the e&ploy&ent of the phrase real estate, or i&&ovable property, and

inas&uch as said provision does not contain any specification deli&itin% the lien to the buildin%, said

article &ust be construed as to e&brace both the land and the buildin% or structure adherin% thereto.

e cannot subscribe to this vie#, for #hile it is true that %enerally, real estate connotes the land and



the buildin% constructed thereon, it is obvious that the inclusion of the buildin%, separate and distinct

fro& the land, in the enu&eration of #hat &ay constitute real properties3 could &ean only one thin%

that a buildin% is by itself an i&&ovable property, a doctrine already pronounced by this Court in

the case of !eung )ee vs. Strong acinery Co., 7 hil., 5. 'oreover, and in vie# of the

absence of any specific provision of la# to the contrary, a buildin% is an i&&ovable property,

irrespective of #hether or not said structure and the land on #hich it is adhered to belon% to the

sa&e o#ner.

A close e:a&ination of the provision of the Civil Code invo?ed by appellant reveals that the la# %ives

preference to unre%istered refectionary credits only #ith respect to the real estate upon #hich the

refection or #or? #as &ade. $his bein% so, the inevitable conclusion &ust be that the lien so created

attaches &erely to the i&&ovable property for the construction or repair of #hich the obli%ation #as

incurred. /vidently, therefore, the lien in favor of appellant for the unpaid value of the lu&ber used in

the construction of the buildin% attaches only to said structure and to no other property of the

obli%ors.

Considerin% the conclusion thus arrived at, i.e., that the &aterial&ans lien could be char%ed only to

the buildin% for #hich the credit #as &ade or #hich received the benefit of refection, the lo#er court

#as ri%ht in, holdin% at the interest of the &ort%a%ee over the land is superior and cannot be &ade

sub*ect to the said &aterial&ans lien.

herefore, and on the stren%th of the fore%oin% considerations, the decision appealed fro& is

hereby affir&ed, #ith costs a%ainst appellant. t is so ordered.

,aras$ C.J.$ Beng"on$ ,adilla$ ontemayor$ 5eyes$ A.$ Bautista Angelo$ !abrador$ Concepcion$

5eyes$ J.B.!. and *ndencia$ JJ.$ concur.



G.R. No. *7917 A?2?6t 7, 1990

S+S. %UAN ". DULOS an MARIA #. DULOS petitioners,

vs.

#OURT O/ A++!ALS, S+S. MARIANO NO#OM an ANA#OR!TA NO#OM an S+S.

LOR!N@O ONG !NG #ONG an #ARM!N SO#O, an D!+UT$ S!RI// ONORIO SANTOS

o te O4e o te Ser4 o Ma5at4, Metro Man4;a, respondents.

Santiago$ Acosta$ Arevalo & Associates for petitioners.

elecio 8irgilio *mata !a( #ffice collaborating counsel for petitioners.

Arturo S. Santos for private respondents.

#RU@, J.:

=y this special civil action of certiorari and prohibition, the spouses 6uan and 'aria ulos #ould

have this Court nullify the resolution of the respondent court dated April 27, 38, denyin% their

application for a #rit of preli&inary in*unction a%ainst the enforce&ent of the decision of the

'etropolitan $rial Court of >as iPas dated 1ctober , 388.

1n 6une 2, 388, the spouses ulos #ere sued for forcible entry by the spouses 'ariano and

Anacoreta Noco&, private respondents herein, in the 'etropolitan $rial Court of >as iPas. $he case

#as set for a pre-trial conference on Au%ust 38, 388, #ith due notice to both parties.

/arlier, on Au%ust 35, 388, the petitioners had filed a co&plaint a%ainst the private respondents for

annul&ent of sale, reconveyance of title, and various other reliefs plus a #rit of preli&inary

in*unction. $his #as doc?eted as Civil Case No. 88355 in the Re%ional $rial Court of 'a?ati. 1n

Au%ust 37, 388, the petitioners filed a &otion for the suspension of the proceedin%s in the forcible

entry case on the %round that there #as a pre*udicial "uestion of o#nership involved in the

annul&ent case. $he petitioners counsel, Atty. edro 9. Ravelo, set Au%ust 38, 388, for the hearin%

of the &otion at the pre-trial conference scheduled on the sa&e date.

Neither petitioners nor their counsel appeared on that date. +o#ever, one Ananita Rectra &anifested

at the hearin% that she #as duly authori<ed by virtue of a special po#er of attorney to represent

petitioner 6uan ulos, her brother, #ho #as then confined at the 'anila octors +ospital after

havin% under%one a fe&ur operation. $he petitioners #ere nonetheless declared in default. 6ud%e

Alfredo R. /nri"ue< denied the &otion for the suspension of the proceedin%s, holdin% that the issue

of o#nership #as not a pre*udicial "uestion in the e*ect&ent case. $he evidence of the private

respondents #as subse"uently received in the absence of the petitioners.

1n 1ctober , 388, *ud%&ent #as rendered in favor of the private respondents, the dispositive

portion readin% as follo#s

+/R/01R/, the Court finds the eviction of defendants to be #arranted and

accordin%ly hereby renders *ud%&ent in favor of the plaintiffs, orderin% defendants as

follo#s



3. and all persons clai&in% ri%ht under the& to vacate the portion of plaintiffs

property covered by $C$ No. 9-44)34 situated at =o. bayo >as iPas '', and to

re&ove structures and i&prove&ents thereon and to restore to plaintiff peaceful

possession thereofD

2. orderin% defendants to pay the su& of 2),))).)) as reasonable co&pensation

for the use of property be%innin% April 388 and every &onth thereafter until

defendants shall have co&pletely vacated the propertyD

. orderin% defendants to pay the plaintiffs the su& of 3),))).))D and

. orderin% defendants to pay the cost of the suit.

$he petitioners received a copy of this decision on 1ctober 3), 388. $hey filed a &otion for

reconsideration on 1ctober 38, 388, #hich #as denied in an order dated Nove&ber 37, 388.

nstead of ta?in% an appeal, the petitioners filed on ece&ber , 388, a special civil action

for certiorari and prohibition #ith preli&inary in*unction #ith the Re%ional $rial Court of 'a?atiprayin% for the nullification of the said *ud%&ent and the earlier order declarin% the& in default.

1n ece&ber 3, 388, #hile that case #as pendin%, the private respondents &oved for the

i&&ediate e:ecution of the *ud%&ent of the 'etropolitan $rial Court on the %round that no appeal

had been filed #ith the proper court and the decision had beco&e final and e:ecutory. $he &otion

#as %ranted, and the #rit of e:ecution #as issued on 0ebruary 8, 38.

1n 0ebruary 35, 38, the petition for certiorari , etc. #as dis&issed on the %rounds that (3! the

petitioners had been properly declared in default for failure to appear at the scheduled hearin%D (2!

the filin% of the action for nullification in the Re%ional $rial Court #as not a valid reason for the

suspension of the hearin% in the 'etropolitan $rial CourtD (! the &otion for reconsideration #as

fatally defective because it #as not verified and acco&panied by an affidavit of &eritD and (! the%rant of the &otion for suspension or postpone&ent #as discretionary upon the court. 1

1n 'arch 2), 38, on &otion of the private respondents, the 'etropolitan $rial Court issued a #rit

of de&olition.

$he petitioners then elevated the &atter to the Court of Appeals in a petition for certiorari and

prohibition #ith preli&inary in*unction. n its order dated April 27, 38, the respondent court denied

the application for preli&inary in*unction, & pro&ptin% the petitioners to co&e to this Court

on certiorari .

rayin% for a nullification of the said order and the proceedin%s held before the '$C, they ar%ue

that

(a! $he pre-trial conference of Au%ust 38, 388, #as the first hearin% set for the

purpose and #ith the appearance of the representative in the person of 'rs. Rectra,

duly ar&ed #ith a notari<ed hospital certification attestin% to the confine&ent of

petitioner 6uan ulos and a special po#er-of-attorney authori<in% her to appear as

representative of petitioner 6uan ulos durin% the conference, 6ud%e /nri"ue<

should not have outri%htly declared petitioners in default.



(b! An affidavit of &erit under the circu&stances #as no lon%er necessary since the

default order #as anchored upon petitioners failure to appear durin% the pre-trial

(citing the case of >ucero v. acayo, 22 9CRA 3))!.

(c! etitioners have been in actual physical possession of the sub*ect land fro& the

ti&e the said property #as ac"uired in 37 by petitioner 'aria ulos fro& her co-

heirs by virtue of the sale of hereditary ri%hts until the sa&e #as assi%ned to ulos

Realty in 37 lon% before the e:ecution of the si&ulated sale in favor of private

respondents in 377.

(d! As the Au%ust 38, 388 1rder #as issued #ithout or in e:cess of *urisdiction, the

sa&e is null and void and all proceedin%s subse"uent thereto #ere also a nullity,

there is no *ud%&ent to spea? of, hence there is nothin% to appeal.

0or their part, the private respondents assert that (3! Rectra did not file her special po#er of

attorney #ith the 'etropolitan $rial CourtD (2! the petitioners did not do anythin% to have the order of

default set asideD (! the deed of sale sou%ht to be nullified #as e:ecuted #ay bac? on 6uly 3, 377,

and the co&plaint for nullification #as filed only eleven years and nine &onths laterD (! petitioner'aria ulos could have appeared at the pre-trial hearin% but failed to do so #ithout any e:planation

#hatsoeverD and (4! certiorari cannot be a substitute for the lost ri%ht of appeal.

$he Court %ave due course to the petition and re"uired the parties to sub&it si&ultaneous

&e&oranda. After considerin% the issues and their ar%u&ents in their respective &e&oranda, #e

find the petition to be #ithout &erit.

0irst of all, it is clear that a case &ay be dis&issed for failure of a party to appear at the pre-trial

conference, as authori<ed by Rule 2), 9ection 2, of the Rules of Court, thus

9ec. 2. A party #ho fails to appear at a pre-trial conference &ay be non-suited or

considered as in default.

Rectra did appear at the scheduled hearin% but did not present to the court her po#er of attorney to

represent 6uan ulos or even the &edical certificate of his operation. n their &e&orandu&, the

petitioners say 'aria ulos did not appear for herself because the spouses ulos had lon% been

separated. +o#ever, the ulos la#yer did not sho# up either althou%h it #as he #ho had as?ed that

his &otion to suspend proceedin%s be set on the date of the pre-trial conference. $he aver&ent that

Atty. Ravelo #as already 7 years old at the ti&e is a fli&sy e:cuse for carelessness nor do #e

accept the e:planation that he #as then attendin% to several detention prisoners. At any rate, the

petitioners could have availed the&selves of other counsel if their counsel then #as unable to

represent the& at the conference.

9econdly, the denial of the application for preli&inary in*unction #as *ustified because the petitioners

did not e&ploy the proper re&edy prescribed by the Rules of Court. As enu&erated in !ina v. Court

of Appeals, 3 the re&edies available to a defendant declared in default are

3. $he defendant in default &ay, at any ti&e after discovery thereof and before *ud%&ent, file a

&otion under oath to set aside the order of default on the %round that #as failure to ans#er or

appear on the date set for pre-trial #as due to fraud, accident, &ista?e or e:cusable ne%li%ence, and

that he has a &eritorious defenseD



2. f the *ud%&ent has already been rendered #hen the defendant discovered the default, but before

the sa&e has beco&e final and e:ecutory, he &ay file a petition for ne# trial under 9ec. 3(a! of Rule

7D

. f the defendant discovered the default after the *ud%&ent has beco&e final and e:ecutory, he

&ay file a petition for relief under 9ec. 2, Rule 8D and

. +e &ay also appeal fro& the *ud%&ent rendered a%ainst hi& as contrary to the evidence or the

la#, even if no petition to set aside the order of default has been presented by hi&.

$he petitioners did not avail the&selves of any of the above re&edies. nstead, after ta?in% no action

#hatsoever for all of si+ty days, they filed a &otion for reconsideration of the decision dated 1ctober

, 388, and, #hen this #as denied, #ent to the Re%ional $rial Court on certiorari and prohibition. As

#e held in the >ina case

... #here the *ud%&ent rendered by the respondent court is the one sou%ht to be

annulled, a petition for relief, under Rule 8, #hich is a re&edy in the ordinary course

of la#, could have been *ust as plain, ade"uate and speedy as certiorari ...

No less si%nificant is the fact that the *ud%&ent of the &etropolitan trial court had already beco&e

final and e:ecutory because of the petitioners failure to appeal therefro& on ti&e. $hey #ere served

#ith notice of the *ud%&ent on 1ctober 3), 388, and filed a &otion for reconsideration on 1ctober

38, 388, #hich #as denied on Nove&ber 37, 388. $hey therefore had until ece&ber 3), 388,

#ithin #hich to perfect their appeal. $hey did not.

nstead, they filed the petition for certiorari in the Re%ional $rial Court, #hich correctly dis&issed it. t

is settled that the special civil action of certiorari is not and cannot be &ade a substitute for an

appeal, #here the latter re&edy is available, ' as in this case. $he filin% of the petition

for certiorari did not therefore suspend the period for appeal or prevent the *ud%&ent fro& beco&in%

final.

t is also note#orthy that the petitioners &ade no &ove to set aside the order of default rendered by

the 'etropolitan $rial Court althou%h they #ere a#are of it. Rectra #as present #hen the said order

#as dictated in open court on Au%ust 38, 388. t is reasonable to assu&e she i&&ediately infor&ed

her brother, #ho had sent her there precisely to represent hi& at the proceedin%s. /ven so, the

petitioners did nothin% until the *ud%&ent by default #as rendered a%ainst the& by 6ud%e /nri"ue<

on 1ctober , 388. All of forty-si+ days had elapsed fro& the order of default #hen the *ud%&ent of

default #as rendered.

$he petitioners no# contend that they could not have ta?en any action prior to the rendition of the

*ud%&ent because they had never been furnised #ith copies of the order declarin% the& in default.

$his is unacceptable. t is obvious the petitioners have failed to ta?e into account the follo#in%

pertinent provisions of the Rules of Court concernin% notices in case a party is declared in default

Rule 38, 9ec. 2. *ffect of order of default. /:cept as provided in 9ection of Rule

3, a party declared in default shall not be entitled to notice of subse"uent

proceedin%s, nor to ta?e part in the trial.



Rule 3, 9ec. . Service upon party in default . No service of papers other than

substantially a&ended or supple&ental pleadin%s and final orders or *ud%&ents shall

be necessary on a party in default unless he files a &otion to set aside the order of

default in #hich event he shall be entitled to notice of all further processin%s

re%ardless of #hether the order of default is set aside or not.

Rule 38, 9ec. . 5elief from order of default . A party declared in default &ay at

any ti&e after discovery thereof and before *ud%&ent file a &otion under oath to set

aside the order of default upon proper sho#in% that his failure to ans#er #as due to

fraud, accident, &ista?e or e:cusable ne%lect and that he has a &eritorious defense.

n such case the order of default &ay be set aside on such ter&s and conditions as

the *ud%e &ay i&pose in the interest of *ustice.

$he ter& used in the last "uoted section is discovery , not notice. And this is so because the

defendant declared in default is not entitled to Enotice of subse"uent proceedin%sE under the

precedin% rules.

n Su"ara v. Caluag ,

(

this Court held that a &otion for reconsideration of a *ud%&ent of default &aybe considered a petition for relief under 9ection 2 of Rule 8 only if the follo#in% re"uisites are

present (3! it &ust be verifiedD (2! it &ust be filed #ithin 5) days fro& the ti&e petitioner learns of

the decision but not &ore than 5 &onths fro& entry thereof, and (! in case of failure to file an

ans#er, the &otion &ust be acco&panied by affidavits of &erit sho#in% the fraud, accident, &ista?e

and e:cusable ne%li%ence relied upon.

e held in )ap v. aDada ) that a &otion for reconsideration &ay be considered a &otion for ne#

trial under 9ec. 2, Rule 7, if it is acco&panied by an affidavit of &erit. 9ince petitioners assert that

their ri%hts #ere i&paired because they #ere prevented fro& presentin% evidence of their defenses,

it #as a fatal o&ission for the& not to attach to their &otion an affidavit of &erit, i.e., an affidavit

sho#in% the facts constitutin% the valid defense #hich the &ovant &ay prove in case a ne# trial is

%ranted. $he re"uire&ent of such an affidavit is essential because a ne# trial #ould be only a #asteof the ti&e of the court if the co&plaint turns out to be %roundless or the defense ineffective.

$he &otion for reconsideration filed by the petitioners on 1ctober 38, 388, #ith the 'etropolitan

$rial Court, and #hich is Anne: E+E of the petition, #as not verified. t does not appear also that it

#as acco&panied by an affidavit of &erit as re"uired by the Rules.

hile this Court did declare in Continental !eaf obacco v. %ntermediate Appellate Court , 7 Ethat

*ud%&ents by default are not loo?ed upon #ith favor,E the default *ud%&ent in that case #as set aside

because there #as e:cusable ne%lect. =esides, the petitioners had a &eritorious defense #hich

*ustified a rela:ation of the procedural rules to allo# full hearin% on the substantive issues raised.

9uch circu&stances have not been clearly sho#n in the case before us.

A little &ore fa&iliarity #ith our rules of procedure could have avoided the predica&ent in #hich the

petitioners no# find the&selves. Infortunately, the Court cannot %ive the& any relief. $hey have not

*ustified a rela:ation of the said rules. hile it is true that a liti%ation is not a %a&e of technicalities, it

is e"ually true that every case &ust be prosecuted in accordance #ith the prescribed procedure, to

insure an orderly ad&inistration of *ustice. t is this sy&biosis bet#een for& and substance that

%uarantees that desirable result.



+/R/01R/, the petition is 9'99/, #ith costs a%ainst the petitioner. t is so ordered.

'arvasa <Cairman=$ >ancayco$ >riDo Aquino and edialdea$ JJ.$ concur.

G.R. No. >-7)47 1ctober 2, 34

'AC+N/RM @ /NGN//RNG 9I>/9, NC., petitioner,

vs.

T! ONORA"L! #OURT O/ A++!ALS, ON. +OT!N#IANO +!#SON, %UDG! O/ T!

#OURT O/ /IRST INSTAN#! O/ MANILA, I+O LIM!STON! #O., IN#., an ANTONIO

VILLARAMA, respondents.

8icente J. /rancisco for petitioner.

Capistrano and Capistrano for respondents.

#ON#!+#ION, J .=

$his is an appeal by certiorari , ta?en by petitioner 'achinery and /n%ineerin% 9upplies nc., fro& a

decision of the Court of Appeals denyin% an ori%inal petition for certiorari filed by said petitioner

a%ainst +on. otenciano ecson, po >i&estone Co., nc., and Antonio Hillara&a, the respondents

herein.

$he pertinent facts are set forth in the decision of the Court of Appeals, fro& #hich #e "uote

1n 'arch 3, 34, the herein petitioner filed a co&plaint for replevin in the Court of 0irst

nstance of 'anila, Civil Case No. 3)57, entitled E'achinery and /n%ineerin% 9upplies,

nc., laintiff, vs. po >i&estone Co., nc., and r. Antonio Hillara&a, defendantsE, for the

recovery of the &achinery and e"uip&ent sold and delivered to said defendants at their

factory in barrio =i%ti, Nor<a%aray, =ulacan. Ipon application e:-parte of the petitioner

co&pany, and upon approval of petitioners bond in the su& of 34,75.)), on 'arch

3,34, respondent *ud%e issued an order, co&&andin% the rovincial 9heriff of =ulacan to

sei<e and ta?e i&&ediate possession of the properties specified in the order (Appendi: ,

Ans#er!. 1n 'arch 3, 34, t#o deputy sheriffs of =ulacan, the said Ra&on 9. Roco, and a

cre# of technical &en and laborers proceeded to =i%ti, for the purpose of carryin% the courts

order into effect. >eonardo Contreras, 'ana%er of the respondent Co&pany, and edro

$orres, in char%e thereof, &et the deputy sheriffs, and Contreras handed to the& a letter

addressed to Atty. >eopoldo C. alad, e:-oficio rovincial 9heriff of =ulacan, si%ned by Atty.

Adolfo Garcia of the defendants therein, protestin% a%ainst the sei<ure of the properties in

"uestion, on the %round that they are not personal properties. Contendin% that the 9heriffs

duty is &erely &inisterial, the deputy sheriffs, Roco, the latters cre# of technicians and

laborers, Contreras and $orres, #ent to the factory. Rocos attention #as called to the fact

that the e"uip&ent could not possibly be dis&antled #ithout causin% da&a%es or in*uries to

the #ooden fra&es attached to the&. As Roco insisted in dis&antlin% the e"uip&ent on his

o#n responsibility, alle%in% that the bond #as posted for such eventuality, the deputy sheriffs

directed that so&e of the supports thereof be cut (Appendi: 2!. 1n 'arch 2), 34, the

defendant Co&pany filed an ur%ent &otion, #ith a counter-bond in the a&ount of 34,75,

for the return of the properties sei<ed by the deputy sheriffs. 1n the sa&e day, the trial court



issued an order, directin% the rovincial 9heriff of =ulacan to return the &achinery and

e"uip&ent to the place #here they #ere installed at the ti&e of the sei<ure (Appendi: !. 1n

'arch 23, 34, the deputy sheriffs returned the properties sei<ed, by depositin% the& alon%

the road, near the "uarry, of the defendant Co&pany, at =i%ti, #ithout the benefit of inventory

and #ithout re-installin% he& in their for&er position and replacin% the destroyed posts,

#hich rendered their use i&practicable. 1n 'arch 2, 34, the defendants counsel as?ed

the provincial 9heriff if the &achinery and e"uip&ent, du&ped on the road #ould be re-installed to& their for&er position and condition (letter, Appendi: !. 1n 'arch 2, 34, the

rovincial 9heriff filed an ur%ent &otion in court, &anifestin% that Roco had been as?ed to

furnish the 9heriffs office #ith the e:penses, laborers, technical &en and e"uip&ent, to carry

into effect the courts order, to return the sei<ed properties in the sa&e #ay said Roco found

the& on the day of sei<ure, but said Roco absolutely refused to do so, and as?in% the court

that the laintiff therein be ordered to provide the re"uired aid or relieve the said 9heriff of

the duty of co&plyin% #ith the said order dated 'arch 2), 34 (Appendi: 4!. 1n 'arch ),

34, the trial court ordered the rovincial 9heriff and the laintiff to reinstate the &achinery

and e"uip&ent re&oved by the& in their ori%inal condition in #hich they #ere found before

their re&oval at the e:pense of the laintiff (Appendi: 7!. An ur%ent &otion of the rovincial

9heriff dated April 34, 34, prayin% for an e:tension of 2) days #ithin #hich to co&ply #ith

the order of the Court (appendi: 3)! #as deniedD and on 'ay , 34, the trial court ordered

the laintiff therein to furnish the rovincial 9heriff #ithin 4 days #ith the necessary funds,

technical &en, laborers, e"uip&ent and &aterials to effect the repeatedly &entioned re-

installation (Appendi: 3!. (etitioners brief, Appendi: A, pp. -H.!

$hereupon petitioner instituted in the Court of Appeals civil case G.R. No. 3328-R, entitled

E'achinery and /n%ineerin% 9upplies, nc. vs. +onorable otenciano ecson, rovincial 9heriff of

=ulacan, po >i&estone Co., nc., and Antonio Hillara&a.E n the petition therein filed, it #as alle%ed

that, in orderin% the petitioner to furnish the provincial sheriff of =ulacan E#ith necessary funds,

technical &en, laborers, e"uip&ent and &aterials, to effect the installation of the &achinery and

e"uip&entE in "uestion, the Court of 0irs nstance of =ulacan had co&&itted a %rave abuse if

discretion and acted in e:cess of its *urisdiction, for #hich reason it #as prayed that its order to thiseffect be nullified, and that, &ean#hile, a #rit of preli&inary in*unction be issued to restrain the

enforce&ent o said order of &ay , 34. Althou%h the afore&entioned #rit #as issued by the Court

of Appeals, the sa&e subse"uently dis&issed by the case for lac? of &erit, #ith costs a%ainst the

petitioner, upon the follo#in% %rounds

hile the sei<ure of the e"uip&ent and personal properties #as ordered by the respondent

Court, it is, ho#ever, lo%ical to presu&e that said court did not authori<e the petitioner or its

a%ents to destroy, as they did, said &achinery and e"uip&ent, by dis&antlin% and unboltin%

the sa&e fro& their concrete base&ents, and cuttin% and sa#in% their #ooden supports,

thereby renderin% the& unserviceable and beyond repair, unless those parts re&oved, cut

and sa#ed be replaced, #hich the petitioner, not #ithstandin% the respondent Courts order,

ada&antly refused to do. $he rovincial 9heriff s tortious act, in obedience to the insistentproddin%s of the president of the etitioner, Ra&on 9. Roco, had no *ustification in la#,

not#ithstandin% the 9heriffs clai& that his duty #as &inisterial. t #as the bounden duty of

the respondent 6ud%e to %ive redress to the respondent Co&pany, for the unla#ful and

#ron%ful acts co&&itted by the petitioner and its a%ents. And as this #as the true ob*ect of

the order of 'arch ), 34, #e cannot hold that sa&e #as #ithin its *urisdiction to issue.

$he &inisterial duty of the 9heriff should have its li&itations. $he 9heriff ?ne# or &ust have

?no#n #hat is inherently ri%ht and inherently #ron%, &ore so #hen, as in this particular case,

the deputy sheriffs #ere sho#n a letter of respondent Co&panys attorney, that the



&achinery #ere not personal properties and, therefore, not sub*ect to sei<ure by the ter&s of

the order. hile it &ay be conceded that this #as a "uestion of la# too technical to decide

on the spot, it #ould not have costs the 9heriff &uch ti&e and difficulty to brin% the letter to

the courts attention and have the e"uip&ent and &achinery %uarded, so as not to frustrate

the order of sei<ure issued by the trial court. =ut actin% upon the directives of the president

of the etitioner, to sei<e the properties at any costs, in issuin% the order sou%ht to be

annulled, had not co&&itted abuse of discretion at all or acted in an arbitrary or despotic&anner, by reason of passion or personal hostilityD on the contrary, it issued said order,

%uided by the #ell ?no#n principle that of the property has to be returned, it should be

returned in as %ood a condition as #hen ta?en (=achrach 'otor Co., nc., vs. =ona, hil.,

78!. f any one had %one beyond the scope of his authority, it is the respondent rovincial

9heriff. =ut considerin% that fact that he acted under the pressure of Ra&on 9. Roco, and

that the order i&pu%ned #as issued not by hi&, but by the respondent 6ud%e, e si&ply

declare that said 9heriff act #as &ost unusual and the result of a poor *ud%&ent. 'oreover,

the 9heriff not bein% an officer e:ercisin% *udicial functions, the #rit &ay not reach hi&,

for certiorari lies only to revie# *udicial actions.

$he etitioner co&plains that the respondent 6ud%e had co&pletely disre%arded his

&anifestation that the &achinery and e"uip&ent sei<ed #ere and still are the etitioners

property until fully paid for and such never beca&e i&&ovable. $he "uestion of o#nership

and the applicability of Art. 34 of the ne# Civil Code are i&&aterial in the deter&ination of

the only issue involved in this case. t is a &atter of evidence #hich should be decided in the

hearin% of the case on the &erits. $he "uestion as to #hether the &achinery or e"uip&ent in

liti%ation are i&&ovable or not is li?e#ise i&&aterial, because the only issue raised before

the trial court #as #hether the rovincial 9heriff of =ulacan, at the etitioners instance, #as

*ustified in destroyin% the &achinery and in refusin% to restore the& to their ori%inal for& , at

the e:pense of the etitioner. hatever &i%ht be the le%al character of the &achinery and

e"uip&ent, #ould not be in any #ay *ustify their *ustify their destruction by the 9heriffs and

the said etitioners. (etitioners brief, Appendi: A, pp. H-H.!

A &otion for reconsideration of this decision of the Court of Appeals havin% been denied , petitioner

has brou%ht the case to Is for revie# by #rit of certiorari . Ipon e:a&ination of the record, e are

satisfied, ho#ever that the Court of Appeals #as *ustified in dis&issin% the case.

$he special civil action ?no#n as replevin, %overned by Rule 52 of Court, is applicable only to

Epersonal propertyE.

1rdinarily replevin &ay be brou%ht to recover any specific personal property unla#fully ta?en

or detained fro& the o#ner thereof, provided such property is capable of identification and

deliveryD but replevin (ill not lie for te recovery of real property or incorporeal personal

property. (77 C. 6. 9. 37! (/&phasis supplied.!

hen the sheriff repaired to the pre&ises of respondent, po >i&estone Co., nc., &achinery and

e"uip&ent in "uestion appeared to be attached to the land, particularly to the concrete foundation of

said pre&ises, in a fi:ed &anner, in such a #ay that the for&er could not be separated fro& the

latter E#ithout brea?in% the &aterial or deterioration of the ob*ect.E +ence, in order to re&ove said

outfit, it beca&e necessary, not only to unbolt the sa&e, but , also, to cut so&e of its #ooden

supports. 'oreover, said &achinery and e"uip&ent #ere Eintended by the o#ner of the tene&ent for

an industryE carried on said i&&ovable and tended.E 0or these reasons, they #ere already



i&&ovable property pursuant to para%raphs and 4 of Article 34 of Civil Code of the hilippines,

#hich are substantially identical to para%raphs and 4 of Article of the Civil Code of 9pain. As

such i&&ovable property, they #ere not sub*ect to replevin.

n so far as an article, includin% a fi:ture anne:ed by a tenant, is re%arded as part of the

realty, it is not the sub*ect for personalityD . . . .

. . . the action of replevin does not lie for articles so anne:ed to the realty as to be part as to

be part thereof, as, for e:a&ple, a house or a turbine pu&p constitutin% part of a buildin%s

coolin% syste&D . . . (5 C. 6. 9. 3))) @ 3))3!

'oreover, as the provincial sheriff hesitated to re&ove the property in "uestion, petitioners a%ent

and president, 'r. Ra&on Roco, insisted Eon the dis&antlin% at is o(n responsibility ,E statin% that.,

precisely, Ethat is the reason #hy plaintiff posted a bond .E n this &anner, petitioner clearly assu&ed

the correspondin% ris?s.

9uch assu&ption of ris? beco&es &ore apparent #hen #e consider that, pursuant to 9ection 4 of

Rule 52 of the Rules of Court, the defendant in an action for replevin is entitled to the return of theproperty in dispute upon the filin% of a counterbond, as provided therein. n other #ords, petitioner

?ne# that the restitution of said property to respondent co&pany &i%ht be ordered under said

provision of the Rules of Court, and that, conse"uently, it &ay beco&e necessary for petitioner to

&eet the liabilities incident to such return.

>astly, althou%h the parties have not cited, and e have not found, any authority s"uarely in point

obviously real property are not sub*ect to replevin it is #ell settled that, #hen the restitution of

#hat has been ordered, the %oods in "uestion shall be returned in substantially the sa&e condition

as #hen ta?en (4 C.6., 4)-5)), 5)-53!. nas&uch as the &achinery and e"uip&ent involved in

this case #ere duly installed and affi:ed in the pre&ises of respondent co&pany #hen petitioners

representative caused said property to be dis&antled and then re&oved, it follo#s that petitioner

&ust also do everythin% necessary to the reinstallation of said property in confor&ity #ith its ori%inalcondition.

herefore, the decision of the Court of Appeals is hereby affir&ed, #ith costs a%ainst the petitioner.

9o ordered.

,ablo$ Beng"on$ ,adilla$ ontemayor$ 5eyes$ A.$ Jugo$ Bautista Angelo and 5eyes$ J.B.!.$

JJ.$ concur.

,aras$ C.J.$ concurs in the result.



G.R. No. 1)*((7 /ebr?ar 1), &007

/!LS !N!RG$, IN#., etitioner, vs.T! +ROVIN#! O/ "ATANGAS an

T! O//I#! O/ T! +ROVIN#IAL ASS!SSOR O/ "ATANGAS, Respondents.

:----------------------------------------------------:

G.R. No. 170)&* /ebr?ar 1), &007

NATIONAL +O!R #OR+ORATION, etitioner, vs.LO#AL "OARD O/ ASS!SSM!NT A++!ALS O/ "ATANGAS, LAURO #. ANDA$A, 4n 46apa4t a6 te A66e66or o te +ro84ne o "atan2a6, an te +ROVIN#! O/ "ATANGASrepre6ente b 4t6 +ro84n4a; A66e66or, Respondents.

/ C 9 1 N

#ALL!%O, SR., J.:

=efore us are t#o consolidated cases doc?eted as G.R. No. 358447 and G.R. No. 37)528, #hich#ere filed by petitioners 0/>9 /ner%y, nc. (0/>9! and National o#er Corporation (NC!,respectively. $he first is a petition for revie# on certiorari assailin% the Au%ust 24, 2)) ecision3 ofthe Court of Appeals (CA! in CA-G.R. 9 No. 57) and its Resolution2 dated 6une 2), 2))4D thesecond, also a petition for revie# on certiorari, challen%es the 0ebruary , 2))4 ecision andNove&ber 2, 2))4 Resolution of the CA in CA-G.R. 9 No. 573. =oth petitions #ere dis&issedon the %round of prescription.

$he pertinent facts are as follo#s

1n 6anuary 38, 3, NC entered into a lease contract #ith olar /ner%y, nc. over :) 'diesel en%ine po#er bar%es &oored at =alayan =ay in Calaca, =atan%as. $he contract,deno&inated as an /ner%y Conversion A%ree&ent4 (A%ree&ent!, #as for a period of five years.

Article 3) reads

3).3 R/91N9=>$M. NA1C1R shall be responsible for the pay&ent of (a! all ta:es, i&portduties, fees, char%es and other levies i&posed by the National Govern&ent of the Republic of thehilippines or any a%ency or instru&entality thereof to #hich 1>AR &ay be or beco&e sub*ect toor in relation to the perfor&ance of their obli%ations under this a%ree&ent (other than (i! ta:es

i&posed or calculated on the basis of the net inco&e of 1>AR and ersonal nco&e $a:es of itse&ployees and (ii! construction per&it fees, environ&ental per&it fees and other si&ilar fees andchar%es! and (b! all real estate ta:es and assess&ents, rates and other char%es in respect of theo#er =ar%es.5

9ubse"uently, olar /ner%y, nc. assi%ned its ri%hts under the A%ree&ent to 0/>9. $he NC initiallyopposed the assi%n&ent of ri%hts, citin% para%raph 37.2 of Article 37 of the A%ree&ent.

http://www.lawphil.net/judjuris/juri2007/feb2007/gr_168557_2007.html#fnt1
















1n Au%ust 7, 34, 0/>9 received an assess&ent of real property ta:es on the po#er bar%es fro&rovincial Assessor >auro C. Andaya of =atan%as City. $he assessed ta:, #hich li?e#ise coveredthose due for 3, a&ounted to 45,38,)88.) per annu&. 0/>9 referred the &atter to NC,re&indin% it of its obli%ation under the A%ree&ent to pay all real estate ta:es. t then %ave NC thefull po#er and authority to represent it in any conference re%ardin% the real property assess&ent ofthe rovincial Assessor.

n a letter 7 dated 9epte&ber 7, 34, NC sou%ht reconsideration of the rovincial AssessorOsdecision to assess real property ta:es on the po#er bar%es. +o#ever, the &otion #as denied on9epte&ber 22, 34, and the rovincial Assessor advised NC to pay the assess&ent.8 $hispro&pted NC to file a petition #ith the >ocal =oard of Assess&ent Appeals (>=AA! for the settin%aside of the assess&ent and the declaration of the bar%es as non-ta:able ite&sD it also prayed thatshould >=AA find the bar%es to be ta:able, the rovincial Assessor be directed to &a?e thenecessary corrections.

n its Ans#er to the petition, the rovincial Assessor averred that the bar%es #ere real property forpurposes of ta:ation under 9ection 3(c! of Republic Act (R.A.! No. 735).

=efore the case #as decided by the >=AA, NC filed a 'anifestation, infor&in% the >=AA that theepart&ent of 0inance (10! had rendered an opinion3) dated 'ay 2), 35, #here it is clearlystated that po#er bar%es are not real property sub*ect to real property assess&ent.

1n Au%ust 25, 35, the >=AA rendered a Resolution33 denyin% the petition. $he fallo reads

+/R/01R/, the etition is /N/. 0/>9 is hereby ordered to pay the real estate ta: in thea&ount of45,38,)88.), for the year 3.

91 1R/R/.32

$he >=AA ruled that the po#er plant facilities, #hile they &ay be classified as &ovable or personal

property, are nevertheless considered real property for ta:ation purposes because they are installedat a specific location #ith a character of per&anency. $he >=AA also pointed out that the o#ner ofthe bar%esS0/>9, a private corporationSis the one bein% ta:ed, not NC. A &ere a%ree&ent &a?in%NC responsible for the pay&ent of all real estate ta:es and assess&ents #ill not *ustify thee:e&ption of 0/>9D such a privile%e can only be %ranted to NC and cannot be e:tended to 0/>9.0inally, the >=AA also ruled that the petition #as filed out of ti&e.

A%%rieved, 0/>9 appealed the >=AAOs rulin% to the Central =oard of Assess&ent Appeals (C=AA!.

1n Au%ust 28, 35, the rovincial $reasurer of =atan%as City issued a Notice of >evy and arrantby istraint3over the po#er bar%es, see?in% to collect real property ta:es a&ountin%to 22,5)2,324.3 as of 6uly 3, 35. $he notice and #arrant #as officially served to 0/>9 onNove&ber 8, 35. t then filed a 'otion to >ift >evy dated Nove&ber 3, 35, prayin% that therovincial Assessor be further restrained by the C=AA fro& enforcin% the disputed assess&entdurin% the pendency of the appeal.

1n Nove&ber 34, 35, the C=AA issued an 1rder 3 liftin% the levy and distraint on the properties of0/>9 in order not to pree&pt and render ineffectual, nu%atory and illusory any resolution or

*ud%&ent #hich the =oard #ould issue.





















'eanti&e, the NC filed a 'otion for ntervention34 dated Au%ust 7, 38 in the proceedin%s beforethe C=AA. $his #as approved by the C=AA in an 1rder 35 dated 9epte&ber 22, 38.

urin% the pendency of the case, both 0/>9 and NC filed several &otions to ad&it bond to%uarantee the pay&ent of real property ta:es assessed by the rovincial Assessor (in the event thatthe *ud%&ent be unfavorable to the&!. $he bonds #ere duly approved by the C=AA.

1n April 5, 2))), the C=AA rendered a ecision37 findin% the po#er bar%es e:e&pt fro& realproperty ta:. $he dispositive portion reads

+/R/01R/, the Resolution of the >ocal =oard of Assess&ent Appeals of the rovince of=atan%as is hereby reversed. Respondent-appellee rovincial Assessor of the rovince of =atan%asis hereby ordered to drop sub*ect property under ARJ$a: eclaration No. )38-))48 fro& the >istof $a:able roperties in the Assess&ent Roll. $he rovincial $reasurer of =atan%as is herebydirected to act accordin%ly.

91 1R/R/.38

Rulin% in favor of 0/>9 and NC, the C=AA reasoned that the po#er bar%es belon% to NCD sincethey are actually, directly and e:clusively used by it, the po#er bar%es are covered by thee:e&ptions under 9ection 2(c! of R.A. No. 735).3 As to the other *urisdictional issue, the C=AAruled that prescription did not preclude the NC fro& pursuin% its clai& for ta: e:e&ption inaccordance #ith 9ection 2)5 of R.A. No. 735). $he rovincial Assessor filed a &otion forreconsideration, #hich #as opposed by 0/>9 and NC.

n a co&plete volte face, the C=AA issued a Resolution2) on 6uly 3, 2))3 reversin% its earlierdecision. $he fallo of the resolution reads

+/R/01R/, pre&ises considered, it is the resolution of this =oard that

(a! $he decision of the =oard dated 5 April 2))) is hereby reversed.

(b! $he petition of 0/>9, as #ell as the intervention of NC, is dis&issed.

(c! $he resolution of the >ocal =oard of Assess&ent Appeals of =atan%as is hereby affir&ed,

(d! $he real property ta: assess&ent on 0/>9 by the rovincial Assessor of =atan%as isli?e#ise hereby affir&ed.

91 1R/R/.23

0/>9 and NC filed separate &otions for reconsideration, #hich #ere ti&ely opposed by the

rovincial Assessor. $he C=AA denied the said &otions in a Resolution22 dated 1ctober 3, 2))3.

issatisfied, 0/>9 filed a petition for revie# before the CA doc?eted as CA-G.R. 9 No. 57).'ean#hile, NC filed a separate petition, doc?eted as CA-G.R. 9 No. 573.

1n 6anuary 37, 2))2, NC filed a 'anifestationJ'otion for Consolidation in CA-G.R. 9 No. 57)prayin% for the consolidation of its petition #ith CA-G.R. 9 No. 573. n a Resolution2 dated0ebruary 32, 2))2, the appellate court directed NC to re-file its &otion for consolidation #ith CA-




























G.R. 9 No. 573, since it is the ponente of the latter petition #ho should resolve the re"uest forreconsideration.

NC failed to co&ply #ith the aforesaid resolution. 1n Au%ust 24, 2)), the $#elfth ivision of theappellate court rendered *ud%&ent in CA-G.R. 9 No. 57) denyin% the petition on the %round ofprescription. $he decretal portion of the decision reads

+/R/01R/, the petition for revie# is /N/ for lac? of &erit and the assailed Resolutionsdated 6uly 3, 2))3 and 1ctober 3, 2))3 of the Central =oard of Assess&ent Appeals are

A00R'/.

91 1R/R/.2

1n 9epte&ber 2), 2)), 0/>9 ti&ely filed a &otion for reconsideration see?in% the reversal of theappellate courtOs decision in CA-G.R. 9 No. 57).

$hereafter, NC filed a petition for revie# dated 1ctober 3, 2)) before this Court, doc?eted asG.R. No. 35433, assailin% the appellate courtOs decision in CA-G.R. 9 No. 57). $he petition

#as, ho#ever, denied in this CourtOs Resolution24 of Nove&ber 8, 2)), for NCOs failure tosufficiently sho# that the CA co&&itted any reversible error in the challen%ed decision. NC filed a&otion for reconsideration, #hich the Court denied #ith finality in a Resolution25 dated 6anuary 3,2))4.

'eanti&e, the appellate court dis&issed the petition in CA-G.R. 9 No. 573. t held that the ri%htto "uestion the assess&ent of the rovincial Assessor had already prescribed upon the failure of0/>9 to appeal the disputed assess&ent to the >=AA #ithin the period prescribed by la#. 9ince0/>9 had lost the ri%ht to "uestion the assess&ent, the ri%ht of the rovincial Govern&ent to collectthe ta: #as already absolute.

NC filed a &otion for reconsideration dated 'arch 8, 2))4, see?in% reconsideration of the 0ebruary

4, 2))4 rulin% of the CA in CA-G.R. 9 No. 573. $he &otion #as denied in a Resolution27

datedNove&ber 2, 2))4.

$he &otion for reconsideration filed by 0/>9 in CA-G.R. 9 No. 57) had been earlier denied forlac? of &erit in a Resolution28 dated 6une 2), 2))4.

1n Au%ust , 2))4, 0/>9 filed the petition doc?eted as G.R. No. 358447 before this Court, raisin%the follo#in% issues

A.

hether po#er bar%es, #hich are floatin% and &ovable, are personal properties and therefore, not

sub*ect to real property ta:.

=.

Assu&in% that the sub*ect po#er bar%es are real properties, #hether they are e:e&pt fro& realestate ta: under 9ection 2 of the >ocal Govern&ent Code (E>GCE!.

C.















Assu&in% ar%uendo that the sub*ect po#er bar%es are sub*ect to real estate ta:, #hether or not itshould be NC #hich should be &ade to pay the sa&e under the la#.

.

Assu&in% ar%uendo that the sub*ect po#er bar%es are real properties, #hether or not the sa&e is

sub*ect to depreciation *ust li?e any other personal properties.

/.

hether the ri%ht of the petitioner to "uestion the patently null and void real property ta: assess&enton the petitionerOs personal properties is i&prescriptible.2

1n 6anuary 3, 2))5, NC filed its o#n petition for revie# before this Court (G.R. No. 37)528!,indicatin% the follo#in% errors co&&itted by the CA

$+/ C1IR$ 10 A/A>9 GRAH/>M /RR/ N +1>NG $+A$ $+/ A/A> $1 $+/ >=AAA9 0>/ 1I$ 10 $'/.

$+/ C1IR$ 10 A/A>9 GRAH/>M /RR/ N N1$ +1>NG $+A$ $+/ 1/R =ARG/9 AR/ N1$ 9I=6/C$ $1 R/A> R1/R$M $A/9.

$+/ C1IR$ 10 A/A>9 GRAH/>M /RR/ N N1$ +1>NG $+A$ $+/ A99/99'/N$ 1N$+/ 1/R =ARG/9 A9 N1$ 'A/ N ACC1RANC/ $+ >A.)

Considerin% that the factual antecedents of both cases are si&ilar, the Court ordered theconsolidation of the t#o cases in a Resolution3 dated 'arch 8, 2))5. 2a(pi2.net

n an earlier Resolution dated 0ebruary 3, 2))5, the Court had re"uired the parties to sub&it theirrespective 'e&oranda #ithin ) days fro& notice. Al&ost a year passed but the parties had notsub&itted their respective &e&oranda. Considerin% that ta:esthe lifeblood of our econo&yareinvolved in the present controversy, the Court #as pro&pted to dispense #ith the said pleadin%s,#ith the end vie# of advancin% the interests of *ustice and avoidin% further delay.

n both petitions, 0/>9 and NC &aintain that the appeal before the >=AA #as not ti&e-barred.0/>9 ar%ues that #hen NC &oved to have the assess&ent reconsidered on 9epte&ber 7, 34,

the runnin% of the period to file an appeal #ith the >=AA #as tolled. 0or its part, NC posits that the5)-day period for appealin% to the >=AA should be rec?oned fro& its receipt of the denial of its&otion for reconsideration.

etitionersO contentions are bereft of &erit.

9ection 225 of R.A. No. 735), other#ise ?no#n as the >ocal Govern&ent Code of 33, provides











9/C$1N 225. >ocal =oard of Assess&ent Appeals. S Any o#ner or person havin% le%al interest inthe property #ho is not satisfied #ith the action of the provincial, city or &unicipal assessor in theassess&ent of his property &ay, #ithin si:ty (5)! days fro& the date of receipt of the #ritten notice of assess&ent, appeal to the =oard of Assess&ent Appeals of the province or city by filin% a petitionunder oath in the for& prescribed for the purpose, to%ether #ith copies of the ta: declarations andsuch affidavits or docu&ents sub&itted in support of the appeal.

e note that the notice of assess&ent #hich the rovincial Assessor sent to 0/>9 on Au%ust 7,34, contained the follo#in% state&ent

f you are not satisfied #ith this assess&ent, you &ay, #ithin si:ty (5)! days fro& the date of receipthereof, appeal to the =oard of Assess&ent Appeals of the province by filin% a petition under oath onthe for& prescribed for the purpose, to%ether #ith copies of ARJ$a: eclaration and such affidavitsor docu&ents sub&itted in support of the appeal. 2

nstead of appealin% to the =oard of Assess&ent Appeals (as stated in the notice!, NC opted to filea &otion for reconsideration of the rovincial AssessorOs decision, a re&edy not sanctioned by la#.

$he re&edy of appeal to the >=AA is available fro& an adverse rulin% or action of the provincial, cityor &unicipal assessor in the assess&ent of the property. t follo#s then that the deter&ination &adeby the respondent rovincial Assessor #ith re%ard to the ta:ability of the sub*ect real properties falls#ithin its po#er to assess properties for ta:ation purposes sub*ect to appeal before the >=AA.

e fully a%ree #ith the rationali<ation of the CA in both CA-G.R. 9 No. 57) and CA-G.R. 9 No.573. $he t#o divisions of the appellate court cited the case of Callanta v. 1ffice of the1&buds&an, #here #e ruled that under 9ection 225 of R.A. No 735), 4 the last action of the localassessor on a particular assess&ent shall be the notice of assess&entD it is this last action #hich%ives the o#ner of the property the ri%ht to appeal to the >=AA. $he procedure li?e#ise does notper&it the property o#ner the re&edy of filin% a &otion for reconsideration before the local assessor.$he pertinent holdin% of the Court in Callanta is as follo#s

: : : F$he sa&e Code is e"ually clear that the a%%rieved o#ners should have brou%ht their appealsbefore the >=AA. Infortunately, despite the advice to this effect contained in their respective noticesof assess&ent, the o#ners chose to brin% their re"uests for a revie#Jread*ust&ent before the cityassessor, a re&edy not sanctioned by the la#. $o allo# this procedure #ould indeed invite corruptionin the syste& of appraisal and assess&ent. t conveniently courts a %raft-prone situation #herevalues of real property &ay be initially set unreasonably hi%h, and then subse"uently reduced uponthe re"uest of a property o#ner. n the latter instance, allusions of a possible covert, illicit trade-offcannot be avoided, and in fact can conveniently ta?e place. 9uch occasion for &ischief &ust beprevented and e:cised fro& our syste&.5

0or its part, the appellate court declared in CA-G.R. 9 No. 573

: : :. $he Court announces +enceforth, #henever the local assessor sends a notice to the o#ner or la#ful possessor of real property of its revised assessed value, the for&er shall no lon%er have any

*urisdiction to entertain any re"uest for a revie# or read*ust&ent. $he appropriate foru& #here thea%%rieved party &ay brin% his appeal is the >=AA as provided by la#. t follo#s ineluctably that the5)-day period for &a?in% the appeal to the >=AA runs #ithout interruption. $his is #hat e held in9 57) and reaffir& today in 9 573.7

$o reiterate, if the ta:payer fails to appeal in due course, the ri%ht of the local %overn&ent to collectthe ta:es due #ith respect to the ta:payerOs property beco&es absolute upon the e:piration of the















period to appeal.8 t also bears stressin% that the ta:payerOs failure to "uestion the assess&ent inthe >=AA renders the assess&ent of the local assessor final, e:ecutory and de&andable, thus,precludin% the ta:payer fro& "uestionin% the correctness of the assess&ent, or fro& invo?in% anydefense that #ould reopen the "uestion of its liability on the &erits.

n fine, the >=AA acted correctly #hen it dis&issed the petitionersO appeal for havin% been filed out of

ti&eD the C=AA and the appellate court #ere li?e#ise correct in affir&in% the dis&issal. /le&entaryis the rule that the perfection of an appeal #ithin the period therefor is both &andatory and

*urisdictional, and failure in this re%ard renders the decision final and e:ecutory.)

n the Co&&ent filed by the rovincial Assessor, it is asserted that the instant petition is barred byres *udicataD that the final and e:ecutory *ud%&ent in G.R. No. 35433 (#here there #as a finaldeter&ination on the issue of prescription!, effectively precludes the clai&s hereinD and that the filin%of the instant petition after an adverse *ud%&ent in G.R. No. 35433 constitutes foru& shoppin%.

0/>9 &aintains that the ar%u&ent of the rovincial Assessor is co&pletely &isplaced since it #asnot a party to the erroneous petition #hich the NC filed in G.R. No. 35433. t avers that it did notparticipate in the aforesaid proceedin%, and the 9upre&e Court never ac"uired *urisdiction over it. As

to the issue of foru& shoppin%, petitioner clai&s that no foru& shoppin% could have been co&&ittedsince the ele&ents of litis pendentia or res *udicata are not present.

e do not a%ree.

Res *udicata pervades every or%ani<ed syste& of *urisprudence and is founded upon t#o %roundse&bodied in various &a:i&s of co&&on la#, na&ely (3! public policy and necessity, #hich &a?es itto the interest of the

9tate that there should be an end to liti%ation S republicae ut sit litiu&D and (2! the hardship on theindividual of bein% ve:ed t#ice for the sa&e cause S ne&o debet bis ve:ari et eade& causa. Aconflictin% doctrine #ould sub*ect the public peace and "uiet to the #ill and dereliction of individuals

and prefer the re%ale&ent of the liti%ious disposition on the part of suitors to the preservation of thepublic tran"uility and happiness.3 As #e ruled in +eirs of $rinidad e >eon Hda. de Ro:as v. Courtof Appeals2

: : : An e:istin% final *ud%&ent or decree S rendered upon the &erits, #ithout fraud or collusion, by acourt of co&petent *urisdiction actin% upon a &atter #ithin its authority S is conclusive on the ri%htsof the parties and their privies. $his rulin% holds in all other actions or suits, in the sa&e or any other

*udicial tribunal of concurrent *urisdiction, touchin% on the points or &atters in issue in the first suit.

: : :

Courts #ill si&ply refuse to reopen #hat has been decided. $hey #ill not allo# the sa&e parties ortheir privies to liti%ate ane# a "uestion once it has been considered and decided #ith finality.>iti%ations &ust end and ter&inate so&eti&e and so&e#here. $he effective and efficientad&inistration of *ustice re"uires that once a *ud%&ent has beco&e final, the prevailin% party shouldnot be deprived of the fruits of the verdict by subse"uent suits on the sa&e issues filed by the sa&eparties.

$his is in accordance #ith the doctrine of res *udicata #hich has the follo#in% ele&ents (3! thefor&er *ud%&ent &ust be finalD (2! the court #hich rendered it had *urisdiction over the sub*ect &atter and the partiesD (! the *ud%&ent &ust be on the &eritsD and (! there &ust be bet#een the first and














the second actions, identity of parties, sub*ect &atter and causes of action. $he application of thedoctrine of res *udicata does not re"uire absolute identity of parties but &erely substantial identity ofparties. $here is substantial identity of parties #hen there is co&&unity of interest or privity ofinterest bet#een a party in the first and a party in the second case even if the first case did noti&plead the latter.

$o recall, 0/>9 %ave NC the full po#er and authority to represent it in any proceedin% re%ardin%real property assess&ent. $herefore, #hen petitioner NC filed its petition for revie# doc?eted asG.R. No. 35433, it did so not only on its behalf but also on behalf of 0/>9. 'oreover, the assaileddecision in the earlier petition for revie# filed in this Court #as the decision of the appellate court inCA-G.R. 9 No. 57), in #hich 0/>9 #as the petitioner. $hus, the decision in G.R. No. 354335 isbindin% on petitioner 0/>9 under the principle of privity of interest. n fine, 0/>9 and NC aresubstantially Eidentical partiesE as to #arrant the application of res *udicata. 0/>9Os ar%u&ent that itis not bound by the erroneous petition filed by NC is thus unavailin%.

1n the issue of foru& shoppin%, #e rule for the rovincial Assessor. 0oru& shoppin% e:ists #hen,as a result of an adverse *ud%&ent in one foru&, a party see?s another and possibly favorable

*ud%&ent in another foru& other than by appeal or special civil action or certiorari. $here is also

foru& shoppin% #hen a party institutes t#o or &ore actions or proceedin%s %rounded on the sa&ecause, on the %a&ble that one or the other court #ould &a?e a favorable disposition.

etitioner 0/>9 alle%es that there is no foru& shoppin% since the ele&ents of res *udicata are notpresent in the cases at barD ho#ever, as already discussed, res *udicata &ay be properly appliedherein. etitioners en%a%ed in foru& shoppin% #hen they filed G.R. Nos. 358447 and 37)528 afterthe petition for revie# in G.R. No. 354335. ndeed, petitioners #ent fro& one court to another tryin%to %et a favorable decision fro& one of the tribunals #hich allo#ed the& to pursue their cases.

t &ust be stressed that an i&portant factor in deter&inin% the e:istence of foru& shoppin% is theve:ation caused to the courts and the parties-liti%ants by the filin% of si&ilar cases to clai&substantially the sa&e reliefs.4 $he rationale a%ainst foru& shoppin% is that a party should not beallo#ed to pursue si&ultaneous re&edies in t#o different fora. 0ilin% &ultiple petitions or co&plaints

constitutes abuse of court processes, #hich tends to de%rade the ad&inistration of *ustice, #rea?shavoc upon orderly *udicial procedure, and adds to the con%estion of the heavily burdened doc?etsof the courts.5

$hus, there is foru& shoppin% #hen there e:ist (a! identity of parties, or at least such parties asrepresent the sa&e interests in both actions, (b! identity of ri%hts asserted and relief prayed for, therelief bein% founded on the sa&e facts, and (c! the identity of the t#o precedin% particulars is suchthat any *ud%&ent rendered in the pendin% case, re%ardless of #hich party is successful, #oulda&ount to res *udicata in the other.7

+avin% found that the ele&ents of res *udicata and foru& shoppin% are present in the consolidatedcases, a discussion of the other issues is no lon%er necessary. Nevertheless, for the peace and

content&ent of petitioners, #e shall shed li%ht on the &erits of the case.

As found by the appellate court, the C=AA and >=AA po#er bar%es are real property and are thussub*ect to real property ta:. $his is also the inevitable conclusion, considerin% that G.R. No. 35433#as dis&issed for failure to sufficiently sho# any reversible error. $a: assess&ents by ta: e:a&inersare presu&ed correct and &ade in %ood faith, #ith the ta:payer havin% the burden of provin%other#ise.8 =esides, factual findin%s of ad&inistrative bodies, #hich have ac"uired e:pertise in theirfield, are %enerally bindin% and conclusive upon the CourtD #e #ill not assu&e to interfere #ith thesensible e:ercise of the *ud%&ent of &en especially trained in appraisin% property. here the *udicial















&ind is left in doubt, it is a sound policy to leave the assess&ent undisturbed. e find no reason todepart fro& this rule in this case.

n Consolidated /dison Co&pany of Ne# Mor?, nc., et al. v. $he City of Ne# Mor?, et al.,4) a po#erco&pany brou%ht an action to revie# property ta: assess&ent. 1n the cityOs &otion to dis&iss, the9upre&e Court of Ne# Mor? held that the bar%es on #hich #ere &ounted %as turbine po#er plants

desi%nated to %enerate electrical po#er, the fuel oil bar%es #hich supplied fuel oil to the po#er plantbar%es, and the accessory e"uip&ent &ounted on the bar%es #ere sub*ect to real property ta:ation.

'oreover, Article 34 (! of the Ne# Civil Code provides that EFdoc?s and structures #hich, thou%hfloatin%, are intended by their nature and ob*ect to re&ain at a fi:ed place on a river, la?e, or coastEare considered i&&ovable property. $hus, po#er bar%es are cate%ori<ed as i&&ovable property bydestination, bein% in the nature of &achinery and other i&ple&ents intended by the o#ner for anindustry or #or? #hich &ay be carried on in a buildin% or on a piece of land and #hich tend directlyto &eet the needs of said industry or #or?.43

etitioners &aintain nevertheless that the po#er bar%es are e:e&pt fro& real estate ta: under9ection 2 (c! of R.A. No. 735) because they are actually, directly and e:clusively used by

petitioner NC, a %overn&ent- o#ned and controlled corporation en%a%ed in the supply, %eneration,and trans&ission of electric po#er.

e affir& the findin%s of the >=AA and C=AA that the o#ner of the ta:able properties is petitioner0/>9, #hich in fine, is the entity bein% ta:ed by the local %overn&ent. As stipulated under 9ection2.33, Article 2 of the A%ree&ent

1N/R9+ 10 1/R =ARG/9. 1>AR shall o#n the o#er =ar%es and all the fi:tures,fittin%s, &achinery and e"uip&ent on the 9ite used in connection #ith the o#er =ar%es #hich havebeen supplied by it at its o#n cost. 1>AR shall operate, &ana%e and &aintain the o#er =ar%esfor the purpose of convertin% 0uel of NA1C1R into electricity.42

t follo#s then that 0/>9 cannot escape liability fro& the pay&ent of realty ta:es by invo?in% itse:e&ption in 9ection 2 (c! of R.A. No. 735), #hich reads

9/C$1N 2. /:e&ptions fro& Real roperty $a:. S $he follo#in% are e:e&pted fro& pay&ent ofthe real property ta:

: : :

(c! All &achineries and e"uip&ent that are actually, directly and e:clusively used by local #aterdistricts and %overn&ent-o#ned or controlled corporations en%a%ed in the supply and distribution of#ater andJor %eneration and trans&ission of electric po#erD : : :

ndeed, the la# states that the &achinery &ust be actually, directly and e:clusively used by the%overn&ent o#ned or controlled corporationD nevertheless, petitioner 0/>9 still cannot find solace inthis provision because 9ection 4.4, Article 4 of the A%ree&ent provides

1/RA$1N. 1>AR underta?es that until the end of the >ease eriod, sub*ect to the supply of thenecessary 0uel pursuant to Article 5 and to the other provisions hereof, it #ill operate the o#er=ar%es to convert such 0uel into electricity in accordance #ith art A of Article 7.4














t is a basic rule that obli%ations arisin% fro& a contract have the force of la# bet#een the parties.Not bein% contrary to la#, &orals, %ood custo&s, public order or public policy, the parties to thecontract are bound by its ter&s and conditions.4

$i&e and a%ain, the 9upre&e Court has stated that ta:ation is the rule and e:e&ption is thee:ception.44 $he la# does not loo? #ith favor on ta: e:e&ptions and the entity that #ould see? to be

thus privile%ed &ust *ustify it by #ords too plain to be &ista?en and too cate%orical to be&isinterpreted.45 $hus, applyin% the rule of strict construction of la#s %rantin% ta: e:e&ptions, andthe rule that doubts should be resolved in favor of provincial corporations, #e hold that 0/>9 isconsidered a ta:able entity.

$he &ere underta?in% of petitioner NC under 9ection 3).3 of the A%ree&ent, that it shall beresponsible for the pay&ent of all real estate ta:es and assess&ents, does not *ustify the e:e&ption.$he privile%e %ranted to petitioner NC cannot be e:tended to 0/>9. $he covenant is bet#een0/>9 and NC and does not bind a third person not privy thereto, in this case, the rovince of=atan%as.

t &ust be pointed out that the protracted and circuitous liti%ation has seriously resulted in the local

%overn&entOs deprivation of revenues. $he po#er to ta: is an incident of soverei%nty and is unli&itedin its &a%nitude, ac?no#led%in% in its very nature no peri&eter so that security a%ainst its abuse isto be found only in the responsibility of the le%islature #hich i&poses the ta: on the constituency#ho are to pay for it.47 $he ri%ht of local %overn&ent units to collect ta:es due &ust al#ays be upheldto avoid severe ta: erosion. $his consideration is consistent #ith the 9tate policy to %uarantee theautono&y of local %overn&ents48 and the ob*ective of the >ocal Govern&ent Code that they en*oy%enuine and &eanin%ful local autono&y to e&po#er the& to achieve their fullest develop&ent asself-reliant co&&unities and &a?e the& effective partners in the attain&ent of national %oals. 4

n conclusion, #e reiterate that the po#er to ta: is the &ost potent instru&ent to raise the neededrevenues to finance and support &yriad activities of the local %overn&ent units for the delivery ofbasic services essential to the pro&otion of the %eneral #elfare and the enhance&ent of peace,pro%ress, and prosperity of the people.5)

+/R/01R/, the etitions are /N/ and the assailed ecisions and Resolutions A00R'/.

91 1R/R/.

ROM!O %. #ALL!%O, SR. Associate 6ustice

/ C1NCIR

#ONSU!LO $NAR!S-SANTIAGO Associate 6ustice

MA. ALI#IA AUSTRIA-MARTIN!@ Asscociate 6ustice

MINITA V. #I#O-NA@ARIO Associate 6ustice

A $ $ / 9 $ A $ 1 N

attest that the conclusions in the above ecision had been reached in consultation before the case#as assi%ned to the #riter of the opinion of the CourtOs ivision.



















#ONSU!LO $NAR!S-SANTIAGO Associate 6usticeChairperson

C / R $ 0 C A $ 1 N

ursuant to 9ection 3, Article H of the Constitution and the ivision ChairpersonOs Attestation, it ishereby certified that the conclusions in the above decision #ere reached in consultation before thecase #as assi%ned to the #riter of the opinion of the CourtOs ivision.

R!$NATO S. +UNOChief 6ustice





Documents

Property Cases 1-10