THIRD DIVISIOND.B.T. MAR-BAY CONSTRUCTION, INCORPORATED,Petitioner,- versus -RICAREDO PANES, ANGELITO PANES,SALVADORCEA, ABOGADO MAUTIN, DONARDO PACLIBAR, ZOSIMO PERALTA and HILARION MANONGDO,Respondents.G.R. No. 167232Present:YNARES-SANTIAGO,J.,Chairperson,CHICO-NAZARIO,VELASCO, JR.,NACHURA, andPERALTA,JJ.Promulgated:July 31, 2009

x------------------------------------------------------------------------------------xDECISIONNACHURA,J.:Before this Court is a Petition[1]for Review onCertiorariunder Rule 45 of the Rules of Civil Procedure, assailing the Court of Appeals (CA) Decision[2]dated October 25, 2004 which reversed and set aside the Order[3]of the Regional Trial Court (RTC) ofQuezon City, Branch 216,dated November 8, 2001.The FactsSubject of this controversy is a parcel of land identified as Lot Plan Psu-123169,[4]containing an area of Two Hundred Forty Thousand, One Hundred Forty-Six (240,146) square meters, and situated at Barangay (Brgy.)Pasong Putik, Novaliches,Quezon City(subject property). The property is included in Transfer Certificate of Title (TCT) No. 200519,[5]entered on July 19, 1974 and issued in favor of B.C. Regalado & Co. (B.C. Regalado).It was conveyed by B.C. Regalado to petitioner D.B.T. Mar-Bay Construction, Inc. (DBT) through adacion en pago[6]for services rendered by the latter to the former.On June 24, 1992, respondents Ricaredo P. Panes (Ricaredo), his son Angelito P. Panes (Angelito), Salvador Cea, Abogado Mautin, Donardo Paclibar, Zosimo P. Peralta, and Hilarion Manongdo (herein collectively referred to as respondents) filed a Complaint[7]for Quieting of Title with Cancellation of TCT No. 200519 and all Titles derived thereat (sic), Damages, with Petition for the Issuance of Injunction with Prayer for the Issuance of Restraining Order Ex-Parte, Etc. against B.C. Regalado, Mar-Bay Realty, Inc., Spouses Gereno Brioso and Criselda M. Brioso, Spouses Ciriaco and Nellie Mariano, Avelino C. Perdido and Florentina Allado, Eufrocina A. Maborang and Fe Maborang, Spouses Jaime and Rosario Tabangcura,Spouses Oscar Ikalina and the Register of Deeds (RD) of Quezon City.Subsequently, respondents filed an Amended Complaint[8]and a Second Amended Complaint[9]particularly impleading DBT as one of the defendants.

In the Complaints, Ricaredo alleged that he is the lawful owner and claimant of the subject property which he had declared for taxation purposes in his name, and assessed in the amount ofP2,602,190.00 by the City Assessor of Quezon City as of the year 1985.Respondents alleged that per Certification[10]of the Department of Environment and Natural Resources(DENR) National Capital Region (NCR) dated May 7, 1992, Lot Plan Psu-123169 was verified to be correct and on file in said office, and approved on July 23, 1948.Respondents also claimed that Ricaredo, his immediate family members, and the other respondents had been, and still are, in actual possession of the portions of the subject property, and their possession preceded the Second World War.To perfect his title in accordance with Act No. 496 (The Land Registration Act) as amended by Presidential Decree (P.D.) No. 1529 (The Property Registration Decree), Ricaredo filed with the RTC of Quezon City, Branch 82 a case docketed as LRC Case No. Q-91-011, with LRC Rec. No. N-62563.[11]Respondents averred that in the process of complying with the publication requirements for the Notice of Initial Hearing with the Land Registration Authority (LRA), it was discovered by the Mapping Services of the LRA that there existed an overlapping of portions of the land subject of Ricaredos application, with the subdivision plan of B.C. Regalado.The said portion had, by then, already been conveyed by B.C. Regalado to DBT.Ricaredo asseverated that upon verification with the LRA, he found that the subdivision plan of B.C. Regalado was deliberately drawn to cover portions of the subject property. Respondents claimed that the title used by B.C. Regalado in the preparation of the subdivision plan did not actually cover the subject property.They asserted that from the records of B.C. Regalado, they gathered that TCT Nos. 211081,[12]211095[13]and 211132,[14]which allegedly included portions of the subject property, were derived from TCT No. 200519.However, TCT No. 200519 only coveredLot503 of the Tala Estate with an area of Twenty-Two Thousand Six Hundred Fifteen (22,615) square meters, and was different from those mentioned in TCT Nos. 211081, 211095 and 211132.According to respondents, an examination of TCT No. 200519 would show that it was derived from TCT Nos. 14814,[15]14827,[16]14815[17]and T-28.In essence, respondents alleged that B.C. Regalado and DBT used the derivative titles which covered properties located far fromPasong Putik, Novaliches,Quezon Citywhere the subject property is located, and B.C. Regalado and DBT then offered the same for sale to the public. Respondents thus submitted that B.C Regalado and DBT through their deliberate scheme, in collusion with others, used (LRC) Pcs-18345 as shown in the consolidation-subdivision plan to include the subject property covered by Lot Plan Psu-123169.In his Answer[18]dated July 24, 1992, the RD of Quezon City interposed the defense that at the time of registration, he found all documents to be in order.Subsequently, on December 5, 1994, in his Motion[19]for Leave to Admit Amended Answer, with the Amended Answer attached, he admitted that he committed a grave mistake when he earlier said that TCT No. 200519 covered only one lot,i.e.Lot503.He averred that upon careful examination, he discovered that TCT No. 200519 is composed of 17 pages, and actually covered 54 lots, namely: Lots 503, 506, 507, 508, 509, 582, 586, 655, 659, 686, 434, 495, 497, 299, 498, 499, 500, 501, 502, 493, 692, 776, 496, 785, 777, 786, 780, 783, 505, 654, 660, 661, 663, 664, 665, 668, 693, 694, 713, 716, 781, 779, 784, 782, 787, 893, 1115, 1114, 778, 669 and 788, all of the Tala Estate. Other lots included therein are Lot 890-B of Psd 36854, Lot 2 of (LRC) Pcs 12892 andLot3 of (LRC) Pcs 12892. Thus, respondents' allegation that Lots 661, 664, 665, 693 and 694 of the Tala Estate were not included in TCT No. 200519 was not true.On December 28, 1993, then defendants Spouses Jaime and Rosario Tabangcura (Spouses Tabangcura) filed their Answer[20]with Counterclaim, claiming that they were buyers in good faith and for value when they bought a house and lot covered by TCT No. 211095 from B.C. Regalado, the latter being a subdivision developer and registered owner thereof, on June 30, 1986. When respondent Abogado Mautin entered and occupied the property, Spouses Tabangcura filed a case for Recovery of Property before the RTC,Quezon City, Branch 97 which rendered a decision[21]in their favor.On its part, DBT, traversing the complaint, alleged that it is the legitimate owner and occupant of the subject property pursuant to adacion en pagoexecuted by B.C. Regalado in the formers favor; that respondents were not real parties-in-interests because Ricaredo was a mere claimant whose rights over the property had yet to be determined by the RTC where he filed his applicationforregistration;that the other respondents did not allegemattersorinvokerightswhichwouldentitlethemtotherelief prayed for in their complaint; that the complaint was premature; and that the action inflicted a chilling effect on the lot buyers of DBT.[22]TheRTC's Rulings

On June 15, 2000, the RTC through Judge Marciano I. Bacalla (Judge Bacalla), rendered a Decision[23]in favor of the respondents. The RTC held that the testimony of Ricaredo that he occupied the subject property since 1936 when he was only 16 years old had not been rebutted; that Ricaredo's occupation and cultivation of the subject property for more than thirty (30) years in the concept of an owner vested in him equitable ownership over the same by virtue of an approved plan, Psu 123169; that the subject property was declared under the name of Ricaredo for taxation purposes;[24]and that the subject property per survey should not have been included in TCT No. 200519, registered in the name of B.C. Regalado and ceded to DBT.The RTC further held that Spouses Tabangcura failed to present satisfactory evidence to prove their claim. Thus, the RTC disposed of the case in this wise:WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered declaring Certificate of Title No. 200519 and all titles derived thereat as null and void insofar as the same embrace the land covered by Plan PSU-123169 with an area of 240,146 square meters in the name of Ricaredo Panes; ordering defendant DBT Marbay Realty, Inc. to pay plaintiff Ricaredo Panes the sum of TWENTY THOUSAND (P20,000) pesos as attorneys fees plus costs of suit.SO ORDERED.On September 12, 2000, DBT filed a Motion[25]for Reconsideration, based on the grounds of prescription and laches. DBT also disputed Ricaredos claim of open, adverse, and continuous possession of the subject property for more than thirty (30) years, and asserted that the subject property could not be acquired by prescription or adverse possession because it is covered by TCT No. 200519.While the said Motion for Reconsideration was pending, Judge Bacalla passed away.Meanwhile, on January 2, 2001, a Motion[26]for Intervention and a Complaint in Intervention were filed by Atty. Andres B. Pulumbarit (Atty. Pulumbarit), representing the Don Pedro/Don Jose de Ocampo Estate.The intervenor alleged that the subject property formed part of the vast tract of land with an area of 117,000 hectares, covered by Original Certificate of Title (OCT) No. 779 issued by the Honorable Norberto Romualdez on March 14, 1913 under Decree No. 10139, which belongs to the Estate of Don Pedro/Don Jose de Ocampo.Thus, the Complaint[27]in Intervention prayed that the RTCs Decision be reconsidered; that the legitimacy and superiority of OCT 779 be upheld; and that the subject property be declared as belonging to the Estate of Don Pedro/Don Jose de Ocampo.In its Order[28]dated March 13, 2001, the RTC, through Acting JudgeModesto C. Juanson (Judge Juanson), denied Atty. Pulumbarits Motion for Intervention because a judgment had already been rendered pursuant to Section 2,[29]Rule 19 of the 1997 Rules of Civil Procedure.On April 10, 2001, the RTC issued an Order[30]stating that there appeared to be a need for a clarificatory hearing before it could act on DBT's Motion for Reconsideration.Thus, a hearing was held on May 17, 2001. Thereafter, supplemental memoranda were required of the parties.[31]Both parties complied.[32]However, having found that the original copy of TCT No. 200519 was not submitted to it for comparison with the photocopy thereof on file, the RTC directed DBT to present the original or certified true copy of the TCT on August 21, 2001.[33]Respondents moved to reconsider the said directive[34]but the same was denied.[35]DBT, on the other hand, manifested that a copy of TCT No. 200519, consisting of 17 pages, had already been admitted in evidence; and that because of the fire in the Office of the RD inQuezon Citysometime in 1988, DBT, despite diligent effort, could not secure an original or certified true copy of said TCT. Instead, DBT submitted a certified true copy of Consolidated Subdivision Plan Pcs 18345.[36]On November 8, 2001, the RTC, through Judge Juanson, issued an Order[37]reversing the earlier RTC Decision and dismissing the Complaint for lack of merit. The RTC held that prescription does not run against registered land; hence, a title once registered cannot be defeated even by adverse, open or notorious possession. Moreover, the RTC opined that even if the subject property could be acquired by prescription, respondents' action was already barred by prescription and/or laches because they never asserted their rights when B.C. Regalado registered the subject property in 1974; and later developed, subdivided and sold the same to individual lot buyers.On December 18, 2001, respondents filed a Motion for Reconsideration[38]which the RTC denied in its Order[39]dated June 17, 2002. Aggrieved, respondents appealed to the CA.[40]The CA's RulingOn October 25, 2004, the CA reversed and set aside the RTC Orders dated November 8, 2001 and June 17, 2002 and reinstated the RTC Decision dated June 15, 2000. The CA held that the properties described and included in TCT No. 200519 are located in San Francisco del Monte, San Juan del Monte, Rizal and Cubao,Quezon Citywhile the subject property is located in Brgy.Pasong Putik, Novaliches,Quezon City. Furthermore, the CA held that Engr. Vertudazo's testimony that there is a gap of around 1,250 meters betweenLot503 and Psu 123169 was not disproved or refuted. The CA found that Judge Juanson committed a procedural infraction when he entertained issues and admitted evidence presented by DBT in its Motion for Reconsideration which were never raised in the pleadings and proceedings prior to the rendition of the RTC Decision. The CA opined that DBT's claims of laches and prescription clearly appeared to be an afterthought. Lastly, the CA held that DBT's Motion for Reconsideration was not based on grounds enumerated in the Rules of Procedure.[41]Petitioner filed a Motion for Reconsideration,[42]which was, however, denied by the CA in its Resolution[43]dated February 22, 2005.Hence, this Petition.The IssuesPetitioner raises the following as grounds for this Petition:I.PETITIONER'S FAILURE TO ALLEGE PRESCRIPTION IN ITS ANSWER IS NOT A WAIVER OF SUCH DEFENSE.II.IT IS NOT ERRONEOUS TO REQUIRE THE PRODUCTION OF A CERTIFIED TRUE COPY OF TCT NO. 200519 AFTER THE DECISION ON THE MERITS HAS BEEN RENDERED BUT BEFORE IT BECAME FINAL.III.A REGISTERED LAND CAN NOT BE ACQUIRED BY ACQUISITIVE PRESCRIPTION.IV.THE TESTIMONY OF ENGR. VERTUDAZO ON THE BASIS OF THE TECHNICAL DESCRIPTION OFLOT503 IN AN INCOMPLETE DOCUMENT IS UNRELIABLE.V.MR. PANES HAS NEVER BEEN IN OPEN, ADVERSE AND CONTINUOUS POSSESSION OF THE SUBJECT PROPERTY FOR MORE THAN THIRTY (30) YEARS.[44]Distilled from the petition and the responsive pleadings, and culled from the arguments of the parties, the issues may be reduced to two questions, namely:1)Did the RTC err in upholding DBT's defenses of prescription and laches as raised in the latter's Motion for Reconsideration?2)Which between DBT and the respondents have a better right over the subject property?Our RulingWe answer the first question in the affirmative.It is true that inDino v. Court of Appeals[45]we ruled:(T)rial courts have authority and discretion to dismiss an action on the ground of prescription when the parties' pleadings or other facts on record show it to be indeed time-barred; (Francisco v. Robles, Feb. 15, 1954;Sison v. McQuaid, 50 O.G. 97;Bambao v. Lednicky, Jan. 28, 1961;Cordova v. Cordova, Jan. 14, 1958;Convets, Inc. v. NDC, Feb. 28, 1958; 32 SCRA 529;Sinaon v. Sorongan, 136 SCRA 408); and it may do so on the basis of a motion to dismiss (Sec. 1, [f] Rule 16, Rules of Court), or an answer which sets up such ground as an affirmative defense (Sec. 5, Rule 16), oreven if the ground is alleged after judgment on the merits, as in a motion for reconsideration(Ferrer v. Ericta, 84 SCRA 705); oreven if the defense has not been asserted at all, as where no statement thereof is found in the pleadings(Garcia v. Mathis, 100 SCRA 250;PNB v. Pacific Commission House, 27 SCRA 766;Chua Lamco v. Dioso, et al., 97 Phil. 821); or where a defendant has been declared in default (PNB v. Perez; 16 SCRA 270).What is essential only, to repeat, is that the facts demonstrating the lapse of the prescriptive period be otherwise sufficiently and satisfactorily apparent on the record; either in the averments of the plaintiff's complaint, or otherwise established by the evidence. (Emphasis supplied)Indeed, one of the inherent powers of courts is to amend and control its processes so as to make them conformable to law and justice. This includes the right to reverse itself, especially when in its opinion it has committed an error or mistake in judgment, and adherence to its decision would cause injustice.[46]Thus, the RTC in its Order dated November 8, 2001 could validly entertain the defenses of prescription and laches in DBT's motion for reconsideration.However, the conclusion reached by the RTC in its assailed Order was erroneous. The RTC failed to consider that the action filed before it was not simply for reconveyance but an action for quieting of title which is imprescriptible.Verily, an action for reconveyance can be barred by prescription. When an action for reconveyance is based on fraud, it must be filed within four (4) years from discovery of the fraud, and such discovery is deemed to have taken place from the issuance of the original certificate of title. On the other hand, an action for reconveyance based on an implied or constructive trust prescribes in ten (10) years from the date of the issuance of the original certificate of title or transfer certificate of title. The rule is that the registration of an instrument in the Office of the RD constitutes constructive notice to the whole world and therefore the discovery of the fraud is deemed to have taken place at the time of registration.[47]However, the prescriptive period applies only if there is an actual need to reconvey the property as when the plaintiff is not in possession of the property.If the plaintiff, as the real owner of the property also remains in possession of the property, the prescriptive period to recover title and possession of the property does not run against him. In such a case, an action for reconveyance, if nonetheless filed, would be in the nature of a suit for quieting of title, an action that is imprescriptible.[48]Thus, inVda. deGualberto v. Go,[49]this Court held:[A]n action for reconveyance of a parcel of land based on implied or constructive trust prescribes in ten years, the point of reference being the date of registration of the deed or the date of the issuance of the certificate of title over the property,but this rule applies only when the plaintiff or the person enforcing the trust is not in possession of the property, since if a person claiming to be the owner thereof is in actual possession of the property, as the defendants are in the instant case, the right to seek reconveyance,which in effect seeks to quiet title to the property, does not prescribe. The reason for this is that one who is in actual possession of a piece of land claiming to be the owner thereof may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right, the reason for the rule being, that his undisturbed possession gives him a continuing right to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a third party and its effect on his own title, which right can be claimed only by one who is in possession.Insofar as Ricaredo and his son, Angelito, are concerned, they established in their testimonies that, for some time, they possessed the subject property and that Angelito bought a house within the subject property in 1987.[50]Thus, the respondents are proper parties to bring an action for quieting of title because persons having legal, as well as equitable, title to or interest in a real property may bring such action, and title here does not necessarily denote a certificate of title issued in favor of the person filing the suit.[51]Although prescription and laches are distinct concepts, we have held, nonetheless, that in some instances, the doctrine of laches is inapplicable where the action was filed within the prescriptive period provided by law. Therefore, laches will not apply to this case, because respondents' possession of the subject property has rendered their right to bring an action for quieting of title imprescriptible and, hence, not barred by laches. Moreover, since laches is a creation of equity, acts or conduct alleged to constitute the same must be intentional and unequivocal so as to avoid injustice.Laches will operate not really to penalize neglect or sleeping on one's rights, but rather to avoid recognizing a right when to do so would result in a clearly inequitable situation.[52]Albeit the conclusion of the RTC in its Order dated November 8, 2001, which dismissed respondents' complaint on grounds of prescription and laches, may have been erroneous, we, nevertheless, resolve the second question in favor of DBT.It is a well-entrenched rule in this jurisdiction that no title to registered land in derogation of the rights of the registered owner shall be acquired by prescription or adverse possession.[53]Article 1126[54]of the Civil Code in connection with Section 46[55]of Act No. 496 (The Land Registration Act), as amended by Section 47[56]of P.D. No. 1529 (The Property Registration Decree), clearly supports this rule. Prescription is unavailing not only against the registered owner but also against his hereditary successors. Possession is a mere consequence of ownership where land has been registered under theTorrenssystem, the efficacy and integrity of which must be protected. Prescription is rightly regarded as a statute of repose whose objective is to suppress fraudulent and stale claims from springing up at great distances of time and surprising the parties or their representatives when the facts have become obscure from the lapse of time or the defective memory or death or removal of witnesses.[57]Thus, respondents' claim of acquisitive prescription over the subject property is baseless. Under Article 1126 of the Civil Code, acquisitive prescription of ownership of lands registered under the Land Registration Act shall be governed by special laws. Correlatively, Act No. 496, as amended by PD No. 1529, provides that no title to registered land in derogation of that of the registered owner shall be acquired by adverse possession.Consequently, in the instant case, proof of possession by the respondents is immaterial and inconsequential.[58]Moreover, it may be stressed that there was no ample proof that DBT participated in the alleged fraud. While factual issues are admittedly not within the province of this Court, as it is not a trier of facts and is not required to re-examine or contrast the oral and documentary evidence anew, we have the authority to review and, in proper cases, reverse the factual findings of lower courts when the findings of fact of the trial court are in conflict with those of the appellate court.[59]In this regard, we reviewed the records of this case and found no clear evidence that DBT participated in the fraudulent scheme.InRepublic v. Court of Appeals,[60]this Court gave due importance to the fact that the private respondent therein did not participate in the fraud averred. We accord the same benefit to DBT in this case. To add, DBT is an innocent purchaser for value and good faith which, throughadacion en pagodulyenteredinto withB.C. Regalado, acquiredownership over the subject property, and whose rights must be protected under Section 32[61]of P.D. No. 1529.Dacion en pagois the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the obligation. It is a special mode of payment where the debtor offers another thing to the creditor, who accepts it as an equivalent of the payment of an outstanding debt. In its modern concept, what actually takes place indacion en pagois an objective novation of the obligation where the thing offered as an accepted equivalent of the performance of an obligation is considered as the object of the contract of sale, while the debt is considered as the purchase price.[62]It must also be noted that portions of the subject property had already been sold to third persons who, like DBT, are innocent purchasers in good faith and for value, relying on the certificates of title shown to them, and who had no knowledge of any defect in the title of the vendor, or of facts sufficient to induce a reasonably prudent man to inquire into the status of the subject property.[63]To disregard these circumstances simply on the basis of alleged continuous and adverse possession of respondents would not only be inimical to the rights of the aforementioned titleholders, but would ultimately wreak havoc on the stability of theTorrenssystem of registration.A final note.While the Torrens system is not a mode of acquiring title, but merely a system of registration of titles to lands, justice and equity demand that the titleholder should not be made to bear the unfavorable effect of the mistake or negligence of the State's agents, in the absence of proof of his complicity in a fraud or of manifest damage to third persons. The real purpose of theTorrenssystem is to quiet title to land and put a stop forever to any question as to the legality of the title, except claims that were noted in the certificate at the time of the registration or that may arise subsequent thereto. Otherwise, the integrity of theTorrenssystem would forever be sullied by the ineptitude and inefficiency of land registration officials, who are ordinarily presumed to have regularly performed their duties.[64]Thus, where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the property, the court cannot disregard those rights and order the cancellation of the certificate. The effect of such outright cancellation will be to impair public confidence in the certificate of title. The sanctity of theTorrenssystem must be preserved; otherwise, everyone dealing with the property registered under the system will have to inquire in every instance on whether the title had been regularly or irregularly issued, contrary to the evident purpose of the law. Every person dealing with the registered land may safely rely on the correctness of the certificate of title issued therefor, and the law will in no way oblige him to go behind the certificate to determine the condition of the property.[65]WHEREFORE, the instant Petition isGRANTEDand the assailed Court of Appeals Decision dated October 25, 2004 is herebyREVERSEDandSET ASIDE.A new judgment is hereby enteredDISMISSINGtheComplaint filed by the respondents for lack of merit.SO ORDERED.ANTONIO EDUARDO B. NACHURAAssociate Justice

SECOND DIVISIONNEW REGENT SOURCES, INC.,Petitioner,- versus -TEOFILO VICTOR TANJUATCO, JR., and VICENTE CUEVAS,*Respondents.G.R. No. 168800Present:QUISUMBING,J., Chairperson,CARPIO MORALES,TINGA,VELASCO, JR.,andBRION,JJ.Promulgated:April 16, 2009

DECISIONQUISUMBING,J.:Petitioner through counsel prays for the reversal of the Orders datedFebruary 12, 2005[1]andJuly 1, 2005[2]of the Regional Trial Court (RTC) ofCalambaCity, Branch 37, in Civil Case No. 2662-98-C.The RTC had granted the demurrer to evidence filed by respondent Tanjuatco, and then denied petitioners motion for reconsideration.The facts, as culled from the records, are as follows:Petitioner New Regent Sources, Inc. (NRSI) filed a Complaint[3]for Rescission/Declaration of Nullity of Contract, Reconveyance and Damages against respondent Tanjuatco and the Register of Deeds of Calamba before the RTC of Calamba, Laguna, Branch 37.NRSI alleged that in 1994, it authorized Vicente P. Cuevas III, its Chairman and President, to apply on its behalf, for the acquisition of two parcels of land by virtue of its right of accretion.Cuevas purportedly applied for the lots in his name by payingP82,400.38 to the Bureau of Lands.OnJanuary 2, 1995, Cuevas and his wife executed a Voting Trust Agreement[4]over their shares of stock in the corporation.Then, pending approval of the application with the Bureau of Lands, Cuevas assigned his right to Tanjuatco for the sum ofP85,000.[5]OnMarch 12, 1996, the Director of Lands released an Order,[6]which approved the transfer of rights from Cuevas to Tanjuatco.Transfer Certificates of Title Nos. T-369406[7]and T-369407[8]were then issued in the name of Tanjuatco. In his Answer with Counterclaim,[9]Tanjuatco advanced the affirmative defense that the complaint stated no cause of action against him.According to Tanjuatco, it was Cuevas who was alleged to have defrauded the corporation.He averred further that the complaint did not charge him with knowledge of the agreement between Cuevas and NRSI.Upon Tanjuatcos motion, the trial court conducted a preliminary hearing on the affirmative defense, but denied the motion to dismiss, and ordered petitioner to amend its complaint and implead Cuevas as a defendant.[10] Summons was served on respondent Cuevas through publication,[11]but he was later declared in default for failure to file an answer.[12] After NRSI completed presenting evidence, Tanjuatco filed a Demurrer to Evidence,[13]which the RTC granted in an Order datedFebruary 12, 2005.In dismissing NRSIs complaint,[14]the RTC cited the Order of the Director of Lands and certain insufficiencies in the allegations in the complaint.The trial court further held that Tanjuatco is an innocent purchaser for value. NRSI moved for reconsideration, but it was denied by the trial court in an Order datedJuly 1, 2005, thus:WHEREFORE, the Motion for Reconsideration filed by the plaintiff onMay 3, 2005is DENIED for lack of merit. SO ORDERED.[15]Hence, NRSI filed the instant petition for review on certiorari, raising the following issues:I.1. WHETHER OR NOT THE ALLEGED INSUFFICIENCY OF THE ALLEGATIONS IN THE COMPLAINT MAY BE USED AS A BASIS TO DISMISS THE SAME BY WAY OF A DEMURRER TO EVIDENCE;2. WHETHER OR NOT A COMPLAINT MAY BE DISMISSED ON DEMURRER TO EVIDENCE BASED ON A DOCUMENT NOT PROPERLY IDENTIFIED, MARKED AND OFFERED IN EVIDENCE.[16]In a nutshell, the issue for our determination is whether the trial court erred in dismissing the case on demurrer to evidence. NRSI argues that the supposed insufficiency of allegations in the complaint did not justify its dismissal on demurrer to evidence.It contends that a dismissal on demurrer to evidence should be grounded on insufficiency of evidence presented at trial.NRSI contends that the sufficiency of its allegations was affirmed when the trial court denied the motion to dismiss.It likewise asserts that the RTC erred in declaring Tanjuatco a buyer in good faith.It stressed that the Order of the Director of Lands, as the basis for such finding, was not formally offered in evidence.Hence, it should not have been considered by the trial court in accordance with Section 34,[17]Rule 132 of the Rules of Court.Tanjuatco, for his part, maintains that NRSI failed to make a case for reconveyance against him.He insists that the complaint stated no cause of action, and the evidence presented established, rather than refuted, that he was an innocent purchaser.Tanjuatco adds that the RTCs denial of the motion to dismiss, and admission of evidence negated NRSIs claim that it relied on the complaint alone to decide the case.Lastly, Tanjuatco argues that the Order of the Director of Lands was a matter of judicial notice.Thus, under Section 1,[18]Rule 129 of the Rules of Court, there was no need to identify, mark, and offer it in evidence. After serious consideration, we find the instant petition utterly without merit. In its petition, NRSI questions the trial courts dismissal of its complaint upon a demurrer to evidence and invites acalibration of the evidence on recordto determine the sufficiency of the factual basis for the trial courts order.This factual analysis, however, would involve questions of fact which are improper in a petition for review under Rule 45 of the Rules of Court.It is well established that in an appeal by certiorari, only questions of law may be reviewed.[19]A question of law exists when there is doubt or difference as to what the law is on a certain state of facts.A question of fact exists if the doubt centers on the truth or falsity of the alleged facts.[20]There is a question of law when the issue does not call for an examination of the probative value of evidence presented, the truth or falsehood of facts being admitted, and the doubt concerns the correct application of law and jurisprudence on the matter.[21]Otherwise, there is a question of fact.Since it raises essentially questions of fact, the instant petition must be denied.In any event, we find that based on the examination of the evidence at hand, we are in agreement that the trial court correctly dismissed NRSIs complaint on demurrer to evidence. Petitioner filed a complaint for rescission/declaration of nullity of contract, reconveyance and damages against respondents.An action for reconveyance is one that seeks to transfer property, wrongfully registered by another, to its rightful and legal owner.[22]In an action for reconveyance, the certificate of title is respected as incontrovertible.What is sought instead is the transfer of the property, specifically the title thereof, which has been wrongfully or erroneously registered in another persons name, to its rightful and legal owner, or to one with a better right.[23] To warrant a reconveyance of the land, the following requisites must concur: (1) the action must be brought in the name of a person claiming ownership or dominical right over the land registered in the name of the defendant; (2) the registration of the land in the name of the defendant was procured through fraud[24]or other illegal means;[25](3) the property has not yet passed to an innocent purchaser for value;[26]and (4) the action is filed after the certificate of title had already become final and incontrovertible[27]but within four years from the discovery of the fraud,[28]or not later than 10 years in the case of an implied trust.[29]Petitioner failed to show the presence of these requisites.Primarily, NRSI anchors its claim over the lands subjects of this case on the right of accretion.It submitted in evidence, titles[30]to four parcels of land, which allegedly adjoin the lots in the name of Tanjuatco. But it must be stressed that accretion as a mode of acquiring property under Article 457[31]of the Civil Code requires the concurrence of the following requisites: (1) that the deposition of soil or sediment be gradual and imperceptible; (2) that it be the result of the action of the waters of the river; and (3) that the land where accretion takes place is adjacent to the banks of rivers.[32]Thus, it is not enough to be a riparian owner in order to enjoy the benefits of accretion.One who claims the right of accretion must show by preponderant evidence that he has met all the conditions provided by law.Petitioner has notably failed in this regard as it did not offer any evidence to prove that it has satisfied the foregoing requisites. Further, it is undisputed that Tanjuatco derived his title to the lands from Original Certificate of Title (OCT) No. 245 registered in the name of the Republic of thePhilippines.Said parcels of land formed part of the Dried San Juan River Bed,[33]which under Article 502 (1)[34]of the Civil Code rightly pertains to the public dominion.The Certification[35]issued by Forester III Emiliano S. Leviste confirms that said lands were verified to be within the Alienable and Disposable Project No. 11-B of Calamba, Laguna per BFD LC Map No. 3004, certified and declared as such onSeptember 28, 1981.Clearly, the Republic is the entity which had every right to transfer ownership thereof to respondent.Next, petitioner sought to establish fraudulent registration of the land in the name of Tanjuatco.NRSI presented before the trial court a copy of the Voting Trust Agreement which the spouses Cuevas executed in favor of Pauline Co.However, nothing in said agreement indicates that NRSI empowered Cuevas to apply for the registration of the subject lots on its behalf. Neither did petitioner adduce evidence to prove that Cuevas was its President and Chairman.Even assuming that Cuevas was the president of NRSI, his powers are confined only to those vested upon him by the board of directors or fixed in the by-laws.[36]In truth, petitioner could have easily presented its by-laws or a corporate resolution[37]to show Cuevass authority to buy the lands on its behalf.But it did not.Petitioner disagrees with the trial courts finding that Tanjuatco was a buyer in good faith.It contends that theMarch 12, 1996Order of the Director of Lands which declared that the lots covered by TCT Nos. T-369406 and T-369407 were free from claims and conflicts when Cuevas assigned his rights thereon to Tanjuatco.But petitioners claim is untenable because respondents did not formally offer said order in evidence.Lastly, petitioner makes an issue regarding the below-fair market value consideration which Tanjuatco paid Cuevas for the assignment of his rights to the lots.But it draws unconvincing conclusions therefrom that do not serve to persuade us of its claims. We note that Tanjuatco filed a demurrer to evidence before the RTC.By its nature, a demurrer to evidence is filed after the plaintiff has completed the presentation of his evidence but before the defendant offers evidence in his defense.Thus, the Rules provide that if the defendants motion is denied, he shall have the right to present evidence.However, if the defendants motion is granted but on appeal the order of dismissal is reversed, he shall be deemed to have waived the right to present evidence.[38]It is understandable, therefore, why the respondent was unable to formally offer in evidence the Order of the Director of Lands, or any evidence for that matter.More importantly, petitioner introduced in evidence TCT Nos. T-369406 and T-369407 in the name of respondent Tanjuatco.These titles bear a certification that Tanjuatcos titles were derived from OCT No. 245 in the name of no less than the Republic of thePhilippines.Hence, we cannot validly and fairly rule that in relying upon said title, Tanjuatco acted in bad faith.A person dealing with registered land may safely rely upon the correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind the certificate to determine the condition of the property.[39]This applies even more particularly when the seller happens to be the Republic, against which, no improper motive can be ascribed.The law, no doubt, considers Tanjuatco an innocent purchaser for value.An innocent purchaser for value is one who buys the property of another, without notice that some other person has a right or interest in such property and pays the full price for the same, at the time of such purchase or before he has notice of the claims or interest of some other person in the property.[40] As regards the consideration which Tanjuatco paid Cuevas for the assignment of rights to the lands, suffice it to state that the assignment merely vested upon Tanjuatco all of Cuevass intangible claims, rights and interests over the properties and not the properties themselves.At the time of the assignment, the lots were still the subjects of a pending sales application before the Bureau of Lands.For, it was not untilMay 24, 1996, that titles were issued in Tanjuatcos name.The assignment not being a sale of real property, it was not surprising that Cuevas demanded from Tanjuatco onlyP85,000 for the transfer of rights. From all the foregoing, it is plain and apparent that NRSI failed to substantiate its claim of entitlement to ownership of the lands in Tanjuatcos name.The trial court, therefore, correctly dismissed petitioners complaint for reconveyance. WHEREFORE, the petition isDENIED.The Orders datedFebruary 12, 2005andJuly 1, 2005of theRegionalTrialCourtofCalambaCity, Branch 37, in Civil Case No. 2662-98-C areAFFIRMED.Costs against petitioner.SO ORDERED.Republic of the PhilippinesSUPREME COURTManilaTHIRD DIVISIONEN BANCG.R. No. 169956 January 19, 2009SPOUSES JONEL PADILLA and SARAH PADILLA,Petitioners,vs.ISAURO A. VELASCO, TEODORA A. VELASCO, DELIA A. VELASCO, VALERIANO A. VELASCO, JR., IDA A. VELASCO, AMELITA C. VELASCO, ERIBERTO C. VELASCO, JR., and CELIA C. VELASCO,Respondents.D E C I S I O NNACHURA,J.:Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Decision1dated February 11, 2005 and the Resolution2dated October 4, 2005 of the Court of Appeals (CA) in CA-G.R. CV No. 69997 entitled Isauro A. Velasco, Teodora A. Velasco, Delia A. Velasco, Valeriano A. Velasco, Jr., Ida A. Velasco, Amelita C. Velasco, Eriberto C. Velasco, Jr. and Celia C. Velasco v. Spouses Jonel Padilla and Sarah Padilla.The factsThe facts of the case are as follows:Respondents are the heirs of Dr. Artemio A. Velasco (Artemio), who died single and without any issue on January 22, 1949. During his lifetime, Artemio acquired Lot No. 2161 consisting of 7,791 square meters situated at Barangay Pinagsanjan, Pagsanjan, Laguna, covered by Tax Declaration No. 4739. Artemio acquired the lot from spouses Brigido Sacluti and Melitona Obial, evidenced by a deed of sale dated February 14, 1944 In October 1987, petitioners entered the property as trustees by virtue of a deed of sale executed by the Rural Bank of Pagsanjan in favor of spouses Bartolome Solomon, Jr. and Teresita Padilla (Solomon spouses).Respondents demanded that petitioners vacate the property, but the latter refused. The matter was referred to the barangay for conciliation; however, the parties failed to reach an amicable settlement. Thereafter, petitioners caused the cutting of trees in the area, fenced it and built a house thereon. They harvested the crops and performed other acts of dominion over the property. On October 14, 1991, respondents filed a complaint for accion publiciana, accounting and damages against petitioners before the Regional Trial Court (RTC) of Santa Cruz, Laguna. They asked the court to order petitioners to vacate the property and to pay moral and exemplary damages, attorneys fees and cost of suit.Isauro A. Velasco (Isauro), the brother of the deceased Artemio, as administrator of the property, was presented as a witness. He testified that Artemio owned the property. As evidence thereof, he presented the Kasulatan ng Bilihang Tuluyan executed by spouses Brigido Sacluti and Melitona Obial in favor of Artemio, and declared that he (Isauro) was present during the signing of the instrument. He offered in evidence tax declarations and tax receipts covering Lot No. 2161 which were all in the name of Artemio. A certification from the Land Registration Authority (LRA) was likewise presented by Isauro which states that based on the records of the LRA, Decree No. 403348 was issued on October 10, 1930 covering Lot No. 2161.3 Rolando R. Flores, a geodetic engineer, also testified that on January 16, 1993, upon prior notice to petitioners, he conducted a survey of the land based on the technical description of the property and the map from the Bureau of Lands. The purpose of the survey was to verify if the area occupied by petitioners was Lot No. 2161. Upon his examination and based on his survey, he concluded that the land occupied by petitioners was Lot No. 2161.4On the other hand, petitioners averred that the Solomon spouses owned the property; that the said spouses bought it from the Rural Bank of Pagsanjan as evidenced by a deed of sale dated September 4, 1987; that the land was identified as Lot No. 76-pt, consisting of 10,000 square meters, located at Pinagsanjan, Pagsanjan, Laguna; and that the spouses authorized petitioners to occupy the land and introduce improvements thereon.Petitioners further claimed that subsequent to the sale of the property to the Solomon spouses, Lot No. 76-pt. was levied on in Civil Case No. 320 under the jurisdiction of the Municipal Trial Court of Pagsanjan, Laguna. The case was entitled Rural Bank of Pagsanjan, Inc. v. Spouses Hector and Emma Velasco, Valeriano Velasco and Virginia Miso. Petitioners alleged that Valeriano Velasco obtained a loan from the Rural Bank of Pagsanjan, with Hector Velasco as co-maker, and the land was mortgaged by Valeriano as collateral. Valerianos failure to pay the loan caused the foreclosure of the land, and on September 17, 1980, Lot No. 76-pt was sold at a public auction by the Provincial Sheriff. The Rural Bank of Pagsanjan was the highest bidder. Pedro Zalameda Trinidad, Jr. (Pedro), as a witness for the petitioners, testified that he was born in Barangay Pinagsanjan, Pagsanjan, Laguna, and had been residing there since birth. He said that based on his knowledge, the land belonged to Nonong (Valeriano) Velasco because he used to buy coconuts harvested from the said land and it was Nonong Velasco who caused the gathering of coconuts thereon.5Petitioner Jonel Padilla also took the witness stand. He testified that Pedro was occupying the land when he initially visited it. A representative of the Rural Bank of Pagsanjan disclosed to him that the land previously belonged to Valeriano. He verified from the Municipal Assessor the technical description of the land, but no longer verified from the Bureau of Lands because he trusted the bank. Upon his recommendation, his sister and his brother-in-law purchased the property after verifying the supporting documents. It was his brother-in-law who went to the Bureau of Lands and found that it was Lot No. 2161.6 On July 27, 1999, the RTC rendered a Decision,7the dispositive portion of which reads:WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered in favor of the [respondents] ordering the [petitioners] to vacate the land presently occupied by them and restore possession thereof to the [respondents], to render an accounting of the proceeds from the crop harvested therefrom starting September 1987 up to the time the property is returned to the [respondents], and to remove at their expense all the structures they constructed thereon.8Petitioners filed an appeal before the CA, but on February 11, 2005, the CA issued the assailed decision affirming the decision of the RTC. They consequently filed a motion for reconsideration. However, the same was denied in the assailed resolution dated October 4, 2005.Hence, the instant petition.The IssuesPetitioners anchor their petition on the following grounds:I. The alleged sale executed between Brigido Sacluti and Melitona Obial as seller and Dr. Artemio [Velasco] as buyer was never established, respondents having failed to present the original copy thereof during the trial despite their clear and categorical commitment to do so. Furthermore, the purported Original Certificate of Title issued in the name of Brigido Sacluti and Melitona Obial was never presented in evidence, thus, creating the presumption that had it been presented, the same would have been adverse to respondents.9II. The spouses Solomon acquired the subject property from its lawful owner in good faith and for value.10III. The spouses Solomon acquired the subject property at the public auction sale conducted by the provincial sheriff of Laguna based on the judgment and writ of execution issued by the Municipal Trial Court of Laguna against respondent Valeriano Velasco for non-payment of a loan considering that (1) the issuance of Tax Declaration No. 4624 in the name of respondent Valeriano Velasco is entitled to the presumption of regularity especially since respondents have not explained how and why it was wrongly issued in the name of their own brother, respondent Valeriano Velasco and without any of them taking any action to correct the alleged mistake; and (2) by their failure to assert their alleged ownership of the property and their inaction [by not] questioning the legal action taken by the bank against their co-respondent Valeriano Velasco and the subject property despite their full awareness since 1980, respondents are barred by estoppel from denying the title of the bank and the Solomon spouses.11IV. The action a quo was barred by prescription considering that respondents filed their legal action against the petitioners only on October 14, 1991, more than ten (10) years after the bank had acquired the subject property on September 17, 1980 at the public auction conducted by the Provincial Sheriff of Laguna.12V. At the very least, respondents are guilty of laches, they having slept on their rights for an unreasonable length of time such that to dispossess petitioners of the property after they had introduced substantial improvements thereon in good faith would result in undue damage and injury to them all due to the silence and inaction of respondents in asserting their alleged ownership over the property.13VI. The evidence proves that Lot no. 2161 and Lot no. 76-pt are one and the same.14VII. The failure of Atty. Asinas to present other witnesses, additional documents and to respond to certain pleadings brought about by his serious illnesses constitutes excusable negligence or incompetency to warrant a new trial considering that the Supreme Court itself had recognized negligence or incompetency of counsel as a ground for new trial especially if it has resulted in serious injustice or to an uneven playing field.15VIII. The overwhelming testimonial and documentary evidence, if presented, would have altered the result and the decision now appealed from.16IX. The petitioners should be awarded their counterclaim for exemplary damages, attorneys fees and litigation expenses.17The arguments submitted by petitioners may be summed up in the following issues:I. Who, as between the parties, have a better right of possession of Lot No. 2161;II. Whether the complaint for accion publiciana has already prescribed; andIII. Whether the negligence of respondents counsel entitles them to a new trial.The Ruling of the CourtWe deny the instant petition.First.The instant case is for accion publiciana, or for recovery of the right to possess. This was a plenary action filed in the regional trial court to determine the better right to possession of realty independently of the title.18Accion publiciana is also used to refer to an ejectment suit where the cause of dispossession is not among the grounds for forcible entry and unlawful detainer, or when possession has been lost for more than one year and can no longer be maintained under Rule 70 of the Rules of Court. The objective of the plaintiffs in accion publiciana is to recover possession only, not ownership.19Based on the findings of facts of the RTC which were affirmed by the CA, respondents were able to establish lawful possession of Lot No. 2161 when the petitioners occupied the property. Lot No. 2161 was the subject of Decree No. 403348 based on the decision dated October 10, 1930 in Cadastre (Cad.) Case No. 11, LRC Record No. 208. The Original Certificate of Title to the land was issued to Brigido Sacluti and Melitona Obial. On February 14, 1944, the original owners of the land sold the same to Artemio. From the date of sale, until Artemios death on January 22, 1949, he was in continuous possession of the land. When Artemio died, Isauro acted as administrator of the land with Tomas Vivero as caretaker. In 1987, petitioners occupied the property by virtue of a deed of sale between the Rural Bank of Pagsanjan and the Solomon spouses. The land bought by the Solomon spouses from the Bank is denominated as Lot No. 76-pt and previously owned by Valeriano. However, it was proved during trial that the land occupied by petitioners was Lot No. 2161 in the name of Artemio, whereas the land sold by the bank to the petitioners was Lot No. 76-pt.Given this factual milieu, it can readily be deduced that respondents are legally entitled to the possession of Lot No. 2161.It is a long-standing policy of this Court that the findings of facts of the RTC which were adopted and affirmed by the CA are generally deemed conclusive and binding. This Court is not a trier of facts and will not disturb the factual findings of the lower courts unless there are substantial reasons for doing so.20In the instant case, we find no exceptional reason to depart from this policy.Second.The case filed by respondents for accion publiciana has not prescribed. The action was filed with the RTC on October 14, 1991. Petitioners dispossessed respondents of the property in October 1987. At the time of the filing of the complaint, only four (4) years had elapsed from the time of dispossession.Under Article 555(4) of the Civil Code of the Philippines, the real right of possession is not lost till after the lapse of ten years. It is settled that the remedy of accion publiciana prescribes after the lapse of ten years.21Thus, the instant case was filed within the allowable period.Third.Petitioners put in issue that Lot No. 2161 and Lot 76-pt are one and the same, and that the land was owned by Valeriano when it was foreclosed by the bank. This, in effect, is a collateral attack on the title over the property which is registered in the name of Artemio.We cannot countenance this stance of the petitioners, and perforce, must strike it down. Title to a registered land cannot be collaterally attacked.22A separate action is necessary to raise the issue of ownership.Inaccion publiciana, the principal issue is possession, and ownership is merely ancillary thereto. Only in cases where the possession cannot be resolved without resolving the issue of ownership may the trial court delve into the claim of ownership. This rule is enunciated inRefugiav. CA,23where the Court declared, viz.:Where the question of who has prior possession hinges on the question of who the real owner of the disputed portion is, the inferior court may resolve the issue of ownership and make a declaration as to who among the contending parties is the real owner. In the same vein, where the resolution of the issue of possession hinges on a determination of the validity and interpretation of the document of title or any other contract on which the claim of possession is premised, the inferior court may likewise pass upon these issues. This is because, and it must be so understood, that any such pronouncement made affecting ownership of the disputed portion is to be regarded merely as provisional, hence, does not bar nor prejudice an action between the same parties involving title to the land.Fourth.Petitioners aver that they are entitled to a new trial due to the failure of their counsel in the proceedings before the RTC to present testimonial and documentary evidence necessary for them to obtain a favorable judgment. They maintain that the failure of their counsel to present these other evidence was due to counsels lingering illness at that time, and therefore, constitutes excusable negligence.It may be reiterated that mistakes of counsel as to the competency of witnesses, the sufficiency and relevancy of evidence, the proper defense, or the burden of proof, as well as his failure to introduce certain evidence or to summon witnesses and to argue the case, are not proper grounds for a new trial, unless the incompetence of counsel be so great that his client is prejudiced and prevented from fairly presenting his case.24In this case, the illness of petitioners counsel and his alleged failure to present additional evidence during the trial of the case do not constitute sufficient ground for a new trial. The Order25issued by the trial court in its denial of the motion for new trial filed by petitioners aptly explains the reason why a new trial is unnecessary,viz.:Assuming that Atty. Asinas failed to perform the imputed acts by reason of his ailments, still, the same is insufficient ground to grant a new trial. The evidence on record established the fact that [respondents] and their predecessors-in-interest have been in possession of the subject realty for a long time. Their possession was interrupted by [petitioners] who entered the property in [1987] pursuant to a deed of sale between the Rural Bank of Pagsanjan and spouses Bartolome C. Solomon and Teresita Padilla. Considering that this is an accion publiciana and [respondents] earlier rightful possession of the subject parcel of land has been adequately established, the testimonial and documentary evidence sought to be adduced in a new trial would not adversely affect the findings of the Court. The ownership and possession of the property purchased by the Solomon spouses from the Rural Bank of Pagsanjan could be the subject of an appropriate action.WHEREFORE,the instant petition isDENIEDfor lack of merit. Costs against the petitioners.SO ORDERED.ANTONIO EDUARDO B. NACHURAAssociate Justice

FIRST DIVISIONJOSEPH REMENTIZO,G.R. No. 170318Petitioner,Present:D E C I S I O NCARPIO,J.:The CaseThis petition for review[1]assails the4 July 2005Amended Decision[2]and3 October 2005Resolution[3]of the Court of Appeals in CA-G.R. SPNo. 65286. The Court of Appeals set aside its26 May 2004Decision[4]by declaring void Emancipation Patent (EP) No. A-028390-H issued to petitioner Joseph Rementizo (Rementizo).The FactsThe instant controversy stemmed from a Complaint for Annulment and Cancellation of Original Certificate of Title (OCT) No. EP-195 and EP No. A-028390-H filed by the late Pelagia Vda. De Madarieta (Madarieta) against Rementizo before the Department of Agrarian Reform Adjudication Board (DARAB) in Camiguin.In her complaint, Madarieta claimed that she is the owner of a parcel of land declared in the name of her late husband Angel Madarieta (Angel),Lot No. 153-F with an area of 436 square meters situated in Tabulig, Poblacion, Mambajao, Camiguin.Madarieta alleged that Rementizo was a tenant of Roque Luspo (Luspo) and, as such, Rementizo was issuedOCT No. EP-185 and OCT No. 174.Madarieta also alleged that the Department of Agrarian Reform (DAR) mistakenly included LotNo. 153-F as part of Luspos property covered by Operation Land Transfer.As a result, EP No. A-028390-H was issued to Rementizo.By virtue of such emancipation patent, OCT No. EP-195 was registered in Rementizos name.Madarieta further claimed that she had been deprived of her property without due process since she had not received any notice or information from the DAR relating to the transfer of ownership over the subject land to Rementizo.In his answer, Rementizo claimed that he had been in possession of the subject land in the concept of an owner since 1987 and even constructed a house on the subject lot after the registration of the title. Rementizo denied that Lot No. 153-F is owned by Angel.Instead, the subject land was allegedly adjoining Lot No. 153 which is owned by Luspo. Rementizo further claimed that assuming Madarietas allegations were true,Angel did not object to his possession of the subject land during the latters lifetime considering that the subject land is just a few meters away from the Madarietas house.Further, Rementizo asserted that, in instituting the case, Madarieta was guilty of laches and that the action had already prescribed.On22 December 1998, the Provincial Adjudicator[5]issued an Orderdeclaring OCT No. EP-195 and EP No. A-028390-H null and void, and directing Rementizo or anyone in possession to vacate the subject property.The dispositive portion of this Order reads:WHEREFORE, the Original Certificate of Title No. 195, EP No. A-028390-H issued in the name of the respondent is hereby ordered cancelled and/or revoked for being null and void ab initio, and the respondent or anybody in possession or occupation of subject land is hereby ordered to turn over subject land to the plaintiff and vacate the premises.SO ORDERED.[6]Rementizo appealed the Provincial Adjudicators order to the DARAB-Central Office.On7 February 2001, the DARAB-Central Office reversed the Provincial Adjudicators order by ruling in favor of Rementizo, thus:x x x After careful considerations, we find the appeal impressed with merit.The records show that the subject land was placed under Operation Land Transfer, pursuant to P.D. No. 27.It must be pointed out that the coverage was made during the lifetime of Angel Madarieta who is the alleged declared owner of the land in question.There is no showing that the late Angel objected to the coverage.Consequently, OCT No. 195 was generated in favor of Respondent-Appellant who took possession thereof and even built his house thereon.All this while there was no objection to said occupation.Considering that the occupation is manifest, that the landholding of said Angel is proximate thereto, there can be no question that the occupancy of Respondent was known to the late Angel Madarieta, under whose alleged rights over said landholding, herein Petitioner-Appellee anchors her claim.Angel Madarieta failed to object to Respondent-Appellants possession and occupation of the subject premises for a period of eleven (11) years; said inaction of alleged declared owner of the subject land only shows that Respondents occupancy thereof was legitimate, and that the late Angel had no rights or claims thereon.Under the circumstances, the surviving wifes claim now of rights over said land on alleged non-notice of DAR coverage is untenable.Moreover, an action to invalidate a Certificate of Title on the ground of fraud prescribes after one (1) year from the entry of the decree of registration.(Bishop vs. Court of Appeals, 208 SCRA 637).In this case, Petitioners (sic) inaction for more than eleven (11) years is inexcusable (Comero vs. Court of Appeals, 247 SCRA 291).WHEREFORE, premises considered, the appealed decision is SET ASIDE.A new judgment is rendered.1.Upholding the validity of Original Certificate of Title (CTC) No. 195, E.P. No. A-028390-H issued in favor of Respondent-Appellant Joseph Rementizo;2.Nullifying the Order dated February 15, 1999, and Ordering the Plaintiff and all persons acting in her behalf to respect and maintain Respondent Rementizo's peaceful occupation of the land in question; and3.Reinstating Respondent-Appellant over the subject land, if already ejected.SO ORDERED.[7]Madarieta filed a petition for review with the Court of Appeals under Rule 43 of the Rules of Court assailing the decision of the DARAB.Madarieta raised the following errors in the Court of Appeals:1.The DARAB erred in holding that she had already learned of Rementizos occupation and possession of the subject property for the last 11 years prior to the filing of the case, when EP No. A-028390-H was registered and the OCT was issued in 1987; and2.The DARAB erred in holding that she committed negligence for failing to file the instant case within the prescriptive period.Madarieta argued that she never knew that the subject land was part of her husbands estate. Madarieta averred that it was only on21 November 1997, through a relocation survey, that she discovered that the land where Rementizo constructed his house was part of her husbands property. This discovery prompted Madarieta to file a complaint with the DARAB on5 November 1998, or within 11 months and 14 days reckoned from such knowledge.The Court of Appeals RulingIn its Decision of26 May 2004, the Court of Appeals held that when Madarieta filed an action on5 November 1998, for the annulment and cancellation of Rementizos title, more than 10 years had passed after the issuance of Rementizos title rendering the title incontrovertible.Madarieta sought reconsideration of the26 May 2004Decision, which the Court of Appeals partially granted in its Amended Decision of4 July 2005.The Court of Appeals set aside its earlier decision of26 May 2004.In its Amended Decision,the appellate court applied the exception to the rule that an action for reconveyance of a fraudulently registered real property prescribes in 10 years.CitingBustarga v. Navo II,[8]the appellate court held that Lot No. 153-F was erroneously awarded to Rementizo.The entire Lot No. 153 was indeed covered by the Operation Land Transfer.Hence, Lot No. 153 was subdivided into:(1) Lot No. 153-B, declared in the name of Alberto Estanilla; (2) Lot No. 153-C, declared in the name of Eusebio Arce; (3)Lot No. 153-D, declared in the name of Feliciano Tadlip; and (4) Lot Nos. 153-E and F, retained and declared in the name of Angel.Nowhere in the records is it shown that Rementizo was a beneficiary or tenant of Lot No. 153-F. The Court of Appeals granted the petition insofar as the cancellation of EP No. A-028390-H was concerned.The appellate court opined that Madarieta still has to file the appropriate action in the Regional Trial Court, which has original jurisdiction in actions after original registration, to have the subject OCT reconveyed by virtue of the issuance of a void emancipation patent.The Court of Appeals disposed of the instant case, as follows:WHEREFORE, the instant motion for reconsideration is PARTIALLY GRANTED.The Decision of this Court promulgated onMay 26,2004is SET ASIDE.In lieu thereof, the herein discussion is adopted and a new judgment is entered, as follows:WHEREFORE, the petition for review is GRANTED.The decision of the DARAB datedFebruary 7, 2001is REVERSED and SET ASIDE.Further, Emancipation Patent (EP) No. A-028390-H, covering Lot No. 153-F, issued to the private respondent, is declared NULL and VOID.SO ORDERED.[9]The IssueThe crucial issue in this case is whether the action for the annulment of the emancipation patent, which ultimately seeks the reconveyance of the title issued to Rementizo, has already prescribed.The Ruling of the Court The petition is meritorious.In the present case, theDAR, which is presumed to have regularly performed its official function, awarded EP No. A-028390-H to Rementizo in 1987. Aside from this emancipation patent, two other emancipation patents and certificates of title (OCT Nos. 183 and 174) were issued to Rementizo covering two different parcels of land.This means that Rementizo was a qualified beneficiary of various parcels of agricultural land placed under the governments Operation Land Transfer.The Court notes that Madarieta was claiming the subject property as the surviving spouse of Angel.While Madarieta presented evidence pointing out that Lot No. 153-F was historically owned and declared in the name of her deceased husband, Angel, there is nothing in the records showing that Angel during his lifetime opposed Rementizos occupation and possession of the subject land. Madarieta and respondents started claiming the property after the death of Angel. Considering that the subject property was proximate to the Madarietas residence, Angel could have questioned the legality of Rementizos occupation over the land.There is no dispute that Rementizo possessed the subject land in the concept of an owner since the issuance of EP No. A-028390-H and the registration of OCT No. EP-195 in 1987, when Angel was still alive.Rementizo even constructed a house on the subject property immediately thereafter.No objection was interposed by Angel against Rementizos possession of the subject land.With Angels unexplained silence or acquiescence, it may be concluded that Angel recognized the legitimacy of Rementizos rights over the land. Otherwise, Angel could have challengedRementizos occupation of the subject property.There is no allegation or proof that there was fraud in the issuance of EP No. A-028390-H and OCT No. EP-195.Madarieta did not adduce any evidence showing the existence of fraud in the issuance of the subject emancipation patent and title.In fact, Madarieta faulted the DAR in including the subject land in the Operation Land Transfer and termed DARs alleged unlawful taking of the subject property as landgrabbing.In her Memorandum before the DARAB, Madarieta stated that:Unfortunately for petitioner (Madarieta), sometime about 1988,DARpeople of Camiguin Province identified respondent as tenant of Roque Luspo and Lourdes Luspo Neri and made him qualified beneficiary of the said landowner in the implementation of P.D. 27, and awarded to respondent not only the farm of the said landowner but also the subject land exclusively belonging to petitioner x x That by virtue thereof, said respondent was issued OCT No. EP 195.Respondent cannot be considered possessor in good faith.He has no hand in the acquisition of the property.He was merely a recipient being a qualified beneficiary.It was the government thru the instrumentality of a law P.D. 27 that acquired the land thru the Ministry of Agrarian Reform.[10](Emphasis supplied)Thus, Madarieta miserably failed to show that Rementizo employed fraud in the awarding of EP No. A-028390-H in his favor.Fraud is a question of fact which must be alleged and proved. Fraud cannot be presumed and must be proven by clear and convincing evidence.[11]In this case, there was no such evidence showing actual fraud on the part of Rementizo.Madarietas evidence at the most tends to show that theDARcommitted a mistake in issuing EP No. A-028390-H in favor of Rementizo, who was admittedly a tenant of Luspo and not of Angel.While the entire Lot No. 153 was indeed covered by the Operation Land Transfer, Madarieta presented the Real Property Historical Ownership which was issued by the Office of the Provincial Assessor,[12]stating that Lot Nos. 153-E and F were retained and declared in the name of Angel.Considering that there appears to be a mistake in the issuance of the subject emancipation patent, then the registration of the title to the subject property in Rementizos name is likewise erroneous.In such a case, the law prescribes a specific remedy reserved to the rightful owner of the erroneously registered property, that is, an action for reconveyance.In an action for reconveyance, the decree of registration is respected as incontrovertible but what is sought instead is the transfer of the property wrongfully or erroneously registered in anothers name to its rightful owner or to one with a better right. The person in whose name the land is registered holds it as a mere trustee.[13]Nevertheless, the right to seek reconveyance of registered property is not absolute because it is subject toextinctive prescription.[14]InCaro v. Court of Appeals,[15]the prescriptive period of an action for reconveyance was explained:[U]nder the present Civil Code, we find that just as an implied or constructive trust is an offspring of the law (Art. 1456, Civil Code), so is the corresponding obligation to reconvey the property and the title thereto in favor of the true owner. In this context, and vis--visprescription, Article 1144 of the Civil Code is applicable.Article 1144. The following actions must be brought within ten years from the time the right of action accrues:(1)Upon a written contract;(2)Upon an obligation created by law;(3)Upon a judgment. (Emphasis supplied)The 10-year prescriptive period is reckoned from the date of issuance of the certificate of title.There is but one instance when prescription cannot be invoked in an action for reconveyance, that is, when the plaintiff or complainant (Madarieta or respondents in this case) is in possession of the land to be reconveyed,[16]and the registered owner was never in possession of the disputed property.In such a case, the Court has allowed the action for reconveyance to prosper despite the lapse of more than 10 years from the issuance of the title to the land.[17]In the instant case, however, it is the rule rather than the exception which should apply.To repeat, an action for reconveyance based on an implied or constructive trust prescribes in 10 years from the issuance of theTorrenstitle over the property, which operates as a constructive notice to the whole world.[18]The title over the subject land was registered in Rementizos name in 1987 while Madarieta filed the complaint to recover the subject lot only in 1998.More than 11 years had lapsed before Madarieta instituted the action for annulment of EP No. A-028390-H, which in essence is an action for reconveyance.Therefore, the complaint was clearly barred by prescription.Madarietas discovery in 1997, through a relocation survey, of the ownership of the subject land can not be considered as the reckoning point for the computation of the prescriptive period. EP No. A-028390-H, by virtue of which OCT No. EP-195 was registered, was issued in 1987, when Angel who is the declared landowner was still alive.InGSIS v. Santiago,[19]Samonte v. Court of Appeals,[20]andAdille v. Court of Appeals,[21]this Court used as starting point the date of the actual discovery of the fraud, instead of the date of the issuance of the certificate of title. In those cases, however, there were evident bad faith, misrepresentations, and fraudulent machinations employed by the registered owners in securing titles over the disputed lots.In this case, there is no evidence adduced by Madarieta or respondents that Rementizo employed fraud in the issuance of EP No. A-028390-H and OCT No. EP-195.Madarieta did not even present any evidence that her late husband objected to Rementizos occupation over the subject land after the issuance of EP No. A-028390-H and OCT No. EP-195. The absence of fraud in the present case distinguishes it from the cases ofGSIS,[22]Samonte,[23]andAdille.[24]The reckoning point, therefore, for the computation of the 10-year prescriptive period is the date of the issuance of EP No. A-028390-H and registration ofOCT No. EP-195 in the name of Rementizo.WHEREFORE, weGRANTthe petition. WeSET ASIDEthe 4 July 2005 Amended Decision and 3 October 2005 Resolution of the Court of Appeals in CA-G.R. SP No. 65286.WeDISMISSthe Complaint for Annulment and Cancellation of Original Certificate of Title No. EP-195 and Emancipation Patent No. A-028390-H on the ground of prescription.Costs against respondents.SO ORDERED.ANTONIO T. CARPIOAssociate JusticeRepublic of the PhilippinesSUPREME COURTManilaFIRST DIVISIONG.R. No. 170923 January 20, 2009SULO SA NAYON, INC. and/or PHILIPPINE VILLAGE HOTEL, INC. and JOSE MARCEL E. PANLILIO,Petitioners,vs.NAYONG PILIPINO FOUNDATION,Respondent.D E C I S I O NPUNO,C.J.:On appeal are the Court of Appeals (CAs) October 4, 2005 Decision1in CA-G.R. SP No. 74631 and December 22, 2005 Resolution,2reversing the November 29, 2002 Decision3of the Regional Trial Court (RTC) of Pasay City in Civil Case No. 02-0133. The RTC modified the Decision4of the Metropolitan Trial Court (MeTC) of Pasay City which ruled against petitioners and ordered them to vacate the premises and pay their arrears. The RTC declared petitioners as builders in good faith and upheld their right to indemnity.The facts are as follows:Respondent Nayong Pilipino Foundation, a government-owned and controlled corporation, is the owner of a parcel of land in Pasay City, known as the Nayong Pilipino Complex. Petitioner Philippine Village Hotel, Inc. (PVHI), formerly called Sulo sa Nayon, Inc., is a domestic corporation duly organized and existing under Philippine laws. Petitioner Jose Marcel E. Panlilio is its Senior Executive Vice President. On June 1, 1975, respondent leased a portion of the Nayong Pilipino Complex, consisting of 36,289 square meters, to petitioner Sulo sa Nayon, Inc. for the construction and operation of a hotel building, to be known as the Philippine Village Hotel. The lease was for an initial period of 21 years, or until May 1996. It is renewable for a period of 25 years under the same terms and conditions upon due notice in writing to respondent of the intention to renew at least 6 months before its expiration. Thus, on March 7, 1995, petitioners sent respondent a letter notifying the latter of their intention to renew the contract for another 25 years. On July 4, 1995, the parties executed a Voluntary Addendum to the Lease Agreement. The addendum was signed by petitioner Jose Marcel E. Panlilio in his official capacity as Senior Executive Vice President of the PVHI and by Chairman Alberto A. Lim of the Nayong Pilipino Foundation. They agreed to the renewal of the contract for another 25 years, or until 2021. Under the new agreement, petitioner PVHI was bound to pay the monthly rental on a per square meter basis at the rate ofP20.00 per square meter, which shall be subject to an increase of 20% at the end of every 3-year period. At the time of the renewal of the lease contract, the monthly rental amounted toP725,780.00.Beginning January 2001, petitioners defaulted in the payment of their monthly rental. Respondent repeatedly demanded petitioners to pay the arrears and vacate the premises. The last demand letter was sent on March 26, 2001. On September 5, 2001, respondent filed a complaint for unlawful detainer before the MeTC of Pasay City. The complaint was docketed as Civil Case No. 708-01. Respondent computed the arrears of petitioners in the amount of twenty-six million one hundred eighty-three thousand two hundred twenty-five pesos and fourteen centavos (P26,183,225.14), as of July 31, 2001.On February 26, 2002, the MeTC rendered its decision in favor of respondent. It ruled, thus:. . . . The court is convinced by the evidence that indeed, defendants defaulted in the payment of their rentals. It is basic that the lessee is obliged to pay the price of the lease according to the terms stipulated (Art. 1657, Civil Code). Upon the failure of the lessee to pay the stipulated rentals, the lessor may eject (sic) and treat the lease as rescinded and sue to eject the lessee (C. Vda[.] De Pamintuan v. Tiglao, 53 Phil. 1). For non-payment of rentals, the lessor may rescind the lease, recover the back rentals and recover possession of the leased premises. . .x x x. . . . Improvements made by a lessee such as the defendants herein on leased premises are not valid reasons for their retention thereof. The Supreme Court has occasion to address a similar issue in which it ruled that: "The fact that petitioners allegedly made repairs on the premises in question is not a reason for them to retain the possession of the premises. There is no provision of law which grants the lessee a right of retention over the leased premises on that ground. Article 448 of the Civil Code, in relation to Article 546, which provides for full reimbursement of useful improvements and retention of the premises until reimbursement is made, applies only to a possessor in good faith, i.e., one who builds on a land in the belief that he is the owner thereof. This right of retention does not apply to a mere lessee, like the petitioners, otherwise, it would always be in his power to "improve" his landlord out of the latters property (Jose L. Chua and Co Sio Eng vs. Court of Appeals and Ramon Ibarra, G.R. No. 109840, January 21, 1999)."Although the Contract of Lease stipulates that the building and all the improvements in the leased premises belong to the defendants herein, such will not defeat the right of the plaintiff to its property as the defendants failed to pay their rentals in violation of the terms of the contract. At most, defendants can only invoke [their] right under Article 1678 of the New Civil Code which grants them the right to be reimbursed one-half of the value of the building upon the termination of the lease, or, in the alternative, to remove the improvements if the lessor refuses to make reimbursement.The dispositive portion of the decision reads as follows:WHEREFORE, premises considered, judgment is hereby rendered in favor of Nayong Pilipino Foundation, and against the defendant Philippine Village Hotel, Inc[.], and all persons claiming rights under it, ordering the latter to:1. VACATE the subject premises and surrender possession thereof to plaintiff;2. PAY plaintiff its rental arrearages in the sum of TWENTY SIX MILLION ONE HUNDRED EIGHTY THREE THOUSAND TWO HUNDRED TWENTY FIVE PESOS AND 14/100 (P26,183,225.14) incurred as of July 31, 2001;3. PAY plaintiff the sum of SEVEN HUNDRED TWENTY FIVE THOUSAND SEVEN HUNDRED EIGHTY PESOS (P725,780.00) per month starting from August 2001 and every month thereafter by way of reasonable compensation for the use and occupation of the premises;4. PAY plaintiff the sum of FIFTY THOUSAND PESOS (P50,000.00) by way of attorneys fees[; and]5. PAY the costs of suit.The complaint against defendant Jose Marcel E. Panlilio is hereby dismissed for lack of cause of action. The said defendants counterclaim however is likewise dismissed as the complaint does not appear to be frivolous or maliciously instituted. SO ORDERED.5Petitioners appealed to the RTC which modified the ruling of the MeTC. It held that:. . . it is clear and undisputed that appellants-lessees were expressly required to construct a first-class hotel with complete facilities. The appellants were also unequivocally declared in the Lease Agreement as the owner of the improvements so constructed. They were even explicitly allowed to use the improvements and building as security or collateral on loans and credit accommodations that the Lessee may secure for the purpose of financing the construction of the building and other improvements (Section 2; pars. "A" to "B," Lease Agreement). Moreover, a time frame was setforth (sic) with respect to the duration of the lease initially for 21 years and renewable for another 25 years in order to enable the appellants-lessees to recoup their huge money investments relative to the construction and maintenance of the improvements.x x xConsidering therefore, the elements of permanency of the construction and substantial value of the improvements as well as the undispute[d] ownership over the land improvements, these, immensely engender the application of Art. 448 of the Civil Code. The only remaining and most crucial issue to be resolved is whether or not the appellants as builders have acted in good faith in order for Art. 448 in relation to Art. 546 of the Civil Code may apply with respect to their rights over improvements.x x x. . . it is undeniable that the improvement of the hotel building of appellants (sic) PVHI was constructed with the written consent and knowledge of appellee. In fact, it was precisely the primary purpose for which they entered into an agreement. Thus, it could not be denied that appellants were builders in good faith.Accordingly, and pursuant to Article 448 in relation to Art. 546 of the Civil Code, plaintiff-appellee has the sole option or choice, either to appropriate the building, upon payment of proper indemnity consonant to Art. 546 or compel the appellants to purchase the land whereon the building was erected. Until such time that plaintiff-appellee has elected an option or choice, ithasnorightofremovalordemolitionagainst appellants unless after having selected a compulsory sale, appellants fail to pay for the land (Ignacio vs. Hilario; 76 Phil. 605). This, however, is without prejudice from the parties agreeing to adjust their rights in some other way as they may mutually deem fit and proper.The dispositive portion of the decision of the RTC reads as follows:WHEREFORE, and in view of the foregoing, judgment is hereby rendered modifying the decision of [the] MTC, Branch 45 of Pasay City rendered on February 26, 2002 as follows:1. Ordering plaintiff-appellee to submit within thirty (30) days from receipt of a copy of this decision a written manifestation of the option or choice it selected, i.e., to appropriate the improvements upon payment of proper indemnity or compulsory sale of the land whereon the hotel building of PVHI and related improvements or facilities were erected;2. Directing the plaintiff-appellee to desist and/or refrain from doing acts in the furtherance or exercise of its rights and demolition against appellants unless and after having selected the option of compulsory sale and appellants failed to pay [and] purchase the land within a reasonable time or at such time as this court will direct;3. Ordering defendants-appellants to pay plaintiff-appellee [their] arrears in rent incurred as of July 31, 2001 in the amount of P26,183,225.14;4. Ordering defendants-appellants to pay to plaintiff-appellee the unpaid monthly rentals for the use and occupation of the premises pending this appeal from July to November 2002 only at P725,780.00 per month;5. The fourth and fifth directives in the dispositive portion of the trial courts decision including that the last paragraph thereof JME Panlilios complaint is hereby affirmed;6. The parties are directed to adjust their respective rights in the interest of justice as they may deem fit and proper if necessary.SO ORDERED.6Respondent appealed to the CA which held that the RTC erroneously applied the rules on accession, as found in Articles 448 and 546 of the Civil Code when it held that petitioners were builders in good faith and, thus, have the right to indemnity. The CA held:By and large, respondents are admittedly mere lessees of the subject premises and as such, cannot validly claim that they are builders in good faith in order to solicit the application of Articles 448 and 546 of the Civil Code in their favor. As it is, it is glaring error on the part of the RTC to apply the aforesaid legal provisions on the supposition that the improvements, which are of substantial value, had been introduced on the leased premises with the permission of the petitioner. To grant the respondents the right of retention and reimbursement as builders in good faith merely because of the valuable and substantial improvements that they introduced to the leased premises plainly contravenes the law and settled jurisprudential doctrines and would, as stated, allow the lessee to easily "improve" the lessor out of its property.. . . . Introduction of valuable improvements on the leased premises does not strip the petitioner of its right to avail of recourses under the law and the lease contract itself in case of breach thereof. Neither does it deprive the petitioner of its right under Article 1678 to exercise its option to acquire the improvements or to let the respondents remove the same.Petitioners Motion for Reconsideration was denied.Hence, this appeal.7Petitioners assign the following errors:THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE REVERSIBLE ERROR IN NOT HOLDING THAT PETITIONERS WERE BUILDERS IN GOOD FAITH OVER THE SUBSTANTIAL AND VALUABLE IMPROVEMENTS WHICH THEY HAD INTRODUCED ON THE SUBJECT PROPERTY, THUS COMPELLING THE APPLICATION OF ARTICLE 448 OF THE CIVIL CODE IN RELATION TO ARTICLE 546 OF THE SAME CODE, INSTEAD OF ARTICLE 1678 OF THE CIVIL CODE.IIHONORABLE COURT OF APPEALS COMMITTED A SERIOUS REVERSIBLE ERROR WHEN IT DISREGARDED THE FACT THAT THE LEASE CONTRACT GOVERNS THE RELATIONSHIP OF THE PARTIES AND CONSEQUENTLY THE PARTIES MAY BE CONSIDERED TO HAVE IMPLIEDLY WAIVED THE APPLICATION OF ARTICLE 1678 OF THE CIVIL CODE TO THE INSTANT CASE.IIIASSUMING ARGUENDO THAT THE PETITIONERS ARE NOT BUILDERS IN GOOD FAITH, THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE REVERSIBLE ERROR WHEN IT OVERLOOKED THE FACT THAT RESPONDENT ALSO ACTED IN BAD FAITH WHEN IT DID NOT HONOR AND INSTEAD BREACHED THE LEASE CONTRACT BETWEEN THE PARTIES, THUS BOTH PARTIES ACTED AS IF THEY ARE IN GOOD FAITH.IVTO SANCTION THE APPLICATION OF ARTICLE 1678 OF THE CIVIL CODE INSTEAD OF ARTICLE 448 OF THE CIVIL CODE IN RELATION TO ARTICLE 546 OF THE SAME CODE WOULD NOT ONLY WREAK HAVOC AND CAUSE SUBSTANTIAL INJURY TO THE RIGHTS AND INTERESTS OF PETITIONER PHILIPPINE VILLAGE HOTEL, INC. WHILE RESPONDENT NAYONG PILIPINO FOUNDATION, IN COMPARISON THERETO, WOULD SUFFER ONLY SLIGHT OR INCONSEQUENTIAL INJURY OR LOSS, BUT ALSO WOULD CONSTITUTE UNJUST ENRICHMENT ON THE PART OF RESPONDENT AT GREAT EXPENSE AND GRAVE PREJUDICE OF PETITIONERS.VTHE HONORABLE COURT OF APPEALS COMMITTED A GRAVE REVERSIBLE ERROR IN NOT HOLDING THAT THE COURTS A QUO DID NOT ACQUIRE JURISDICTION OVER THE UNLAWFUL DETAINER CASE FOR NON-COMPLIANCE WITH JURISDICTIONAL REQUIREMENTS DUE TO THE ABSENCE OF A NOTICE TO VACATE UPON PETITIONERS.8First, we settle the issue of jurisdiction. Petitioners argue that the MeTC did not acquire jurisdiction to hear and decide the ejectment case because they never received any demand from respondent to pay rentals and vacate the premises, since such demand is a jurisdictional requisite. We reiterate the ruling of the MeTC, RTC and CA. Contrary to the claim of petitioners, documentary evidence proved that a demand letter dated March 26, 2001 was sent by respondent through registered mail to petitioners, requesting them "to pay the rental arrears or else it will be constrained to file the appropriate legal action and possess the leased premises."Further, petitioners argument that the demand letter is "inadequate" because it contained no demand to vacate the leased premises does not persuade. We have ruled that:. . . . The word "vacate" is not a talismanic word that must be employed in all notices. The alternatives in this case are clear cut. The tenants must pay rentals which are fixed and which became payable in the past, failing which they must move out. There can be no other interpretation of the notice given to them. Hence, when the petitioners demanded that either he paysP18,000 in five days or a case of ejectment would be filed against him, he was placed on notice to move out if he does not pay. There was, in effect, a notice or demand to vacate.9In the case at bar, the language of the demand letter is plain and simple: respondent demanded payment of the rental arrears amounting toP26,183,225.14 within ten days from receipt by petitioners, or respondent will be constrained to file an appropriate legal action against petitioners to recover the said amount. The demand letter further stated that respondent will possess the leased premises in case of petitioners failure to pay the rental arrears within ten days. Thus, it is clear that the demand letter is intended as a notice to petitioners to pay the rental arrears, and a notice to vacate the premises in case of failure of petitioners to perform their obligation to pay.Second, we resolve the main issue of whether the rules on accession, as found in Articles 448 and 546 of the Civil Code, apply to the instant case.Ar