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G.R. No. L-44426 February 25, 1982

SULPICIO CARVAJAL, petitioner,
vs.
THE HONORABLE COURT OF APPEALS ** and EUTIQUIANO CAMARILLO and LIBERATA CACABELOS, respondents.

TEEHANKEE, J.:
The Court reverses the appellate court's decision affirming in toto the judgment of the Court of First Instance of Pangasinan, declaring
plaintiffs-respondents the lawful owners of the land in question and ordering defendant (herein petitioner) to pay P30.00 monthly rentals until
possession of the property is surrendered to respondents, for unless there is partition of the estate of the deceased, either extra judicially or
by court order, a co-heir cannot validly claim title to a specific portion of the estate and send the same. Title to any specific part of the estate
does not automatically pass to the heirs by the mere death of the decedent and the effect of any disposition by a co-heir before partition shall
be limited to the portion which may be allotted to him upon the dissolution of the communal estate. What a co-heir can validly dispose of is
only his hereditary rights.
Private respondents, who are husband and wife, had instituted a complaint before the Court of First Instance for ejectment and recovery of
possession against herein petitioner, docketed as Civil Case No. T-1163, alleging that they are the owners in fee simple of a parcel of
commercial land, pro-indiviso, consisting of 150.8 sq. meters, more or less, situated in Poblacion, Tayug, Pangasinan, having bought the
same from Evaristo G. Espique by virtue of a Deed of Absolute Sale executed on April 15, 1964. They also demand that petitioner pay a
monthly rental for the use of the property all P40.00 until the property is surrendered to them.
The property in question is a 1/5 portion of a 754 sq. qmeter land originally owned by Hermogenes Espique and his wife, both dead. After
their death their five children, namely: Maria, Evaristo, Faustina, Estefanio and Tropinia succeeded them in the ownership of the whole lot.
Petitioner presently occupies two-fifths of the whole lot inherited pro-indiviso by the Espique children. Petitioner alleges that he purchased the
northern one-half portion of the lot he is occupying (which is also claimed by respondents) from Estefanio Espique and that the southern one-
half portion of the lot he is occupying (which is also claimed by respondents) from Estefanio Espique and that the southern one-half portion is
leased to him by Tropinia Espique. The land subject of the controversy is the most southern portion of the whole lot inherited by the Espique
children which petitioner claims he had bought from Estefanio on April 26, 1967 and which respondents claim they had bough from Evaristo
on April 15, 1964.
Both sales were made while the petition for partition filed by Evaristo Espique was still pending before the Court of First Instance of
Pangasinan, docketed therein as Civil Case No. T-966.
The Court finds merit in the petition for setting aside respondent appellate court's decision finding for respondents-plaintiffs, for the following
considerations:
The action for ejectment and recovery of possession instituted by herein respondents in the lower court is premature, for what must be
settled frist is the action for partition. Unless a project of partition is effected, each heir cannot claim ownership over a definite portion of the
inheritance. Without partition, either by agreement between the parties of by judicial proceeding, a co-heir cannot dispose of a specific
portion of the estate. For where there are two or more heirs, the whole estate such heirs.
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Upon the death of a person, each of his heirs
becomes the undivided owner of the whole estate left wtih respect to the part of portion which might be adjudicated to him, a community of
ownership being thus formed among the co-owners of the estate or co-heirs while it remains undivided.
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While under Article 493 of the New Civil Code, each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining
thereto and he may alienate, assign or mortgage it, and even substitute another person in its enjoyment, the effect of the alienation or the
mortgage with respect to the co-owners, shall be limited, by mandate of the same article, to the portion which may be allotted to him in the
division upon the termination of the co-ownership. He has no right to sell or alienate a concrete, specific, or determinate part of the thing in
common to the exclusion of the other co-owners because his right over the thing is represented by an abstract or Ideal portion without any
physical adjudication.
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An individual co- owner cannot adjudicate to himself or claim title to any definite portion of the land or thing owned in
common until its actual partition by agreement or judicial decree. Prior to that time all that the co-owner has is an Ideal or abstract quota or
proportionate share in the entire thing owned in common by all the co-owners.
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What a co owner may dispose of is only his undivided aliquot
share, which shall be limited to the portion that may be allotted to him upon partition.
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Before partition, a co-heir can only sell his
successional rights.
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In the case at bar, the fact that the sale executed by Evaristo G. qqqEspique in favor of respondents and the sale executed by Estefanio
Espique in favor of petitioner were made before the partition of the property among the co-heirs does not annul or invalidate the deeds of
sale and both sales are valid. However, the interests thereby acquired by petitioner and respondents are limited only to the parts that may be
ultimately assigned to Estefanio and Evaristo, respectively, upon the partition of the estate
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subject to provisions on subrogation of the other
co-heirs to the rights of the stranger-purchaser provided in Article 1088 of the Civil Code.
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Respondent court's ruling that the sale by
Estefanio in favor of petitioner is not valid because of lack of notice to his co-heirs is erroneous. Such notice in writing is not a requisite for
the validity of the sale. Its purpose is merely to apprise the co-heirs of the sale of a portion of the estate, for them to exercise their
preferential right of subrogation under Article 1088 of the New Civil Code, that is, the right to redeem the property sold within one month
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from the time they were notified in writing of the sale by a co-heir. (There is nothing in the record to indicate that such right of subrogation
was in effect sought to be exercised upon the co-heirs' having learned of the sale, which is not in issue here.)
Thus, respondents have no right to eject petitioners nor demand payment of rentals for the use of the property in dispute. Until the partition
of the estate is ordered by the Court of First Instance of Pangasinan in the pending partition proceedings and the share of each co-heir is
determined by metes and bounds, neither petitioner nor respondents can rightfully claim that what they bought is the part in dispute.
Accordingly, respondent court's judgment is set aside and judgment is hereby rendered dismissing the complaint of respondents-plaintiffs in
the court below. No pronouncement as to costs.
Makasiar, Guerrero, Melencio-Herrera and Plana, JJ., concur.
G.R. No. L-33187 March 31, 1980
CORNELIO PAMPLONA alias GEMINIANO PAMPLONA and APOLONIA ONTE, petitioners,
vs.
VIVENCIO MORETO, VICTOR MORETO, ELIGIO MORETO, MARCELO MORETO, PAULINA MORETO, ROSARIO MORETO, MARTA
MORETO, SEVERINA MENDOZA, PABLO MENDOZA, LAZARO MENDOZA, VICTORIA TUIZA, JOSEFINA MORETO, LEANDRO MORETO
and LORENZO MENDOZA, respondents.
E.P. Caguioa for petitioners.
Benjamin C. Yatco for respondents.

GUERRERO, J.:
This is a petition for certiorari by way of appeal from the decision of the Court of Appeals
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in CA-G.R. No. 35962-R, entitled "Vivencio Moreto,
et al., Plaintiff-Appellees vs. Cornelio Pamplona, et al., Defendants-Appellants," affirming the decision of the Court of First Instance of Laguna,
Branch I at Bian.
The facts, as stated in the decision appealed from, show that:
Flaviano Moreto and Monica Maniega were husband and wife. During their marriage, they acquired adjacent lots Nos. 1495, 4545, and 1496
of the Calamba Friar Land Estate, situated in Calamba, Laguna, containing 781-544 and 1,021 square meters respectively and covered by
certificates of title issued in the name of "Flaviano Moreto, married to Monica Maniega."
The spouses Flaviano Moreto and Monica Maniega begot during their marriage six (6) children, namely, Ursulo, Marta, La Paz, Alipio, Pablo,
and Leandro, all surnamed Moreto.
Ursulo Moreto died intestate on May 24, 1959 leaving as his heirs herein plaintiffs Vivencio, Marcelo, Rosario, Victor, Paulina, Marta and Eligio,
all surnamed Moreto.
Marta Moreto died also intestate on April 30, 1938 leaving as her heir plaintiff Victoria Tuiza.
La Paz Moreto died intestate on July 17, 1954 leaving the following heirs, namely, herein plaintiffs Pablo, Severina, Lazaro, and Lorenzo, all
surnamed Mendoza.
Alipio Moreto died intestate on June 30, 1943 leaving as his heir herein plaintiff Josefina Moreto.
Pablo Moreto died intestate on April 25, 1942 leaving no issue and as his heirs his brother plaintiff Leandro Moreto and the other plaintiffs
herein.
On May 6, 1946, Monica Maniega died intestate in Calamba, Laguna.
On July 30, 1952, or more than six (6) years after the death of his wife Monica Maniega, Flaviano Moreto, without the consent of the heirs of
his said deceased wife Monica, and before any liquidation of the conjugal partnership of Monica and Flaviano could be effected, executed in
favor of Geminiano Pamplona, married to defendant Apolonia Onte, the deed of absolute sale (Exh. "1") covering lot No. 1495 for P900.00.
The deed of sale (Exh. "1") contained a description of lot No. 1495 as having an area of 781 square meters and covered by transfer certificate
of title No. 14570 issued in the name of Flaviano Moreto, married to Monica Maniega, although the lot was acquired during their marriage. As
a result of the sale, the said certificate of title was cancelled and a new transfer certificate of title No. T-5671 was issued in the name of
Geminiano Pamplona married to Apolonia Onte (Exh. "A").
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After the execution of the above-mentioned deed of sale (Exh. "1"), the spouses Geminiano Pamplona and Apolonia Onte constructed their
house on the eastern part of lot 1496 as Flaviano Moreto, at the time of the sale, pointed to it as the land which he sold to Geminiano
Pamplona. Shortly thereafter, Rafael Pamplona, son of the spouses Geminiano Pamplona and Apolonia Onte, also built his house within lot
1496 about one meter from its boundary with the adjoining lot. The vendor Flaviano Moreto and the vendee Geminiano Pamplona thought all
the time that the portion of 781 square meters which was the subject matter of their sale transaction was No. 1495 and so lot No. 1495
appears to be the subject matter in the deed of sale (Exh. "1") although the fact is that the said portion sold thought of by the parties to be
lot No. 1495 is a part of lot No. 1496.
From 1956 to 1960, the spouses Geminiano Pamplona and Apolonio Onte enlarged their house and they even constructed a piggery corral at
the back of their said house about one and one-half meters from the eastern boundary of lot 1496.
On August 12, 1956, Flaviano Moreto died intestate. In 1961, the plaintiffs demanded on the defendants to vacate the premises where they
had their house and piggery on the ground that Flaviano Moreto had no right to sell the lot which he sold to Geminiano Pamplona as the same
belongs to the conjugal partnership of Flaviano and his deceased wife and the latter was already dead when the sale was executed without
the consent of the plaintiffs who are the heirs of Monica. The spouses Geminiano Pamplona and Apolonia Onte refused to vacate the premises
occupied by them and hence, this suit was instituted by the heirs of Monica Maniega seeking for the declaration of the nullity of the deed of
sale of July 30, 1952 above-mentioned as regards one-half of the property subject matter of said deed; to declare the plaintiffs as the rightful
owners of the other half of said lot; to allow the plaintiffs to redeem the one-half portion thereof sold to the defendants. "After payment of the
other half of the purchase price"; to order the defendants to vacate the portions occupied by them; to order the defendants to pay actual and
moral damages and attorney's fees to the plaintiffs; to order the defendants to pay plaintiffs P120.00 a year from August 1958 until they
have vacated the premises occupied by them for the use and occupancy of the same.
The defendants claim that the sale made by Flaviano Moreto in their favor is valid as the lot sold is registered in the name of Flaviano Moreto
and they are purchasers believing in good faith that the vendor was the sole owner of the lot sold.
After a relocation of lots 1495, 1496 and 4545 made by agreement of the parties, it was found out that there was mutual error between
Flaviano Moreto and the defendants in the execution of the deed of sale because while the said deed recited that the lot sold is lot No. 1495,
the real intention of the parties is that it was a portion consisting of 781 square meters of lot No. 1496 which was the subject matter of their
sale transaction.
After trial, the lower court rendered judgment, the dispositive part thereof being as follows:
WHEREFORE, judgment is hereby rendered for the plaintiffs declaring the deed of absolute sale dated July 30, 1952
pertaining to the eastern portion of Lot 1496 covering an area of 781 square meters null and void as regards the 390.5
square meters of which plaintiffs are hereby declared the rightful owners and entitled to its possession.
The sale is ordered valid with respect to the eastern one-half (1/2) of 1781 square meters of Lot 1496 measuring 390.5
square meters of which defendants are declared lawful owners and entitled to its possession.
After proper survey segregating the eastern one-half portion with an area of 390.5 square meters of Lot 1496, the
defendants shall be entitled to a certificate of title covering said portion and Transfer Certificate of Title No. 9843 of the
office of the Register of Deeds of Laguna shall be cancelled accordingly and new titles issued to the plaintiffs and to the
defendants covering their respective portions.
Transfer Certificate of Title No. 5671 of the office of the Register of Deeds of Laguna covering Lot No. 1495 and registered
in the name of Cornelio Pamplona, married to Apolonia Onte, is by virtue of this decision ordered cancelled. The
defendants are ordered to surrender to the office of the Register of Deeds of Laguna the owner's duplicate of Transfer
Certificate of Title No. 5671 within thirty (30) days after this decision shall have become final for cancellation in accordance
with this decision.
Let copy of this decision be furnished the Register of Deeds for the province of Laguna for his information and guidance.
With costs against the defendants.
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The defendants-appellants, not being satisfied with said judgment, appealed to the Court of Appeals, which affirmed the judgment, hence
they now come to this Court.
The fundamental and crucial issue in the case at bar is whether under the facts and circumstances duly established by the evidence,
petitioners are entitled to the full ownership of the property in litigation, or only one-half of the same.
There is no question that when the petitioners purchased the property on July 30, 1952 from Flaviano Moreto for the price of P900.00, his
wife Monica Maniega had already been dead six years before, Monica having died on May 6, 1946. Hence, the conjugal partnership of the
spouses Flaviano Moreto and Monica Maniega had already been dissolved. (Article 175, (1) New Civil Code; Article 1417, Old Civil Code). The
records show that the conjugal estate had not been inventoried, liquidated, settled and divided by the heirs thereto in accordance with law.
The necessary proceedings for the liquidation of the conjugal partnership were not instituted by the heirs either in the testate or intestate
proceedings of the deceased spouse pursuant to Act 3176 amending Section 685 of Act 190. Neither was there an extra-judicial partition
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between the surviving spouse and the heirs of the deceased spouse nor was an ordinary action for partition brought for the purpose.
Accordingly, the estate became the property of a community between the surviving husband, Flaviano Moreto, and his children with the
deceased Monica Maniega in the concept of a co-ownership.
The community property of the marriage, at the dissolution of this bond by the death of one of the spouses, ceases to
belong to the legal partnership and becomes the property of a community, by operation of law, between the surviving
spouse and the heirs of the deceased spouse, or the exclusive property of the widower or the widow, it he or she be the
heir of the deceased spouse. Every co-owner shall have full ownership of his part and in the fruits and benefits derived
therefrom, and he therefore may alienate, assign or mortgage it, and even substitute another person in its enjoyment,
unless personal rights are in question. (Marigsa vs. Macabuntoc, 17 Phil. 107)
In Borja vs. Addision, 44 Phil. 895, 906, the Supreme Court said that "(t)here is no reason in law why the heirs of the deceased wife may not
form a partnership with the surviving husband for the management and control of the community property of the marriage and conceivably
such a partnership, or rather community of property, between the heirs and the surviving husband might be formed without a written
agreement." In Prades vs. Tecson, 49 Phil. 230, the Supreme Court held that "(a)lthough, when the wife dies, the surviving husband, as
administrator of the community property, has authority to sell the property withut the concurrence of the children of the marriage,
nevertheless this power can be waived in favor of the children, with the result of bringing about a conventional ownership in common between
the father and children as to such property; and any one purchasing with knowledge of the changed status of the property will acquire only
the undivided interest of those members of the family who join in the act of conveyance.
It is also not disputed that immediately after the execution of the sale in 1952, the vendees constructed their house on the eastern part of Lot
1496 which the vendor pointed out to them as the area sold, and two weeks thereafter, Rafael who is a son of the vendees, also built his
house within Lot 1496. Subsequently, a cemented piggery coral was constructed by the vendees at the back of their house about one and
one-half meters from the eastern boundary of Lot 1496. Both vendor and vendees believed all the time that the area of 781 sq. meters
subject of the sale was Lot No. 1495 which according to its title (T.C.T. No. 14570) contains an area of 781 sq. meters so that the deed of
sale between the parties Identified and described the land sold as Lot 1495. But actually, as verified later by a surveyor upon agreement of
the parties during the proceedings of the case below, the area sold was within Lot 1496.
Again, there is no dispute that the houses of the spouses Cornelio Pamplona and Apolonia Onte as well as that of their son Rafael Pamplona,
including the concrete piggery coral adjacent thereto, stood on the land from 1952 up to the filing of the complaint by the private respondents
on July 25, 1961, or a period of over nine (9) years. And during said period, the private respondents who are the heirs of Monica Maniega as
well as of Flaviano Moreto who also died intestate on August 12, 1956, lived as neighbors to the petitioner-vendees, yet lifted no finger to
question the occupation, possession and ownership of the land purchased by the Pamplonas, so that We are persuaded and convinced to rule
that private respondents are in estoppel by laches to claim half of the property, in dispute as null and void. Estoppel by laches is a rule of
equity which bars a claimant from presenting his claim when, by reason of abandonment and negligence, he allowed a long time to elapse
without presenting the same. (International Banking Corporation vs. Yared, 59 Phil. 92)
We have ruled that at the time of the sale in 1952, the conjugal partnership was already dissolved six years before and therefore, the estate
became a co-ownership between Flaviano Moreto, the surviving husband, and the heirs of his deceased wife, Monica Maniega. Article 493 of
the New Civil Code is applicable and it provides a follows:
Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he
may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal
rights are involve. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the
portion which may be allotted to him in the division upon the termination of the co-ownership.
We agree with the petitioner that there was a partial partition of the co-ownership when at the time of the sale Flaviano Moreto pointed out
the area and location of the 781 sq. meters sold by him to the petitioners-vendees on which the latter built their house and also that whereon
Rafael, the son of petitioners likewise erected his house and an adjacent coral for piggery.
Petitioners point to the fact that spouses Flaviano Moreto and Monica Maniega owned three parcels of land denominated as Lot 1495 having
an area of 781 sq. meters, Lot 1496 with an area of 1,021 sq. meters, and Lot 4545 with an area of 544 sq. meters. The three lots have a
total area of 2,346 sq. meters. These three parcels of lots are contiguous with one another as each is bounded on one side by the other, thus:
Lot 4545 is bounded on the northeast by Lot 1495 and on the southeast by Lot 1496. Lot 1495 is bounded on the west by Lot 4545. Lot 1496
is bounded on the west by Lot 4545. It is therefore, clear that the three lots constitute one big land. They are not separate properties located
in different places but they abut each other. This is not disputed by private respondents. Hence, at the time of the sale, the co-ownership
constituted or covered these three lots adjacent to each other. And since Flaviano Moreto was entitled to one-half pro-indiviso of the entire
land area or 1,173 sq. meters as his share, he had a perfect legal and lawful right to dispose of 781 sq. meters of his share to the Pamplona
spouses. Indeed, there was still a remainder of some 392 sq. meters belonging to him at the time of the sale.
We reject respondent Court's ruling that the sale was valid as to one-half and invalid as to the other half for the very simple reason that
Flaviano Moreto, the vendor, had the legal right to more than 781 sq. meters of the communal estate, a title which he could dispose, alienate
in favor of the vendees-petitioners. The title may be pro-indiviso or inchoate but the moment the co-owner as vendor pointed out its location
and even indicated the boundaries over which the fences were to be erectd without objection, protest or complaint by the other co-owners, on
the contrary they acquiesced and tolerated such alienation, occupation and possession, We rule that a factual partition or termination of the
co-ownership, although partial, was created, and barred not only the vendor, Flaviano Moreto, but also his heirs, the private respondents
herein from asserting as against the vendees-petitioners any right or title in derogation of the deed of sale executed by said vendor Flaiano
Moreto.
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Equity commands that the private respondents, the successors of both the deceased spouses, Flaviano Moreto and Monica Maniega be not
allowed to impugn the sale executed by Flaviano Moreto who indisputably received the consideration of P900.00 and which he, including his
children, benefitted from the same. Moreover, as the heirs of both Monica Maniega and Flaviano Moreto, private respondents are duty-bound
to comply with the provisions of Articles 1458 and 1495, Civil Code, which is the obligation of the vendor of the property of delivering and
transfering the ownership of the whole property sold, which is transmitted on his death to his heirs, the herein private respondents. The
articles cited provide, thus:
Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to
deliver a determinate thing, and the other part to pay therefore a price certain in money or its equivalent.
A contract of sale may be absolute or conditionial.
Art. 1495. The vendor is bound to transfer the ownership of and deliver, as well as warrant the thing which is the object of
the sale.
Under Article 776, New Civil Code, the inheritance which private respondents received from their deceased parents and/or predecessors-in-
interest included all the property rights and obligations which were not extinguished by their parents' death. And under Art. 1311, paragraph
1, New Civil Code, the contract of sale executed by the deceased Flaviano Moreto took effect between the parties, their assigns and heirs,
who are the private respondents herein. Accordingly, to the private respondents is transmitted the obligation to deliver in full ownership the
whole area of 781 sq. meters to the petitioners (which was the original obligation of their predecessor Flaviano Moreto) and not only one-half
thereof. Private respondents must comply with said obligation.
The records reveal that the area of 781 sq. meters sold to and occupied by petitioners for more than 9 years already as of the filing of the
complaint in 1961 had been re-surveyed by private land surveyor Daniel Aranas. Petitioners are entitled to a segregation of the area from
Transfer Certificate of Title No. T-9843 covering Lot 1496 and they are also entitled to the issuance of a new Transfer Certificate of Title in
their name based on the relocation survey.
WHEREFORE, IN VIEW OF THE FOREGOING, the judgment appealed from is hereby AFFIRMED with modification in the sense that the sale
made and executed by Flaviano Moreto in favor of the petitioners-vendees is hereby declared legal and valid in its entirely.
Petitioners are hereby declared owners in full ownership of the 781 sq. meters at the eastern portion of Lot 1496 now occupied by said
petitioners and whereon their houses and piggery coral stand.
The Register of Deeds of Laguna is hereby ordered to segregate the area of 781 sq. meters from Certificate of Title No. 9843 and to issue a
new Transfer Certificate of Title to the petitioners covering the segregated area of 781 sq. meters.
No costs.
SO ORDERED.
Teehankee (Chairman), Makasiar, Fernandez, De Castro and Melencio-Herrera, JJ., concur.
G.R. No. L-25014 October 17, 1973
DOLORES LAHORA VDA. DE CASTRO, ARSENIO DE CASTRO, JR., WILFREDO DE CASTRO, IRINEO DE CASTRO and VIRGINIA DE
CASTRO ALEJANDRO, (in substitution for the deceased defendant-appellant ARSENIO DE CASTRO, SR.)., petitioners,
vs.
GREGORIO ATIENZA, respondent.
Arsenio de Castro, Jr. and F.T. Papa for petitioners.
Dakila Castro and Z.D. de Mesa for respondent.

TEEHANKEE, J.:
The Court rejects petitioners' appeal as without merit and affirms the judgment of the appellate court. Petitioners' predecessor-in-interest as
co-owner of an undivided one-half interest in the fishpond could validly lease his interest to a third party, respondent Atienza, independently
of his co-owner (although said co-owner had also leased his other undivided one-half interest to the same third party) and could likewise by
mutual agreement independently cancel his lease agreement with said third party. Said predecessor-in-interest (and petitioners who have
substituted him as his heirs) therefore stands liable on his express undertaking to refund the advance rental paid to him by the lessee on the
cancelled lease and cannot invoke the non-cancellation of the co-owner's lease to elude such liability.
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The Court of Appeals, in its decision affirming in toto the judgment of the Manila court of first instance ordering therein defendant-appellant
Arsenio de Castro, Sr. (now deceased and substituted by above-named petitioners as his heirs) "to return to the plaintiff (respondent)
Gregorio Atienza the sum P2,500.00 with legal interest from the date of the filing of complaint until fully paid plus the sum of P250.00 as
attorney's fees and the costs of the suit", found the following facts to undisputed:
On January 24, 1956 the brothers Tomas de Castro and Arsenio de Castro, Sr. leased to plaintiff a fishpond containing an
area of 26 hectares situated in Polo, Bulacan and forming part of a bigger parcel of land covered by Transfer Certificate of
Title No. 196450 of the registry of the property of Bulacan. The lessors are co-owners in equal shares of the leased
property.
According to the contract of lease (Exh. 1) the term of the lease was for five years from January 24, 1956 at a rental of
P5,000 a year, the first year's rental to be paid on February 1, 1956, the second on February 1, 1957 and the rental for the
last three years on February 1, 1958. The first year's rental was paid on time.
In the meantime, Tomas de Castro died.
In the month of November, 1956, plaintiff as lessee and defendant Arsenio de Castro, Sr. as one of the lessors, agreed to
set aside and annul the contract of lease and for this purpose an agreement (Exh. A) was signed by them, Exhibit A as
signed by plaintiff and defendant shows that Felisa Cruz Vda. de Castro, widow of Tomas de Castro, was intended to be
made a party thereof in her capacity as representative of the heirs of Tomas Castro.
Condition No. 2 of Exhibit A reads as follows:
"2. Na sa pamamagitan nito ay pinawawalang kabuluhan namin ang nasabing kasulatan at nagkasundo kami na ang bawat
isa sa amin ni Arsenio de Castro at Felisa Cruz Vda. de Castro ay isauli kay GREGORIO ATIENZA ang tig P2,500.00 o
kabuuang halagang P5,000.00 na paunang naibigay nito alinsunod sa nasabing kasulatan; na ang nasabing tig P2,500.00
ay isasauli ng bawat isa sa amin sa o bago dumating ang Dec. 30, 1956."
Felisa Cruz Vda. de Castro refused to sign Exhibit A. Defendant did not pay the P2,500.00 which under the above-quoted
paragraph of Exhibit A, he should have paid on December 30, 1956. Demand for payment was made by plaintiff's counsel
on January 7, 1957 but to no avail, hence the present action.
On the conflicting contentions between the parties as to who between them would attend to securing the signature of Mrs. Felisa Cruz Vda. de
Castro (widow of Tomas de Castro) to the agreement of cancellation of the lease with respondent Atienza, the appellate court found that "the
testimony of the defendant (Arsenio de Castro, Sr.) ... supports the contention of the plaintiff (Atienza) "that it was the defendant Arsenio
who was interested and undertook to do so, citing Arsenio's own declaration that "I agreed to sign this document (referring to the
cancellation) because of my desire to cancel our original agreement" and that his purpose in obtaining the cancellation of said lease
agreement with plaintiff Atienza was "(B)ecause I had the intention of having said fishpond leased to other persons and I cannot lease it to
third parties unless I can secure the signature of Felisa Vda. de Castro."
The appellate court thus held in effect that as Arsenio "was the one interested in cancelling the lease (Exh. 1), it stands to reason that he
most probably undertook to obtain the signature of Mrs. Castro [widow and successor-in-interest of his brother Tomas]" and that he could not
invoke his own failure to obtain such signature to elude his own undertaking and liability to refund respondent (plaintiff) his share of the
rental paid in advance by respondent on the cancelled lease in the sum of P2,500.00.
The appellate court furthermore correctly held that the consent or concurrence of Felisa Vda. de Castro (as co-owner in succession of Tomas)
was not an essential condition to the validity and effectivity of the agreement of cancellation of the lease (Exhibit A) as between Arsenio and
respondent-lessee, contrary to petitioners' claim, holding that "(S)ince there is no specific provision in Exhibit A supporting defendant's claim,
we are not prepared to supply such condition unless the same can be deduced from other evidence or unless the terms of Exhibit A cannot be
performed by plaintiff and defendant without Mrs. Castro being bound as a party thereto."
The issue is simply reduced to whether Arsenio as co-owner of the fishpond owned pro-indiviso by him with his brother Tomas (succeeded by
Felisa Vda. de Castro) could validly lease his half-interest to a third party (respondent Atienza) independently of his
co-owner, and in case his co-owner also leased his other half interest to the same third party, whether Arsenio could cancel his own lease
agreement with said third party?
The appellate court correctly resolved the issue thus: "Our view of the contract of lease Exhibit 1 is that each of the Castro brothers, leased
his undivided one-half interest in the fishpond they owned in common to the plaintiff. Could one of them have validly leased his interest
without the other co-owner leasing his own? The answer to this is given by appellant in his own brief (p. 14) when he said that it would result
in a partnership between the lessee and the owner of the other undivided half. If the lease could be entered into partially by one of the co-
owners, insofar as his interest is concerned, then the lease, Exhibit 1, can also be cancelled partially as between plaintiff and defendant.
Therefore, we conclude that the consent of Mrs. Felisa Cruz Vda. de Castro is not essential for the cancellation of the lease of defendant's
one-half undivided share in the fishpond to plaintiff."
The appellate court's judgment is fully supported by the Civil Code provisions on the rights and prerogatives of co-owners, and specifically by
Article 493 which expressly provides that
7

Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefitspertaining thereto, and he
may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal
rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the
portion which may be alloted to him in the division upon the termination of the co-ownership. *
ACCORDINGLY, the appealed judgment is hereby affirmed with costs against petitioners.
Makalintal, Actg. C.J., Zaldivar, Castro, Fernando, Barredo, Makasiar, Antonio and Esguerra, JJ., concur.
G.R. No. L-24419 July 15, 1968
LEONORA ESTOQUE, plaintiff-appellant,
vs.
ELENA M. PAJIMULA, assisted by her husband CIRIACO PAJIMULA, defendants-appellees.
Jesus P. Mapanao for plaintiff-appellant.
Vergara and Dayot for defendants-appellees.
REYES, J.B.L., J.:
Direct appeal from an order of the Court of First Instance of La Union, in its Civil Case No. 1990, granting a motion to dismiss the complaint
for legal redemption by a co-owner (retracto legal de comuneros) on account of failure to state a cause of action.
The basic facts and issues are stated in the decision appealed from, as follows:
Plaintiff based her complaint for legal redemption on a claim that she is a co-owner of Lot No. 802, for having purchased 1/3 portion
thereof, containing an area of 640 square meters as evidenced by a deed of sale, Annex "A", which was executed on October 28,
1951 by Crispina Perez de Aquitania, one of the co-owners, in her favor.
On the other hand, the defendant, who on December 30, 1959 acquired the other 2/3 portion of Lot No. 802 from Crispina Aquitania
and her children, claimed that the plaintiff bought the 1/3 southeastern portion, which is definitely identified and segregated, hence
there existed no co-ownership at the time and after said plaintiff bought the aforesaid portion, upon which right of legal redemption
can be exercised or taken advantage of.
From the complaint, it would appear that Lot No. 802 of the Cadastral survey of Rosario, covered by original certificate of title No.
RO-2720 (N.A.) was originally owned by the late spouses, Rosendo Perez and Fortunata Bernal, who were survived by her children,
namely, Crispina Perez, Lorenzo Perez and Ricardo Perez. Ricardo Perez is also now dead. On October 28, 1951, Crispina P. Vda. de
Aquitania sold her right and participation in Lot No. 802 consisting of 1/3 portion with an area of 640 square meters to Leonora
Estoque (Annex A of the complaint). On October 29, 1951, Lorenzo Perez, Crispina Perez and Emilia P. Posadas, widow of her
deceased husband, Ricardo Perez for herself and in behalf of her minor children, Gumersindo, Raquel, Emilio and Ricardo, Jr.,
executed a deed of extrajudicial settlement wherein Lorenzo Perez, Emilia P. Posadas and her minor children assigned all their right,
interest and participation in Lot No. 802 to Crispina Perez (Annex B of the complaint). On December 30, 1959, Crispina Perez and
her children Rosita Aquitania Belmonte, Remedios Aquitania Misa, Manuel Aquitania, Sergio Aquitania and Aurora Aquitania sold to
Elena Pajimula, the remaining 2/3 western portion of Lot No. 802 with an area of 958 square meters (Annex C of the complaint).
The action of the plaintiff is premised on the claim of co-ownership. From the deed of sale executed in favor of the plaintiff, it can be
seen that the 1/3 portion sold to plaintiff is definitely identified as the 1/3 portion located on the southeastern part of Lot No. 802
and specifically bounded on the north by De Guzman Street, on the east by Posadas Street, on the south by Perez Street, and on
the west by remaining portion of the same lot, which contained an area of 640 square meters. And in the deed of sale executed by
Crispina Perez and her children in favor of defendant Elena Pajimula over the remaining 2/3 portion of Lot No. 802, said portion is
identified as the western portion of Lot No. 802 which is bounded on the north by De Guzman Street, on the east by properties of
Leonarda Estoque, on the south by the national road and on the west by Lots Nos. 799 and 801, containing an area of 598 square
meters.
The appellant's stand is that the deed in her favor was inoperative to convey the southeastern third of Lot 802 of the Rosario Cadastre
notwithstanding the description in the deed itself, for the reason that the vendor, being a mere co-owner, had no right to sell any definite
portion of the land held in common but could only transmit her undivided share, since the specific portion corresponding to the selling co-
owner is not known until partition takes place (Lopez vs. Ilustre, 5 Phil. 567; Ramirez vs. Bautista, 14 Phil. 528). From this premise, the
appellant argues that the sale in her favor, although describing a definite area, should be construed as having conveyed only the undivided
1/3 interest in Lot 802 owned at the time by the vendor, Crispina Perez Vda. de Aquitania. Wherefore, when the next day said vendor
acquired the 2/3 interest of her two other co-owners, Lot 802 became the common property of appellant and Crispina Perez. Therefore,
appellant argues, when Crispina sold the rest of the property to appellee Pajimula spouses, the former was selling an undivided 2/3 that
appellant, as co-owner, was entitled to redeem, pursuant to Article 1620 of the New Civil Code.
ART. 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners or of any of
them, are sold to a third person. If the price of the alienation is grossly excessive the redemptioner shall pay only a reasonable one.
8

Should two or more co-owners desire to exercise the right of redemption, they may only do so in proportion to the share they may
respectively have in the thing owned in common.
The lower court, upon motion of defendant, dismissed the complaint, holding that the deeds of sale show that the lot acquired by plaintiff
Estoque was different from that of the defendants Pajimula; hence they never became co-owners, and the alleged right of legal redemption
was not proper. Estoque appealed.
We find no error in the order of dismissal, for the facts pleaded negate the claim that appellant Estoque ever became a co-owner of appellees
Pajimula.
(1) The deed of sale to Estoque (Annex A of the complaint) clearly specifies the object sold as the southeastern third portion of Lot 802 of the
Rosario Cadastre, with an area of 840 square meters, more or less. Granting that the seller, Crispina Perez Vda. de Aquitania could not have
sold this particular portion of the lot owned in common by her and her two brothers, Lorenzo and Ricardo Perez, by no means does it follow
that she intended to sell to appellant Estoque her 1/3 undivided interest in the lot forementioned. There is nothing in the deed of sale to
justify such inference. That the seller could have validly sold her one-third undivided interest to appellant is no proof that she did choose to
sell the same. Ab posse ad actu non valet illatio.
(2) While on the date of the sale to Estoque (Annex A) said contract may have been ineffective, for lack of power in the vendor to sell the
specific portion described in the deed, the transaction was validated and became fully effective when the next day (October 29, 1951) the
vendor, Crispina Perez, acquired the entire interest of her remaining co-owners (Annex B) and thereby became the sole owner of Lot No. 802
of the Rosario Cadastral survey (Llacer vs. Muoz, 12 Phil. 328). Article 1434 of the Civil Code of the Philippines clearly prescribes that .
When a person who is not the owner of a thing sells or alienates and delivers it, and later the seller or grantor acquires title thereto,
such title passes by operation of law to the buyer or grantee."
Pursuant to this rule, appellant Estoque became the actual owner of the southeastern third of lot 802 on October 29, 1951. Wherefore, she
never acquired an undivided interest in lot 802. And when eight years later Crispina Perez sold to the appellees Pajimula the western two-
thirds of the same lot, appellant did not acquire a right to redeem the property thus sold, since their respective portions were distinct and
separate.
IN VIEW OF THE FOREGOING, the appealed order of dismissal is affirmed. Costs against appellant Estoque.1wph1.t
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.
G.R. No. L-27933 December 24, 1968
DIVERSIFIED CREDIT CORPORATION, plaintiff-appellee,
vs.
FELIPE ROSADO and LUZ JAYME ROSADO, defendants-appellants.
Montalvo and Bernabe for plaintiff-appellee.
Pedro D. Delfin for defendants-appellants.
REYES, J.B.L.:
This appeal from a decision of the Court of First Instance of Bacolod City, Negros Occidental (Civ. Case No. 7516 of that Court) was certified
to us by the Court of Appeals (Second Division) because the same involves no questions of fact.
The case had its origin in the Municipal Court of Bacolod City, when the Diversified Credit Corporation filed an action to compel the spouses
Felipe Rosado and Luz Jayme Rosado to vacate and restore possession of a parcel of land in the City of Bacolod (Lot 62-B of Subdivision plan
LRC-Psd-33823) that forms part of Lot No. 62 of the Bacolod Cadastre, and is covered by Transfer Certificate of Title No. 27083 in the name
of plaintiff. After answer, claiming that the lot was defendants' conjugal property, the Municipal Court ordered defendants to surrender and
vacate the land in litigation; to pay P100.00 a month from the filing of the complaint up to the actual vacating of the premises; to pay
P500.00 attorneys' fees and costs. Upon appeal to the Court of First Instance, the case was submitted on the following stipulation of facts
(Rec. on App., pp. 59-60):
1. That Lot No. 62-B of Bacolod Cadastre belong to the thirteen co-owners, including the wife of the defendant herein, who owns
1/13th part pro-indiviso;
2. That on May 11, 1964, Luz Jayme Rosado, wife of the defendant Felipe Rosado, signed a Deed of Sale together with the co-
owners of the property to the plaintiff as shown by Exh. "A" for the plaintiff;
3. That on the lot in question the defendant Felipe Rosado had built a house sometime in 1957 without the whole property having
been previously partitioned among the thirteen (13) co-owners;
9

4. That the title of the property has already been transferred to the plaintiff upon registration of the Deed of Sale in June, 1964, with
the Office of the Register of Deeds;
5. That demand was made by the plaintiff upon the defendant Felipe Rosado and his wife Luz Jayme Rosado on October 19, 1964,
but until now the defendant Felipe Rosado has refused to vacate the premises or to remove his house thereon as shown by Exh. "B"
for the plaintiff, on the grounds as he alleged in his answer that he had built on the lot in question a conjugal house worth
P8,000.00 which necessarily makes the lot on which it stands subject to Article 158 of the Civil Code and on the point of view of
equity that the wife of the defendant Felipe Rosado received an aliquot share of P2,400.00 only from the share and if the house
were demolished the defendant would suffer damage in the amount of P8,000.00;
6. That the portion of the lot on which the house stands, would earn a monthly rental of P50.00;
7. That Felipe Rosado, husband of Luz Jayme, did not give his conformity to the Deed of Sale, Exh. "A".
8. That on October 31, 1964, the defendant Felipe Rosado requested the plaintiff in the letter, Exh. "C" for the plaintiff, for a period
of six (6) months within which to vacate the premises.
9. That the letter was not answered by the plaintiff and they did not accept the offer, and on November 25, 1964, they filed a
complaint before the Municipal Court which proves that plaintiff neglected the offer;
The Court of First Instance in its decision rejected the claim of ownership advanced by Rosado, based upon the construction of a house on the
disputed lot by the conjugal partnership of the Rosado spouses, which allegedly converted the land into conjugal property under Article 158,
paragraph 2 of the present Civil Code of the Philippines; further held that defendants were in estoppel to claim title in view of the letter
Exhibit C requesting for six (6) months within which to vacate the premises, and affirmed the decision of the Inferior Court. Defendant Felipe
Rosado resorted to the Court of Appeals, and his appeal (CA-G.R. No. 37398-R) is the one now before us. He assigns four alleged errors:
(a) The lower court erred in not holding that Exhibit "A" is null and void, since upon the construction of the conjugal dwelling
thereon, the conjugal partnership of the defendant-appellant Felipe Rosado and Luz Jayme became the owner of the share of Luz
Jayme in Lot No. 62-B, Bacolod Cadastre;
(b) The trial court erred in ordering the defendant-appellant to vacate Lot No. 62-B and in not holding that Exhibit "A" is null and
void because as the legal usufructuary of the share of Luz Jayme Rosado in Lot 62-B, Bacolod Cadastre, the conjugal partnership,
managed and administered by the defendant-appellant Felipe Rosado can not be deprived of its usufructuary rights by any contract
between Luz Jayme and the plaintiff-appellee;
(c) The trial court erred in not holding that the defendant-appellant should be reimbursed the value of the conjugal house
constructed on Lot 62-B; and
(d) The lower court erred in ordering the defendant-appellant to pay attorneys' fees in the amount of five hundred (P500.00) pesos.
It can be seen that the key question is whether by the construction of a house on the lot owned in common by the Jaymes, and sold by them
to the appellant corporation, the land in question or a 1/13th part of it became conjugal property.
Appellant, husband of vendor Luz Jayme, claims the affirmative invoking the second paragraph of Article 158 of the Civil Code of the
Philippines, prescribing that:
ART. 158. Improvements, whether for utility or adornment, made on the separate property of the spouses through advancements
from the partnership or through the industry of either the husband or the wife, belong to the conjugal partnership.
Buildings constructed, at the expense of the partnership, during the marriage on land belonging to one of the spouses, also pertain
to the partnership, but the value of the land shall be reimbursed to the spouse who owns the same.
Rosado further contends that as the building of the house at the expense of the conjugal partnership converted the 1/13 undivided share on
his wife in Lot 62-B into property of the community, the deed of sale of May 11, 1964 in favor of the appellee corporation was void in so far
as said 1/13 share is concerned, because his wife, Luz Jayme, had ceased to own such share from and after the building of the house; and
Rosado, as manager of the conjugal partnership, had not participated in the sale, nor subsequently ratified the same.
We find appellant's thesis legally untenable. For it is a basic principle in the law of co-ownership, both under the present Civil Code as in the
Code of 1889, that no individual co-owner can claim title to any definite portion of the land or thing owned in common until the partition
thereof. Prior to that time, all that the co-owner has is an ideal, or abstract, quota or proportionate share in the entire thing owned in
common by all the co-owners. The principle is emphasized by the rulings of this Court. In Lopez vs. Ilustre, 5 Phil. 567, it was held that while
a co-owner has the right to freely sell and dispose of his undivided interest, he has no right to sell a divided part of the real estate owned in
common. "If he is the owner of an undivided half of a tract of land, he has the right to sell and convey an undivided half, but he has no right
to divide the lot into two parts, and convey the whole of one part by metes and bounds." The doctrine was reiterated in Mercado vs. Liwanag,
L-14429, June 20, 1962, holding that a co-owner may not convey a physical portion of the land owned in common. And in Santos vs.
10

Buenconsejo, L-20136, June 23, 1965, it was ruled that a co-owner may not even adjudicate to himself any determinate portion of land
owned in common.
Since the share of the wife, Luz Jayme, was at no time physically determined, it cannot be validly claimed that the house constructed by her
husband was built on land belonging to her, and Article 158 of the Civil Code can not apply. Certainly, on her 1/13 ideal or abstract undivided
share, no house could be erected. Necessarily, the claim of conversion of the wife's share from paraphernal to conjugal in character as a
result of the construction must be rejected for lack of factual or legal basis.
It is the logical consequence of the foregoing ruling that the lower court did not err in holding that the appellant was bound to vacate the land
without reimbursement, since he knew that the land occupied by the house did not belong exclusively to his wife, but to the other owners as
well, and there is no proof on record that the house occupied only 1/13 of the total area. The construction was not done in good faith.
WHEREFORE, the judgment of the Court of First Instance is affirmed. Costs against appellant Felipe Rosado.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Fernando and Capistrano, JJ., concur.
G.R. No. L-34404 June 25, 1980
PHILIPPINE NATIONAL BANK, petitioner,
vs.
THE HON. COURT OF APPEALS (SPECIAL FIRST DIVISION), PEDRO BITANGA, FERNANDO BITANGA, GREGORIO BITANGA,
GUILLERMO BITANGA, CLARITA BITANGA together with her husband AGRIPINO L. RABAGO and MELITONA LAGPACAN, assisted
by her husband JORGE MALACAS, respondents.

GUERRERO, J.:
This is a petition for review of the decision of the Court of Appeals, promulgated on September 30, 1971 in CA-G.R. No. 29868-R
entitled "Pedro Bitanga, et al., Plaintiffs-Appellees, versus Philippine National Bank, et al.,Defendants-Appellants, Melitona Lagpacan, assisted
by her husband, Jorge Malacas, Intervenors Appellees which decision
1
affirmed with certain modifications the judgment of the Court of First
Instance of Ilocos Norte in favor of plaintiffs-appellants, now the herein respondents.
This case was commenced on May 17, 1954 when herein respondents Pedro, Fernando, Gregorio, Guillermo and Clarita, all surnamed
Bitanga, filed a complaint before the Court of First Instance of Ilocos Norte against the Philippine National Bank, the Register of Deeds of
Ilocos Norte and Felizardo Reyes, for reconveyance of real property and damages, with a prayer for the issuance of an ex-parte writ of pre
injunction restraining and enjoining the PNB and Felizardo Reyes from consummating the sale of the property in question and prohibiting the
Register of Deeds from registering the sale in favor of Felizardo Reyes. As prayed for, the writ of preliminary injunction was issued. All three
of the defendants named in the complaint filed their respective Answers. During the pendency of the case, herein respondent-spouses,
Melitona Lagpacan and Jorge Maracas, filed a Motion to admit their complaint in intervention, alleging that they had a legal interest in the
subject matter of the case, and the same was granted.
The factual background of this case as recited in the decision of respondent court under review is as follows:
It is not disputed that the property in question originally belonged to the spouses Iigo Bitanga and Rosa Ver as their
conjugal property. At the cadastral proceedings during which the said property was submitted for adjudication, the
Cadastral Court rendered a decision dated December 27, 1934, by virtue of which a decree of registration of the said lot
bearing date of September 14, 1937 was issued. Thereafter, a corresponding title in the name of the spouses Iigo Bitanga
and Rosa Ver was likewise issued and in the Registry Books of the Register of Deeds of Ilocos Norte on December 15, 1937
(Exhibit "A").
Before the issuance of the said original certificate of tale (Exhibit "A"), however, death came to Iigo Bitanga on
September 25, 1935, and was survived by his wife, Rosa Ver, and his children, the plaintiffs herein. A little over a year
from the death of her husband, or on October 20, 1936, to be exact Rosa Ver mortgaged the entire property covered by
Exhibit "A" (also known as Exhibit 1-Lagpacan) in favor of the Philippine National Bank for the with of FIVE HUNDRED
PESOS (P500.00) as shown in Exhibit 1-Lagpacan. The mortgage document was registered in the day book of the Register
of Deeds of Ilocos Norte on November 12, 1936; this said mortgage lien was, however, not annotated in the day book of
the Register of Deeds, when the original certificate of title (Exhibit "A"), was issued. Nevertheless, the power of attorney
dated October 20, 1936 in favor of the mortgagee Philippine National Bank "to take possession of, and retain the property
herein mortgaged, to sell or lease the same or any part thereof, and to do such other acts as necessary in the performance
of the power granted to the mortgagee should the mortgagor fail or violate the term of the mortgage" was annotated on
said Exhibit "A" some five years from October 20, 1936, i.e. on February 27, 1941, to be precise (Exhibit "A").
In the meantime, Rosa Ver had defaulted in the fulfillment of her obligation with the Manila Trading Company. So the said
company levied upon her share in the lot in question on December 13, 1939, and had the attachment annotated on the
title on February 14, 1940 (Exhibit "A-3"). Rosa Ver's interest in the lot in question was afterwards sold at public auction,
11

at which the Manila Trading Company was the highest bidder; that was on March 19, 1940, and the deed of sale in favor of
the Manila Trading Company was annotated on the title on May 25, 1940 (Exhibit "A-4").
On November 14, 1940, the Manila Trading Company sold its rights over the lot in question to Santiago Sambrano, who
secured the annotation of the said sale on the title on March 20, 1941 (Exhibit "A-5"). Thereafter, as stated, one-half of
the said property passed into the hands of the intervenors as a result of Civil Case No. 1846 (Exhibits 7, 8, 9, and 9-A).
Because Rosa Ver failed to settle her obligation with the Philippine National Bank, the latter sold at public auction the
whole lot that the former had mortgaged to it, and in the same auction sale, the Philippine National Bank emerged as the
highest bidder (Exhibits 2, 3, 4 and 5); and, after the period of redemption had expired without the property having been
redeemed, the Philippine National Bank consolidated its title over it. The document of consolidation was, however, not
annotated upon the owner's duplicate certificate of title as Rosa Ver failed to surrender the same.
So it was that on November 25, 1950, the Philippine National Bank presented a petition before the trial court (Exhibit 14)
asking, on the one hand, that the owner's certificate of title No. 7683 (Exhibit A), be declared null and void, and praying,
on the other, that a new certificate of title be issued in its name. Acting favorably on the petition, the Court, in an order
dated October 2, 1951 (Exhibit 19-A), ordered the Register of Deeds of the Province of Ilocos Norte to cancel the owner's
duplicate certificate of title No. 7683 (Exhibit A), and to issue a new owner's duplicate certificate of title in the name of the
petitioner Philippine National Bank. As issued, the new owner's duplicate certificate of title carried the number-description
T-2701 (Exhibit B or 23).
Sometime later, that is, on May 24, 1954, the Philippine National Bank sold the property in question to Felizardo Reyes
(Exhibit 16-A),.as a result of which a new owner's duplicate certificate of title, No. T-3944 (Exhibit 6), was issued in the
latter's name.
2

It further appears from the evidence that by virtue of the judgment obtained by the Manila Trading and Supply Company against the
defendants Rosa Ver and Guillermo Bitanga in Civil Case No. 121519 in the Municipal Court of the City of Manila (Exhibit "2-Lagpacan"), the
property in question was sold by the Provincial Sheriff per Certificate of Sale (Exhibit 4-Lagpacan) to the Manila Trading and Supply Company
as the highest and only bidder at the auction sale, the latter acquiring therefor "all the rights, title, interest and participation which the
defendants Guillermo Bitanga and Rosa Ver de Bitanga have or might have in the property. " The sale was registered in the back of the
Certificate of Title No. 7683 (Exhibit 4-A Lagpacan) under Entry No. 5100 dated May 25, 1940.
On November 16, 1960, the trial court rendered a decision in favor of the plaintiffs and intervenors below, the Court finding and holding that:
(a) The lot in question is a conjugal partnership property, one-half of which must go to the heirs of the late Iigo Bitanga, the plaintiffs
herein; (b) The other half goes to Rosa Ver as her share. The mortgage executed by her of her one-half portion in favor of the Philippine
National Bank is not an existing hen on the said portion because it did not have a "special mention in the decree of registration." It follows,
therefore, that the acquisition of the said portion by the Manila Trading Company in the manner above-described was valid and legal.
Consequently, the sale made by the said Company to Santiago Sambrano over the one-half portion must also be valid and legal. In
connection with Civil Case No. 1846 in which the intervenors were the plaintiffs and Santiago Sambrano was the defendant, what the
intervenors had attached and sold in a public auction in which they (intervenors) were the highest bidders was the very said portion sold by
the Manila Trading Company to Santiago Sambrano; (c) That Felizardo Reyes is not a purchaser of a registered land for value and in good
faith, and (d) Since the issuance of Transfer Certificate of Title No. 3944 in favor of the Philippine National Bank, exhibit "B", and Owner's
Duplicate Certificate of Title No. 3944, Exhibit "16", in favor of Felizardo Reyes were without legal basis, they are, therefore, declared nun and
void and cancelled. With costs against the defendants.
3

On appeal by PNB and Felizardo Reyes to the Court of Appeals, respondent Court affirmed the judgment appealed from in all respects except
letter (d) thereof which was modified to read as follows:
(d) Since the issuance of Transfer Certificate of Title No. T2701, Exhibit "B" in favor of the Philippine National Bank, and
Transfer Certificate of Title No. T-3944, Exhibit "16", in favor of Felizardo Reyes, was without legal basis, they are,
therefore, declared null and void and cancelled. The Register of Deeds is hereby ordered to issue in lieu of the foregoing
transfer certificate of titles another certificate of title in the names of the plaintiffs and intervenors as follows:
Undivided one-half () share to Pedro Bitanga, married to Agripina Purisima, Fernando Bitanga, single, Gregorio Bitanga
single, Guillermo Bitanga, single, Clarita Bitanga, married to Agripino L. Rabago, and of legal age, Filipino citizens, and
residents of Laoag, Ilocos Norte, and the remaining undivided one-half () share to the spouses Jorge Maracas and
Melitona Lagpacan, both of legal age, Filipino citizens, and residents of Burgos, Ilocos Norte, free from incumbrance
regarding the claims of the Philippine National Bank and Felizardo Reyes, after payment of lawful fees.
4

Petitioner, not satisfied with the Decision of respondent Court of Appeals and its Resolution denying the motion for its reconsideration, now
comes to Us and submits the following assignment of errors:
I. The Court of Appeals erred in holding that the mortgage deed (Exhibit 1-Bank) is valid and existing only with respect to
the one-half portion of the lot in question allegedly belonging to the mortgagor Rosa Ver as her share in the conjugal
partnership with her husband Iigo Bitanga.
12

II. The Court of Appeals erred in holding that the mortgage deed (Exhibit 1-Bank) executed by Rosa Ver was no longer
subsisting simply because the same was not annotated on the face of original certificate of title No. 7683 (Exhibit A).
III. The Court of Appeals erred in holding that estoppel and/or laches has not stepped in to defeat the right of respondents
Bitanga's and Rabago over the lot in question, specifically to the one-half portion thereof representing their undivided
share of the lot as their inheritance from their father Iigo Bitanga.
|li720IV. The Court of Appeals erred in holding that the acquisition of the other half portion of the lot in question by the intervenors spouses
Melitona Lagpacan and Jorge Malacas bears the earmarks of validity and regularity.
Upon being required to comment on this petition, respondents filed a Motion to Dismiss on the grounds that the decision of respondent court
sought to be reviewed had become final and executory on account of the failure of Felizardo Reyes, the real party in interest, to join the PNB
in this petition, and that the issues presented are questions of fact and not of law, hence, not proper for review by this Court.
By Resolution of January 10, 1972, this Court denied the petition for lack of merit.
On January 25, 1972, the PNB moved to reconsider the denial contending that at least the validity of the mortgage deed as to the share of
herein respondent-heirs should be upheld because of their acquiescence thereto, and that the bank still has an interest over the case for the
reason that although it had already sold its interests over the property which is the subject matter of this litigation to Felizardo Reyes, it still
stands to be affected in the event that this case is finally decided in favor of respondents. In other words, it is the contention of PNB that it
has the personality to bring this petition, even without Felizardo Reyes, since it still has an interest in the final outcome of this case.
On March 2, 1972, this Court reconsidered the Resolution of January 10, 1972 and resolved to give due course to the petition.
On the first assigned error, PNB contends that the mortgage constituted by Rosa Ver in its favor on October 20, 1936 is valid and covers the
entire property known as Lot 9068 for the reasons that: (1) the valid execution, existence and registration of said real estate mortgage under
Act No. 3344 are not denied; and (2) the fact that Tax Declaration No. 120225-A then covering the mortgaged property was issued in the
exclusive name of mortgagor Rosa Ver was likewise not denied but in fact admitted by herein respondents and, therefore, the latter in effect
admitted the genuineness and due execution of said Tax Declaration.
There is no dispute that the document of mortgage executed by Rosa Ver was in accordance with the formalities required by law and that was
register in the day book of the Register of Deeds of Ilocos Norte within a month after its execution. What is here contested is whether Rosa
Ver could, as she did in fact, m the entire Lot 9068 to petitioner PNB. In other words, the issue refers to the intrinsic vanity of the mortgage,
as distinguished from its formal sufficiency.
The trial court found and so held that Lot 9068 belonged to the conjugal partnership of the spouse lingo Bitanga and Rosa Ver. Therefore,
when Inigo died on September 25, 1936, his one-half share in said lot was transmitted to his heirs (Article 777, New Civil Code; Article 657,
old Civil Code)
5
and a co-ownership was established between them and Iigo's surviving spouse Rosa Ver. Hence, on October 20, 1936, a
little over a year after Iigo's death, Rosa Ver, by herself alone, could not have validly mortgaged the whole of Lot 9068 to PNB.
Under Article 2085, New Civil Code (Art. 1857, Old Civil Code), one of the essential requisites to the contract of pledge and mortgage is that
the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged. And under Article 493, New Civil Code (Art. 399, Old Civil
Code), each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore
alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect
of the alienation or the mortgage, with respect to the co-owners, shag be limited to the portion which may be allotted to him in the division
upon the termination of the co-ownership.
Hence, We fully agree with the trial court and the respondent Court and affirm the holding that "what the Philippine National Bank had
acquired from Rosa Ver by virtue of the mortgage was simply one-half () of the entire property, for this was all she had in her power to
convey the other half being, as it still is, the lawful share of the plaintiffs-appellees as inheritance from their father, Iigo Bitanga. Nemo
date quod non habet One cannot give what is not his.
6

Applying the provisions of the Old Civil Code
7
the law in force at the time of Inigo Bitanga's death in 1935, Rosa Ver, as surviving spouse,
cannot take part legally in the sharing of the estate left by her deceased husband (one-half () of Lot 9068) with respect to which she only
had usufructuary rights. "The usufructuary not being an owner, cannot alienate or dispose of the objects included in the usufruct. Thus, he
cannot ... mortgage or pledge the thing ...
8

It is not disputed that Tax Declaration No. 120225-A, then covering Lot 9068, was in the exclusive name of Rosa Ver. Such fact, however,
even if expressly admitted by herein respondent-heirs does not and cannot alter the conjugal character of the lot in question, much less
would it affect the mortgage in favor of petitioner PNB. We have already held in several cases that declarations of ownership for purposes of
taxation are not sufficient evidence of title.
9
If petitioner relied upon Tax Declaration No. 120225-A in assuming that the whole property
belonged exclusively to mortgagor Rosa Ver, such erroneous assumption should not prejudice the rights of the other co-owners, herein
respondent-heirs As far as the latter are concerned, their respective shares were not included m the mortgage in favor of PNB.
We, therefore, reject PNB's contention that the mortgage constituted by Rosa Ver in its favor on October 20, 1936 is valid and covers the
entire property known as Lot 9068.
13

In the second assignment of error, petitioner maintains that the respondent appellate court erred in holding that the mortgage deed (Exhibit
1-Bank) executed by Rosa Ver was no longer subsisting simply because the same was not annotated on the face of original certificate of title
No. 7683 (Exhibit A).
Petitioner argues that Rosa Ver, being the one who constituted the mortgage deed and has full knowledge of the existence of the same as
well as the respondent Bitanga's and Rabago in their capacity as heirs, subscribing witnesses and as notary public, respectively, having also
full knowledge of the existence of the mortgage contract, have the legal duty to apprise petitioner Philippine National Bank of the impending
registration proceedings covering the lot in question as well as to the issuance of the original certificate of title No. 7683, in line with Section
19 of the Land Registration Act, paragraph 2 (b) that the mortgagor shall not make application without the consent in writing of the
mortgagee, and paragraph 3 which requires that the decree of registration in case the mortgagor does not consent to the making of the
application shall state that registration is made subject to such mortgage, describing it ... Petitioner further argues that no notice whatsoever,
either verbal or in writing, having been made by the mortgagor Rosa Ver and/or the respondents Bitanga's and Rabago, petitioner could not
have taken any action to annotate its mortgage lien on the lot in question on the face of original certificate of title No. 7683 and, therefore,
should not be blamed for its failure to annotate the mortgage lien on the lot within a period of one (1) year from the issuance of the decree
on September 14, 1937 since under Section 19 of Act 496, it is specifically provided that the decree of registration in such a case shall state
that the registration is subject to such mortgage. Petitioner concludes that if the mortgage is not so annotated on the face of original
certificate of title No. 7683 within a period of one (1) year from September 14, 1937, then it is not a fatal defect for the enforcement of the
said mortgage lien.
Petitioner further buttresses its stand in distinguishing the requirements of the law as embodied in Sections 19 and 21 of the Land
Registration Act from the "general notice" contemplated under Section 31 in relation to Section 35 of the same Act in that the notice required
in Sections 19 and 21 are specific while in the latter, the notice is merely constructive. And to cap his argument, petitioner contends that
mortgagor Rosa Ver and her heirs had already benefitted from the loan and the mortgage transaction and that they should not be allowed to
enrich themselves at the expense of the petitioner.
Petitioner's theory is clearly untenable and cannot be sustained for otherwise it would do violence to the fundamental and basic foundation of
the Torrens system which is the indefeasibility of a Torrens title under Sections 38, 39 and 47 of Act 496, which provide as follows:
Sec 38. If the court after hearing finds that the applicant or adverse claimant has title as stated in his application or
adverse claim and proper for registration, a decree of confirmation and registration shall be entered. Every decree of
registration shall bind the land, and quiet title thereto, subject only to the exceptions stated in the following section. It
shall be conclusive upon and against all persons, including the Insular Government and all the branches thereof, whether
mentioned by name in the application, notice, or citation, or included in the general description "To all whom it may
concern." Such decree shall not be opened by reason of the absence, infancy, or other disability of any person affected
thereby, nor by any proceeding in any court for reversing judgments or decrees; subject, however, to the right of any
person deprived of land or any estate or interest therein by decree of registration obtained by fraud to file in the
competent Court of First Instance a petition for review within one year after entry of the decree provided no innocent
purchaser for value has acquired an interest. Upon the expiration of said term of one year, every decree or certificate of
title issued in accordance with this section shall be incontrovertible. If there is any such purchaser, the decree of
registration shall not be opened, but shall remain in full force and effect forever, subject only to the right of all
hereinbefore provided: Provided, however, That no decree or certificate of title issued to persons not parties to the appeal
shall be cancelled or annulled. But any person aggrieved by such decree in any case may pursue his remedy by action for
damages against the applicant or any other person for fraud in procuring the decree. Whenever the phrase "innocent
purchaser for value" or an equivalent phrase occurs in this Act, it shall be deemed to include an innocent lessee,
mortgagee, or other encumbrances for value. (As amended by Sec. 3, Act No. 3621; and Sec. 1, Act No. 3630).
Sec. 39. Every person receiving a certificate of title in purchase office of a decree of registration, and every subsequent
purchaser of registered land who takes a certificate of title for value in good faithshall hold the same five of all
encumberance except those noted on mid certificate and any of the following encumbrances which may be sub existing,
namely:
First. Liens or rights arising or existing under the laws or Constitution of the United States or of the Philippine Islands
which the statues of the Philippine Islands cannot require to appear of record in the registry.
Second. Taxes within two years after the same become due and payable.
Third. Any public highway, way, private way established by law, or any Government irrigation canal or lateral thereof,
where the certificate of title does not state that the boundaries of such highway, way, or irrigation canal or lateral thereof,
have been determined.
But if there are easements or other rights appurtenant to a Parcel of registered land which for any reason have failed to be
registered, such easements or rights shall remain so appurtenant notwithstanding such failure, and shall be held to pass
with the land until cut off or extinguished by the registration of the servient estate, or in any other manner. (As amended
by Act No. 2011, and Sec. 4, Act No. 3621).
Sec. 47. The original certificate in the registration book, any copy thereof duly certified under the signature of the clerk, or
of the register of deeds of the province or city where the land is situated and the seal of the court, and also the owner's
14

duplicate certificate shag be received as evidence in all the courts of the Philippine Islands and shall be conclusive as to all
matters contained thereinexcept so far as otherwise provided in this Act.
Parenthetically, it may be stated that Presidential Decree No. 1529 which amends and codifies the laws relative to registration of property
reiterates the provisions cited above under the Land Registration Act, Act No. 496. Thus, Section 38 of Act 496 is reiterated by Sections 29,
30, 31 and 32 of P.D. No. 1529, while Section 39 of Act 496 is repeated under Section 44 of P.D. No. 1529. Section 47 of Act 496 is
substantially repeated in paragraph 2 of Sec. 31 of the Presidential Decree.
It is well-settled in Our jurisprudence that a decree of registration, after the lapse of the one-year period from its entry, becomes indefeasible
and conclusive. (Garcia, et al. vs. Bello, et al., L-21355, April 30, 1965, 13 SCRA 769, 770; Baldoz vs. Papa, et al., L-18150, July 30, 1965,
14 SCRA 691; Ylarde, et all vs. Lichauco, et al., L-22115, Dec. 29, 1971, 42 SCRA 641, 650). The reason for the rule is succinctly stated
in Gestosani et al., vs. Insular Development Company, et al., L-21166, September 15, 1967, 21 SCRA 114 by the Supreme Court, speaking
through Justice Dizon, thus:
At the risk of stating what is obvious, We say that land registration proceedings under Act 496 are in rem and that such
proceedings, as well as the title issued as a result thereof, are binding and conclusive upon the whole world. Upon the
expiration of one year within which a petition to review the decree of registration may be filed, said decree and the title
issued pursuant thereto become incontrovertible (Sec. 38, Act 496), and the same may no longer be changed, altered or
modified, much less set, aside (Director of Lands vs. Gutierrez David, 50 Phil. 797). This has to be the rule, for if even
after the ownership of a property has been decreed by a land registration court in favor of a particular person, the title
issued may still be annulled, changed, altered or modified after the lapse of the one year period fixed by the legal provision
mentioned above, the object of the Torrens system, namely, to guarantee the indefeasibility of the title to the property,
would be defeated (Cabanos vs. Register of Deeds, 40 Phil. 620).
We agree with the ruling of both the trial and the appellate courts in their adherence to the doctrine laid down by Us in Snyder vs. the
Provincial Fiscal of Cebu and Jose Avila No. 17132, February 8, 1922, 42 Phil. 761, which presented a nearly Identical situation as that in the
case at bar, where the issue decided was whether or not a lease contract entered into prior to the original registration of the land subject of
the lease and existing pending the registration proceedings could be registered or recorded after such original registration. Like the mortgage
executed by Rosa Ver in the instant petition, the contract of lease was entered into prior to the issuance of the decree of registration and the
Supreme Court held, thus:
It will be noted from the provisions of section 38, above quoted, that the decree of registration cannot be opened or
altered even by reason of the absence, infancy, or other disability of any person affected thereby; and it can only be
reviewed or modified upon the petition, filed within one year after the entry of the decree, of any person who has been
deprived of land or of any estate or interest therein through fraud.
x x x x x x x x x
If, under the Land Registration Act, an owner of land, as against third parties, and after the lapse of one year, by failing to
appear and claim such ownership duly the registration proceeding, thereby loses the same, with equal or greater reason
does a lessee, mortgagee, or other person having an interest in said land lose such interest or right, so far as the land is
concerned by not claiming the same during the registration proceeding and by allowing said land to be registered free of all
encumbrances ... (Emphasis supplied)
Since a clean title was issued in the name of the spouse Iigo Bitanga and Rosa Ver by virtue of the decree of registration entered on
September 14, 1937, and said decree not having been contested or reopened for a period of one year, the same became incontrovertible. We
must reiterate here the rationale of the doctrine We laid dwn in William H. Anderson and Co. vs. Garcia, 64 Phil. 506, 514-515, after an
analysis of the Apparently conflicting decisions in the cases of Worcester vs. Ocampo and Ocampo, 34 Phil. 646; Lanci vs Yangco, 52 Phil.
563; andLaxamana vs. Carlos, 57 Phil. 722 thus:
Whatever might have been generally or unqualifiedly stated in the cases heretofore decided by this court, We hold that
under the Torrens system registration is the operative act that gives validity to the transfer or creates a lien upon the land
(Secs. 50 and 51, Land Registration Act). A person dealing with registered land is not required to go behind the register to
determine the condition of the property. He is only charged with notice of the burdens on the property which are noted on
the face of the register or the certificate of title. To require him to do more is to defeat one of the pry objects of the
Torrens system. A bona fide purchaser for value of such property at an auction sale acquires good title as against a prior
transferee of the same property if such transfer was unrecorded at the time of the auction sale. ...
In the instant case, there is no showing that the Manila Trading Company (MTC) had any knowledge or notice of the prior mortgage in favor
of the PNB, hence, it may be safely presumed that it (MTC) acquired the rights of Rosa Ver and Guillermo Bitanga as an innocent purchaser
for value and free from all incumbrances. From the MTC, the aforesaid rights of Rosa and Guillermo passed to Santiago Sambrano, and from
the latter, to herein intervenors. There is no question, therefore, as to intervenors' rights over the property, as against the PNB or its
transferee, Felizardo Reyes. The intervenors merely stepped into the shoes of MTC, a prior purchaser in good faith, and thereby became
entitled to an the defenses available to said Company, including those arising from the acquisition of the property in good faith and for value.
(Granados vs. Monton, L-1698, April 8, 1950, 86 Phil. 42).
Upon the clear and explicit provisions of the Land Registration Act and the jurisprudence on the indefeasibility of the Torrens title after the
lapse of one year as reiterated and emphasized in the unbroken line of authorities, We hold that the respondent court committed no error in
15

holding that "the lien by reason or on account of the mortgage executed by Rosa Ver over the entire parcel on October 20, 1936, which was
not annotated on the original certificate of title, could not have attached to the land. Otherwise stated, the failure of the interested party to
appear during the registration proceeding and claim such interest in the land barred him from thereafter having such interest annotated on
the certificate of title."
The third assignment of error assails the respondent court in holding that estoppel and/or laches has not stepped in to defeat the right of
respondents Bitangas and Rabago over the lot in question, specifically to the one-half (1/2) portion thereof representing their undivided share
of the lot as their in. inheritance from their father, Inigo Bitanga.
In rejecting appellant's defense of estoppel or laches, the respondent Court of Appeals ruled:
Corollary to the foregoing, appellants cannot maintain that estoppel or laches has stepped in to defeat the right of the
plaintiffs-appellees to institute an action to indicate their right. And the reason is basic in its simplicity: the mortgage
contract entered into by Rosa Ver respecting the other half of the lot in question having been null and void ab initio, lapse
of time could not have validated or ratified it, and an action, predicated upon the indubitable nullity of the contract
constituted may always be maintained by the aggrieved party to set it aside. (pp. 13-14, CA Decision).
Petitioner argues that respondents Bitangas and Rabago, as heirs and/or successors-in-interest of Rosa Ver are bound by the mortgage and
may not be permitted to question the validity of the same, and assuming that Rosa Ver does not have any right to constitute a mortgage on
the other half of the lot in question, petitioner contends that nonetheless the validity Of the mortgage deed constituted by her over the share
of her husband should be upheld as well as its acquisition by the petitioner because respondents Bitangas and Rabago are likewise estopped
to question the validity of the same by reason of acquisence On their Part in that Guillermo Bitanga together with Mary Bitanga Castillo signed
as witness to the mortgage deed executed by their mother on the whole portion of the lot in question on October 20, 1936 while respondent
Atty. Agripino L. Rabago, the son-in-law of the mortgagor Rosa Ver, notarized the said mortgage deed. Petitioner also points to the fact that
respondent Pedro Bitanga offered to repurchase the whole portion of the property from the petitioner, which offer is an admission, conclusive
upon him that the PNB is the absolute and legal owner of the lot in question and have the right to dispose of the same. And citing the case
of Cruz vs Ilagan 81 Phil. 554, and authority quoted from 21 Am. Jur. 756, petitioner concludes that respondents Bitangas and Rabago, as
heirs of the deceased husband, by their conduct, in effect bound themselves to the real estate mortgage contract over the share of the
husband, as completely and effectively as though they themselves signed the document as mortgagors over the share of the husband.
Petitioner also stresses that respondents Bitangas and Rabago filed the complaint for reconveyance and annulment of mortgage on May
17,1954, after nineteen (19) solid years have already elapsed from the time the mortgage was executed on October 20, 1936 by Rosa Ver,
and the lot in question had been the subject of several transactions during which time said respondents never did anything in assuming or
vindicating their right to institute a suit against the petitioner though with ample opportunity to do so and, therefore, said respondents slept
on or neglected in asserting their right, hence they are guilty of laches.
Petitioner's contention is without merit. First, it must be clarified that not all the respondent heirs signed the mortgage deed as instrumental
witnesses. An examination of the mortgage contract (Exhibit "1") that of the five (5) Bitanga respondents, namely, Pedro, Fernando,
Gregorio, Guillermo and Clarita only Guillermo Bitanga signed as one of the instrumental witnesses, the first being Mary B. Castillo.
Even as regards Guillermo Bitanga, who signed as witness of the deed of mortgage, PNB's reliance upon the case of Vda de la Cruz vs.
Ilagan is unavailing. In the De la Cruz case, the heirs of the decedent, who were the es sought to be estopped from questioning the validity of
the sale made by their co-heir and the administrator of the decedent's estate, did not merely sign as witnesses to the deed of sale. In the
words of Justice Zaldivar who penned the decision, they "gave their approval and conformity to the made and to the administrator's motion
by signing with appropriate expressions both papers." (Cruz vs. Ilagan, 81 Phil. 554, 556). Thus, that the heirs gave their consent to the sale
could not be doubted, as in fact it was expressed in words in the deed itself and in the motion submitted to the court for judicial approval of
the sale, and on the basis of this express approval and conformity, the Court held them in estoppel and bound as co-vendors. In the instant
case, on the other hand, the party sought to be estopped signed merely as an instrumental witness. A distinction should be made, as indeed
there is, between one who signs a document merely as an instrumental witness, and one who affixes his signature as proof of his consent to,
approval of, and conformity with, the contents of the deed or document. The former simply attests that the party or parties to the instrument
signed the same in his presence, so that he is frequently referred to as a "Witness to the signature," and he is not bound to know or be aware
of the contents of the document; while the latter is not only presumed to know the subject matter of the deed, but more importantly, binds
himself thereto as effectively as the party if would be bound thereby.
The foregoing distinction makes clear the inapplicability of the ruling in Vda de la Cruz vs. Ilagan to the facts obtaining in the case at bar. We
cannot hold Guillermo Bitanga in estoppel by declaring that he bound himself to the mortgage as effectively as the mortgagor Rosa Ver when
he signed the mortgage deed as a witness in the absence of clear proof that he was in fact aware of the contents of the document at the time
of its execution. We can only go as far as stating that the deed was signed by the parties thereto in his presence.
Moreover, there is no allegation nor evidence on record to show that petitioner-mortgagee relied upon the signature of Guillermo Bitanga on
the mortgage deed, or that he made any representations with the PNB for the acceptance of the mortgage. On the contrary, PNB states that
Rosa Ver mortgaged the entire lot "on the basis and strength of Tax Declaration No. 120225-A" which "was issued and declared in her
exclusive name.
10
As held by this Court, speaking through Justice Zaldivar, in the case of Kalalo vs. Luz, L-27782, July 31, 1970, 34 SCRA
337, 346-347:
An essential element of estoppel is that the person invoking it has been influenced and has relied on the representations or
conduct of the person sought to be estopped, and this element is wanting in the instant case ... And in Republic of the
Philippines vs. Garcia, et al. (91 Phil. 46, 49 ), this Court ruled that there is no estoppel where the statement or action
16

invoked as its basis did not mislead the adverse party. Estoppel has been characterized as harsh or odious and not favored
by law (Coronet, et al. vs. C.I.R., et al., 24 SCRA 990, 996) ... Estoppel cannot be sustained by mere argument or doubtful
inference; it must be clearly proved in all its essential elements by clear, convincing and satisfactory evidence (Rivers vs.
Metropolitan Life Ins. Co. of New York, 6 N.Y., 2d, 3, 5) ...
Consequently, there is no estoppel where there is no reliance upon representations and where there is no deliberate misleading of another.
Intention to mislead is an important element of estoppel, as well as the lead party's reliance upon the declaration, act or omission of the party
sought to be estopped. Both elements have not been proved in the instant case, hence again, estoppel does not lie against Guillermo Bitanga.
Under this same ground of estoppel, petitioner makes capital of the fact that it was Atty. Agripino L. Rabago, son-in-law of mortgagor Rosa
Ver and husband of one of herein respondent-heirs, Clarita Bitanga Rabago, who notarized the mortgage deed. It is contended that since
Atty. Rabago acted as the judicial administrator and lawyer of the Bitanga family estate at the time of the execution of the mortgage, he
should have prevailed upon his mother-in-law Rosa Ver not to mortgage the entire lot but only half thereof to PNB when he was approached
to notarize the Hipoteca de Bienes Immuebles (Exhibit 1). Furthermore, knowing that the property was already the subject of original
registration proceedings under Act No. 496, he should have informed the bank thereof.
Again, this contention of petitioner is untenable. Assuming that Atty. Rabago was the lawyer for the Bitanga family administrator of its estate
of which the trial and appellate courts made no such finding, his acts, declarations and omissions in the performance of his duties as such,
whether deliberate or not, cannot adversely affect herein respondent hers as to deprive them of their right to umpugn a contract which was
prejudicial to their interests. Under the circumstances of the case at bar, that Atty. Rabago could have or should have done a particular thing
which he did not do is his own responsibility. The settled rule in Philippines Jurisprudence that a client is bound by his 's actions, negligence,
mistakes and/or shortcomings enunciated in a number of cases
11
presupposes the existence of a ending litigation whether in court or in an
administrative body, and refers only to matters to the conduct of such case. Precisely said rule requires the existence of an attorney-client
relationship, while herein, there is merely a single, independent transaction, that of a mortgage, which was in no way con. connected with
any pending litigation at the time of its execution. Therefore, the above-stated rule finds no application in the instant case.
We likewise disagree with the contention that Pedro Bitanga's offer to buy the lot in question, as contained in his letter to the PNB dated
September 14, 1949 (Exhibit 10), is a conclusive admission on his part that the bank was the absolute and legal owner of the property so as
to estop him from contesting the validity of the mortgage (Exhibit 1) and the title (TCT T-2701) procured by the bank over the property. For
in the aforesaid letter, Bitanga categorically wrote: "1. That I offer the amount of P800.00 to buy said lot, and please consider that the rights
which the bank had purchased was the property and shares of my mother and brother, Guillermo, and that my rights as well as the rights of
my other brothers and sisters were not sold to the bank;" There can be no estoppel arising from said vehement and assertive claim. If he
offered to buy the entire property despite such expressed claim, his purpose may well be that he wished to avoid a long-drawn, expensive
litigation and not necessarily to admit that petitioner was the absolute and legal owner of the property.
As to petitioner's contention that respondents are guilty of laches for having slept on or neglected in asserting their right to the land after the
lapse of more than nineteen (19) years from the time the mortgage was executed on October 20, 1936 by Rosa Ver, the ruling in Angeles, et
al., vs. Court of Appeals, et al., 102 Phil. 1006, declares that "where the sale of a homestead is null and void, the action to recover the same
does not prescribe because mere lapse of the time Cannot give efficacy to the contracts that are null and void and inexistent." This is a
principle recognized since Tipton vs. Velasco, 6 Phil. 67, that "mere lapse of time to give efficacy to contracts that are null and void cited
in Eugenie vs. Perdido et al., 97 Phil. 41.
As to the fourth assignment of error faulting the respondent appellate court in holding that the acquisition of the other half portion of the lot
in question by the intervenors-spouses Melitona Lagpacan and Jorge Maracas bears the earmarks of validity and registry petitioner theorizes
that the mortgage executed by Rosa Ver on the lot in question in its entirety was valid and that said mortgage was very much ahead than
that of the levy made by the Manila Trading & Supply Co. since the mortgage was registered on November 12, 1936 under Act 3344 as then
the property mortgaged was still an unregistered land. On the other hand, the levy made by the Manila Trading & Supply Co. was noted in the
first Torrens title of the land after its registration under the Torrens system, on February 14, 1940. And being first in time, herein petitioner
maintains it should be first in right and the mortgage should enjoy preference over the levy.
It must be noted, however, that in Our resolution of the first assignment of error, We ruled that the mortgage deed was valid and existing
only with respect to the one-half portion of the lot in question belonging to the mortgagor Rosa Ver as her share in the conjugal partnership
with her husband Iigo Bitanga. Hence, petitioner's assumption that the mortgage of the whole lot was valid, is erroneous. What this Court
held is that the mortgagor, Rosa Ver, as surviving spouse, could convey in mortgage to the petitioner bank one-half () of the entire
property being her share in the conjugal partnership with her deceased husband, the other half being the lawful share of the respondent heirs
as inheritance from their deceased father, Iigo Bitanga.
And resolving the secnd assignment of error, We have ruled likewise that the respondent court committed no error in holding that the
mortgage lien executed by Rosa Ver over the entire parcel of land on October 20, 1936 which was not annotated on the original certificate of
title could not have attached to the land. Stated otherwise, the failure of the petitioner bank to appear during the registration proceedings and
claim such interest in the land, and further to do so after more than a year after the issuance of the decree of registration which rendered the
title undefeasible and free from any collateral attack by any person g title to or interest in the land prior to registration proceedings, has
resulted into the petitioner bank being virtually deprived of its mortgage. It follows, therefore, that the acquisition of the other half portion of
the lot in question by the intervenors-spouses Melitona Lagpacan and Jorge Macalas into whose hands said one-half () passed as a result of
Civil Case No. 1846 of the Court of First Instance of Ilocos Norte entitled "Jorge Maracas, et al., vs. Alfredo Formoso, et al." was valid and
regular, which holding of the Court of Appeals is correct and We affirm the same.
To recapitulate, the mortgage executed by Rosa Ver in favor of the PNB was valid only as regards her one-half () conjugal share in Lot
9068. On the other hand, the intervenors-spouses Melitona Lagpacan and Jorge Malacas acquired their right to the shares of Rosa Ver and
17

Guillermo Bitanga in the same lot from the Manila Trading Co., another creditor of Rosa Ver, which acquired "all the rights, title, interests and
participations which ... Guillermo Bitanga and Row Ver de Bitanga have or might have" over Lot 9068 (Exh 4-Lagpacan) more than two (2)
years after the decree of registration was entered in the name of the Bitanga spouses on September 14, 1937. Since Original Certificate of
Title No. 7683 covering the land in question was issued on December 15, 1937 free from any mortgage lien and no such lien was recorded
thereafter even until May 25, 1940 when the certificate of sale in favor of the Manila Trading Co. as highest bidder of the shares of Rosa and
Guillermo was annotated on the title (Exh. A-4), it is quite clear that as between the PNB and the Manila Trading Co., the latter had the better
rights.
One further point that militates against the claim of the petitioner bank who now prosecutes its claim or mortgage lien in behalf of Felizardo
Reyes to whom the bank sold the property on May 24, 1954, is the finding of the appellate court that said Felizardo Reyes is a purchaser in
bad faith, a notice of lis pendens having been annotated on the certificate of title cover. ing the property sometime before the de thereof was
made by the Philippine National Bank in favor of F o Reyes. This finding of fact is conclusive and binding upon Us and bad faith We can neither
condone nor reward.
The judgment of the Court of Appeals must, however, be modified. Paragraph (d) of the dispositive portion of the decision appealed from
directed the Register of Deeds to issue in lieu of Transfer Certificate of Title Nos. T-2701 and T-3944 another certificate of title in the names
of the plaintiffs and in. intervenors as follows:
Undivided behalf () share to Pedro Bitanga married to Agripina . Fernando Bitanga single Gregorio Bitanga single,
Guillermo Bitanga, single, Clarita Bitanga, married to Agripino L. Rabago, all of legal age, Filipino citizens, and residents of
Laoag, Ilocos Norte, and the remaining undivided one-half (1/2) re to the spouses Jorge Malacas and Melitona Lagpacan,
both of legal age, Filipino citizens, and residents of Burgos, Ilocos Norte free from incumbrance regarding the claims of the
Philippine National Bank and Felizardo Reyes, after payment of lawful fees.
As We have hereinbefore ruled that the Manila Trading Company acquired not only the rights, title, interests and participation of Rosa Ver to
one-half () of Lot 9068 but also that pertaining to Guillermo Bitanga or one-fifth (1/5) of the other half of the lot which the latter shared
with his sister and three (3) brothers, each one having one-fifth (1/5) share each, the intervenor spouses as successors-in-interest of the
Manila Trading Company are entitled to six-tenths (6/10) or three-fifths (3/5) of the entire lot, and not merely one-half () thereof as held
by the lower court and the appellate court. The undivided two-fifths (2/5) share only should appertain to Pedro Bitanga, Fernando Bitanga,
Gregorio Bitanga and Clarita Bitanga.
WHEREFORE, IN VIEW OF THE FOREGOING, the judgment of the Court of Appeals is hereby affirmed with modification in the sense that
paragraph (d) is hereby amended to read as follows:
(d) Since the issuance of Transfer Certificate of Title No. T2701, Exhibit "D" in favor of the Philippine National Bank, and Transfer Certificate of
Title No. T-3944, Exhibit "16", in favor of Felizardo Reyes, was without legal basis, they are, therefore, declared null and void and cancelled.
The Register of Deeds is hereby ordered to issue in hell of the foregoing transfer certificates of title another certificate of title in the names of
the private respondents as follows:
Undivided two-fifths (2/5) share to Pedro Bitanga, married to Agripina, Purisima Fernando Bitanga, single, Gregorio Bitanga, single, and
Clarita Bitanga, married to Agripino L. Rabago, all of legal age, Filipino citizens, and residents of Laoag, Ilocos Norte, and the remaining
undivided three-fifths (3/5) share to the spouses Jorge Maracas and Melitona Lagpacan, both of legal age, Filipino citizens, and residents of
Burgos, Ilocos Norte, free from incumbrance regarding the claims of the Philippine National Bank and Felizardo Reyes, after payment of lawful
fees.
Costs against the petitioner.
SO ORDERED.
Makasiar, Fernandez and De Castro, JJ., concur.
G.R. No. L-52361 April 27, 1981
SUNSET VIEW CONDOMINIUM CORPORATION, petitioner,
vs.
THE HON. JOSE C. CAMPOS, JR. OF THE COURT OF FIRST INSTANCE, BRANCH XXX, PASAY CITY and AGUILAR-BERNARES
REALTY, respondents.
G.R. No. L-52524 April 27, 1981
SUNSET VIEW CONDOMINIUM CORPORATION, petitioner,
vs.
THE HON. JOSE C. CAMPOS, JR., PRESIDING JUDGE OF THE COURT OF FIRST INSTANCE, BRANCH XXX, PASAY CITY, and LIM
SIU LENG, respondents.
18


FERNANDEZ, J.:
These two cases which involve similar facts and raise Identical questions of law were ordered consolidated by resolution of this Court dated
March 17, 1980.
1

The petitioner, Sunset View Condominium Corporation, in both cases, is a condominium corporation within the meaning of Republic Act No.
4726 in relation to a duly registered Amended Master Deed with Declaration of Restrictions of the Sunset View Condominium Project located
at 2230 Roxas Boulevard, Pasay City of which said petitioner is the Management Body holding title to all the common and limited common
areas.
2

G.R. NO. 52361
The private respondent, Aguilar-Bernares Realty, a sole proprietorship with business name registered with the Bureau of Commerce, owned
and operated by the spouses Emmanuel G. Aguilar and Zenaida B. Aguilar, is the assignee of a unit, "Solana", in the Sunset View
Condominium Project with La Perla Commercial, Incorporated, as assignor.
3
The La Perla Commercial, Incorporated bought the "Solana" unit
on installment from the Tower Builders, Inc.
4
The petitioner, Sunset View Condominium Corporation, filed for the collection of assessments
levied on the unit against Aguilar-Bernares Realty, private respondent herein, a complaint dated June 22, 1979 docketed as Civil Case No.
7303-P of the Court of First Instance of Pasay City, Branch XXX. The private respondent filed a Motion to Dismiss the complaint on the
grounds (1) that the complaint does not state a cause of action: (2) that the court has no jurisdiction over the subject or nature other action;
and (3) that there is another action pending between the same parties for the same cause. The petitioner filed its opposition thereto. The
motion to dismiss was granted on December 11, 1979 by the respondent Judge who opined that the private respondent is, pursuant to
Section 2 of Republic Act No. 4726, a "holder of a separate interest" and consequently, a shareholder of the plaintiff condominium
corporation; and that "the case should be properly filed with the Securities & Exchange Commission which has exclusive original jurisdiction
on controversies arising between shareholders of the corporation." the motion for reconsideration thereof having been denied, the petitioner,
alleging grave abuse of discretion on the part of respondent Judge, filed the instant petition for certiorari praying that the said orders be set
aside.
G.R. NO. 52524
The petitioner filed its amended complaint dated July 16, 1979 docketed as Civil Case No. 14127 of Branch I of the City Court of Pasay City
for the collection of overdue accounts on assessments and insurance premiums and the interest thereon amounting to P6,168 06 as of March
31, 1979 against the private respondent Lim Siu Leng
5
to whom was assigned on July 11, 1977 a unit called "Alegria" of the Sunset. View
Condominium Project by Alfonso Uy
6
who had entered into a "Contract to Buy and Sell" with Tower Builders, Inc. over the said unit on
installment basis.
7

The private respondent filed a motion to dismiss on the ground of lack of jurisdiction, alleging that the amount sought to be collected is an
assessment. The correctness and validity of which is certain to involve a dispute between her and the petitioner corporation; that she has
automatically become, as a purchaser of the condominium unit, a stockholder of the petitioner pursuant to Section 2 of the Condominium Act,
Republic Act No. 4726; that the dispute is intra-corporate and is consequently under the exclusive jurisdiction of the Securities & Exchange
Commission as provided in Section 5 of P.D. No. 902-A.
8

The petitioner filed its opposition thereto, alleging that the private respondent who had not fully paid for the unit was not the owner thereof,
consequently was not the holder of a separate interest which would make her a stockholder, and that hence the case was not an intra-
corporate dispute.
9

After the private respondent had filed her answer to the opposition to the motion to dismiss
10
of the petitioner, the trial court issued an order
dated August 13, 1979 denying the motion to dismiss.
11
The private respondent's motion for reconsideration thereof was denied by the trial
court in its Order dated September 19, 1979.
12

The private respondent then appealed pursuant to Section 10 of Rule 40 of the Rules of Court to the Court of First Instance, where the appeal
was docketed as Civil Case No. 7530P. The petitioner filed its "Motion to Dismiss Appeal" on the ground that the order of the trial court
appealed from is interlocutory.
13

The motion to dismiss the appeal was denied and the parties were ordered to submit their respective memorandum on the issue raised before
the trial court and on the disputed order of the trial judge.
14
After the parties had submitted their respective memoranda on the matter, the
respondent Judge issued an order dated December 14, 1979 in which he directed that "the appeal is hereby dismissed and d the judgment of
the lower court is reversed. The case is dismissed and the parties are directed to ventilate their controversy with the Securities & Exchange
Commission.
15
The petitioner's motion for reconsideration thereof was denied in an order dated January 14, 1980.
16
Hence this petition for
certiorari, alleging grave abuse of discretion on the part of the respondent Judge.
Issues Common to Both Cases
It is admitted that the private respondents in both cases have not yet fully paid the purchase price of their units. The Identical issues raised in
both petitions are the following:
19

1. Is a purchaser of a condominium unit in the condominium project managed by the petitioner, who has not yet fully paid the purchase price
thereof, automaticaly a ,stockholder of the petitioner Condominium Corporation
2. Is it the regular court or the Securities & Exchange Commission that has jurisdiction over cases for collection of assessments assessed by
the Condominium Corporation on condominium units the full purchase price of which has not been paid?
The private respondents in both cases argue that every purchaser of a condominium unit, regardless of whether or not he has fully paid the
purchase price, is a "holder of a separate interest" mentioned in Section 2 of Republic Act No. 4726, otherwise known as "The Condominium
Act" and is automatically a shareholder of the condominium corporation.
The contention has no merit. Section 5 of the Condominium Act expressly provides that the shareholding in the Condominium Corporation will
be conveyed only in a proper case. Said Section 5 provides:
Any transfer or conveyance of a unit or an apartment, office or other space therein, shall include the transfer or
conveyance of the undivided interests in the common areas or, in a proper case, the membership or shareholding in the
condominium corporation ...
It is clear then that not every purchaser of a condominium unit is a shareholder of the condominium corporation. The Condominium Act leaves
to the Master Deed the determination of when the shareholding will be transferred to the purchaser of a unit. Thus, Section 4 of said Act
provides:
The provisions of this Act shall apply to property divided or to be divided into condominium only if there shall be recorded
in the Register of Deeds of the province or city in which the property lies and duly annotated in the corresponding
certificate of title of the land ... an enabling or master deed which shall contain, among others, the following:
xxx xxx xxx
(d) Astatement of the exact nature of the interest acquired or to be acquired by the purchaser in the separate units and in
the common areas of the condominium project ...
The Amended Master Deeds in these cases, which were duly registered in the Register of Deeds, and which contain, by mandate of Section 4,
a statement of the exact nature of the interest acquired by a purchaser of a unit, provide in Section 6 of Part 1:
(d) Each Unit owner shall, as an essential condition to such ownership, acquire stockholding in the Condominium
Corporation herein below provided ...
17

The Amended Master Deeds likewise provide in Section 7 (b), thus.
(b) All unit owners shall of necessity become stockholders of the Condominium Corporation. TOWER shall acquire all the
shares of stock of SUNSET VIEW and shall allocate the said shares to the units in proportion to the appurtenant interest in
the COMMON AREAS and LIMITED COMMON AREAS as provided in Section 6 (b) above. Said shares allocated are mere
appurtenances of each unit, and therefore, the same cannot be transferred, conveyed, encumbered or otherwise disposed
of separately from the Unit ...
18

It is clear from the above-quoted provisions of the Master Deeds that the shareholding in the Condominium Corporation is inseparable from
the unit to which it is only an appurtenant and that only the owner of a unit is a shareholder in the Condominium Corporation.
Subparagraph (a) of Part 1, Section 6, of the Master Deeds determines when and under what conditions ownership of a unit is acquired by a
purchaser thus:
(a) The purchaser of a unit shall acquire title or ownership of such Unit, subject to the terms and conditions of the
instrument conveying the unit to such purchaser and to the terms and conditions of any subsequent conveyance under
which the purchaser takes title to the Unit, and subject further to this MASTER DEED ...
19

The instrument conveying the unit "Solana" in G.R. NO. 52361 is the "Contract to Buy and Sell" dated September 13, 1977, Annex "D", while
that conveying the unit "Alegria" in G.R. NO. 52524 is the "Contract to Buy and Sell" dated May 12, 1976, Annex "C". In both deeds of
conveyance, it is provided:
4. Upon full payment by the BUYER of the total purchase price and full compliance by the BUYER of an its obligations
herein, the SELLER will convey unto the BUYER, as soon as practicable after completion of the construction, full and
absolute title in and to the subject unit, to the shares of stock pertaining thereto and to an rights and interests in
connection therewith ...
20

20

The share of stock appurtenant to the unit win be transferred accordingly to the purchaser of the unit only upon full payment of the purchase
price at which time he will also become the owner of the unit. Consequently, even under the contract, it is only the owner of a unit who is a
shareholder of the Condominium Corporation. Inasmuch as owners is conveyed only upon full payment of the purchase price, it necessarily
follows that a purchaser of a unit who has not paid the full purchase price thereof is not The owner of the unit and consequently is not a
shareholder of the Condominium Corporation.
That only the owner of a unit is a stockholder of the Condominium Corporation is inferred from Section 10 of the Condominium Act which
reads:
SEC. 10. ... Membership in a condominium corporation, regardless of whether it is a stock or non-stock corporation, shall
not be transferable separately from the condominium unit of which it is an appurtenance When a member or stockholder
ceases is to own a unit in the project in which the condominium corporation owns or holds the common areas, he shall
automatically cease to be a member or stockholder of the condominium corporation.
Pursuant to the above statutory provision, ownership of a unit is a condition sine qua non to being a shareholder in the condominium
corporation. It follows that a purchaser of a unit who is not yet the owner thereof for not having fully paid the full purchase price, is not a
shareholder By necessary implication, the "separate interest" in a condominium, which entitles the holder to become automatically a share
holder in the condominium corporation, as provided in Section 2 of the Condominium Act, can be no other than ownership of a unit. This is so
because nobody can be a shareholder unless he is the owner of a unit and when he ceases to be the owner, he also ceases automatically to
be a shareholder.
The private respondents, therefore, who have not fully paid the purchase price of their units and are consequently not owners of their units
are not members or shareholders of the petitioner condominium corporation,
Inasmuch as the private respondents are not shareholders of the petitioner condominium corporation, the instant case for collection cannot be
a "controversy arising out of intracorporate or partnership relations between and among stockholders, members or associates; between any
or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively" which
controversies are under the original and exclusive jurisdiction of the Securities & Exchange Commission, pursuant to Section 5 (b) of P.D. No.
902- A. The subject matters of the instant cases according to the allegations of the complaints are under the jurisdiction of the regular courts:
that of G.R. NO. 52361, which is for the collection of P8,335.38 with interest plus attorney's fees equivalent to the principal or a total of more
than P10,000.00 is under the jurisdiction of the Court of First Instance; and that of G.R. NO. 52524, which is for the collection of P6,168-06 is
within the jurisdiction of the City Court.
In view of the foregoing, it is no longer necessary to resolve the issue raised in G.R. NO. 52524 of whether an order of the City Court denying
a motion to dismiss on the ground of lack of jurisdiction can be appealed to the Court of First Instance.
WHEREFORE, the questioned orders of the respondent Judge dated December 11, 1979 and January 4, 1980 in Civil Case No. 7303-P, subject
matter of the Petition in G.R. No. 52361, are set aside and said Judge is ordered to try the case on the merits. The orders dated December
14, 1979 and January 14, 1980 in Civil Case No. 7530-P, subject matter of the petition in G.R. No. 52524 are set aside and the case is
ordered remanded to the court a quo, City Court of Pasay City, for trial on the merits, with costs against the private respondents.
SO ORDERED.
Teehankee (Chairman), Makasiar, Guerrero and Melencio-Herrera, JJ., concur.
[G.R. No. 146890. June 8, 2004]
LILIAN CAPITLE, SOFRONIO CORREJADO, ARTEMIO CORREJADO, VICENTE CORREJADO, CECILIA CORREJADO, GLORIA VDA. DE
BEDUNA, ROGELIA CORREJADO, MANUEL CORREJADO, RODOLFO CORREJADO, TERESITA C. AMARANTE, JUANITA
CORREJADO AND JULIETA C. PEREGRINO, petitioners, vs. JULIETA VDA. DE GABAN, JULIA CORREJADO AND
HERMINIGILDO CORREJADO, respondents.
D E C I S I O N
CARPIO-MORALES, J.:
Fabian Correjado (Fabian) inherited from his father Santos Correjado two parcels of land subject of the case at bar, Lot No. 1782-B of
the Pontevedra Cadastre and Lot No. 952 of the Hinigaran Cadastre containing 26,728 sq. m. and 55,591 sq. m., respectively.
Fabian died intestate in 1919. He was survived by four children, namely: Julian, Zacarias, Francisco and Manuel, all surnamed
Correjado.
21

After Fabians death in 1919, his son Julian occupied and cultivated the two subject parcels of land (the property) until his death in
1950. He was survived by three children, namely, herein respondents Julieta vda. de Gaban (Julieta), Julia Correjado (Julia) and Hermegildo
Correjado.
Julians brother Francisco died in 1960. He was survived by herein petitioners Manuel Correjado, Teresita C. Amarante, Juanita
Correjado, Rodolfo Correjado, and Jileta Peregrino.
Julians brother Zacarias died in 1984. He was survived by the other petitioners herein, Aurora P. vda. de Correjado, Lilia Capitle,
Artemio Correjado, Cecilia Correjado, Rogelia Correjado (Rogelia), Sofronio Correjado, Vicente Correjado and Gloria vda. de Beduna.
On November 26, 1986, petitioners filed a complaint
[1]
for partition of the property and damages before the Regional Trial Court (RTC)
of La Carlota City against respondents, alleging that Fabian contracted two marriages, the first with Brigida Salenda who was the mother of
Julian, and the subsequent one with Maria Catahay (Maria) who was the mother of Zacarias, Manuel and Francisco; that the property
remained undivided even after the death of Julian in 1950, his children-herein respondents having arrogated unto themselves the use and
enjoyment of the property, to the exclusion of petitioners; and that respondents refused to deliver petitioners share in the property despite
demands therefor and for partition.
To the Complaint respondents countered in their Answer
[2]
that in the proceedings in the intestate estate of their great grandfather
Santos Correjado, petitioners were not adjudicated any share in the property, for Maria, the mother of petitioners respective fathers
Francisco and Zacarias, was just a mistress of Fabian, hence, Francisco and Zacarias (as well as Manuel) were illegitimate who were not
entitled to inherit under the old Civil Code (Spanish Civil Code of 1889).
By Decision of December 29, 1992,
[3]
Branch 63 of the La Carlota City RTC dismissed the complaint upon the grounds of prescription
and laches.
On appeal to the Court of Appeals wherein petitioners raised as sole error of the trial court its dismissal of the complaint without basis
in fact and in law, the appellate court, by Decision of August 29, 2000,
[4]
dismissed the appeal and affirmed the decision of the trial court.
In affirming the decision of the trial court, appellant passed upon the issue of legitimacy of the brothers Francisco and Zacarias (as well
as of their brother Manuel) in order to determine whether they co-owned the property with Julian, illegitimate children not being entitled to
inherit under the Spanish Civil Code of 1889
[5]
which was in force when the brothers father Fabian died in 1919.
The appellate court found that respondents failed to discharge the onus of proving that Francisco and Zacarias were illegitimate. But it
too found that petitioners also failed to prove that Zacarias and Francisco were legitimate.
Upon the disputable presumption, however, that a man and a woman deporting themselves as husband and wife have entered into a
lawful contract of marriage,
[6]
the appellate court presumed that Fabian and Maria were lawfully married, hence, their children Zacarias and
Francisco (as well as Manuel)-predecessors-in-interest of petitioners were legitimate children and, therefore, they co-owned with Julian the
property.
Its finding of co-ownership of the property by the predecessors-in-interest of the parties notwithstanding, the appellate court held that,
as did the trial court, prescription and laches had set in, ratiocinating as follows:
It is a hornbook doctrine that the possession of a co-owner is like that of a trustee and shall not be regarded as adverse to the other co-
owners but in fact as beneficial to all of them so much so that each co-owner may demand at anytime the partition of the common property
and that this implies that an action to demand partition is imprescriptible or cannot be barred by laches (Salvador vs. Court of Appeals, 243
SCRA 23; De Castro vs. Echarri, 20 Phil. 23).
While the right of action to demand partition does not prescribe, acquisitive prescription may set in where one of the co-
owners openly and adversely occupies the property without recognizing the co-ownership (Cordova vs. Cordova, 102 Phil. 1182; Heirs of
Segunda Manungding vs. Court of Appeals, 276 SCRA 601), The statute of limitations operates, as in other cases, from the moment such
adverse title is asserted by the possessor of the property (Ramos vs. Ramos, 45 Phil. 362; Bargayo vs. Camumot, 40 Phil. 857).
The elements constituting adverse possession by a co-owner against another co-owner or cestui que trust are: (1) that he has performed
unequivocal acts of repudiation amounting to an ouster of the cestui que trust or other co-owners; (ii) that such positive acts of repudiation
have been made known to the cestui que trust or the other co-owners; and (iii) that the evidence thereon must be clear and convincing
(Salvador vs. Court of Appeals, supra).
Granting that appellants, as well as their predecessors-in-interest, were initially co-owners of the disputed property,
nevertheless, acquisitive prescription in favor of appellees had already set in. Appellees had performed unequivocalacts of repudiation. This
is shown by the unrebutted testimony of [herein respondent] Julia who declared that her brother Atilano (deceased) introduced improvements
on the disputed property and the fact that appellees and their fatherJulian paid the realty taxes thereon as exclusive owners
thereof. Moreover, applicants admitted in paragraph 12 of the Complaint that after Julians death (in 1950),
appellees arrogated unto themselves the use and enjoyment of thedisputed property, to the exclusion of appellants. This admission is
bolstered by [herein petitioner] Rogelias testimony, as follows:
Q By the way you said that you are going to recover this 1/6 share from Julieta vda. de Gaban. Why, is she in possession of this
land?
A Yes, sir.
Q She is presently in possession of the said lot?
A Yes, sir.
22

Q Can you tell us since when did she possess that land?
A 1980.
Q Previous to that, can you tell us if she was in possession of the said land?
A Yes, sir. She has been in possession of the said lot before 1980.
Q Was there a period of years that you have been in possession of the said land?
[A No, sir. We have never been in possession of the said land.]
x x x
Q Were you able to gather benefits from that land?
A We never benefited.
Q Since when have you not benefited from that land?
A Since 1919.
x x x
Q By the way, can you tell us since when you have been deprived of that land, from what year?
A From 1919 to 1990. (TSN, January 9, 1990, pp. 51-55). (Underscoring supplied)
[7]

Petitioners filed a motion for reconsideration
[8]
of the appellate courts decision upon the ground that THIS CASE HAS BEEN
OVERTAKEN BY EVENTS, PARTICULARLY ART. 19 OF THE [NEW] CIVIL CODE which reads:
ART. 19. Every person, must be in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith,
citing some cases in support thereof.
Finding the invocation of Art. 19 misplaced, the appellate court, by Resolution of February 7, 2001,
[9]
denied the Motion for
Reconsideration, hence, the present petition
[10]
proffering the following
ISSUES FOR RESOLUTION
I
WHETHER OR NOT RELIANCE ON ART. 19 OF THE CIVIL CODE ISMISPLACED.
II
WHETHER IN RESOLVING CASES, THE ISSUE OF MORALITY OF THE ACT DOES NOT COME INTO PLAY.
III
WHETHER OR NOT LACHES IS APPLICABLE IN THE CASE AT BAR.
[11]

Petitioners contend that [t]here is such a thing as morality that comes into play, as after all, the appellate court found the parties to
be first cousins and, therefore, following Art. 19 of the Civil Code, petitioners should get their share in the property.
Petitioners further contend that laches is not strictly applied when it comes to close relations, citing Gallardo v. IAC, 155 SCRA 248.
The petition fails.
Article 19 of the Civil Code in Chapter 2 on Human Relations is a statement of principle that supplements but does not supplant a
specific provision of law.
With respect to rights to the inheritance of a person who died before the effectivity on August 30, 1950 of the Civil Code like Fabian who
died in 1919:
Art. 2263, New Civil Code
23

ART. 2263. Rights to the inheritance of a person who died, with or without a will, before the effectivity of this Code, shall be governed by the
Civil Code of 1889, by other previous laws, and by the Rules of Court. x x x
ART. 807, Spanish Civil Code of 1889
ART 807. The following are forced heirs:
1. Legitimate children and descendants, with respect to their legitimate parents and ascendants;
2. In default of the foregoing, legitimate parents and ascendants, with respect to their legitimate children and descendants;
The widower or widow, natural children legally acknowledged, and the father or the mother of the latter, in the manner and to the extent
established by Articles 834, 835, 836, 837, 840, 841, 842, and 846.
ART. 939, Spanish Civil Code of 1889,
ART. 939. In the absence of legitimate descendants and ascendants, the natural children legally acknowledged and those legitimated by royal
concession shall succeed to the entire estate of the deceased.
With respect to prescription:
Art. 1134, New Civil Code
ART. 1134. Ownership and other real rights over immovable property are acquired by ordinary prescription through possession of ten years.
Art. 1137, New Civil Code
ART. 1137. Ownership and other real rights over immovables also prescribe through uninterrupted adverse possession thereof for thirty
years, without need of title or of good faith.
Assuming arguendo that petitioners respective fathers Francisco and Zacarias were legitimate and, therefore, were co-owners of the
property: From the moment co-owner Julian occupied in 1919 and claimed to be the absolute and exclusive owner of the property and
denied his brothers any share therein up to the time of his death in 1950, the question involved is no longer one of partition but of ownership
in which case imprescriptibility of the action for partition can no longer be invoked. The adverse possession by Julian and his successors-in-
interest- herein respondents as exclusive owner of the property having entailed a period of about 67 years at the time of the filing of the case
at bar in 1986, ownership by prescription had vested in them.
[12]

As for estoppel by laches which is a creation of equity,
[13]
since laches cannot interfere with the running of the period of prescription,
absent any conduct of the parties operating as estoppel,
[14]
in light of the prescription of petitioners action, discussion thereof is dispensed
with. Suffice it to state that while laches may not be strictly applied between near relatives, under the facts and circumstances of the case,
especially the uncontroverted claim of respondents that their father Julian, and the documented claim of respondent Julieta, had paid realty
taxes on the property as exclusive owner, as well as the admission of petitioner Rogelia that, as quoted above, she and her co-petitioners
never benefited or were deprived of any benefits from the property since 1919 up to the time of the filing of the case in 1986 before the
RTC or for a period of 67 years, despite demands therefor, even an extremely liberal application of laches would bar the filing of the case.
WHEREFORE, the petition is hereby DISMISSED and the decision of the Court of Appeals is AFFIRMED.
SO ORDERED.
Vitug, (Chairman), Sandoval-Gutierrez, and Corona, JJ., concur.
G.R. No. L-13298 November 19, 1918
CORNELIO RAMOS, petitioner-appellant,
vs.
THE DIRECTOR OF LANDS, objector-appellee.
Basilio Aromin for appellant.
Office of the Solicitor-General Paredes for appellee.

MALCOLM, J.:
24

This is an appeal by the applicant and appellant from a judgment of the Court of First Instance of Nueva Ecija, denying the registration of the
larger portion of parcel No. 1 (Exhibit A of the petitioner), marked by the letters A, B, and C on the plan, Exhibit 1, of the Government.
One Restituto Romero y Ponce apparently gained possession of a considerable tract of land located in the municipality of San Jose, Province of
Nueva Ecija, in the year 1882. He took advantage of the Royal Decree of February 13, 1894, to obtain a possessory information title to the
land, registered as such on February 8, 1896. Parcel No. 1, included within the limits of the possessory information title of Restituto Romero,
was sold in February, 1907, to Cornelio Ramos, the instant petitioner, and his wife Ambrosia Salamanca.
Ramos instituted appropriate proceedings to have his title registered. Opposition was entered by the Director of Lands on the ground that
Ramos had not acquired a good title from the Spanish government and by the Director of Forestry on the ground that the first parcel was
forest land. The trial court agreed with the objectors and excluded parcel No. 1 from registration. So much for the facts.
As to the law, the principal argument of the Solicitor-General is based on the provisions of the Spanish Mortgage Law and of the Royal Decree
of February 13, 1894, commonly known as the Maura Law. The Solicitor-General would emphasize that for land to come under the protective
gis of the Maura Law, it must have been shown that the land was cultivated for six years previously, and that it was not land which
pertained to the "zonas forestales." As proof that the land was, even as long ago as the years 1894 to 1896, forestal and not agricultural in
nature is the fact that there are yet found thereon trees from 50 to 80 years of age.
We do not stop to decide this contention, although it might be possible, following the doctrine laid down by the United States Supreme Court
with reference to Mexican and Spanish grantes within the United States, where some recital is claimed to be false, to say that the possessory
information, apparently having taken cognizance of the requisites for title, should not now be disturbed. (Hancock vs. McKinney [1851], 7
Tex., 192; Hornsby and Roland vs. United States [1869], 10 Wall., 224.) It is sufficient, as will later appear, merely to notice that the
predecessor in interest to the petitioner at least held this tract of land under color of title.
Subsection 6 of section 54, of Act No. 926, entitled The Public Land Law, as amended by Act No. 1908, reads as follows:
6. All persons who by themselves or their predecessors and interest have been in the open, continuous, exclusive, and notorious
possession and occupation of agricultural public lands, as defined by said Act of Congress of July first, nineteen hundred and two,
under a bona fide claim of ownership except as against the Government, for a period of ten years next preceding the twenty-sixth
day of July, nineteen hundred and four, except when prevented by war or force majeure, shall be conclusively presumed to have
performed all the conditions essential to a government grant and to have received the same, and shall be entitled to a certificate of
title to such land under the provisions of this chapter.
There are two parts to the above quoted subsection which must be discussed. The first relates to the open, continuous, exclusive, and
notorious possession and occupation of what, for present purposes, can be conceded to be agricultural public land, under a bona fide claim of
ownership.
Actual possession of land consists in the manifestation of acts of dominion over it of such a nature as a party would naturally exercise over his
own property. Relative to actuality of possession, it is admitted that the petitioner has cultivated only about one fourth of the entire tract. This
is graphically portrayed by Exhibit 1 of the Government, following:
25


The question at once arises: Is that actual occupancy of a part of the land described in the instrument giving color of title sufficient to give
title to the entire tract of land?lawphil.net
The doctrine of constructive possession indicates the answer. The general rule is that the possession and cultivation of a portion of a tract
under claim of ownership of all is a constructive possession of all, if the remainder is not in the adverse possession of another.
(Barr vs. Gratz's Heirs [1819], 4 Wheat., 213; Ellicott vs.Pearl [1836], 10 Pet., 412; Smith vs. Gale [1892], 144 U. S., 509.) Of course, there
are a number of qualifications to the rule, one particularly relating to the size of the tract in controversy with reference to the portion actually
in possession of the claimant. It is here only necessary to apply the general rule.
The claimant has color of title; he acted in good faith; and he has had open, peaceable, and notorious possession of a portion of the property,
sufficient to apprise the community and the world that the land was for his enjoyment. (See arts. 446, 448, Civil Code.) Possession in the
eyes of the law does not mean that a man has to have his feet on every square meter of ground before it can be said that he is in possession.
Ramos and his predecessor in interest fulfilled the requirements of the law on the supposition that he premises consisted of agricultural public
land.
The second division of the law requires consideration of the term "agricultural public land." The law affirms that the phrase is denied by the
Act of Congress of July 1st, 1902, known as the Philippine bill. Turning to the Philippine Bill, we find in sections 13 to 18 thereof that three
classes of land are mentioned. The first is variously denominated "public land" or "public domain," the second "mineral land," and the third
"timber land." Section 18 of the Act of Congress comes nearest to a precise definition, when it makes the determination of whether the land is
more valuable for agricultural or for forest uses the test of its character.
Although these sections of the Philippine Bill have come before the courts on numerous occasions, what was said in the case of
Jones vs. Insular Government ([1906], 6 Phil., 122), is still true, namely: "The meaning of these sections is not clear and it is difficult to give
to them a construction that will be entirely free from objection." In the case which gave most serious consideration to the subject
(Mapa vs. Insular Government [1908], 10 Phil., 175), it was found that there does exist in the Act of Congress a definition of the phrase
"agricultural public lands." It was said that the phrase "agricultural public lands" as used in Act No. 926 means "those public lands acquired
from Spain which are not timber or mineral lands."
The idea would appear to be to determine, by exclusion, if the land is forestal or mineral in nature and, if not so found, to consider it to be
agricultural land. Here, again, Philippine law is not very helpful. For instance, section 1820 of the Administrative Code of 1917 provides: "For
the purposes of this chapter, 'public forest' includes, except as otherwise specially indicated, all unreserved public land, including nipa and
mangrove swamps, and all forest reserves of whatever character." This definition of "public forest," it will be noted, is merely "for the
purposes of this chapter." A little further on, section 1827 provides: "Lands in public forests, not including forest reserves, upon the
certification of the Director of Forestry that said lands are better adapted and more valuable for agricultural than for forest purposes and not
required by the public interests to be kept under forest, shall be declared by the Department Head to be agricultural lands." With reference to
26

the last section, there is no certification of the Director of Forestry in the record, as to whether this land is better adapted and more valuable
for agricultural than for forest purposes.
The lexicographers define "forest" as "a large tract of land covered with a natural growth of trees and underbrush; a large wood." The
authorities say that he word "forest" has a significant, not an insignificant meaning, and that it does not embrace land only partly woodland.
It is a tract of land covered with trees, usually of considerable extent. (Higgins vs. Long Island R. Co. [1908], 114 N. Y. Supp., 262;
People vs. Long Island R. Co. [1908], 110 N. Y. Supp., 512.)
The foresters say that no legal definition of "forest" is practicable or useful. B. H. Baden-Powell, in his work on Forest Law of India, states as
follows:
Every definition of a forest that can be framed for legal purposes will be found either to exclude some cases to which the law ought
to apply, or on the other hand, to include some with which the law ought not to interfere. It may be necessary, for example, to take
under the law a tract of perfectly barren land which at present has neither trees, brushwood, nor grass on it, but which in the course
f time it is hoped will be "reboise;" but any definition wide enough to take in all such lands, would also take in much that was not
wanted. On the other hand, the definition, if framed with reference to tree-growth, might (and indeed would be almost sure to)
include a garden, shrubbery, orchard, or vineyard, which it was not designed to deal with.
B. E. Fernow, in his work on the Economics of Forestry, states as follows:
A forest in the sense in which we use the term, as an economic factor, is by no means a mere collection of trees, but an organic
whole in which all parts, although apparently heterogeneous, jumbled together by accident as it were and apparently unrelated,
bear a close relation to each other and are as interdependent as any other beings and conditions in nature.
The Director of Forestry of the Philippine Islands has said:
During the time of the passage of the Act of Congress of July 1, 1902, this question of forest and agricultural lands was beginning to
receive some attention and it is clearly shown in section 18 of the above mentioned Act; it leaves to the Bureau of Forestry the
certification as to what lands are for agricultural or forest uses. Although the Act states timber lands, the Bureau has in its
administration since the passage of this act construed this term to mean forest lands in the sense of what was necessary to protect,
for the public good; waste lands without a tree have been declared more suitable for forestry in many instances in the past. The
term 'timber' as used in England and in the United States in the past has been applied to wood suitable for construction purposes
but with the increase in civilization and the application of new methods every plant producing wood has some useful purpose and
the term timber lands is generally though of as synonymous with forest lands or lands producing wood, or able to produce wood, if
agricultural crops on the same land will not bring the financial return that timber will or if the same land is needed for protection
purposes.
x x x x x x x x x
The laws in the United States recognize the necessity of technical advice of duly appointed boards and leave it in the hands of these
boards to decide what lands are more valuable for forestry purposes or for agricultural purposes.
In the Philippine Islands this policy is follows to as great an extent as allowable under the law. In many cases, in the opinion of the
Bureau of Forestry, lands without a single tree on them are considered as true forest land. For instance, mountain sides which are
too steep for cultivation under ordinary practice and which, if cultivated, under ordinary practice would destroy the big natural
resource of the soil, by washing, is considered by this bureau as forest land and in time would be reforested. Of course, examples
exist in the Mountain Province where steep hillsides have been terraced and intensive cultivation practiced but even then the
mountain people are very careful not to destroy forests or other vegetative cover which they from experience have found protect
their water supply. Certain chiefs have lodged protests with the Government against other tribes on the opposite side of the
mountain cultivated by them, in order to prevent other tribes from cutting timber or destroy cover guarding their source of water for
irrigation.
Dr. M. S. Shaler, formerly Dean of the Lawrence Scientific School, remarked that if mankind could not devise and enforce ways
dealing with the earth, which will preserve this source of like "we must look forward to the time, remote it may be, yet equally
discernible, when out kin having wasted its great inheritance will fade from the earth because of the ruin it has accomplished."
The method employed by the bureau of Forestry in making inspection of lands, in order to determine whether they are more
adapted for agricultural or forest purposes by a technical and duly trained personnel on the different phases of the conservation of
natural resources, is based upon a previously prepared set of questions in which the different characters of the land under inspection
are discussed, namely:
Slope of land: Level; moderate; steep; very steep.
Exposure: North; South; East; West.
Soil: Clay; sandy loam; sand; rocky; very rocky.
27

Character of soil cover: Cultivated, grass land, brush land, brush land and timber mixed, dense forest.
If cultivated, state crops being grown and approximate number of hectares under cultivation. (Indicate on sketch.)
For growth of what agricultural products is this land suitable?
State what portion of the tract is wooded, name of important timber species and estimate of stand in cubic meters per hectare,
diameter and percentage of each species.
If the land is covered with timber, state whether there is public land suitable for agriculture in vicinity, which is not covered with
timber.
Is this land more valuable for agricultural than for forest purposes? (State reasons in full.)
Is this land included or adjoining any proposed or established forest reserve or communal forest? Description and ownership of
improvements.
If the land is claimed under private ownership, give the name of the claimant, his place of residence, and state briefly (if necessary
on a separate sheet) the grounds upon which he bases his claim.
When the inspection is made on a parcel of public land which has been applied for, the corresponding certificate is forwarded to the
Director of Lands; if it is made on a privately claimed parcel for which the issuance of a title is requested from the Court of Land
Registration, and the inspection shows the land to be more adapted for forest purposes, then the Director of Forestry requests the
Attorney-General to file an opposition, sending him all data collected during the inspection and offering him the forest officer as a
witness.
It should be kept in mind that the lack of personnel of this Bureau, the limited time intervening between the notice for the trial on
an expediente of land and the day of the trial, and the difficulties in communications as well as the distance of the land in question
greatly hinder the handling of this work.
In the case of lands claimed as private property, the Director of Forestry, by means of his delegate the examining officer, submits
before the court all evidence referring to the present forest condition of the land, so that the court may compare them with the
alleged right by the claimant. Undoubtedly, when the claimant presents a title issued by the proper authority or evidence of his right
to the land showing that he complied with the requirements of the law, the forest certificate does not affect him in the least as such
land should not be considered as a part of the public domain; but when the alleged right is merely that of possession, then the
public or private character of the parcel is open to discussion and this character should be established not simply on the alleged
right of the claimant but on the sylvical condition and soil characteristics of the land, and by comparison between this area, or
different previously occupied areas, and those areas which still preserve their primitive character.
Either way we look at this question we encounter difficulty. Indubitably, there should be conservation of the natural resources of the
Philippines. The prodigality of the spendthrift who squanders his substance for the pleasure of the fleeting moment must be restrained for the
less spectacular but surer policy which protects Nature's wealth for future generations. Such is the wise stand of our Government as
represented by the Director of Forestry who, with the Forester for the Government of the United States, believes in "the control of nature's
powers by man for his own good." On the other hand, the presumption should be, in lieu of contrary proof, that land is agricultural in nature.
One very apparent reason is that it is for the good of the Philippine Islands to have the large public domain come under private ownership.
Such is the natural attitude of the sagacious citizen.
If in this instance, we give judicial sanction to a private claim, let it be noted that the Government, in the long run of cases, has its remedy.
Forest reserves of public land can be established as provided by law. When the claim of the citizen and the claim of the Government as to a
particular piece of property collide, if the Government desires to demonstrate that the land is in reality a forest, the Director of Forestry
should submit to the court convincing proof that the land is not more valuable for agricultural than for forest purposes. Great consideration, it
may be stated, should, and undoubtedly will be, paid by the courts to the opinion of the technical expert who speaks with authority on
forestry matters. But a mere formal opposition on the part of the Attorney-General for the Director of Forestry, unsupported by satisfactory
evidence will not stop the courts from giving title to the claimant.
We hold that the petitioner and appellant has proved a title to the entire tract of land for which he asked registration, under the provisions of
subsection 6, of section 54, of Act No. 926, as amended by Act No. 1908, with reference to the Philippine Bill and the Royal Decree of
February 13, 1894, and his possessory information.
Judgment is reversed and the lower court shall register in the name of the applicant the entire tract in parcel No. 1, as described in plan
Exhibit A, without special finding as to costs. So ordered.
Arellano, C.J., Torres, Johnson, Street and Fisher, JJ., concur.
[G.R. No. 112567. February 7, 2000]
28

THE DIRECTOR, LANDS MANAGEMENT BUREAU, petitioner vs. COURT OF APPEALS and AQUILINO L. CARIO, respondents.
D E C I S I O N
PURISIMA, J.:
At bar is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to set aside the decision of the Court of Appeals,
dated November 11, 1993, in CA-G.R. No. 29218, which affirmed the decision, dated February 5, 1990, of Branch XXIV, Regional Trial Court
of Laguna, in LRC NO. B-467, ordering the registration of Lot No. 6 in the name of the private respondent.
The facts that matter are as follows:
On May 15, 1975, the private respondent, Aquilino Cario, filed with the then Branch I, Court of First Instance of Laguna, a petition
[1]
for
registration of Lot No. 6, a sugar land with an area of forty-three thousand six hundred fourteen (43,614) square meters, more or less,
forming part of a bigger tract of land surveyed as Psu-108952 and situated in Barrio Sala, Cabuyao, Laguna.
Private respondent declared that subject land was originally owned by his mother, Teresa Lauchangco, who died on February 15, 1911,
[2]
and
later administered by him in behalf of his five brothers and sisters, after the death of their father in 1934.
[3]

In 1949, private respondent and his brother, Severino Cario, became co-owners of Lot No. 6 by virtue of an extra-judicial partition of the
land embraced in Plan Psu-108952, among the heirs of Teresa Lauchangco. On July 26, 1963, through another deed of extrajudicial
settlement, sole ownership of Lot No. 6 was adjudicated to the private respondent.
[4]

Pertinent report of the Land Investigator of the Bureau of Lands (now Bureau of Lands Management), disclosed:
"x x x
1. That the land subject for registration thru judicial confirmation of imperfect title is situated in the barrio of Sala,
municipality of Cabuyao, province of Laguna as described on plan Psu-108952 and is identical to Lot No. 3015, Cad. 455-
D, Cabuyao Cadastre; and that the same is agricultural in nature and the improvements found thereon are sugarcane,
bamboo clumps, chico and mango trees and one house of the tenant made of light materials;
2. That the land subject for registration is outside any civil or military reservation, riverbed, park and watershed
reservation and that same land is free from claim and conflict;
3. That said land is neither inside the relocation site earmarked for Metro Manila squatters nor any pasture lease; it is not
covered by any existing public land application and no patent or title has been issued therefor;
4. That the herein petitioner has been in continuous, open and exclusive possession of the land who acquired the same
thru inheritance from his deceased mother, Teresa Lauchangco as mentioned on the Extra judicial partition dated July 26,
1963 which applicant requested that said instrument will be presented on the hearing of this case; and that said land is
also declared for taxation purposes under Tax Declaration No. 6359 in the name of the petitioner;
x x x"
[5]

With the private respondent as lone witness for his petition, and the Director of Lands as the only oppositor, the proceedings below ended. On
February 5, 1990, on the basis of the evidence on record, the trial court granted private respondent's petition, disposing thus:
"WHEREFORE, the Court hereby orders and declares the registration and confirmation of title to one (1) parcel of land
identified as Lot 6, plan Psu-108952, identical to Cadastral Lot No. 3015, Cad. 455-D, Cabuyao Cadastre, situated in the
barrio of Sala, municipality of Cabuyao, province of Laguna, containing an area of FORTY THREE THOUSAND SIX HUNDRED
FOURTEEN (43,614) Square Meters, more or less, in favor of applicant AQUILINO L. CARINO, married to Francisca Alomia,
of legal age, Filipino with residence and postal address at Bian, Laguna.
After this decision shall have become final, let an order for the issuance of decree of registration be issued.
SO ORDERED."
[6]

From the aforesaid decision, petitioner (as oppositor) went to the Court of Appeals, which, on November 11, 1993, affirmed the decision
appealed from.
Undaunted, petitioner found his way to this Court via the present Petition; theorizing that:
29

I.
THE COURT OF APPEALS ERRED IN NOT FINDING THAT PRIVATE RESPONDENT HAS NOT SUBMITTED PROOF OF HIS FEE
SIMPLE TITLE OR PROOF OF POSSESSION IN THE MANNER AND FOR THE LENGTH OF TIME REQUIRED BY THE LAW TO
JUSTIFY CONFIRMATION OF AN IMPERFECT TITLE.
II.
THE COURT OF APPEALS ERRED IN NOT DECLARING THAT PRIVATE RESPONDENT HAS NOT OVERTHROWN THE
PRESUMPTION THAT THE LAND IS A PORTION OF THE PUBLIC DOMAIN BELONGING TO THE REPUBLIC OF THE
PHILIPPINES.
[7]

The Petition is impressed with merit.
The petition for land registration
[8]
at bar is under the Land Registration Act.
[9]
Pursuant to said Act, he who alleges in his petition or
application, ownership in fee simple, must present muniments of title since the Spanish times, such as a titulo real or royal grant,
a concession especial or special grant, a composicion con el estado or adjustment title, or a titulo de compra or title through purchase; and
informacion possessoria or possessory information title, which would become a titulo gratuito or a gratuitous title.
[10]

In the case under consideration, the private respondents (petitioner below) has not produced a single muniment of title to substantiate his
claim of ownership.
[11]
The Court has therefore no other recourse, but to dismiss private respondent's petition for the registration of subject
land under Act 496.
Anyway, even if considered as petition for confirmation of imperfect title under the Public land Act (CA No. 141), as amended, private
respondents petition would meet the same fate. For insufficiency of evidence, its denial is inevitable. The evidence adduced by the private
respondent is not enough to prove his possession of subject lot in concept of owner, in the manner and for the number of years required by
law for the confirmation of imperfect title.
Section 48 (b) of Commonwealth Act No. 141,
[12]
as amended by R.A. No. 1942 and R.A. No. 3872, the law prevailing at the time the Petition
of private respondent was filed on May 15, 1975, provides:
"Sec. 48. The following described citizens of the Philippines, occupying lands of the public domain or claiming to own any
such lands or an interest therein, but whose titles have not been perfected or completed, may apply to the Court of first
Instance of the province where the land is located for confirmation of their claim and the issuance of title therefor, under
the Land Registration Act, to wit:
x.................x.................x
(b) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive, and
notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition or
ownership, for at least thirty years immediately preceding the filing of the application for confirmation of title except when
prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to
a Government grant and shall be entitled to a certificate of title under the provisions of this chapter." (Emphasis supplied)
Possession of public lands, however long, never confers title upon the possessor, unless the occupant can prove possession or occupation of
the same under claim of ownership for the required period to constitute a grant from the State.
[13]

Notwithstanding absence of opposition from the government, the petitioner in land registration cases is not relieved of the burden of proving
the imperfect right or title sought to be confirmed. In Director of Lands vs. Agustin,
[14]
this Court stressed that:
" x x x The petitioner is not necessarily entiled to have the land registered under the Torrens system simply because no
one appears to oppose his title and to oppose the registration of his land. He must show, even though there is no
opposition, to the satisfaction of the court, that he is the absolute owner, in fee simple. Courts are not justified in
registering property under the Torrens system, simply because there is no opposition offered. Courts may, even in the
absence of any opposition, deny the registration of the land under the Torrens system, upon the ground that the facts
presented did not show that petitioner is the owner, in fee simple, of the land which he is attempting to have
registered."
[15]

There is thus an imperative necessity of the most rigorous scrutiny before imperfect titles over public agricultural lands may be granted
judicial recognition.
[16]

The underlying principle is that all lands that were not acquired from the government, either by purchase or by grant, belong to the state as
part of the public domain. As enunciated in Republic vs. Lee:"
[17]

30

"x x x Both under the 1935 and the present Constitutions, the conservation no less than the utilization of the natural
resources is ordained. There would be a failure to abide by its command if the judiciary does not scrutinize with care
applications to private ownership of real estate. To be granted, they must be grounded in well-nigh incontrovertible
evidence. Where, as in this case, no such proof would be forthcoming, there is no justification for viewing such claim with
favor. It is a basic assumption of our polity that lands of whatever classification belong to the state. Unless alienated in
accordance with law, it retains its right over the same as dominus. x x x"
[18]

In order that a petition for registration of land may prosper and the petitioners may savor the benefit resulting from the issuance of certificate
of title for the land petitioned for, the burden is upon him (petitioner) to show that he and/or his predecessor-in-interest has been in open,
continuous, exclusive, and adverse possession and occupation of the land sought for registration, for at least thirty (30) years immediately
preceding the filing of the petition for confirmation of title.
[19]

In the case under consideration, private respondent can only trace his own possession of subject parcel of land to the year 1949, when the
same was adjudicated to him by virtue of an extra-judicial settlement and partition. Assuming that such a partition was truly effected, the
private respondent has possessed the property thus partitioned for only twenty-six (26) years as of 1975, when he filed his petition for the
registration thereof. To bridge the gap, he proceeded to tack his possession to what he theorized upon as possession of the same land by his
parents. However, other than his unilateral assertion, private respondent has not introduced sufficient evidence to substantiate his allegation
that his late mother possessed the land in question even prior to 1911.
Basic is the rule that the petitioner in a land registration case must prove the facts and circumstances evidencing his alleged ownership of the
land applied for. General statements, which are mere conclusions of law and not factual proof of possession are unavailing and cannot
suffice.
[20]

From the relevant documentary evidence, it can be gleaned that the earliest tax declaration covering Lot No. 6 was Tax Declaration No. 3214
issued in 1949 under the names of the private respondent and his brother, Severino Carino. The same was followed by Tax Declaration No.
1921 issued in 1969 declaring an assessed value of Five Thousand Two Hundred Thirty-three (P5,233.00) Pesos and Tax Declaration No. 6359
issued in 1974 in the name of private respondent, declaring an assessment of Twenty-One Thousand Seven Hundred Seventy (P21,770.00)
Pesos.
[21]

It bears stressing that the Exhibit "E" referred to in the decision below as the tax declaration for subject land under the names of the parents
of herein private respondent does not appear to have any sustainable basis. Said Exhibit "E" shows that it is Tax Declaration 1921 for Lot No.
6 in the name of private respondent and not in the name of his parents.
[22]

The rule that findings of fact by the trial court and the Court of Appeals are binding upon this Court is not without exceptions. Where, as in
this case, pertinent records belie the findings by the lower courts that subject land was declared for taxation purposes in the name of private
respondent's predecessor-in-interest, such findings have to be disregarded by this Court. In Republic vs. Court of Appeals,
[23]
the Court
ratiocinated thus:
"This case represents an instance where the findings of the lower court overlooked certain facts of substance and value
that if considered would affect the result of the case (People v. Royeras, 130 SCRA 259) and when it appears that the
appellate court based its judgment on a misapprehension of facts (Carolina Industries, Inc. v. CMS Stock Brokerage, Inc.,
et al., 97 SCRA 734; Moran, Jr. v. Court of Appeals, 133 SCRA 88; Director of Lands v. Funtillar, et al., G.R. No. 68533,
May 3, 1986). This case therefore is an exception to the general rule that the findings of facts of the Court of Appeals are
final and conclusive and cannot be reviewed on appeal to this Court.
and-
x x x in the interest of substantial justice this Court is not prevented from considering such a pivotal factual matter that
had been overlooked by the Courts below. The Supreme Court is clothed with ample authority to review palpable errors not
assigned as such if it finds that their consideration is necessary in arriving at a just decision."
[24]

Verily, the Court of Appeals just adopted entirely the findings of the trial court. Had it examined the original records of the case, the said
court could have verified that the land involved was never declared for taxation purposes by the parents of the private respondent. Tax
receipts and tax declarations are not incontrovertible evidence of ownership. They are mere indicia of claim of ownership.
[25]
In Director of
Lands vs. Santiago:
[26]

"x x x if it is true that the original owner and possessor, Generosa Santiago, had been in possession since 1925, why were
the subject lands declared for taxation purposes for the first time only in 1968, and in the names of Garcia and Obdin? For
although tax receipts and declarations, of ownership for taxation purposes are not incontrovertible evidence of ownership,
they constitute at least proof that the holder had a claim of title over the property."
[27]

As stressed by the Solicitor General, the contention of private respondent that his mother had been in possession of subject land even prior to
1911 is self-serving, hearsay, and inadmissible in evidence. The phrase "adverse, continuous, open, public, peaceful and in concept of
owner", by which characteristics private respondent describes his possession and that of his parents, are mere conclusions of law requiring
evidentiary support and substantiation. The burden of proof is on the private respondent, as applicant, to prove by clear, positive and
convincing evidence that the alleged possession of his parents was of the nature and duration required by law. His bare allegations without
more, do not amount to preponderant evidence that would shift the burden of proof to the oppositor.
[28]

31

In a case,
[29]
this Court set aside the decisions of the trial court and the Court of Appeals for the registration of a parcel of land in the name of
the applicant, pursuant to Section 48 (b) of the Public Land Law; holding as follows:
"Based on the foregoing, it is incumbent upon private respondent to prove that the alleged twenty year or more possession
of the spouses Urbano Diaz and Bernarda Vinluan which supposedly formed part of the thirty (30) year period prior to the
filing of the application, was open, continuous, exclusive, notorious and in concept of owners. This burden, private
respondent failed to discharge to the satisfaction of the Court. The bare assertion that the spouses Urbano Diaz and
Bernarda Vinluan had been in possession of the property for more than twenty (20) years found in private respondent's
declaration is hardly the 'well-nigh incontrovertible' evidence required in cases of this nature. Private respondent should
have presented specific facts that would have shown the nature of such possession. x x x"
[30]

In Director of Lands vs. Datu,
[31]
the application for confirmation of imperfect title was likewise denied on the basis of the following
disquisition, to wit:
"We hold that applicants' nebulous evidence does not support their claim of open, continuous, exclusive and notorious
occupation of Lot No. 2027-B en concepto de dueno. Although they claimed that they have possessed the land since 1950,
they declared it for tax purposes only in 1972. It is not clear whether at the time they filed their application in 1973, the
lot was still cogon land or already cultivated land.
They did not present as witness their predecessor, Peaflor, to testify on his alleged possession of the land. They alleged in their application
that they had tenants on the land. Not a single tenant was presented as witness to prove that the applicants had possessed the land as
owners.
x x x
On the basis of applicants' insubstantial evidence, it cannot justifiably be concluded that they have an imperfect title that
should be confirmed or that they had performed all the conditions essential to a Government grant of a portion of the
public domain."
[32]

Neither can private respondent seek refuge under P.D. No. 1073,
[33]
amending Section 48(b) of Commonwealth Act No. 141, under which law
a certificate of title may issue to any occupant of a public land, who is a Filipino citizen, upon proof of open, continuous, exclusive, and
notorious possession and occupation since June 12, 1945, or earlier. Failing to prove that his predecessors-in-interest occupied subject land
under the conditions laid down by law, the private respondent could only establish his possession since 1949, four years later than June 12,
1945, as set by law.
The Court cannot apply here the juris et de jure presumption that the lot being claimed by the private respondent ceased to be a public land
and has become private property.
[34]
To reiterate, under the Regalian doctrine all lands belong to the State.
[35]
Unless alienated in accordance
with law, it retains its basic rights over the same as dominus.
[36]

Private respondent having failed to come forward with muniments of title to reinforce his petition for registration under the Land Registration
Act (Act 496), and to present convincing and positive proof of his open, continuous, exclusive and notorious occupation of Lot No. 6 en
concepto de dueno for at least 30 years immediately preceding the filing of his petition,
[37]
the Court is of the opinion, and so finds, that
subject Lot No. 6 surveyed under Psu-108952, forms part of the pubic domain not registrable in the name of private respondent.
WHEREFORE, the Petition is GRANTED; the Decision of the Court of Appeals, dated November 11, 1993, in CA-G.R. No. 29218 affirming the
Decision, dated February 5, 1990, of Branch XXIV, Regional Trial Court of Laguna in LRC No. B-467, is SET ASIDE; and Lot No. 6, covered by
and more particularly described in Psu-108952, is hereby declared a public land, under the administrative supervision and power of
disposition of the Bureau of Lands Management. No pronouncement as to costs.
SO ORDERED.
Melo, (Chairman), Vitug, Panganiban, and Gonzaga-Reyes, JJ., concur.
[G.R. No. 79688. February 1, 1996]
PLEASANTVILLE DEVELOPMENT CORPORATION, petitioner, vs. COURT OF APPEALS, WILSON KEE, C.T. TORRES ENTERPRISES,
INC. and ELDRED JARDINICO,respondents.
D E C I S I O N
PANGANIBAN, J.:
32

Is a lot buyer who constructs improvements on the wrong property erroneously delivered by the owners agent, a builder in good
faith? This is the main issue resolved in this petition for review on certiorari to reverse the Decision
[1]
of the Court of Appeals
[2]
in CA-G.R. SP
No. 11040, promulgated on August 20, 1987.
By resolution dated November 13, 1995, the First Division of this Court resolved to transfer this case (along with several others) to the
Third Division. After due deliberation and consultation, the Court assigned the writing of this Decision to the undersigned ponente.
The Facts
The facts, as found by respondent Court, are as follows:
Edith Robillo purchased from petitioner a parcel of land designated as Lot 9, Phase II and located at Taculing Road, Pleasantville
Subdivision, Bacolod City. In 1975, respondent Eldred Jardinico bought the rights to the lot from Robillo. At that time, Lot 9 was vacant.
Upon completing all payments, Jardinico secured from the Register of Deeds of Bacolod City on December 19, 1978 Transfer Certificate
of Title No. 106367 in his name. It was then that he discovered that improvements had been introduced on Lot 9 by respondent Wilson Kee,
who had taken possession thereof.
It appears that on March 26, 1974, Kee bought on installment Lot 8 of the same subdivision from C.T. Torres Enterprises, Inc. (CTTEI),
the exclusive real estate agent of petitioner. Under the Contract to Sell on Installment, Kee could possess the lot even before the completion
of all installment payments. On January 20, 1975, Kee paid CTTEI the relocation fee of P50.00 and another P50.00 on January 27, 1975, for
the preparation of the lot plan. These amounts were paid prior to Kees taking actual possession of Lot 8. After the preparation of the lot
plan and a copy thereof given to Kee, CTTEI through its employee, Zenaida Octaviano, accompanied Kees wife, Donabelle Kee, to
inspect Lot 8. Unfortunately, the parcel of land pointed by Octaviano was Lot 9. Thereafter, Kee proceeded to construct his residence, a
store, an auto repair shop and other improvements on the lot.
After discovering that Lot 9 was occupied by Kee, Jardinico confronted him. The parties tried to reach an amicable settlement, but
failed.
On January 30, 1981, Jardinicos lawyer wrote Kee, demanding that the latter remove all improvements and vacate Lot 9. When Kee
refused to vacate Lot 9, Jardinico filed with the Municipal Trial Court in Cities, Branch 3, Bacolod City (MTCC), a complaint for ejectment with
damages against Kee.
Kee, in turn, filed a third-party complaint against petitioner and CTTEI.
The MTCC held that the erroneous delivery of Lot 9 to Kee was attributable to CTTEI. It further ruled that petitioner and CTTEI could
not successfully invoke as a defense the failure of Kee to give notice of his intention to begin construction required under paragraph 22 of the
Contract to Sell on Installment and his having built a sari-sari store without. the prior approval of petitioner required under paragraph 26 of
said contract, saying that the purpose of these requirements was merely to regulate the type of improvements to be constructed on the lot
[3]
.
However, the MTCC found that petitioner had already rescinded its contract with Kee over Lot 8 for the latters failure to pay the
installments due, and that Kee had not contested the rescission. The rescission was effected in 1979, before the complaint was
instituted. The MTCC concluded that Kee no longer had any right over the lot subject of the contract between him and
petitioner. Consequently, Kee must pay reasonable rentals for the use of Lot 9, and, furthermore, he cannot claim reimbursement for the
improvements he introduced on said lot.
The MTCC thus disposed:
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered as follows:
1. Defendant Wilson Kee is ordered to vacate tithe premises of Lot 9, covered by TCT No. 106367 and to remove all structures and
improvements he introduced thereon;
2. Defendant Wilson Kee is ordered to pay to the plaintiff rentals at the rate of P 15.00 a day computed from the time this suit was filed
on March 12, 1981 until he actually vacates the premises. This amount shall bear interests (sic) at the rate of 12 per cent (sic) per annum.
3. Third-Party Defendant CT. Torres Enterprises, Inc. and Pleasantville Subdivision are ordered to pay the plaintiff jointly and severally the
sum of P3,000.00 as attorneys fees and P700.00 as cost and litigation expenses.
[4]

On appeal, the Regional Trial Court, Branch 48, Bacolod City (RTC) ruled that petitioner and CTTEI were not at fault or were not
negligent, there being no preponderant evidence to show that they directly participated in the delivery of Lot 9 to Kee.
[5]
It found Kee a
builder in bad faith. It further ruled that even assuming arguendo that Kee was acting in good faith, he was, nonetheless, guilty of unlawfully
usurping the possessory right of Jardinico over Lot 9 from the time he was served with notice to vacate said lot, and thus was liable for rental.
The RTC thus disposed:
WHEREFORE, the decision appealed from is affirmed with respect to the order against the defendant to vacate the premises of Lot No. 9
covered by Transfer Certificate of Title No. T-106367 of the land records of Bacolod City; the removal of all structures and improvements
introduced thereon at his expense and the payment to plaintiff (sic) the sum of Fifteen (P 15.00) Pesos a day as reasonable rental to be
33

computed from January 30, 1981, the date of the demand, and not from the date of the filing of the complaint, until he had vacated (sic) the
premises, with interest thereon at 12% per annum. This Court further renders judgment against the defendant to pay the plaintiff the sum of
Three Thousand (P3,000.00) Pesos as attorneys fees, plus costs of litigation.
The third-party complaint against Third-Party Defendants Pleasantville Development Corporation and C.T. Torres Enterprises, Inc. is
dismissed. The order against Third-Party Defendants to pay attorneys fees to plaintiff and costs of litigation is reversed.
[6]

Following the denial of his motion for reconsideration on October 20, 1986, Kee appealed directly to the Supreme Court, which referred
the matter to the Court of Appeals.
The appellate court ruled that Kee was a builder in good faith, as he was unaware of the mix-up when he began construction of the
improvements on Lot 8. It further ruled that the erroneous delivery was due to the negligence of CTTEI, and that such wrong delivery was
likewise imputable to its principal, petitioner herein. The appellate court also ruled that the award of rentals was without basis.
Thus, the Court of Appeals disposed:
WHEREFORE, the petition is GRANTED, the appealed decision is REVERSED, and judgment is rendered as follows:
1. Wilson Kee is declared a builder in good faith with respect to the improvements he introduced on Lot 9, and is entitled to the
rights granted him under Articles 448, 546 and 548 of the New Civil Code.
2. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development Corporation are solidarily liable under the
following circumstances:
a. If Eldred Jardinico decides to appropriate the improvements and, thereafter, remove these structures, the third-party
defendants shall answer for all demolition expenses and the value of the improvements thus destroyed or rendered useless;
b. If Jardinico prefers that Kee buy the land, the third-party defendants shall answer for the amount representing the value
of Lot 9 that Kee should pay to Jardinico.
3. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development Corporation are ordered to pay in
solidum the amount of P3,000.00 to Jardinico as attorneys fees, as well as litigation expenses.
4. The award of rentals to Jardinico is dispensed with.
Furthermore, the case is REMANDED to the court of origin for the determination of the actual value of the improvements and the property
(Lot 9), as well as for further proceedings in conformity with Article 448 of the New Civil Code.
[7]

Petitioner then filed the instant petition against Kee, Jardinico and CTTEI.
The Issues
The petition submitted the following grounds to justify a review of the respondent Courts Decision, as follows:
1. The Court of Appeals has decided the case in a way probably not in accord with law or the the (sic) applicable decisions of the Supreme
Court on third-party complaints, by ordering third-party defendants to pay the demolition expenses and/or price of the land;
2. The Court of Appeals has so far departed from the accepted course of judicial proceedings, by granting to private respondent-Kee the
rights of a builder in good faith in excess of what the law provides, thus enriching private respondent Kee at the expense of the petitioner;
3. In the light of the subsequent events or circumstances which changed the rights of the parties, it becomes imperative to set aside or at
least modify the judgment of the Court of Appeals to harmonize with justice and the facts;
4. Private respondent-Kee in accordance with the findings of facts of the lower court is clearly a builder in bad faith, having violated several
provisions of the contract to sell on installments;
5. The decision of the Court of Appeals, holding the principal, Pleasantville Development Corporation (liable) for the acts made by the agent
in excess of its authority is clearly in violation of the provision of the law;
6. The award of attorneys fees is clearly without basis and is equivalent to putting a premium in (sic) court litigation.
From these grounds, the issues could be re-stated as follows:
34

(1) Was Kee a builder in good faith?
(2) What is the liability, if any, of petitioner and its agent, C.T. Torres Enterprises, Inc.? and
(3) Is the award of attorneys fees proper?
The First Issue: Good Faith
Petitioner contends that the Court of Appeals erred in reversing the RTCs ruling that Kee was a builder in bad faith.
Petitioner fails to persuade this Court to abandon the findings and conclusions of the Court of Appeals that Kee was a builder in good
faith. We agree with the following observation of the Court of Appeals:
The roots of the controversy can be traced directly to the errors committed by CTTEI, when it pointed the wrong property to Wilson Kee and
his wife. It is highly improbable that a purchaser of a lot would knowingly and willingly build his residence on a lot owned by another,
deliberately exposing himself and his family to the risk of being ejected from the land and losing all improvements thereon, not to mention
the social humiliation that would follow.
Under the circumstances, Kee had acted in the manner of a prudent man in ascertaining the identity of his property. Lot 8 is covered by
Transfer Certificate of Title No. T-69561, while Lot 9 is identified in Transfer Certificate of Title No. T-106367. Hence, under
the Torrens system of land registration, Kee is presumed to have knowledge of the metes and bounds of the property with which he is
dealing. x x x
xxx xxx xxx
But as Kee is a layman not versed in the technical description of his property, he had to find a way to ascertain that what was described in
TCT No. 69561 matched Lot 8. Thus, he went to the subdivision developers agent and applied and paid for the relocation of the lot, as well
as for the production of a lot plan by CTTEIs geodetic engineer. Upon Kees receipt of the map, his wife went to the subdivision site
accompanied by CTTEIs employee, Octaviano, who authoritatively declared that the land she was pointing to was indeed Lot 8. Having full
faith and confidence in the reputation of CTTEI, and because of the companys positive identification of the property, Kee saw no reason to
suspect that there had been a misdelivery. The steps Kee had taken to protect his interests were reasonable. There was no need for him to
have acted ex-abundantia cautela, such as being present during the geodetic engineers relocation survey or hiring an independent geodetic
engineer to countercheck for errors, for the final delivery of subdivision lots to their owners is part of the regular course of everyday business
of CTTEI. Because of CTTEIs blunder, what Kee had hoped to forestall did in fact transpire. Kees efforts all went to naught.
[8]

Good faith consists in the belief of the builder that the land he is building on is his and his ignorance of any defect or flaw in his
title.
[9]
And as good faith is presumed, petitioner has the burden of proving bad faith on the part of Kee.
[10]

At the time he built improvements on Lot 8, Kee believed that said lot was what he bought from petitioner. He was not aware that the
lot delivered to him was not Lot 8. Thus, Kees good faith. Petitioner failed to prove otherwise.
To demonstrate Kees bad faith, petitioner points to Kees violation of paragraphs 22 and 26 of the Contract of Sale on Installment.
We disagree. Such violations have no bearing whatsoever on whether Kee was a builder in good faith, that is, on his state of mind at the
time he built the improvements on Lot 9. These alleged violations may give rise to petitioners cause of action against Kee under the said
contract (contractual breach), but may not be bases to negate the presumption that Kee was a builder in good faith.
Petitioner also points out that, as found by the trial court, the Contract of Sale on Installment covering Lot 8 between it and Kee was
rescinded long before the present action was instituted. This has no relevance on the liability of petitioner, as such fact does not negate the
negligence of its agent in pointing out the wrong lot to Kee. Such circumstance is relevant only as it gives Jardinico a cause of action for
unlawful detainer against Kee.
Petitioner next contends that Kee cannot claim that another lot was erroneously pointed out to him because the latter agreed to the
following provision in the Contract of Sale on Installment, to wit:
13. The Vendee hereby declares that prior to the execution of his contract he/she has personally examined or inspected the property made
subject-matter hereof, as to its location, contours, as well as the natural condition of the lots and from the date hereof whatever
consequential change therein made due to erosion, the said Vendee shall bear the expenses of the necessary fillings, when the same is so
desired by him/her.
[11]

The subject matter of this provision of the contract is the change of the location, contour and condition of the lot due to erosion. It
merely provides that the vendee, having examined the property prior to the execution of the contract, agrees to shoulder the expenses
resulting from such change.
We do not agree with the interpretation of petitioner that Kee contracted away his right to recover damages resulting from petitioners
negligence. Such waiver would be contrary to public policy and cannot be allowed. Rights may be waived, unless the waiver is contrary to
law, public order, public policy, morals, or good customs, or prejudicial to a third person with a right recognized by law.
[12]

35

The Second Issue: Petitioners Liability
Kee filed a third-party complaint against petitioner and CTTEI, which was dismissed by the RTC after ruling that there was no evidence
from which fault or negligence on the part of petitioner and CTTEI can be inferred. The Court of Appeals disagreed and found CTTEI negligent
for the erroneous delivery of the lot by Octaviano, its employee.
Petitioner does not dispute the fact that CTTEI was its agent. But it contends that the erroneous delivery of Lot 9 to Kee was an act
which was clearly outside the scope of its authority, and consequently, CTTEI alone should be liable. It asserts that while [CTTEI] was
authorized to sell the lot belonging to the herein petitioner, it was never authorized to deliver the wrong lot to Kee.
[13]

Petitioners contention is without merit.
The rule is that the principal is responsible for the acts of the agent, done within the scope of his authority, and should bear the damage
caused to third persons.
[14]
On the other hand, the agent who exceeds his authority is personally liable for the damage.
[15]

CTTEI was acting within its authority as the sole real estate representative of petitioner when it made the delivery to Kee. In acting
within its scope of authority, it was, however, negligent. It is this negligence that is the basis of petitioners liability, as principal of CTTEI, per
Articles 1909 and 1910 of the Civil Code.
Pending resolution of the case before the Court of Appeals, Jardinico and Kee on July 24, 1987 entered into a deed of sale, wherein the
former sold Lot 9 to Kee. Jardinico and Kee did not inform the Court of Appeals of such deal.
The deed of sale contained the following provision:
1. That Civil Case No. 3815 entitled Jardinico vs. Kee which is now pending appeal with the Court of Appeals, regardless of the outcome of
the decision shall be mutually disregarded and shall not be pursued by the parties herein and shall be considered dismissed and without effect
whatsoever;
[16]

Kee asserts though that the terms and conditions in said deed of sale are strictly for the parties thereto and that (t)here is no waiver
made by either of the parties in said deed of whatever favorable judgment or award the honorable respondent Court of Appeals may make in
their favor against herein petitioner Pleasantville Development Corporation and/or private respondent C.T. Torres Enterprises, Inc.
[17]

Obviously, the deed of sale can have no effect on the liability of petitioner. As we have earlier stated, petitioners liability is grounded
on the negligence of its agent. On the other hand, what the deed of sale regulates are the reciprocal rights of Kee and Jardinico; it stressed
that they had reached an agreement independent of the outcome of the case.
Petitioner further assails the following holding of the Court of Appeals:
2. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development Corporation are solidarily liable under the following
circumstances:
a. If Eldred Jardinico decides to appropriate the improvements and, thereafter, remove these structures, the third-party
defendants shall answer for all demolition expenses and the value of the improvements thus destroyed or rendered useless;
b. If Jardinico prefers that Kee buy the land, the third-party defendants shall answer for the amount representing the value
of Lot 9 that Kee should pay to Jardinico.
[18]

Petitioner contends that if the above holding would be carried out, Kee would be unjustly enriched at its expense. In other words, Kee
would be -able to own the lot, as buyer, without having to pay anything on it, because the aforequoted portion of respondent Courts Decision
would require petitioner and CTTEI jointly and solidarily to answer or reimburse Kee there for.
We agree with petitioner.
Petitioners liability lies in the negligence of its agent CTTEI. For such negligence, the petitioner should be held liable for damages. Now,
the extent and/or amount of damages to be awarded is a factual issue which should be determined after evidence is adduced. However,
there is no showing that such evidence was actually presented in the trial court; hence no damages could now be awarded.
The rights of Kee and Jardinico vis-a-vis each other, as builder in good faith and owner in good faith, respectively, are regulated by
law (i.e., Arts. 448, 546 and 548 of the Civil Code). It was error for the Court of Appeals to make a slight modification in the application of
such law, on the ground of equity. At any rate, as it stands now, Kee and Jardinico have amicably settled through their deed of sale their
rights and obligations with regards to Lot 9. Thus, we delete items 2 (a) and (b) of the dispositive portion of the Court of Appeals Decision
[as reproduced above] holding petitioner and CTTEI solidarily liable.
The Third Issue: Attorneys Fees
The MTCC awarded Jardinico attorneys fees and costs in the amount of P3,000.00 and P700.00, respectively, as prayed for in his
complaint. The RTC deleted the award, consistent with its ruling that petitioner was without fault or negligence. The Court of Appeals,
however, reinstated the award of attorneys fees after ruling that petitioner was liable for its agents negligence.
36

The award of attorneys fees lies within the discretion of the court and depends upon the circumstances of each case.
[19]
We shall not
interfere with the discretion of the Court of Appeals. Jardinico was compelled to litigate for the protection of his interests and for the recovery
of damages sustained as a result of the negligence of petitioners agent.
[20]

In sum, we rule that Kee is a builder in good faith. The disposition of the Court of Appeals that Kee is entitled to the rights granted him
under Articles 448, 546 and 548 of the New Civil Code is deleted, in view of the deed of sale entered into by Kee and Jardinico, which deed
now governs the rights of Jardinico and Kee as to each other. There is also no further need, as ruled by the appellate Court, to remand the
case to the court of origin for determination of the actual value of the improvements and the property (Lot 9), as well as for further
proceedings in conformity with Article 448 of the New Civil Code.
WHEREFORE, the petition is partially GRANTED. The Decision of the Court of Appeals is hereby MODIFIED as follows:
(1) Wilson Kee is declared a builder in good faith;
(2) Petitioner Pleasantville Development Corporation and respondent C.T. Tones Enterprises, Inc. are declared solidarily liable
for damages due to negligence; however, since the amount and/or extent of such damages was not proven during the trial,
the same cannot now be quantified and awarded;
(3) Petitioner Pleasantville Develpment Corporation and respondent C.T. Torres Enterprises, Inc. are ordered to pay
in solidum the amount of P3,000.00 to Jardinico as attorneys fees, as well as litigation expenses; and
(4) The award of rentals to Jardinico is dispensed with.
SO ORDERED.
G.R. No. 46623 December 7, 1939
MARCIAL KASILAG, petitioner,
vs.
RAFAELA RODRIGUEZ, URBANO ROQUE, SEVERO MAPILISAN and IGNACIO DEL ROSARIO,respondents.
Luis M. Kasilag for petitioner.
Fortunato de Leon for respondents.

IMPERIAL, J.:
This is an appeal taken by the defendant-petitioner from the decision of the Court of Appeals which modified that rendered by the court of
First Instance of Bataan in civil case No. 1504 of said court and held: that the contract Exhibit "1" is entirely null and void and without effect;
that the plaintiffs-respondents, then appellants, are the owners of the disputed land, with its improvements, in common ownership with their
brother Gavino Rodriguez, hence, they are entitled to the possession thereof; that the defendant-petitioner should yield possession of the
land in their favor, with all the improvements thereon and free from any lien; that the plaintiffs-respondents jointly and severally pay to the
defendant-petitioner the sum of P1,000 with interest at 6 percent per annum from the date of the decision; and absolved the plaintiffs-
respondents from the cross-complaint relative to the value of the improvements claimed by the defendant-petitioner. The appealed decision
also ordered the registrar of deeds of Bataan to cancel certificate of title No. 325, in the name of the deceased Emiliana Ambrosio and to issue
in lieu thereof another certificate of title in favor of the plaintiffs-respondents and their brother Gavino Rodriguez, as undivided owners in
equal parts, free of all liens and incumbrances except those expressly provided by law, without special pronouncement as to the costs.
The respondents, children and heirs of the deceased Emiliana Ambrosio, commenced the aforesaid civil case to the end that they recover from
the petitioner the possession of the land and its improvements granted by way of homestead to Emiliana Ambrosio under patent No. 16074
issued on January 11, 1931, with certificate of title No. 325 issued by the registrar of deeds of Bataan on June 27, 1931 in her favor, under
section 122 of Act No. 496, which land was surveyed and identified in the cadastre of the municipality of Limay, Province of Bataan, as lot No.
285; that the petitioner pay to them the sum of P650 being the approximate value of the fruits which he received from the land; that the
petitioner sign all the necessary documents to transfer the land and its possession to the respondents; that he petitioner be restrained, during
the pendency of the case, from conveying or encumbering the land and its improvements; that the registrar of deeds of Bataan cancel
certificate of title No. 325 and issue in lieu thereof another in favor of the respondents, and that the petitioner pay the costs of suit.
The petitioner denied in his answer all the material allegations of the complaint and by way of special defense alleged that he was in
possession of the land and that he was receiving the fruits thereof by virtue of a mortgage contract, entered into between him and the
deceased Emiliana Ambrosio on May 16, 1932, which was duly ratified by a notary public; and in counterclaim asked that the respondents pay
him the sum of P1,000 with 12 per cent interest per annum which the deceased owed him and that, should the respondents be declared to
have a better right to the possession of the land, that they be sentenced to pay him the sum of P5,000 as value of all the improvements
which he introduced upon the land.lawphil.net
On May 16, 1932 Emiliana Ambrosio, in life, and the petitioner executed the following public deed:
37

"This agreement, made and entered into this 16th day of May, 1932, by and between Emiliana Ambrosio, Filipino, of legal age, widow and
resident of Limay, Bataan, P.L., hereinafter called the party of the first part, and Marcial Kasilag, Filipino, of legal age, married to Asuncion
Roces, and resident at 312 Perdigon Street, Manila, P.L., hereinafter called party of the second part.
WITNESSETH: That the parties hereto hereby covenant and agree to and with each other as follows:
ARTICLE I. That the party of the first part is the absolute registered owner of a parcel of land in the barrio of Alngan, municipality of
Limay, Province of Bataan, her title thereto being evidenced by homestead certificate of title No. 325 issued by the Bureau of Lands
on June 11, 1931, said land being lot No. 285 of the Limay Cadastre, General Land Registration Office Cadastral Record No. 1054,
bounded and described as follows:
Beginning at point marked 1 on plan E-57394, N. 84 32' W. 614.82 m. from B.B.M. No. 3, thence N. 66 35' E. 307.15 m. to point "2"; S. 5
07' W. to point "5"; S.6 10' E. 104.26 m. to point "4"; S. 82 17' W. to point "5"; S. 28 53' W. 72.26 m. to point "6"; N. 71 09' W. to point
"7"; N. 1 42' E. 173.72 m. to point 1, point of beginning, "Containing an area of 6.7540 hectares. "Points 1,2,6 and 7, B.L.; points 3,4 and 5,
stakes; points 4, 5 and 6 on bank of Alangan River. "Bounded on the North, by property claimed by Maria Ambrosio; on the East, by Road; on
the South, by Alangan River and property claimed by Maxima de la Cruz; and on the West, by property claimed by Jose del Rosario. "Bearing
true. Declination 0 51' E. "Surveyed under authority of sections 12-22, Act No. 2874 and in accordance with existing regulations of the
Bureau of Lands, by Mamerto Jacinto, public land surveyor, on July 8, 1927 and approved on February 25, 1931.
ARTICLE II. That the improvements on the above described land consist of the following:
Four (4) mango trees, fruit bearing: one hundred ten (110) hills of bamboo trees; one (1) tamarind and six (6) boga trees.
ARTICLE III. That the assessed value of the land is P940 and the assessed value of the improvements is P860, as evidenced by tax
declaration No. 3531 of the municipality of Limay, Bataan.
ARTICLE IV. That for and in consideration of the sum of one thousand pesos (P1,000) Philippine currency, paid by the party of
second part to the party of the first part, receipt whereof is hereby acknowledged, the party of the first part hereby encumbers and
hypothecates, by way of mortgage, only the improvements described in Articles II and III hereof, of which improvements the party
of the first part is the absolute owner.
ARTICLE V. That the condition of said mortgage is such that if the party of the first part shall well and truly pay, or cause to paid to
the party of the second part, his heirs, assigns, or executors, on or before the 16th day of November, 1936, or four and one-half
(4) years after date of the execution of this instrument, the aforesaid sum of one thousand pesos (P1,000) with interest at 12 per
cent per annum, then said mortgage shall be and become null and void; otherwise the same shall be and shall remain in full force
and effect, and subject to foreclosure in the manner and form provided by law for the amount due thereunder, with costs and also
attorney's fees in the event of such foreclosure.lawphil.net
ARTICLE VI. That the party of the first part shall pay all taxes and assessments which are or may become due on the above
described land and improvements during the term of this agreement.
ARTICLE VII. That within thirty (30) days after date of execution of this agreement, the party of the first part shall file a motion
before the Court of First Instance at Balanga, Bataan, P. I., requesting cancellation of Homestead Certificate of Title No. 325
referred to in Article I hereof and the issuance, in lieu thereof, of a certificate of title under the provisions of Land Registration Act
No. 496, as amended by Act 3901.
ARTICLE III. It if further agreed that if upon the expiration of the period of time (4) years stipulated in this mortgage, the
mortgagor should fail to redeem this mortgage, she would execute a deed of absolute sale of the property herein described for the
same amount as this mortgage, including all unpaid interests at the rate of 12 per cent per annum, in favor of the mortgagee.
ARTICLE IX. That in the event the contemplated motion under Article VII hereof is not approved by the Court, the foregoing contract
of sale shall automatically become null and void, and the mortgage stipulated under Article IV and V shall remain in full force and
effect.
In testimony whereof, the parties hereto have hereunto set their hands the day and year first herein before written.
(Sgd.) MARCIAL KASILAG
(Sgd.) EMILIANA AMBROSIO
Signed in the presence of:
(Sgd.) ILLEGIBLE
38

(Sgd.) GAVINO RODRIGUEZ.

PHILIPPINE ISLANDS } ss.
BALANGA, BATAAN } ss.
Before me this day personally appeared Emiliana Ambrosio without cedula by reason of her sex, to me known and known to me to
be the person who signed the foregoing instrument, and acknowledged to me that she executed the same as her free and voluntary
act and deed.
I hereby certify that this instrument consists of three (3) pages including this page of the acknowledgment and that each page
thereof is signed by the parties to the instrument and the witnesses in their presence and in the presence of each other, and that
the land treated in this instrument consists of only one parcel.
In witness whereof I have hereunto set my hand and affixed my notarial seal, this 16th day of May, 1932.
(Sgd.) NICOLAS NAVARRO
Notary Public
My commission expires December 31, 1933.


Doc. No. 178
Page 36 of my register
Book No. IV
One year after the execution of the aforequoted deed, that is, in 1933, it came to pass that Emiliana Ambrosio was unable to pay the
stipulated interests as well as the tax on the land and its improvements. For this reason, she and the petitioner entered into another verbal
contract whereby she conveyed to the latter the possession of the land on condition that the latter would not collect the interest on the loan,
would attend to the payment of the land tax, would benefit by the fruits of the land, and would introduce improvements thereon. By virtue of
this verbal contract, the petitioner entered upon the possession of the land, gathered the products thereof, did not collect the interest on the
loan, introduced improvements upon the land valued at P5,000, according to him and on May 22, 1934 the tax declaration was transferred in
his name and on March 6, 1936 the assessed value of the land was increased from P1,020 to P2,180.
After an analysis of the conditions of Exhibit "1" the Court of Appeals came to the conclusion and so held that the contract entered into by and
between the parties, set out in the said public deed, was one of absolute purchase and sale of the land and its improvements. And upon this
ruling it held null and void and without legal effect the entire Exhibit 1 as well as the subsequent verbal contract entered into between the
parties, ordering, however, the respondents to pay to the petitioner, jointly and severally, the loan of P1,000 with legal interest at 6 per cent
per annum from the date of the decision. In this first assignment of error the petitioner contends that the Court of Appeals violated the law in
holding that Exhibit 1 is an absolute deed of sale of the land and its improvements and that it is void and without any legal effect.
The cardinal rule in the interpretation of contracts is to the effect that the intention of the contracting parties should always prevail because
their will has the force of law between them. Article 1281 of the Civil Code consecrates this rule and provides, that if the terms of a contract
are clear and leave no doubt as to the intention of the contracting parties, the literal sense of its stipulations shall be followed; and if the
words appear to be contrary to the evident intention of the contracting parties, the intention shall prevail. The contract set out in Exhibit 1
should be interpreted in accordance with these rules. As the terms thereof are clear and leave no room for doubt, it should be interpreted
according to the literal meaning of its clauses. The words used by the contracting parties in Exhibit 1 clearly show that they intended to enter
into the principal contract of loan in the amount of P1,000, with interest at 12 per cent per annum, and into the accessory contract of
mortgage of the improvements on the land acquired as homestead, the parties having moreover, agreed upon the pacts and conditions stated
in the deed. In other words, the parties entered into a contract of mortgage of the improvements on the land acquired as homestead, to
secure the payment of the indebtedness for P1,000 and the stipulated interest thereon. In clause V the parties stipulated that Emiliana
Ambrosio was to pay, within four and a half years, or until November 16, 1936, the debt with interest thereon, in which event the mortgage
would not have any effect; in clause VI the parties agreed that the tax on the land and its improvements, during the existence of the
mortgage, should be paid by the owner of the land; in clause VII it was covenanted that within thirty days from the date of the contract, the
owner of the land would file a motion in the Court of First Instance of Bataan asking that certificate of title No. 325 be cancelled and that in
lieu thereof another be issued under the provisions of the Land Registration Act No. 496, as amended by Act No. 3901; in clause VIII the
parties agreed that should Emiliana Ambrosio fail to redeem the mortgage within the stipulated period of four years and a half, she would
execute an absolute deed of sale of the land in favor of the mortgagee, the petitioner, for the same amount of the loan of P1,000 including
unpaid interest; and in clause IX it was stipulated that in case the motion to be presented under clause VII should be disapproved by the
Court of First Instance of Bataan, the contract of sale would automatically become void and the mortgage would subsist in all its force.
Another fundamental rule in the interpretation of contracts, not less important than those indicated, is to the effect that the terms, clauses
and conditions contrary to law, morals and public order should be separated from the valid and legal contract and when such separation can
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be made because they are independent of the valid contract which expresses the will of the contracting parties. Manresa, commenting on
article 1255 of the Civil Code and stating the rule of separation just mentioned, gives his views as follows:
On the supposition that the various pacts, clauses or conditions are valid, no difficulty is presented; but should they be void, the
question is as to what extent they may produce the nullity of the principal obligation. Under the view that such features of the
obligation are added to it and do not go to its essence, a criterion based upon the stability of juridical relations should tend to
consider the nullity as confined to the clause or pact suffering therefrom, except in case where the latter, by an established
connection or by manifest intention of the parties, is inseparable from the principal obligation, and is a condition, juridically
speaking, of that the nullity of which it would also occasion. (Manresa, Commentaries on the Civil Code, Volume 8, p. 575.)
The same view prevails in the Anglo-American law, as condensed in the following words:
Where an agreement founded on a legal consideration contains several promises, or a promise to do several things, and a part only
of the things to be done are illegal, the promises which can be separated, or the promise, so far as it can be separated, from the
illegality, may be valid. The rule is that a lawful promise made for a lawful consideration is not invalid merely because an unlawful
promise was made at the same time and for the same consideration, and this rule applies, although the invalidity is due to violation
of a statutory provision, unless the statute expressly or by necessary implication declares the entire contract void. . . . (13 C. J.,
par. 470, p. 512; New York Cent. etc. R. Co. v. Gray, 239 U.S., 583; 60 Law ed., 451; U.S. v. Mora, 97 U.S., 413, 24 Law. ed.,
1017; U.S. v. Hodson, 10 Wall, 395; 19 Law ed. 937; Gelpcke v. Dubuque, 1 Wall. 175, 17 Law ed., 520; U.S. v. Bradly, 10 Pet.
343, 9 Law. ed., 448; Borland v. Prindle, 144 Fed 713; Western Union Tel. Co. v. Kansas Pac. R. Co., 4 Fed., 284; Northern Pac. R.
Co. v. U.S., 15 Ct. Cl., 428.)
Addressing ourselves now to the contract entered into by the parties, set out in Exhibit 1, we stated that the principal contract is that of loan
and the accessory that of mortgage of the improvements upon the land acquired as a homestead. There is no question that the first of these
contract is valid as it is not against the law. The second, or the mortgage of the improvements, is expressly authorized by section 116 of Act
No. 2874, as amended by section 23 of Act No. 3517, reading:
SEC. 116. Except in favor of the Government or any of its branches, units or institutions, or legally constituted banking corporations,
lands acquired under the free patent or homestead provisions shall not be subject to encumbrance or alienation from the date of the
approval of the application and for a term of five years from and after the date of issuance of the patent or grant, nor shall they
become liable to the satisfaction of any debt contracted prior to the expiration of said period; but the improvements or crops on the
land may be mortgaged or pledged to qualified persons, associations, or corporations.
It will be recalled that by clause VIII of Exhibit 1 the parties agreed that should Emiliana Ambrosio fail to redeem the mortgage within the
stipulated period of four and a half years, by paying the loan together with interest, she would execute in favor of the petitioner an absolute
deed of sale of the land for P1,000, including the interest stipulated and owing. The stipulation was verbally modified by the same parties
after the expiration of one year, in the sense that the petitioner would take possession of the land and would benefit by the fruits thereof on
condition that he would condone the payment of interest upon the loan and he would attend to the payment of the land tax. These pacts
made by the parties independently were calculated to alter the mortgage a contract clearly entered into, converting the latter into a contract
of antichresis. (Article 1881 of the Civil Code.) The contract of antichresis, being a real encumbrance burdening the land, is illegal and void
because it is legal and valid.
The foregoing considerations bring us to the conclusion that the first assignment of error is well-founded and that error was committed in
holding that the contract entered into between the parties was one of absolute sale of the land and its improvements and that Exhibit 1 is null
and void. In the second assignment of error the petitioner contends that the Court of Appeals erred in holding that he is guilty of violating the
Public Land Act because he entered into the contract, Exhibit 1. The assigned error is vague and not specific. If it attempts to show that the
said document is valid in its entirety, it is not well-founded because we have already said that certain pacts thereof are illegal because they
are prohibited by section 116 of Act No. 2874, as amended.
In the third assignment of error the petitioner insists that his testimony, as to the verbal agreement entered into between him and Emiliana
Ambrosio, should have been accepted by the Court of Appeals; and in the fourth and last assignment of error the same petitioner contends
that the Court of Appeals erred in holding that he acted in bad faith in taking possession of the land and in taking advantage of the fruits
thereof, resulting in the denial of his right to be reimbursed for the value of the improvements introduced by him.
We have seen that subsequent to the execution of the contract, Exhibit 1, the parties entered into another verbal contract whereby the
petitioner was authorized to take possession of the land, to receive the fruits thereof and to introduce improvements thereon, provided that
he would renounce the payment of stipulated interest and he would assume payment of the land tax. The possession by the petitioner and his
receipt of the fruits of the land, considered as integral elements of the contract of antichresis, are illegal and void agreements because, as
already stated, the contract of antichresis is a lien and such is expressly prohibited by section 116 of Act No. 2874, as amended. The Court of
Appeals held that the petitioner acted in bad faith in taking possession of the land because he knew that the contract he made with Emiliana
Ambrosio was an absolute deed of sale and, further, that the latter could not sell the land because it is prohibited by section 116. The Civil
Code does not expressly define what is meant by bad faith, but section 433 provides that "Every person who is unaware of any flaw in his
title, or in the manner of its acquisition, by which it is invalidated, shall be deemed a possessor in good faith"; and provides further, that
"Possessors aware of such flaw are deemed possessors in bad faith". Article 1950 of the same Code, covered by Chapter II relative to
prescription of ownership and other real rights, provides, in turn, that "Good faith on the part of the possessor consists in his belief that the
person from whom he received the thing was the owner of the same, and could transmit the title thereto." We do not have before us a case of
prescription of ownership, hence, the last article is not squarely in point. In resume, it may be stated that a person is deemed a possessor in
bad faith when he knows that there is a flaw in his title or in the manner of its acquisition, by which it is invalidated.
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Borrowing the language of Article 433, the question to be answered is whether the petitioner should be deemed a possessor in good faith
because he was unaware of any flaw in his title or in the manner of its acquisition by which it is invalidated. It will be noted that ignorance of
the flaw is the keynote of the rule. From the facts found established by the Court of Appeals we can neither deduce nor presume that the
petitioner was aware of a flaw in his title or in the manner of its acquisition, aside from the prohibition contained in section 116. This being
the case, the question is whether good faith may be premised upon ignorance of the laws. Manresa, commenting on article 434 in connection
with the preceding article, sustains the affirmative. He says:
"We do not believe that in real life there are not many cases of good faith founded upon an error of law. When the acquisition appears in a
public document, the capacity of the parties has already been passed upon by competent authority, and even established by appeals taken
from final judgments and administrative remedies against the qualification of registrars, and the possibility of error is remote under such
circumstances; but, unfortunately, private documents and even verbal agreements far exceed public documents in number, and while no one
should be ignorant of the law, the truth is that even we who are called upon to know and apply it fall into error not infrequently. However, a
clear, manifest, and truly unexcusable ignorance is one thing, to which undoubtedly refers article 2, and another and different thing is
possible and excusable error arising from complex legal principles and from the interpretation of conflicting doctrines.
But even ignorance of the law may be based upon an error of fact, or better still, ignorance of a fact is possible as to the capacity to
transmit and as to the intervention of certain persons, compliance with certain formalities and appreciation of certain acts, and an
error of law is possible in the interpretation of doubtful doctrines. (Manresa, Commentaries on the Spanish Civil Code. Volume IV,
pp. 100, 101 and 102.)
According to this author, gross and inexcusable ignorance of law may not be the basis of good faith, but possible, excusable ignorance may be
such basis. It is a fact that the petitioner is not conversant with the laws because he is not a lawyer. In accepting the mortgage of the
improvements he proceeded on the well-grounded belief that he was not violating the prohibition regarding the alienation of the land. In
taking possession thereof and in consenting to receive its fruits, he did not know, as clearly as a jurist does, that the possession and
enjoyment of the fruits are attributes of the contract of antichresis and that the latter, as a lien, was prohibited by section 116. These
considerations again bring us to the conclusion that, as to the petitioner, his ignorance of the provisions of section 116 is excusable and may,
therefore, be the basis of his good faith. We do not give much importance to the change of the tax declaration, which consisted in making the
petitioner appear as the owner of the land, because such an act may only be considered as a sequel to the change of possession and
enjoyment of the fruits by the petitioner, to about which we have stated that the petitioner's ignorance of the law is possible and excusable.
We, therefore, hold that the petitioner acted in good faith in taking possession of the land and enjoying its fruits.
The petitioner being a possessor in good faith within the meaning of article 433 of the Civil Code and having introduced the improvements
upon the land as such, the provisions of article 361 of the same Code are applicable; wherefore, the respondents are entitled to have the
improvements and plants upon indemnifying the petitioner the value thereof which we fix at P3,000, as appraised by the trial court; or the
respondents may elect to compel the petitioner to have the land by paying its market value to be fixed by the court of origin.
The respondents also prayed in their complaint that the petitioner be compelled to pay them the sum of P650, being the approximate value of
the fruits obtained by the petitioner from the land. The Court of Appeals affirmed the judgment of the trial court denying the claim or
indemnity for damages, being of the same opinion as the trial court that the respondents may elect to compel the petitioner to have the land.
The Court of Appeals affirmed the judgment of the trial court that the respondents have not established such damages. Under the verbal
contract between the petitioner and the deceased Emiliana Ambrosio, during the latter's lifetime, the former would take possession of the
land and would receive the fruits of the mortgaged improvements on condition that he would no longer collect the stipulated interest and that
he would attend to the payment of the land tax. This agreement, at bottom, is tantamount to the stipulation that the petitioner should apply
the value of the fruits of the land to the payment of stipulated interest on the loan of P1,000 which is, in turn, another of the elements
characterizing the contract of antichresis under article 1881 of the Civil Code. It was not possible for the parties to stipulate further that the
value of the fruits be also applied to the payment of the capital, because the truth was that nothing remained after paying the interest at 12%
per annum. This interest, at the rate fixed, amounted to P120 per annum, whereas the market value of the fruits obtainable from the land
hardly reached said amount in view of the fact that the assessed value of said improvements was, according to the decision, P860. To this
should be added the fact that, under the verbal agreement, from the value of the fruits had to be taken a certain amount to pay the annual
land tax. We mention these data here to show that the petitioner is also not bound to render an accounting of the value of the fruits of the
mortgaged improvements for the reason stated that said value hardly covers the interest earned by the secured indebtednes.
For all the foregoing considerations, the appealed decision is reversed, and we hereby adjudge: (1) that the contract of mortgage of the
improvements, set out in Exhibit 1, is valid and binding; (2) that the contract of antichresis agreed upon verbally by the parties is a real
incumbrance which burdens the land and, as such, is a null and without effect; (3) that the petitioner is a possessor in good faith; (4) that the
respondents may elect to have the improvements introduced by the petitioner by paying the latter the value thereof, P3,000, or to compel the
petitioner to buy and have the land where the improvements or plants are found, by paying them its market value to be filed by the court of
origin, upon hearing the parties; (5) that the respondents have a right to the possession of the land and to enjoy the mortgaged
improvements; and (6) that the respondents may redeem the mortgage of the improvements by paying to the petitioner within three months
the amount of P1,000, without interest, as that stipulated is set off by the value of the fruits of the mortgaged improvements which petitioner
received, and in default thereof the petitioner may ask for the public sale of said improvements for the purpose of applying the proceeds
thereof to the payment of his said credit. Without special pronouncement as to the costs in all instances. So ordered.
Diaz, J., concur.