G.R. No.

171514

July 18, 2012

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
DOMINGO ESPINOSA, Respondent.
DECISION
REYES, J.:
This is a petition for review on certiorari from the
Decision1 dated November 11, 2004 and Resolution2 dated
February 13, 2006 of the Court of Appeals in CA-G.R. CV No.
72456.
On March 3, 1999, respondent Domingo Espinosa (Espinosa)
tiled with the Municipal Trial Court (MTC) of Consolacion, Cebu
an application3 for land registration covering a parcel of land
with an area of 5,525 square meters and situated in Barangay
Cabangahan, Consolacion, Cebu. In support of his application,
which was docketed as LRC Case No. N-81, Espinosa alleged
that: (a) the property, which is more particularly known as Lot
No. 8499 of Cad. 545-D (New), is alienable and disposable; (b)
he purchased the property from his mother, Isabel Espinosa
(Isabel), on July 4, 1970 and the latters other heirs had
waived their rights thereto; and (c) he and his predecessor-ininterest had been in possession of the property in the concept
of an owner for more than thirty (30) years.
Espinosa submitted the blueprint of Advanced Survey Plan 070008934 to prove the identity of the land. As proof that the
property is alienable and disposable, he marked as evidence
the annotation on the advance survey plan made by Cynthia
L. Ibaez, Chief of the Map Projection Section, stating that
"CONFORMED PER L.C. MAP NOTATION L.C. Map No. 2545
Project No. 28 certified on June 25, 1963, verified to be within
Alienable & Disposable Area".5 Espinosa also presented two
(2) tax declarations for the years 1965 and 1974 in Isabels
name Tax Declaration Nos. 013516 and 06137 to prove
that she had been in possession of the property since 1965. To
support his claim that he had been religiously paying the
taxes due on the property, Espinosa presented a
Certification6 dated December 1, 1998 issued by the Office of
the Treasurer of Consolacion, Cebu and three (3) tax
declarations for the years 1978, 1980 and 1985 Tax
Declaration Nos. 14010, 17681 and 010717.8
Petitioner opposed Espinosas application, claiming that: (a)
Section 48(b) of Commonwealth Act No. 141 otherwise known
as the "Public Land Act" (PLA) had not been complied with as
Espinosas predecessor-in-interest possessed the property
only after June 12, 1945; and (b) the tax declarations do not
prove that his possession and that of his predecessor-ininterest are in the character and for the length of time
required by law.
On August 18, 2000, the MTC rendered a Judgment 9 granting
Espinosas petition for registration, the dispositive portion of
which states:
WHEREFORE, and in view of all the foregoing, judgment is
hereby rendered ordering for the registration and the
confirmation of title of Espinosa over Lot No. 8499, Cad 545-D
(New), situated at Barangay Cabangahan, Consolacion, Cebu,
Philippines, containing an area of 5,525 square meters and
that upon the finality of this decision, let a corresponding
decree of registration be issued in favor of the herein
applicant in accordance with Section 39, P.D. 1529.
SO ORDERED.10
According to the MTC, Espinosa was able to prove that the
property is alienable and disposable and that he complied

with the requirements of Section 14(1) of Presidential Decree

(P.D.) No. 1529. Specifically:
After a careful consideration of the evidence presented in the
above-entitled case, the Court is convinced, and so holds, that
Espinosa was able to establish his ownership and possession
over the subject lot which is within the area considered by the
Department of Environment and Natural Resources (DENR) as
alienable and disposable land of the public domain.
The Court is likewise convinced that the applicant and that of
predecessor-in-interest have been in open, actual, public,
continuous, adverse and under claim of title thereto within the
time prescribed by law (Sec. 14, sub-par. 1, P.D. 1529) and/or
in accordance with the Land Registration Act.11
Petitioner appealed to the CA and pointed Espinosas failure to
prove that his possession and that of his predecessor-ininterest were for the period required by law. As shown by Tax
Declaration No. 013516, Isabels possession commenced only
in 1965 and not on June 12, 1945 or earlier as required by
Section 48(b) of the PLA. On the other hand, Espinosa came
into possession of the property only in 1970 following the sale
that transpired between him and his mother and the earliest
tax declaration in his name was for the year 1978. According
to petitioner, that Espinosa and his predecessor-in-interest
were supposedly in possession for more than thirty (30) years
is inconsequential absent proof that such possession began on
June 12, 1945 or earlier.12
Petitioner also claimed that Espinosas failure to present the
original tracing cloth of the survey plan or a sepia copy
thereof is fatal to his application. Citing Del Rosario v. Republic
of the Philippines13 and Director of Lands v. Judge
Reyes,14 petitioner argued that the submission of the original
tracing cloth is mandatory in establishing the identity of the
land subject of the application.15
Further, petitioner claimed that the annotation on the advance
survey plan is not the evidence admissible to prove that the
subject land is alienable and disposable.16
By way of the assailed decision, the CA dismissed petitioners
appeal and affirmed the MTC Decision dated August 18, 2000.
The CA ruled that possession for at least thirty (30) years,
despite the fact that it commenced after June 12, 1945,
sufficed to convert the property to private. Thus:
The contention of petitioner is not meritorious on the following
grounds:
a) The record of the case will show that Espinosa has
successfully established valid title over the subject land and
that he and his predecessor-in-interest have been in
continuous, adverse, public and undisturbed possession of
said land in the concept of an owner for more than 30 years
before the filing of the application. Established jurisprudence
has consistently pronounced that "open, continuous and
exclusive possession for at least 30 years of alienable public
land ipso jure converts the same into private property
(Director of Lands vs. Intermediate Appellate Court, 214 SCRA
604). This means that occupation and cultivation for more
than 30 years by applicant and his predecessor-in-interest
vests title on such applicant so as to segregate the land from
the mass of public land (National Power Corporation vs. Court
of Appeals, 218 SCRA 41); and
b) It is true that the requirement of possession since June 12,
1945 is the latest amendment of Section 48(b) of the Public
Land Act (C.A. No. 141), but a strict implementation of the law
would in certain cases result in inequity and unfairness to
Espinosa. As wisely stated by the Supreme Court in the case
of Republic vs. Court of Appeals, 235 SCRA 567:

"Following the logic of the petitioner, any transferee is thus

foreclosed to apply for registration of title over a parcel of
land notwithstanding the fact that the transferor, or his
predecessor-in-interest has been in open, notorious and
exclusive possession thereof for thirty (30) years or more." 17
The CA also ruled that registration can be based on other
documentary evidence, not necessarily the original tracing
cloth plan, as the identity and location of the property can be
established by other competent evidence.
Again, the aforesaid contention of [the petitioner] is without
merit. While the best evidence to identify a piece of land for
registration purposes may be the original tracing cloth plan
from the Land Registration Commission, the court may
sufficiently order the issuance of a decree of registration on
the basis of the blue print copies and other evidence (Republic
of the Philippines vs. Intermediate Appellate Court, G.R. No. L70594, October 10, 1986). The said case provides further:
"The fact that the lower court finds the evidence of the
applicant sufficient to justify the registration and confirmation
of her titles and did not find it necessary to avail of the
original tracing cloth plan from the Land Registration
Commission for purposes of comparison, should not militate
against the rights of the applicant. Such is especially true in
this case where no clear, strong, convincing and more
preponderant proof has been shown by the oppositor to
overcome the correctness of said plans which were found both
by the lower court and the Court of Appeals as conclusive
proofs of the description and identities of the parcels of land
contained therein."
There is no dispute that, in case of Del Rosario vs. Republic,
supra the Supreme Court pronounced that the submission in
evidence of the original tracing cloth plan, duly approved by
the Bureau of Lands, in cases for application of original
registration of land is a mandatory requirement, and that
failure to comply with such requirement is fatal to ones
application for registration. However, such pronouncement
need not be taken as an iron clad rule nor to be applied
strictly in all cases without due regard to the rationale behind
the submission of the tracing cloth plan.
x x x:
xxxx
As long as the identity of and location of the lot can be
established by other competent evidence like a duly approved
blueprint copy of the advance survey plan of Lot 8499 and
technical description of Lot 8499, containing and identifying
the boundaries, actual area and location of the lot, the
presentation of the original tracing cloth plan may be
excused.18

Espinosa failed to prove by competent evidence that the

subject property is alienable and disposable; (b) jurisprudence
dictates that a survey plan identifies the property in
preparation for a judicial proceeding but does not convert the
property into alienable, much less, private; (c) under Section
17 of P.D. No. 1529, the submission of the original tracing
cloth plan is mandatory to determine the exact metes and
bounds of the property; and (d) a blueprint copy of the survey
plan may be admitted as evidence of the identity and location
of the property only if it bears the approval of the Director of
Lands.
Issues
The resolution of the primordial question of whether Espinosa
has acquired an imperfect title over the subject property that
is worthy of confirmation and registration is hinged on the
determination of the following issues:
a. whether the blueprint of the advanced survey plan
substantially complies with Section 17 of P.D. No. 1529; and
b. whether the notation on the blueprint copy of the plan
made by the geodetic engineer who conducted the survey
sufficed to prove that the land applied for is alienable and
disposable.
Our Ruling
The lower courts were unanimous in holding that Espinosas
application is anchored on Section 14(1) of P.D. No. 1529 in
relation to Section 48(b) of the PLA and the grant thereof is
warranted in view of evidence supposedly showing his
compliance with the requirements thereof.
This Court is of a different view.
Based on Espinosas allegations and his supporting
documents, it is patent that his claim of an imperfect title over
the property in question is based on Section 14(2) and not
Section 14(1) of P.D. No. 1529 in relation to Section 48(b) of
the PLA. Espinosa did not allege that his possession and that
of his predecessor-in-interest commenced on June 12, 1945 or
earlier as prescribed under the two (2) latter provisions. On
the contrary, Espinosa repeatedly alleged that he acquired
title thru his possession and that of his predecessor-ininterest, Isabel, of the subject property for thirty (30) years, or
through prescription. Therefore, the rule that should have
been applied is Section 14(2) of P.D. No. 1529, which states:
Sec. 14. Who may apply. The following persons may file in
the proper Court of First Instance an application for
registration of title to land, whether personally or through
their duly authorized representatives:
xxxx

Moreover, the CA ruled that Espinosa had duly proven that the
property is alienable and disposable:

(2) Those who have acquired ownership of private lands by

prescription under the provision of existing laws.

Espinosa has established that Lot 8499 is alienable and

disposable. In the duly approved Advance Survey Plan As-070000893 (sic) duly approved by the Land Management
Services, DENR, Region 7, Cebu City, it is certified/verified
that the subject lot is inside the alienable and disposable area
of the disposable and alienable land of the public domain.19

Obviously, the confusion that attended the lower courts

disposition of this case stemmed from their failure to apprise
themselves of the changes that Section 48(b) of the PLA
underwent over the years. Section 48(b) of the PLA originally
states:

Petitioner moved for reconsideration but this was denied by

the CA in its Resolution20 dated February 13, 2006.
Petitioners Case
Petitioner entreats this Court to reverse and set aside the CAs
assailed decision and attributes the following errors: (a)

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 claims and the issuance of a certificate of
title therefor, under the Land Registration Act, to wit:

xxxx
(b) Those who by themselves or through their predecessorsin-interest have been in the open, continuous, exclusive and
notorious possession and occupation of agricultural lands of
the public domain, under a bona fide claim of acquisition or
ownership, except as against the Government, since July
twenty-sixth, eighteen hundred and ninety-four, 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.
Thus, the required possession and occupation for judicial
confirmation of imperfect title was since July 26, 1894 or
earlier.
On June 22, 1957, Republic Act (R.A.) No. 1942 amended
Section 48(b) of the PLA by providing a thirty (30)-year
prescriptive period for judicial confirmation of imperfect title.
Thus:
(b) Those who by themselves or through their predecessorsin-interest have been in the 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.
On January 25, 1977, P.D. No. 1073 was issued, changing the
requirement for possession and occupation for a period of
thirty (30) years to possession and occupation since June 12,
1945 or earlier. Section 4 of P.D. No. 1073 states:
Sec. 4. The provisions of Section 48(b) and Section 48(c),
Chapter VIII of the Public Land Act are hereby amended in the
sense that these provisions shall apply only to alienable and
disposable lands of the public domain which have been in
open, continuous, exclusive and notorious possession and
occupation by the applicant himself or thru his predecessor-ininterest, under a bona fide claim of acquisition of ownership,
since June 12, 1945.
On June 11, 1978, P.D. No. 1529 was enacted. Notably, the
requirement for possession and occupation since June 12,
1945 or earlier was adopted under Section 14(1) thereof.
P.D. No. 1073, in effect, repealed R.A. No. 1942 such that
applications under Section 48(b) of the PLA filed after the
promulgation of P.D. No. 1073 should allege and prove
possession and occupation that dated back to June 12, 1945
or earlier. However, vested rights may have been acquired
under Section 48(b) prior to its amendment by P.D. No. 1073.
That is, should petitions for registration filed by those who had
already been in possession of alienable and disposable lands
of the public domain for thirty (30) years at the time P.D. No.
1073 was promulgated be denied because their possession
commenced after June 12, 1945? In Abejaron v. Nabasa,21 this
Court resolved this legal predicament as follows:
However, as petitioner Abejarons 30-year period of
possession and occupation required by the Public Land Act, as
amended by R.A. 1942 ran from 1945 to 1975, prior to the
effectivity of P.D. No. 1073 in 1977, the requirement of said
P.D. that occupation and possession should have started on
June 12, 1945 or earlier, does not apply to him. As the Susi
doctrine holds that the grant of title by virtue of Sec. 48(b)
takes place by operation of law, then upon Abejarons
satisfaction of the requirements of this law, he would have

already gained title over the disputed land in 1975. This

follows the doctrine laid down in Director of Lands v.
Intermediate Appellate Court, et al., that the law cannot
impair vested rights such as a land grant. More clearly stated,
"Filipino citizens who by themselves or their predecessors-ininterest have been, prior to the effectivity of P.D. 1073 on
January 25, 1977, in open, continuous, exclusive and
notorious possession and occupation of agricultural lands of
the public domain, under a bona fide claim of acquisition of
ownership, for at least 30 years, or at least since January 24,
1947" may apply for judicial confirmation of their imperfect or
incomplete title under Sec. 48(b) of the Public Land
Act.22 (Citations omitted)
Consequently, for one to invoke Section 48(b) and claim an
imperfect title over an alienable and disposable land of the
public domain on the basis of a thirty (30)-year possession
and occupation, it must be demonstrated that such
possession and occupation commenced on January 24, 1947
and the thirty (30)-year period was completed prior to the
effectivity of P.D. No. 1073.
There is nothing in Section 48(b) that would suggest that it
provides for two (2) modes of acquisition. It is not the case
that there is an option between possession and occupation for
thirty (30) years and possession and occupation since June 12,
1945 or earlier. It is neither contemplated under Section 48(b)
that if possession and occupation of an alienable and
disposable public land started after June 12, 1945, it is still
possible to acquire an imperfect title if such possession and
occupation spanned for thirty (30) years at the time of the
filing of the application.
In this case, the lower courts concluded that Espinosa
complied with the requirements of Section 48(b) of the PLA in
relation to Section 14(1) of P.D. No. 1529 based on supposed
evidence that he and his predecessor-in-interest had been in
possession of the property for at least thirty (30) years prior to
the time he filed his application. However, there is nothing on
record showing that as of January 25, 1977 or prior to the
effectivity of P.D. No. 1073, he or Isabel had already acquired
title by means of possession and occupation of the property
for thirty (30) years. On the contrary, the earliest tax
declaration in Isabels name was for the year 1965 indicating
that as of January 25, 1977, only twelve (12) years had lapsed
from the time she first came supposedly into possession.
The CAs reliance on Director of Lands v. Intermediate
Appellate Court23 is misplaced considering that the application
therein was filed on October 20, 1975 or before the effectivity
of P.D. No. 1073. The same can be said with respect to
National Power Corporation v. Court of Appeals.24 The petition
for registration therein was filed on August 21, 1968 and at
that time, the prevailing rule was that provided under Section
48(b) as amended by R.A. No. 1942.
In Republic v. Court of Appeals,25 the applicants therein
entered into possession of the property on June 17, 1978 and
filed their application on February 5, 1987. Nonetheless, there
is evidence that the individuals from whom the applicant
purchased the property, or their predecessors-in-interest, had
been in possession since 1937. Thus, during the effectivity of
Section 48(b) as amended by R.A. No. 1942, or while the
prevailing rule was possession and occupation for thirty (30)
years, or prior to the issuance of P.D. No. 1073, the thirty (30)year prescriptive period was already completed.
Thus, assuming that it is Section 48(b) of the PLA in relation to
Section 14(1) of P.D. No. 1529 that should apply in this case,
as the lower courts held, it was incumbent upon Espinosa to
prove, among other things, that Isabels possession of the
property dated back at least to June 12, 1945. That in view of

the established fact that Isabels alleged possession and

occupation started much later, the lower courts should have
dismissed Espinosas application outright.
In sum, the CA, as well as the MTC, erred in not applying the
present text of Section 48(b) of the PLA. That there were
instances wherein applications were granted on the basis of
possession and occupation for thirty (30) years was for the
sole reason discussed above. Regrettably, such reason does
not obtain in this case.
Being clear that it is Section 14(2) of P.D. No. 1529 that should
apply, it follows that the subject property being supposedly
alienable and disposable will not suffice. As Section 14(2)
categorically provides, only private properties may be
acquired thru prescription and under Articles 420 and 421 of
the Civil Code, only those properties, which are not for public
use, public service or intended for the development of
national wealth, are considered private. In Heirs of Mario
Malabanan v. Republic,26 this Court held that there must be an
official declaration to that effect before the property may be
rendered susceptible to prescription:
Nonetheless, Article 422 of the Civil Code states that
"property of public dominion, when no longer intended for
public use or for public service, shall form part of the
patrimonial property of the State." It is this provision that
controls how public dominion property may be converted into
patrimonial property susceptible to acquisition by prescription.
After all, Article 420(2) makes clear that those property "which
belong to the State, without being for public use, and are
intended for some public service or for the development of
the national wealth" are public dominion property. For as long
as the property belongs to the State, although already
classified as alienable or disposable, it remains property of the
public dominion if when it is "intended for some public service
or for the development of the national wealth." (Emphasis
supplied)
Accordingly, there must be an express declaration by the
State that the public dominion property is no longer intended
for public service or the development of the national wealth or
that the property has been converted into patrimonial.
Without such express declaration, the property, even if
classified as alienable or disposable, remains property of the
public dominion, pursuant to Article 420(2), and thus
incapable of acquisition by prescription. It is only when such
alienable and disposable lands are expressly declared by the
State to be no longer intended for public service or for the
development of the national wealth that the period of
acquisitive prescription can begin to run. Such declaration
shall be in the form of a law duly enacted by Congress or a
Presidential Proclamation in cases where the President is duly
authorized by law.27
Thus, granting that Isabel and, later, Espinosa possessed and
occupied the property for an aggregate period of thirty (30)
years, this does not operate to divest the State of its
ownership. The property, albeit allegedly alienable and
disposable, is not patrimonial. As the property is not held by
the State in its private capacity, acquisition of title thereto
necessitates observance of the provisions of Section 48(b) of
the PLA in relation to Section 14(1) of P.D. No. 1529 or
possession and occupation since June 12, 1945. For
prescription to run against the State, there must be proof that
there was an official declaration that the subject property is
no longer earmarked for public service or the development of
national wealth. Moreover, such official declaration should
have been issued at least ten (10) or thirty (30) years, as the
case may be, prior to the filing of the application for
registration. The period of possession and occupation prior to
the conversion of the property to private or patrimonial shall

not be considered in determining completion of the

prescriptive period. Indeed, while a piece of land is still
reserved for public service or the development of national
wealth, even if the same is alienable and disposable,
possession and occupation no matter how lengthy will not
ripen to ownership or give rise to any title that would defeat
that of the States if such did not commence on June 12, 1945
or earlier.
At any rate, as petitioner correctly pointed out, the notation
on the survey plan does not constitute incontrovertible
evidence that would overcome the presumption that the
property belongs to the inalienable public domain.
All lands of the public domain belong to the State, which is the
source of any asserted right to any ownership of land. All
lands not appearing to be clearly within private ownership are
presumed to belong to the State. Accordingly, public lands not
shown to have been reclassified or released as alienable
agricultural land, or alienated to a private person by the State,
remain part of the inalienable public domain. The burden of
proof in overcoming the presumption of State ownership of
the lands of the public domain is on the person applying for
registration (or claiming ownership), who must prove that the
land subject of the application is alienable or disposable. To
overcome this presumption, incontrovertible evidence must
be established that the land subject of the application (or
claim) is alienable or disposable.28
In Republic v. Sarmiento,29 this Court reiterated the earlier
ruling in Menguito v. Republic30 that the notation made by a
surveyor-geodetic engineer that the property surveyed is
alienable and disposable is not the positive government act
that would remove the property from the inalienable domain.
Neither it is the evidence accepted as sufficient to controvert
the presumption that the property is inalienable:
To discharge the onus, respondent relies on the blue print
copy of the conversion and subdivision plan approved by the
DENR Center which bears the notation of the surveyorgeodetic engineer that "this survey is inside the alienable and
disposable area, Project No. 27-B. L.C. Map No. 2623, certified
on January 3, 1968 by the Bureau of Forestry."
Menguito v. Republic teaches, however, that reliance on such
a notation to prove that the lot is alienable is insufficient and
does not constitute incontrovertible evidence to overcome the
presumption that it remains part of the inalienable public
domain.
"To prove that the land in question formed part of the
alienable and disposable lands of the public domain,
petitioners relied on the printed words which read: "This
survey plan is inside Alienable and Disposable Land Area,
Project No. 27-B as per L.C. Map No. 2623, certified by the
Bureau of Forestry on January 3, 1968," appearing on Exhibit
"E" (Survey Plan No. Swo-13-000227).
This proof is not sufficient. Section 2, Article XII of the 1987
Constitution, provides: "All lands of the public domain, waters,
minerals, coal, petroleum, and other mineral oils, all forces of
potential energy, fisheries, forests or timber, wildlife, flora and
fauna, and other natural resources are owned by the
State. . . ."
For the original registration of title, the applicant (petitioners
in this case) must overcome the presumption that the land
sought to be registered forms part of the public domain.
Unless public land is shown to have been reclassified or
alienated to a private person by the State, it remains part of
the inalienable public domain. Indeed, "occupation thereof in
the concept of owner, no matter how long, cannot ripen into
ownership and be registered as a title." To overcome such

presumption, incontrovertible evidence must be shown by the

applicant. Absent such evidence, the land sought to be
registered remains inalienable.
In the present case, petitioners cite a surveyor geodetic
engineers notation in Exhibit "E" indicating that the survey
was inside alienable and disposable land. Such notation does
not constitute a positive government act validly changing the
classification of the land in question.
Verily, a mere surveyor has no authority to reclassify lands of
the public domain. By relying solely on the said surveyors
assertion, petitioners have not sufficiently proven that the
land in question has been declared alienable."31 (Citations
omitted and underscoring supplied)
Therefore, even if Espinosas application may not be
dismissed due to his failure to present the original tracing
cloth of the survey plan, there are numerous grounds for its
denial. The blueprint copy of the advanced survey plan may
be admitted as evidence of the identity and location of the
subject property if: (a) it was duly executed by a licensed
geodetic engineer; (b) it proceeded officially from the Land
Management Services (LMS) of the DENR; and (c) it is
accompanied by a technical description of the property which
is certified as correct by the geodetic surveyor who conducted
the survey and the LMS of the DENR. As ruled in Republic v.
Guinto-Aldana,32 the identity of the land, its boundaries and
location can be established by other competent evidence
apart from the original tracing cloth such as a duly executed
blueprint of the survey plan and technical description:

Based on the foregoing, it appears that Espinosa cannot avail

the benefits of either Section 14(1) of P.O. No. 1529 in relation
to Section 48(b) of the PLA or Section 14(2) of P.O. No. 1529.
Applying Section 14(1) of P.O. No. 1529 and Section 48(b) of
the PLA, albeit improper, Espinosa failed to prove that: (a)
Isabel's possession of the property dated back to June 12,
1945 or earlier; and (b) the property is alienable and
disposable. On the other hand, applying Section 14(2) of P.O.
No. 1529, Espinosa failed to prove that the property is
patrimonial. As to whether Espinosa was able to prove that his
possession and occupation and that of Isabel were of the
character prescribed by law, the resolution of this issue has
been rendered unnecessary by the foregoing considerations.
WHEREFORE, premises considered, the petition is GIVEN DUE
COURSE and GRANTED. The Decision dated November 11,
2004 and Resolution dated February 13, 2006 of the Court of
Appeals in CA-G.R. CV No. 72456 are REVERSED and SET
ASIDE and Domingo Espinosa's application for registration of
title over Lot No. 8499 of Cad. 545-D (New) located at
Barangay Cabangahan, Consolacion, Cebu is hereby DENIED
for lack of merit. No pronouncement as to costs.
SO ORDERED.

Yet if the reason for requiring an applicant to adduce in

evidence the original tracing cloth plan is merely to provide a
convenient and necessary means to afford certainty as to the
exact identity of the property applied for registration and to
ensure that the same does not overlap with the boundaries of
the adjoining lots, there stands to be no reason why a
registration application must be denied for failure to present
the original tracing cloth plan, especially where it is
accompanied by pieces of evidencesuch as a duly executed
blueprint of the survey plan and a duly executed technical
description of the propertywhich may likewise substantially
and with as much certainty prove the limits and extent of the
property sought to be registered.33
However, while such blueprint copy of the survey plan may be
offered as evidence of the identity, location and the
boundaries of the property applied for, the notation therein
may not be admitted as evidence of alienability and
disposability. In Republic v. Heirs of Juan Fabio,34 this Court
enumerated the documents that are deemed relevant and
sufficient to prove that the property is already outside the
inalienable public domain as follows:
In Republic v. T.A.N. Properties, Inc., we ruled that it is not
enough for the Provincial Environment and Natural Resources
Office (PENRO) or CENRO to certify that a land is alienable and
disposable. The applicant for land registration must prove that
the DENR Secretary had approved the land classification and
released the land of the public domain as alienable and
disposable, and that the land subject of the application for
registration falls within the approved area per verification
through survey by the PENRO or CENRO. In addition, the
applicant must present a copy of the original classification of
the land into alienable and disposable, as declared by the
DENR Secretary, or as proclaimed by the President. Such copy
of the DENR Secretarys declaration or the Presidents
proclamation must be certified as a true copy by the legal
custodian of such official record.1wphi1 These facts must be
established to prove that the land is alienable and
disposable.35 (Citation omitted)

G.R. No. 198356

April 20, 2015

ESPERANZA SUP APO and the HEIRS OF ROMEO

SUPAPO, namely: ESPERANZA, REX EDWARD, RONALD
TROY, ROMEO, JR., SHEILA LORENCE, all surnamed
SUPAPO, and SHERYL FORTUNE SUPAPOSANDIGAN,Petitioners,
vs.
SPOUSES ROBERTO and SUSAN DE JESUS, MACARIO
BERNARDO, and THOSE PERSONS CLAIMING RIGHTS
UNDER THEM, Respondents.
DECISION
BRION, J.:
We resolve the petition for review on certiorari1 filed by
petitioners Esperanza Supapo and Romeo Supapo2(Spouses
Supapo) to assail the February 25, 2011 decision3 and August
25, 2011 resolution4 of the Court of Appeals (CA) in CA-G.R. SP
No. 111674.
Factual Antecedents
The Spouses Supapo filed a complaint5 for accion publiciana
against Roberto and Susan de Jesus (Spouses de Jesus),
Macario Bernardo (Macario), and persons claiming rights
under them (collectively, the respondents), with the
Metropolitan Trial Court (MeTC) of Caloocan City. The
complaint sought to compel the respondents to vacate a piece
of land located in Novaliches, Quezon City, described as Lot
40, Block 5 (subject lot). The subject lot is covered by Transfer
Certificate of Title (TCT) No. C-284416 registered and titled
under the Spouses Supapos names. The land has an assessed
value of thirty-nine thousand nine hundred eighty pesos
(P39,980.00) as shown in the Declaration of Real Property
Value (tax declaration) issued by the Office of the City
Assessor of Caloocan.7
The Spouses Supapo did not reside on the subject lot. They
also did not employ an overseer but they made sure to visit at
least twice a year.8 During one of their visits in 1992, they saw
two (2) houses built on the subject lot. The houses were built
without their knowledge and permission. They later learned
that the Spouses de Jesus occupied one house while Macario
occupied the other one.9

On April 30, 1999, the CAs dismissal of the criminal case

became final.16
Notwithstanding the dismissal, the Spouses Supapo moved for
the execution of the respondents civil liability, praying that
the latter vacate the subject lot. The Regional Trial Court (RTC)
granted the motion and issued the writ of execution. The
respondents moved for the quashal of the writ but the RTC
denied the same. The RTC also denied the respondents
motion for reconsideration.
The respondents thus filed with the CA a petition for certiorari
to challenge the RTCs orders denying the quashal of the writ
and the respondents motion for reconsideration. 17 The CA
granted the petition and held that with the repeal of the AntiSquatting Law, the respondents criminal and civil liabilities
were extinguished.18 The dispositive portion of the decision
reads: WHEREFORE, premises considered, the petition for
certiorari with prayer for injunction is GRANTED. The orders
dated June 5, 2003 and July 24, 2003 of Branch 131 of the
Regional Trial Court of Caloocan City in Criminal Case No. C45610 are REVERSED and SET ASIDE. Said court is hereby
permanently ENJOINED from further executing or
implementing its decision dated March 18, 1996.
SO ORDERED.
The CA, however, underscored that the repeal of the AntiSquatting Law does not mean that people now have unbridled
license to illegally occupy lands they do not own, and that it
was not intended to compromise the property rights of
legitimate landowners.19 In cases of violation of their property
rights, the CA noted that recourse may be had in court by
filing the proper action for recovery of possession.
The Spouses Supapo thus filed the complaint for accion
publiciana.20
After filing their Answer,21 the respondents moved to set their
affirmative defenses for preliminary hearing22 and argued
that: (1) there is another action pending between the same
parties; (2) the complaint for accion publiciana is barred by
statute of limitations; and (3) the Spouses Supapos cause of
action is barred by prior judgment.
The MeTC Ruling23

The Spouses Supapo demanded from the respondents the

immediate surrender of the subject lot by bringing the dispute
before the appropriate Lupong Tagapamayapa. The Lupon
issued a Katibayan Upang Makadulog sa Hukuman (certificate
to file action) for failure of the parties to settle amicably. 10

The MeTC denied the motion to set the affirmative defenses

for preliminary hearing. It ruled that the arguments advanced
by the respondents are evidentiary in nature, which at best
can be utilized in the course of the trial. The MeTC likewise
denied the respondents motion for reconsideration.

The Spouses Supapo then filed a criminal case11 against the

respondents for violation of Presidential Decree No. 772 or the
Anti-Squatting Law.12 The trial court convicted the
respondents. The dispositive portion of the decision reads:

From the MeTCs ruling, the respondents filed a petition for

certiorari with the RTC.24

WHEREFORE, in view of all the foregoing, this Court finds

accused ROBERTO DE JESUS, SUSAN DE JESUS and MACARIO
BERNARDO, GUILTY beyond reasonable doubt for Violation of
Presidential Decree No. 772, and each accused is hereby
ordered to pay a fine of ONE THOUSAND PESOS (P1,000.00),
and to vacate the subject premises.

The RTC granted the petition for certiorari on two grounds,

viz.: (i) the action has prescribed; and (ii) accion publiciana
falls within the exclusive jurisdiction of the RTC.

SO ORDERED.13 (Emphasis supplied.)

The respondents appealed their conviction to the CA. 14 While
the appeal was pending, Congress enacted Republic Act (RA)
No. 8368, otherwise known as "An Act Repealing Presidential
Decree No. 772," which resulted to the dismissal of the
criminal case.15

The RTC Ruling25

It held that in cases where the only issue involved is

possession, the MeTC has jurisdiction if the action for forcible
entry or unlawful detainer is filed within one (1) year from the
time to demand to vacate was made. Otherwise, the
complaint for recovery of possession should be filed before
the RTC.
The dispositive portion of the RTC decision reads:
WHEREFORE, premises considered, the instant petition is
hereby GRANTED.

The Orders dated October 24, 2008 and February 23, 2009 are
hereby declared NULL and VOID.
The Public Respondent is hereby directed to DISMISS Civil
Case No. 08-29245 for lack of jurisdiction.
SO ORDERED.26
In their motion for reconsideration,27 the Spouses Supapo
emphasized that the courts jurisdiction over an action
involving title to or possession of land is determined by its
assessed value; that the RTC does not have an exclusive
jurisdiction on all complaints for accion publiciana; and that
the assessed value of the subject lot falls within MeTCs
jurisdiction.
The RTC denied the petitioners motion for reconsideration.
It held that although the MeTC had jurisdiction based on the
assessed value of the subject lot, the Spouses Supapos cause
of action had already prescribed, the action having been filed
beyond the ten (10)-year prescriptive period under Article 555
of the Civil Code.28 As it was not proven when the actual
demand to vacate was made, the RTC ruled that the reckoning
period by which the ejectment suit should have been filed is
counted from the time the certificate to file action was issued.
The certificate to file action was issued on November 25,
1992,while the complaint for accion publiciana was filed only
on March 7, 2008, or more than ten (10) years thereafter.
Dissatisfied with the RTC ruling, the Spouses Supapo appealed
to the CA.29
The CA Ruling

30

The CA dismissed the appeal and held that the complaint for
accion publiciana should have been lodged before the RTC
and that the period to file the action had prescribed.
The dispositive portion of the CA decision reads:
WHEREFORE, the appeal is DENIED. The Decision dated June
30, 2009 and Order dated October 19, 2009 are AFFIRMED.
SO ORDERED.
The Spouses Supapo moved31 but failed32 to secure a
reconsideration of the CA decision; hence, they came to us
through the present petition.
The Petition
In seeking reversal of the CAs ruling, the Spouses Supapo
essentially argue that:
(1) the MeTC exercises exclusive original jurisdiction over
accion publiciana where the assessed value of the property
does not exceed P20,000.00, or P50,000.00 if the property is
located in Metro Manila; and that
(2) prescription had not yet set in because their cause of
action is imprescriptible under the Torrens system.
The Respondents Case33
The respondents argue that the complaint for accion
publiciana was (1) filed in the wrong court; (2) barred by
prescription; and (3) barred by res judicata.
Issues
The issues for resolution are:
I. Whether the MeTC properly acquired jurisdiction;

II. Whether the cause of action has prescribed; and

III. Whether the complaint for accion publiciana is barred by
res judicata.
Our Ruling
The petition is meritorious.
We hold that: (1) the MeTC properly acquired jurisdiction; (2)
the cause of action has not prescribed; and (3) the complaint
is not barred by res judicata.
Accion Publiciana and the Jurisdiction of the MeTC
Accion publiciana is an ordinary civil proceeding to determine
the better right of possession of realty independent of title. It
refers to an ejectment suit filed after the expiration of one
year from the accrual of the cause of action or from the
unlawful withholding of possession of the realty. 34
In the present case, the Spouses Supapo filed an action for
the recovery of possession of the subject lot but they based
their better right of possession on a claim of ownership.
This Court has held that the objective of the plaintiffs in
accion publiciana is to recover possession only, not
ownership. However, where the parties raise the issue of
ownership, the courts may pass upon the issue to determine
who between the parties has the right to possess the
property.35
This adjudication is not a final determination of the issue of
ownership; it is only for the purpose of resolving the issue of
possession, where the issue of ownership is inseparably linked
to the issue of possession. The adjudication of the issue of
ownership, being provisional, is not a bar to an action
between the same parties involving title to the property. The
adjudication, in short, is not conclusive on the issue of
ownership.36
Thus, while we will dissect the Spouses Supapos claim of
ownership over the subject property, we will only do so to
determine if they or the respondents should have the right of
possession. Having thus determined that the dispute involves
possession over a real property, we now resolve which court
has the jurisdiction to hear the case.
Under Batas Pambansa Bilang 129,37 the jurisdiction of the
RTC over actions involving title to or possession of real
property is plenary.38
RA No. 7691,39 however, divested the RTC of a portion of its
jurisdiction and granted the Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial Courts the
exclusive and original jurisdiction to hear actions where the
assessed value of the property does not exceed Twenty
Thousand Pesos (P20,000.00), or Fifty Thousand Pesos
(P50,000.00), if the property is located in Metro Manila.
Section 1 of RA No. 7691 states:
Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise
known as the "Judiciary Reorganization Act of 1980," is hereby
amended to read as follows:
Section. 19. Jurisdiction in civil cases. - Regional Trial Courts
shall exercise exclusive original jurisdiction:
(2) In all civil actions which involve the title to, or possession
of, real property, or any interest therein, where the assessed
value of the property involved exceeds Twenty thousand
pesos (P20,000.00) or, for civil actions in Metro Manila, where

such value exceeds Fifty thousand pesos (P50,000.00) x x x.

(Emphasis supplied.)
Section 3 of the same law provides:
Section. 3. Section 33 of the same law is hereby amended to
read as follows:
Section. 33. Jurisdiction of Metropolitan Trial Courts, Municipal
Trial Courts and Municipal Circuit Trial Courts in Civil Cases. Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts shall exercise:
xxxx
(3) Exclusive original jurisdiction in all civil actions which
involve title to, or possession of, real property, or any interest
therein where the assessed value of the property or interest
therein does not exceed Twenty thousand pesos (P20,000.00)
or, in civil actions in Metro Manila, where such assessed value
does not exceed Fifty thousand pesos (P50,000.00)exclusive
of interest, damages of whatever kind, attorney's fees,
litigation expenses and costs x x x. (Emphasis supplied.)
In view of these amendments, jurisdiction over actions
involving title to or possession of real property is now
determined by its assessed value.40 The assessed value of real
property is its fair market value multiplied by the assessment
level. It is synonymous to taxable value.41
In Quinagoran v. Court of Appeals,

42

we explained:

[D]oes the RTC have jurisdiction over all cases of recovery of

possession regardless of the value of the property involved?
The answer is no. The doctrine on which the RTC anchored its
denial of petitioner's Motion to Dismiss, as affirmed by the CA
-- that all cases of recovery of possession or accion publiciana
lies with the regional trial courts regardless of the value of the
property -- no longer holds true. As things now stand, a
distinction must be made between those properties the
assessed value of which is below P20,000.00, if outside Metro
Manila; and P50,000.00, if within.43 (Emphasis supplied.)
In this regard, the complaint must allege the assessed value
of the real property subject of the complaint or the interest
thereon to determine which court has jurisdiction over the
action. This is required because the nature of the action and
the court with original and exclusive jurisdiction over the
same is determined by the material allegations of the
complaint, the type of relief prayed for by the plaintiff, and
the law in effect when the action is filed, irrespective of
whether the plaintiffs are entitled to some or all of the claims
asserted therein.44
In the present case, the Spouses Supapo alleged that the
assessed value of the subject lot, located in Metro Manila,
is P39,980.00. This is proven by the tax declaration45 issued
by the Office of the City Assessor of Caloocan. The
respondents do not deny the genuineness and authenticity of
this tax declaration.
Given that the Spouses Supapo duly complied with the
jurisdictional requirements, we hold that the MeTC of Caloocan
properly acquired jurisdiction over the complaint for accion
publiciana. The cause of action has not prescribed
The respondents argue that the complaint for accion
publiciana is dismissible for being filed out of time.
They invoke Article 555 of the Civil Code, which states:
Art. 555. A possessor may lose his possession:

xxxx
(4) By the possession of another, subject to the provisions of
Article 537, if the new possession has lasted longer than one
year. But the real right of possession is not lost till after the
lapse of ten years. (Emphasis supplied.)
The respondents point out that the Spouses Supapo filed the
complaint for accion publiciana on March 7, 2008 or more
than ten (10) years after the certificate to file action was
issued on November 25, 1992. The respondents contend that
the Spouses Supapo may no longer recover possession of the
subject property, the complaint having been filed beyond the
period provided by law.
Further, while the respondents concede that the Spouses
Supapo hold a TCT over the subject property, and assuming a
Torrens title is imprescriptible and indefeasible, they posit that
the latter have lost their right to recover possession because
of laches.
On their part, the Spouses Supapo admit that they filed the
complaint for accion publiciana more than ten (10) years after
the certificate to file action was issued. Nonetheless, they
argue that their cause of action is imprescriptible since the
subject property is registered and titled under the Torrens
system.
We rule that the Spouses Supapos position is legally correct.
At the core of this controversy is a parcel of land registered
under the Torrens system. The Spouses Supapo acquired the
TCT on the subject lot in 1979.46 Interestingly, the respondents
do not challenge the existence, authenticity and genuineness
of the Supapos TCT.47
In defense, the respondents rest their entire case on the fact
that they have allegedly been in actual, public, peaceful and
uninterrupted possession of the subject property in the
concept of an owner since 1992. The respondents contend
that they built their houses on the subject lot in good faith.
Having possessed the subject lot for more than ten (10) years,
they claim that they can no longer be disturbed in their
possession.48
Under the undisputed facts of this case, we find that the
respondents contentions have no legal basis.
In a long line of cases, we have consistently ruled that lands
covered by a title cannot be acquired by prescription or
adverse possession. We have also held that a claim of
acquisitive prescription is baseless when the land involved is a
registered land because of Article 112649 of the Civil Code in
relation to Act 496 [now, Section 47 of Presidential Decree
(PD) No. 152950 ].51
The Spouses Supapo (as holders of the TCT) enjoy a panoply
of benefits under the Torrens system. The most essential
insofar as the present case is concerned is Section 47 of PD
No. 1529 which states:
Section 47. Registered land not subject to prescriptions. No
title to registered land in derogation of the title of the
registered owner shall be acquired by prescription or adverse
possession.
In addition to the imprescriptibility, the person who holds a
Torrens Title over a land is also entitled to the possession
thereof.52 The right to possess and occupy the land is an
attribute and a logical consequence of ownership. 53 Corollary
to this rule is the right of the holder of the Torrens Title to
eject any person illegally occupying their property. Again, this
right is imprescriptible.54

In Bishop v. CA,55 we held that even if it be supposed that the

holders of the Torrens Title were aware of the of other
persons occupation of the property, regardless of the length
of that possession, the lawful owners have a right to demand
the return of their property at any time as long as the
possession was unauthorized or merely tolerated, if at all.56
Even if the defendant attacks the Torrens Title because of a
purported sale or transfer of the property, we still rule in favor
of the holder of the Torrens Title if the defendant cannot
adduce, in addition to the deed of sale, a duly-registered
certificate of title proving the alleged transfer or sale.
57

A case in point is Umpoc v. Mercado in which we gave

greater probative weight to the plaintiffs TCT vis--vis the
contested unregistered deed of sale of the defendants. Unlike
the defendants in Umpoc, however, the respondents did not
adduce a single evidence to refute the Spouses Supapos TCT.
With more reason therefore that we uphold the indefeasibility
and imprescriptibility of the Spouses Supapos title.

To recall, CA-G.R. SP No. 78649 is the petition for certiorari

filed by the respondents to challenge the RTCs issuance of
the writ enforcing their civil liability (i.e., to vacate the subject
property) arising from their conviction under the AntiSquatting Law. The CA granted the petition and permanently
enjoined the execution of the respondents conviction because
their criminal liability had been extinguished by the repeal of
the law under which they were tried and convicted. It follows
that their civil liability arising from the crime had also been
erased.
The respondents reliance on the principle of res judicatais
misplaced.
Res judicata embraces two concepts: (1) bar by prior
judgment as enunciated in Rule 39, Section 47(b) of the Rules
of Civil Procedure; and (2) conclusiveness of judgment in Rule
39, Section 47(c).62

By respecting the imprescriptibility and indefeasibility of the

Spouses Supapos TCT, this Court merely recognizes the value
of the Torrens System in ensuring the stability of real estate
transactions and integrity of land registration.

"Bar by prior judgment" means that when a right or fact had

already been judicially tried on the merits and determined by
a court of competent jurisdiction, the final judgment or order
shall be conclusive upon the parties and those in privity with
them and constitutes an absolute bar to subsequent actions
involving the same claim, demand or cause of action.63

We reiterate for the record the policy behind the Torrens

System, viz.:

The requisites64 for res judicata under the concept of bar by

prior judgment are:

The Government has adopted the Torrens system due to its

being the most effective measure to guarantee the integrity of
land titles and to protect their indefeasibility once the claim of
ownership is established and recognized. If a person
purchases a piece of land on the assurance that the seller's
title thereto is valid, he should not run the risk of being told
later that his acquisition was ineffectual after all, which will
not only be unfair to him as the purchaser, but will also erode
public confidence in the system and will force land
transactions to be attended by complicated and not
necessarily conclusive investigations and proof of ownership.
The further consequence will be that land conflicts can be
even more abrasive, if not even violent.58

(1) The former judgment or order must be final;

With respect to the respondents defense59 of laches, suffice it

to say that the same is evidentiary in nature and cannot be
established by mere allegations in the pleadings.60 In other
words, the party alleging laches must adduce in court
evidence proving such allegation. This Court not being a trier
of facts cannot rule on this issue; especially so since the lower
courts did not pass upon the same.
Thus, without solid evidentiary basis, laches cannot be a valid
ground to deny the Spouses Supapo's petition.61On the
contrary, the facts as culled from the records show the clear
intentof the Spouses Supapo to exercise their right over and
recover possession of the subject lot, viz.: (1) they brought
the dispute to the appropriate Lupon; (2) they initiated the
criminal complaint for squatting; and (3) finally, they filed the
accion publiciana. To our mind, these acts negate the
allegation of laches.
With these as premises, we cannot but rule that the Spouses
Supapos right to recover possession of the subject lot is not
barred by prescription.
The action is not barred by prior judgment
As a last-ditch effort to save their case, the respondents
invoke res judicata. They contend that the decision of the CA
in CA-G.R. SP No. 78649 barred the filing of the accion
publiciana.

(2) It must be a judgment on the merits;

(3) It must have been rendered by a court having jurisdiction
over the subject matter and the parties; and
(4) There must be between the first and second actions,
identity of parties, subject matter, and cause of action.
Res judicata is not present in this case.
While requisites one to three may be present, it is obvious
that the there is no identity of subject matter, parties and
causes of action between the criminal case prosecuted under
the Anti-Squatting Law and the civil action for the recovery of
the subject property.
First, there is no identity of parties. The criminal complaint,
although initiated by the Spouses Supapo, was prosecuted in
the name of the people of the Philippines. The accion
publiciana, on the other hand, was filed by and in the name of
the Spouses Supapo.
Second, there is no identity of subject matter. The criminal
case involves the prosecution of a crime under the AntiSquatting Law while the accion publiciana is an action to
recover possession of the subject property.
And third, there is no identity of causes of action. The people
of the Philippines filed the criminal case to protect and
preserve governmental interests by prosecuting persons who
violated the statute. The Spouses Supapo filed the accion
publiciana to protect their proprietary interests over the
subject property and recover its possession.
Even casting aside the requirement of identity of causes of
action, the defense of res judicata has still no basis.
The concept of "conclusiveness of judgment" does not require
that there is identity of causes of action provided that there is
identity of issue and identity of parties.65
Under this particular concept of res judicata, any right, fact, or
matter in issue directly adjudicated or necessarily involved in

the determination of an action before a competent court in

which judgment is rendered on the merits is conclusively
settled by the judgment therein and cannot again be litigated
between the parties and their privies, whether or not the
claim, demand, purpose, or subject matter of the two actions
is the same.66
As already explained, there is no identity of parties between
the criminal complaint under the Anti-Squatting law and the
civil action for accion publiciana. For this reason alone,
"conclusiveness of judgment" does not apply.
Even if we assume, for the sake of argument, that there is
identity of parties, "conclusiveness of judgment" still does not
apply because there is no identity of issues. The issue in the
criminal case is whether the respondents (accused therein)
committed the crime alleged in the information, while the only
issue in accion publiciana is whether the Spouses Supapo
have a better right than the respondents to possess and
occupy the subject property.1wphi1
For all these reasons, the defense of res judicata is baseless.
Final Note
As a final note, we stress that our ruling in this case is limited
only to the issue of determining who between the parties has
a better right to possession. This adjudication is not a final
and binding determination of the issue of ownership. As such,
this is not a bar for the parties or even third persons to file an
action for the determination of the issue of ownership.
WHEREFORE, premises considered, we GRANT the petition,
and consequently REVERSE and SET ASIDE the February 25,
2011 decision and August 25, 2011 resolution of the Court of
Appeals in CA-G.R. SP No. 111674.
SO ORDERED.

10

G.R. No. 170671, August 19, 2015

FILADELFA T. LAUSA, LORETA T. TORRES, PRIMITIVO
TUGOT AND ANACLETO T.
CADUHAY, Petitioners, v. MAURICIA QUILATON, RODRIGO
Q. TUGOT, PURIFICACION T. CODILLA, TEOFRA T.
SADAYA, ESTRELLITA T. GALEOS AND ROSITA T.
LOPEZ, Respondents.
DECISION
BRION, J.:
Before us is a Petition for review on certiorari assailing the
Court of Appeals (CA) Decision in CA-G.R. CV No. 63248. The
CA reversed the decision of the Regional Trial Court (RTC) of
Cebu City, Branch 15 in Civil Case No. CEB - 17857, and.
upheld the validity of Transfer Certificate Title (TCT) No. 571.
Factual Antecedents

ownership over Lot 571: first, Rodrigo, on March 23, 1995,

mortgaged TCT No. 130517 to Lopez as security for a loan he
obtained from the latter. Rodrigo subsequently defaulted on
his loan, prompting the foreclosure of TCT No. 130517. The
land covered by TCT No. 130517 was thereafter sold by public
auction to Lopez, for which she was issued TCT No. 143511 on
March 31, 1997.
Second, Mauricia's children filed a complaint for ejectment
against the petitioners, docketed as Civil Case No. R-35137,
on August 4, 1995.
In response, the petitioners filed Civil Case No. CEB-17857 for
the annulment of TCT No. 571 and the subsequent titles that
originate from TCT No. 571, as well as criminal complaints 2 for
falsification and perjury against the respondents.
The Regional Trial Court's ruling

The main issue in the present case involves the title to Lot No.
557, a parcel of land situated in V. Ranudo and D. Jakosalem
Streets, Cogon Central, Cebu City.

The RTC found TCT No. 571 to be a forgery, and declared it

and all titles originating from it to be null and void ab initio.
The RTC gave the following reasons as basis for this
conclusion:

The petitioners and the respondents are relatives residing in

Lot No. 557.

First, the RTC noted several discrepancies in TCT No. 571

indicating that it is a forgery, viz.:

Petitioners Filadelfa T. Lausa, Loreta T. Torres, Primitivo Tugot,

and Anacleto T. Caduhay are the cousins of respondents
Rodrigo Tugot, Purificacion Codilla, Teofra Sadaya, and
Estrellita Galeos; while Mauricia Quilaton is the respondents'
mother and the petitioners' aunt-in-law.

(i) The TCTs issued before and after TCT No. 571, that is, TCT
No. 570 and TCT No. 572, both use a different and more
recent form than TCT No. 571. TCT Nos. 570 and 572 use
Judicial Form No. 109, which was issued in June 1945, while
TCT No. 571 uses Judicial Form No. 140-D, which was issued
in April 1936.

The respondent Rosita T. Lopez, on the other hand, acquired

the rights of Rodrigo when he mortgaged Lot No. 557-A, a
portion of Lot No. 557, to her. Rodrigo subsequently defaulted
on his loan.
The petitioners and respondents, with the exception of
Mauricia and Rosita, are all grandchildren of Alejandro Tugot.
Alejandro had possessed Lot No. 557 since September 13,
1915, after it was assigned to him by Martin Antonio.
Lot No. 557 formed part of the Banilad Friar Estate Lands,
which had been bought by the government through Act No.
1120 for distribution to its occupants. Antonio had initially
been Lot No. 557's beneficiary, but subsequently assigned his
rights over Lot No. 557 to Alejandro.
Since then, Alejandro possessed Lot No. 557 until his death;
thereafter, his children and grandchildren continued to reside
in the lot. The present controversy arose when the
respondents, claiming to be its registered owners, attempted
to eject the petitioners from Lot No. 557.
On January 1993, Mauricia filed before the RTC of Cebu City
Branch 17 a petition for the issuance of a new owner's
duplicate of TCT No. 571, which purportedly covers Lot No.
557. Mauricia claimed to own TCT No. 571, but lost her
owner's duplicate during a strong typhoon sometime in 1946.
The RTC, after due hearing, granted Quilaton's petition and
directed the issuance of a new owner's duplicate of TCT No.
571.
On September 27, 1994, Mauricia donated Lot No. 557 to her
children Rodrigo, Purificacion, Teofra and Estrellita. Thus, TCT
No. 571 was cancelled, and re-issued as TCT Nos. 130517,
130518, 130519, 130520 and 130521 in the names of
Mauricia's children.1cralawrednad
Mauricia's children subsequently performed several acts of

(ii TCT Nos. 570 and 572 was signed by Martina L. Arnoco as
) Register of Deeds, while TCT No. 571 was signed by
Gervasio Lavilles as Acting Register of Deeds.

(iii There are distinct differences in Lavilles' signature as it

) appears in TCT No. 571 from his signatures in other TCTs,
such as TCT Nos. 525 and 526.
Second, Mauricia's previous acts show that she
acknowledged Alejandro's ownership over Lot No. 557. Prior to
instituting a petition for issuance of a new owner's duplicate in
1993, Mauricia had been paying Alejandro (and subsequently
Aurea) contributions for the real estate taxes due on Lot No.
557.
Third, Mauricia exercised acts of full ownership over Lot No.
557 only in 1994, after she had filed a petition for the
issuance of a new owner's duplicate, even as she claimed to
have owned the lot since 1946.
Fourth, Mauricia failed to present evidence showing how she
acquired title to Lot No. 557. If indeed the land was purchased
from Martin Antonio, she could have secured a copy of its
document of sale from the Archives Office, Manila.
Additionally, the RTC held that the petitioners had better title
to Lot No. 557 than the respondents. The RTC found that Lot
No. 557 had been in the possession of Alejandro since
September 13, 1915, when the lot's owner, Martin Antonio,
executed a Deed of Assignment in favor of Alejandro. This
conveyance, together with Alejandro and his heirs' continuous
payment of Lot No. 557's real estate taxes since 1928,
amounts to more than thirty years of adverse possession, so

11

that ownership over the lot vested in him.

As Alejandro's heirs, both the petitioners and respondents are
entitled to a share in Lot No. 557.
Lastly, the RTC declared Lopez's TCT No. 143511, which she
acquired when she purchased TCT No. 130517, to be null and
void. TCT No. 130517 covers Lot No. 557-A, and had been
annotated with a Notice of Lis Pendens at the time Lopez
purchased it. Thus, Lopez had knowledge of the dispute over
the ownership of the lot she bought, and could not claim the
defense of a purchaser in good faith. She acquired no greater
title to the lot than Rodrigo, who mortgaged TCT No. 130517.
The respondents filed a motion for reconsideration contesting
the RTC's decision. After the RTC denial of the motion, the
respondents appealed to the CA.
The Court of Appeals' ruling
The CA reversed the RTC's decision, and upheld the validity of
TCT No. 571 and all the titles originating from it.
In upholding the validity of TCT No. 571 (and all the titles
originating from it), the CA emphasized the existence of a
copy of TCT No. 571 in the custody of the Office of the
Register of Deeds of Cebu City, and noted that it is presumed
by law to have been issued in a regular manner. The
application of this presumption is called for by the purpose of
the Torrens system, which is to promote the stability and
integrity of land titles.
According to the CA, the petitioners have failed to disprove
this presumption of regularity. The pieces of evidence that the
petitioners presented (i.e., the tax receipts and Antonio's
Deed of Assignment of Lot No. 557 to Alejandro) do not prove
with clear, positive, and convincing evidence that TCT No. 571
had been fraudulently issued. The payment of real estate
taxes over Lot No. 557 does not prove ownership. The Deed of
Assignment, on the other hand, had been subsequently
cancelled, as shown by the Friar Lands Sale Certificate
Register on file with the DENR. It proves that the lot had been
earlier assigned to Alejandro, but because the assignment
was canceled, the ownership of Lot No. 557 remained with
Antonio.
The CA also noted that the lot that Alejandro appears to have
owned was not Lot No. 557 but Lot No. 357. The description of
Lot No. 557 - as set forth by the petitioners in their original
complaint - substantially varies from the actual and precise
technical description of Lot No. 557. Additionally, some of the
documentary evidence in the case (such as tax declarations,
tax receipts and notices of tax delinquency) show that what
Alejandro owned was Lot No. 357, not Lot No. 557.
The CA also pointed out that Alejandro could not have
acquired Lot 557 through acquisitive prescription for two
reasons: first, Mauricia had been in possession of the
property since 1946; and second, a lot registered under the
Torrens system cannot be acquired through acquisitive
prescription. Records show that the lands comprising the
Banilad Friar Lands Estate, of which Lot No. 557 was a part,
had been brought under the operation of the Torrens system
on September 23, 1913.
The CA found Lopez to be an innocent purchaser for value.
Applying the Court's ruling in Bank of the Philippine Islands v.
Noblejas, the CA held that Lopez's good faith as a mortgagee
extends to her eventual purchase of the lot during its
foreclosure. Since TCT No. 130517 had no notice of any
adverse claim at the time it was mortgaged to Lopez, then the

subsequent annotation of Notice of Lis Pendens prior to TCT

No. 130517's foreclosure should not affect her status as a
mortgagee-in-good-faith. The clean title presented to Lopez at
the time TCT No. 130517 was mortgaged to her maintains this
status at the time of its foreclosure, and cannot be prejudiced
by the subsequent annotation of a claim to it before the lot is
foreclosed.
Lastly, the CA found that the RTC erred when it did not
immediately dismiss the petitioners' complaint, as their cause
of action had been barred by prescription and laches. An
action for the annulment of title to land prescribes in ten
years. The petitioners filed their complaint only on September
20, 1995, almost fifty years after Mauricia had been issued
TCT No. 571 on July 16, 1946. Thus, the petitioners had slept
on their claimed right over Lot 557; consequently, they are
now barred by laches from seeking redress before the courts.
The petitioners filed a motion for reconsideration assailing the
CA's decision, which motion the CA denied. The denial opened
the way for the present petition for review on certiorari before
this Court.
The present petition
In their present petition, the petitioners seek the reversal of
the CA's decision through their assertion that they have
acquired ownership over Lot No. 557 by acquisitive
prescription.
The petitioners claim that the CA committed the following
errors:
First, the CA erred in upholding the validity of TCT No. 571,
which is a fake and fabricated title;
Second, the CA erred in finding that Mauricia owned and
possessed Lot No. 557, as it was Alejandro who exercised acts
of exclusive ownership and possession over the lot since it
was assigned to him in 1915. The lot Antonio assigned to
Alejandro covered Lot No. 557, although earlier tax
declarations indicated the areas of the lot to be Lot No. 357.
This error was corrected in subsequent tax declarations by the
City of Cebu Assessor's Office in 1997.
Third, the CA erred in holding that Lopez is an innocent
purchaser in good faith, as she knew that the portion of Lot
No. 557 being mortgaged to her was in the possession of
Filadelfa, and not Rodrigo. She knew of this possession before
she executed the real estate mortgage contract over the
property with Rodrigo.
Fourth, the CA erred in finding the petitioners' cause of action
barred by prescription and laches, as they discovered the
existence of TCT No. 571 only in August 1995, when Mauricia
and her children instituted ejectment proceedings against
them.
In response, the respondents argue that the petitioners have
no cause of action against them because Alejandro's tax
declarations cover Lot No. 357, and not Lot No. 557, which is
covered by their TCTs. They also cited the CA's decision, and
argued that the CA committed no error of law in upholding the
validity of their TCTs.
Lopez, on the other hand, asserted that her status as an
innocent purchaser or mortgagor in good faith had not been
included in the petitioners' amended complaint including her
as an indispensible party, and should thus not have been
considered as an issue in the case. In any case, Lopez asserts

12

that her title to Lot No. 557-A is valid because she is an

innocent purchaser in good faith.
Issues:
The issues, having been properly joined, present to us the
following questions:
(1 Whether the CA erred in finding that the lot that the
) petitioners claim to own covers Lot No. 357, and not Lot No.
557;

(2 Whether the CA erred in finding that the respondents, and

) not the petitioners, are the owners and possessors of Lot
No. 557;

(3 Whether the CA erred in finding Lopez an innocent

) purchaser in good faith; and

(4 Whether the CA erred in finding the petitioners' cause of

) action to have been barred by prescription and laches.

The Court's Ruling

We find the petition meritorious.
We note at the outset that the Court is not a trier of facts, and
our jurisdiction in cases brought before us from the appellate
court is limited to the review of errors of law.
We have, however, recognized several exceptional situations
that call for a re-evaluation of the CA's factual conclusions,
among them, the situation when the CA's findings are
contrary to that of the trial court, and when the CA manifestly
overlooks relevant facts not disputed by the parties and
which, if properly considered, would lead to a different
conclusion.3cralawrednad
We find these circumstances in the present case, prompting
us to re-examine the records of the case and to reverse the
CA's decision after due consideration of the records.
The CA erred in finding that the lot that the petitioners
claim to own is Lot No. 357, and not Lot No. 557
The CA, in upholding the validity of Mauricia's title and
ownership over Lot No. 557, pointed out that the lot that
Alejandro claimed to own was not Lot No. 557, but Lot No.
357.
The CA based this conclusion on several tax documents in the
name of Alejandro Tugot, which indicate that the lot covered is
Lot No. 357, and not Lot No. 557.

557.
According to Abellana, Lot No. 357 is located in a barangay
different from the address found in Alejandro's tax
declaration. The base map of Cebu locates Lot No. 357 to be
in Barangay Day-as, almost five meters from Sikatuna Street,
while the address in Alejandro's erroneous tax declaration
indicates that Lot No. 357 is located in Jakosalem Street.
Second, records of the Cebu City Assessor's Office show that
Lot No. 357 is covered by another tax declaration with an
address corresponding to the city's base map. In this tax
declaration, Lot No. 357 is owned by a certain Antonio Yap.
Third, the deed of donation4 of Lot No. 558, which adjoins Lot
Nos. 557 and 559, recognized Alejandro Tugot as the owner of
Lot No. 557.
We find that these pieces of evidence sufficiently explain that
the lot in Alejandro and Aurea's tax declarations actually
covered Lot No. 557, and its initial designation as Lot No. 357
was an error. The Assessor's Office of Cebu City, which had
the responsibility of classifying, appraising, and assessing real
property in Cebu, had acknowledged this designation to be
erroneous, and subsequently made rectification. This
acknowledgment is not only entitled to the presumption of
regularity; it is also corroborated by the Deed of Donation of
an adjoining lot.
Additionally, we also found other pieces of evidence
supporting the conclusion of the Cebu City Assessor's Office.
The tax declarations in Alejandro and (subsequently) Aurea's
names indicate that they covered the same address as the Lot
No. 557 described in the Deed of Assignment that Antonio
executed in Alejandro's favor in 1915. The identity of the
addresses in these two documents show that what the
petitioners intended to pay real property tax for, was the lot
covered in the Deed of Assignment, which was Lot No. 557.
Thus, the tax declarations that placed Lot No. 357 under
Alejandro's name actually pertained to the lot covered by Lot
No. 557; its designation as covered by Lot No. 357 was an
error that the Cebu City Assessor's Office eventually
discovered and corrected.
In the same vein, the court-approved subdivision plan for Lot
No. 557 indicated it to be found along Jakosalem Street, the
address of the lot covered by Alejandro and Aurea's tax
declarations. The plan was commissioned for Alejandro and
his children, including Romualdo (Mauricia's husband and the
father of her children), in 1960. That the address of Lot No.
557 in the subdivision plan is identical to the address in
Alejandro and Aurea's tax declarations establishes that what
they actually claim to own is Lot No. 557, and not Lot No. 357.
With this foundation established, we now resolve the issue of
who among them have the better right over Lot No. 557.
The CA erred in finding that the petitioners failed to
prove that TCT No. 571 is a fabricated title

In so doing, the CA overlooked several key pieces of evidence

presented before the RTC, which had led the latter to conclude
that the designation of Lot No. 357 in Alejandro's tax
declarations actually pertained to Lot No. 557. These pieces of
evidence are as follows:

In upholding the validity of Mauricia's TCT No. 571, the CA

held that the petitioners failed to overcome the presumption
of regularity that attended its issuance. The CA emphasized
that a copy of TCT No. 571 is currently with the Register of
Deeds, and that the documents that the petitioners presented
do not prove their ownership over the lot.

First, the testimony of Mr. Antonio Abellana of the City of

Cebu Assessor's Office established that he issued a
Certification of Correction to change Alejandro's tax
declarations, which initially covered Lot No. 357, to Lot No.

The CA's conclusion, however, overlooked the evidence that

the petitioners presented before the RTC to prove that TCT No.
571 is a fabricated title. These pieces of evidence include the
TCTs issued immediately before and after TCT No. 571; TCT

13

No. 16534 (the TCT from which TCT No. 571 allegedly
originated); and several TCTs that contain the signature of the
Acting Register of Deeds who signed TCT No. 571. Taken
together, all these pieces of evidence sufficiently prove, by
preponderance of evidence, that TCT No. 571 is a fabricated
title.
We cite with approval the RTC's factual observations and
conclusions, viz:
First, the text of TCT No. 571 contains glaring discrepancies
with TCT No. 16534, the title indicated in TCT No. 571 as its
precursor.
TCT No. 16534 covered a different area from TCT No. 571. TCT
No. 16534 covered Lot 7005-E-2, which has an area of 3,311
square meters, while TCT No. 571 covers Lot No. 557 with an
area of 525 square meters. Too, TCT No. 16534 was issued in
September 1957, or almost ten years after the title it
supposedly gave rise to was issued in 1946.
Second, TCT No. 571 contains discrepancies when compared
with TCT Nos. 570 and 572, the TCTs that were supposedly
issued before and after TCT No. 571. These discrepancies are
as follows:
(i) TCT Nos. 570 and 572 had both been issued on February
26, 1947, almost a year after TCT No. 571 was issued on
July 16, 1946. Since TCT No. 571 was an intervening title
between TCT No. 570 and 572, then it should have also
been issued on February 26, 1947.

(ii TCT No. 571 used an old form, Judicial Form No. 140-D,
) which was revised in June 1945 by Judicial Form No. 109.
Since TCT No. 571 shows that it was issued in 1946, then it
should have used Judicial Form No. 109. Notably, both TCT
Nos. 570 and 572 used the updated Judicial Form No. 109,
as they were issued in 1947.

(ivTCT Nos. 570 and 572 were signed by Martina L. Arnoco as

) Register of Deeds, while TCT No. 571 was signed by
Gervasio Lavilles as Acting Register of Deeds.

(v There are distinct differences in Lavilles' signature as it

) appears in TCT No. 571, compared with his signatures in
other TCTs, such as TCT Nos. 525 and 526.
Additionally, we note that Mauricia's claim that she bought Lot
No. 557 from Antonio is contradicted by the contents of TCT
No. 16534.
For a new TCT to be issued, the owner's duplicate of the seller
should have been surrendered to the Registry of Deeds, along
with a copy of the TCT's Deed of Sale. Thus, the seller's TCT
would be cancelled, and the new TCT of the buyer would
indicate the seller's TCT as its TCT of origin.
The text of TCT No. 571 shows that it originated from TCT No.
16534. If indeed TCT No. 571 was issued to Mauricia because
the latter bought Lot No. 557 from Antonio, then TCT No.
16534 should have reflected this transaction.
However, instead of reflecting Antonio's title to Lot No. 557,
TCT No. 16534 shows that it pertained to a different lot, and
had been issued ten years after the issuance of TCT No.
571 to a certain Crispina Lopez.

The original certificate of title from which TCT No. 571 and TCT
No. 16534 originated are also different: TCT No. 571
originated from Original Certificate of Title (OCT) No. 251-253,
while TCT No. 16534 originated fromOCTNo. 11375.
These discrepancies, taken together with its variations from
the other titles issued around the same time and Mauricia's
failure to present proof of how she acquired the lot from
Antonio, reasonably establish that TCT No. 571 is a fabricated
title.
We now proceed to determine whether Alejandro was Lot No.
557's rightful owner.
The CA erred in relying on a fabricated title as basis to
deny Alejandro's claim to acquisitive prescription
The CA, in reversing the RTC's decision recognizing Alejandro's
ownership over Lot No. 571, held that Lot No. 557 could no
longer be acquired through prescription because it had
already been brought under the Torrens system, in Registry
Book No. A-3.
Registry Book No. A-3 refers to the registry book where OCT
No. 251-253 is registered, as indicated in TCT No. 571. Thus,
the CA concluded that Lot No. 557 has been brought under
the Torrens system because TCT No. 571 is already covered by
the system. But as TCT No. 571 is a fabricated title, the CA
erred in relying on its contents to conclude that Lot No. 557
has already been brought under the Torrens system.
Alejandro Tugot did not acquire Lot No. 557 through
acquisitive prescription
We agree with the CA's conclusion that Lot No. 557 cannot be
acquired through prescription, but for a different reason.
In the present case, the Deed of Assignment between Antonio
and Alejandro was cancelled three months after it was
executed. The Deed, executed on September 13, 1915, was
inscribed with the phrase: "Cancelled December 21, 1915.
See letter # 12332."
Both the trial court and the CA found this inscription to be
sufficient proof that the Deed of Assignment had been
cancelled three months after its execution. As a consequence,
the Deed of Assignment could not have vested Antonio's
rights over Lot No. 557 to Alejandro.
Thus, Lot No. 557 reverted to its original status after the Deed
of Assignment was cancelled. It remained subject to the
conditional sale5 between the government and Antonio; under
the Certificate of Sale between the Bureau of Lands and
Antonio, the government should transfer title to Lot No. 557 to
Antonio upon full payment of the lot's purchase price.
The nature of the contract of sale between Antonio and the
government is in line with Section 15 of Act No. 1120, which
provides for the administration, temporary lease, and sale of
friar lands that the government bought through sections 63 to
65 of "An Act temporarily to provide for the administration of
the affairs of civil government in the Philippine Islands, and for
other purposes." These friar lands included the Banilad Estate
Friar Lands, from where Lot No. 557 originated.
Section 15 of Act No. 1120 that applied to Lot No. 557
provides:cralawlawlibrary
Sec. 15. The Government hereby reserves the title to
each and every parcel of land sold under the

14

provisions of this Act until the full payment of all

installments or purchase money and interest by the
purchaser has been made, and any sale or encumbrance
made by him shall be invalid as against the Government of
the Philippine Islands and shall be in all respects subordinate
to its prior claim.
xxxx
According to jurisprudence, Section 15 of Act No. 1120
reserves to the government the naked title to the friar lands,
until its beneficiaries have fully paid their purchase price.
Since the intent of Act No. 1120 was to transfer ownership of
the friar lands to its actual occupants, the equitable and
beneficial title to the land passes to them the moment the
first installment is paid and a certificate of sale is issued. This
right is subject to the resolutory condition that the sale may
be rescinded if the agreed price shall not be paid in full.
When the Certificate of Sale was executed, Antonio obligated
himself to pay P9.00 as the final installment to purchase Lot
No. 557. His previous lease payments to the lot were applied
as initial installments for the payment of the lot's purchase
price of PI5.16. Upon full payment of the installment and its
annual 4% interest, the government was bound to transfer full
ownership of Lot No. 557 to Antonio under Section 122 of Act
No. 496.
While the records of the case do not show any documents or
paper trail showing the actions of the parties to the Certificate
of Sale after the Deed of Assignment was cancelled, we can,
with certainty, rule out the possibility that Alejandro acquired
title to it through prescription.
Three scenarios could have happened after the Deed of
Assignment was cancelled - all of which forego the possibility
of acquisitive prescription.
First, Antonio could have completed payment of the purchase
price of Lot No. 557. Upon full payment, the lot would have
then been registered in Antonio's name.
The Certificate of Sale between Antonio and the government
requires registration under Section 122 of Act No. 496, or the
Land Registration Act of 1902, for the ownership over Lot No.
557 to be transferred to Antonio. Section 122 of Act No. 496
provides:cralawlawlibrary
Section 122. Whenever public lands in the Philippine Islands
belonging to the Government of the United States or to the
Government of the Philippine Islands are alienated, granted,
or conveyed to persons or to public or private corporations,
the same shall be brought forthwith under the operation of
this Act and shall become registered lands. It shall be the duty
of the official issuing the instrument of alienation, grant, or
conveyance in behalf of the Government to cause such
instrument, before its delivery to the grantee, to be filed with
the register of deeds for the province where the land lies and
to be there registered like other deeds and conveyances,
whereupon a certificate shall be entered as in other cases of
registered land, and an owner's duplicate certificate issued to
the grantee. The deed, grant, or instrument of
conveyance from the Government to the grantee shall
not take effect as a conveyance or bind the land, but
shall operate as a contract between the Government
and the grantee and as evidence of authority to the
clerk or register of deeds to make registration. The act
of registration shall be the operative act to convey and
affect the lands, and in all cases under this Act
registration shall be made in the office of the register
of deeds for the province where the land lies. The fees
for registration shall be paid by the grantee. After due

registration and issue of the certificate and owner's duplicate

such land shall be registered land for all purposes under this
Act.
Thus, the government could have registered the title to Lot
No. 557 in Antonio's name only after he had paid the purchase
price in full. Had Antonio eventually completed the payment
of Lot No. 557's purchase price, it would have been registered
under the Torrens system, through Section 122 of Act No. 496.
Land registered under the Torrens system cannot be acquired
through prescription. As early as 1902, Section 46 of Act No.
496 categorically declared that lands registered under the
Torrens system cannot be acquired by
prescription, viz:cralawlawlibrary
Section 46. No title to registered land in derogation to that of
the registered owner shall be acquired by prescription or
adverse possession.
Second, Antonio could have failed to complete payment of
Lot No. 557's purchase price; thus, the naked title to Lot No.
557 remains with the government.
Under Act No. 1120, the Chief of the Bureau of Public Lands is
required to register title to the friar lands acquired by the
government through Act No. 496. Section 6 of Act No. 1120, in
particular, provides:cralawlawlibrary
SECTION 6. The title, deeds and instruments of conveyance
pertaining to the lands in each province, when executed and
delivered by said grantors to the Government and placed in
the keeping of the Chief of the Bureau of Public Lands, as
above provided, shall be by him transmitted to the register of
deeds of each province in which any part of said lands lies, for
registration in accordance with law. But before transmitting
the title, deeds, and instruments of conveyance in this section
mentioned to the register of deeds of each province for
registration, the Chief of the Bureau of Public Lands shall
record all such deeds and instruments at length in one or
more books to be provided by him for that purpose and
retained in the Bureau of Public Lands, when duly certified by
him shall be received in all courts of the Philippine Islands as
sufficient evidence of the contents of the instrument so
recorded whenever it is not practicable to produce the
originals in court.
The law on land registration at that time was Act No. 496,
which established the Torrens system in the Philippines. As
earlier pointed out, a piece of land, once registered under the
Torrens system, can no longer be the subject of acquisitive
prescription.
No certificate of title pertaining to the government's transfer
of ownership of Lot No. 557 was ever presented in evidence.
Assuming, however, that the Chief of the Bureau of Public
Lands failed to register Lot No. 557, the lot could not have
been acquired by Alejandro through prescription, under the
rule that prescription does not lie against the government.
Third, Antonio could have sold his rights to Lot No. 557 to
another person. Assuming he did, only that person could have
stepped into his shoes, and could have either completed
payment of the purchase price of Lot No. 557 and had it
registered in his name; or, he could have failed to pay the
purchase price in full, in which case the naked title to the lot
remains government property.
In all three scenarios, Alejandro could not have acquired
ownership over Lot No. 557 through prescription.
Republic Act No. 9443 and the friar lands

15

The Court is not unaware of the enactment of Republic Act No.

9443, which confirms the validity of titles covering any portion
of the Banilad Friar Lands with Certificates of Sale and
Assignment of Sale that do not contain the signature of the
then Secretary of the Interior and/or Chief of the Bureau of
Public Lands. It does not apply to TCTs that have been
fraudulently issued and registered.
Republic Act No. 9443, however, does not validate any of the
parties' claims of ownership over Lot No. 557.
Mauricia's title, as earlier established, is fabricated; thus, her
situation falls within the exception expressed under Section 1
of RA No. 9443, viz:cralawlawlibrary
This confirmation and declaration of validity shall in all
respects be entitled to like effect and credit as a decree of
registration, binding the land and quieting the title thereto
and shall be' conclusive upon and against all persons,
including the national government and all branches
thereof; except when, in a given case involving a
certificate of title or a reconstituted certificate of title,
there is a clear evidence that such certificate of title or
reconstituted certificate of title was obtained through
fraud, in which case the solicitor general or his duly
designated representative shall institute the necessary judicial
proceeding to cancel the certificate of title or reconstituted
certificate of title as the case may be, obtained through such
fraud.
With respect to Alejandro, his claim to Lot No. 557 rests on the
Deed of Assignment executed between him and Antonio,
which had been cancelled; hence, it cannot be confirmed
through Republic Act No. 9443.
Effects of the nullity of TCT No. 571
After establishing that neither Mauricia nor Alejandro has title
over Lot No. 557, we now resolve the validity of the TCTs that
originated from TCTNo. 571.
As a general rule, a person transmits only the rights that he
possesses. When innocent third persons, however, purchase
or acquire rights over the property relying on the correctness
of its certificate of title, courts cannot disregard the rights
they acquired and order the cancellation of the certificate. As
the third paragraph of section 53 of Presidential Decree No.
1529, otherwise known as the Property Registration Decree,
provides:cralawlawlibrary
Section 53. xxx
xxxx
In all cases of registration procured by fraud, the owner may
pursue all his legal and equitable remedies against the parties
to such fraud without prejudice, however, to the rights
of any innocent holder for value of a certificate of title.
After the entry of the decree of registration on the original
petition or application, any subsequent registration procured
by the presentation of a forged duplicate certificate of title, or
a forged deed or other instrument, shall be null and void.
Thus, innocent purchasers in good faith may safely rely on the
correctness of the certificate of title issued therefor, and
neither the law nor the courts can oblige them to go behind
the certificate and investigate again the true condition of the
property. They are only charged with notice of the liens and
encumbrances on the property that are noted on the
certificate.

Jurisprudence defines innocent purchaser for value as "one

who buys the property of another, without notice that
some other person has a right or interest in such
property and pays a full price for the same, at the time
of such purchase or before he has notice of the claims or
interest of some other person in the property."
PD 1529 has expanded the definition of an innocent purchaser
for value to include an innocent lessee, mortgagee, or other
encumbrancer for value.
Neither PD 1529 nor jurisprudence, however, has included an
innocent donee to the definition, and for good reason. An
innocent purchaser for value pays for the full price of the
property, while a donee receives the property out of the
donor's liberality. Additionally, what the law does not include,
it excludes, and a donee is not included in the expansion of
the term innocent purchaser for value.
Applying these principles of law in the case at hand, we hold
that the Deed of Donation Mauricia issued in favor of her
children immediately after getting a copy of TCT No. 571 could
not have transferred ownership over Lot No. 557 to her
children. Since TCT No. 571 is a fabricated title, it does not
indicate ownership over Lot No. 557; thus, the Deed of
Donation involving TCT No. 571 could not have conveyed the
ownership of Lot No. 557 to Mauricia's children.
Neither could her children claim the status of an innocent
purchaser in good faith, as they received the property through
donation.
The TCTs issued to Mauricia's children pursuant to the
donation should thus be cancelled, as they do not signify
ownership over Lot No. 557.
We also note several circumstances that cast doubt over the
ignorance of Mauricia's children regarding the fabricated
nature of TCT No. 571, viz: (1) the petitioners are their close
relatives, who have been residing in Lot No. 557 as early as
1928; (2) their father, Romualdo, signed and recognized a
subdivision plan of Lot No. 557 that would divide the lot
among all of Alejandro's heirs, including the petitioners; (3)
their mother executed the deed of donation as soon as she
acquired a copy of TCT No. 571; (4) their mother's
nonpayment of taxes due Lot No. 557 since 1946; and (5) the
payment of real property taxes only to facilitate the
subdivision of Lot No. 557 among them.
Lopez is not an innocent purchaser for value of Lot 5
57-A
We now determine Lopez's claim that she is an innocent
purchaser for value of Lot No. 557-A, and should thus be
allowed to keep her title over it.
The CA, in affirming Lopez's title over Lot No. 557-A, held that
she was an innocent mortgagee for value. According to the
CA, TCT No. 130517 had no encumbrances and liens at the
time it was mortgaged to Lopez, and this status extended to
the time that TCT No. 130517 was foreclosed to answer for
Rodrigo's loan.
We cannot agree with the CA's conclusion.
As a general rule, a person dealing with registered land has a
right to rely on the Torrens certificate of title and to dispense
with the need of further inquiring over the status of the lot.
Jurisprudence has established exceptions to the protection

16

granted to an innocent purchaser for value, such as when the

purchaser has actual knowledge of facts and circumstances
that would compel a reasonably cautious man to inquire into
the status of the lot; or of a defect or the lack of title in his
vendor; or of sufficient facts to induce a reasonably prudent
man to inquire into the status of the title of the property in
litigation.
The presence of anything that excites or arouses suspicion
should then prompt the vendee to look beyond the certificate
and investigate the title of the vendor appearing on the face
of the certificate. One who falls within the exception can
neither be denominated as innocent purchaser for value nor a
purchaser in good faith, and hence does not merit the
protection of the law.
In particular, the Court has consistently held that that a buyer
of a piece of land that is in the actual possession of persons
other than the seller must be wary and should investigate the
rights of those in possession. Without such inquiry, the buyer
can hardly be regarded as a buyer in good faith.
We find that Lopez knew of circumstances that should have
prodded her to further investigate the Lot No. 557-A's status
before she executed a mortgage contract over it with Rodrigo.
In the pre-trial brief she submitted before the trial court,
Lopez made the following admissions:cralawlawlibrary
xxx Only after these checking did an actual inspection of the
properties took (sic) place, but on this occasion, unfortunately,
none of the plaintiffs, especially plaintiff Filadelfa T. Lausa,
who is found lately to be residing nearby, furnished her the
information of the present claims.
She likewise made the same admission in an
affidavit, viz:cralawlawlibrary
6. The properties which were mortgaged were checked and no
one at that time, even plaintiff Filadelfa T. Lausa who is just
residing nearby, disputed that the absolute owners thereof
were the spouses Rodrigo and Ligaya Tugot.
While these admissions pertain to the petitioners' act of not
telling Lopez of the status of Lot No. 557-A, it implies that she
had inspected the property, and accordingly found that
Rodrigo did not reside in Lot No. 557-A.
Records of the case show that Filadelfa resided in Lot No. 557A at the time Lopez executed the real estate mortgage with
Rodrigo. In August 1995, Rodrigo and his siblings filed an
ejectment case against the petitioners Filadelfa Lausa and
Anacleto Caduhay - Filadelfa resides in Lot No. 557-A while
Anacleto's in Lot 557-B. Notably, this ejectment case was filed
five months after Lopez had entered into the real estate
mortgage contract. Thus, at the time Lopez inspected Lot No.
557, she would have found Filadelfa residing in it, and not
Rodrigo.
That Filadelfa - and not Rodrigo - resided in Lot No. 557-A
should have prompted Lopez to make further inquiries over its
status. Further inquiries with the lot owners of surrounding
property could have informed her of its actual status. Instead,
she contented herself with checking the copy of the title to Lot
No. 557-A against the copy in the Registry of Deeds of Cebu,
which she had done prior to the actual inspection of Lot No.
557-A. The law cannot protect Lopez's rights to Lot 557-A
given her complacency.
Further, the status of an innocent-purchaser for value or
innocent mortgagor for value is established by the person
claiming it, an onus probandi that Lopez failed to meet.

In her memorandum, Lopez urged the Court to acknowledge

her rights over Lot No. 557-A, arguing that the declaration of
her status as an innocent-purchaser and innocent mortgagor
is a non-issue because it was never pleaded in her corespondents' amended complaint. She also pointed out that a
valid title can emerge from a fabricated title, and essentially
invoked the innocent purchaser for value doctrine.
The amended complaint alleges that Lopez's status as current
owner of Lot 557-A prejudices the rights of the petitioners,
who are its true owners. The circumstances regarding how
Lopez acquired ownership over Lot No. 557-A had also been
pleaded therein.
Verily, the amended complaint does not need to allege
Lopez's status as an innocent purchaser or mortgagor in good
faith precisely because it was incumbent upon her to allege
and prove this to defend her title to Lot No. 557-A. It merely
needed to allege a cause of action against Lopez, (which it did
by alleging the circumstances surrounding Lopez's ownership
of Lot No. 557-A) and that it prejudices the petitioners' rights
as its true owners.
Further, Lopez chose to ignore in her Memorandum the
petitioners' contention that she knew that Filadelfa Lausa, and
not Rodrigo, resided in Lot No. 557-A. To reiterate, Lopez has
the burden of proving her status as an innocent purchaser for
value in order to invoke its application. Failing in this, she
cannot avail of the protection the law grants to innocent
purchasers for value.
The CA erred in finding that the petitioners' claim of
ownership over Lot No. 557 had been barred by
prescription and laches
The outcome of the present case dispenses with the need for
a discussion regarding extinctive prescription and laches.
We note, however, that the CA erred in applying the principle
of prescription and laches to the petitioners' cause of action
involving Lot No. 557.
An action for annulment of title or reconveyance based on
fraud is imprescriptible where the plaintiff is in possession of
the property subject of the fraudulent acts. One who is in
actual possession of a piece of land on a claim of ownership
thereof may wait until his possession is disturbed or his title is
attacked before taking steps to vindicate his right.
The records of the case show that the petitioners resided in
the property at the time they learned about TCT No. 571.
Being in possession of Lot No. 557, their claim for annulment
of title had not expired. Their ownership of Lot No. 571,
however, is a different matter.
Effects of the Court's decision
Our decision in the present case does not settle the ownership
of Lot No. 557. To recapitulate, our examination of the records
and the evidence presented by the petitioners and the
respondents lead us to conclude that neither of them own Lot
No. 557.
Despite the intent of Act No. 1120 and Republic Act No. 9443
to transfer ownership of the Banilad Friar Estate Lands to its
occupants, we cannot settle the ownership of Lot No. 557 in
the present case.
Indeed, the petitioners and the respondents are the actual
occupants of Lot No. 557, and they and their families (with the

17

exception of Rosita Lopez) have resided in the lot since 1915.

However, as we have discussed above, neither party had
been able to establish their right of ownership, much less
possession, of Lot No. 557. The petitioners anchor their claim
on acquisitive prescription, which does not lie against
registered land or the government. The respondents, on the
other hand, presented spurious TCTs. Thus, no amount of
liberal interpretation of Act No. 1120 or Republic Act No. 9443
could give either party the right over the lot.
Neither can we ignore the evidence showing that none of
them could rightfully own Lot No. 557. The petitioners'
cancelled deed of assignment and tax declarations cannot
establish their ownership over Lot No. 557; especially since
the operation of pertinent laws prevented the possibility of
acquisitive prescription. The respondents' TCT No. 571, on the
other hand, had several discrepancies indicating that it was a
fake.
The exercise of the Court's judicial power settles actual
controversies between parties, through which the Court
establishes their legally enforceable and demandable rights.
We determine the parties' rights based on the application of
the law to the facts established through the pieces of
evidence submitted by the parties. The application of the law
on the facts of the present case establishes that neither party
has a legally enforceable right over Lot No. 557.
Given this situation, we direct that the records of the case be
transmitted to the Land Management Bureau6 for further
investigation and appropriate action over Lot No. 557 of the
Banilad Friar Estate Lands.
Additionally, we direct that a copy of the records of the case
be transmitted to the Ombudsman, for further investigation
regarding how the fake TCTs covering Lot No. 557 ended up in
the Registry of Deeds of Cebu City, and for the criminal and
administrative investigation of government officials liable for
them.
WHEREFORE, premises considered, the instant Petition for
Review on Certiorari is PARTIALLY GRANTED. The Court of
Appeals Decision in CA-G.R. CV No. 63248 is MODIFIED, and
the following titles are declared null and void: (1) TCT No. 571
issued to Mauricia Quilaton; (2) TCT No. 130517 issued to
Rodrigo Tugot; (3) TCT No. 130518 issued to Purificacion
Codilla; (4) TCT No. 130519 issued to Teofra Sadaya; (5) TCT
No. 130520 issued to Estrellita Galeos; (5) TCT No. 130521
issued to Rodrigo Tugot; and (6) TCT No. 143511 issued to
Rosita Lopez.
The claim of the petitioners Filadelfa T. Lausa, Loreta T. Torres,
Primitivo Tugot and Anacleto T. ]Caduhay for recognition of
their ownership over Lot No. 557 is DENIED.
We DIRECT that a copy of the records of the case be
transmitted to the Land Management Bureau and the
Ombudsman for further investigation and appropriate action.
SO ORDERED.

18

G.R. No. 201405, August 24, 2015

LIWAYWAY ANDRES, RONNIE ANDRES, AND PABLO B.
FRANCISCO, Petitioners, v. STA. LUCIA REALTY &
DEVELOPMENT, INCORPORATED, Respondent.
DECISION
DEL CASTILLO, J.:
Not all may demand for an easement of right-of-way. Under
the law, an easement of right-of-way may only be demanded
by the owner of an immovable property or by any person who
by virtue of a real right may cultivate or use the same.
This Petition for Review on Certiorari assails the November 17,
2011 Decision1 of the Court of Appeals in CA-G.R. CV No.
87715, which reversed and set aside the May 22, 2006
Decision2 of the Regional Trial Court (RTC), Binangonan, Rizal,
Branch 68 granting petitioners Pablo B. Francisco (Pablo),
Liwayway Andres (Liwayway), Ronnie Andres (Ronnie) and
their co-plaintiff Liza Andres (Liza) a 50-square meter right-ofway within the subdivision of respondent Sta. Lucia Realty and
Development, Incorporated (respondent).
Likewise assailed is the March 27, 2012 CA Resolution 3 which
denied petitioners and Liza's Motion for Reconsideration
thereto.
Factual Antecedents
Petitioners and Liza filed a Complaint4 for Easement of Rightof-Way against respondent before the RTC on November
28,2000. They alleged that they are co-owners and
possessors for more than 50 years of three parcels of
unregistered agricultural land in Pag-asa, Binangonan, Rizal
with a total area of more or less 10,500 square meters
(subject property). A few years back, however, respondent
acquired the lands surrounding the subject property,
developed the same into a residential subdivision known as
the Binangonan Metropolis East, and built a concrete
perimeter fence around it such that petitioners and Liza were
denied access from subject property to the nearest public
road and vice versa. They thus prayed for a right-of-way
within Binangonan Metropolis East in order for them to have
access to Col. Guido Street, a public road.
In its Answer,5 respondent denied knowledge of any property
adjoining its subdivision owned by petitioners and Liza. At any
rate, it pointed out that petitioners and Liza failed to
sufficiently allege in their complaint the existence of the
requisites for the grant of an easement of right-of-way.
During trial, Pablo testified that he bought a 4,000-square
meter-portion of the subject property from Carlos Andres
(Carlos), the husband of Liwayway and father of Ronnie and
Liza.6 According to Pablo, he and his co-plaintiffs are still in
possession of the subject property as evidenced by an April
13, 1998 Certification7 issued by the Barangay Chairman of
Pag-asa.8 Further, Pablo clarified that the easement of right-ofway that they are asking from respondent would traverse the
latter's subdivision for about 50 meters from the subject
property all the way to another subdivision that he co-owns,
Victoria Village, which in turn, leads to Col. Guido Street. 9 He
claimed that the prevailing market value of lands in the area
is about P600.00 per square meter. Pablo also explained that
the subject property is still not registered under the Land
Registration Act since no tax declaration over the same has
been issued to them despite application with the Municipal
Assessor of Binangonan.10 When required by the court to
submit documents regarding the said application, 11 Pablo
attached in his Compliance,12 among others, Carlos' letter13 of

Maty 18, 1998 to the Municipal Assessor of Binangonan

requesting for the issuance of a tax declaration and the reply
thereto dated August 5, 199814 of the Provincial Assessor of
Rizal. In the aforesaid reply, the Provincial Assessor denied the
request on the ground that the subject property was already
declared for taxation purposes under the name of Juan Diaz
and later, in the name of Juanito 15 Blanco, et al. (the Blancos).
Liwayway testified next. According to her, she and her
children Ronnie and Liza are the surviving heirs of the late
Carlos who owned the subject property.16 Carlos acquired
ownership over the same after he had been in continuous,
public and peaceful possession thereof for 50 years,17 the
circumstances of which he narrated in a Sinumpaang
Salaysay18 that he executed while he was still alive. Carlos
stated therein that even before he was born in 1939, his
father was already in possession and working on the subject
property; that in 1948, he started to help his father in tilling
the land; that when his father became weak and eventually
died, he took over the land; and, that he already sought to
register his ownership of the property with the Department of
Environment and Natural Resources (DENR) and to declare the
same for taxation purposes.
For its part, respondent presented as a lone witness the then
Municipal Assessor of Binangonan, Virgilio Flordeliza
(Flordeliza). Flordeliza confirmed that Carlos wrote him a
letter-request for the issuance of a tax declaration.19 He,
however, referred the matter to the Provincial Assessor of
Rizal since the property for which the tax declaration was
being applied for was already declared for taxation purposes
in the name of one Juan Diaz.20 Later, the tax declaration of
Juan Diaz was cancelled and in lieu thereof, a tax declaration
in the name of the Blancos was issued.21 For this reason, the
Provincial Assessor of Rizal denied Carlos' application for
issuance of tax declaration.22cralawrednad
Ruling of the Regional Trial Court
The RTC rendered its Decision23 on May 22, 2006. It observed
that petitioners and Liza's allegation in their Complaint that
they were in possession of the subject property for more than
50 years was not denied by respondent in its Answer. Thus,
the same is deemed to have been impliedly admitted by the
latter. It then ratiocinated that based on Article 113724 of the
Civil Code, petitioners and Liza are considered owners of the
subject property through extraordinary prescription. Having
real right over the same, therefore, they are entitled to
demand an easement of right-of-way under Article
64925cralawred of the Civil Code.
The RTC further held that Pablo's testimony sufficiently
established: (1) that the subject property was surrounded by
respondent's property; (2) the area and location of the rightof-way sought; (3) the value of the land on which the right-ofway is to be constituted which was P600.00 per square meter;
and (4) petitioners and Liza's possession of the subject
property up to the present time.
In the ultimate, said court concluded that petitioners and Liza
are entitled to an easement of right-of-way,
thus:cralawlawlibrary
WHEREFORE, judgment is hereby rendered giving the
plaintiffs a right of way of 50 square meters to reach Victoria
Village towards Col. Guido Street. Defendant Sta. Lucia is
hereby ordered to grant the right of way to the plaintiffs as
previously described upon payment of an indemnity
equivalent to the market value of the [50-square meter right
of way].

19

Blancos.
SO ORDERED.26

On appeal, respondent argued mat petitioners and Liza were

neither able to prove that they were owners nor that they
have any real right over the subject property intended to be
the dominant estate. Hence, they are not entitled to demand
an easement of right-of-way. At any rate, they likewise failed
to establish that the only route available from their property
to Col. Guido Street is through respondent's subdivision.

In the alternative, petitioners assert that they have already

become owners of the subject property through extraordinary
acquisitive prescription since (1) they have been in open,
continuous and peaceful possession thereof for more than 50
years; (2) the subject property, as depicted in the Survey Plan
they caused to be prepared is alienable and disposable; (3)
Carlos filed a claim of ownership over the property with the
DENR, the agency charged with the administration of
alienable public land; and (4) Carlos' manifestation of
willingness to declare the property for taxation purposes not
only had the effect of giving notice of his adverse claim on the
property but also strengthened his bona fide claim of
ownership over the same.

In a Decision29 dated November 17, 2011, the CA held that the

evidence adduced by petitioners and Liza failed to sufficiently
establish their asserted ownership and possession of the
subject property. Moreover, it held that contrary to the RTC's
observation, respondent in fact denied in its Answer the
allegation of petitioners and Liza that they have been in
possession of subject property for more than 50 years. In view
of these, the CA concluded that petitioners and Liza have no
right to demand an easement of right-of-way from
respondent, thus:cralawlawlibrary

It must be stressed at the outset that contrary to petitioners'

allegations, there is no showing that Carlos filed a claim of
ownership over the subject property with the DENR. His April
13, 1998 letter35 to the said office which petitioners assert to
be an application for the registration of such claim is actually
just a request for the issuance of certain documents and
nothing more. Moreover, while Carlos indeed attempted to
declare the subject property for taxation purposes, his
application, as previously mentioned, was denied because a
tax declaration was already issued to the Blancos.

Respondent filed a Notice of Appeal27 which was given due

course by the RTC in an Order28 dated June 27, 2006.
Ruling of the Court of Appeals

WHEREFORE, in view of the foregoing, the appeal is hereby

GRANTED. Accordingly, the May 22, 2006 Decision of the
Regional Trial Court of Binangonan, Rizal, Branch 68 is
REVERSED and SET ASIDE. Civil Case No. 00-037-B is ordered
DISMISSED.
SO ORDERED.30
Petitioners and Liza's Motion for Reconsideration31 was denied
in the CA Resolution32 dated March 27, 2012.
Hence, petitioners seek recourse to this Court through this
Petition for Review on Certiorari.
Issue
Whether petitioners are entitled to demand an easement of
right-of-way from respondent.
Our Ruling
The Petition has no merit.
Under Article 649 of the Civil Code, an easement of right-ofway may be demanded by the owner of an immovable or by
any person who by virtue of a real right may cultivate or use
the same.
Here, petitioners argue that they are entitled to demand an
easement of right-of-way from respondent because they are
the owners of the subject property intended to be the
dominant estate. They contend that they have already
acquired ownership of the subject property through ordinary
acquisitive prescription.33 This is considering that their
possession became adverse as against the Blancos (under
whose names the subject property is declared for taxation)
when Carlos formally registered his claim of ownership with
the DENR and sought to declare the subject property for
taxation purposes in 1998. And since more than 10
years34 had lapsed from that time without the Blancos doing
anything to contest their continued possession of the subject
property, petitioners aver that ordinary acquisitive
prescription had already set in their favor and against the

Anent petitioners' invocation of ordinary acquisitive

prescription, the Court notes that the same was raised for the
first time on appeal. Before the RTC, petitioners based their
claim of ownership on extraordinary acquisitive prescription
under Article 1137 of the Civil Code36 such that the said court
declared them owners of the subject property by virtue
thereof in its May 22, 2006 Decision.37 Also with the CA,
petitioners initially asserted ownership through extraordinary
acquisitive prescription.38 It was only later in their Motion for
Reconsideration39 therein that they averred that their
ownership could also be based on ordinary acquisitive
prescription.40 "Settled is the rule that points of law, theories,
issues and arguments not brought to the attention of the
lower court need not be considered by a reviewing court, as
they cannot be raised for the first time at that late stage.
Basic considerations of fairness and due process impel this
rule."41cralawrednad
Even if timely raised, such argument of petitioners, as well as
with respect to extraordinary acquisitive prescription, fails.
"Prescription is one of the modes of acquiring ownership
under the Civil Code."42 There are two modes of prescription
through which immovables may be acquired - ordinary
acquisitive prescription which requires possession in good
faith and just title for 10 years and, extraordinary prescription
wherein ownership and other real rights over immovable
property are acquired through uninterrupted adverse
possession for 30 years without need of title or of good
faith.43 However, it was clarified in the Heirs of Mario
Malabanan v. Republic of the Philippines,44 that only lands of
the public domain subsequently classified or declared as no
longer intended for public use or for the development of
national wealth, or removed from the sphere of public
dominion and are considered converted into patrimonial lands
or lands of private ownership, may be alienated or disposed
through any of the modes of acquiring ownership under the
Civil Code.45 And if the mode of acquisition is prescription,
whether ordinary or extraordinary, it must first be shown that
the land has already been converted to private ownership
prior to the requisite acquisitive prescriptive period.
Otherwise, Article 1113 of the Civil Code, which provides that
property of the State not patrimonial in character shall not be
the subject of prescription, applies.46cralawrednad

20

Sifting through petitioners' allegations, it appears that the

subject property is an unregistered public agricultural land.
Thus, being a land of the public domain, petitioners, in order
to validly claim acquisition thereof through prescription, must
first be able to show that the State has expressly declared through either a law enacted by Congress
or a proclamation issued by the President that the subject
[property] is no longer retained for public service or the
development of the national wealth or that the property has
been converted into patrimonial. Consequently, without an
express declaration by the State, the land remains to be a
property of public dominion and hence, not susceptible to
acquisition by virtue of prescription.47
In the absence of such proof of declaration in this case,
petitioners' claim of ownership over the subject property
based on prescription necessarily crumbles. Conversely, they
cannot demand an easement of right-of-way from respondent
for lack of personality.
All told, the Court finds no error on the part of the CA in
reversing and setting aside the May 22, 2006 Decision of the
RTC and in ordering the dismissal of petitioners' Complaint for
Easement of Right-of-Way against respondent.
WHEREFORE, the Petition is DENIED. The November 17,
2011 Decision and March 27, 2014 Resolution of the Court of
Appeals in CA-G.R. CV No. 87715 are AFFIRMED.
SO ORDERED.

21

G.R. No. 213014, October 14, 2015

MAYBANK PHILIPPINES, INC. (FORMERLY PNB-REPUBLIC
BANK1), Petitioner, v. SPOUSES OSCAR AND NENITA
TARROSA, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari2 are the
Decision3 dated November 29, 2013 and the Resolution4 dated
May 13, 2014 of the Court of Appeals (CA) in CA-G.R. CV No.
02211, which affirmed the Decision5 dated June 16, 2005 of
the Regional Trial Court of Bacolod City, Branch 41 (RTC) in
Civil Case No. 98-10451 declaring the extrajudicial foreclosure
sale of the property covered by Transfer Certificate of Title
(TCT) No. T-5649 as null and void for being barred by
prescription.
The Facts
On December 15, 1980, respondents-spouses Oscar and
Nenita Tarrosa (Sps. Tarrosa) obtained from then PNB-Republic
Bank, now petitioner Maybank Philippines, Inc. (Maybank), a
loan in the amount of P91,000.00. The loan was secured by a
Real Estate Mortgage6 dated January 5, 1981 (real estate
mortgage) over a 500-square meter parcel of land situated in
San Carlos City, Negros Occidental (subject property), covered
by TCT No. T-5649,7 and the improvements thereon.8
After paying the said loan, or sometime in March 1983, Sps.
Tarrosa obtained another loan from Maybank in the amount of
P60,000.00 (second loan),9 payable on March 11,
1984.10 However, Sps. Tarrosa failed to settle the second loan
upon maturity.11
Sometime in April 1998, Sps. Tarrosa received a Final Demand
Letter12 dated March 4, 1998 (final demand letter) from
Maybank requiring them to settle their outstanding loan in the
aggregate amount of P564,579.91, inclusive of principal,
interests, and penalty charges.13 They offered to pay a lesser
amount, which Maybank refused.14 Thereafter, or on June 25,
1998, Maybank commenced extrajudicial foreclosure
proceedings15 before the office of Ex-Officio Provincial Sheriff
Ildefonso Villanueva, Jr. (Sheriff Villanueva). The subject
property was eventually sold in a public auction sale held on
July 29, 199816 for a total bid price of P600,000.00, to the
highest bidder, Philmay Property, Inc. (PPI), which was
thereafter issued a Certificate of Sale17 dated July 30, 1998.18
On September 7, 1998, Sps. Tarrosa filed a complaint 19 for
declaration of nullity and invalidity of the foreclosure of real
estate and of public auction sale proceedings and damages
with prayer for preliminary injunction against Maybank, PPI,
Sheriff Villanueva, and the Registry of Deeds of San Carlos
City, Negros Occidental (RD-San Carlos), before the RTC,
docketed as Civil Case No. 98-10451. They averred, inter
alia,that: (a) the second loan was a clean or unsecured loan;
(b) after receiving the final demand letter, they tried to pay
the second loan, including the agreed interests and charges,
but Maybank unjustly refused their offers of payment; and (c)
Maybank's right to foreclose had prescribed or is barred by
laches.20
On the other hand, Maybank and PPI countered21 that: (a) the
second loan was secured by the same real estate mortgage
under a continuing security provision therein; (b) when the
loan became past due, Sps. Tarrosa promised to pay and
negotiated for a restructuring of their loan, but failed to pay
despite demands; and (c) Sps. Tarrosa's positive

acknowledgment and admission of their indebtedness

controverts the defense of prescription.
The RTC Ruling
In a Decision23 dated June 16, 2005, the RTC held that the
second loan was subject to the continuing security provision
in the real estate mortgage.24 However, it ruled that
Maybank's right to foreclose, reckoned from the time the
mortgage indebtedness became due and payable on March
11, 1984, had already prescribed, considering the lack of any
timely judicial action, written extrajudicial demand or written
acknowledgment by the debtor of his debt that could interrupt
the prescriptive period.25Accordingly, it declared the
extrajudicial foreclosure proceedings affecting the subject
property as null and void, and ordered Maybank to pay Sps.
Tarrosa moral and exemplary damages, as well as attorney's
fees and litigation expenses.26
Maybank filed a motion for reconsideration27 which was,
however, denied in an Order28 dated December 9, 2005,
prompting it to appeal29 to the CA.
The CA Ruling
In a Decision30 dated November 29, 2013, the CA affirmed the
RTC ruling that Maybank's right to foreclose the real estate
mortgage over the subject property is already barred by
prescription. It held that the prescriptive period should be
reckoned from March 11, 1984 when the second loan had
become past due and remained unpaid since demand was not
a condition sine qua non for the accrual of the latter's right to
foreclose under paragraph 5 of the real estate mortgage. It
observed that Maybank failed to present evidence of any
timely written extrajudicial demand or written
acknowledgment by the debtors of their debt that could have
effectively interrupted the running of the prescriptive period. 31
Undaunted, Maybank moved for reconsideration, 32 which was
denied in a Resolution33 dated May 13, 2014; hence this
petition.
The Issues Before the Court
The essential issue for the Court's resolution is whether or not
the CA committed reversible error in finding that Maybank's
right to foreclose the real estate mortgage over the subject
property was barred by prescription.chanrobleslaw
The Court's Ruling
The petition is meritorious.
An action to enforce a right arising from a mortgage
should be enforced within ten (10) years from the time
the right of action accrues, i.e., when the mortgagor
defaults in the payment of his obligation to the
mortgagee; otherwise, it will be barred by prescription
and the mortgagee will lose his rights under the
mortgage.34 However, mere delinquency in payment does
not necessarily mean delay in the legal concept. To be in
default is different from mere delay in the grammatical sense,
because it involves the beginning of a special condition or
status which has its own peculiar effects or results. 35
In order that the debtor may be in default, it is necessary that:
(a) the obligation be demandable and already liquidated; (b)
the debtor delays performance; and (c) the creditor requires
the performance judicially or extrajudicially,36unless demand

22

is not necessary - i.e., when there is an express stipulation to

that effect; where the law so provides; when the period is the
controlling motive or the principal inducement for the creation
of the obligation; and where demand would be useless.
Moreover, it is not sufficient that the law or obligation fixes a
date for performance; it must further state expressly that
after the period lapses, default will commence. Thus, it is
only when demand to pay is unnecessary in case of the
aforementioned circumstances, or when required, such
demand is made and subsequently refused that the
mortgagor can be considered in default and the
mortgagee obtains the right to file an action to collect
the debt or foreclose the mortgage.38

SO ORDERED.

In the present case, both the CA and the RTC reckoned the
accrual of Maybank's cause of action to foreclose the real
estate mortgage over the subject property from the maturity
of the second loan on May 11, 1984. The CA further held that
demand was unnecessary for the accrual of the cause of
action in light of paragraph 5 of the real estate mortgage,
which pertinently provides:
5. In the event that the Mortgagor herein should fail or refuse
to pay any of the sums of money secured by this mortgage, or
any part thereof, in accordance with the terms and conditions
herein set forth, or should he/it fail to perform any of the
conditions stipulated herein, then and in any such case, the
Mortgagee shall have the right, at its election to foreclose this
mortgage, [x x x].39
However, this provision merely articulated Maybank's right to
elect foreclosure upon Sps. Tarrosa's failure or refusal to
comply with the obligation secured, which is one of the rights
duly accorded to mortgagees in a similar situation.40 In no way
did it affect the general parameters of default, particularly the
need of prior demand under Article 116941 of the Civil Code,
considering that it did not expressly declare: (a) that demand
shall not be necessary in order that the mortgagor may be in
default; or (b) that default shall commence upon mere failure
to pay on the maturity date of the loan. Hence, the CA erred
in construing the above provision as one through which the
parties had dispensed with demand as a condition sine qua
non for the accrual of Maybank's right to foreclose the real
estate mortgage over the subject property, and thereby,
mistakenly reckoned such right from the maturity date of the
loan on March 11, 1984. In the absence of showing that
demand is unnecessary for the loan obligation to become due
and demandable, Maybank's right to foreclose the real estate
mortgage accrued only after the lapse of the period indicated
in its final demand letter for Sps. Tarrosa to pay, i.e., after the
lapse of five (5) days from receipt of the final demand letter
dated March 4, 1998.42 Consequently, both the CA and the
RTC committed reversible error in declaring that Maybank's
right to foreclose the real estate mortgage had already
prescribed.
Thus, considering that the existence of the loan had been
admitted, the default on the part of the debtors-mortgagors
had been duly established, and the foreclosure proceedings
had been initiated within the prescriptive period as aforediscussed, the Court finds no reason to nullify the extrajudicial
foreclosure sale of the subject property.
WHEREFORE, the petition is GRANTED. The Decision dated
November 29, 2013 and the Resolution dated May 13, 2014 of
the Court of Appeals in CA-G.R. CV No. 02211 are
hereby REVERSED AND SET ASIDE. The complaint in Civil
Case No. 98-10451 is DISMISSED.

23

G.R. No. 169442, October 14, 2015

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE
PRIVATIZATION AND MANAGEMENT OFFICE
(PMO), Petitioner, v. ANTONIO V. BAEZ, LUISITA BAEZ
VALERA, NENA BAEZ HOJILLA, AND EDGARDO B.
HOJILLA, JR., Respondents.
DECISION
PEREZ, J.:
Assailed and sought to be annulled in this Petition for Review
on Certiorari under Rule 45 of the 1997 Rules of Civil
Procedure is the Decision1 of the Court of Appeals dated 23
August 2005 in CA-G.R. CV No. 70137, entitled "Cellophil
Resources Corporation v. Antonio V. Baez, Luisita Baez
Valera, Nena Baez Hojilla and Edgar do B. Hojilla, Jr.," which
affirmed the Order2 of the Regional Trial Court (RTC), Branch 1,
Bangued, Abra, dated 16 August 2000, that dismissed the
complaint of petitioner Republic of the Philippines,
represented by Privatization and Management Office (PMO),
for specific performance, recovery of possession, and
damages against respondents Antonio V. Baez, Luisita Baez
Valera, Nena Baez Hojilla and Edgardo B. Hojilla, Jr., docketed
as Civil Case No. 1853.
The facts as culled from the records are as follows:
In 1976, Antonio V. Baez, Luisita Baez Valera, and Nena
Baez Hojilla (collectively, respondents) offered for sale a
parcel of land (subject property), with an area of 20,000 sq m
in Barangay Calaba, Bangued, Abra to Cellophil Resources
Corporation (CRC). Pursuant to the offer to sell on 7 December
1981, respondents executed a Letter Agreement irrevocably
giving CRC the option to purchase the subject property, which
CRC accepted. The pertinent portion of the Letter Agreement
(hereinafter referred to as Contract), to wit:
1. The purchase price shall be Twenty Pesos xxx per square
meter or a total amount of Four Hundred Thousand Pesos
(P400,000.00).
2. The co-owners shall take all necessary steps to
cause the CRC Portion to be brought under the
operation of Republic Act No. 496, as amended, and to
cause the issuance in their name of the corresponding
original certificate of title, all of the foregoing to be
accomplished within a reasonable time from date
hereof. xxx
xxxx
7. The co-owners hereby confirm their agreement and
permission to CRC's entry into, construction of building[s] and
improvements, and occupancy of, any portion of the Property,
and xxx waive any right of action they may have against CRC
respecting such entry, construction, or occupancy by the
latter of any Portion of the Property.
8. An absolute deed of sale containing the above
provisions and standard warranties on conveyances of
real property shall be executed by the co-owners in
favor of CRC or its assignee/s and the same delivered to
the latter together with the original certificate of title upon
payment of the purchase price less the advances made by
CRC in accordance with Paragraphs 2 and 3 above; provided,
that payment shall be made by CRC only upon
presentation by the co-owners to CRC of certificate/s
and/or clearances, with corresponding receipts, issued
by the appropriate government office/s or agency/ies
to the effect that capital gains tax, real estate taxes on

the Property and local transfer tax and other taxes,

fees or charges due on the transaction and/or on the
Property have been paid.
9. This option shall be effective from [the] date of your
acceptance as indicated by your conformity below and for a
period of one (1) month from and after CRC shall have been
notified in writing by the co-owners that an original certificate
of title has been issued in their names and that they are ready
to execute the xxx deed of sale.3
Respondents asked for several cash advances which reached
the total amount of, more or less, Two Hundred Seventeen
Thousand Pesos (P217,000.00), to be deducted from the
purchase price of Four Hundred Thousand Pesos
(P400,000.00). After paying cash advances to respondents,
CRC constructed staff houses and introduced improvements
on the subject property. As respondents would be staying
abroad for a time, they executed a Special Power of Attorney
(SPA) in favor of Edgardo B. Hojilla (Hojilla). The SPA
authorized Hojilla to perform the following:
1. To take all steps necessary to cause a portion of the lot
covered by Tax Declaration No. 40185 in the name of Urbano
Baez which is the subject of our "Offer to Sell" to Cellophil
Resources Corporation containing an area xxx to be brought
under the operation of Republic Act No. 496, as amended, and
to cause the issuance in our name of the corresponding
original certificate of title.
2. To do all acts and things and to execute all papers and
documents of whatever nature or kind required for the
accomplishments of the aforesaid purpose.
HEREBY GRANTING AND GIVING unto our said attorney full
power and authority whatsoever requisite or necessary or
proper to be done in or about the premises as fully to all
intents and purposes as we might or could lawfully do if
personally present (with power of substitution and
revocation), and hereby ratifying and confirming all that our
said attorney shall do or cause to be done under and by virtue
of these presents.4ChanRoblesVirtualawlibrary
However, CRC stopped its operation. The Development Bank
of the Philippines and National Development Company took
over CRC's operation and turned over CRC's equity to Asset
Privatization Trust (APT), which is a government agency
created by virtue of Proclamation No. 50, as amended. The
APT's function is to take title to and possession of,
provisionally manage and dispose of nonperforming assets of
government financial institutions. Upon the expiration of APT's
term on 31 December 2000, the government issued Executive
Order (E.O.) No. 323, which created the Privatization and
Management Office (PMO). By virtue of E.O. No. 323, the
powers, functions, and duties of APT were transferred to the
PMO. Thus, the original party, CRC, is now represented by the
Republic of the Philippines through the PMO (hereinafter
referred to as petitioner), the successor of the defunct APT.
As alleged by petitioner, respondents declared afterwards the
subject property as Urbano Baez property, rented out to third
parties the staff houses petitioner constructed, and ordered its
guards to prohibit the petitioner from entering the compound,
which impelled petitioner to file a complaint for specific
performance, recovery of possession, and damages against
respondents, including Hojilla, on 10 April 2000. Among
others, the complaint prayed for respondents to surrender and
deliver the title of the subject property, and execute a deed of
absolute sale in favor of petitioner upon full payment. It
mentioned three letters sent to respondents on 29 May 1991,

24

24 October 1991, and 6 July 1999.

In the Complaint, it was alleged that:
"[t]here is no justification, legal or otherwise for the
[respondents] to dispossess (sic) the [petitioner] from the
subject property. [Petitioner] is more than willing and able to
pay the [respondents] the balance of the purchase price of
the subject parcel of land but its inability to do so was due to
the [respondents'] failure to produce the original certificate of
title of the subject parcel of land and to execute the pertinent
deed of sale, as well as the unjustified occupation by the
[respondents] of the property and [of] the staff houses built by
[petitioner and that] such actions of the [respondents] are
contrary to their undertaking under condition no. 7 of the
subject letter agreement, that is, for [respondents] to permit
[petitioner's] entry into and occupancy of any portion of the
subject property and their waiver of any right of action they
may have against [petitioner] respecting such entry and
occupancy of any portion of the property. And despite
repeated demands made by [petitioner] upon the
[respondents] for them to vacate and turnover the subject
parcel of land and the staff houses to [petitioner], the last of
which was in a letter dated July 6, 1999, the said
[respondents] have failed and neglected and still fail and
neglect to do so up to the present
time."5ChanRoblesVirtualawlibrary

Ruling of the RTC

On 23 June 2000, Hojilla filed a Motion to Dismiss on the
grounds that he was not a real party-in-interest and that the
action was barred by the Statute of Limitations, which Motion
the RTC granted in an Order dated 16 August 2000 based on
Article 1144(1) of the Civil Code, which bars actions filed
beyond ten (10) years upon the execution of the written
contract. According to the RTC, the letters petitioner sent to
respondents were not demands for respondents to comply
with their obligation to deliver the title as to interrupt the
running of the prescriptive period. The pertinent portion of the
RTC Order reads:
In the instant case, the defendants were given [enough] time
from December 7, 1981 to comply with their obligation,
hence, after a reasonable period of time, the plaintiff should
have demanded compliance of defendants' undertakings or
initiated any other action to protect its interest without
waiting for the statute of limitations to bar their claim. 6

The RTC resolved that because the written contract was

executed on 7 December 1981, then the complaint that was
filed more than eighteen (18) years since the contract was
executed was beyond the 10-year prescriptive period. Within
that 18-year period, there was no act on the part of petitioner,
whether judicial or extrajudicial, to interrupt prescription.
While petitioner paid cash advances to respondents for the
processing of the registration of the title, "which totaled to
more or less P217,000.00 as of September 7, 1984 xxx to the
filing of this suit, [petitioner] has not demanded compliance
by [respondents] of their obligation, that is, the execution of
the absolute deed of sale and the delivery of the Original
Certificate of Title to the property to [petitioner] upon
payment of the purchase price stipulated. There were letters
addressed to [respondents] but these were not demands for
compliance of [respondents'] obligation and which is not
sufficient under the law to interrupt the prescriptive period." 7
The RTC further stated that:
"[t]he parties could not have contemplated that the delivery
of the property and the payment thereof could be made
indefinitely and render uncertain the status of the land. The
failure of either [of the] parties to demand performance of the
obligation of the other for an unreasonable length of time
renders the contract ineffective." 8
The motion for reconsideration was likewise denied in an
Order dated 5 January 2001.
On appeal, petitioner argued that the RTC erred when it
dismissed the complaint. Petitioner averred that: (1) its claim
was not yet barred by prescription; (2) the period of
prescription had been interrupted by extrajudicial demand; (3)
the Statute of Limitation did not run against the State; (4)
petitioner's claim not having prescribed, laches could not
have set in; (5) the laches of one nullified the laches of the
other; and (6) laches cannot be used to defeat justice or to
perpetuate fraud and injustice.chanrobleslaw
Ruling of the Court of Appeals
The Court of Appeals affirmed the ruling of the RTC in a
Decision dated 23 August 2005 on the ground that the
complaint was barred by the Statute of Limitations. Contrary
to petitioner's arguments, the Court of Appeals found that the
extrajudicial demand to respondents did not serve to toll the
running of the prescriptive period. The Court of Appeals ruled
that the record is bereft of evidence that would attest that
written extrajudicial demands were sent to respondents. While
petitioner sent demand letters dated 29 May 1991 and 24
October 1991, these demand letters were not considered as
demand letters because the letters simply called the attention
of Hojilla to return the properties and unlock the gates. As
regards the letter dated 6 July 1999, the Court of Appeals
ruled that because the letter was addressed to Hojilla, who
was only an attorney-in-fact authorized to register the
property, it was not binding upon the respondents. The Court
of Appeals also gave no probative value to the 6 July 1999
letter for having no proof of service.
With regard to the issue of running of prescriptive period
against the State, the Court of Appeals opined that because
the subject property is a patrimonial property of the State
when APT became the controlling stockholder of CRC,
prescription may run against the State. Thus, the reasonable
period within which to register the property is three (3) years.
According to the Court of Appeals, the cause of action of

25

petitioner accrued three (3) years from the time the Contract
was executed on 7 December 1981 or, to say the least, on 15
August 1984 when Hojilla sent the acknowledgment letter
dated 15 August 1984, at which time it became clear that
respondents could no longer fulfill their obligation.
Hence, petitioner is before us raising the following arguments:
A.

The Court of Appeals erred in ruling that the running

of the prescriptive period was not interrupted when
respondents acknowledged their still unfulfilled
obligation to initiate proceedings for the registration
of title of the subject property and at the same time
committed that they will only claim the full payment
of the property upon presentation of a clean title and
execution of a Deed of Sale signed by the heirs as
stated in the letter dated August 15, 1984.

B.

The Court of Appeals erred in affirming the outright

dismissal of petitioner's suit for specific performance,
recovery of possession and damages on the basis of
prescription even as it is evident that there is a need
to fix a period considering that the performance of
the condition or obligation is dependent upon the will
of respondents.

C.

The Court of Appeals erred in ignoring certain

manifest equitable considerations which militate
against a resort to a purely mathematical
computation of the prescriptive period and in
disregarding the provision of the irrevocable offer
that the option remains effective for a period of one
month from and after notice that a certificate of title
has been issued.9

The main issue is whether or not the complaint for specific

performance was filed beyond the prescriptive
period.chanrobleslaw
Petitioner's Arguments
The petitioner argues that although there is a 10-year
limitation within which to file a case based on a written
contract, the period was interrupted due to a written
acknowledgment of respondents' obligation and demand by
petitioner. The argument is based on Article 1155 of the Civil
Code, which provides that the running of the prescriptive
period is interrupted when there is a written extrajudicial
demand by the creditors, and when there is any written
acknowledgment of the debt by the debtor.
The petitioner referred to the letter sent by Hojilla to the
former dated 15 August 1984, and letters given by petitioner
to Hojilla dated 29 May 1991, 24 October 1991, and 6 July
1999. In the letter dated 15 August 1984, respondents
affirmed their undertaking that they will claim full payment of
the property upon presentation of a clean title and the
execution of the Absolute Deed of Sale, which reads, "[t]he
Baez heirs will only claim for the full payment of the property
upon presentation of a clean title and execution of a Deed of
Sale signed by the heirs."10
Based on Hojilla's representation as stated in the letter dated
15 August 1984, petitioner argues that Hojilla is estopped by
his own acts and for misleading petitioner because
"respondents not only failed to comply with their commitment
to deliver a certificate of title but where [sic] they also
[misled] petitioner into believing that they were working on
the title of subject property even as they had[,] at the back of
their mind[s], the running of the statute of limitations as an

arsenal once petitioner demands the fulfillment of their

obligation."11
The petitioner further added that because there was no period
fixed for the fulfillment or performance of the obligation to
deliver the title, the least the court should have done was to
fix the period pursuant to Article 1197 of the Civil Code.
Finally, the petitioner posits that pursuant to paragraph 9 of
the Contract, its obligation is conditioned upon respondents'
obligation, which is to deliver the title. Thus, because the
respondents failed to deliver such, the obligation of petitioner
never ripened.chanrobleslaw
Respondents' Arguments
The arguments of respondents, which are aligned with the
reasons of the lower courts, rely on Article 1144 of the Civil
Code, which provides that actions upon a written contract
must be brought within ten (10) years from execution.
Because the complaint was filed beyond the 10-year
prescriptive period, the action was already barred by the
Statute of Limitations. Further, during such period, petitioner
failed to act either judicially or extrajudicially to effectively
interrupt the running of the prescriptive period. Thus, the
complaint must be dismissed for having been extinguished by
the Statute of Limitations.chanrobleslaw
Our Ruling
We rule in favor of the petitioner.
We deem material, for the resolution of the issues in this case,
the letters that were exchanged by the parties.
We shall discuss each letter in seriatim.
Hojilla 's letter dated 15 August 1984
In Hojilla's letter to petitioner dated 15 August 1984, Hojilla
updated petitioner of the status of the subject property's title,
in this wise:
The preparation of the advance survey plan, technical
description and Engineer's Certificate pursuant to Land
Administrative Order No. 10-4 has been submitted to the
Regional Land Office, and approved by the Regional Director.
Atty. Valera is now in the process of preparing the petition
papers of the Calaba property for submission to the local
court.12
There is no other logical conclusion but that the 15 August
1984 letter is an acknowledgment of respondents'
commitment under the Contract. The letter served to update
petitioner of the status of the subject property's title, an
obligation agreed upon by the parties in the Contract. It would
be specious to argue that respondents did not acknowledge
the existence of the Contract and yet, send correspondence to
petitioner updating it of the status of the application for title
on the subject property. Therefore, the letter dated 15 August
1984 served as a written acknowledgment of debt or
obligation of respondents.
In Philippine National Railways v. NLRC,13 it was stated that a
written acknowledgment of debt or obligation effectively
interrupts the running of the prescriptive period and sets the
same running anew.14Hence, because Hojilla's letter dated 15
August 1984 served as a written acknowledgement of the

26

respondents' debt or obligation, it interrupted the running of

the prescriptive period and set the same running anew with a
new expiry period of 15 August 1994.
Petitioner's letters dated 29 May
1991 and 24 October 1991
With regard to the letters petitioner sent to Hojilla dated 29
May 1991 and 24 October 1991, the RTC ruled that these
letters were insufficient under the law to interrupt the
prescriptive period because these were not demand letters.
We lift the pertinent portion from the letter dated 29 May
1991, which demanded respondents to return the properties
and to unlock the gates:
Under the agreement to purchase the lot, APT-CRC shall pay
the whole of the purchase price thereof when the certificate of
title and other documents enumerated therein are presented
to it. Clearly, the consummation of the sale is within your
control, x x x
In view of the foregoing, demand is hereby made upon
you and your principals, the heirs of Urbano Baez, to
return the properties withdrawn and to unlock the
gates leading to the staffhouses (sic), within fifteen
(15) days from receipt thereof, otherwise we will be
constrained to institute the necessary action to protect
the interest of APT-CRC.15 (Emphasis and underscoring
ours)
In the same vein, the letter dated 24 October 1991 demanded
respondents to discontinue the construction, repair,
demolition, and occupancy of several staff houses. A pertinent
portion of the 24 October 1991 letter reads:
Considering that these action (sic) are unauthorized, they
constitute violations of the irrevocable option to purchase
dated December 7, 1981, which remains valid, binding and
effective to this day. Demand is hereby made upon you to
discontinue such unauthorized acts and vacate the
premises within fifteen (15) days from receipt
hereof.16 x x x (Emphasis and underscoring ours)
We do not agree with the lower courts. Clearly, the 29 May
1991 and 24 October 1991 letters demanded respondents to
return the properties, discontinue the construction, repair,
demolition and occupancy of several staff houses, and unlock
the gates, which is to enforce respondents' obligations
pursuant to paragraph 7 of the Contract which reads:
7. The co-owners hereby confirm their agreement and
permission to CRC's entry into, construction of building and
improvements, and occupancy of, any portion of the Property,
and hereby accordingly waive any right of action they may
have against CRC respecting such entry, construction, or
occupancy by the latter of any Portion of the Property. 17
The letters dated 29 May 1991 and 24 October 1991 are
deemed demand letters as contemplated under Article 1155.
They are demand letters to enforce respondents' obligation
under the Contract, which is to cede possession to petitioner.
The letters interrupted the running of the prescriptive period
which commenced to run anew.
Petitioner's letter dated 6 July 1999
Compared to the letters dated 29 May and 24 October 1991,
which demanded Hojilla to surrender possession of the subject
property, this time, in petitioner's letter to Hojilla dated 6 July

1999, petitioner demanded Hojilla to produce the title of the

subject property. However, despite the fact that the letter was
a clear demand of the nature contemplated by law that would
interrupt the prescriptive period, the Court of Appeals found
that (1) the letter did not effectively interrupt the prescriptive
period because the complaint had long prescribed; (2) the
letter was addressed to the wrong party; and, finally, (3) the
letter did not bear any proof of service or receipt.
We do not agree.
Hojilla's SPA
We refer to the SPA, which granted the authority of Hojilla.
When respondents went abroad pending the performance of
their obligations in the Contract, they authorized Hojilla to
register the subject property a single obligation in the whole
range of obligations in the Contract. The SPA appeared to
have left no representative to fulfill respondents' obligations in
the Contract on their behalf except for Hojilla's authority to
register the subject property. The pertinent portion of the SPA
reads:
1. To take all steps necessary to cause a portion of the
lot covered by Tax Declaration No. 40185 in the name
of Urbano Baflez which is the subject of our "Offer to
Sell" to Cellophil Resources Corporation containing an
area xxx to be brought under the operation of Republic
Act No. 496, as amended, and to cause the issuance in
our name of the corresponding original certificate of
title.
2. To do all acts and things and to execute all papers and
documents of whatever nature or kind required for the
accomplishments of the aforesaid purpose.
HEREBY GRANTING AND GIVING unto our said attorney full
power and authority whatsoever requisite or necessary or
proper to be done in or about the premises as fully to all
intents and purposes as we might or could lawfully do if
personally present (with power of substitution and
revocation), and hereby ratifying and confirming all that our
said attorney shall do or cause to be done under and by virtue
of these presents.18 (Emphasis and underscoring ours)
This was read simply by the lower courts as limiting Hojilla's
authority to the registration of the subject property under the
name of his principal, and all the necessary acts for such
purpose. It observed that nowhere in the SPA was Hojilla
authorized as administrator or agent of respondents with
respect to the execution of the Contract.
In the case at bar, the reliefs prayed for by petitioner include
the execution of the Contract such as delivery of the subject
title, recovery of possession of the subject property, execution
of the deed of sale or transfer of absolute ownership upon full
payment of the balance, and damages for alleged violation of
respondents of the Contract for non-delivery of the title and
refusal to vacate the subject property. Indeed, following the
reading of the lower courts of the scope of Hojilla's authority,
Hojilla is neither the proper party to execute the Contract nor
the proper party to receive the demand letters on behalf of
respondents.
This strict construction of the tenor of the SPA will render the
obligatory force of the Contract ineffective. Construction is not
a tool to prejudice or commit fraud or to obstruct, but to attain
justice. Ea Est Accipienda Interpretatio Quae Vitio Caret. To
favor the lower court's interpretation of the scope of Hojilla's

27

power is to defeat the juridical tie of the Contract

the vinculum juris of the parties. As no one was authorized to
represent respondents in the Contract, then petitioner cannot
enforce the Contract, as it were. This is an absurd
interpretation of the SPA. It renders the Contract ineffective
for lack of a party to execute the Contract.
Contrary to the findings of the lower court, the present case is
a case of an express agency, where, Hojilla, the agent, binds
himself to represent another, the principal, who are herein
respondents, with the latter's express consent or
authority.19 In a contract of agency, the agent acts for and in
behalf of the principal on matters within the scope of the
authority conferred upon him, such that, the acts of the agent
have the same legal effect as if they were personally done by
the principal.20 Because there is an express authority granted
upon Hojilla to represent the respondents as evidenced by the
SPA, Hojilla's actions bind the respondents.

Hojilla to act as though he had full powers by impliedly

ratifying Hojilia's actionsthrough action by omission.26 This is
the import of the principle of agency by estoppel or the
doctrine of apparent authority.
In an agency by estoppel or apparent authority, "[t]he
principal is bound by the acts of his agent with the apparent
authority which he knowingly permits the agent to assume, or
which he holds the agent out to the public as possessing." 27
The respondents' acquiescence of Hojilla's acts was made
when they failed to repudiate the latter's acts. They knowingly
permitted Hojilla to represent them and petitioners were
clearly misled into believing Hojilla's authority. Thus, the
respondents are now estopped from repudiating Hojilla's
authority, and Hojilla's actions are binding upon the
respondents.
Receipt of the Letters

As agent, the representations and guarantees of Hojilla are

considered representations and guarantees of the principal.
This is the principle of agency by promissory estoppel. We
refer to the evidence on record. It was Hojilla who
administered and/or managed the subject property. 21 Based
on Hojilla's letter dated 15 August 1984 to petitioner, Hojilla
made the representation that besides being the attorney-infact of the respondents with limited authority to register the
property, he was also their agent with regard to respondents'
other obligations related to the Contract. The pertinent
portion of the 15 August 1984 letter of Hojilla to petitioner
reads:
Regarding our loan with the National Electrification
Administration (NEA), Hon. Mel Mathay who is helping the
Bafiez heirs has initiated negotiations with NEA for Abreco to
purchase our lot in front of the Provincial Jail to offset our loan
with NEA.22
Also, one glaring fact that cannot escape us is Hojilla's
representation and guarantee that petitioner's obligation will
only arise upon presentation of a clean title and execution of a
Deed of Sale signed by the respondents' heirs, which reads,
"[t]he Baez heirs will only claim for the full payment
of the property upon presentation of a clean title and
execution of a Deed of Sale signed by the heirs."23
If Hojilla knew that he had no authority to execute the
Contract and receive the letters on behalf of respondents, he
should have opposed petitioner's demand letters. However,
having received the several demand letters from petitioner,
Hojilla continuously represented himself as the duly
authorized agent of respondents, authorized not only to
administer and/or manage the subject property, but also
authorized to register the subject property and represent the
respondents with regard to the latter's obligations in the
Contract. Hojilla also assured petitioner that petitioner's
obligation to pay will arise only upon presentation of the title.
Clearly, the respondents are estopped by the acts and
representations of their agent. Falling squarely in the case at
bar is our pronouncement in Philippine National Bank v. IAC
(First Civil Cases Div.),24 "[h]aving given that assurance,
[Hojilla] may not turn around and do the exact opposite of
what [he] said [he] would do. One may not take inconsistent
positions. A party may not go back on his own acts and
representations to the prejudice of the other party who relied
upon them."25cralawred
Assuming further that Hojilla exceeded his authority, the
respondents are still solidarity liable because they allowed

Time and time again, this Court has reiterated it is not a trier
of facts and parties may raise only questions of law. The
jurisdiction of the Court is limited to reviewing errors of law
and findings of fact of the Court of Appeals are conclusive
because it is not the Court's function to review, examine, and
evaluate or weigh the evidence all over again.28 The rule,
however, is not without exceptions, viz.:
(1) [W]hen the [conclusion is a finding] grounded entirely on
speculations, surmises [and] conjectures;cralawlawlibrary
(2) [W]hen the inference made is manifestly mistaken, absurd
or impossible;cralawlawlibrary
(3) [W]hen there is grave abuse of discretion;cralawlawlibrary
(4) [W]hen the judgment is based on a
misapprehension of facts;cralawlawlibrary
(5) [W]hen the findings of fact are conflicting;
(6) [W]hen xxx the Court of Appeals[, in making its findings,]
went beyond the issues of the case [and the same is] contrary
to the admissions of both the appellant and the
appellee;cralawlawlibrary
(7) [W]hen the findings are contrary to [those] of the
trial court;
(8) [W]hen the findings [of fact] are conclusions without
citation of specific evidence on which they are
based;cralawlawlibrary
(9) [W]hen the facts set forth in the petition as well as in the
petitioner's main and reply briefs are not disputed by the
respondents;cralawlawlibrary
(10) [w]hen the findings of fact [of the Court of
Appeals] are premised on the supposed absence of
evidence and contradicted by the evidence on record
and
(11) [When] the Court of Appeals manifestly overlooked
certain irrelevant facts not disputed by the parties, which, if
properly considered, would justify a different conclusion.29
In the case at bar, the findings of the RTC and the Court of
Appeals are contradictory: the RTC did not make any finding
on the receipt of the demand letters by Hojilla, while the Court
of Appeals resolved that assuming arguendo that the letters

28

were demand letters contemplated under Article 1155 of the

Civil Code, the same are unavailing because the letters do not
bear any proof of service of receipt by respondents.

case by the petitioner should be counted from 29 May 1991,

ending on 29 May 2001. The complaint at bar was filed on 10
April 2000, well within the required period.

A perusal of the records reveals that only the 24 October 1991

letter has no proof of receipt.30 The demand letters dated 29
May 199131 and 6 July 199932 contain proofs of receipt.

Notably, before the expiration of the new prescriptive period,

the petitioner again sent a new demand letter on 6 July 1999,
which again caused the same to run anew, which will expire
on 6 July 2009. The complaint filed on 10 April 2000 was
timely.

Thus, the core issue of whether or not the action has

prescribed.

The Contract and True Intent of the Parties

An action based on a written contract must be brought within
ten (10) years from the time the right of action accrued.
Accordingly, a cause of action on a written contract accrues
only when an actual breach or violation thereof occurs.33 A
cause of action has three elements, to wit: (1) a right in favor
of the plaintiff by whatever means and under whatever law it
arises or is created; (2) an obligation on the part of the named
defendant to respect or not to violate such right; and (3) an
act or omission on the part of such defendant violative of the
right of the plaintiff or constituting a breach of the obligation
of the defendant to the plaintiff.34
By the contract between the herein parties, the cause of
action accrued at the point when the reasonable time within
which to present the title lapsed. The parties did not
determine the date when the respondents must present the
title and other documents to the petitioner. The parties only
agreed that the respondents must present the same within a
"reasonable time." Reasonable time means "so much time as
is necessary under the circumstances for a reasonably
prudent and diligent man to do, conveniently, what the
contract or duty requires that should be done, having a regard
for the rights and possibility of loss, if any, to the other
party."35 Such reasonable time was determined by the
respondents through the letter dated 15 August 1984. The
respondents acknowledged their obligation to deliver the title
and asked for a new period to do so. It states:
The preparation of the advance survey plan, technical
description and Engineer's Certificate pursuant to Land
Administrative Order No. 10-4 has been submitted to the
Regional Land Office, and approved by the Regional Director.
Arty. Valera is now in the process of preparing the petition
papers of the Calaba property for submission to the local
court.
xxxx
The Baez heirs will only claim for the full payment of the
property upon presentation of a clean title and execution of a
Deed of Sale signed by the heirs.36
The accrual of the cause of action to demand the titling of the
land cannot be earlier than 15 August 1984. So that, the
petitioner can sue on the contract until 15 August 1994. Prior
to the expiration of the aforesaid period, the petitioner sent a
demand letter to Hojilla dated 29 May 1991. A few months
thereafter, petitioner sent another demand letter to Hojilla
dated 24 October 1991.37 The prescriptive period was
interrupted on 29 May 1991.

Based on the stipulation in the Contract, the parties agreed

that payment shall be made only upon presentation of the
title and other documents of the subject property to
petitioner. Paragraph 8 of the Contract reads:
8. An absolute deed of sale containing the above provisions
and standard warranties on conveyances of real property shall
be executed by the co-owners in favor of CRC or its assignee/s
and the same delivered to the latter together with the original
certificate of title upon payment of the purchase price less the
advances made by CRC in accordance with Paragraphs 2 and
3 above; provided, that payment shall be made by CRC
only upon presentation by the co-owners to CRC of
certificate/s and/or clearances, with corresponding
receipts, issued by the appropriate government office/s
or agency/ies to the effect that capital gains tax, real
estate taxes on the Property and local transfer tax and
other taxes, fees or charges due on the transaction
and/or on the Property have been paid.38 (Emphasis and
underscoring ours)
The true intent of the parties is further enunciated in Hojilla's
letter to petitioner dated 15 August 1984, which stated,
"[t]he Baez heirs will only claim for the full payment
of the property upon presentation of a clean title and
execution of a Deed of Sale signed by the heirs."39
To rule in favor of respondents despite their failure to perform
their obligations is the height of injustice. Respondents cannot
benefit from their own inaction and failure to comply with
their obligations in the Contract and let the petitioner suffer
from respondents' own default.
WHEREFORE, the petition is GRANTED. The Decision of the
Court of Appeals dated 23 August 2005 in CA-G.R. CV No.
70137, affirming the Order of the Regional Trial Court, which
ruled that the action has prescribed, is reversed and set aside.
Let the records of this case be REMANDED to the court of
origin, which is DIRECTED to admit the Answer with
Counterclaim of the petitioner for further trial on the merits.
The respondents are further ordered to return possession of
the subject property to petitioner. No pronouncement as to
costs.
SO ORDERED.

The consequence is stated in Article 1155 of the Civil Code. It

states, "[t]he prescription of actions is interrupted when they
are filed before the court, when there is a written extrajudicial
demand by the creditors, and when there is any written
acknowledgment of the debt by the debtor."
Following the law, the new ten-year period for the filing of a

29

G.R. No. 190828, March 16, 2015

ONOFRE V. MONTERO, et al, Petitioners, v. TIMES
TRANSPORTATION CO., INC., AND SANTIAGO RONDARIS,
MENCORP TRANSPORT SYSTEMS, INC., VIRGINIA R.
MENDOZA AND REYNALDO MENDOZA, Respondents.
DECISION
REYES, J.:
This appeal by petition for review1 seeks to annul and set
aside the Decision2 dated August 28, 2009 and
Resolution3 dated December 11, 2009 of the Court of Appeals
(CA) in CA-G.R. SP No. 106260, which affirmed the
Decision4dated March 31, 2008 of the National Labor Relations
Commission (NLRC) in NLRC CA No. 046325-05 (08), and its
Resolution5 dated September 5, 2008, denying the petitioners
Motion for Reconsideration. The NLRC decision vacated and
set aside the Decision6 dated June 29, 2005 of the Labor
Arbiter (LA) on the ground that the consolidated complaints
for illegal dismissal, unfair labor practice and money claims
have already prescribed.
The Facts
Respondent Times Transportation Co., Inc., (TTCI) is a
company engaged in the business of land transportation for
passengers and goods serving the Ilocos Region to Metro
Manila route. TTCI employed the herein 21 petitioners as bus
drivers, conductors, mechanics, welders, security guards and
utility personnel, namely: Onofre V. Montero (Montero),
Edgardo N. Estraero (Estraero), Rening P. Padre (Padre),
Gabriel A. Madera (Madera), Herminio T. Tacla, Nelson C.
Viloria, Demetrio Q. Pajarillo (Pajarillo), Alfredo R. Aganon
(Aganon), Reynaldo Avila (Avila), Albert T. Ruiz, Nestor Y. Yago
(Yago), Harty M. Tupasi (Tupasi), Agustin R. Avila, Jr. (Avila, Jr.),
Bonifacio B. Gaano (Gaano), Joselito D. Cuenta (Cuenta), Jonas
P. Estilong (Estilong), Dominador C. Canaria (Canaria), Genaro
C. Rondaris (Genaro), Herardo M. Dulay (Dulay), Franklin A.
Ravina, Jr. (Ravina), and Ruben C. Cabello (Cabello)
(petitioners).7chanroblesvirtuallawlibrary
Sometime in 1995, the rank-and-file employees of TTCI
formed a union named as Times Employees Union (TEU) which
was later certified as the sole and exclusive bargaining unit
within TTCI.8chanroblesvirtuallawlibrary
In March 1997, members of TEU went on strike; but when
former Labor Secretary Leonardo A. Quisimbing assumed
jurisdiction over the labor dispute and certified the same for
compulsory arbitration, a return-to-work Order dated March
10, 1997 was issued which ended the strike and enjoined the
parties from committing any other act that may intensify the
situation.9chanroblesvirtuallawlibrary
On August 23, 1997, TTCI Board of Directors approved a
resolution confirming the authority given to respondent
Santiago Rondaris (Santiago), TTCI President and Chairman of
the Board of Directors, to gradually dispose the assets of the
TTCI as a result of its unabated increase of the cost of
operations and losses for the last two years. TTCI also adopted
a company-wide retrenchment program, which will take effect
on October 1, 1997, where Santiago was given the authority
to determine the number of excess employees who would be
the subject of retrenchment.10chanroblesvirtuallawlibrary
The sale of 25 buses of TTCI, as well as the Certificates of
Public Convenience for the operation of the buses, were

likewise approved and subsequently transferred to respondent

Mencorp Transport Systems, Inc., (MENCORP) by virtue of a
Deed of Sale dated December 12, 1997. Thereafter, several
union members received notices that they were being
retrenched effective 30 days from September 16,
1997.11chanroblesvirtuallawlibrary
For a second time, on October 17, 1997, TEU declared a strike
against TTCI, but the latter merely reiterated the earlier
return-to-work order of the Labor Secretary. For disregarding
the said return-to-work order, Santiago issued two notices of
termination dated October 26, 199712 terminating some 106
workers and a revised list dated November 24,
199713 increasing the number of dismissed employees to 119,
for participating in the illegal
strike.14chanroblesvirtuallawlibrary
On December 4, 1997, Santiago served to the Department of
Labor and Employment Regional Office I a notice that TTCI
would be closing its operations due to heavy business
losses.15chanroblesvirtuallawlibrary
On May 14, 1998, petitioners Estraero, Pajarillo, Padre, Avila,
Avila, Jr., Tupasi, Cuenta, Dulay, Yago, and Aganon filed
several complaints against TTCI and MENCORP before the
NLRC. The complaints were thereafter consolidated under the
case entitled Malana v. TTCI docketed as NLRC RAB-I-011007.16However, this case was withdrawn on March 4, 1999
upon motion by the TEUs counsel which was given due
course on March 22, 1999.17chanroblesvirtuallawlibrary
Four years later, several complaints for unfair labor practice,
illegal dismissal with money claims, damages and attorneys
fees were filed against TTCI, Santiago, MENCORP and its
General Manager Virginia Mendoza, including the latters
husband Reynaldo Mendoza (collectively called the
respondents), before the LA from June to July
2002.18 Accordingly, these complaints were consolidated.
In response, TTCI asserted that the petitioners cause of action
had already been barred by prescription because the
complaints were filed only in June 2002 or after almost five
years from the date of their dismissal. MENCORP, on the other
hand, raised the defense of lack of employer-employee
relationship since it never engaged the services of the
petitioners when TTCI sold to them its buses and the
Certificates of Public
Convenience.19chanroblesvirtuallawlibrary
On June 9, 2005, the LA rendered a Decision dismissing the
petitioners claim for unfair labor practice and money claims
on the ground of prescription. However, with regard to the
issue of illegal dismissal, only the complaints of Montero,
Ravina, Cabello, Genaro, Madera, Gaano, Arsenio Donato and
Estilong were dismissed for having been barred by
prescription.20chanroblesvirtuallawlibrary
The LA found that petitioners Estraero, Pajarillo, Aganon,
Padre, Dulay, Cuenta, Canaria, Yago, Avila and Avila, Jr. were
illegally dismissed and were awarded their separation pay and
backwages. According to the LA, the complaints of these 10
petitioners were timely filed in June 2002 because the eightmonth period during which their cases were pending should
be excluded from the four-year prescriptive
period.21chanroblesvirtuallawlibrary
Disagreeing with the LA decision, all parties interposed an
appeal before the NLRC. However, said appeals have both
been denied for non-perfection, particularly for failure of the
petitioners to verify their appeal, and for failure of the
respondent to post the required cash or surety bond. In a

30

Decision22 dated March 31, 2008, the NLRC vacated and set
aside the findings of the LA, upon finding that the petitioners
complaints had already been barred by prescription. The
dispositive part of which reads:chanRoblesvirtualLawlibrary
WHEREFORE, IN VIEW OF THE FOREGOING, the decision
appealed from is hereby VACATED and SET ASIDE, and the
complaints dismissed on ground of prescription.
SO ORDERED.23
The NLRC observed that the LA had ignored the rule on
prescription, and chose to be selective in awarding relief to
the 10 complainants by stating in his decision that the period
during which the labor cases were pending should be
deducted from the period of prescription. According to the
NLRC:chanRoblesvirtualLawlibrary
We have thoroughly examined the records and find no
justification for the [LA] to rule that the pendency of the cases
has worked in favor of the complainants to whom he awarded
separation pay and backwages. The [LA] has not at all
indicated in his decision when the eight (8)[-]month period of
pendency he alluded to commenced and when it ended. As a
matter of fact, these cases took almost three (3) years from
filing of the complaints to the rendition of the appealed
decision.24
The NLRC added that the application of the principle of
prescription should not be done on a selective basis,
especially when the dates of accrual of the causes of action
and the filing of the complaints readily show that prescription
has set in.25chanroblesvirtuallawlibrary
The petitioners filed a motion for reconsideration26 dated May
16, 2008, but it was denied.27 Hence, they filed a petition for
certiorari28 before the CA.
On August 28, 2009, the CA Decision dismissed the
petition.29 In sustaining the NLRC decision, the appellate court
ratiocinated:
Here, the illegal dismissal case was filed only in June 2002 or
for more than four (4) years and seven (7) months from the
time petitioners received the notices of their dismissal in
November and October 1997. Clearly, the four-year
prescriptive period has already elapsed.
Moreover, there is likewise no merit in petitioners contention
that the period when they filed a complaint on May 14, 1998
but withdrawn on March 30, 1998 should be excluded from
the computation of the four-year prescriptive [period] for
illegal dismissal cases. The prescriptive period continues even
after the withdrawal of the case as though no action has been
filed at all. This was clarified in the case of Intercontinental
Broadcasting Corporation vs. Panganiban, where the
Supreme Court held that although the commencement of an
action stops the running of the statute of prescription or
limitations, its dismissal or voluntary abandonment by plaintiff
leaves the parties in exactly the same position as though no
action had been commenced at all. x x x.30
Aggrieved by the foregoing disquisition, the petitioners moved
for reconsideration31 but it was denied by the CA.32 Hence, the
present petition for review
on certiorari.33chanroblesvirtuallawlibrary
The Issue
The main issue in this case is whether or not the petitioners
complaints for illegal dismissal have already prescribed.
Ruling of the Court
The petition is bereft of merit.

It should be emphasized at the outset that as a rule, this

Court is not a trier of facts and this applies with greater force
in labor cases. Hence, factual findings of quasi-judicial bodies
like the NLRC, particularly when they coincide with those of
the [LA] and if supported by substantial evidence, are
accorded respect and even finality by this Court. But where
the findings of the NLRC and the [LA] are contradictory, as in
the present case, this Court may delve into the records and
examine for itself the questioned
findings.34chanroblesvirtuallawlibrary
Nevertheless, the Court has thoroughly reviewed the records
in this case and finds that the NLRC did not commit any grave
abuse of its discretion amounting to lack or in excess of
jurisdiction in rendering its decision in favor of the
respondents. The CA acted in accord with the evidence on
record and case law when it dismissed the petition and
affirmed the assailed decision and resolution of the NLRC.
In the case at bar, October 26, 1997 and November 24, 1997
appear on record to be the dates when the petitioners
employment were terminated by TTCI. The antecedent facts
that gave rise to the petitioners dismissal from employment
are not disputed in this case. There is no question about the
fact that the petitioners complaints for unfair labor practice
and money claims have already prescribed. The petitioners
however argue that their complaints for illegal dismissal were
duly filed within the four-year prescriptive period since the
period during which their cases were pending should be
deducted from the period of prescription. On the other hand,
the respondents insist that said complaints have already
prescribed. Hence, the pivotal question in resolving the issues
hinges on the resolution of whether the period during which
the petitioners cases were pending should be excluded from
the period of prescription.
Settled is the rule that when one is arbitrarily and unjustly
deprived of his job or means of livelihood, the action instituted
to contest the legality of ones dismissal from employment
constitutes, in essence, an action predicated upon an injury to
the rights of the plaintiff, as contemplated under Article
114635 of the New Civil Code, which must be brought within
four years.36chanroblesvirtuallawlibrary
The petitioners contend that the period when they filed a
labor case on May 14, 1998 but withdrawn on March 22, 1999
should be excluded from the computation of the four-year
prescriptive period for illegal dismissal cases. However, the
Court had already ruled that the prescriptive period continues
even after the withdrawal of the case as though no action has
been filed at all. The applicability of Article 115537of the Civil
Code in labor cases was upheld in the case of Intercontinental
Broadcasting Corporation v. Panganiban38 where the Court
held that although the commencement of a civil action stops
the running of the statute of prescription or limitations, its
dismissal or voluntary abandonment by plaintiff leaves the
parties in exactly the same position as though no action had
been commenced at all.39chanroblesvirtuallawlibrary
In like manner, while the filing of the complaint for illegal
dismissal before the LA interrupted the running of the
prescriptive period, its voluntary withdrawal left the
petitioners in exactly the same position as though no
complaint had been filed at all. The withdrawal of their
complaint effectively erased the tolling of the reglementary
period.
A prudent review of the antecedents of the claim reveals that
it has in fact prescribed due to the petitioners withdrawal of
their labor case docketed as NLRC RAB-I-01-1007.40 Hence,

31

while the filing of the said case could have interrupted the
running of the four-year prescriptive period, the voluntary
withdrawal of the petitioners effectively cancelled the tolling
of the prescriptive period within which to file their illegal
dismissal case, leaving them in exactly the same position as
though no labor case had been filed at all. The running of the
four-year prescriptive period not having been interrupted by
the filing of NLRC RAB-I-01-1007, the petitioners cause of
action had already prescribed in four years after their
cessation of employment on October 26, 1997 and November
24, 1997. Consequently, when the petitioners filed their
complaint for illegal dismissal, separation pay, retirement
benefits, and damages in 2002, their claim, clearly, had
already been barred by
prescription.41chanroblesvirtuallawlibrary

extinguished their right of action. Although the Constitution is

committed to the policy of social justice and the protection of
the working class, it does not necessary follow that every
labor dispute will be automatically decided in favor of labor.
The management also has its own rights. Out of concern for
the less privileged in life, this Court, has more often than not
inclined, to uphold the cause of the worker in his conflict with
the employer. Such leaning, however, does not blind the Court
to the rule that justice is in every case for the deserving, to be
dispensed in the light of the established facts and applicable
law and doctrine.

Sadly, the petitioners have no one but themselves to blame

for their own predicament. By their own allegations in their
respective complaints, they have barred their remedy and

SO ORDERED.

WHEREFORE, the Decision dated August 28, 2009 and

Resolution dated December 11, 2009 of the Court of Appeals
in CA-G.R. SP No. 106260 are AFFIRMED.

32