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G.R. No.

L-20329 March 16, 1923

THE STANDARD OIL COMPANY OF NEW YORK, petitioner,


vs.
JOAQUIN JARAMILLO, as register of deeds of the City of Manila, respondent.

Ross, Lawrence and Selph for petitioner.


City Fiscal Revilla and Assistant City Fiscal Rodas for respondent.

STREET, J.:

This cause is before us upon demurrer interposed by the respondent, Joaquin Jaramillo,
register of deeds of the City of Manila, to an original petition of the Standard Oil
Company of New York, seeking a peremptory mandamus to compel the respondent to
record in the proper register a document purporting to be a chattel mortgage executed
in the City of Manila by Gervasia de la Rosa, Vda. de Vera, in favor of the Standard Oil
Company of New York.

It appears from the petition that on November 27, 1922, Gervasia de la Rosa, Vda. de
Vera, was the lessee of a parcel of land situated in the City of Manila and owner of the
house of strong materials built thereon, upon which date she executed a document in
the form of a chattel mortgage, purporting to convey to the petitioner by way of
mortgage both the leasehold interest in said lot and the building which stands thereon.

The clauses in said document describing the property intended to be thus mortgage are
expressed in the following words:

Now, therefore, the mortgagor hereby conveys and transfer to the mortgage, by
way of mortgage, the following described personal property, situated in the City
of Manila, and now in possession of the mortgagor, to wit:

(1) All of the right, title, and interest of the mortgagor in and to the contract of
lease hereinabove referred to, and in and to the premises the subject of the said
lease;

(2) The building, property of the mortgagor, situated on the aforesaid leased
premises.

After said document had been duly acknowledge and delivered, the petitioner caused
the same to be presented to the respondent, Joaquin Jaramillo, as register of deeds of
the City of Manila, for the purpose of having the same recorded in the book of record of
chattel mortgages. Upon examination of the instrument, the respondent was of the
opinion that it was not a chattel mortgage, for the reason that the interest therein
mortgaged did not appear to be personal property, within the meaning of the Chattel
Mortgage Law, and registration was refused on this ground only.
We are of the opinion that the position taken by the respondent is untenable; and it is
his duty to accept the proper fee and place the instrument on record. The duties of a
register of deeds in respect to the registration of chattel mortgage are of a purely
ministerial character; and no provision of law can be cited which confers upon him any
judicial or quasi-judicial power to determine the nature of any document of which
registration is sought as a chattel mortgage.

The original provisions touching this matter are contained in section 15 of the Chattel
Mortgage Law (Act No. 1508), as amended by Act No. 2496; but these have been
transferred to section 198 of the Administrative Code, where they are now found. There
is nothing in any of these provisions conferring upon the register of deeds any authority
whatever in respect to the "qualification," as the term is used in Spanish law, of chattel
mortgage. His duties in respect to such instruments are ministerial only. The efficacy of
the act of recording a chattel mortgage consists in the fact that it operates as
constructive notice of the existence of the contract, and the legal effects of the contract
must be discovered in the instrument itself in relation with the fact of notice.
Registration adds nothing to the instrument, considered as a source of title, and affects
nobody's rights except as a specifies of notice.

Articles 334 and 335 of the Civil Code supply no absolute criterion for discriminating
between real property and personal property for purpose of the application of the
Chattel Mortgage Law. Those articles state rules which, considered as a general
doctrine, are law in this jurisdiction; but it must not be forgotten that under given
conditions property may have character different from that imputed to it in said articles.
It is undeniable that the parties to a contract may by agreement treat as personal
property that which by nature would be real property; and it is a familiar phenomenon
to see things classed as real property for purposes of taxation which on general
principle might be considered personal property. Other situations are constantly arising,
and from time to time are presented to this court, in which the proper classification of
one thing or another as real or personal property may be said to be doubtful.

The point submitted to us in this case was determined on September 8, 1914, in an


administrative ruling promulgated by the Honorable James A. Ostrand, now a Justice of
this Court, but acting at that time in the capacity of Judge of the fourth branch of the
Court of First Instance of the Ninth Judicial District, in the City of Manila; and little of
value can be here added to the observations contained in said ruling. We accordingly
quote therefrom as follows:

It is unnecessary here to determine whether or not the property described in the


document in question is real or personal; the discussion may be confined to the
point as to whether a register of deeds has authority to deny the registration of a
document purporting to be a chattel mortgage and executed in the manner and
form prescribed by the Chattel Mortgage Law.
Then, after quoting section 5 of the Chattel Mortgage Law (Act No. 1508), his Honor
continued:

Based principally upon the provisions of section quoted the Attorney-General of


the Philippine Islands, in an opinion dated August 11, 1909, held that a register
of deeds has no authority to pass upon the capacity of the parties to a chattel
mortgage which is presented to him for record. A fortiori a register of deeds can
have no authority to pass upon the character of the property sought to be
encumbered by a chattel mortgage. Of course, if the mortgaged property is real
instead of personal the chattel mortgage would no doubt be held ineffective as
against third parties, but this is a question to be determined by the courts of
justice and not by the register of deeds.

In Leung Yee vs. Frank L. Strong Machinery Co. and Williamson (37 Phil., 644), this
court held that where the interest conveyed is of the nature of real, property, the
placing of the document on record in the chattel mortgage register is a futile act; but
that decision is not decisive of the question now before us, which has reference to the
function of the register of deeds in placing the document on record.

In the light of what has been said it becomes unnecessary for us to pass upon the point
whether the interests conveyed in the instrument now in question are real or personal;
and we declare it to be the duty of the register of deeds to accept the estimate placed
upon the document by the petitioner and to register it, upon payment of the proper fee.

The demurrer is overruled; and unless within the period of five days from the date of
the notification hereof, the respondent shall interpose a sufficient answer to the
petition, the writ of mandamus will be issued, as prayed, but without costs. So ordered.

Araullo, C.J., Malcolm, Avancea, Ostrand, Johns, and Romualdez, JJ., concur.
G.R. No. L-11658 February 15, 1918

LEUNG YEE, plaintiff-appellant,


vs.
FRANK L. STRONG MACHINERY COMPANY and J. G. WILLIAMSON, defendants-
appellees.

Booram and Mahoney for appellant.


Williams, Ferrier and SyCip for appellees.

CARSON, J.:

The "Compaia Agricola Filipina" bought a considerable quantity of rice-cleaning


machinery company from the defendant machinery company, and executed a chattel
mortgage thereon to secure payment of the purchase price. It included in the mortgage
deed the building of strong materials in which the machinery was installed, without any
reference to the land on which it stood. The indebtedness secured by this instrument
not having been paid when it fell due, the mortgaged property was sold by the sheriff,
in pursuance of the terms of the mortgage instrument, and was bought in by the
machinery company. The mortgage was registered in the chattel mortgage registry, and
the sale of the property to the machinery company in satisfaction of the mortgage was
annotated in the same registry on December 29, 1913.

A few weeks thereafter, on or about the 14th of January, 1914, the "Compaia Agricola
Filipina" executed a deed of sale of the land upon which the building stood to the
machinery company, but this deed of sale, although executed in a public document,
was not registered. This deed makes no reference to the building erected on the land
and would appear to have been executed for the purpose of curing any defects which
might be found to exist in the machinery company's title to the building under the
sheriff's certificate of sale. The machinery company went into possession of the building
at or about the time when this sale took place, that is to say, the month of December,
1913, and it has continued in possession ever since.

At or about the time when the chattel mortgage was executed in favor of the machinery
company, the mortgagor, the "Compaia Agricola Filipina" executed another mortgage
to the plaintiff upon the building, separate and apart from the land on which it stood, to
secure payment of the balance of its indebtedness to the plaintiff under a contract for
the construction of the building. Upon the failure of the mortgagor to pay the amount of
the indebtedness secured by the mortgage, the plaintiff secured judgment for that
amount, levied execution upon the building, bought it in at the sheriff's sale on or about
the 18th of December, 1914, and had the sheriff's certificate of the sale duly registered
in the land registry of the Province of Cavite.
At the time when the execution was levied upon the building, the defendant machinery
company, which was in possession, filed with the sheriff a sworn statement setting up
its claim of title and demanding the release of the property from the levy. Thereafter,
upon demand of the sheriff, the plaintiff executed an indemnity bond in favor of the
sheriff in the sum of P12,000, in reliance upon which the sheriff sold the property at
public auction to the plaintiff, who was the highest bidder at the sheriff's sale.

This action was instituted by the plaintiff to recover possession of the building from the
machinery company.

The trial judge, relying upon the terms of article 1473 of the Civil Code, gave judgment
in favor of the machinery company, on the ground that the company had its title to the
building registered prior to the date of registry of the plaintiff's certificate.

Article 1473 of the Civil Code is as follows:

If the same thing should have been sold to different vendees, the ownership
shall be transfer to the person who may have the first taken possession thereof
in good faith, if it should be personal property.

Should it be real property, it shall belong to the person acquiring it who first
recorded it in the registry.

Should there be no entry, the property shall belong to the person who first took
possession of it in good faith, and, in the absence thereof, to the person who
presents the oldest title, provided there is good faith.

The registry her referred to is of course the registry of real property, and it must be
apparent that the annotation or inscription of a deed of sale of real property in a chattel
mortgage registry cannot be given the legal effect of an inscription in the registry of
real property. By its express terms, the Chattel Mortgage Law contemplates and makes
provision for mortgages of personal property; and the sole purpose and object of the
chattel mortgage registry is to provide for the registry of "Chattel mortgages," that is to
say, mortgages of personal property executed in the manner and form prescribed in the
statute. The building of strong materials in which the rice-cleaning machinery was
installed by the "Compaia Agricola Filipina" was real property, and the mere fact that
the parties seem to have dealt with it separate and apart from the land on which it
stood in no wise changed its character as real property. It follows that neither the
original registry in the chattel mortgage of the building and the machinery installed
therein, not the annotation in that registry of the sale of the mortgaged property, had
any effect whatever so far as the building was concerned.

We conclude that the ruling in favor of the machinery company cannot be sustained on
the ground assigned by the trial judge. We are of opinion, however, that the judgment
must be sustained on the ground that the agreed statement of facts in the court below
discloses that neither the purchase of the building by the plaintiff nor his inscription of
the sheriff's certificate of sale in his favor was made in good faith, and that the
machinery company must be held to be the owner of the property under the third
paragraph of the above cited article of the code, it appearing that the company first
took possession of the property; and further, that the building and the land were sold
to the machinery company long prior to the date of the sheriff's sale to the plaintiff.

It has been suggested that since the provisions of article 1473 of the Civil Code require
"good faith," in express terms, in relation to "possession" and "title," but contain no
express requirement as to "good faith" in relation to the "inscription" of the property on
the registry, it must be presumed that good faith is not an essential requisite of
registration in order that it may have the effect contemplated in this article. We cannot
agree with this contention. It could not have been the intention of the legislator to base
the preferential right secured under this article of the code upon an inscription of title in
bad faith. Such an interpretation placed upon the language of this section would open
wide the door to fraud and collusion. The public records cannot be converted into
instruments of fraud and oppression by one who secures an inscription therein in bad
faith. The force and effect given by law to an inscription in a public record presupposes
the good faith of him who enters such inscription; and rights created by statute, which
are predicated upon an inscription in a public registry, do not and cannot accrue under
an inscription "in bad faith," to the benefit of the person who thus makes the
inscription.

Construing the second paragraph of this article of the code, the supreme court of Spain
held in its sentencia of the 13th of May, 1908, that:

This rule is always to be understood on the basis of the good faith mentioned in
the first paragraph; therefore, it having been found that the second purchasers
who record their purchase had knowledge of the previous sale, the question is to
be decided in accordance with the following paragraph. (Note 2, art. 1473, Civ.
Code, Medina and Maranon [1911] edition.)

Although article 1473, in its second paragraph, provides that the title of
conveyance of ownership of the real property that is first recorded in the registry
shall have preference, this provision must always be understood on the basis of
the good faith mentioned in the first paragraph; the legislator could not have
wished to strike it out and to sanction bad faith, just to comply with a mere
formality which, in given cases, does not obtain even in real disputes between
third persons. (Note 2, art. 1473, Civ. Code, issued by the publishers of the La
Revista de los Tribunales, 13th edition.)

The agreed statement of facts clearly discloses that the plaintiff, when he bought the
building at the sheriff's sale and inscribed his title in the land registry, was duly notified
that the machinery company had bought the building from plaintiff's judgment debtor;
that it had gone into possession long prior to the sheriff's sale; and that it was in
possession at the time when the sheriff executed his levy. The execution of an
indemnity bond by the plaintiff in favor of the sheriff, after the machinery company had
filed its sworn claim of ownership, leaves no room for doubt in this regard. Having
bought in the building at the sheriff's sale with full knowledge that at the time of the
levy and sale the building had already been sold to the machinery company by the
judgment debtor, the plaintiff cannot be said to have been a purchaser in good faith;
and of course, the subsequent inscription of the sheriff's certificate of title must be held
to have been tainted with the same defect.

Perhaps we should make it clear that in holding that the inscription of the sheriff's
certificate of sale to the plaintiff was not made in good faith, we should not be
understood as questioning, in any way, the good faith and genuineness of the plaintiff's
claim against the "Compaia Agricola Filipina." The truth is that both the plaintiff and
the defendant company appear to have had just and righteous claims against their
common debtor. No criticism can properly be made of the exercise of the utmost
diligence by the plaintiff in asserting and exercising his right to recover the amount of
his claim from the estate of the common debtor. We are strongly inclined to believe
that in procuring the levy of execution upon the factory building and in buying it at the
sheriff's sale, he considered that he was doing no more than he had a right to do under
all the circumstances, and it is highly possible and even probable that he thought at
that time that he would be able to maintain his position in a contest with the machinery
company. There was no collusion on his part with the common debtor, and no thought
of the perpetration of a fraud upon the rights of another, in the ordinary sense of the
word. He may have hoped, and doubtless he did hope, that the title of the machinery
company would not stand the test of an action in a court of law; and if later
developments had confirmed his unfounded hopes, no one could question the legality
of the propriety of the course he adopted.

But it appearing that he had full knowledge of the machinery company's claim of
ownership when he executed the indemnity bond and bought in the property at the
sheriff's sale, and it appearing further that the machinery company's claim of ownership
was well founded, he cannot be said to have been an innocent purchaser for value. He
took the risk and must stand by the consequences; and it is in this sense that we find
that he was not a purchaser in good faith.

One who purchases real estate with knowledge of a defect or lack of title in his vendor
cannot claim that he has acquired title thereto in good faith as against the true owner
of the land or of an interest therein; and the same rule must be applied to one who has
knowledge of facts which should have put him upon such inquiry and investigation as
might be necessary to acquaint him with the defects in the title of his vendor. A
purchaser cannot close his eyes to facts which should put a reasonable man upon his
guard, and then claim that he acted in good faith under the belief that there was no
defect in the title of the vendor. His mere refusal to believe that such defect exists, or
his willful closing of his eyes to the possibility of the existence of a defect in his vendor's
title, will not make him an innocent purchaser for value, if afterwards develops that the
title was in fact defective, and it appears that he had such notice of the defects as
would have led to its discovery had he acted with that measure of precaution which
may reasonably be acquired of a prudent man in a like situation. Good faith, or lack of
it, is in its analysis a question of intention; but in ascertaining the intention by which
one is actuated on a given occasion, we are necessarily controlled by the evidence as to
the conduct and outward acts by which alone the inward motive may, with safety, be
determined. So it is that "the honesty of intention," "the honest lawful intent," which
constitutes good faith implies a "freedom from knowledge and circumstances which
ought to put a person on inquiry," and so it is that proof of such knowledge overcomes
the presumption of good faith in which the courts always indulge in the absence of
proof to the contrary. "Good faith, or the want of it, is not a visible, tangible fact that
can be seen or touched, but rather a state or condition of mind which can only be
judged of by actual or fancied tokens or signs." (Wilder vs. Gilman, 55 Vt., 504, 505; Cf.
Cardenas Lumber Co. vs. Shadel, 52 La. Ann., 2094-2098; Pinkerton Bros.
Co. vs. Bromley, 119 Mich., 8, 10, 17.)

We conclude that upon the grounds herein set forth the disposing part of the decision
and judgment entered in the court below should be affirmed with costs of this instance
against the appellant. So ordered.

Arellano, C.J., Johnson, Araullo, Street and Malcolm, JJ., concur.


Torres, Avancea and Fisher, JJ., took no part.
G.R. No. L-50008 August 31, 1987

PRUDENTIAL BANK, petitioner,


vs.
HONORABLE DOMINGO D. PANIS, Presiding Judge of Branch III, Court of
First Instance of Zambales and Olongapo City; FERNANDO MAGCALE &
TEODULA BALUYUT-MAGCALE, respondents.

PARAS, J.:

This is a petition for review on certiorari of the November 13, 1978 Decision * of the
then Court of First Instance of Zambales and Olongapo City in Civil Case No. 2443-0
entitled "Spouses Fernando A. Magcale and Teodula Baluyut-Magcale vs. Hon. Ramon
Y. Pardo and Prudential Bank" declaring that the deeds of real estate mortgage
executed by respondent spouses in favor of petitioner bank are null and void.

The undisputed facts of this case by stipulation of the parties are as follows:

... on November 19, 1971, plaintiffs-spouses Fernando A. Magcale and


Teodula Baluyut Magcale secured a loan in the sum of P70,000.00 from
the defendant Prudential Bank. To secure payment of this loan, plaintiffs
executed in favor of defendant on the aforesaid date a deed of Real
Estate Mortgage over the following described properties:

l. A 2-STOREY, SEMI-CONCRETE, residential building with warehouse


spaces containing a total floor area of 263 sq. meters, more or less,
generally constructed of mixed hard wood and concrete materials, under a
roofing of cor. g. i. sheets; declared and assessed in the name of
FERNANDO MAGCALE under Tax Declaration No. 21109, issued by the
Assessor of Olongapo City with an assessed value of P35,290.00. This
building is the only improvement of the lot.

2. THE PROPERTY hereby conveyed by way of MORTGAGE includes the


right of occupancy on the lot where the above property is erected, and
more particularly described and bounded, as follows:

A first class residential land Identffied as Lot No. 720, (Ts-


308, Olongapo Townsite Subdivision) Ardoin Street, East
Bajac-Bajac, Olongapo City, containing an area of 465 sq. m.
more or less, declared and assessed in the name of
FERNANDO MAGCALE under Tax Duration No. 19595 issued
by the Assessor of Olongapo City with an assessed value of
P1,860.00; bounded on the
NORTH: By No. 6, Ardoin Street

SOUTH: By No. 2, Ardoin Street

EAST: By 37 Canda Street, and

WEST: By Ardoin Street.

All corners of the lot marked by conc.


cylindrical monuments of the Bureau of Lands
as visible limits. ( Exhibit "A, " also Exhibit "1"
for defendant).

Apart from the stipulations in the printed portion of the


aforestated deed of mortgage, there appears a rider typed
at the bottom of the reverse side of the document under the
lists of the properties mortgaged which reads, as follows:

AND IT IS FURTHER AGREED that in the event


the Sales Patent on the lot applied for by the
Mortgagors as herein stated is released or
issued by the Bureau of Lands, the Mortgagors
hereby authorize the Register of Deeds to hold
the Registration of same until this Mortgage is
cancelled, or to annotate this encumbrance on
the Title upon authority from the Secretary of
Agriculture and Natural Resources, which title
with annotation, shall be released in favor of
the herein Mortgage.

From the aforequoted stipulation, it is obvious that the


mortgagee (defendant Prudential Bank) was at the outset
aware of the fact that the mortgagors (plaintiffs) have
already filed a Miscellaneous Sales Application over the lot,
possessory rights over which, were mortgaged to it.

Exhibit "A" (Real Estate Mortgage) was registered under the


Provisions of Act 3344 with the Registry of Deeds of
Zambales on November 23, 1971.

On May 2, 1973, plaintiffs secured an additional loan from


defendant Prudential Bank in the sum of P20,000.00. To
secure payment of this additional loan, plaintiffs executed in
favor of the said defendant another deed of Real Estate
Mortgage over the same properties previously mortgaged in
Exhibit "A." (Exhibit "B;" also Exhibit "2" for defendant). This
second deed of Real Estate Mortgage was likewise registered
with the Registry of Deeds, this time in Olongapo City, on
May 2,1973.

On April 24, 1973, the Secretary of Agriculture issued Miscellaneous Sales


Patent No. 4776 over the parcel of land, possessory rights over which
were mortgaged to defendant Prudential Bank, in favor of plaintiffs. On
the basis of the aforesaid Patent, and upon its transcription in the
Registration Book of the Province of Zambales, Original Certificate of Title
No. P-2554 was issued in the name of Plaintiff Fernando Magcale, by the
Ex-Oficio Register of Deeds of Zambales, on May 15, 1972.

For failure of plaintiffs to pay their obligation to defendant Bank after it


became due, and upon application of said defendant, the deeds of Real
Estate Mortgage (Exhibits "A" and "B") were extrajudicially foreclosed.
Consequent to the foreclosure was the sale of the properties therein
mortgaged to defendant as the highest bidder in a public auction sale
conducted by the defendant City Sheriff on April 12, 1978 (Exhibit "E").
The auction sale aforesaid was held despite written request from plaintiffs
through counsel dated March 29, 1978, for the defendant City Sheriff to
desist from going with the scheduled public auction sale (Exhibit "D")."
(Decision, Civil Case No. 2443-0, Rollo, pp. 29-31).

Respondent Court, in a Decision dated November 3, 1978 declared the deeds of Real
Estate Mortgage as null and void (Ibid., p. 35).

On December 14, 1978, petitioner filed a Motion for Reconsideration (Ibid., pp. 41-53),
opposed by private respondents on January 5, 1979 (Ibid., pp. 54-62), and in an Order
dated January 10, 1979 (Ibid., p. 63), the Motion for Reconsideration was denied for
lack of merit. Hence, the instant petition (Ibid., pp. 5-28).

The first Division of this Court, in a Resolution dated March 9, 1979, resolved to require
the respondents to comment (Ibid., p. 65), which order was complied with the
Resolution dated May 18,1979, (Ibid., p. 100), petitioner filed its Reply on June 2,1979
(Ibid., pp. 101-112).

Thereafter, in the Resolution dated June 13, 1979, the petition was given due course
and the parties were required to submit simultaneously their respective memoranda.
(Ibid., p. 114).

On July 18, 1979, petitioner filed its Memorandum (Ibid., pp. 116-144), while private
respondents filed their Memorandum on August 1, 1979 (Ibid., pp. 146-155).
In a Resolution dated August 10, 1979, this case was considered submitted for decision
(Ibid., P. 158).

In its Memorandum, petitioner raised the following issues:

1. WHETHER OR NOT THE DEEDS OF REAL ESTATE MORTGAGE ARE VALID; AND

2. WHETHER OR NOT THE SUPERVENING ISSUANCE IN FAVOR OF PRIVATE


RESPONDENTS OF MISCELLANEOUS SALES PATENT NO. 4776 ON APRIL 24, 1972
UNDER ACT NO. 730 AND THE COVERING ORIGINAL CERTIFICATE OF TITLE NO. P-
2554 ON MAY 15,1972 HAVE THE EFFECT OF INVALIDATING THE DEEDS OF REAL
ESTATE MORTGAGE. (Memorandum for Petitioner, Rollo, p. 122).

This petition is impressed with merit.

The pivotal issue in this case is whether or not a valid real estate mortgage can be
constituted on the building erected on the land belonging to another.

The answer is in the affirmative.

In the enumeration of properties under Article 415 of the Civil Code of the Philippines,
this Court ruled that, "it is obvious that the inclusion of "building" separate and distinct
from the land, in said provision of law can only mean that a building is by itself an
immovable property." (Lopez vs. Orosa, Jr., et al., L-10817-18, Feb. 28, 1958;
Associated Inc. and Surety Co., Inc. vs. Iya, et al., L-10837-38, May 30,1958).

Thus, while it is true that a mortgage of land necessarily includes, in the absence of
stipulation of the improvements thereon, buildings, still a building by itself may be
mortgaged apart from the land on which it has been built. Such a mortgage would be
still a real estate mortgage for the building would still be considered immovable
property even if dealt with separately and apart from the land (Leung Yee vs. Strong
Machinery Co., 37 Phil. 644). In the same manner, this Court has also established that
possessory rights over said properties before title is vested on the grantee, may be
validly transferred or conveyed as in a deed of mortgage (Vda. de Bautista vs. Marcos,
3 SCRA 438 [1961]).

Coming back to the case at bar, the records show, as aforestated that the original
mortgage deed on the 2-storey semi-concrete residential building with warehouse and
on the right of occupancy on the lot where the building was erected, was executed on
November 19, 1971 and registered under the provisions of Act 3344 with the Register
of Deeds of Zambales on November 23, 1971. Miscellaneous Sales Patent No. 4776 on
the land was issued on April 24, 1972, on the basis of which OCT No. 2554 was issued
in the name of private respondent Fernando Magcale on May 15, 1972. It is therefore
without question that the original mortgage was executed before the issuance of the
final patent and before the government was divested of its title to the land, an event
which takes effect only on the issuance of the sales patent and its subsequent
registration in the Office of the Register of Deeds (Visayan Realty Inc. vs. Meer, 96 Phil.
515; Director of Lands vs. De Leon, 110 Phil. 28; Director of Lands vs. Jurado, L-14702,
May 23, 1961; Pena "Law on Natural Resources", p. 49). Under the foregoing
considerations, it is evident that the mortgage executed by private respondent on his
own building which was erected on the land belonging to the government is to all
intents and purposes a valid mortgage.

As to restrictions expressly mentioned on the face of respondents' OCT No. P-2554, it


will be noted that Sections 121, 122 and 124 of the Public Land Act, refer to land
already acquired under the Public Land Act, or any improvement thereon and therefore
have no application to the assailed mortgage in the case at bar which was executed
before such eventuality. Likewise, Section 2 of Republic Act No. 730, also a restriction
appearing on the face of private respondent's title has likewise no application in the
instant case, despite its reference to encumbrance or alienation before the patent is
issued because it refers specifically to encumbrance or alienation on the land itself and
does not mention anything regarding the improvements existing thereon.

But it is a different matter, as regards the second mortgage executed over the same
properties on May 2, 1973 for an additional loan of P20,000.00 which was registered
with the Registry of Deeds of Olongapo City on the same date. Relative thereto, it is
evident that such mortgage executed after the issuance of the sales patent and of the
Original Certificate of Title, falls squarely under the prohibitions stated in Sections 121,
122 and 124 of the Public Land Act and Section 2 of Republic Act 730, and is therefore
null and void.

Petitioner points out that private respondents, after physically possessing the title for
five years, voluntarily surrendered the same to the bank in 1977 in order that the
mortgaged may be annotated, without requiring the bank to get the prior approval of
the Ministry of Natural Resources beforehand, thereby implicitly authorizing Prudential
Bank to cause the annotation of said mortgage on their title.

However, the Court, in recently ruling on violations of Section 124 which refers to
Sections 118, 120, 122 and 123 of Commonwealth Act 141, has held:

... Nonetheless, we apply our earlier rulings because we believe that as


in pari delicto may not be invoked to defeat the policy of the State neither
may the doctrine of estoppel give a validating effect to a void contract.
Indeed, it is generally considered that as between parties to a contract,
validity cannot be given to it by estoppel if it is prohibited by law or is
against public policy (19 Am. Jur. 802). It is not within the competence of
any citizen to barter away what public policy by law was to preserve
(Gonzalo Puyat & Sons, Inc. vs. De los Amas and Alino supra). ... (Arsenal
vs. IAC, 143 SCRA 54 [1986]).
This pronouncement covers only the previous transaction already alluded to and does
not pass upon any new contract between the parties (Ibid), as in the case at bar. It
should not preclude new contracts that may be entered into between petitioner bank
and private respondents that are in accordance with the requirements of the law. After
all, private respondents themselves declare that they are not denying the legitimacy of
their debts and appear to be open to new negotiations under the law (Comment; Rollo,
pp. 95-96). Any new transaction, however, would be subject to whatever steps the
Government may take for the reversion of the land in its favor.

PREMISES CONSIDERED, the decision of the Court of First Instance of Zambales &
Olongapo City is hereby MODIFIED, declaring that the Deed of Real Estate Mortgage for
P70,000.00 is valid but ruling that the Deed of Real Estate Mortgage for an additional
loan of P20,000.00 is null and void, without prejudice to any appropriate action the
Government may take against private respondents.

SO ORDERED.

Teehankee, C.J., Narvasa, Cruz and Gancayco, JJ., concur.


G.R. No. L-16218 November 29, 1962

ANTONIA BICERRA, DOMINGO BICERRA, BERNARDO BICERRA, CAYETANO


BICERRA, LINDA BICERRA, PIO BICERRA and EUFRICINA BICERRA, plaintiffs-
appellants,
vs.
TOMASA TENEZA and BENJAMIN BARBOSA, defendants-appellees.

Agripino Brillantes and Alberto B. Bravo for plaintiffs-appellants.


Ernesto Parol for defendants-appellees.

MAKALINTAL, J.:

This case is before us on appeal from the order of the Court of First Instance of Abra
dismissing the complaint filed by appellants, upon motion of defendants-appellate on
the ground that the action was within the exclude (original) jurisdiction of the Justice of
the Peace Court of Lagangilang, of the same province.

The complaint alleges in substance that appellants were the owners of the house, worth
P200.00, built on and owned by them and situated in the said municipality Lagangilang;
that sometime in January 1957 appealed forcibly demolished the house, claiming to be
the owners thereof; that the materials of the house, after it was dismantled, were
placed in the custody of the barrio lieutenant of the place; and that as a result of
appellate's refusal to restore the house or to deliver the material appellants the latter
have suffered actual damages the amount of P200.00, plus moral and consequential
damages in the amount of P600.00. The relief prayed for is that "the plaintiffs be
declared the owners of the house in question and/or the materials that resulted in (sic)
its dismantling; (and) that the defendants be orders pay the sum of P200.00, plus
P600.00 as damages, the costs."

The issue posed by the parties in this appeal is whether the action involves title to real
property, as appellants contend, and therefore is cognizable by the Court of First
Instance (Sec. 44, par. [b], R.A. 296, as amended), whether it pertains to the
jurisdiction of the Justice of the Peace Court, as stated in the order appealed from,
since there is no real property litigated, the house having ceased to exist, and the
amount of the demand does exceed P2,000.00 (Sec. 88, id.)1

The dismissal of the complaint was proper. A house is classified as immovable property
by reason of its adherence to the soil on which it is built (Art. 415, par. 1, Civil Code).
This classification holds true regardless of the fact that the house may be situated on
land belonging to a different owner. But once the house is demolished, as in this case,
it ceases to exist as such and hence its character as an immovable likewise ceases. It
should be noted that the complaint here is for recovery of damages. This is the only
positive relief prayed for by appellants. To be sure, they also asked that they be
declared owners of the dismantled house and/or of the materials. However, such
declaration in no wise constitutes the relief itself which if granted by final judgment
could be enforceable by execution, but is only incidental to the real cause of action to
recover damages.

The order appealed from is affirmed. The appeal having been admitted in forma
pauperis, no costs are adjudged.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera,
Paredes, Dizon and Regala, JJ., concur.
G.R. No. L-40411 August 7, 1935

DAVAO SAW MILL CO., INC., plaintiff-appellant,


vs.
APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC., defendants-
appellees.

Arsenio Suazo and Jose L. Palma Gil and Pablo Lorenzo and Delfin Joven for appellant.
J.W. Ferrier for appellees.

MALCOLM, J.:

The issue in this case, as announced in the opening sentence of the decision in the trial
court and as set forth by counsel for the parties on appeal, involves the determination
of the nature of the properties described in the complaint. The trial judge found that
those properties were personal in nature, and as a consequence absolved the
defendants from the complaint, with costs against the plaintiff.

The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the
Government of the Philippine Islands. It has operated a sawmill in the sitio of Maa,
barrio of Tigatu, municipality of Davao, Province of Davao. However, the land upon
which the business was conducted belonged to another person. On the land the sawmill
company erected a building which housed the machinery used by it. Some of the
implements thus used were clearly personal property, the conflict concerning machines
which were placed and mounted on foundations of cement. In the contract of lease
between the sawmill company and the owner of the land there appeared the following
provision:

That on the expiration of the period agreed upon, all the improvements and
buildings introduced and erected by the party of the second part shall pass to
the exclusive ownership of the party of the first part without any obligation on its
part to pay any amount for said improvements and buildings; also, in the event
the party of the second part should leave or abandon the land leased before the
time herein stipulated, the improvements and buildings shall likewise pass to the
ownership of the party of the first part as though the time agreed upon had
expired: Provided, however, That the machineries and accessories are not
included in the improvements which will pass to the party of the first part on the
expiration or abandonment of the land leased.

In another action, wherein the Davao Light & Power Co., Inc., was the plaintiff and the
Davao, Saw, Mill Co., Inc., was the defendant, a judgment was rendered in favor of the
plaintiff in that action against the defendant in that action; a writ of execution issued
thereon, and the properties now in question were levied upon as personalty by the
sheriff. No third party claim was filed for such properties at the time of the sales thereof
as is borne out by the record made by the plaintiff herein. Indeed the bidder, which
was the plaintiff in that action, and the defendant herein having consummated the sale,
proceeded to take possession of the machinery and other properties described in the
corresponding certificates of sale executed in its favor by the sheriff of Davao.

As connecting up with the facts, it should further be explained that the Davao Saw Mill
Co., Inc., has on a number of occasions treated the machinery as personal property by
executing chattel mortgages in favor of third persons. One of such persons is the
appellee by assignment from the original mortgages.

Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to the Code,
real property consists of

1. Land, buildings, roads and constructions of all kinds adhering to the soil;

xxx xxx xxx

5. Machinery, liquid containers, instruments or implements intended by the


owner of any building or land for use in connection with any industry or trade
being carried on therein and which are expressly adapted to meet the
requirements of such trade of industry.

Appellant emphasizes the first paragraph, and appellees the last mentioned paragraph.
We entertain no doubt that the trial judge and appellees are right in their appreciation
of the legal doctrines flowing from the facts.

In the first place, it must again be pointed out that the appellant should have registered
its protest before or at the time of the sale of this property. It must further be pointed
out that while not conclusive, the characterization of the property as chattels by the
appellant is indicative of intention and impresses upon the property the character
determined by the parties. In this connection the decision of this court in the case of
Standard Oil Co. of New York vs. Jaramillo ( [1923], 44 Phil., 630), whether obiter
dicta or not, furnishes the key to such a situation.

It is, however not necessary to spend overly must time in the resolution of this appeal
on side issues. It is machinery which is involved; moreover, machinery not intended by
the owner of any building or land for use in connection therewith, but intended by a
lessee for use in a building erected on the land by the latter to be returned to the
lessee on the expiration or abandonment of the lease.

A similar question arose in Puerto Rico, and on appeal being taken to the United States
Supreme Court, it was held that machinery which is movable in its nature only becomes
immobilized when placed in a plant by the owner of the property or plant, but not when
so placed by a tenant, a usufructuary, or any person having only a temporary right,
unless such person acted as the agent of the owner. In the opinion written by Chief
Justice White, whose knowledge of the Civil Law is well known, it was in part said:

To determine this question involves fixing the nature and character of the
property from the point of view of the rights of Valdes and its nature and
character from the point of view of Nevers & Callaghan as a judgment creditor of
the Altagracia Company and the rights derived by them from the execution levied
on the machinery placed by the corporation in the plant. Following the Code
Napoleon, the Porto Rican Code treats as immovable (real) property, not only
land and buildings, but also attributes immovability in some cases to property of
a movable nature, that is, personal property, because of the destination to which
it is applied. "Things," says section 334 of the Porto Rican Code, "may be
immovable either by their own nature or by their destination or the object to
which they are applicable." Numerous illustrations are given in the fifth
subdivision of section 335, which is as follows: "Machinery, vessels, instruments
or implements intended by the owner of the tenements for the industrial or
works that they may carry on in any building or upon any land and which tend
directly to meet the needs of the said industry or works." (See also Code Nap.,
articles 516, 518 et seq. to and inclusive of article 534, recapitulating the things
which, though in themselves movable, may be immobilized.) So far as the
subject-matter with which we are dealing machinery placed in the plant it is
plain, both under the provisions of the Porto Rican Law and of the Code
Napoleon, that machinery which is movable in its nature only becomes
immobilized when placed in a plant by the owner of the property or plant. Such
result would not be accomplished, therefore, by the placing of machinery in a
plant by a tenant or a usufructuary or any person having only a temporary right.
(Demolombe, Tit. 9, No. 203; Aubry et Rau, Tit. 2, p. 12, Section 164; Laurent,
Tit. 5, No. 447; and decisions quoted in Fuzier-Herman ed. Code Napoleon under
articles 522 et seq.) The distinction rests, as pointed out by Demolombe, upon
the fact that one only having a temporary right to the possession or enjoyment
of property is not presumed by the law to have applied movable property
belonging to him so as to deprive him of it by causing it by an act of
immobilization to become the property of another. It follows that abstractly
speaking the machinery put by the Altagracia Company in the plant belonging to
Sanchez did not lose its character of movable property and become immovable
by destination. But in the concrete immobilization took place because of the
express provisions of the lease under which the Altagracia held, since the lease
in substance required the putting in of improved machinery, deprived the tenant
of any right to charge against the lessor the cost such machinery, and it was
expressly stipulated that the machinery so put in should become a part of the
plant belonging to the owner without compensation to the lessee. Under such
conditions the tenant in putting in the machinery was acting but as the agent of
the owner in compliance with the obligations resting upon him, and the
immobilization of the machinery which resulted arose in legal effect from the act
of the owner in giving by contract a permanent destination to the machinery.

xxx xxx xxx

The machinery levied upon by Nevers & Callaghan, that is, that which was placed
in the plant by the Altagracia Company, being, as regards Nevers & Callaghan,
movable property, it follows that they had the right to levy on it under the
execution upon the judgment in their favor, and the exercise of that right did not
in a legal sense conflict with the claim of Valdes, since as to him the property
was a part of the realty which, as the result of his obligations under the lease, he
could not, for the purpose of collecting his debt, proceed separately against.
(Valdes vs. Central Altagracia [192], 225 U.S., 58.)

Finding no reversible error in the record, the judgment appealed from will be affirmed,
the costs of this instance to be paid by the appellant.

Villa-Real, Imperial, Butte, and Goddard, JJ., concur.


G.R. No. L-41643 July 31, 1935

B.H. BERKENKOTTER, plaintiff-appellant,


vs.
CU UNJIENG E HIJOS, YEK TONG LIN FIRE AND MARINE INSURANCE
COMPANY, MABALACAT SUGAR COMPANY and THE PROVINCE SHERIFF OF
PAMPANGA, defendants-appellees.

Briones and Martinez for appellant.


Araneta, Zaragoza and Araneta for appellees Cu Unjieng e Hijos.
No appearance for the other appellees.

VILLA-REAL, J.:

This is an appeal taken by the plaintiff, B.H. Berkenkotter, from the judgment of the
Court of First Instance of Manila, dismissing said plaintiff's complaint against Cu
Unjiengs e Hijos et al., with costs.

In support of his appeal, the appellant assigns six alleged errors as committed by the
trial court in its decision in question which will be discussed in the course of this
decision.

The first question to be decided in this appeal, which is raised in the first assignment of
alleged error, is whether or not the lower court erred in declaring that the additional
machinery and equipment, as improvement incorporated with the central are subject to
the mortgage deed executed in favor of the defendants Cu Unjieng e Hijos.

It is admitted by the parties that on April 26, 1926, the Mabalacat Sugar Co., Inc.,
owner of the sugar central situated in Mabalacat, Pampanga, obtained from the
defendants, Cu Unjieng e Hijos, a loan secured by a first mortgage constituted on two
parcels and land "with all its buildings, improvements, sugar-cane mill, steel railway,
telephone line, apparatus, utensils and whatever forms part or is necessary complement
of said sugar-cane mill, steel railway, telephone line, now existing or that may in the
future exist is said lots."

On October 5, 1926, shortly after said mortgage had been constituted, the Mabalacat
Sugar Co., Inc., decided to increase the capacity of its sugar central by buying
additional machinery and equipment, so that instead of milling 150 tons daily, it could
produce 250. The estimated cost of said additional machinery and equipment was
approximately P100,000. In order to carry out this plan, B.A. Green, president of said
corporation, proposed to the plaintiff, B.H. Berkenkotter, to advance the necessary
amount for the purchase of said machinery and equipment, promising to reimburse him
as soon as he could obtain an additional loan from the mortgagees, the herein
defendants Cu Unjieng e Hijos. Having agreed to said proposition made in a letter dated
October 5, 1926 (Exhibit E), B.H. Berkenkotter, on October 9th of the same year,
delivered the sum of P1,710 to B.A. Green, president of the Mabalacat Sugar Co., Inc.,
the total amount supplied by him to said B.A. Green having been P25,750. Furthermore,
B.H. Berkenkotter had a credit of P22,000 against said corporation for unpaid salary.
With the loan of P25,750 and said credit of P22,000, the Mabalacat Sugar Co., Inc.,
purchased the additional machinery and equipment now in litigation.

On June 10, 1927, B.A. Green, president of the Mabalacat Sugar Co., Inc., applied to Cu
Unjieng e Hijos for an additional loan of P75,000 offering as security the additional
machinery and equipment acquired by said B.A. Green and installed in the sugar central
after the execution of the original mortgage deed, on April 27, 1927, together with
whatever additional equipment acquired with said loan. B.A. Green failed to obtain said
loan.

Article 1877 of the Civil Code provides as follows.

ART. 1877. A mortgage includes all natural accessions, improvements, growing


fruits, and rents not collected when the obligation falls due, and the amount of
any indemnities paid or due the owner by the insurers of the mortgaged property
or by virtue of the exercise of the power of eminent domain, with the
declarations, amplifications, and limitations established by law, whether the
estate continues in the possession of the person who mortgaged it or whether it
passes into the hands of a third person.

In the case of Bischoff vs. Pomar and Compaia General de Tabacos (12 Phil., 690),
cited with approval in the case of Cea vs. Villanueva (18 Phil., 538), this court laid
shown the following doctrine:

1. REALTY; MORTGAGE OF REAL ESTATE INCLUDES IMPROVEMENTS AND


FIXTURES. It is a rule, established by the Civil Code and also by the Mortgage
Law, with which the decisions of the courts of the United States are in accord,
that in a mortgage of real estate, the improvements on the same are included;
therefore, all objects permanently attached to a mortgaged building or land,
although they may have been placed there after the mortgage was constituted,
are also included. (Arts. 110 and 111 of the Mortgage Law, and 1877 of the Civil
Code; decision of U.S. Supreme Court in the matter of Royal Insurance Co. vs. R.
Miller, liquidator, and Amadeo [26 Sup. Ct. Rep., 46; 199 U.S., 353].)

2. ID.; ID.; INCLUSION OR EXCLUSION OF MACHINERY, ETC. In order that it


may be understood that the machinery and other objects placed upon and used
in connection with a mortgaged estate are excluded from the mortgage, when it
was stated in the mortgage that the improvements, buildings, and machinery
that existed thereon were also comprehended, it is indispensable that the
exclusion thereof be stipulated between the contracting parties.
The appellant contends that the installation of the machinery and equipment claimed by
him in the sugar central of the Mabalacat Sugar Company, Inc., was not permanent in
character inasmuch as B.A. Green, in proposing to him to advance the money for the
purchase thereof, made it appear in the letter, Exhibit E, that in case B.A. Green should
fail to obtain an additional loan from the defendants Cu Unjieng e Hijos, said machinery
and equipment would become security therefor, said B.A. Green binding himself not to
mortgage nor encumber them to anybody until said plaintiff be fully reimbursed for the
corporation's indebtedness to him.

Upon acquiring the machinery and equipment in question with money obtained as loan
from the plaintiff-appellant by B.A. Green, as president of the Mabalacat Sugar Co.,
Inc., the latter became owner of said machinery and equipment, otherwise B.A. Green,
as such president, could not have offered them to the plaintiff as security for the
payment of his credit.

Article 334, paragraph 5, of the Civil Code gives the character of real property to
"machinery, liquid containers, instruments or implements intended by the owner of any
building or land for use in connection with any industry or trade being carried on
therein and which are expressly adapted to meet the requirements of such trade or
industry.

If the installation of the machinery and equipment in question in the central of the
Mabalacat Sugar Co., Inc., in lieu of the other of less capacity existing therein, for its
sugar industry, converted them into real property by reason of their purpose, it cannot
be said that their incorporation therewith was not permanent in character because, as
essential and principal elements of a sugar central, without them the sugar central
would be unable to function or carry on the industrial purpose for which it was
established. Inasmuch as the central is permanent in character, the necessary
machinery and equipment installed for carrying on the sugar industry for which it has
been established must necessarily be permanent.

Furthermore, the fact that B.A. Green bound himself to the plaintiff B.H. Berkenkotter to
hold said machinery and equipment as security for the payment of the latter's credit
and to refrain from mortgaging or otherwise encumbering them until Berkenkotter has
been fully reimbursed therefor, is not incompatible with the permanent character of the
incorporation of said machinery and equipment with the sugar central of the Mabalacat
Sugar Co., Inc., as nothing could prevent B.A. Green from giving them as security at
least under a second mortgage.

As to the alleged sale of said machinery and equipment to the plaintiff and appellant
after they had been permanently incorporated with sugar central of the Mabalacat
Sugar Co., Inc., and while the mortgage constituted on said sugar central to Cu Unjieng
e Hijos remained in force, only the right of redemption of the vendor Mabalacat Sugar
Co., Inc., in the sugar central with which said machinery and equipment had been
incorporated, was transferred thereby, subject to the right of the defendants Cu
Unjieng e Hijos under the first mortgage.

For the foregoing considerations, we are of the opinion and so hold: (1) That the
installation of a machinery and equipment in a mortgaged sugar central, in lieu of
another of less capacity, for the purpose of carrying out the industrial functions of the
latter and increasing production, constitutes a permanent improvement on said sugar
central and subjects said machinery and equipment to the mortgage constituted
thereon (article 1877, Civil Code); (2) that the fact that the purchaser of the new
machinery and equipment has bound himself to the person supplying him the purchase
money to hold them as security for the payment of the latter's credit, and to refrain
from mortgaging or otherwise encumbering them does not alter the permanent
character of the incorporation of said machinery and equipment with the central; and
(3) that the sale of the machinery and equipment in question by the purchaser who was
supplied the purchase money, as a loan, to the person who supplied the money, after
the incorporation thereof with the mortgaged sugar central, does not vest the creditor
with ownership of said machinery and equipment but simply with the right of
redemption.

Wherefore, finding no error in the appealed judgment, it is affirmed in all its parts, with
costs to the appellant. So ordered.

Malcolm, Imperial, Butte, and Goddard, JJ., concur.


G.R. No. L-17500 May 16, 1967

PEOPLE'S BANK AND TRUST CO. and ATLANTIC GULF AND PACIFIC CO. OF
MANILA, plaintiffs-appellants,
vs.
DAHICAN LUMBER COMPANY, DAHICAN AMERICAN LUMBER CORPORATION
and CONNELL BROS. CO. (PHIL.), defendants-appellants.

Angel S. Gamboa for defendants-appellants.


Laurel Law Offices for plaintiffs-appellants.

DIZON, J.:

On September 8, 1948, Atlantic Gulf & Pacific Company of Manila, a West Virginia
corporation licensed to do business in the Philippines hereinafter referred to as
ATLANTIC sold and assigned all its rights in the Dahican Lumber concession to
Dahican Lumber Company hereinafter referred to as DALCO for the total sum of
$500,000.00, of which only the amount of $50,000.00 was paid. Thereafter, to develop
the concession, DALCO obtained various loans from the People's Bank & Trust Company
hereinafter referred to as the BANK amounting, as of July 13, 1950, to
P200,000.00. In addition, DALCO obtained, through the BANK, a loan of $250,000.00
from the Export-Import Bank of Washington D.C., evidenced by five promissory notes
of $50,000.00 each, maturing on different dates, executed by both DALCO and the
Dahican America Lumber Corporation, a foreign corporation and a stockholder of
DALCO, hereinafter referred to as DAMCO, all payable to the BANK or its order.

As security for the payment of the abovementioned loans, on July 13, 1950 DALCO
executed in favor of the BANK the latter acting for itself and as trustee for the
Export-Import Bank of Washington D.C. a deed of mortgage covering five parcels of
land situated in the province of Camarines Norte together with all the buildings and
other improvements existing thereon and all the personal properties of the mortgagor
located in its place of business in the municipalities of Mambulao and Capalonga,
Camarines Norte (Exhibit D). On the same date, DALCO executed a second mortgage
on the same properties in favor of ATLANTIC to secure payment of the unpaid balance
of the sale price of the lumber concession amounting to the sum of $450,000.00
(Exhibit G). Both deeds contained the following provision extending the mortgage lien
to properties to be subsequently acquired referred to hereafter as "after acquired
properties" by the mortgagor:

All property of every nature and description taken in exchange or replacement,


and all buildings, machinery, fixtures, tools equipment and other property which
the Mortgagor may hereafter acquire, construct, install, attach, or use in, to,
upon, or in connection with the premises, shall immediately be and become
subject to the lien of this mortgage in the same manner and to the same extent
as if now included therein, and the Mortgagor shall from time to time during the
existence of this mortgage furnish the Mortgagee with an accurate inventory of
such substituted and subsequently acquired property.

Both mortgages were registered in the Office of the Register of Deeds of Camarines
Norte. In addition thereto DALCO and DAMCO pledged to the BANK 7,296 shares of
stock of DALCO and 9,286 shares of DAMCO to secure the same obligations.

Upon DALCO's and DAMCO's failure to pay the fifth promissory note upon its maturity,
the BANK paid the same to the Export-Import Bank of Washington D.C., and the latter
assigned to the former its credit and the first mortgage securing it. Subsequently, the
BANK gave DALCO and DAMCO up to April 1, 1953 to pay the overdue promissory note.

After July 13, 1950 the date of execution of the mortgages mentioned above
DALCO purchased various machineries, equipment, spare parts and supplies in addition
to, or in replacement of some of those already owned and used by it on the date
aforesaid. Pursuant to the provision of the mortgage deeds quoted theretofore
regarding "after acquired properties," the BANK requested DALCO to submit complete
lists of said properties but the latter failed to do so. In connection with these purchases,
there appeared in the books of DALCO as due to Connell Bros. Company (Philippines)
a domestic corporation who was acting as the general purchasing agent of DALCO
thereinafter called CONNELL the sum of P452,860.55 and to DAMCO, the sum of
P2,151,678.34.

On December 16, 1952, the Board of Directors of DALCO, in a special meeting called for
the purpose, passed a resolution agreeing to rescind the alleged sales of equipment,
spare parts and supplies by CONNELL and DAMCO to it. Thereafter, the corresponding
agreements of rescission of sale were executed between DALCO and DAMCO, on the
one hand and between DALCO and CONNELL, on the other.

On January 13, 1953, the BANK, in its own behalf and that of ATLANTIC, demanded
that said agreements be cancelled but CONNELL and DAMCO refused to do so. As a
result, on February 12, 1953; ATLANTIC and the BANK, commenced foreclosure
proceedings in the Court of First Instance of Camarines Norte against DALCO and
DAMCO. On the same date they filed an ex-parte application for the appointment of a
Receiver and/or for the issuance of a writ of preliminary injunction to restrain DALCO
from removing its properties. The court granted both remedies and appointed George
H. Evans as Receiver. Upon defendants' motion, however, the court, in its order of
February 21, 1953, discharged the Receiver.

On March 2, 1953, defendants filed their answer denying the material allegations of the
complaint and alleging several affirmative defenses and a counterclaim.
On March 4 of the same year, CONNELL, filed a motion for intervention alleging that it
was the owner and possessor of some of the equipments, spare parts and supplies
which DALCO had acquired subsequent to the execution of the mortgages sought to be
foreclosed and which plaintiffs claimed were covered by the lien. In its order of March
18,1953 the Court granted the motion, as well as plaintiffs' motion to set aside the
order discharging the Receiver. Consequently, Evans was reinstated.

On April 1, 1953, CONNELL filed its answer denying the material averment of the
complaint, and asserting affirmative defenses and a counterclaim.

Upon motion of the parties the Court, on September 30, 1953, issued an order
transferring the venue of the action to the Court of First Instance of Manila where it
was docketed as Civil Case No. 20987.

On August 30, 1958, upon motion of all the parties, the Court ordered the sale of all the
machineries, equipment and supplies of DALCO, and the same were subsequently sold
for a total consideration of P175,000.00 which was deposited in court pending final
determination of the action. By a similar agreement one-half (P87,500.00) of this
amount was considered as representing the proceeds obtained from the sale of the
"undebated properties" (those not claimed by DAMCO and CONNELL), and the other
half as representing those obtained from the sale of the "after acquired properties".

After due trial, the Court, on July 15, 1960, rendered judgment as follows:

IN VIEW WHEREFORE, the Court:

1. Condemns Dahican Lumber Co. to pay unto People's Bank the sum of
P200,000,00 with 7% interest per annum from July 13, 1950, Plus another sum
of P100,000.00 with 5% interest per annum from July 13, 1950; plus 10% on
both principal sums as attorney's fees;

2. Condemns Dahican Lumber Co. to pay unto Atlantic Gulf the sum of
P900,000.00 with 4% interest per annum from July 3, 1950, plus 10% on both
principal as attorney's fees;

3. Condemns Dahican Lumber Co. to pay unto Connell Bros, the sum of
P425,860.55, and to pay unto Dahican American Lumber Co. the sum of
P2,151,678.24 both with legal interest from the date of the filing of the
respective answers of those parties, 10% of the principals as attorney's fees;

4. Orders that of the sum realized from the sale of the properties of
P175,000.00, after deducting the recognized expenses, one-half thereof be
adjudicated unto plaintiffs, the court no longer specifying the share of each
because of that announced intention under the stipulation of facts to "pool their
resources"; as to the other one-half, the same should be adjudicated unto both
plaintiffs, and defendant Dahican American and Connell Bros. in the proportion
already set forth on page 9, lines 21, 22 and 23 of the body of this decision; but
with the understanding that whatever plaintiffs and Dahican American and
Connell Bros. should receive from the P175,000.00 deposited in the Court shall
be applied to the judgments particularly rendered in favor of each;

5. No other pronouncement as to costs; but the costs of the receivership as to


the debated properties shall be borne by People's Bank, Atlantic Gulf, Connell
Bros., and Dahican American Lumber Co., pro-rata.

On the following day, the Court issued the following supplementary decision:

IN VIEW WHEREOF, the dispositive part of the decision is hereby amended in


order to add the following paragraph 6:

6. If the sums mentioned in paragraphs 1 and 2 are not paid within ninety (90)
days, the Court orders the sale at public auction of the lands object of the
mortgages to satisfy the said mortgages and costs of foreclosure.

From the above-quoted decision, all the parties appealed.

Main contentions of plaintiffs as appellants are the following: that the "after acquired
properties" were subject to the deeds of mortgage mentioned heretofore; that said
properties were acquired from suppliers other than DAMCO and CONNELL; that even
granting that DAMCO and CONNELL were the real suppliers, the rescission of the sales
to DALCO could not prejudice the mortgage lien in favor of plaintiffs; that considering
the foregoing, the proceeds obtained from the sale of the "after acquired properties" as
well as those obtained from the sale of the "undebated properties" in the total sum of
P175,000.00 should have been awarded exclusively to plaintiffs by reason of the
mortgage lien they had thereon; that damages should have been awarded to plaintiffs
against defendants, all of them being guilty of an attempt to defraud the former when
they sought to rescind the sales already mentioned for the purpose of defeating their
mortgage lien, and finally, that defendants should have been made to bear all the
expenses of the receivership, costs and attorney's fees.

On the other hand, defendants-appellants contend that the trial court erred: firstly, in
not holding that plaintiffs had no cause of action against them because the promissory
note sued upon was not yet due when the action to foreclose the mortgages was
commenced; secondly, in not holding that the mortgages aforesaid were null and void
as regards the "after acquired properties" of DALCO because they were not registered
in accordance with the Chattel Mortgage Law, the court erring, as a consequence, in
holding that said properties were subject to the mortgage lien in favor of plaintiffs;
thirdly, in not holding that the provision of the fourth paragraph of each of said
mortgages did not automatically make subject to such mortgages the "after acquired
properties", the only meaning thereof being that the mortgagor was willing to constitute
a lien over such properties; fourthly, in not ruling that said stipulation was void as
against DAMCO and CONNELL and in not awarding the proceeds obtained from the sale
of the "after acquired properties" to the latter exclusively; fifthly, in appointing a
Receiver and in holding that the damages suffered by DAMCO and CONNELL by reason
of the depreciation or loss in value of the "after acquired properties" placed under
receivership was damnum absque injuria and, consequently, in not awarding, to said
parties the corresponding damages claimed in their counterclaim; lastly, in sentencing
DALCO and DAMCO to pay attorney's fees and in requiring DAMCO and CONNELL to
pay the costs of the Receivership, instead of sentencing plaintiffs to pay attorney's fees.

Plaintiffs' brief as appellants submit six assignments of error, while that of defendants
also as appellants submit a total of seventeen. However, the multifarious issues thus
before Us may be resolved, directly or indirectly, by deciding the following issues:

Firstly, are the so-called "after acquired properties" covered by and subject to the deeds
of mortgage subject of foreclosure?; secondly, assuming that they are subject thereto,
are the mortgages valid and binding on the properties aforesaid inspite of the fact that
they were not registered in accordance with the provisions of the Chattel Mortgage
Law?; thirdly, assuming again that the mortgages are valid and binding upon the "after
acquired properties", what is the effect thereon, if any, of the rescission of sales
entered into, on the one hand, between DAMCO and DALCO, and between DALCO and
CONNELL, on the other?; and lastly, was the action to foreclose the mortgages
premature?

A. Under the fourth paragraph of both deeds of mortgage, it is crystal clear that all
property of every nature and description taken in exchange or replacement, as well as
all buildings, machineries, fixtures, tools, equipments, and other property that the
mortgagor may acquire, construct, install, attach; or use in, to upon, or in connection
with the premises that is, its lumber concession "shall immediately be and become
subject to the lien" of both mortgages in the same manner and to the same extent as if
already included therein at the time of their execution. As the language thus used
leaves no room for doubt as to the intention of the parties, We see no useful purpose in
discussing the matter extensively. Suffice it to say that the stipulation referred to is
common, and We might say logical, in all cases where the properties given as collateral
are perishable or subject to inevitable wear and tear or were intended to be sold, or to
be used thus becoming subject to the inevitable wear and tear but with the
understanding express or implied that they shall be replaced with others to be
thereafter acquired by the mortgagor. Such stipulation is neither unlawful nor immoral,
its obvious purpose being to maintain, to the extent allowed by circumstances, the
original value of the properties given as security. Indeed, if such properties were of the
nature already referred to, it would be poor judgment on the part of the creditor who
does not see to it that a similar provision is included in the contract.
B. But defendants contend that, granting without admitting, that the deeds of mortgage
in question cover the "after acquired properties" of DALCO, the same are void and
ineffectual because they were not registered in accordance with the Chattel Mortgage
Law. In support of this and of the proposition that, even if said mortgages were valid,
they should not prejudice them, the defendants argue (1) that the deeds do not
describe the mortgaged chattels specifically, nor were they registered in accordance
with the Chattel Mortgage Law; (2) that the stipulation contained in the fourth
paragraph thereof constitutes "mere executory agreements to give a lien" over the
"after acquired properties" upon their acquisition; and (3) that any mortgage stipulation
concerning "after acquired properties" should not prejudice creditors and other third
persons such as DAMCO and CONNELL.

The stipulation under consideration strongly belies defendants contention. As adverted


to hereinbefore, it states that all property of every nature, building, machinery etc.
taken in exchange or replacement by the mortgagor "shall immediately be and become
subject to the lien of this mortgage in the same manner and to the same extent as if
now included therein". No clearer language could have been chosen.

Conceding, on the other hand, that it is the law in this jurisdiction that, to affect third
persons, a chattel mortgage must be registered and must describe the mortgaged
chattels or personal properties sufficiently to enable the parties and any other person to
identify them, We say that such law does not apply to this case.

As the mortgages in question were executed on July 13, 1950 with the old Civil Code
still in force, there can be no doubt that the provisions of said code must govern their
interpretation and the question of their validity. It happens however, that Articles 334
and 1877 of the old Civil Code are substantially reproduced in Articles 415 and 2127,
respectively, of the new Civil Code. It is, therefore, immaterial in this case whether we
take the former or the latter as guide in deciding the point under consideration.

Article 415 does not define real property but enumerates what are considered as such,
among them being machinery, receptacles, instruments or replacements intended by
owner of the tenement for an industry or works which may be carried on in a building
or on a piece of land, and shall tend directly to meet the needs of the said industry or
works.

On the strength of the above-quoted legal provisions, the lower court held that
inasmuch as "the chattels were placed in the real properties mortgaged to plaintiffs,
they came within the operation of Art. 415, paragraph 5 and Art. 2127 of the New Civil
Code".

We find the above ruling in agreement with our decisions on the subject:
(1) In Berkenkotter vs. Cu Unjieng, 61 Phil. 663, We held that Article 334, paragraph 5
of the Civil Code (old) gives the character of real property to machinery, liquid
containers, instruments or replacements intended by the owner of any building or land
for use in connection with any industry or trade being carried on therein and which are
expressly adapted to meet the requirements of such trade or industry.

(2) In Cu Unjieng e Hijos vs. Mabalacat Sugar Co., 58 Phil. 439, We held that a
mortgage constituted on a sugar central includes not only the land on which it is built
but also the buildings, machinery and accessories installed at the time the mortgage
was constituted as well as the buildings, machinery and accessories belonging to the
mortgagor, installed after the constitution thereof .

It is not disputed in the case at bar that the "after acquired properties" were purchased
by DALCO in connection with, and for use in the development of its lumber concession
and that they were purchased in addition to, or in replacement of those already existing
in the premises on July 13, 1950. In Law, therefore, they must be deemed to have
been immobilized, with the result that the real estate mortgages involved herein
which were registered as such did not have to be registered a second time as chattel
mortgages in order to bind the "after acquired properties" and affect third parties.

But defendants, invoking the case of Davao Sawmill Company vs. Castillo, 61 Phil. 709,
claim that the "after acquired properties" did not become immobilized because DALCO
did not own the whole area of its lumber concession all over which said properties were
scattered.

The facts in the Davao Sawmill case, however, are not on all fours with the ones
obtaining in the present. In the former, the Davao Sawmill Company, Inc., had
repeatedly treated the machinery therein involved as personal property by executing
chattel mortgages thereon in favor of third parties, while in the present case the parties
had treated the "after acquired properties" as real properties by expressly and
unequivocally agreeing that they shall automatically become subject to the lien of the
real estate mortgages executed by them. In the Davao Sawmill decision it was, in fact,
stated that "the characterization of the property as chattels by the appellant is
indicative of intention and impresses upon the property the character determined by the
parties" (61 Phil. 112, emphasis supplied). In the present case, the characterization of
the "after acquired properties" as real property was made not only by one but by both
interested parties. There is, therefore, more reason to hold that such consensus
impresses upon the properties the character determined by the parties who must now
be held in estoppel to question it.

Moreover, quoted in the Davao Sawmill case was that of Valdez vs. Central Altagracia,
Inc. (225 U.S. 58) where it was held that while under the general law of Puerto Rico,
machinery placed on property by a tenant does not become immobilized, yet, when the
tenant places it there pursuant to contract that it shall belong to the owner, it then
becomes immobilized as to that tenant and even as against his assignees and creditors
who had sufficient notice of such stipulation. In the case at bar it is not disputed that
DALCO purchased the "after acquired properties" to be placed on, and be used in the
development of its lumber concession, and agreed further that the same shall become
immediately subject to the lien constituted by the questioned mortgages. There is also
abundant evidence in the record that DAMCO and CONNELL had full notice of such
stipulation and had never thought of disputed validity until the present case was filed.
Consequently all of them must be deemed barred from denying that the properties in
question had become immobilized.

What We have said heretofore sufficiently disposes all the arguments adduced by
defendants in support their contention that the mortgages under foreclosure are void,
and, that, even if valid, are ineffectual as against DAMCO and CONNELL.

Now to the question of whether or not DAMCO CONNELL have rights over the "after
acquired properties" superior to the mortgage lien constituted thereon in favor of
plaintiffs. It is defendants' contention that in relation to said properties they are "unpaid
sellers"; that as such they had not only a superior lien on the "after acquired properties"
but also the right to rescind the sales thereof to DALCO.

This contention it is obvious would have validity only if it were true that DAMCO
and CONNELL were the suppliers or vendors of the "after acquired properties".
According to the record, plaintiffs did not know their exact identity and description prior
to the filing of the case bar because DALCO, in violation of its obligation under the
mortgages, had failed and refused theretofore to submit a complete list thereof. In the
course of the proceedings, however, when defendants moved to dissolve the order of
receivership and the writ of preliminary injunction issued by the lower court, they
attached to their motion the lists marked as Exhibits 1, 2 and 3 describing the
properties aforesaid. Later on, the parties agreed to consider said lists as identifying
and describing the "after acquire properties," and engaged the services of auditors to
examine the books of DALCO so as to bring out the details thereof. The report of the
auditors and its annexes (Exhibits V, V-1 V4) show that neither DAMCO nor CONNELL
had supplied any of the goods of which they respective claimed to be the unpaid seller;
that all items were supplied by different parties, neither of whom appeared to be
DAMCO or CONNELL that, in fact, CONNELL collected a 5% service charge on the net
value of all items it claims to have sold to DALCO and which, in truth, it had purchased
for DALCO as the latter's general agent; that CONNELL had to issue its own invoices in
addition to those o f the real suppliers in order to collect and justify such service
charge.

Taking into account the above circumstances together with the fact that DAMCO was a
stockholder and CONNELL was not only a stockholder but the general agent of DALCO,
their claim to be the suppliers of the "after acquired required properties" would seem to
be preposterous. The most that can be claimed on the basis of the evidence is that
DAMCO and CONNELL probably financed some of the purchases. But if DALCO still
owes them any amount in this connection, it is clear that, as financiers, they can not
claim any right over the "after acquired properties" superior to the lien constituted
thereon by virtue of the deeds of mortgage under foreclosure. Indeed, the execution of
the rescission of sales mentioned heretofore appears to be but a desperate attempt to
better or improve DAMCO and CONNELL's position by enabling them to assume the role
of "unpaid suppliers" and thus claim a vendor's lien over the "after acquired properties".
The attempt, of course, is utterly ineffectual, not only because they are not the "unpaid
sellers" they claim to be but also because there is abundant evidence in the record
showing that both DAMCO and CONNELL had known and admitted from the beginning
that the "after acquired properties" of DALCO were meant to be included in the first and
second mortgages under foreclosure.

The claim that Belden, of ATLANTIC, had given his consent to the rescission, expressly
or otherwise, is of no consequence and does not make the rescission valid and legally
effective. It must be stated clearly, however, in justice to Belden, that, as a member of
the Board of Directors of DALCO, he opposed the resolution of December 15, 1952
passed by said Board and the subsequent rescission of the sales.

Finally, defendants claim that the action to foreclose the mortgages filed on February
12, 1953 was premature because the promissory note sued upon did not fall due until
April 1 of the same year, concluding from this that, when the action was commenced,
the plaintiffs had no cause of action. Upon this question the lower court says the
following in the appealed judgment;

The other is the defense of prematurity of the causes of action in that plaintiffs,
as a matter of grace, conceded an extension of time to pay up to 1 April, 1953
while the action was filed on 12 February, 1953, but, as to this, the Court taking
it that there is absolutely no debate that Dahican Lumber Co., was insolvent as
of the date of the filing of the complaint, it should follow that the debtor thereby
lost the benefit to the period.

x x x unless he gives a guaranty or security for the debt . . . (Art. 1198, New Civil
Code);

and as the guaranty was plainly inadequate since the claim of plaintiffs reached
in the aggregate, P1,200,000 excluding interest while the aggregate price of the
"after-acquired" chattels claimed by Connell under the rescission contracts was
P1,614,675.94, Exh. 1, Exh. V, report of auditors, and as a matter of fact, almost
all the properties were sold afterwards for only P175,000.00, page 47, Vol. IV,
and the Court understanding that when the law permits the debtor to enjoy the
benefits of the period notwithstanding that he is insolvent by his giving a
guaranty for the debt, that must mean a new and efficient guaranty, must
concede that the causes of action for collection of the notes were not premature.
Very little need be added to the above. Defendants, however, contend that the lower
court had no basis for finding that, when the action was commenced, DALCO was
insolvent for purposes related to Article 1198, paragraph 1 of the Civil Code. We find,
however, that the finding of the trial court is sufficiently supported by the evidence
particularly the resolution marked as Exhibit K, which shows that on December 16, 1952
in the words of the Chairman of the Board DALCO was "without funds, neither
does it expect to have any funds in the foreseeable future." (p. 64, record on appeal).

The remaining issues, namely, whether or not the proceeds obtained from the sale of
the "after acquired properties" should have been awarded exclusively to the plaintiffs or
to DAMCO and CONNELL, and if in law they should be distributed among said parties,
whether or not the distribution should be pro-rata or otherwise; whether or not
plaintiffs are entitled to damages; and, lastly, whether or not the expenses incidental to
the Receivership should be borne by all the parties on a pro-rata basis or exclusively by
one or some of them are of a secondary nature as they are already impliedly resolved
by what has been said heretofore.

As regard the proceeds obtained from the sale of the of after acquired properties" and
the "undebated properties", it is clear, in view of our opinion sustaining the validity of
the mortgages in relation thereto, that said proceeds should be awarded exclusively to
the plaintiffs in payment of the money obligations secured by the mortgages under
foreclosure.

On the question of plaintiffs' right to recover damages from the defendants, the law
(Articles 1313 and 1314 of the New Civil Code) provides that creditors are protected in
cases of contracts intended to defraud them; and that any third person who induces
another to violate his contract shall be liable for damages to the other contracting
party. Similar liability is demandable under Arts. 20 and 21 which may be given
retroactive effect (Arts. 225253) or under Arts. 1902 and 2176 of the Old Civil Code.

The facts of this case, as stated heretofore, clearly show that DALCO and DAMCO, after
failing to pay the fifth promissory note upon its maturity, conspired jointly with
CONNELL to violate the provisions of the fourth paragraph of the mortgages under
foreclosure by attempting to defeat plaintiffs' mortgage lien on the "after acquired
properties". As a result, the plaintiffs had to go to court to protect their rights thus
jeopardized. Defendants' liability for damages is therefore clear.

However, the measure of the damages suffered by the plaintiffs is not what the latter
claim, namely, the difference between the alleged total obligation secured by the
mortgages amounting to around P1,200,000.00, plus the stipulated interest and
attorney's fees, on the one hand, and the proceeds obtained from the sale of "after
acquired properties", and of those that were not claimed neither by DAMCO nor
CONNELL, on the other. Considering that the sale of the real properties subject to the
mortgages under foreclosure has not been effected, and considering further the lack of
evidence showing that the true value of all the properties already sold was not realized
because their sale was under stress, We feel that We do not have before Us the true
elements or factors that should determine the amount of damages that plaintiffs are
entitled recover from defendants. It is, however, our considered opinion that, upon the
facts established, all the expenses of the Receivership, which was deemed necessary to
safeguard the rights of the plaintiffs, should be borne by the defendants, jointly and
severally, in the same manner that all of them should pay to the plaintiffs, jointly a
severally, attorney's fees awarded in the appealed judgment.

In consonance with the portion of this decision concerning the damages that the
plaintiffs are entitled to recover from the defendants, the record of this case shall be
remanded below for the corresponding proceedings.

Modified as above indicated, the appealed judgment is affirmed in all other respects.
With costs.

Concepcion, C.J., Reyes, J.B.L., Regala, Makalintal, Bengzon, J.P., Zaldivar, Sanchez
and Castro, JJ., concur.
G.R. No. L-19527 March 30, 1963

RICARDO PRESBITERO, in his capacity as Executor of the Testate Estate of


EPERIDION PRESBITERO,petitioner,
vs.
THE HON. JOSE F. FERNANDEZ, HELEN CARAM NAVA, and the PROVINCIAL
SHERIFF OF NEGROS OCCIDENTAL, respondents.

San Juan, Africa and Benedicto and Hilado and Hilado for petitioner.
Paredes, Poblador, Cruz and Nazareno and Manuel Soriano for respondents.

REYES, J.B.L., J.:

Petition for a writ of certiorari against the Court of First Instance of Negros Occidental.

It appears that during the lifetime of Esperidion Presbitero, judgment was rendered
against him by the Court of Appeals on October 14, 1959, in CA-G.R. No. 20879,

... to execute in favor of the plaintiff, within 30 days from the time this judgment
becomes final, a deed of reconveyance of Lot No. 788 of the cadastral survey of
Valladolid, free from all liens and encumbrances, and another deed of
reconveyance of a 7-hectare portion of Lot No. 608 of the same cadastral survey,
also free from all liens and encumbrances, or, upon failure to do so, to pay to the
plaintiff the value of each of the said properties, as may be determined by the
Court a quo upon evidence to be presented by the parties before it. The
defendant is further adjudged to pay to the plaintiff the value of the products
received by him from the 5-hectare portion equivalent to 20 cavans of palay per
hectare every year, or 125 cavans yearly, at the rate of P10.00 per cavan, from
1951 until possession of the said 5-hectare portion is finally delivered to the
plaintiff with legal interest thereon from the time the complaint was filed; and to
pay to the plaintiff the sum of P1,000.00 by way of attorney's fees, plus costs.

This judgment, which became final, was a modification of a decision of the Court of
First Instance of Negros Occidental, in its Civil Case No. 3492, entitled "Helen Caram
Nava, plaintiff, versus Esperidion Presbitero, defendant."

Thereafter, plaintiff's counsel, in a letter dated December 8, 1959, sought in vain to


amicably settle the case through petitioner's son, Ricardo Presbitero. When no response
was forthcoming, said counsel asked for, and the court a quo ordered on June 9, 1960,
the issuance of a partial writ of execution for the sum of P12,250.00. On the following
day, June 10, 1960, said counsel, in another friendly letter, reiterated his previous
suggestion for an amicable settlement, but the same produced no fruitful result.
Thereupon, on June 21, 1960, the sheriff levied upon and garnished the sugar quotas
allotted to plantation audit Nos. 26-237, 26-238, 26-239, 26-240 and 26-241 adhered to
the Ma-ao Mill District and "registered in the name of Esperidion Presbitero as the
original plantation-owner", furnishing copies of the writ of execution and the notice of
garnishment to the manager of the Ma-ao Sugar Central Company, Bago, Negros
Occidental, and the Sugar Quota Administration at Bacolod City, but without presenting
for registration copies thereof to the Register of Deeds.

Plaintiff Helen Caram Nava (herein respondent) then moved the court, on June 22,
1960, to hear evidence on the market value of the lots; and after some hearings,
occasionally protracted by postponements, the trial court, on manifestation of
defendant's willingness to cede the properties in litigation, suspended the proceedings
and ordered him to segregate the portion of Lot 608 pertaining to the plaintiff from the
mass of properties belonging to the defendant within a period to expire on August 24,
1960, and to effect the final conveyance of the said portion of Lot 608 and the whole of
Lot 788 free from any lien and encumbrance whatsoever. Because of Presbitero's failure
to comply with this order within the time set forth by the court, the plaintiff again
moved on August 25, 1960 to declare the market value of the lots in question to be
P2,500.00 per hectare, based on uncontradicted evidence previously adduced. But the
court, acting on a prayer of defendant Presbitero, in an order dated August 27, 1960,
granted him twenty (20) days to finalize the survey of Lot 608, and ordered him to
execute a reconveyance of Lot 788 not later than August 31, 1960. Defendant again
defaulted; and so plaintiff, on September 21, 1960, moved the court for payment by the
defendant of the sum of P35,000.00 for the 14 hectares of land at P2,500.00 to the
hectare, and the court, in its order dated September 24, 1960, gave the defendant until
October 15, 1960 either to pay the value of the 14 hectares at the rate given or to
deliver the clean titles of the lots. On October 15, 1960, the defendant finally delivered
Certificate of Title No. T-28046 covering Lot 788, but not the title covering Lot 608
because of an existing encumbrance in favor of the Philippine National Bank. In view
thereof, Helen Caram Nava moved for, and secured on October 19, 1960, a writ of
execution for P17,500.00, and on the day following wrote the sheriff to proceed with
the auction sale of the sugar quotas previously scheduled for November 5, 1960. The
sheriff issued the notice of auction sale on October 20, 1960.

On October 22, 1960, death overtook the defendant Esperidion Presbitero.

Proceedings for the settlement of his estate were commenced in Special Proceedings
No. 2936 of the Court of First Instance of Negros Occidental; and on November 4,
1960, the special administrator, Ricardo Presbitero, filed an urgent motion, in Case No.
3492, to set aside the writs of execution, and to order the sheriff to desist from holding
the auction sale on the grounds that the levy on the sugar quotas was invalid because
the notice thereof was not registered with the Register of Deeds, as for real property,
and that the writs, being for sums of money, are unenforceable since Esperidion
Presbitero died on October 22, 1960, and, therefore, could only be enforced as a money
claim against his estate.
This urgent motion was heard on November 5, 1960, but the auction sale proceeded on
the same date, ending in the plaintiff's putting up the highest bid for P34,970.11; thus,
the sheriff sold 21,640 piculs of sugar quota to her.

On November 10, 1960, plaintiff Nava filed her opposition to Presbitero's urgent motion
of November 4, 1960; the latter filed on May 4, 1961 a supplement to his urgent
motion; and on May 8 and 23, 1961, the court continued hearings on the motion, and
ultimately denied it on November 18, 1961.

On January 11, 1962, plaintiff Nava also filed an urgent motion to order the Ma-ao
Sugar Central to register the sugar quotas in her name and to deliver the rentals of
these quotas corresponding to the crop year 1960-61 and succeeding years to her. The
court granted this motion in its order dated February 3, 1962. A motion for
reconsideration by Presbitero was denied in a subsequent order under date of March 5,
1962. Wherefore, Presbitero instituted the present proceedings for certiorari.

A preliminary restraining writ was thereafter issued by the court against the
respondents from implementing the aforesaid orders of the respondent Judge, dated
February 3, 1960 and March 5, 1962, respectively. The petition further seeks the setting
aside of the sheriff's certificate of sale of the sugar quotas made out in favor of Helen
Caram Nava, and that she be directed to file the judgment credit in her favor in Civil
Case No. 3492 as a money claim in the proceedings to settle the Estate of Esperidion
Presbitero.

The petitioner denies having been personally served with notice of the garnishment of
the sugar quotas, but this disclaimer cannot be seriously considered since it appears
that he was sent a copy of the notice through the chief of police of Valladolid on June
21, 1960, as certified to by the sheriff, and that he had actual knowledge of the
garnishment, as shown by his motion of November 4, 1960 to set aside the writs of
execution and to order the sheriff to desist from holding the auction sale.

Squarely at issue in this case is whether sugar quotas are real (immovable) or personal
properties. If they be realty, then the levy upon them by the sheriff is null and void for
lack of compliance with the procedure prescribed in Section 14, Rule 39, in relation with
Section 7, Rule 59, of the Rules of Court requiring "the filing with the register of deeds
a copy of the orders together with a description of the property . . . ."

In contending that sugar quotas are personal property, the respondent, Helen Caram
Nava, invoked the test formulated by Manresa (3 Manresa, 6th Ed. 43), and opined that
sugar quotas can be carried from place to place without injury to the land to which they
are attached, and are not one of those included in Article 415 of the Civil Code; and not
being thus included, they fall under the category of personal properties:

ART. 416. The following are deemed to be personal property:


xxx xxx xxx

4. In general, all things which can be transported from place to place without
impairment of the real property to which they are fixed.

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be
admitted and approved by this Honorable Court, without prejudice to the parties
adducing other evidence to prove their case not covered by this stipulation of
facts. 1wph1.t

Respondent likewise points to evidence she submitted that sugar quotas are, in fact,
transferred apart from the plantations to which they are attached, without impairing,
destroying, or diminishing the potentiality of either quota or plantation. She was
sustained by the lower court when it stated that "it is a matter of public knowledge and
it is universal practice in this province, whose principal industry is sugar, to transfer by
sale, lease, or otherwise, sugar quota allocations from one plantation to any other" and
that it is "specious to insist that quotas are improvements attaching to one plantation
when in truth and in fact they are no longer attached thereto for having been sold or
leased away to be used in another plantation". Respondent would add weight to her
argument by invoking the role that sugar quotas play in our modern social and
economic life, and cites that the Sugar Office does not require any registration with the
Register of Deeds for the validity of the sale of these quotas; and, in fact, those here in
question were not noted down in the certificate of title of the land to which they
pertain; and that Ricardo Presbitero had leased sugar quotas independently of the land.
The respondent cites further that the U.S.-Philippine Trade Relations Act, approved by
the United States Congress in 1946, limiting the production of unrefined sugar in the
Philippines did not allocate the quotas for said unrefined sugar among lands planted to
sugarcane but among "the sugar producing mills and plantation OWNERS", and for this
reason Section 3 of Executive Order No. 873, issued by Governor General Murphy,
authorizes the lifting of sugar allotments from one land to another by means only of
notarized deeds.

While respondent's arguments are thought-provoking, they cannot stand against the
positive mandate of the pertinent statute. The Sugar Limitation Law (Act 4166, as
amended) provides

SEC. 9. The allotment corresponding to each piece of land under the provisions
of this Act shall be deemed to be an improvement attaching to the land entitled
thereto ....

and Republic Act No. 1825 similarly provides


SEC. 4. The production allowance or quotas corresponding to each piece of land under
the provisions of this Act shall be deemed to be an improvement attaching to the land
entitled thereto ....

And Executive Order No. 873 defines "plantation" as follows:

(a) The term 'plantation' means any specific area of land under sole or undivided
ownership to which is attached an allotment of centrifugal sugar.

Thus, under express provisions of law, the sugar quota allocations are accessories to
land, and can not have independent existence away from a plantation, although the
latter may vary. Indeed, this Court held in the case of Abelarde vs. Lopez, 74 Phil. 344,
that even if a contract of sale of haciendas omitted "the right, title, interest,
participation, action (and) rent" which the grantors had or might have in relation to the
parcels of land sold, the sale would include the quotas, it being provided in Section 9,
Act 4166, that the allotment is deemed an improvement attached to the land, and that
at the time the contract of sale was signed the land devoted to sugar were practically of
no use without the sugar allotment.

As an improvement attached to land, by express provision of law, though not physically


so united, the sugar quotas are inseparable therefrom, just like servitudes and other
real rights over an immovable. Article 415 of the Civil Code, in enumerating what are
immovable properties, names

10. Contracts for public works, and servitudes and other real rights over
immovable property. (Emphasis supplied)

It is by law, therefore, that these properties are immovable or real, Article 416 of the
Civil Code being made to apply only when the thing (res) sought to be classified is not
included in Article 415.

The fact that the Philippine Trade Act of 1946 (U.S. Public Law 371-79th Congress)
allows transfers of sugar quotas does not militate against their immovability. Neither
does the fact that the Sugar Quota Office does not require registration of sales of
quotas with the Register of Deeds for their validity, nor the fact that allocation of
unrefined sugar quotas is not made among lands planted to sugarcane but among "the
sugar producing mills and plantation OWNERS", since the lease or sale of quotas
are voluntary transactions, the regime of which, is not necessarily identical
to involuntary transfers or levies; and there cannot be a sugar plantation owner without
land to which the quota is attached; and there can exist no quota without there being
first a corresponding plantation.

Since the levy is invalid for non-compliance with law, it is impertinent to discuss the
survival or non-survival of claims after the death of the judgment debtor, gauged from
the moment of actual levy. Suffice it to state that, as the case presently stands, the
writs of execution are not in question, but the levy on the quotas, and, because of its
invalidity, the levy amount to no levy at all. Neither is it necessary, or desirable, to pass
upon the conscionableness or unconscionableness of the amount produced in the
auction sale as compared with the actual value of the quotas inasmuch as the sale must
necessarily be also illegal.

As to the remedial issue that the respondents have presented: that certiorari does not
lie in this case because the petitioner had a remedy in the lower court to "suspend" the
auction sale, but did not avail thereof, it may be stated that the latter's urgent motion
of November 4, 1960, a day before the scheduled sale (though unresolved by the court
on time), did ask for desistance from holding the sale.

WHEREFORE, the preliminary injunction heretofore granted is hereby made permanent,


and the sheriff's certificate of sale of the sugar quotas in question declared null and
void. Costs against respondent Nava.

Bengzon, C.J., Padilla, Labrador, Barrera, Paredes, Dizon and Regala, JJ., concur.
Makalintal, J., took no part.
G.R. No. L-26278 August 4, 1927

LEON SIBAL , plaintiff-appellant,


vs.
EMILIANO J. VALDEZ ET AL., defendants.
EMILIANO J. VALDEZ, appellee.

J. E. Blanco for appellant.


Felix B. Bautista and Santos and Benitez for appellee.

JOHNSON, J.:

The action was commenced in the Court of First Instance of the Province of Tarlac on
the 14th day of December 1924. The facts are about as conflicting as it is possible for
facts to be, in the trial causes.

As a first cause of action the plaintiff alleged that the defendant Vitaliano Mamawal,
deputy sheriff of the Province of Tarlac, by virtue of a writ of execution issued by the
Court of First Instance of Pampanga, attached and sold to the defendant Emiliano J.
Valdez the sugar cane planted by the plaintiff and his tenants on seven parcels of land
described in the complaint in the third paragraph of the first cause of action; that within
one year from the date of the attachment and sale the plaintiff offered to redeem said
sugar cane and tendered to the defendant Valdez the amount sufficient to cover the
price paid by the latter, the interest thereon and any assessments or taxes which he
may have paid thereon after the purchase, and the interest corresponding thereto and
that Valdez refused to accept the money and to return the sugar cane to the plaintiff.

As a second cause of action, the plaintiff alleged that the defendant Emiliano J. Valdez
was attempting to harvest the palay planted in four of the seven parcels mentioned in
the first cause of action; that he had harvested and taken possession of the palay in
one of said seven parcels and in another parcel described in the second cause of action,
amounting to 300 cavans; and that all of said palay belonged to the plaintiff.

Plaintiff prayed that a writ of preliminary injunction be issued against the defendant
Emiliano J. Valdez his attorneys and agents, restraining them (1) from distributing him
in the possession of the parcels of land described in the complaint; (2) from taking
possession of, or harvesting the sugar cane in question; and (3) from taking
possession, or harvesting the palay in said parcels of land. Plaintiff also prayed that a
judgment be rendered in his favor and against the defendants ordering them to consent
to the redemption of the sugar cane in question, and that the defendant Valdez be
condemned to pay to the plaintiff the sum of P1,056 the value of palay harvested by
him in the two parcels above-mentioned ,with interest and costs.
On December 27, 1924, the court, after hearing both parties and upon approval of the
bond for P6,000 filed by the plaintiff, issued the writ of preliminary injunction prayed for
in the complaint.

The defendant Emiliano J. Valdez, in his amended answer, denied generally and
specifically each and every allegation of the complaint and step up the following
defenses:

(a) That the sugar cane in question had the nature of personal property and was
not, therefore, subject to redemption;

(b) That he was the owner of parcels 1, 2 and 7 described in the first cause of
action of the complaint;

(c) That he was the owner of the palay in parcels 1, 2 and 7; and

(d) That he never attempted to harvest the palay in parcels 4 and 5.

The defendant Emiliano J. Valdez by way of counterclaim, alleged that by reason of the
preliminary injunction he was unable to gather the sugar cane, sugar-cane shoots
(puntas de cana dulce) palay in said parcels of land, representing a loss to him of
P8,375.20 and that, in addition thereto, he suffered damages amounting to P3,458.56.
He prayed, for a judgment (1) absolving him from all liability under the complaint; (2)
declaring him to be the absolute owner of the sugar cane in question and of the palay
in parcels 1, 2 and 7; and (3) ordering the plaintiff to pay to him the sum of
P11,833.76, representing the value of the sugar cane and palay in question, including
damages.

Upon the issues thus presented by the pleadings the cause was brought on for trial.
After hearing the evidence, and on April 28, 1926, the Honorable Cayetano Lukban,
judge, rendered a judgment against the plaintiff and in favor of the defendants

(1) Holding that the sugar cane in question was personal property and, as such,
was not subject to redemption;

(2) Absolving the defendants from all liability under the complaint; and

(3) Condemning the plaintiff and his sureties Cenon de la Cruz, Juan Sangalang
and Marcos Sibal to jointly and severally pay to the defendant Emiliano J. Valdez
the sum of P9,439.08 as follows:

(a) P6,757.40, the value of the sugar cane;

(b) 1,435.68, the value of the sugar-cane shoots;


(c) 646.00, the value of palay harvested by plaintiff;

(d) 600.00, the value of 150 cavans of palay which the defendant was not
able to raise by reason of the injunction, at P4 cavan. 9,439.08 From that
judgment the plaintiff appealed and in his assignments of error contends
that the lower court erred: (1) In holding that the sugar cane in question
was personal property and, therefore, not subject to redemption;

(2) In holding that parcels 1 and 2 of the complaint belonged to Valdez, as well
as parcels 7 and 8, and that the palay therein was planted by Valdez;

(3) In holding that Valdez, by reason of the preliminary injunction failed to


realized P6,757.40 from the sugar cane and P1,435.68 from sugar-cane shoots
(puntas de cana dulce);

(4) In holding that, for failure of plaintiff to gather the sugar cane on time, the
defendant was unable to raise palay on the land, which would have netted him
the sum of P600; and.

(5) In condemning the plaintiff and his sureties to pay to the defendant the sum
of P9,439.08.

It appears from the record:

(1) That on May 11, 1923, the deputy sheriff of the Province of Tarlac, by virtue
of writ of execution in civil case No. 20203 of the Court of First Instance of
Manila (Macondray & Co., Inc. vs. Leon Sibal),levied an attachment on eight
parcels of land belonging to said Leon Sibal, situated in the Province of Tarlac,
designated in the second of attachment as parcels 1, 2, 3, 4, 5, 6, 7 and 8
(Exhibit B, Exhibit 2-A).

(2) That on July 30, 1923, Macondray & Co., Inc., bought said eight parcels of
land, at the auction held by the sheriff of the Province of Tarlac, for the sum to
P4,273.93, having paid for the said parcels separately as follows (Exhibit C, and
2-A):

Parcel
1 ..................................................................... P1.00
2 ..................................................................... 2,000.00
3 ..................................................................... 120.93
4 ..................................................................... 1,000.00
5 ..................................................................... 1.00
6 ..................................................................... 1.00
7 with the house thereon .......................... 150.00

8 ..................................................................... 1,000.00
==========
4,273.93

(3) That within one year from the sale of said parcel of land, and on the 24th
day of September, 1923, the judgment debtor, Leon Sibal, paid P2,000 to
Macondray & Co., Inc., for the account of the redemption price of said parcels of
land, without specifying the particular parcels to which said amount was to
applied. The redemption price said eight parcels was reduced, by virtue of said
transaction, to P2,579.97 including interest (Exhibit C and 2).

The record further shows:

(1) That on April 29, 1924, the defendant Vitaliano Mamawal, deputy sheriff of
the Province of Tarlac, by virtue of a writ of execution in civil case No. 1301 of
the Province of Pampanga (Emiliano J. Valdez vs. Leon Sibal 1. the same
parties in the present case), attached the personal property of said Leon Sibal
located in Tarlac, among which was included the sugar cane now in question in
the seven parcels of land described in the complaint (Exhibit A).

(2) That on May 9 and 10, 1924, said deputy sheriff sold at public auction said
personal properties of Leon Sibal, including the sugar cane in question to Emilio
J. Valdez, who paid therefor the sum of P1,550, of which P600 was for the sugar
cane (Exhibit A).

(3) That on April 29,1924, said deputy sheriff, by virtue of said writ of execution,
also attached the real property of said Leon Sibal in Tarlac, including all of his
rights, interest and participation therein, which real property consisted of eleven
parcels of land and a house and camarin situated in one of said parcels (Exhibit
A).

(4) That on June 25, 1924, eight of said eleven parcels, including the house and
the camarin, were bought by Emilio J. Valdez at the auction held by the sheriff
for the sum of P12,200. Said eight parcels were designated in the certificate of
sale as parcels 1, 3, 4, 5, 6, 7, 10 and 11. The house and camarin were situated
on parcel 7 (Exhibit A).
(5) That the remaining three parcels, indicated in the certificate of the sheriff as
parcels 2, 12, and 13, were released from the attachment by virtue of claims
presented by Agustin Cuyugan and Domiciano Tizon (Exhibit A).

(6) That on the same date, June 25, 1924, Macondray & Co. sold and conveyed
to Emilio J. Valdez for P2,579.97 all of its rights and interest in the eight parcels
of land acquired by it at public auction held by the deputy sheriff of Tarlac in
connection with civil case No. 20203 of the Court of First Instance of Manila, as
stated above. Said amount represented the unpaid balance of the redemption
price of said eight parcels, after payment by Leon Sibal of P2,000 on September
24, 1923, fro the account of the redemption price, as stated above. (Exhibit C
and 2).

The foregoing statement of facts shows:

(1) The Emilio J. Valdez bought the sugar cane in question, located in the seven
parcels of land described in the first cause of action of the complaint at public
auction on May 9 and 10, 1924, for P600.

(2) That on July 30, 1923, Macondray & Co. became the owner of eight parcels
of land situated in the Province of Tarlac belonging to Leon Sibal and that on
September 24, 1923, Leon Sibal paid to Macondray & Co. P2,000 for the account
of the redemption price of said parcels.

(3) That on June 25, 1924, Emilio J. Valdez acquired from Macondray & Co. all of
its rights and interest in the said eight parcels of land.

(4) That on June 25, 1924, Emilio J. Valdez also acquired all of the rights and
interest which Leon Sibal had or might have had on said eight parcels by virtue
of the P2,000 paid by the latter to Macondray.

(5) That Emilio J. Valdez became the absolute owner of said eight parcels of
land.

The first question raised by the appeal is, whether the sugar cane in question is
personal or real property. It is contended that sugar cane comes under the classification
of real property as "ungathered products" in paragraph 2 of article 334 of the Civil
Code. Said paragraph 2 of article 334 enumerates as real property the following: Trees,
plants, and ungathered products, while they are annexed to the land or form an integral
part of any immovable property." That article, however, has received in recent years an
interpretation by the Tribunal Supremo de Espaa, which holds that, under certain
conditions, growing crops may be considered as personal property. (Decision of March
18, 1904, vol. 97, Civil Jurisprudence of Spain.)
Manresa, the eminent commentator of the Spanish Civil Code, in discussing section 334
of the Civil Code, in view of the recent decisions of the supreme Court of Spain, admits
that growing crops are sometimes considered and treated as personal property. He
says:

No creemos, sin embargo, que esto excluya la excepcionque muchos autores


hacen tocante a la venta de toda cosecha o de parte de ella cuando aun no esta
cogida (cosa frecuente con la uvay y la naranja), y a la de lenas, considerando
ambas como muebles. El Tribunal Supremo, en sentencia de 18 de marzo de
1904, al entender sobre un contrato de arrendamiento de un predio rustico,
resuelve que su terminacion por desahucio no extingue los derechos del
arrendario, para recolectar o percibir los frutos correspondientes al ao agricola,
dentro del que nacieron aquellos derechos, cuando el arrendor ha percibido a su
vez el importe de la renta integra correspondiente, aun cuando lo haya sido por
precepto legal durante el curso del juicio, fundandose para ello, no solo en que
de otra suerte se daria al desahucio un alcance que no tiene, sino en que, y esto
es lo interesante a nuestro proposito, la consideracion de inmuebles que el
articulo 334 del Codigo Civil atribuge a los frutos pendientes, no les priva del
caracter de productos pertenecientes, como tales, a quienes a ellos tenga
derecho, Ilegado el momento de su recoleccion.

xxx xxx xxx

Mas actualmente y por virtud de la nueva edicion de la Ley Hipotecaria,


publicada en 16 de diciembre de 1909, con las reformas introducidas por la de
21 de abril anterior, la hipoteca, salvo pacto expreso que disponga lo contrario, y
cualquiera que sea la naturaleza y forma de la obligacion que garantice, no
comprende los frutos cualquiera que sea la situacion en que se encuentre. (3
Manresa, 5. edicion, pags. 22, 23.)

From the foregoing it appears (1) that, under Spanish authorities, pending fruits and
ungathered products may be sold and transferred as personal property; (2) that the
Supreme Court of Spain, in a case of ejectment of a lessee of an agricultural land, held
that the lessee was entitled to gather the products corresponding to the agricultural
year, because said fruits did not go with the land but belonged separately to the lessee;
and (3) that under the Spanish Mortgage Law of 1909, as amended, the mortgage of a
piece of land does not include the fruits and products existing thereon, unless the
contract expressly provides otherwise.

An examination of the decisions of the Supreme Court of Louisiana may give us some
light on the question which we are discussing. Article 465 of the Civil Code of Louisiana,
which corresponds to paragraph 2 of article 334 of our Civil Code, provides: "Standing
crops and the fruits of trees not gathered, and trees before they are cut down, are
likewise immovable, and are considered as part of the land to which they are attached."
The Supreme Court of Louisiana having occasion to interpret that provision, held that in
some cases "standing crops" may be considered and dealt with as personal property. In
the case of Lumber Co. vs. Sheriff and Tax Collector (106 La., 418) the Supreme Court
said: "True, by article 465 of the Civil Code it is provided that 'standing crops and the
fruits of trees not gathered and trees before they are cut down . . . are considered as
part of the land to which they are attached, but the immovability provided for is only
one in abstracto and without reference to rights on or to the crop acquired by others
than the owners of the property to which the crop is attached. . . . The existence of a
right on the growing crop is a mobilization by anticipation, a gathering as it were in
advance, rendering the crop movable quoad the right acquired therein. Our
jurisprudence recognizes the possible mobilization of the growing crop." (Citizens'
Bank vs. Wiltz, 31 La. Ann., 244; Porche vs. Bodin, 28 La., Ann., 761;
Sandel vs. Douglass, 27 La. Ann., 629; Lewis vs. Klotz, 39 La. Ann., 267.)

"It is true," as the Supreme Court of Louisiana said in the case of Porche vs. Bodin (28
La. An., 761) that "article 465 of the Revised Code says that standing crops are
considered as immovable and as part of the land to which they are attached, and article
466 declares that the fruits of an immovable gathered or produced while it is under
seizure are considered as making part thereof, and incurred to the benefit of the person
making the seizure. But the evident meaning of these articles, is where the crops
belong to the owner of the plantation they form part of the immovable, and where it is
seized, the fruits gathered or produced inure to the benefit of the seizing creditor.

A crop raised on leased premises in no sense forms part of the immovable. It


belongs to the lessee, and may be sold by him, whether it be gathered or not,
and it may be sold by his judgment creditors. If it necessarily forms part of the
leased premises the result would be that it could not be sold under execution
separate and apart from the land. If a lessee obtain supplies to make his crop,
the factor's lien would not attach to the crop as a separate thing belonging to his
debtor, but the land belonging to the lessor would be affected with the recorded
privilege. The law cannot be construed so as to result in such absurd
consequences.

In the case of Citizen's Bank vs. Wiltz (31 La. Ann., 244)the court said:

If the crop quoad the pledge thereof under the act of 1874 was an immovable, it
would be destructive of the very objects of the act, it would render the pledge of
the crop objects of the act, it would render the pledge of the crop impossible, for
if the crop was an inseparable part of the realty possession of the latter would be
necessary to that of the former; but such is not the case. True, by article 465 C.
C. it is provided that "standing crops and the fruits of trees not gathered and
trees before they are cut down are likewise immovable and are considered as
part of the land to which they are attached;" but the immovability provided for is
only one in abstracto and without reference to rights on or to the crop acquired
by other than the owners of the property to which the crop was attached. The
immovability of a growing crop is in the order of things temporary, for the crop
passes from the state of a growing to that of a gathered one, from an
immovable to a movable. The existence of a right on the growing crop is a
mobilization by anticipation, a gathering as it were in advance, rendering the
crop movable quoad the right acquired thereon. The provision of our Code is
identical with the Napoleon Code 520, and we may therefore obtain light by an
examination of the jurisprudence of France.

The rule above announced, not only by the Tribunal Supremo de Espaa but by the
Supreme Court of Louisiana, is followed in practically every state of the Union.

From an examination of the reports and codes of the State of California and other
states we find that the settle doctrine followed in said states in connection with the
attachment of property and execution of judgment is, that growing crops raised by
yearly labor and cultivation are considered personal property. (6 Corpuz Juris, p. 197;
17 Corpus Juris, p. 379; 23 Corpus Juris, p. 329: Raventas vs. Green, 57 Cal., 254;
Norris vs. Watson, 55 Am. Dec., 161; Whipple vs. Foot, 3 Am. Dec., 442; 1 Benjamin on
Sales, sec. 126; McKenzie vs. Lampley, 31 Ala., 526; Crine vs. Tifts and Co., 65 Ga.,
644; Gillitt vs. Truax, 27 Minn., 528; Preston vs. Ryan, 45 Mich., 174; Freeman on
Execution, vol. 1, p. 438; Drake on Attachment, sec. 249; Mechem on Sales, sec. 200
and 763.)

Mr. Mechem says that a valid sale may be made of a thing, which though not yet
actually in existence, is reasonably certain to come into existence as the natural
increment or usual incident of something already in existence, and then belonging to
the vendor, and then title will vest in the buyer the moment the thing comes into
existence. (Emerson vs. European Railway Co., 67 Me., 387; Cutting vs. Packers
Exchange, 21 Am. St. Rep., 63.) Things of this nature are said to have a potential
existence. A man may sell property of which he is potentially and not actually
possessed. He may make a valid sale of the wine that a vineyard is expected to
produce; or the gain a field may grow in a given time; or the milk a cow may yield
during the coming year; or the wool that shall thereafter grow upon sheep; or what
may be taken at the next cast of a fisherman's net; or fruits to grow; or young animals
not yet in existence; or the good will of a trade and the like. The thing sold, however,
must be specific and identified. They must be also owned at the time by the vendor.
(Hull vs. Hull, 48 Conn., 250 [40 Am. Rep., 165].)

It is contended on the part of the appellee that paragraph 2 of article 334 of the Civil
Code has been modified by section 450 of the Code of Civil Procedure as well as by Act
No. 1508, the Chattel Mortgage Law. Said section 450 enumerates the property of a
judgment debtor which may be subjected to execution. The pertinent portion of said
section reads as follows: "All goods, chattels, moneys, and other property, both real
and personal, * * * shall be liable to execution. Said section 450 and most of the other
sections of the Code of Civil Procedure relating to the execution of judgment were
taken from the Code of Civil Procedure of California. The Supreme Court of California,
under section 688 of the Code of Civil Procedure of that state (Pomeroy, p. 424) has
held, without variation, that growing crops were personal property and subject to
execution.

Act No. 1508, the Chattel Mortgage Law, fully recognized that growing crops are
personal property. Section 2 of said Act provides: "All personal property shall be subject
to mortgage, agreeably to the provisions of this Act, and a mortgage executed in
pursuance thereof shall be termed a chattel mortgage." Section 7 in part provides: "If
growing crops be mortgaged the mortgage may contain an agreement stipulating that
the mortgagor binds himself properly to tend, care for and protect the crop while
growing.

It is clear from the foregoing provisions that Act No. 1508 was enacted on the
assumption that "growing crops" are personal property. This consideration tends to
support the conclusion hereinbefore stated, that paragraph 2 of article 334 of the Civil
Code has been modified by section 450 of Act No. 190 and by Act No. 1508 in the
sense that "ungathered products" as mentioned in said article of the Civil Code have the
nature of personal property. In other words, the phrase "personal property" should be
understood to include "ungathered products."

At common law, and generally in the United States, all annual crops which are
raised by yearly manurance and labor, and essentially owe their annual existence
to cultivation by man, . may be levied on as personal property." (23 C. J., p.
329.) On this question Freeman, in his treatise on the Law of Executions, says:
"Crops, whether growing or standing in the field ready to be harvested, are,
when produced by annual cultivation, no part of the realty. They are, therefore,
liable to voluntary transfer as chattels. It is equally well settled that they may be
seized and sold under execution. (Freeman on Executions, vol. p. 438.)

We may, therefore, conclude that paragraph 2 of article 334 of the Civil Code has been
modified by section 450 of the Code of Civil Procedure and by Act No. 1508, in the
sense that, for the purpose of attachment and execution, and for the purposes of the
Chattel Mortgage Law, "ungathered products" have the nature of personal property.
The lower court, therefore, committed no error in holding that the sugar cane in
question was personal property and, as such, was not subject to redemption.

All the other assignments of error made by the appellant, as above stated, relate to
questions of fact only. Before entering upon a discussion of said assignments of error,
we deem it opportune to take special notice of the failure of the plaintiff to appear at
the trial during the presentation of evidence by the defendant. His absence from the
trial and his failure to cross-examine the defendant have lent considerable weight to the
evidence then presented for the defense.
Coming not to the ownership of parcels 1 and 2 described in the first cause of action of
the complaint, the plaintiff made a futile attempt to show that said two parcels
belonged to Agustin Cuyugan and were the identical parcel 2 which was excluded from
the attachment and sale of real property of Sibal to Valdez on June 25, 1924, as stated
above. A comparison of the description of parcel 2 in the certificate of sale by the
sheriff (Exhibit A) and the description of parcels 1 and 2 of the complaint will readily
show that they are not the same.

The description of the parcels in the complaint is as follows:

1. La caa dulce sembrada por los inquilinos del ejecutado Leon Sibal 1. en una
parcela de terreno de la pertenencia del citado ejecutado, situada en Libutad,
Culubasa, Bamban, Tarlac, de unas dos hectareas poco mas o menos de
superficie.

2. La caa dulce sembrada por el inquilino del ejecutado Leon Sibal 1., Ilamado
Alejandro Policarpio, en una parcela de terreno de la pertenencia del ejecutado,
situada en Dalayap, Culubasa, Bamban, Tarlac de unas dos hectareas de
superficie poco mas o menos." The description of parcel 2 given in the certificate
of sale (Exhibit A) is as follows:

2a. Terreno palayero situado en Culubasa, Bamban, Tarlac, de 177,090 metros


cuadrados de superficie, linda al N. con Canuto Sibal, Esteban Lazatin and
Alejandro Dayrit; al E. con Francisco Dizon, Felipe Mau and others; al S. con
Alejandro Dayrit, Isidro Santos and Melecio Mau; y al O. con Alejandro Dayrit
and Paulino Vergara. Tax No. 2854, vador amillarado P4,200 pesos.

On the other hand the evidence for the defendant purported to show that parcels 1 and
2 of the complaint were included among the parcels bought by Valdez from Macondray
on June 25, 1924, and corresponded to parcel 4 in the deed of sale (Exhibit B and 2),
and were also included among the parcels bought by Valdez at the auction of the real
property of Leon Sibal on June 25, 1924, and corresponded to parcel 3 in the certificate
of sale made by the sheriff (Exhibit A). The description of parcel 4 (Exhibit 2) and parcel
3 (Exhibit A) is as follows:

Parcels No. 4. Terreno palayero, ubicado en el barrio de Culubasa,Bamban,


Tarlac, I. F. de 145,000 metros cuadrados de superficie, lindante al Norte con
Road of the barrio of Culubasa that goes to Concepcion; al Este con Juan Dizon;
al Sur con Lucio Mao y Canuto Sibal y al Oeste con Esteban Lazatin, su valor
amillarado asciende a la suma de P2,990. Tax No. 2856.

As will be noticed, there is hardly any relation between parcels 1 and 2 of the complaint
and parcel 4 (Exhibit 2 and B) and parcel 3 (Exhibit A). But, inasmuch as the plaintiff
did not care to appear at the trial when the defendant offered his evidence, we are
inclined to give more weight to the evidence adduced by him that to the evidence
adduced by the plaintiff, with respect to the ownership of parcels 1 and 2 of the
compliant. We, therefore, conclude that parcels 1 and 2 of the complaint belong to the
defendant, having acquired the same from Macondray & Co. on June 25, 1924, and
from the plaintiff Leon Sibal on the same date.

It appears, however, that the plaintiff planted the palay in said parcels and harvested
therefrom 190 cavans. There being no evidence of bad faith on his part, he is therefore
entitled to one-half of the crop, or 95 cavans. He should therefore be condemned to
pay to the defendant for 95 cavans only, at P3.40 a cavan, or the sum of P323, and not
for the total of 190 cavans as held by the lower court.

As to the ownership of parcel 7 of the complaint, the evidence shows that said parcel
corresponds to parcel 1 of the deed of sale of Macondray & Co, to Valdez (Exhibit B and
2), and to parcel 4 in the certificate of sale to Valdez of real property belonging to Sibal,
executed by the sheriff as above stated (Exhibit A). Valdez is therefore the absolute
owner of said parcel, having acquired the interest of both Macondray and Sibal in said
parcel.

With reference to the parcel of land in Pacalcal, Tarlac, described in paragraph 3 of the
second cause of action, it appears from the testimony of the plaintiff himself that said
parcel corresponds to parcel 8 of the deed of sale of Macondray to Valdez (Exhibit B
and 2) and to parcel 10 in the deed of sale executed by the sheriff in favor of Valdez
(Exhibit A). Valdez is therefore the absolute owner of said parcel, having acquired the
interest of both Macondray and Sibal therein.

In this connection the following facts are worthy of mention:

Execution in favor of Macondray & Co., May 11, 1923. Eight parcels of land were
attached under said execution. Said parcels of land were sold to Macondray & Co. on
the 30th day of July, 1923. Rice paid P4,273.93. On September 24, 1923, Leon Sibal
paid to Macondray & Co. P2,000 on the redemption of said parcels of land. (See
Exhibits B and C ).

Attachment, April 29, 1924, in favor of Valdez. Personal property of Sibal was attached,
including the sugar cane in question. (Exhibit A) The said personal property so
attached, sold at public auction May 9 and 10, 1924. April 29, 1924, the real property
was attached under the execution in favor of Valdez (Exhibit A). June 25, 1924, said
real property was sold and purchased by Valdez (Exhibit A).

June 25, 1924, Macondray & Co. sold all of the land which they had purchased at public
auction on the 30th day of July, 1923, to Valdez.

As to the loss of the defendant in sugar cane by reason of the injunction, the evidence
shows that the sugar cane in question covered an area of 22 hectares and 60 ares
(Exhibits 8, 8-b and 8-c); that said area would have yielded an average crop of 1039
picos and 60 cates; that one-half of the quantity, or 519 picos and 80 cates would have
corresponded to the defendant, as owner; that during the season the sugar was selling
at P13 a pico (Exhibit 5 and 5-A). Therefore, the defendant, as owner, would have
netted P 6,757.40 from the sugar cane in question. The evidence also shows that the
defendant could have taken from the sugar cane 1,017,000 sugar-cane shoots (puntas
de cana) and not 1,170,000 as computed by the lower court. During the season the
shoots were selling at P1.20 a thousand (Exhibits 6 and 7). The defendant therefore
would have netted P1,220.40 from sugar-cane shoots and not P1,435.68 as allowed by
the lower court.

As to the palay harvested by the plaintiff in parcels 1 and 2 of the complaint, amounting
to 190 cavans, one-half of said quantity should belong to the plaintiff, as stated above,
and the other half to the defendant. The court erred in awarding the whole crop to the
defendant. The plaintiff should therefore pay the defendant for 95 cavans only, at P3.40
a cavan, or P323 instead of P646 as allowed by the lower court.

The evidence also shows that the defendant was prevented by the acts of the plaintiff
from cultivating about 10 hectares of the land involved in the litigation. He expected to
have raised about 600 cavans of palay, 300 cavans of which would have corresponded
to him as owner. The lower court has wisely reduced his share to 150 cavans only. At
P4 a cavan, the palay would have netted him P600.

In view of the foregoing, the judgment appealed from is hereby modified. The plaintiff
and his sureties Cenon de la Cruz, Juan Sangalang and Marcos Sibal are hereby ordered
to pay to the defendant jointly and severally the sum of P8,900.80, instead of
P9,439.08 allowed by the lower court, as follows:

P6,757.40 for the sugar cane;


1,220.40 for the sugar cane shoots;
323.00 for the palay harvested by plaintiff in parcels 1 and 2;
600.00 for the palay which defendant could have raised.

8,900.80
============

In all other respects, the judgment appealed from is hereby affirmed, with costs. So
ordered.

Street, Malcolm, Villamor, Romualdez and Villa-Real., JJ., concur.


G.R. No. L-69002 June 30, 1988

REPUBLIC OF THE PHILIPPINES, petitioner,


vs.
AMANDA LAT VDA. DE CASTILLO, FLORENCIO T. CASTILLO, SOLEDAD LOTA
CASTILLO, CARLOS L. CASTILLO, NIEVES KATIGBAK CASTILLO, MARIANO L.
CASTILLO, HIPOLITA DYTIAPCO CASTILLO, AIDA CASTILLO HERRERA,
HERMITO HERRERA, JOSE L. CASTILLO, LILIA MACEDA CASTILLO, TERESITA
L. CASTILLO, REGISTER OF DEEDS OF BATANGAS and THE INTERMEDIATE
APPELLATE COURT, respondents.

Castro, Nardo, Quintanilla, Gonzales & Macatangay Law Office for respondents.

PARAS, J.:

This is a petition for review on certiorari of the April 26, 1984 Decision of the then
Intermediate Appellate Court * reversing the February 6, 1976 Decision of the then
Court of First Instance of Batangas, Branch VI, in Civil Case No. 2044.

The antecedental facts of this case, as found by the then Intermediate Appellate Court,
are as follows:

Sometime in 1951, the late Modesto Castillo applied for the registration of
two parcels of land, Lots 1 and 2, located in Banadero, Tanauan,
Batangas, described in Plan Psu-119166, with a total area of 39,755
square meters. In a decision dated August 31, 1951, the said Modesto
Castillo, married to Amanda Lat, was declared the true and absolute
owner of the land with the improvements thereon, for which Original
Certificate of Title No. 0-665 was, issued to him by the Register of Deeds
at Batangas, Batangas, on February 7, 1952. By virtue of an instrument
dated March 18, 1960, the said Lots 1 and 2 covered by Original
Certificate of Title No. 0-665, together with Lot No. 12374 covered by
Transfer Certificate of Title No. 3254-A and Lot No. 12377 covered by
Transfer Certificate of Title No. 3251-A, were consolidated and sub-
divided into Lots 1 to 9 under Pcs-1046. After the death of Modesto
Castillo, or on August 31, 1960, Amanda Lat Vda. de Castillo, et al.,
executed a deed of partition and assumption of mortgage in favor of
Florencio L. Castillo, et al., as a result of which Original Certificate of Title
No. D-665 was cancelled, and in lieu thereof, new transfer cerfificates of
title were issued to Florencio Castillo, et al., to wit: Transfer Certificate of
Title No. 21703 (Lot 4) (and) Transfer Certificate of Title No. 21704 to
Florencio Castillo (Lot 5); Transfer Certificate of Title No. T-21708 to
Carlos L. Castillo (Lot 7); Transfer Certificate of Title No. T-21712 to
Mariano L. Castillo (Lot 6); Transfer Certificate of Title No. T-21713 to
Jose L. Castillo (Lot 9); Transfer Certificate of Title No. T-21718 to Aida C.
Herrera (Lot 2); and Transfer Certificate of Title No. T-21727 to Teresita
L. Castillo (Lot 8).

The Republic of the Philippines filed Civil Case No. 2044 with the lower
court for the annulment of the certificates of title issued to defendants
Amanda Lat Vda. de Castillo, et al., as heirs/successors of Modesto
Castillo, and for the reversion of the lands covered thereby (Lots 1 and 2,
Psu-119166) to the State. It was alleged that said lands had always
formed part of the Taal Lake, washed and inundated by the waters
thereof, and being of public ownership, it could not be the subject of
registration as private property. Appellants herein, defendants below,
alleged in their answer that the Government's action was already barred
by the decision of the registration court; that the action has prescribed;
and that the government was estopped from questioning the ownership
and possession of appellants.

After trial, the then Court of First Instance of Batangas, Branch VI, presided over by
Honorable Benjamin Relova, in a Decision dated February 6, 1976 (Record on Appeal,
pp. 62-69), ruled in favor of herein petitioner Republic of the Philippines. The decretal
portion of the said decision, reads:

WHEREFORE, the Register of Deeds of Batangas is hereby ordered to


cancel Original Certificate of Title No. 0-665 in the name of Modesto
Castillo and the subsequent Transfer of Certificates of Title issued over the
property in the names of the defendants. Lots Nos. 1 and 2 of Plan Psu-
19166 are hereby declared public lands belonging to the state. Without
pronouncement as to costs.

The Court of Appeals, on appeal, in a Decision promulgated on April 26,1984, reversed


and set aside the appealed decision, and dismissed the complaint (Record, pp. 31-41).
Herein petitioner filed a Motion for Reconsideration (Record, pp. 42-51), but the same
was denied in a Resolution promulgated on October 12,1984 (Record, p. 52). Hence,
the instant petition.

The sole issue raised in this case is whether or not the decision of the Land Registration
Court involving shore lands constitutes res adjudicata.

There is no question that one of the requisites of res judicata is that the court rendering
the final judgment must have jurisdiction over the subject matter (Ramos v. Pablo, 146
SCRA 24 [1986]; that shores are properties of the public domain intended for public use
(Article 420, Civil Code) and, therefore, not registrable. Thus, it has long been settled
that portions of the foreshore or of the territorial waters and beaches cannot be
registered. Their inclusion in a certificate of title does not convert the same into
properties of private ownership or confer title upon the registrant (Republic v. Ayala y
Cia, 14 SCRA, 259 [1965], citing the cases of Dizon, et al. v. Bayona, et al., 98 Phil.
943; and Dizon, et al. v. Rodriguez, et al., 13 SCRA 704).

But an important bone of contention is the nature of the lands involved in this case.

Petitioner contends "that "Lots 1 and 2, PSU-119166 had always formed part of the
Taal Lake, washed and inundated by the waters thereof. Consequently, the same were
not subject to registration, being outside the commerce of men; and that since the lots
in litigation are of public domain (Art. 502), par. 4 Civil Code) the registration court (of
1951) did not have jurisdiction to adjudicate said lands as private property, hence, res
judicatadoes not apply. (Rollo, pp. 37-38).

The Government presented both oral and documentary evidence.

As summarized by the Intermediate Appelate Court (now Court of Appeals), the


testimonies of the witnesses for the petitioner are as follows:

1. Rosendo Arcenas, a Geodetic Engineer connected with the Bureau of


Lands since 1961, testified to the effect that Lots 1 and 2, Psu-119166,
which are the lots in question, adjoin the cadastral survey of Tanauan,
Batangas (Cad. 168); that the original boundary of the original cadastral
survey was foreshore land as indicated on the plan; that the cadastral
survey of Tanauan was executed sometime in 1923; that the first survey
executed of the land after 1923 was the one executed in 1948 under Plan
Psu-119166 that in the relocation survey of the disputed lots in 1962
under SWO-40601, said lots were annotated on the plan as claimed by the
Republic of the Philippines in the same manner that it was so annotated in
Plan Psu-119166; thus showing that the Government was the only
claimant of the land during the survey in 1948; that during the relocation
survey made in 1962, old points cannot be Identified or located because
they were under water by about forty centimeters; that during the ocular
inspection of the premises on November 23, 1970, he found that 2
monuments of the lots in question were washed out by the waters of the
Baloyboy Creek; that he also found duck pens along the lots in question;
that there are houses in the premises as well as some camotes and
bananas; and that he found also some shells ('suso') along the banks of
the Taal lake (Tsn, Nov. 16, 1970, pp. 13-21; Feb. 16, 1971, pp. 4-36).

2. Braulio Almendral testified to the effect that he is a resident of


Tanauan, Batangas, near the Taal lake; that like himself there are other
occupants of the land among whom are Atanacio Tironas, Gavino
Mendoza, Juliano Tirones, Agapito Llarena, etc.; that it was they who filled
up the area to make it habitable; that they filled up the area with shells
and sand; that their occupation is duck raising; and that the Castillos
never stayed in or occupied the premises (Tsn, Nov. 16, 1970, pp. 32-50).

3. Arsenio Ibay, a Geodetic Engineer connected with the Bureau of Lands


since 1968, also testified to the effect that in accordance with the
cadastral plan of Tanauan, the only private claim of Sixto Castillo referred
to Lots 1006 to 1008; that the Castillos never asserted any private claim
to the lots in question during the cadastral survey;' that in the preparation
of plan Psu-119166, Lots 12374 and 12377 were made as reference to
conform to previously approved plans; that lot 12374 is a portion of
cadastral lot 10107, SWO-86738 while Lot 22377 is a portion of Lot 10108
of the same plan (Tsn, Nov. 25, 1970, pp. 115-137).

4. Jose Isidro, a Land Investigator of the Bureau of Lands, testified to the


effect that pursuant to the order of the Director of Lands, he, together
with Engineer Rufino Santiago and the barrio captain of Tanauan,
Batangas, conducted an investigation of the land in question; that he
submitted a report of investigation, dated October 19, 1970 (Exh. H-1);
that portions of the lot in question were covered by public land
applications filed by the occupants thereof; that Engineer Santiago also
submitted a report (Exh. H-8); that he had notified Dr. Mariano Castillo
before conducting the investigation (Tsn, Nov. 25,1970, pp. 137-162).

5. Rufino Santiago, another Geodetic Engineer connected with the Bureau


of Lands, testified to the effect that on October 19,1970, he submitted a
report of investigation regarding the land in question; that he noted on
the plan Exhibit H-9 the areas on which the houses of Severo Alcantara
and others were built; that he found that the land was planted to
coconuts which are about 15 years old; that the land is likewise improved
with rice paddies; that the occupants thereof are duck raisers; that the
area had been elevated because of the waste matters and duck feeds that
have accumulated on the ground through the years (Tsn, Nov. 26,1970,
pp. 163-196).

6. Pablo Tapia, Barrio Captain of Tanauan, Batangas, since 1957, testified


to the effect that the actual occupants of Lots I and 2 are Atanacio
Tirones,tc.; that during the war the water line reached up to a point
marked Exhibit A-9 and at present the water has receded to a point up to
Exhibit A-12; that the reasons why the waters of Taal lake have receded
to the present level is because of the fillings made by the people living in
Lots 1 and 2; that there are several duck pens all over the place; that the
composition of the soil is a mixture of mud and duck feeds; that
improvements consist of bananas, bamboos and palay; that the shoreline
is not even in shape because of the Baloyboy Creek; that the people in
the area never came to know about the registration case in which the lots
in question were registered; that the people living in the area, even
without any government aid, helped one another in the construction of
irrigated rice paddies; that he helped them file their public land
applications for the portions occupied by them; that the Castillos have
never been in possession of the premises; that the people depend upon
duck raising as their means of their livelihood; that Lots 1 and 2 were yet
inexistent during the Japanese occupation; and that the people started
improving the area only during liberation and began to build their houses
thereon. (Tsn, Nov. 26,1970, pp. 197-234).

Among the exhibits formally offered by the Government are: the Original Plan of
Tanauan, Batangas, particularly the Banader Estate, the Original Plan of PSU-119166,
Relocation Verification Survey Plan, maps, and reports of Geodetic Engineers, all
showing the original shoreline of the disputed areas and the fact that the properties in
question were under water at the time and are still under water especially during the
rainy season (Hearing, March 17,1971, TSN, pp. 46-47).

On the other hand, private respondents maintain that Lots 1 and 2 have always been in
the possession of the Castillo family for more than 76 years and that their possession
was public, peaceful, continuous, and adverse against the whole world and that said
lots were not titled during the cadastral survey of Tanauan, because they were still
under water as a result of the eruption of Taal Volcano on May 5, 1911 and that the
inundation of the land in question by the waters of Taal Lake was merely accidental and
does not affect private respondents' ownership and possession thereof pursuant to
Article 778 of the Law of Waters. They finally insisted that this issue of facts had been
squarely raised at the hearing of the land registration case and, therefore, res
judicata (Record on Appeal, pp. 63-64). They submitted oral and documentary evidence
in support of their claim.

Also summarized by respondent Appellate Court, the testimonies of the witnesses of


private respondents are as follows:

1. Silvano Reano, testified to the effect that he was the overseer of the
property of the late Modesto Castillo located at Banadero,Tanauan,
Batangas since 1944 to 1965; that he also knows Lots 1 and 2, the parcels
of land in question, since he was managing said property; that the
occupants of said Lots 1 and 2 were engaged in duck raising; that those
occupants were paying the Castillos certain amount of money because
their animals used to get inside the lots in question; that he was present
during the survey of the land in 1948; and that aside from the duck pens
which are built in the premises, the land is planted to rice (Tsn, April 14,
1971, pp. 62-88).

2. Dr. Mariano Castillo, testified to the effect that the late Modesto Castillo
was a government official who held high positions in the Government; and
that upon his death the land was subdivided among his legal heirs.
(Appellee's Brief, pp. 4-9).

As above-stated, the trial court decided the case in favor of the government but the
decision was reversed on appeal by the Court of Appeals.

A careful study of the merits of their varied contentions readily shows that the evidence
for the government has far outweighed the evidence for the private respondents.
Otherwise stated, it has been satisfactorily established as found by the trial court, that
the properties in question were the shorelands of Taal Lake during the cadastral survey
of 1923.

Explaining the first survey of 1923, which showed that Lots 1 and 2 are parts of the
Taal Lake, Engineer Rosendo Arcenas testified as follows:

ATTY. AGCAOILI:

Q Now, you mentioned Engineer that a subject matter of


that plan which appears to be Lots 1 and 2 are adjoining
cadastral lots of the Tanauan Cadastre, now, will you please
state to the Court what is the basis of that statement of
yours?

A The basis of that statement is the plan itself, because


there is here an annotation that the boundary on the
northeastern side is Tanauan Cadastre 168 which indicates
that the boundary of the original cadastral survey of
Tanauan Cadastre way back in the year 1923 adjoins a
foreshore land which is also indicated in this plan as
foreshore lands of Taal lake, sir.

xxx xxx xxx

Q Now, on this plan Exhibit "A-2", there are two lots


indicated namely, Lots 12374 and 12377, what do these lots
represent?

A This is the cadastral lot executed in favor of a certain


Modesto Castillo that corresponds to Lots 12374 and another
Lot 12377, sir.
Q At the time this survey plan Psu-119166 and marked as
Exhibit "A-2" was executed in 1948, were these lots 1 and 2
already in existence as part of the cadastral survey?

A No, sir, because there is already a foreshore boundary.

Q Do I understand from you Mr. Witness at the time of the


survey of this land these two lots form part of this portion?

A Yes, sir.

Q When again was the cadastral survey of Tanauan,


Batangas, executed if you know?

A In the year 1923, sir. (Hearing of Nov. 16, 1970, TSN pp.
15-17).

Such fact was further verified in the Verification-Relocation Survey of 1948 by Engineer
Arcenas who conducted said survey himself and reported the following:

That as per original plan Psu-119166, it appears that Lot 1 and Lot 2, Psu-
119166 surveyed and approved in the name of Modesto Castillo is a
portion of Taal Lake and as such it appears to be under water during the
survey of cadastral Lot No. 12374 and Lot No. 12377, which was surveyed
and approved in the name of Modesto Castillo under Cad. 168. To support
this theory is the annotation appearing and printed along lines 2-3-4-5 of
Lot 1, Psu-119166 and along lines 4-5-6 of Lot 2, Psu-119166 which
notations clearly indicates that such boundary of property was a former
shorelines of Taal Lake, in other words, it was the extent of cultivation
being the shorelines and the rest of the area going to the southwestern
direction are already covered by water level.

Another theory to bolster and support this Idea is the actual location now
in the verification-relocation survey of a known geographic point were
Barrio Boundary Monument (BBM N. 22) is under water level quite for
sometimes as evidence by earthworks (collection of mud) that amount
over its surface by eighty (80) centimeters below the ground, see notation
appearing on verification-relocation plan previously submitted. (Re-
Verification-Relocation Survey Exhibits, pp. 64-65).

Said surveys were further confirmed by the testimonies of witnesses to the effect that
from 1950 to 1969, during rainy season, the water of Taal lake even went beyond the
questioned lots; and that the water, which was about one (1) foot, stayed up to more
or less two (2) to three (3) months (Testimonies of Braulio Almendral and Anastacio
Tirones both residents of Banadero, Tanauan, Batangas (Hearing of Nov. 16, 1970,
TSN, pp. 41-42 and Hearing of Nov. 23, 1970, TSN, pp. 93, 98-99, respectively). In the
Relocation Survey of 1962, there were no definite boundary or area of Lots 1 and 2
because a certain point is existing which was under water by 40 centimeters (Testimony
of Engineer Arcena, Hearing of Nov. 16,1970, TSN, p. 20).

Lakeshore land or lands adjacent to the lake, like the lands in question must be
differentiated from foreshore land or that part of the land adjacent to the sea which is
alternately covered and left dry by the ordinary flow of the tides (Castillo, Law on
Natural Resources, Fifth Edition, 1954, p. 67).

Such distinction draws importance from the fact that accretions on the bank of a lake,
like Laguna de Bay, belong to the owners of the estate to which they have been added
(Gov't. v. Colegio de San Jose, 53 Phil. 423) while accretion on a sea bank still belongs
to the public domain, and is not available for private ownership until formally declared
by the government to be no longer needed for public use (Ignacio v. Director of Lands,
108 Phil. 335 [1960]).

But said distinction will not help private respondents because there is no accretion
shown to exist in the case at bar. On the contrary, it was established that the occupants
of the lots who were engaged in duck raising filled up the area with shells and sand to
make it habitable.

The defense of long possession is likewise not available in this case because, as already
ruled by this Court, mere possession of land does not by itself automatically divest the
land of its public character (Cuevas v. Pineda, 143 SCRA 674 [1968]).

PREMISES CONSIDERED, the April 26,1984 Decision of the then Intermediate Appellate
Court is hereby SET ASIDE and REVERSED and the February 6,1976 Decision of the
then Court of First Instance of Batangas is hereby AFFIRMED and REINSTATED.

SO ORDERED.

Yap, C.J., Padilla and Sarmiento, JJ., concur.


G.R. No. L-66575 May 24, 1988

ADRIANO MANECLANG, JULIETA, RAMONA, VICTOR, ANTONINA, LOURDES,


TEODORO and MYRNA, all surnamed MANECLANG, petitioners,
vs.
THE INTERMEDIATE APPELLATE COURT and ALFREDO MAZA, CORLETO
CASTRO, SALOME RODRIGUEZ, EDUCARDO CUISON, FERNANDO ZARCILLA,
MARIANO GABRIEL, NICOMEDES CORDERO, CLETO PEDROZO, FELIX SALARY
and JOSE PANLILIO, respondents.

Loreto Novisteros for petitioners.

Corleto R. Castro for respondents.

RESOLUTION

FERNAN, J.:

Petitioners Adriano Maneclang, et al. filed before the then Court of First Instance of
Pangasinan, Branch XI a complaint for quieting of title over a certain fishpond located
within the four [4] parcels of land belonging to them situated in Barrio Salomague,
Bugallon, Pangasinan, and the annulment of Resolutions Nos. 38 and 95 of the
Municipal Council of Bugallon, Pangasinan. The trial court dismmissed the complaint in
a decision dated August 15, 1975 upon a finding that the body of water traversing the
titled properties of petitioners is a creek constituting a tributary of the Agno River;
therefore public in nature and not subject to private appropriation. The lower court
likewise held that Resolution No. 38, ordering an ocular inspection of the Cayangan
Creek situated between Barrios Salomague Sur and Salomague Norte, and Resolution
No. 95 authorizing public bidding for the lease of all municipal ferries and fisheries,
including the fishpond under consideration, were passed by respondents herein as
members of the Municipal Council of Bugallon, Pangasinan in the exercise of their
legislative powers.

Petitioners appealed said decision to the Intermediate Appellate Court, which affirmed
the same on April 29,1983. Hence, this petition for review on certiorari.

Acting on the petition, the Court required the respondents to comment thereon.
However, before respondents could do so, petitioners manifested that for lack of
interest on the part of respondent Alfredo Maza, the awardee in the public bidding of
the fishpond, the parties desire to amicably settle the case by submitting to the Court a
Compromise Agreement praying that judgment be rendered recognizing the ownership
of petitioners over the land the body of water found within their titled properties,
stating therein, among other things, that "to pursue the case, the same will not amount
to any benefit of the parties, on the other hand it is to the advantage and benefit of the
municipality if the ownership of the land and the water found therein belonging to
petitioners be recognized in their favor as it is now clear that after the National
Irrigation Administration [NIA] had built the dike around the land, no water gets in or
out of the land. 1

The stipulations contained in the Compromise Agreement partake of the nature of an


adjudication of ownership in favor of herein petitioners of the fishpond in dispute,
which, as clearly found by the lower and appellate courts, was originally a creek
forming a txibutary of the Agno River. Considering that as held in the case of Mercado
vs. Municipal President of Macabebe, 59 Phil. 592 [1934], a creek, defined as a recess
or arm extending from a river and participating in the ebb and flow of the sea, is a
property belonging to the public domain which is not susceptible to private
appropriation and acquisitive prescription, and as a public water, it cannot be registered
under the Torrens System in the name of any individual [Diego v. Court of Appeals, 102
Phil. 494; Mangaldan v. Manaoag, 38 Phil. 455]; and considering further that neither
the mere construction of irrigation dikes by the National Irrigation Administration which
prevented the water from flowing in and out of the subject fishpond, nor its conversion
into a fishpond, alter or change the nature of the creek as a property of the public
domain, the Court finds the Compromise Agreement null and void and of no legal
effect, the same being contrary to law and public policy.

The finding that the subject body of water is a creek belonging to the public domain is a
factual determination binding upon this Court. The Municipality of Bugallon, acting thru
its duly-constituted municipal council is clothed with authority to pass, as it did the two
resolutions dealing with its municipal waters, and it cannot be said that petitioners were
deprived of their right to due process as mere publication of the notice of the public
bidding suffices as a constructive notice to the whole world.

IN VIEW OF THE FOREGOING, the Court Resolved to set aside the Compromise
Agreement and declare the same null and void for being contrary to law and public
policy. The Court further resolved to DISMISS the instant petition for lack of merit.

SO ORDERED.

Gutierrez, Jr., Feliciano, Bidin and Cortes, JJ., concur.


G.R. No. L-15829 December 4, 1967

ROMAN R. SANTOS, petitioner-appellee,


vs.
HON. FLORENCIO MORENO, as Secretary of Public Works and
Communications and JULIAN C. CARGULLO, respondents-appellants.

Gil R. Carlos and Associates for petitioner-appellee.


Office of the Solicitor General for respondents-appellants.

BENGZON, J.P., J.:

THE APPEAL

The Honorable Secretary of Public Works & Communications appeals from the decision
of the Court of First Instance of Manila declaring of private ownership certain creeks
situated in barrio San Esteban, Macabebe, Pampanga.

THE BACKGROUND

The Zobel family of Spain formerly owned vast track of marshland in the municipality of
Macabebe, Pampanga province. Called Hacienda San Esteban, it was administered and
managed by the Ayala y Cia. From the year 1860 to about the year 1924 Ayala y Cia.,
devoted the hacienda to the planting and cultivation of nipa palms from which it
gathered nipa sap or "tuba." It operated a distillery plant in barrio San Esteban to turn
nipa tuba into potable alcohol which was in turn manufactured into liquor.

Accessibility through the nipa palms deep into the hacienda posed as a problem. Ayala
y Cia., therefore dug canals leading towards the hacienda's interior where most of them
interlinked with each other. The canals facilitated the gathering of tuba and the
guarding and patrolling of the hacienda by security guards called "arundines." By the
gradual process of erosion these canals acquired the characteristics and dimensions of
rivers.

In 1924 Ayala y Cia shifted from the business of alcohol production to bangus culture. It
converted Hacienda San Esteban from a forest of nipa groves to a web of fishponds. To
do so, it cut down the nipa palm, constructed dikes and closed the canals criss-crossing
the hacienda.

Sometime in 1925 or 1926 Ayala y Cia., sold a portion of Hacienda San Esteban to
Roman Santos who also transformed the swamp land into a fishpond. In so doing, he
closed and built dikes across Sapang Malauling Maragul, Quiorang Silab,
Pepangebunan, Bulacus, Nigui and Nasi.
The closing of the man-made canals in Hacienda San Esteban drew complaints from
residents of the surrounding communities. Claiming that the closing of the canals
caused floods during the rainy season, and that it deprived them of their means of
transportation and fishing grounds, said residents demanded re-opening of those
canals. Subsequently, Mayor Lazaro Yambao of Macabebe, accompanied by policemen
and some residents went to Hacienda San Esteban and opened the closure dikes at
Sapang Malauling Maragul Nigui and Quiorang Silab. Whereupon, Roman Santos filed
Civil Case No. 4488 in the Court of First Instance of Pampanga which preliminarily
enjoined Mayor Yambao and others from demolishing the dikes across the canals. The
municipal officials of Macabebe countered by filing a complaint (docketed as Civil Case
No. 4527) in the same court. The Pampanga Court of First Instance rendered judgment
in both cases against Roman Santos who immediately elevated the case to the Supreme
Court.

In the meantime, the Secretary of Commerce and Communications1 conducted his own
investigation and found that the aforementioned six streams closed by Roman Santos
were natural, floatable and navigable and were utilized by the public for transportation
since time immemorial. He consequently ordered Roman Santos on November 3, 1930
to demolish the dikes across said six streams. However, on May 8, 1931 the said official
revoked his decision of November 3, 1930 and declared the streams in question
privately owned because they were artificially constructed. Subsequently, upon
authority granted under Act 3982 the Secretary of Commerce and Communications
entered into a contract with Roman Santos whereby the former recognized the private
ownership of Sapang Malauling Maragul, Quiorang Silab, Pepangebunan, Bulacus,
Nigui and Nasi and the latter turned over for public use two artificial canals and bound
himself to maintain them in navigable state. The Provincial Board of Pampanga and the
municipal councils of Macabebe and Masantol objected to the contract. However, the
Secretary of Justice, in his opinion dated March 6, 1934, upheld its legality. Roman
Santos withdraw his appeals in the Supreme Court.

With respect to the portion of Hacienda San Esteban still owned by the Zobel family,
the municipal authorities of Macabebe filed in 1930 an administrative complaint, in the
Bureau of Public Works praying for the opening of the dikes and dams across certain
streams in Hacienda San Esteban. Whereupon, the district engineer of Pampanga and a
representative of the Bureau of Public Works conducted investigations. In the
meantime, the Attorney General, upon a query from the Secretary of Commerce and
Communications, rendered an opinion dated October 11, 1930 sustaining the latter's
power to declare streams as publicly owned under Sec. 4 of Act 2152, as amended by
Act 3208.

On September 29, 1930 the investigator of the Bureau of Public Works, Eliseo Panopio,
submitted his report recommending the removal of the dikes and dams in question. And
on the basis of said report, the Secretary of Commerce and Communications rendered
his decision on November 3, 1930 ordering Ayala y Cia., to demolish the dikes and
dams across the streams named therein situated in Hacienda San Esteban. Ayala y Cia.,
moved for reconsideration, questioning the power of the Secretary of Commerce and
Communications to order the demolition of said dikes.

Days before the Secretary of Commerce and Communications rendered his


aforementioned decision, Ayala y Cia., thru counsel, made representations with the
Director of Public Works for a compromise agreement. In its letter dated October 11,
1930, Ayala y Cia., offered to admit public ownership of the following creeks:

Antipolo, Batasan Teracan, Biuas or Batasan, Capiz, Carbon, Cutut, Dalayap,


Enrique, Iba, Inaun, Margarita, Malauli or Budbud, Matalaba Palapat, Palipit
Maisao, Panlovenas, Panquitan, Quinapati, Quiorang, Bubong or Malauli Malati,
Salop, Sinubli and Vitas.

provided the rest of the streams were declared private. Acting on said offer, the
Director of Public Works instructed the surveyor in his office, Eliseo Panopio, to proceed
to Pampanga and conduct another investigation.

On January 23, 1931 Panopio submitted his report to the Director of Public Works
recommending that some streams enumerated therein be declared public and some
private on the ground that they were originally dug by the hacienda owners. The
private streams were:

Agape, Atlong, Cruz, Balanga, Batasan, Batasan Matlaue, Balibago, Baliti, Bato,
Buengco Malati, Bungalin, Bungo Malati, Bungo Maragui, Buta-buta, Camastiles,
Catlu, Cauayan or Biabas, Cela, Dampalit, Danlimpu, Dilinquente, Fabian,
Laguzan, Lalap Maburac, Mabutol, Macabacle, Maragul or Macanduli, Macabacle
or Mababo, Maisac, Malande, Malati, Magasawa, Maniup, Manulit, Mapanlao,
Maisac, Maragul Mariablus Malate, Masamaral, Mitulid, Nasi, Nigui or Bulacus,
Palipit, Maragul, Pangebonan, Paumbong, Pasco or Culali, Pilapil, Pinac Malati,
Pinac, Maragul or Macabacle, Quiorang Silab or Malauli Maragul, Raymundo,
Salamin, Salop Maisac, Salop Maragul, Sermon and Sinca or Mabulog.

He therefore recommended revocation of the decision already mentioned above, dated


November 3, 1930 of the Secretary of Commerce and Communications ordering the
demolition of the dikes closing Malauling Maragul, Quiorang, Silab, Pepangebonan,
Nigui, Bulacus, Nasi, and Pinac. On February 13, 1931 the Director of Public Works
concurred in Panopio's report and forwarded the same the Secretary of Commerce and
Communications.

On February 25, 1935 the municipality of Macabebe and the Zobel family executed an
agreement whereby they recognized the nature of the streams mentioned in Panopio's
report as public or private, depending on the findings in said report. This agreement
was approved by the Secretary of Public Works and Communications on February 27,
1935 and confirmed the next day by the municipal council of Macabebe under
Resolution No. 36.

A few months later, that is, on June 12, 1935, the then Secretary of Justice issued an
opinion holding that the contract executed by the Zobel family and the municipality of
Macabebe has no validity for two reasons, namely, (1) the streams although originally
dug by Ayala y Cia., lost their private nature by prescription inasmuch as the public was
allowed to use them for navigation and fishing, citing Mercado vs. Municipality of
Macabebe, 59 Phil. 592; and (2) at the time the Secretary of Commerce and
Communications approved the said contract, he had no more power so to do, because
such power under Sec. 2 of Act 2152 was revoked by the amending Act 4175 which
took effect on December 7, 1934.

Despite the above ruling of the Secretary of Justice, the streams in question remained
closed.

In 1939 administrative investigations were again conducted by various agencies of the


Executive branch of our government culminating in an order of President Manuel
Quezon immediately before the national elections in 1941 requiring the opening of
Sapang Macanduling, Maragul Macabacle, Balbaro and Cansusu. Said streams were
again closed in 1942 allegedly upon order of President Quezon.

THE CASE

Roman Santos acquired in 1940 from the Zobel family a larger portion of Hacienda San
Esteban wherein are located 25 streams which were closed by Ayala y Cia., and are
now the subject matter in the instant controversy.

Eighteen years later, that is in 1958, Congress enacted Republic Act No. 20562 following
a congressional inquiry which was kindled by a speech delivered by Senator Rogelio de
la Rosa in the Senate. On August 15, 1958 Senator de la Rosa requested in writing the
Secretary of Public Works and communications to proceed in pursuance of Republic Act
No. 2056 against fishpond owners in the province of Pampanga who have closed rivers
and appropriated them as fishponds without color of title. On the same day, Benigno
Musni and other residents in the vicinity of Hacienda San Esteban petitioned the
Secretary of Public Works and Communications to open the following streams:

Balbaro, Batasan Matua, Bunga, Cansusu, Macabacle, Macanduling, Maragul,


Mariablus, Malate, Matalabang, Maisac, Nigui, Quiorang Silab, Sapang Maragul
and Sepung Bato.

Thereupon, the Secretary of Public Works and Communications instructed Julian C.


Cargullo to conduct an investigation on the above named streams.
On October 20, 1958 Musni and his co-petitioners amended their petition to include
other streams. The amended petition therefore covered the following streams:

Balbaro, Balili, Banawa, Batasan Matua Bato, Bengco, Bunga, Buta-buta,


Camastiles, Cansusu, Cela, Don Timpo, Mabalanga, Mabutol, Macabacle,
Macabacle qng. Iba, Macanduling, Maragul, Malauli, Magasawa, Mariablus Malate
Masamaral, Matalabang Maisa, Mariablus,3 Nigui, Pita, Quiorang, Silab, Sapang
Maragul, Sepung Bato, Sinag and Tumbong.

On March 2, 4, 10, 30 and 31, and April 1, 1959, the Secretary of Public Works and
Communications rendered his decisions ordering the opening and restoration of the
channel of all the streams in controversy except Sapang Malauling, Maragul, Quiorang,
Silab, Nigui Pepangebonan, Nasi and Bulacus, within 30 days on the ground that said
streams belong to the public domain.

On April 29, 1959, that is, after receipt of the Secretary's decision dated March 4, 1959,
Roman Santos filed a motion with the Court of First Instance of Man for junction
against the Secretary of Public Works and Communications and Julian C. Cargullo. As
prayed for preliminary injunction was granted on May 8, 1959. The Secretary of Public
Work and Communications answered and alleged as defense that venue was improperly
laid; that Roman Santos failed to exhaust administrative remedies; that the contract
between Ayala y Cia., and the Municipality of Macabebe is null and void; and, that
Section 39 of Act 496 excludes public streams from the operation of the Torrens
System.

On April 29 and June 12, 1969, Roman Santos received the decision of the Secretary of
Public Works and Communications dated March 10 and March 30, March 31, and April
1, 1959. Consequently, on June 24, 1959 he asked the court to cite in contempt
Secretary Florendo Moreno, Undersecretary M.D. Bautista and Julian Cargullo for issuing
and serving upon him the said decisions despite the existence of the preliminary
injunction. The Solicitor General opposed the motion alleging that the decisions in
question had long been issued when the petition for injunction was filed, that they were
received after preliminary injunction issued because they were transmitted through the
District Engineer of Pampanga to Roman Santos; that their issuance was for Roman
Santos' information and guidance; and, that the motion did not allege that respondents
took steps to enforce the decision. Acting upon said motion, on July 17, 1959, the trial
court considered unsatisfactory the explanation of the Solicitor General but ruled that
Secretary Florencio Moreno, Undersecretary M.D. Bautista and Julian Cargullo acted in
good faith. Hence, they were merely "admonished to desist from any and further action
in this case, observe the preliminary injunction issued by this Court, with the stern
warning, however, that a repetition of the acts complained of shall be dealt with
severely."
On July 18, 1959 the trial court declared all the streams under litigation private, and
rendered the following judgment:

The Writ of preliminary injunction restraining the respondent Secretary of Public


Works & Communications from enforcing the decisions of March 2 And 4, 1959
and all other similar decisions is hereby made permanent.

The Secretary of Public Works and Communication and Julian Cargullo appealed to this
Court from the order of July 17, 1959 issued in connection with Roman Santos' motion
for contempt and from the decision of the lower court on the merits of the case.

ISSUES

The issues are: (1) Did Roman Santos exhaust administrative remedies? (2) Was venue
properly laid? (3) Did the lower court err in conducting a trial de novo of the case and
in admitting evidence not presented during the administrative proceeding? (4) Do the
streams involved in this case belong to the public domain or to the owner of Hacienda
San Esteban according to law and the evidence submitted to the Department of Public
Works and Communications?

DISCUSSION OF THE ISSUES

1. Respondents maintain that Roman Santos resorted to the courts without first
exhausting administrative remedies available to him, namely, (a) motion for
reconsideration of the decisions of the Secretary of Public Works and Communications;
and, (b) appeal to the President of the Philippines.

Whether a litigant, in exhausting available administrative remedies, need move for the
reconsideration of an administrative decision before he can turn to the courts for relief,
would largely depend upon the pertinent law,4 the rules of procedure and the usual
practice followed in a particular office.5

Republic Act No. 2056 does not require the filing of a motion for reconsideration as a
condition precedent to judicial relief. From the context of the law, the intention of the
legislators to forego a motion for reconsideration manifests itself
clearly.1awphil.net Republic Act No. 2056 underscores the urgency and summary
nature of the proceedings authorized thereunder. Thus in Section 2 thereof the
Secretary of Public Works and Communications under pain of criminal liability is duty
bound to terminate the proceedings and render his decision within a period not
exceeding 90 days from the filing of the complaint. Under the same section, the party
respondent concerned is given not than 30 days within which to comply with the
decision of the Secretary of Public Works and Communications, otherwise the removal
of the dams would be done by the Government at the expense of said party. Congress
has precisely provided for a speedy and a most expeditious proceeding for the removal
of illegal obstructions to rivers and on the basis of such a provision it would be
preposterous to conclude that it had in mind to require a party to file a motion for
reconsideration an additional proceeding which would certainly lengthen the time
towards the final settlement of existing controversies. The logical conclusion is that
Congress intended the decision of the Secretary of Public Works and Communications to
be final and executory subject to a timely review by the courts without going through
formal and time consuming preliminaries.

Moreover, the issues raised during the administrative proceedings of this case are the
same ones submitted to court for resolution. No new matter was introduced during the
proceeding in the court below which the Secretary of Public Works and Communications
had no opportunity to correct under his authority.

Furthermore, Roman Santos assailed the constitutionality of Republic Act No. 2056 and
the jurisdiction of the Secretary of Public Works and Communications to order the
demolition of dams across rivers or streams. Those questions are not within the
competence of said Secretary to decide upon a motion for reconsideration.itc-alf They
are purely legal questions, not administrative in nature, and should properly be aired
before a competent court as was rightly done by petitioner Roman Santos .

At any rate, there is no showing in the records of this case that the Secretary of Public
Works and Communications adopted rule of procedure in investigations authorized
under Republic Act No. 2056 which require a party litigant to file a motion for the
reconsideration of the Secretary's decision before he can appeal to the courts. Roman
Santos however stated in his brief that the practice is not to entertain motions for
reconsideration for the reason that Republic Act No. 2056 does not expressly or
impliedly allow the Secretary to grant the same. Roman Santos' statement is supported
by Opinion No. 61, Series of 1959, dated April 14, 1959 of the Secretary of Justice.

As to the failure of Roman Santos to appeal from the decision of the Secretary of Public
Works and Communications to the President of the Philippines, suffice it to state that
such appeal could be dispensed with because said Secretary is the alter ego of the
President.itc-alf The actions of the former are presumed to have the implied sanction of
the latter.6

2. It is contended that if this case were considered as an ordinary civil action, venue
was improperly laid when the same was instituted in the Court of First Instance of
Manila for the reason that the case affects the title of a real property. In fine, the
proposition is that since the controversy dwells on the ownership of or title to the
streams located in Hacienda San Esteban, the case is real action which, pursuant to
Sec. 3 of Rule 5 of the Rules of Court should have been filed in the Court of First
Instance of Pampanga.

The mere fact that the resolution of the controversy in this case would wholly rest on
the ownership of the streams involved herein would not necessarily classify it as a real
action. The purpose of this suit is to review the decision of the Secretary of Public
Works and Communications to enjoin him from enforcing them and to prevent him from
making and issuing similar decisions concerning the stream in Hacienda San Esteban.
The acts of the Secretary of Public Works and Communications are the object of the
litigation, that is, petitioner Roman Santos seeks to control them, hence, the suit ought
to be filed in the Court of First Instance whose territorial jurisdiction encompasses the
place where the respondent Secretary is found or is holding office. For the rule is that
outside its territorial limits, the court has no power to enforce its order.7

Section 3 of Rule 5 of the Rules of Court does not apply to determine venue of this
action. Applicable is Sec. 1 the same rule, which states:

Sec. 1. General rule. Civil actions in Courts of First Instance may be


commenced and tried where the defendant any of the defendants residents or
may be found or where the plaintiff or any of the plaintiffs resides, at the
election of the plaintiff.

Accordingly, the Petition for injunction who correctly filed in the Court of First Instance
of Manila. Respondents Secretary of Public Works and Communications and Julian
Cargullo are found and hold office in the City of Manila.

3. The lower court tried this case de novo. Against this procedure respondents objected
and maintained that the action, although captioned as an injunction is really a petition
for certiorari to review the decision of the Secretary of Public Works and
Communications. Therefore they now contend that the court should have confined itself
to reviewing the decisions of the respondent Secretary of Public Works and
Communications only on the basis of the evidence presented in the administrative
proceedings. On the other hand, Roman Santos now, submits that the action is a
proceeding independent and distinct from the administrative investigation; that,
accordingly, the lower court correctly acted in trying the case anew and rendering
judgment upon evidence adduced during the trial.

Whether the action instituted in the Court of First Instance be for mandamus, injunction
or certiorari is not very material. In reviewing the decision of the Secretary of Public
Works and Communications, the Court of First Instance shall confine its inquiry to the
evidence presented during, the administrative proceedings. Evidence not presented
therein shall not be admitted, and considered by the trial court. As aptly by this Court
speaking through Mr. Justice J.B.L. Reyes, in a similar case:

The findings of the Secretary can not be enervated by new evidence not laid
before him, for that would be tantamount to holding a new investigation, and to
substitute for the discretion and judgment of the Secretary the discretion and
judgment of the court, to whom the statute had not entrusted the case. It is
immaterial that the present action should be one for prohibition or injunction and
not one for certiorari; in either event the case must be resolved upon the
evidence submitted to the Secretary, since a judicial review of executive
decisions does not import a trial de novo, but only an ascertainment of whether
the "executive findings are not in violation of the Constitution or of the laws, and
are free from fraud or imposition, and whether they find reasonable support in
the evidence. . . .8

The case at bar, no matter what the parties call it, is in reality a review of several
administrative decisions of the Secretary of Public Works and Communications. Being
so, it was error for the lower court to conduct a trial de novo. Accordingly, for purposes
of this review, only the evidence presented and admitted in the administrative
investigation will be considered in our determination of whether on the basis thereof
the decisions of the Secretary of Public Works and Communications were correct.

4. We come to the question whether the streams involved in this case belong to the
public domain or to the owner of Hacienda San Esteban. If said streams are public, then
Republic Act 2056 applies, if private, then the Secretary of Public Works and
Communications cannot order demolition of the dikes and dams across them pursuant
to his authority granted by said law.

First, we come to the question of the constitutionality of Republic Act No. 2056. The
lower court held Republic Act No. 2056 constitutional but ruled that it was applied by
respondents unconstitutionally. That is, it held that Roman Santos was being deprived
of his property without due process of law, for the dikes of his fishponds were ordered
demolished through an administrative, instead of a judicial, proceeding. This conclusion
and rationalization of the lower court amount in effect to declaring the law
unconstitutional, stated inversely. Note that the law provides for an expeditious
administrative process to determine whether or not a dam or dike should be declare a
public nuisance and ordered demolished. And to say that such an administrative
process, when put to operation, is unconstitutional is tantamount to saying that the law
itself violates the Constitution. In Lovina vs. Moreno, supra, We held said law
constitutional. We see no reason here to hold otherwise.

Discussing now the applicability of Republic Act 2056, the same applies to two types of
bodies of water, namely (1)public navigable rivers, streams, coastal waters, or
waterways and (b) areas declared as communal fishing grounds, as provided for in
Section 1 thereof:

Sec. 1. . . . the construction or building of dams, dikes or any other works which
encroaches into any public navigable river, stream, coastal waters and any other
navigable public waters or waterways as well as the construction or building of
dams, dikes or any other works in areas declared as communal fishing grounds,
shall be ordered removed as public nuisances or as prohibited constructions as
herein provided: . . .
We are not concerned with communal fishing grounds because the streams here
involved have not been so declared, but with public navigable streams. The question
therefore is: Are the streams in Hacienda San Esteban which are mentioned in the
petition of Benigno Musni and others, public and navigable?

Respondents contend that said streams are public on the following grounds:

(1) Hacienda San Esteban was formerly a marshland and being so, it is not susceptible
to appropriation. It therefore belongs to the State. Respondents rely on Montano vs.
Insular Government, 12 Phil. 572.

(2) The streams in question are natural streams. They are tributaries of public streams.
Cited are the cases of Samson vs. Dionisio, et al., 11 Phil. 538 and Bautista vs. Alarcon,
23 Phil. 636.

(3) The streams have for their source public rivers, therefore they cannot be classified
as canals.

(4) Assuming the streams were artificially made by Ayala y Cia., said titleholder lost
ownership over them by prescription when it allowed the public to use them for
navigation for a long time. Respondents cite Mercado vs. Municipal President of
Macabebe, 59 Phil. 592.

(5) Assuming the streams in question are not mentioned as public in the certificates of
title held by Ayala y Cia., over Hacienda San Esteban, still they cannot be considered as
privately owned for Section 39 of Act 496 expressly excepts public streams from private
ownership.

(6) The Panopio Report, which found the streams in question of private ownership was
nullified by the Secretary of Justice in his opinion dated June 12, 1935.1awphil.net And,
the contract between Ayala y Cia., and the Secretary of Commerce and
Communications agreeing on the ownership of the streams in question is ultra vires.

The doctrine in Montano vs. Insular Government, supra, that a marshland which is
inundated by the rise of the tides belongs to the State and is not susceptible to
appropriation by occupation has no application here inasmuch as in said case the
land subject matter of the litigation was not yet titled and precisely Isabelo Montano
sought title thereon on the strength of ten years' occupation pursuant to paragraph 6,
section 54 of Act 926 of the Philippine Commission. Whereas, the subject matter in this
case Hacienda San Esteban is titled land and private ownership thereof by Ayala y
Cia., has been recognized by the King of Spain and later by the Philippine Government
when the same was registered under Act 496.

Respondents further cite Bautista vs. Alarcon, 23 Phil. 631, where the plaintiff sought
injunction against the defendants who allegedly constructed a dam across a public
canal which conveyed water from the Obando River to fishponds belonging to several
persons. The canal was situated within a public land. In sustaining the injunction
granted by the Court of First Instance, this Court said:

No private persons has right to usurp possession of a watercourse, branch of a


river, or lake of the public domain and use, unless it shall have been proved that
he constructed the same within in property of his exclusive ownership, and such
usurpation constitutes a violation of the legal provisions which explicity exclude
such waterways from the exclusive use or possession of a private party.
(Emphasis supplied)

As indicated in the above-cited case, a private person may take possession of a


watercourse if he constructed the same within his property.itc-alf This puts Us into
inquiry whether the streams in question are natural or artificial. In so doing, We shall
examine only the evidence presented before the Department of Public Works and
Communications and disregard that which was presented for the first time before the
lower court, following our ruling in Lovina vs. Moreno, supra.

(1) Sapang Macanduling Maragul or Macanduli is presently enclosed in Fishpond No. 12


of Roman Santos. Its banks cannot anymore be seen but some traces of them could be
noted by a row of isolated nipa palms. Its water is subject to the rise and fall of the
tides coming from Guagua and Antipolo Rivers and it is navigable by light watercrafts.
Its inlet is Antipolo River; another dike at its outlet along the Palapat River.9 It is closed
by four dikes: One dike at its inlet along the Antipolo River; another dike at its cutlet
along the Palatpat River; and, two dikes in between. Then exist channel at the Palapat
River where the fishpond gate lies has been filled up with dredge spoils from the
Pampanga River Control Project.

(2) Sapang Macabacle is found in Fishpond No. 13. Its banks are still evident. This
stream is about 30 meters wide, two meters deep and one and one-half to two
kilometers long. Its source is Rio Cansusu. Like Macanduli, its channel is obstructed by
four dikes. One of them was constructed by the engineers of the Pampanga River
Control Project.

(3) Sapang Balbaro which is found in Fishpond No. 13, runs from Canal Enrique near
Rio Cansusu to Sapang Macabacle, a distance of about one-half kilometer. It is passable
by banca. The closures of this stream consist of two dikes located at each ends on
Canal Enrique and Sapang Macabacle.

(4) Sapang Cansusu is a continuation of the Cansusu River. The Cansusu River opens at
the Guagua River and allegedly ends at the Palanas River in front of Barrio San Esteban.
At a point near the mouth of Sapang Balbaro, the owners of Hacienda San Esteban built
a canal leading straight to one end of Barrio San Esteban. They called this canal "Canal
Enrique." And at the point where Canal Enrique joins Cansusu they built a dike across
Cansusu, thus closing this very portion of the river which extends up to Palanas River
where they built another closure dike. This closed portion, called "Sapang Cansusu," is
now part of Fishpond No. 1.

Sapang Cansusu is half a kilometer long and navigable by banca.

Appellant's witnesses, Beligno Musni, 41, Macario Quiambao, 96, Roman Manansala, 55
and Castor Quiambao, 76, all residents of Barrio San Esteban, testified that prior to
their closure, Sapang Macaduli, Macabacle, Balbaro and Cansusu were used as
passageway and as fishing grounds; that people transported through them
tuba,10 wood and sasa,11 and that the tuba was brought to the distillery in Barrio San
Esteban. Macario Quiambao testified also that said four streams "were created by God
for the town people"; and that if any digging was done it was only to deepen the
shallow parts to make passage easier. According to witness Anastacio Quiambao said
streams were navigable, even Yangco's ship "Cababayan" could pass through. Simplicio
Quiambao, 36, and Marcelino Ocampo, 55, stated on direct examination that before
closure of the above named four streams, people from the surrounding towns of
Guagua, Bacolor, Macabebe, Masantol and Sexmoan fished and navigated in them.

Against the aforementioned, testimonial evidence Roman Santos presented the


testimony of Nicanor Donarber, 80, Mariano Guinto, 71, and his own. Donarber, who
started working as an arundin12 testified that Ayala y Cia., dug Sapang Macanduli,
Balbaro and Macabacle; that he worked also in the construction together with other
workers; and, that as an overseer he inspected their work. Mariano Guinto testified that
he worked for Ayala y Cia., as a tuba gatherer; that in order to reach remote nipa
groves by banca, they made canals; and, that he was one of the who worked in the
construction of those canals. Roman Santos also testified that Sapang Macanduli,
Macabacle, Balbaro and Cansusu are artificial canals excavated as far back as 1850 and
due to erosion coupled with the spongy nature of the land, they acquired the proportion
of rivers; that he joined Sapang Balbaro to Sapang Macabacle because the former was
a dying canal; and that Cansusu River is different from Sapang Cansusu Witness
Domingo Yumang likewise testified that Sapang Balbaro man-made.

We observe that witnesses positively stated that Sapang Macanduli, Macabacle and
Balbaro were made by the owners of Hacienda San Esteban. With respect to Sapang
Cansusu none, except Roman Santos himself, testified that Sapang Cansusu is an
artificial canal. It is not one of the streams found and recommended to be declared
private in the Panopio Report. Sapang Cansusu follows a winding course different and,
distinct from that of a canal such as that of Canal Enrique which is straight. Moreover,
Sapang Cansusu is a part of Cansusu River, admittedly a public stream.

(5) Sapang Maragul, Mabalanga and Don Timpo are all part of Fishpond No. 1. Maragul
is 600 meters long and 30 to 35 meters wide. Mabalanga is 250 meters in length and
50 meters in width. Don Timpo is 220 meters long and 20 meters wide. All of them are
navigable by banca. Maragul and Mabalanga open at Guagua River and join each other
inside the hacienda to form one single stream, Sapang Don Timpo, which leads to the
Matalaba River. Maragul, Mabalanga and Don Timpo, formerly ended inside the
hacienda but later Mabalanga was connected to Don Timpo. Maragul was connected to
Mabalanga and Sapang Cela was extended to join Maragul.

Witnesses Nicanor Donarber, Mariano Ocampo and Mariano Guinto testified that
Maragul, Mabalanga and Don Timpo are artificial canals dug by Ayala y Cia., and that
they (Donarber and Mariano Guinto) worked in said excavations.13 Witness Mariano
Guinto clarified that Don Timpo was originally dug but Mabalanga and Maragul were
formerly small non-navigable streams which were deepened into artificial navigable
canals by Ayala y Cia.14

Exhibit F, which is a map showing the streams and rivers in Hacienda San Esteban,
shows that Maragul, Mabalanga and Don Timpo are more or less straight. From the big
rivers (Guagua and Matalaba Rivers) they lead deep into the interior of the hacienda,
thus confirming the testimony that they were built precisely as a means of reaching the
interior of the estate by banca. The weight of evidence, therefore, indicate that said
streams are manmade.

(6) Sapang Bunga, now part of Bunga fishpond, gets its water from Sapanga Iba and
empties at Sta. Cruz River. It is about 300-400 meters long, 5-6 meters wide and 1-1.60
meters deep.

(7) Sapang Batu is found in Capiz Fishpond. About 300-400 meters long, 4-5 meters
wide and 1.50-2.20 meters deep, it starts at Capiz River and ends at Malauling Maragul.
From Capiz River until it intersects Sapang Nigui the stream is called Sapang Batu
Commencing from Sapang Nigui and up to its end at Sapang Malauling Maragul, the
stream is called Sapang Batu. Commencing from Sapang Nigui and up to its end at
Sapang Malauling Maragul, the stream is called Sepong Batu. Sepong Batu is not among
those streams declared in the Panopio Report as private.

(8) Sapang Banawa has one end at Palanas River and the other at Sapang Macabacle.
It is about 300 meters long, 3-4 meters wide and 1.30-1.40 meters deep. Its whole
length is within Fishpond No. 13 of Roman Santos.

(9) Sapang Mabutol is a dead-end stream, that is, it ends inside the hacienda. It opens
along Guagua river. Since its closure, it has become part of Fishpond No. 1.

(10) Sapang Buta-buta, like Mabutol, dies inside the hacienda. It connects with Cansusu
River and is about 100 meters long, 3-4 meters wide and 1.2-1.5 meters deep. It is now
a part of Fishpond No. 13.
(11) Sapang Masamaral, another stream which opens at Cansusu River And ends inside
the hacienda., is 100-200 meters long, 3-4 meters wide and 1.50-2 meters deep. It now
forms part of Fishpond No. 13.

The uncontradicted testimony of Marcos Guinto is that Sapang Bunga, Batu, Sepong
Batu, Banawa, Mabutol, Buta-Buta and Masamaral were constructed by Ayala y Cia., to
gain access to the nipa the, interior of the hacienda. This testimony tallies with the
findings in the Panopio Report which will be discussed herein later. The evidence
adduced in the administrative proceeding conducted before a representative of the
Secretary of Public Works and Communications supports the contention that said
streams are merely canals built by Ayala y Cia., for easy passage into the hinterland of
its hacienda.

(12) Sapang Magasawa consists of two streams running parallel to each other
commencing from Matalaba River and terminating at Mariablus Rivers. About 600-700
meters long, 4-5 meters wide and 1.5-2 meters deep, these two streams are navigable
by banca. They are enclosed within Fishpond No. 1.

(13) Sapang Mariablus Malate, about 3-4 meters wide and 250 meters long, is another
stream that ends inside the hacienda and gets its water from Guagua River. It is no part
of Fishpond No. 1.

(14) Sapang Matalabang Malate or Maisac opens at Guagua River and ends at Sapang
Cela and Matalabang Maragul. This stream, which is about 800 meters long and 18
meters wide, forms part of Fishpond No. 1 of Roman Santos.

(15) Sapang Batasan Matua about 600 meters long, three meters wide and .80 meters
deep at low tide and 1.90 meters deep at high tide crosses the hacienda from Mariablus
River to Cansusu River. It is at present a part of Fishpond No. 1-A.

(16) Sapang Camastiles, a dead end stream of about 200 to 300 meters in length, gets
its water from Biuas River. It is within Fishpond No. 1.

(17) Sapang Cela is within Fishpond No. 1. Its whole length situated inside the
hacienda, it opens at Sapang Matalabang Malate or Maisac and ends at Sapang
Malungkot. Latter Cela was extended to connect with Sapang Maragul. It is about 200
meters long and four meters wide.

Mariano Guinto, 71, testified without contradiction that Sapang Mariablus Malate and
Matalabang Malate were formerly small and non-navigable streams which were dug by
Ayala y Cia.,15 while Batasan Matua Camastiles, Magasawa and Cela are original canals
made by Ayala y Cia.,16 that he was one of those who worked in the construction of
said canals; and that it took years to construct them. All these streams were
recommended in the Panopio Report for declaration as private streams.
(18) Sapang Sinag, 200 meters long, four to five meters wide, one meter and one and
one-half meters deep at low and high tides, respectively, gets its water from Cutod
River and leads inside the hacienda to connect with Sapang Atlong Cruz, a stream
declared private in the Panopio Report. It is now inside Fishpond No. 14.

(19) Sapang Balili, also found inside Fishpond No. 14, is about 200 meters long, three
to four meters wide and one meter deep at low tide. From its mouth at Cutod River it
drifts into the interior of the hacienda and joins Sapang Bengco.17

(20) Sapang Pita is within Fishpond Capiz. It takes water from Capiz River but dies 250
meters inside the hacienda. It is about four to five meters wide, and one meter deep at
low tide and 1.50 meters deep at high tide.

(21) Sapang Tumbong, situated inside Capiz Fishpond, derives its water from Sapang
Quiorang Silab, a stream declared private by the Secretary of Public Works and
Communications, and ends inside the hacienda.18

(22) Sapang Bengco is found within Fishpond No. 14.1awphil.net Two hundred meters
long, five meters wide, and one meter deep at low tide and 1.50 meters deep at high
tide it gets water from Sapang Biabas and connects with Baliling Maisac.19

According to Marcos Guinto, a witness for Roman Santos, Sapang Sinag, Balili, Pita
Tumbong and Bengco were excavated a long time ago by Ayala y Cia.; and that they
have a winding course because when they were made the workers followed the location
of the nipa palms.20 On the other hand, Marcelo Quiambao, testified that Sapang
Tumbong is a natural stream and that the reason he said so is because the stream was
already there as far back as 1910 when he reached the age of ten. No other oral
evidence was presented to contradict the testimony of Marcos Guinto that the said five
streams were artificially made by Ayala y Cia.

To show that the streams involved in this case were used exclusively by the hacienda
personnel and occasionally by members of their families, Roman Santos introduced the
testimony of Eliseo Panopio, Nicanor Donarber, Blas Gaddi, Mariano Ocampo, Mariano
Guinto, Alejandro Manansala and himself. The witnesses categorically testified that the
public was prohibited from using the streams as a means of navigation and that the
prohibition was enforced by guards called arundines.

One and all, the evidence, oral and documentary, presented by Roman Santos in the
administrative proceedings supports the conclusion of the lower court that the streams
involved in this case were originally man-made canals constructed by the former
owners of Hacienda San Esteban and that said streams were not held open for public
use. This same conclusion was reached 27 years earlier by an investigator of the
Bureau of Public Works whose report and recommendations were approved by the
Director of Public Works and submitted to the Secretary of Commerce and
Communications.

As stated, pursuant to Act 2152, as amended by Act 3208, the Bureau of Public Works
and the Department of Commerce and Communications locked into and settled the
question of whether or not the streams situated within Hacienda San Esteban are
publicly or privately owned. We refer to the so-called Panopio Report which contains the
findings and recommendations of Eliseo Panopio, a surveyor in the Bureau of Public
Works, who was designated to conduct formal hearings and investigation. Said report
found the following streams, among others, of private ownership:

Camastiles, Cela Balanga, Bato, Batasan, Bengco, Buta-buta, Don Timpo,


Mabutol, Macabacle, Macanduli, Malande Malate (Bunga), Magasawa, Masamaral,
Maragul, Mariablus Malate, Matalaba Malate, Nasi, Nigui, Pangebonan and
Quiorang Silab

on the ground that

The preponderance of the probatory facts, . . ., shows that the rivers, creeks,
esteros and canals listed in (1) have originally been constructed, deepened,
widened, and lengthened by the owners of the Hacienda San Esteban. That they
have been used as means of communication from one place to another and to
the inner most of the nipales, exclusively for the employees, colonos and
laborers of the said Hacienda San Esteban. That they have never been used by
the public for navigation without the express consent of the owners of the said
Hacienda.21

Bases for the above-quoted conclusion were "the reliable informations gathered from
old residents of the locality, from outsiders, the sworn statements obtained from
different persons not interested in this case and the comparison of the three plans
prepared in 1880, 1906 and 1930.22 The persons referred to are Martin Isip, Hilarion
Lobo, Emigdio Ignacio, Castor Quiambao, Matias Sunga facio Cruz, Inocencio Dayrit,
Gabriel Manansala, Lope Quiambao, Marcelino Bustos and Juan Lara .

On February 13, 1931 the Director of Public Works transmitted the Panopio Report to
the Secretary of Commerce and Communications recommending approval thereof.
Later, on February 27, 1935, Secretary of Public Works and Communications De las Alas
approved the agreement of Ayala y Cia., and the Municipality of Macabebe, concerning
the ownership of the streams in Hacienda San Esteban, for being in conformity with
said Panopio Report.

This agreement of Ayala y Cia and the Municipality of Macabebe which was approved by
the Secretary of Public Works and Communications only on February 27, 1935, could
not however bind the Government because the power of the Secretary of Public Works
and Communication to enter thereto had been suppressed by the Philppine Legislature
when it enacted Act 4175 which effect on December 7, 1934.

Nullity of the aforesaid contract would not of course affect the findings of fact contained
in the Panopio Report.

In weighing the evidence presented before the administrative investigation which


culminated in this appeal, respondent Secretary seemed to have ignored the Panopio
Report and other documentary evidence as well as the testimony of witnesses
presented by petitioner but instead gave credence only to the witnesses of Benigno
Musni, et al. Upon review, however, the lower court, taking into account all the
evidence adduced in the administrative hearing, including the Panopio Report, as well
as those presented for the first time before it, sustained petitioner's averment that the
streams in question were artificially made, hence of private ownership. As stated, this
conclusion of the lower court which is in accord with the findings of Panopio as
contained in his report, finds ample support from the evidence presented and admitted
in the administrative investigation. Accordingly, we see no merit in disturbing the lower
court's findings fact.

We next consider the issue of whether under pertinent laws, the streams in question
are public or private.

We quote Articles 339, 407 and 408 of the Spanish Civil Code of 1889:

Art. 339. Property of public ownerships is

1. That devoted to public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, river banks, shores, roadsteads, and that of a
similar character;

Art. 407. The following are of public ownership:

1. Rivers and their natural channels;

2. Continuous or intermittent waters from springs or brooks running in their


natural channels and the channels themselves.

3. Waters rising continuously or intermittently on lands of public ownership;

4. Lakes and ponds formed by nature, on public lands, and their beds;

5. Rain waters running through ravines or sand beds, the channels of which are
of public ownership;

6. Subterranean waters on public lands;


7. Waters found within the zone of operation of public works, even though
constructed under contract;

8. Waters which flow continuously or intermittently from lands belonging to


private persons, to the State, to provinces, or to towns, from the moment they
leave such lands;

9. The waste waters of fountains, sewers, and public institutions.

Art. 408. The following are of private ownership:

1. Waters, either continuous or intermittent rising on private etates, while they


run through them;

2. Lakes and ponds and their beds when formed by nature on such estates;

3. Subterranean waters found therein;

4. Rain water falling thereon as long as their bounderies.

5. The channels of flowing streams, continuous or intermittent, formed by rain


water, and those of brooks crossing estates which are not of public ownership.

The water, bed, banks, and floodgates of a ditch or aqueduct are deemed to be
an integral part of the estate or building for which the waters are intended. The
owners of estates through or along the boundaries of which the aqueduct passes
can assert no ownership over it, nor any right to make use. of it beds or banks,
unless they base their claims on title deed which specify the right or the
ownership claimed.

Articles 71 and 72 of the Spanish Law of Waters of August 3, 1866 state:

Art. 71. The water-beds of all creeks belong to the owners of the estates or
lands over which they flow.

Art. 72. The water-beds on public land, of creeks through which spring waters
run, are a part of the public domain.

The natural water-beds or channels of rivers are also part of the public domain.

Pursuant to Article 71 of the Spanish Law of Waters of August 3, 1866, and Article
408(5) of the Spanish Civil Code, channels of creeks and brooks belong to the owners
of estates over which they flow. The channels, therefore, of the streams in question
which may be classified creeks, belong to the owners of Hacienda San Esteban.
The said streams, considered as canals, of which they originally were, are of private
ownership in contemplation of Article 339(l) of the Spanish Civil Code. Under Article
339, canals constructed by the State and devoted to public use are of public ownership.
Conversely, canals constructed by private persons within private lands and devoted
exclusively for private use must be of private ownership.

Our attention has been called to the case of Mercado v. Municipal President of
Macabebe, 59 Phil. 592. There the creek (Batasan-Limasan) involved was originally dug
by the estate's owner who, subsequently allowed said creek to be used by the public for
navigation and fishing purposes for a period of 22 years. Said this Court through Mr.
Justice Diaz:

And even granting that the Batasan-Limasan creek acquired the proportions
which it had, before it was closed, as a result of excavations made by laborers of
the appellant's predecesor in interest, it being a fact that, since the time it was
opened as a water route between the Nasi River and Limasan creek, the owners
thereof as well as strangers, that is, both the residents of the hacienda and those
of other nearby barrios and municipalities, had been using it not only for their
bancas to pass through but also for fishing purposes, and it being also a fact that
such was the condition of the creek at least since 1906 until it was closed in
1928, if the appellant and her predecessors in interest had acquired any right to
the creek in question by virtue of excavations which they had made thereon,
they had such right through prescription, inasmuch as they failed to obtain, and
in fact they have not obtained, the necessary authorization to devote it to their
own use to the exclusion of all others. The use and enjoyment of a creek, as any
other property simceptible of appropriation, may be acquired or lost through
prescription, and the appellant and her predecessors in interest certainly lost
such right through the said cause, and they cannot now claim it exclusively for
themselves after the general public had been openly using the same from 1906
to 1928. . . .

In the cited case, the creek could have been of private ownership had not its builder
lost it by prescription. Applying the principle therein enunciated to the case at bar, the
conclusion would be inevitably in favor of private ownership, considering that the
owners of Hacienda San Esteban held them for their exclusive use and prohibited the
public from using them.

It may be noted that in the opinion, mentioned earlier, issued on June 12, 1935, the
Secretary of Justice answered in the negative the query of the Secretary of Public
Works and Communications whether the latter can declare of private ownership those
streams which "were dug up artificially", because it was assumed that the streams were
used "by the public as fishing ground and in transporting their commerce in bancas or
in small crafts without the objection of the parties who dug" them. Precisely, Mercado
v. Municipality of Macabebe was given application therein. However, the facts, as then
found by the Bureau of Public Works, do not support the factual premise that the
streams in question were used by the public "without the objection of the parties who
dug" them. We cannot therefore take as controlling in determining the merits of this the
factual premises and the legal conclusion contained in said opinion.

The case at bar should be differentiated from those cases where We held illegal the
closing and/or appropriation of rivers or streams by owners of estates through which
they flow for purposes of converting them into fishponds or other works.23 In those
cases, the watercourses which were dammed were natural navigable streams and used
habitually by the public for a long time as a means of navigation. Consequently, they
belong to the public domain either as rivers pursuant to Article 407 (1) of the Spanish
Civil Code of 1889 or as property devoted to public use under Article 339 of the same
code. Whereas, the streams involved in this case were artificially made and devoted to
the exclusive use of the hacienda owner.

Finally, Sapang Cansusu, being a natural stream and a continuation of the Cansusu
River, admittedly a public stream, belongs to the public domain. Its closure therefore by
the predecessors of Roman Santos was illegal.

The petition for the opening of Sapang Malauling Maragul, Quiorang Silab, Nigui,
Pepangebunan, Nasi and Bulacus was dismissed by the Secretary of Public Works and
Communications and the case considered closed. The said administrative decision has
not been questioned in this appeal by either party. Hence, they are deemed excluded
herein.

All the other streams, being artificial and devoted exclusively for the use of the
hacienda owner and his personnel, are declared of private ownership. Hence, the dams
across them should not he ordered demolished as public nuisances.

With respect to the issue of contempt of court on the part of the Secretary of Public
Works and Communications and Julian Cargullo for the alleged issuance of a
administrative decisions ordering demolition of dikes involved in this case after the writ
of injunction was granted and served, suffice it to state that the lower court made no
finding of contempt of court. Necessarily, there is no conviction for contempt reviewable
by this Court and any discussion on the matter would be academic.

WHEREFORE, the decision appealed from is affirmed, except as to Sapang Cansusu


which is hereby declared public and as to which the judgment of the lower court is
reversed. No costs. So ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal. Zaldivar, Sanchez, Castro, Angeles
and Fernando, JJ., concur.
G.R. No. L-31271 April 29, 1974

ROMEO MARTINEZ and LEONOR SUAREZ, spouses, petitioners-appellants,


vs.
HON. COURT OF APPEALS, SECRETARY and UNDERSECRETARY OF PUBLIC
WORKS & COMMUNICATIONS, respondents-appellees.

Flores Macapagal, Ocampo and Balbastro for petitioners-appellants.

Office of the Solicitor General Felix Q. Antonio, Acting Assistant Solicitor General
Dominador L. Quiroz and Solicitor Concepcion T. Agapinan for respondents-appellees.

ESGUERRA, J.:p

Petition for review by certiorari of the judgment of the Court of Appeals dated
November 17, 1969 in its CA-G.R. 27655-R which reverses the judgment of the Court of
First Instance of Pampanga in favor of petitioners-appellants against the Secretary and
Undersecretary of Public Works & Communications in the case instituted to annul the
order of November 25, 1958 of respondent Secretary of Public Works &
Communications directing the removal by the petitioners of the dikes they had
constructed on Lot No. 15856 of the Register of Deeds of Pampanga, which order was
issued pursuant to the provisions of Republic Act No. 2056. The dispositive portion of
the judgment of reversal of the Court of Appeals reads as follows:

IN VIEW OF THE FOREGOING CONSIDERATIONS, the judgment appealed


from is hereby reversed, and another entered: [1] upholding the validity
of the decision reached by the respondent officials in the administrative
case; [2] dissolving the injunction issued by the Court below; and [3]
cancelling the registration of Lot No. 2, the disputed area, and ordering its
reconveyance to the public domain. No costs in this instance.

The background facts are stated by the Court of Appeals as follows:

The spouses Romeo Martinez and Leonor Suarez, now petitioners-


appellees, are the registered owners of two (2) parcels of land located in
Lubao, Pampanga, covered by transfer certificate of title No. 15856 of the
Register of Deeds of the said province. Both parcels of land are fishponds.
The property involved in the instant case is the second parcel mentioned
in the above-named transfer certificate of title.

The disputed property was originally owned by one Paulino Montemayor,


who secured a "titulo real" over it way back in 1883. After the death of
Paulino Montemayor the said property passed to his successors-in-
interest, Maria Montemayor and Donata Montemayor, who in turn, sold it,
as well as the first parcel, to a certain Potenciano Garcia.

Because Potenciano Garcia was prevented by the then municipal president


of Lubao, Pedro Beltran, from restoring the dikes constructed on the
contested property, the former, on June 22, 1914, filed Civil Case No.
1407 with the Court of First Instance against the said Pedro Beltran to
restrain the latter in his official capacity from molesting him in the
possession of said second parcel, and on even date, applied for a writ of
preliminary injunction, which was issued against said municipal president.
The Court, by decision promulgated June 12, 1916, declared permanent
the preliminary injunction, which, decision, on appeal, was affirmed by the
Supreme Court on August 21, 1918. From June 22, 1914, the dikes
around the property in question remained closed until a portion thereof
was again opened just before the outbreak of the Pacific War.

On April 17, 1925. Potenciano Garcia applied for the registration of both
parcels of land in his name, and the Court of First Instance of Pampanga,
sitting as land registration court, granted the registration over and against
the opposition of the Attorney-General and the Director of Forestry.
Pursuant to the Court's decision, original certificate of title No. 14318,
covering said parcels 1 and 2 was issued to the spouses Potenciano Garcia
and Lorenza Sioson.

These parcels of land were subsequently bought by Emilio Cruz de Dios in


whose name transfer certificate of title No. 1421 was first issued on
November 9, 1925.

Thereafter, the ownership of these properties changed hands until


eventually they were acquired by the herein appellee spouses who hold
them by virtue of transfer certificate of title No. 15856.

To avoid any untoward incident, the disputants agreed to refer the matter
to the Committee on Rivers and Streams, by then composed of the
Honorable Pedro Tuason, at that time Secretary of Justice, as chairman,
and the Honorable Salvador Araneta and Vicente Orosa, Secretary of
Agriculture and National Resources and Secretary of Public Works and
Communications, respectively, as members. This committee thereafter
appointed a Sub-Committee to investigate the case and to conduct an
ocular inspection of the contested property, and on March 11, 1954, said
Sub-Committee submitted its report to the Committee on Rivers and
Streams to the effect that Parcel No. 2 of transfer certificate of title No.
15856 was not a public river but a private fishpond owned by the herein
spouses.
On July 7, 1954, the Committee on Rivers and Streams rendered its
decision the dispositive part of which reads:

"In view of the foregoing considerations, the spouses Romeo


Martinez and Leonor Suarez should be restored to the
exclusive possession, use and enjoyment of the creek in
question which forms part of their registered property and
the decision of the courts on the matter be given full force
and effect."

The municipal officials of Lubao, led by Acting Mayor Mariano Zagad,


apparently refused to recognize the above decision, because on
September 1, 1954, the spouses Romeo Martinez and Leonor Suarez
instituted Civil Case No. 751 before the Court of First Instance of
Pampanga against said Mayor Zagad, praying that the latter be enjoined
from molesting them in their possession of their property and in the
construction of the dikes therein. The writ of preliminary injunction
applied for was issued against the respondent municipal Mayor, who
immediately elevated the injunction suit for review to the Supreme Court,
which dismissed Mayor Zagad's petition on September 7, 1953. With this
dismissal order herein appellee spouses proceeded to construct the dikes
in the disputed parcel of land.

Some four (4) years later, and while Civil Case No. 751 was still pending
the Honorable Florencio Moreno, then Secretary of Public Works and
Communications, ordered another investigation of the said parcel of land,
directing the appellees herein to remove the dikes they had constructed,
on the strength of the authority vested in him by Republic Act No. 2056,
approved on June 13, 1958, entitled "An Act To Prohibit, Remove and/or
Demolish the Construction of Dams. Dikes, Or Any Other Walls In Public
Navigable Waters, Or Waterways and In Communal Fishing Grounds, To
Regulate Works in Such Waters or Waterways And In Communal Fishing
Grounds, And To Provide Penalties For Its Violation, And For Other
Purposes. 1 The said order which gave rise to the instant proceedings,
embodied a threat that the dikes would be demolished should the herein
appellees fail to comply therewith within thirty (30) days.

The spouses Martinez replied to the order by commencing on January 2,


1959 the present case, which was decided in their favor by the lower
Court in a decision dated August 10, 1959, the dispositive part of which
reads:

"WHEREFORE, in view of the foregoing considerations, the


Court hereby declares the decision, Exhibit S, rendered by
the Undersecretary of Public Works and Communications null
and void; declares the preliminary injunction, hereto for
issued, permanent, and forever enjoining both respondents
from molesting the spouses Romeo Martinez and Leonor
Suarez in their possession, use and enjoyment of their
property described in Plan Psu-9992 and referred to in their
petition."

"Without pronouncement as to costs."

"SO ORDERED."

As against this judgment respondent officials of the Department of Public


Works and Communications took the instant appeal, contending that the
lower Court erred:

1. In holding that then Senator Rogelio de la Rosa, complainant in the


administrative case, is not an interested party and his letter-complaint
dated August 15, 1958 did not confer jurisdiction upon the respondent
Undersecretary of Public Works and Communications to investigate the
said administrative case;

2. In holding that the duty to investigate encroachments upon public


rivers conferred upon the respondent Secretary under Republic Act No.
7056 cannot be lawfully delegated by him to his subordinates;

3. In holding that the investigation ordered by the respondent Secretary in


this case is illegal on the ground that the said respondent Secretary has
arrogated unto himself the power, which he does not possess, of
reversing, making nugatory, and setting aside the two lawful decisions of
the Court Exhibits K and I, and even annulling thereby, the one rendered
by the highest Tribunal of the land;

4. In not sustaining respondent's claim that petitioners have no cause of


action because the property in dispute is a public river and in holding that
the said claim has no basis in fact and in law;

5. In not passing upon and disposing of respondent's counterclaim;

6. In not sustaining respondent's claim that the petition should not have
been entertained on the ground that the petitioners have not exhausted
administrative remedies; and

7. In holding that the decision of the respondents is illegal on the ground


that it violates the principles that laws shall have no retroactive effect
unless the contrary is provided and in holding that the said Republic Act
No. 2056 is unconstitutional on the ground that respondents' threat of
prosecuting petitioners under Section 3 thereof for acts done four years
before its enactment renders the said law ex post facto.

The Court of Appeals sustained the above-mentioned assignment of errors committed


by the Court of First Instance of Pampanga and, as previously stated, reversed the
judgment of the latter court. From this reversal this appeal by certiorari was taken, and
before this Court, petitioners-appellants assigned the following errors allegedly
committed by the Court of Appeals:

1. THE COURT OF APPEALS ERRED IN DECLARING IN THE INSTANT CASE


THAT PARCEL NO. 2 OF TRANSFER CERTIFICATE OF TITLE NO. 15856 IS
A PUBLIC RIVER AND ORDERING THE CANCELLATION OF ITS
REGISTRATION BECAUSE THIS CONSTITUTES A COLLATERAL ATTACK
ON A TORRENS TITLE IN VIOLATION OF THE LAW AND THE WELL-
SETTLED JURISPRUDENCE ON THE MATTER.

2. THE COURT OF APPEALS ERRED IN REOPENING AND RE-LITIGATING


THE ISSUE AS TO WHETHER OR NOT LOT NO. 2 OF TRANSFER
CERTIFICATE OF TITLE NO. 15856 REGISTER OF DEEDS OF PAMPANGA,
IS A PUBLIC RIVER NOTWITHSTANDING THE FACT THAT THIS ISSUE
HAS BEEN LONG RESOLVED AND SETTLED BY THE LAND REGISTRATION
COURT OF PAMPANGA IN LAND REGISTRATION PROCEEDING NO. 692
AND IS NOW RES JUDICATA.

3. THE COURT OF APPEALS ERRED IN ORDERING THE CANCELLATION


OF THE REGISTRATION OF LOT NO. 2 OF TRANSFER CERTIFICATE OF
TITLE NO. 15856 NOTWITHSTANDING THE FACT THAT THE TORRENS
TITLE COVERING IT HAS BEEN VESTED IN THE PETITIONERS WHO ARE
THE SEVENTH OF THE SUCCESSIVE INNOCENT PURCHASERS THEREOF
AND WHO IN PURCHASING THE SAME RELIED ON THE PRINCIPLE THAT
THE PERSONS DEALING WITH REGISTERED LAND NEED NOT GO
BEHIND THE REGISTER TO DETERMINE THE CONDITION OF THE
PROPERTY.

The 1st and 2nd assignment of errors, being closely related, will be taken up together.

The ruling of the Court of Appeals that Lot No. 2 covered by Transfer Certificate of Title
No. 15856 of the petitioners-appellants is a public stream and that said title should be
cancelled and the river covered reverted to public domain, is assailed by the petitioners-
appellants as being a collateral attack on the indefeasibility of the torrens title originally
issued in 1925 in favor of the petitioners-appellants' predecessor-in-interest, Potenciano
Garcia, which is violative of the rule of res judicata. It is argued that as the decree of
registration issued by the Land Registration Court was not re-opened through a petition
for review filed within one (1) year from the entry of the decree of title, the certificate
of title issued pursuant thereto in favor of the appellants for the land covered thereby is
no longer open to attack under Section 38 of the Land Registration Act (Act 496) and
the jurisprudence on the matter established by this Tribunal. Section 38 of the Land
Registration Act cited by appellants expressly makes a decree of registration, which
ordinarily makes the title absolute and indefeasible, subject to the exemption stated in
Section 39 of the said Act among which are: "liens, claims or rights arising or existing
under the laws or Constitution of the United States or of the Philippine Islands which
the statute of the Philippine Islands cannot require to appear of record in the registry."

At the time of the enactment of Section 496, one right recognized or existing under the
law is that provided for in Article 339 of the old Civil Code which reads as follows:

Property of public ownership is:

1. That destined to the public use, such as roads, canals, rivers, torrents,
ports, and bridges constructed by the State, and banks shores,
roadsteads, and that of a similar character. (Par. 1)

The above-mentioned properties are parts of the public domain intended for public use,
are outside the commerce of men and, therefore, not subject to private appropriation. (
3 Manresa, 6th ed. 101-104.)

In Ledesma v. Municipality of Iloilo, 49 Phil. 769, this Court held:

A simple possession of a certificate of title under the Torrens system does


not necessarily make the possessor a true owner of all the property
described therein. If a person obtains title under the Torrens system
which includes by mistake or oversight, lands which cannot be registered
under the Torrens system, he does not by virtue of said certificate alone
become the owner of the land illegally included.

In Mercado v. Municipal President of Macabebe, 59 Phil. 592, it was also said:

It is useless for the appellant now to allege that she has obtained
certificate of title No. 329 in her favor because the said certificate does
not confer upon her any right to the creek in question, inasmuch as the
said creek, being of the public domain, is included among the various
exceptions enumerated in Section 39 of Act 496 to which the said
certificate is subject by express provision of the law.

The same ruling was laid down in Director of Lands v. Roman Catholic Bishop of
Zamboanga, 61 Phil. 644, as regards public plaza.
In Dizon, et al. v. Rodriguez, et al., G.R. No. L-20300-01 and G.R. No. L-20355-56, April
30, 1965, 20 SCRA 704, it was held that the incontestable and indefeasible character of
a Torrens certificate of title does not operate when the land covered thereby is not
capable of registration.

It is, therefore, clear that the authorities cited by the appellants as to the
conclusiveness and incontestability of a Torrens certificate of title do not apply here.
The Land Registration Court has no jurisdiction over non-registerable properties, such
as public navigable rivers which are parts of the public domain, and cannot validly
adjudge the registration of title in favor of a private applicant. Hence, the judgment of
the Court of First Instance of Pampanga as regards the Lot No. 2 of Certificate of Title
No. 15856 in the name of petitioners-appellants may be attacked at any time, either
directly or collaterally, by the State which is not bound by any prescriptive period
provided for by the Statute of Limitations (Article 1108, par. 4, new Civil Code). The
right of reversion or reconveyance to the State of the public properties fraudulently
registered and which are not capable of private appropriation or private acquisition does
not prescribe. (Republic v. Ramona Ruiz, et al., G.R. No. L-23712, April 29, 1968, 23
SCRA 348; Republic v. Ramos, G.R. No.
L-15484, January 31, 1963, 7 SCRA 47.)

When it comes to registered properties, the jurisdiction of the Secretary of Public Works
& Communications under Republic Act 2056 to order the removal or obstruction to
navigation along a public and navigable creek or river included therein, has been
definitely settled and is no longer open to question (Lovina v. Moreno, G.R. No L-17821,
November 29, 1963, 9 SCRA 557; Taleon v. Secretary of Public Works &
Communications G.R. No. L-24281, May 16, 1961, 20 SCRA 69, 74).

The evidence submitted before the trial court which was passed upon by the
respondent Court of Appeals shows that Lot No. 2 (Plan Psu 992) of Transfer Certificate
of Title No. 15856, is a river of the public domain. The technical description of both Lots
Nos. 1 and 2 appearing in Original Certificate of Title No. 14318 of the Register of
Deeds of Pampanga, from which the present Transfer Certificate of Title No. 15856 was
derived, confirms the fact that Lot No. 2 embraced in said title is bounded practically on
all sides by rivers. As held by the Court of First Instance of Pampanga in Civil Case No.
1247 for injunction filed by the petitioners' predecessors-in-interest against the
Municipal Mayor of Lubao and decided in 1916 (Exh. "L"), Lot No. 2 is a branch of the
main river that has been covered with water since time immemorial and, therefore, part
of the public domain. This finding having been affirmed by the Supreme Court, there is
no longer any doubt that Lot No. 2 of Transfer Certificate of Title No. 15856 of
petitioners is a river which is not capable of private appropriation or acquisition by
prescription. (Palanca v. Com. of the Philippines, 69 Phil. 449; Meneses v. Com. of the
Philippines, 69 Phil. 647). Consequently, appellants' title does not include said river.

II
As regards the 3rd assignment of error, there is no weight in the appellants' argument
that, being a purchaser for value and in good faith of Lot No. 2, the nullification of its
registration would be contrary to the law and to the applicable decisions of the
Supreme Court as it would destroy the stability of the title which is the core of the
system of registration. Appellants cannot be deemed purchasers for value and in good
faith as in the deed of absolute conveyance executed in their favor, the following
appears:

6. Que la segunda parcela arriba descrita y mencionada esta actualmente


abierta, sin malecones y excluida de la primera parcela en virtud de la
Orden Administrative No. 103, tal como fue enmendada, del pasado
regimen o Gobierno.

7. Que los citados compradores Romeo Martinez y Leonor Suarez se


encargan de gestionar de las autoridades correspondientes para que la
citada segunda parcela pueda ser convertida de nuevo en pesqueria,
corriendo a cuenta y cargo de los mismos todos los gastos.

8. Que en el caso de que dichos compradores no pudiesen conseguir sus


propositos de convertir de nuevo en pesquera la citada segunda parcela,
los aqui vendedores no devolveran ninguna cantidad de dinero a los
referidos compradores; este es, no se disminuiriat el precio de esta venta.
(Exh. 13-a, p. 52, respondents record of exhibits)

These stipulations were accepted by the petitioners-appellants in the same conveyance


in the following terms:

Romeo Martinez y Leonor Suarez, mayores de edad, filipinos y residentes


en al Barrio de Julo Municipio de Malabon, Provincia de Rizal, por la
presente, declaran que estan enterados del contenido de este documento
y lo aceptan en los precisos terminos en que arriba uedan consignados.
(Exh. 13-a, ibid)

Before purchasing a parcel of land, it cannot be contended that the appellants who
were the vendees did not know exactly the condition of the land that they were buying
and the obstacles or restrictions thereon that may be put up by the government in
connection with their project of converting Lot No. 2 in question into a fishpond.
Nevertheless, they willfully and voluntarily assumed the risks attendant to the sale of
said lot. One who buys something with knowledge of defect or lack of title in his vendor
cannot claim that he acquired it in good faith (Leung Lee v. Strong Machinery Co., et
al., 37 Phil. 664).

The ruling that a purchaser of a registered property cannot go beyond the record to
make inquiries as to the legality of the title of the registered owner, but may rely on the
registry to determine if there is no lien or encumbrances over the same, cannot be
availed of as against the law and the accepted principle that rivers are parts of the
public domain for public use and not capable of private appropriation or acquisition by
prescription.

FOR ALL THE FOREGOING, the judgment of the Court of Appeals appealed from is in
accordance with law, and the same is hereby affirmed with costs against the
petitioners-appellants.

Makalintal, C.J., Castro, Teehankee and Muoz Palma, JJ., concur.


G.R. No. L-37682 March 29, 1974

REPUBLIC OF THE PHILIPPINES, Represented by the DIRECTOR OF


LANDS, petitioner,
vs.
HON. PEDRO SAMSON ANIMAS, in his capacity as Judge of CFI South
Cotabato, Branch I, General Santos City, ISAGANI DU TIMBOL and the
REGISTER OF DEEDS OF GENERAL SANTOS CITY, respondent.

Office of the Solicitor General Estelito P. Mendoza, Assistant Solicitor General Santiago
M. Kapunan and Solicitor Patricio M. Patajo for petitioner.

Quitain Law Office for private respondent.

ESGUERRA, J.:p

Petition to review the order of the Court of First Instance of South Cotabato, Branch I,
General Santos City, dated June 22, 1973, dismissing the complaint in its Civil Case No.
1253, entitled "Republic of the Philippines, Plaintiff, vs. Isagani Du Timbol and the
Register of Deeds of General Santos City, Defendants", instituted by the plaintiff to
declare null and void Free Patent No. V-466102 and Original Certificate of Title (O.C.T.)
No. P-2508 based thereon issued in the name of defendant Isagani Du Timbol; to order
the aforesaid defendant to surrender the owner's duplicate of O.C.T. No. P-2508 and
the defendant Register of Deeds to cancel the same; to decree the reversion of the land
in question to the mass of public domain, and granting such further relief as may be
just and equitable in the premises.

The land covered by the free patent and title in question was originally applied for by
Precila Soria, who on February 23, 1966, transferred her rights to the land and its
improvements to defendant Isagani Du Timbol who filed his application therefor on
February 3, 1969, as a transferee from Precila Soria.

On December 12, 1969, free Patent No. V-466102 was issued by the President of the
Philippines for the land in question, and on July 20, 1970, after transmittal of the patent
to the Register of Deeds of General Santos City, Original Certificate of Title (O.C.T.) No.
P-2508 was issued in the name of defendant Isagani Du Timbol.

On August 5, 1971, the Republic of the Philippines, at the instance of the Bureau of
Forestry, filed a complaint in the Court of First Instance of Cotabato, Branch I, General
Santos City (Civil Case No. 1253), to declare free patent No. V-466102 and Original
Certificate of Title No. P-2508 in the name of defendant Isagani Du Timbol null and
void ab initio and to order the reversion of the land in question to the mass of public
domain. The action is based on the ground that the land covered thereby is a forest or
timber land which is not disposable under the Public Land Act; that in a reclassification
of the public lands in the vicinity where the land in question is situated made by the
Bureau of Forestry on March 7, 1958, the said land was plotted on Bureau of Forestry
map L.C. 700 to be inside the area which was reverted to the category of public forest,
whereas the application for free patent by Isagani Du Timbol was filed on June 3, 1969,
or more than eleven years thereafter; that the said patent and title were obtained
fraudulently as private respondent Isagani Du Timbol never occupied and cultivated the
land applied for.

Invoking the case of Ramirez vs. Court of Appeals (G.R. No. L-28591, 30 SCRA 207-
301), holding that a certificate of title fraudulently secured is not null and void ab initio,
unless the fraud consisted in misrepresenting that the land covered by the application is
part of the public domain when it is not, the respondent court dismissed the complaint
on the ground that Certificate of Title based on the patent had became indefeasible in
view of the lapse of the one-year period prescribed under Section 38 of the Land
Registration Act for review of a decree of title on the ground of fraud. From this order
of June 22, 1973, dismissing the complaint, plaintiff Republic of the Philippines has
appealed to this Court for review.

After careful deliberation, this Court grants the petition on the ground that the area
covered by the patent and title is not disposable public land, it being a part of the forest
zone and, hence the patent and title thereto are null and void.

The defense of indefeasibility of a certificate of title issued pursuant to a free patent


does not lie against the state in an action for reversion of the land covered thereby
when such land is a part of a public forest or of a forest reservation. As a general rule,
timber or forest lands are not alienable or disposable under either the Constitution of
1935 or the Constitution of 1973. Although the Director of Lands has jurisdiction over
public lands classified as agricultural under the constitution, or alienable or disposable
under the Public Land Act, and is charged with the administration of all laws relative
thereto, mineral and timber lands are beyond his jurisdiction. It is the Bureau of
Forestry that has jurisdiction and authority over the demarcation, protection,
management, reproduction, occupancy and use of all public forests and forest
reservations and over the granting of licenses for the taking of products therefrom,
including stone and earth (Section 1816 of the Revised Administrative Code). That the
area in question is a forest or timber land is clearly established by the certification made
by the Bureau of Forest Development that it is within the portion of the area which was
reverted to the category of forest land, approved by the President on March 7, 1958.
When the defendant Isagani Du Timbol filed his application for free patent over the
land in question on June 3, 1969, the area in question was not a disposable or alienable
public land but a public forest. Titles issued to private parties by the Bureau of Lands
when the land covered thereby is not disposable public land but forest land are void ab
initio. In Gatchalian vs. Pavilen, et al., L-17619, Oct. 31, 1962, 6 SCRA p. 508, 512, this
Court said:
And if it be true that the Bureau of Lands had no jurisdiction to issue a
patent because the land involved was still inalienable forest land when
granted, then it may be plausibly contended that the patent title would
be ab initio void, subject to attack at any time by any party adversely
affected. (Gatchalian vs. Pavilen, et al., L-17619, Oct. 31, 1962, supra,
citing Civil Code Arts. 1409 and 1421; Vao vs. Insular Gov't., 41 Phil.
161; Aderable vs. Director of Forestry, L-13663, March 25, 1960).

A patent is void at law if the officer who issued the patent had no authority to do so
(Knight vs. Land Ass., 142 U.S. 161, 12 Sup. Ct., 258, 35L ED. 974; emphasis supplied).
If a person obtains a title under the Public Land Act which includes, by mistake or
oversight, lands which cannot be registered under the Torrens System, or when the
Director of Lands did not have jurisdiction over the same because it is a public forest,
the grantee does not, by virtue of said certificate of title alone, become the owner of
the land illegally included. (See Ledesma vs. Municipality of Iloilo, 49 Phil. 769)

The case of Ramirez vs. Court of Appeals, G. R. No. L-28591, Oct. 31, 1969, 30 SCRA
297, relied upon by respondent Court in dismissing this case, is not controlling. In that
case no forest land was involved but agricultural public land which was first covered by
a patent issued to one party and later registered under the Torrens System by the other
party. The litigation was between private parties where the party who registered it
under Act No. 496 sought the nullity of the title of the patentee under the Public Land
Act. In the case at bar the party seeking the nullity of the title and reversion of the land
is the state itself which is specifically authorized under Section 101 of the Public Land
Act to initiate such proceedings as an attribute of sovereignty, a remedy not available to
a private individual.

The complaint alleges in its paragraph 8 that applicant Isagani Du Timbol was never in
possession of the property prior to his filing the application, contrary to the provisions
of law that the applicant must have been in possession or cultivation thereof for at least
30 years; that the applicant, after diligent search by the Acting Chief of the Survey-
Party, Francisco R. Alcones, in South Cotabato, could not be contacted because he is a
resident of Davao City; that there are no existing signs of improvements found in the
area in question as it is not under cultivation but covered with grasses, bushes and
small trees; that it is being used as ranch for grazing cows by the heirs of Hermogenes
Chilsot; that no monuments were placed on the area surveyed which goes to show that
there was no actual survey thereof; that the property in question is inside the ranch of
the heirs of Hermogenes Chilsot under Pasture Lease Agreement No. 1244 and,
therefore, inside the forest zone; and that said ranch has a fence around it to show that
other persons could not enter and cultivate the same, and that the signature of then
Acting District Land Officer Elias de Castro of South Cotabato has been forged to
facilitate the issuance of patent in favor of Isagani Du Timbol.
The above alleged circumstances are indicative of fraud in the filing of the application
and obtaining title to the land, and if proven would override respondent Judge's order
dismissing the case without hearing. The misrepresentations of the applicant that he
had been occupying and cultivating the land and residing thereon are sufficient grounds
to nullify the grant of the patent and title under Section 91 of the Public Land Law
which provides as follows:

That statements made in the application shall be considered as essential


conditions or parts of any concession, title or permit issued on the basis of
such application, and any false statement thereon or omission of facts,
changing, or modifying the consideration of the facts set forth in such
statement, and any subsequent modification, alteration, or change of the
material facts set forth in the application shall ipso facto produce the
cancellation of the concession, title or permit granted. ...

A certificate of title that is void may be ordered cancelled. A title will be considered void
if it is procured through fraud, as when a person applies for registration of the land
under his name although the property belongs to another. In the case of disposable
public lands, failure on the part of the grantee to comply with the conditions imposed
by law is a ground for holding such title void (Director of Lands vs. Court of Appeals, et
al., G.R. No. L-17696, May 19, 1966, 17 SCRA, 71, 79-80; emphasis supplied). The
lapse of the one year period within which a decree of title may be reopened for fraud
would not prevent the cancellation thereof, for to hold that a title may become
indefeasible by registration, even if such title had been secured through fraud or in
violation of the law, would be the height of absurdity. Registration should not be a
shield of fraud in securing title. (J. M. Tuason & Co., Inc. vs. Macalindog, L-15398,
December 29, 1962, 6 SCRA 938, page 38).

Considering that it is the state is seeking the cancellation of the title of respondent
Isagani Du Timbol, said title has not become indefeasible for prescription cannot be
invoked against the state. A title founded on fraud may be cancelled, notwithstanding
the lapse of one year from the issuance thereof, through a petition filed in court by the
Solicitor General, (Sumail vs. Court of First Instance of Cotabato, 51 O.G. p. 2414 Phil.
L-8278. 96 Phil. 946: Eugenio, et al., vs. Perdido, et al., G. R. No. L-7083, May 19,
1955; De los Santos vs. Roman Catholic Church of Midsayap G.R. No. L-6088, Feb. 24,
1954, 94 Phil. 405).

Public land fraudulently included in patents or certificates of title may be recovered or


reverted to the state in accordance with Section 101 of the Public Land Act (Director of
Lands vs. Jugado et al., G.R. No. L-14707, May 23, 1961). Prescription does not lie
against the state in such cases for the Statute of Limitations does not run against the
state (Article 1108, paragraph 4 of the New Civil Code). The right of reversion or
reconveyance to the state is not barred prescription (Republic of the Philippines vs.
Ramona Ruiz, et al., G.R. No. L-23712, April 29, 1968, 23 SCRA 348. People vs. Ramos,
G.R. No. L-15484, Jan. 31, 1963, 47 SCRA 12; Government of the Philippines vs. Monte
de Piedad 35 Phil. 728; 751-753).

Even granting that the title of private respondent Isagani Du Timbol can no longer be
reopened under the Land Registration Act, the land covered thereby may be
reconveyed to the state in an action for reconveyance under Section 101 of
Commonwealth Act 141 (Public Land Act), for the remedy of reconveyance is
adequately covered by the prayer of the complaint for the grant of such other relief as
may be just and equitable in the premises.

FOR ALL THE FOREGOING, the order of the respondent court, dated June 22, 1973,
dismissing the complaint, and that of September 29, 1973, denying the motion for its
reconsideration, both issued in Civil Case No. 1253 of the respondent court, are hereby
annulled and set aside. The respondent court shall proceed to hear said Civil Case and
render judgment thereon accordingly.

Costs against respondent Isagani Du Timbol.

Makalintal, C.J., Castro, Makasiar, Muoz Palma, JJ., concur.


G.R. No. L-36610 June 18, 1976

REPUBLIC OF THE PHILIPPINES and DIRECTOR OF LANDS, petitioners,


vs.
HON. AMADO B. REYES, as Judge of the Court of First Instance of Bataan,
Branch II, and ELISEO PALATINO, respondents.

Solicitor General Estelito P. Mendoza, Assistant Solicitor General Bernardo P. Pardo and
Solicitor Leonardo I. Cruz for petitioners.

Filoteo T. Banzon for respondents.

ESGUERRA, J.:

This is an appeal via certiorari seeking to reverse the final order (decision) of the Court
of First Instance of Bataan, Branch II, approving the registration of a parcel of land
applied for by the herein private respondent and the setting aside of the order denying
petitioners' motion for reconsideration of said decision.

Petitioners registered two assignments of error allegedly committed by the trial court,
to wit:

THE LOWER COURT ERRED IN RULING THAT THE APPLICANT POSSESSED AN


IMPERFECT AND INCOMPLETE TITLE THAT IS REGISTERABLE;

II

THE LOWER COURT ERRED IN NOT GRANTING THE OPPOSITOR GOVERNMENT THE
OPPORTUNITY TO PROVE THAT THE LAND APPLIED FOR WAS INALIENABLE. 1

Arguing on these alleged errors, petitioners, in the first error averred that "By the
decision of the Cadastral Court rendered before the last world war, Lot 622 of the
Mariveles Cadastre was declared public land ... Such being the case, the lower Court is
without jurisdiction over the subject matter of the application for voluntary registration
under Act 496 filed by respondent Eliseo Palatino. The land subject thereof having been
subjected to compulsory registration proceedings under the Cadastral Act and declared
public land per decision of the Cadastral Court, the same land can no longer be the
subject of registration by voluntary proceedings under Act 496 ... The ruling (of the
court below) is plainly erroneous. It ignores the conclusiveness of said judgment
constituting res judicata. The previous cadastral proceeding was in rem, binding on the
whole world." 2
As to the second error, petitioners argued: "... the lower court ruled that 'not the whole
of Mariveles was declared a U.S. Military Reservation and there is no evidence to show
that the area in question, which is part of Lot 626 of the cadastral survey of Mariveles,
is within the U.S. Military Reservation."

Precisely, the lower Court deprived the oppositor Government of the opportunity to
adduce evidence on the point by denying its motion for reconsideration. True that the
Solicitor General was given notice of the initial hearing set on December 21, 1972, but
as the record was not forwarded to him pursuant to law (Sections 50, 51, CA 141, as
amended), he could not file a timely opposition to the application on or before the initial
date of hearing. 3

For his part, private respondent Eliseo Palatino answers that the aforecited assignment
of errors alleged by the petitioners "... hinges upon the determination of the following
issues ... :

1. Whether the failure on the part of the petitioners to file a notice of


appeal with the lower court and to serve copy of the same to the
respondent, as the original record, the petition, the motion to dismiss and
the brief of the petitioners show, the judgment or order becomes final,
and as a consequence, this Honorable Court has no jurisdiction to alter
the same;

2. Whether this Honorable Court can consider petitioners' evidence in


support of their assignment of errors, which evidence was not formally
offered during the trial as the petitioners were declared in default and did
not introduce any evidence and they continue to be in default since they
did not appeal from the order declaring them in default; and,

3. Since the appeal raises questions of facts or even mixed questions of


facts and law, whether under Section 2, Republic Act No. 5440, approved
on September 9, 1968, amending Section 171, Judiciary Act, the
petitioners must appeal to the Court of Appeals and not to the Supreme
Court. 4

To understand these issues, We shall examine the facts of this case as they appear in
the records, to wit:

1. On September 6, 1972, the herein private respondent Eliseo Palatino filed with the
respondent court an application for registration of title under Act No. 496, the Land
Registration Law, of a parcel of land situated in Bo. Cabcaben, Municipality of Mariveles,
Bataan Province, containing an area of 22,744 sq. meters, more or less; 5

2. On October 20, 1972, notice of initial hearing was duly issued by the Commissioner
of Land Registration; 6
3. On December 21, 1972, respondent trial court issued an order of general default
against all persons, including herein petitioner the Director of Lands, for the failure of
anyone, including the said Director of Lands or his representative, to appear and
oppose the application; 7

4. Notice of this order of general default was received by petitioners on January 17,
1973; 8

5. On January 5, 1973, respondent court issued its order (decision) granting the
application for registration, the dispositive portion of which reads as follows:

WHEREFORE, finding that the applicant is entitled to the registration of


this parcel of land known as Lot No. 622-portion of the Mariveles
Cadastre, the Court hereby adjudicates said parcel of land subject matter
of this application described on plan Sgs-4377-D and its technical
description in favor of Eliseo Palatino, of legal age, Filipino, married to
Beinvenida M. Palatino and a resident of 13 San Vicente Street, San
Francisco del Monte, Quezon City.

Once the decision becomes final, let corresponding decree of registration


issue.

xxx xxx xxx 9

6. Notice of the order (decision) was received by herein petitioners on January 17,
1973; 10

7. On February 14, 1973, petitioners filed with the trial court a motion to life order of
general default and for reconsideration of the order (decision) on the ground that ...
contrary to the specific provisions of Sections 50 and 51 of C.A. No. 141 the original
record of the case was not forwarded to the Office of the Solicitor General, which thus
prevented him from investigating all the facts alleged in the application or otherwise
brought to his attention ... and that the order (decision) adjudicating the lot applied for
by the applicant, respondent Palatino, is without basis in fact because the applicant
could not have possessed the land applied for at least thirty years immediately
preceding the application for the reason that the land was originally part of the United
States Military Reservation reserved by the then Governor General under Proclamation
No. 10 dated February 16, 1925 and it was only on June 10, 1967 that the President of
the Philippines by Proclamation No. 210-B revoked Proclamation No. 10 and declared
such portion of the area therein embraced including the land applied for, as are
classified as alienable and disposable, opened for disposition under the provisions of the
Public Land Act." 11
8. In an order dated March 26, 1973, the trial court denied the petitioners' motion to lift
the order of general default and for reconsideration of the order (decision) on the
ground that the same was without merit; 12

9. On April 5, 1973, the present appeal by certiorari was filed with this Court.

Of the points and/or issues raised by both parties herein those registered by the
respondents appear to be in need of Our prior attention and resolution because they
involve jurisdictional questions. They are:

a) The appeal was filed outside the reglementary 30-day period from
receipt of the order or decision;

b) The appeal was filed direct to the Supreme Court without riling a notice
of appeal with the trial court;

c) Respondent had not been served copy of the appeal. 13

This Court had reviewed the records of this case and it is convinced that certain
essential requisites of procedural law were not complied with by the herein petitioners.
There was a failure to perfect an appeal and consequently this failure had the effect of
rendering final and executory the judgment or final order of the trial court. This fact
certainly deprives the appellate court, this Court, of jurisdiction to entertain the appeal.

In view of the consistent stand of this Tribunal that the perfection of an appeal in
accordance with law is the only legal basis for an appellate court to acquire jurisdiction
and enter the appeal, this Court finds that the only issue to be resolved in this case,
relegating all other questions raised by both parties herein to the background, is the
issue of whether or not an appeal had been perfected on time by the herein petitioners.
This is a jurisdictional question.

Since the rules in ordinary civil actions and those applied in land registration
proceedings are the same, 14 Section 3 of Rule 41 of the new Rules of Court, in relation
with Section 17 of the same Rule 41, appear to be pertinent to the matter at hand. Said
Section 3 reads:

Section 3. How appeal is taken. Appeal may be taken by serving upon


the adverse party and filing with the trial court within thirty (30) days
from notice of order or judgment, a notice of appeal, an appeal bond, and
a record on appeal ...

On the other hand, Section 17 of the aforementioned Rule, dealing with appeal in
certiorari, provides:
Section 17. Appeal in certiorari, prohibition, mandamus, quo warranto,
and employers liability cases. In appeals in certiorari, prohibition,
mandamus, quo warranto, workmen's compensation and employers'
liability cases, the original record of th case shall be transmitted to the
appellate court in lieu of the record on appeal. The clerk of the trial court
shall observe the provisions of Section 11 of this rule as far as practicable.

Section 17 of Rule 41 has not substantially changed the requirements of Section 3 of


the same Rule in matters of appeals. The reglementary period of 30 days from notice of
the order or judgment for perfecting an appeal and the filing of the notice of appeal
with the trial court, two essential and jurisdictional requisites enjoined by the latter
Section, have not been dispensed with even in Section 17 of said Rule.

The records fail to show that the herein petitioners have complied with these requisites
for perfecting an appeal. As had repeatedly been declared by this Court, perfection of
an appeal in the manner and within the period laid down by law is not only mandatory
but jurisdictional. Failure to perfect an appeal as legally required renders final and
executory the judgment of the court below, and deprives the appellate court of
jurisdiction to entertain the appeal. 15

Although it is true that the herein petitioners have filed a motion on February 14, 1973,
to lift the order of general default and for reconsideration of the order (decision) of the
trial court, and, applying this Court's rule that where a motion for reconsideration is
filed, the period for appeal should be deemed suspended, 16 still by actual reckoning of
time, it will be seen that the period for filing and perfecting an appeal had been past
overdue.

Commencing on January 17, 1973, the day petitioners had notice of the final order
(decision) of the trial court to the day the running of the period for appeal was
suspended by the filing of the motion for reconsideration 17 on February 14, 1973 and
started running once again on April 3, 1973, the day the petitioners received the order
denying their motion for reconsideration, 18 up to May 2, 1973, when the Deputy Clerk
of the Court of First Instance of Bataan, Branch II certified that as of said day
petitioners have not filed notice of appeal or done any other act tending to show their
intention to appeal, 19 is a stretch of time far beyond the 30-day period allowed by law
for perfecting an appeal. Petitioners herein have procrastinated too long on their rights
and on the duties imposed on them that this Court is now prevented from extending to
them the relief they are now seeking.

As We have observed in a similar case, 20 it is truly unfortunate that through


inexcusable neglect and laches, the Government lost its case, as it is once again losing
this case now for the same avoidable cause. Section 13 of the aforecited Rule 41 of the
Rules of Court is crystal clear in its language and tenor: Where the notice of appeal,
appeal bond or record on appeal is not filed within the period so prescribed, the appeal
shall be dismissed. For all legal purposes, the State in this case has already lost its
cause. As clearly and unambiguously declared by this Court in the past, the judgment
rendered in a land registration case becomes final upon the expiration of 30 days to be
counted from the date on which the interested party has received notice of the
decision. 21 The decision or final order granting the registration of the parcel of land
applied for by herein private respondent Eliseo Palatino, having become final and
executory, there now remains only the issuance of the decree and the certificate of title
over the property. Thus, this Court declares, following its time-honored dictum: After a
decision has become final, the prevailing party becomes entitled as a matter of right to
its execution; 22 that it becomes merely the ministerial duty of the court to issue the
writ of execution. 23

Despite, however, this harsh stricture of our law which had, in many instances, worked
against the State and had caused the loss of portions of the national patrimony to those
who may not in equity be entitled to a grant thereof, the State is not without remedy in
recovering or seeking the reversion of inalienable public lands unduly ordered
registered.

This is based on the premise that our Torrens system of land registration is a system
for the registration of title to land only. It was not established as a means for the
acquisition of title to private land, much less title to lands of the public domain. It is
intended merely to confirm and register the title which one may already have over the
land. Where the applicant possesses no title or ownership over the parcel of land, he
cannot acquire one under the Torrens System of registration.

In such action for reversion, petitioners may perhaps be permitted to raise the question
belatedly sought to be raised herein that the private respondent was not possessed of
registerable title, on the strength of their allegation that Lot No. 622 of the Mariveles
Cadastre, alleged to be the same lot finally awarded by the lower court to the herein
respondent, is part of the Mariveles Military Reservation established by then Governor
General Leonard Wood under Proclamation No. 10 issued in 1925 and that it was only
on June 10, 1967 that this Military Reservation area had been declared as disposable
and alienable land of the public domain by Presidential Proclamation No. 210-B. Should
petitioners duly establish by competent evidence these allegations, they may then raise
the crucial question whether the private respondent and his predecessors-in-interest
may be deemed to have validly and legally commenced occupation of the land and
physically occupied the same en concepto de dueo for thirty years or more to entitle
them to registration under section 48(b) of the Public Land Act a question which we
cannot resolve now in view of our finding that we are without jurisdiction to entertain
the appeal since the decision or final order granting registrations has long become final
and executory besides the fact that petitioners' evidence has not been duly presented
and admitted. Such questions as may be raised by the petitioners in a separate case of
reversion are of course understood to be subject to such counter-evidence and
defenses as the private respondent may properly put up including res judicata where
applicable.

WHEREFORE, the petition for certiorari to review the decision or order of the Court of
First Instance of Bataan, and seeking to nullify all proceedings had in connection with
the application for registration of respondent Eliseo Palatino; to make the preliminary
injunction granted earlier by this Court permanent, and/or to grant new trial to the
herein petitioners, is hereby denied. This is without prejudice, however, to whatever
separate action petitioners may take in the proper court for the annulment of the
decision and/or reversion of the land involved to the public domain and the proper
defenses thereto in turn of the private respondent as indicated in the Court's opinion.
This is further without prejudice to the Solicitor General's institution of appropriate
proceedings against those whose inexcusable neglect has prejudiced the State and for
indemnification of any consequent loss or damages incurred by the State.

SO ORDERED.

Teehankee (Chairman), Makasiar, Muoz Palma and Martin, JJ., concur.


G.R. No. L-45768 December 23, 1937

EUFEMIA MERCADO, petitioner,


vs.
HERMOGENES REYES, Judge of the First Instance of Pampanga, THE
MUNICIPAL PRESIDENT OF MACABEBE, PAMPANGA, and THE SECRETARY OF
PUBLIC WORKS AND COMMUNICATIONS, respondents.

Carmelino G. Alvendia for petitioner.


Roman de Jesus and Solicitor General Tuason for respondents.

DIAZ, J.:

Having failed in her attempt to obtain reconsideration of the order issued by the
respondent judge of the Court of First Instance of Pampanga on September 27, 1937,
providing for the execution of the judgment rendered in civil case No. 4527, affirmed by
this court by means of its decision of March 1, 1934 (G. R. No. 37986, Mercado vs.
Municipal President of Macabebe and Secretary of Commerce and Communications, 59
Phil., 592), the petitioner instituted this proceeding, alleging that the respondent judge
exceeded his jurisdiction in ordering the sheriff of the Province of Pampanga, by means
of the writ in question, to cause the removal of the obstacles or dikes placed in the
creek named Batasan-Limasan, for the following reasons:

1. In civil vase No. 4527, the location of the Batasan-Limasan creek was not
determined;

2. The question relative to the location of said creek was not raised because the
technical description thereof was not even given:

3. There being no technical description of the creek in question, there is no way


of identifying it by means of the writ of execution issued;lawphil.net

4. The exact location of the Batasan-Limasan creek not having been determined
in the writ of execution, it may be said that the respondent judge has left the
determination of said fact entirely in the hands of the sheriff, such act being
tantamount to a delegation of judicial powers the exercise of which exclusively
belongs to the courts of competent jurisdiction; andlawphil.net

5. The removal of the obstacles and dikes referred to in the writ would
unnecessarily exposed private property, as the petitioner's, to the risk of being
destroyed by the sheriff.
The question decided in said case No. 4527 was whether the creek named Batasan-
Limasan or Pinac-Bugalun, which crosses a part of the hacienda described in certificate
of title No. 329 of the registry of deeds of Pampanga and registered therein in the
name of the petitioner, belonged to said petitioner or to the public domain. The Court
of First Instance of Pampanga and this court decided the question by holding that the
creek in question is property of the public domain.

Before the question so decided was raised, and while he was yet the owner of the
hacienda, Romulo Mercado, the petitioner's predecessor in interest, cause the
construction of dikes at both end of the creek to close it to water traffic and convert the
same into a fishpond, as he had done with some portions of the land thereof. While the
aforesaid case was being tried in the courts, the fishponds in the hacienda, together
with creek whose two ends had been closed by Romulo Mercado, were in the
possession of Francisco de Leon, as lessee thereof, and the latter's contract to said
effect with the Mercados, that is, Romulo Mercado and the petitioner, did not expire
until November 15, 1937.

After the judgment holding the Batasan-Limasan or Pinac-Bugalun creek to be


property of the public domain had become final, the lessee Francisco de Leon, in order
not to lose the creek in question which, as stated above, had already been converted
into a fishpond, and to be able to continue enjoying it as such lessee, filed an
application to lease said creek from the municipality of Macabebe, within whose
jurisdiction it was located. His application was granted with the approval of the
Secretaries of the Department of Public Works and Agriculture, and the contract so
entered between him and the municipality will not expire until the 31st of the current
month and year.

Upon the expiration of his contract of lease with the Mercados, which was not renewed,
Francisco de Leon returned to the petitioner, who already became the owner of the
entire hacienda, the fishpond located therein, but kept the Batasan-Limasan creek by
virtue of his contract of lease with municipality of Macabebe. Finding later that the
existence of the dikes, with which the two ends of the Batasan-Limasan creek had been
closed, did not suit his interest as lessee, he asked the corresponding authorities for the
removal thereof, for which reason the fiscal of Pampanga, representing the municipality
of Macabebe and the Secretary of Public Works and Communications, applied for and
obtained the issuance of the writ of execution the validity of which is questioned.

The reasons adduced by the petitioner in support of her petition for certiorari and
prohibition, as she prays that the respondent judge, at the same time, be enjoined from
issuing the writ of execution stated hereinbefore, are of no moment and without merit.
This is so because, by reading the decisions of the Court of First Instance Pampanga
and this court, appearing in the record of case No. 4527, one necessarily comes to
know which is the Batasan-Limasan or Pinac-Bugalun creek and which are the dikes to
be removed, the latter being those constructed at said creek's two ends located on the
opposite side of the petitioner's hacienda through which the creek in question passes,
because they obstruct the passage of boats and other vessels along the creek.

It having been held in said decisions that the creek in question is property of the public
domain, and since said creek id very well known, there being no other creek of the
same name passing through the petitioner's hacienda, it is pure technicality, to say the
least, to require, as the petitioner now requires, other description and data to identify
said creek and the dikes to be removed from the ends thereof, by virtue of judgments
that have become absolutely final but have not yet been complied with.

If by the removal of the dikes in question, some damage may be caused to the
petitioner's fishponds within the boundaries of her hacienda, let such damage be
caused where it is absolutely unavoidable, because it is unlawful to have the Batasan-
Limasan or Pinac-Bugalun creek closed to water traffic by blocking it up, as was done,
with said dikes. The fact, however, is that the removal of the dikes is a task which the
petitioner is bound to perform, inasmuch as she was ordered to do so in the judgment
rendered in said civil case No. 4527, and it is to be expected that she will know how to
act with the necessary prudence and care so as not to cause herself any damage, since
she can easily do so by first constructing the necessary dikes along the sides of her
hacienda which adjoin the creek, or by constructing any other work that may have the
same effect, within a reasonable period of time which, if asked by her, will perhaps be
granted by the respondent judge. Should she not do so, then the sheriff will do it, but
entirely on her account.

The fact that the municipality of Macabebe, with the approval of the corresponding
authorities, has leased the creek in question to Francisco de Leon, and that said creek is
actually under the administration and care of said lessee in no reason to exempt the
petitioner from complying with the obligation, which, by judgment, she had been
ordered to perform, that is to remove the dikes at the end of the creek passing through
her hacienda. The municipality of Macabebe could not exempted the petitioner from
complying with said obligation by the mere fact of having leased the creek to Francisco
de Leon, because an unlawful act cannot be ratified either expressly of impliedly, and it
is undoubtedly unlawful to have blocked up a dikes, a navigable creek, as the one
under consideration (sec. 64, Act No. 4003).

The petitioner's petition should be, as it is hereby denied, with costs to said petitioner.
So ordered.

Villa-Real, Abad Santos, Imperial, Laurel and Concepcion, JJ., concur.


G.R. No. L-37995 August 31, 1987

BUREAU OF FORESTRY, BUREAU OF LANDS and PHILIPPINE FISHERIES


COMMISSION, petitioners,
vs.
COURT OF APPEALS and FILOMENO GALLO, respondents.

PARAS, J.:

Before Us is a petition for review on certiorari, which seeks to annul and set aside the
Decision 1 (promulgated on April 11, 1973) of the respondent court in CA-G.R. No.
38163-R, affirming the decision 2 (dated April 6, 1966) of the then Court of First
Instance of Iloilo in Land Registration Case No. N-506, G.L.R.O. Record No. N-20783
entitled "Filomeno Gallo, Applicant vs. Bureau of Forestry, Bureau of Lands, and
Philippine Fisheries Commission, oppositors. " The dispositive portion of the trial court's
decision reads as follows:

WHEREFORE, the court Orders the registration of Lots Nos. 2, 3, and 4


and the bigger portion of Lot No. 1 after excluding the portion Identified
as Lot 1-A together with the improvements thereon in the name of
Filomeno Gallo, of legal age, widower, Filipino citizen, and resident of 155
Fuentes Street, Iloilo City, Philippines. Lots Nos. 1, 2 and 3 are subject to
the road right-of-way of 15 meters wide which is presently known as Sto.
Rosario Rizal Montpiller provincial Road and Buenavista-Daraga provincial
Road they being properties of the Province of Iloilo and should be
registered in the name of said province. The oppositions of the Director of
Lands, Director of Forestry and the Philippine Fisheries Commission are
dismissed. Lot 1-A with an area of 2.6864 hectares which is enclosed in
red pencil and is found inside Lot No. 1 in the plan Exhibit is hereby
declared public land. After the decision has become final let the
corresponding decree be issued.

SO ORDERED. (p. 38, Joint Record on Appeal Annex "A." p. 25, Rollo)

This appeal also seeks to annul and set aside respondent court's resolution dated
December 14, 1973 denying for lack of merit, herein petitioners' motion for
reconsideration.

The basic issue which petitioners raise in this appeal is

Whether or not the classification of lands of the public domain by the


Executive Branch of the Government into agricultural, forest or mineral
can be changed or varied by the court depending upon the evidence
adduced before it. (p. 9, Brief for the Petitioners, p. 105, Rollo)

The antecedent facts of the case are as follows:

On July 11, 1961, four (4) parcels of land situated in Buenavista, Iloilo described in Plan
Psu-150727, containing an approximate area of 30.5943 hectares were the subject of
an application for registration by Mercedes Diago who alleged among others that she
herself occupied said parcels of land having bought them from the testate estate of the
late Jose Ma. Nava who, in his lifetime, had bought the lands in turn from Canuto
Gustilo on June 21, 1934. The Director of Lands opposed said application on the ground
that neither the applicant nor her predecessors-in-interest have sufficient title over the
lands applied for, which could be registered under the Torrens systems, and that they
have never been in open, continuous and exclusive possession of the said lands for at
least 30 years prior to the filing of the application. The Director of Forestry on the other
hand anchored his opposition principally on the ground that certain specific portions of
the lands subject matter of the application, with an area of approximately 194,080
square meters are mangrove swamps and are within Timberland Block "B " L.C. Project
No. 38, L.C. Map No. 1971 of Buenavista, Iloilo.

On June 30, 1965, respondent Filomeno Gallo, having purchased the subject parcels of
land from Mercedes Diago on April 27, 1965, moved to be substituted in place of the
latter, attaching to his motion an Amended Application for Registration of Title
substantially reproducing the allegations in the application of Mercedes Diago. Petitioner
Philippine Fisheries Commission also moved on August 30, 1965 to be substituted in
place of petitioner Bureau of Forestry as oppositor over a portion of the land sought to
be registered, supervision and control of said portion having been transferred from the
Bureau of Forestry to the Philippine Fisheries Commission.

On April 6, 1966, the trial court rendered its decision ordering the registration of the
four (4) parcels of land in the name of respondent Filomeno Gallo after excluding a
portion Identified as Lot "1-A" which is the site of the municipal hall of Buenavista town,
and subjecting Lots Nos. 1, 2 and 3 to the road-of-way of 15 meters width.

Petitioners appealed from said decision to the respondent Court of Appeals assigning
the following errors in their brief:

THE TRIAL COURT ERRED IN ORDERING THE REGISTRATION OF THE


SUBJECT LAND WHICH CONSISTS OF TIMBERLAND, FORESHORELAND
AND LAND BELONGING TO THE PUBLIC DOMAIN HENCE
UNREGISTERABLE.

THE TRIAL COURT ERRED IN HOLDING THAT THE POSSESSION OF THE


APPLICANT-APPELLEE AND HIS PREDECESSORS-IN-INTEREST HAD BEEN
PEACEFUL, OPEN, CONTINUOUS, UNINTERRUPTED AND ADVERSE TO
CLAIMANTS AND IN THE CONCEPT OF OWNER. (p. 6, Brief for the
Petitioners, p. 105, Rollo)

Respondent court affirmed said decision and denied a motion for reconsideration of the
same hence the present petition with two (2) assigned errors, basically the same issues
raised with the respondent court:

RESPONDENT COURT ERRED IN NOT HOLDING THAT THE


DETERMINATION OF WHETHER A PUBLIC LAND IS AGRICULTURAL OR
STILL A FOREST LAND RESTS EXCLUSIVELY UPON THE DIRECTOR OF
FORESTRY (NOW DIRECTOR OF FOREST DEVELOPMENT), THE
SECRETARY OF NATURAL RESOURCES) AND THE PRESIDENT OF THE
PHILIPPINES.

RESPONDENT COURT ERRED IN NOT HOLDING THAT THE LAND IS


PRESUMED TO BELONG TO THE PUBLIC DOMAIN AND PRIVATE
RESPONDENT HEREIN HAS NOT CONVINCINGLY SHOWN THAT THE
REMOTE PREDECESSOR-IN-INTEREST POSSESSED THE LAND IN
QUESTION SINCE TIME IMMEMORIAL. (pp. 9 & 20, Brief for the
Petitioners, p. 105, Rollo)

Out of the 30.5943 hectares applied for registration under the Torrens System, 11.1863
hectares are coconut lands and admittedly within the disposable portion of the public
domain. These are more particularly Identified as parcels "B," B-1", "B-2" and "B-3" of
the sketch plan Exh. "1-A." The rest, consisting of 19.4080 hectares and Identified as
parcels A, A-1, A-2 and A-3 of the same plan Exh. "1-A," is now the center of
controversy of the present appeal.

Petitioners contend that respondent court completely ignored the undisputed facts that
1) the controverted area is within Timberland Block "B," L.C. Project No. 38, L.C. Map
No. 1971 of Buenavista, Iloilo and that 2) the certification of February 18, 1956 of the
then Director of Forestry to the effect that the area in question is needed for forest
purposes. Respondent court in affirming the decision of the Iloilo trial court ruled that
although the controverted portion of 19.4080 hectares are mangrove and nipa swamps
within Timberland Block "B," L.C. Project No. 38, same cannot be considered part of the
public forest not susceptible of private ownership since petitioners failed to submit
convincing proof that these lands are more valuable for forestry than for agricultural
purposes, and the presumption is that these are agricultural lands. Respondent court
based its conclusion upon the premise that whether or not a controverted parcel of land
is forest land, is a question of fact which should be settled by competent proofs, and if
such a question be an issue in a land registration proceeding, it is incumbent upon the
Director of Forestry to submit to the court convincing proofs that the land in dispute is
not more valuable for agriculture than for forest purposes. It is the position of
respondent that respondent court did "not hesitate to apply this presumption with full
force particularly where, as in the case at bar, the lands applied for have been
possessed and cultivated by the applicant and his predecessors-in-interest for a long
number of years without the government taking any positive step to dislodge the
occupants from their holdings which have passed from one to another by inheritance or
by purchase." (p. 9, Brief for private respondents) Otherwise stated, it is Our impression
that private respondents claim the rule of prescription against the government.

Such contentions of private respondents do not hold water. Admittedly the controversial
area is within a timberland block as classification of the municipality and certified to by
the Director of Forestry on February 18, 1956 as lands needed for forest purposes and
hence they are portions of the public domain which cannot be the subject of
registration proceedings. Clearly therefore the land is public land and there is no need
for the Director of Forestry to submit to the court convincing proofs that the land in
dispute is not more valuable for agriculture than for forest purposes, as there was no
question of whether the land is forest land or not. Be it remembered that said forest
land had been declared and certified as such by the Director of the Bureau of Forestry
on February 18, 1956, several years before the original applicant of the lands for
registration Mercedes Diago, filed it on July 11, 1961. In the case of Government of the
Philippine Islands vs. Abella, 49 Phil. 49, cited by private respondents themselves in
their brief, We held

Following the decision of Ankon vs. Government of the Philippine Islands


(40 Phil. 10), it is again held, that whether a particular parcel of land is
more valuable for forestry purposes than for agricultural purposes, or vice
versa, is a fact which must be established during the trial of the case.
Whether the particular land is agricultural, forestry or mineral is a
question to be settled in each particular case unless the Bureau of
Forestry has, under the authority conferred upon it by law, prior to the
intervention of private interest, set aside said land for forestry or mineral
resources. (Italics for emphasis)

We also held in the case of Republic vs. Animas, 56 SCRA 499, 503 that-

... As a general rule, timber or forest lands are not alienable or disposable
under either the Constitution of 1935 or the Constitution of 1973.

... It is the Bureau of Forestry that has jurisdiction and authority over the
demarcation, protection, management, reproduction, occupancy and use
of all public forests and forest reservations and over the granting of
licenses for the taking of products therefrom, including stone and earth
(Section 1816 of the Revised Administrative Code). That the area in
question is a forest or timber land is clearly established by the certification
made by the Bureau of Forest Development that it is within the portion of
the area which was reverted to the category of forest land, approved by
the President on March 7, 1958.

As provided for under Sec. 6 of Commonwealth Act No. 141, which was lifted from Act
No. 2874, the classification or reclassification of public lands into alienable or
disposable, mineral or forest lands is now a prerogative of the Executive Department of
the government and not of the courts. With these rules, there should be no more room
for doubt that it is not the court which determines the classification of lands of the
public domain into agricultural, forest or mineral but the Executive Branch of the
Government, through the Office of the President. Hence, it was grave error and/or
abuse of discretion for the respondent court to ignore the uncontroverted facts that (1)
the disputed area is within a timberland block and (2) as certified to by the then
Director of Forestry, the area is needed for forest purposes.

Furthermore, private respondents Cannot claim to have obtained their title by


prescription inasmuch as the application filed by them necessarily implied an admission
that the portions applied for are part of the public domain which cannot be acquired by
prescription, unless the law expressly permits it. It is a rule of law that possession of
forest lands, however long, cannot ripen into private ownership (Director of Forestry vs.
Munoz, 23 SCRA 1184).

WHEREFORE, in the light of the foregoing, the assailed decision is hereby SET ASIDE,
and a new one is hereby rendered, declaring that:

1) Parcels "B," "B-1," "B-2 and "B-3" of the sketch plan Exhibit "1-A" consisting of
11.1863 hectares of coconut land and admittedly within the disposable portion of the
public domain are hereby ordered registered in the name of the applicant Filomeno
Gallo and/or his successors-in-interest as provided for by the Public Land Law; and

2) Parcels "A," "A-1," and "A-2," and "A-3" of the same plan Exh. "1-A," consisting of
19.4080 hectares, are forest lands or lands of the public domain of the Republic of the
Philippines and are therefore inalienable.

SO ORDERED.

Teehankee, C.J., Narvasa, Cruz and Gancayco, JJ., concur.


[G.R. No. L-40402. March 16, 1987.]

REPUBLIC OF THE PHILIPPINES, Petitioner, v. THE HON. COURT OF APPEALS,


and EMILIO BERNABE, SR., EMILIO BERNABE, JR., LUZ BERNABE, AMPARO
BERNABE, and ELISA BERNABE, Respondents.

DECISION

PARAS, J.:

This is a petition for review on certiorari seeking a reversal of the decision of


Respondent Court of Appeals 1 dated February 5, 1975 in CA-G.R. No. 50076-R,
entitled "EMILIO BERNABE, SR., Et. Al. v. REPUBLIC OF THE PHILIPPINES," affirming
the order of the Court of First Instance of Bataan dated August 14, 1971 in Cadastral
Case No. 19, LRC Cadastral Record No. 1097, which dismissed petitioner Republics
petition for review of the decrees of registration issued pursuant to the decision
rendered on December 17, 1968 adjudicating in favor of the private Respondents
herein, the lots applied for by them, and the Resolution of Respondent Court dated
March 19, 1975 denying herein Petitioners motion for reconsideration.

The undisputed facts are as follows:chanrob1es virtual 1aw library

Lot No. 622 of the Mariveles Cadastre was declared public land in a decision rendered
before the last war in Cadastral Case No. 19, LRC Cadastral Record No. 1097.

On July 6, 1965, Lot 622 was segregated from the forest zone and released and
certified by the Bureau of Forestry as an agricultural land for disposition under the
Public Land Act (Record on Appeal, p. 7).

On April 26, 1967, Respondents filed in the Court of First Instance of Bataan a petition
to reopen Cadastral Case No. 19, LRC Cadastral Record No. 1097, under Republic Act
931, as amended by Republic Act 2061, concerning a portion of Lot No. 622 Lot Nos.
792, 793, 794, 795, 796, 797, 798 and a portion of Lot No. 324 Lot Nos. 791 and
799 more particularly identified and delineated in the segregation plans of Sgs-3343,
Sgs-3440, Sgs-3340, Sgs-3341, Sgs-3342 and Sgs-3339, approved by the Director of
Lands, to perfect their rights and register their titles to said lots, having allegedly
acquired ownership and possession of said parcels of land by purchase from the original
owners thereof, whose possession of the same including that of the herein
Respondents, has always been continuous, open, active, exclusive, public, adverse, and
in the concept of owners thereof for more than 30 years (Record on Appeal, pp. 3-5
and 11).
On May 17, 1967, the lower court issued an Order setting the petition for hearing and
directing that the Republic of the Philippines be notified thereof by furnishing the
Solicitor-General, the Director of Lands and the Director of Forestry, a copy of said
Order together with Respondents petition by registered mail (Record on Appeal, p. 6).

On August 24, 1967, the Director of Forestry filed an opposition to the petition praying
for the denial of the petition once the area involved is found to be within the timberland
and therefore inalienable under the Constitution (Record on Appeal, p. 7). Upon
verification, however, the Director of Forestry found the area to be the portion of the
timberland already released by the government from the mass of public forests and
promptly withdrew his Opposition (Record on Appeal, p. 8).

On September 1, 1967, the Acting Provincial Fiscal of Bataan, for and in behalf of the
Director of Lands, filed his opposition to the petition alleging that the land is still, in
truth and in fact, public land and as such cannot be the subject of a land registration
proceeding under Act 496.

The lower court found that the petitioners have complied with all the terms and
conditions which would entitle them to a grant. Thus, the dispositive portion of its
decision dated December 17, 1968 (Record on Appeal, p. 19),
reads:jgc:chanrobles.com.ph

"WHEREFORE, the segregation plans, Sgs-3340, Sgs-3339, Sgs-3341, Sgs-3342, Sgs-


3343 and Sgs-3340 and their technical descriptions are hereby APPROVED, and
pursuant to Sec. 11 of Act 2259, the court hereby adjudicates in favor of petitioners
Emilio Bernabe, Sr., married; Emilio Bernabe, Jr., married; Luz Bernabe, single; Amparo
Bernabe, single and Elisa Bernabe, single, all Filipinos and residents of Balanga, Bataan,
the lots herein applied for as follows:chanrob1es virtual 1aw library

Luz Bernabe Sgs-791 82,771 sq. m.

3339

Elisa Bernabe Sgs-793 71.596 sq. m.

3341

Amparo Bernabe Sgs-794 43,399 sq. m.

3342 795 100,439 sq. m.

Josefina Bernabe Sgs-796 69,355 sq. m.


3343 797 75,100 sq. m.

Emilio Bernabe, Jr. Sgs-798 100,183 sq. m.

Sgs-3440 Sgs-799 64,052. sq. m.

and upon this decision having become final, the Commissioner of Land Registration is
hereby directed to issue the corresponding decrees of registration therefor."cralaw
virtua1aw library

Pursuant to the aforecited decision, the Commissioner of Land Registration issued


Decrees Nos. N-124813-124818, all dated May 7, 1969 (Record on Appeal, pp. 20-25).

On May 7, 1979, petitioner Republic of the Philippines, acting in its behalf and in behalf
of the Director of Lands and the Director of Forestry, through the Solicitor-General, filed
a petition for review of the decrees of registration under Section 38, of Act No. 496, as
amended, and the corresponding decision of the lower court, on the grounds that the
entire proceeding was vitiated by lack of notice to the Solicitor General of the
subsequent hearings of the petition for re-opening of the cadastral proceedings; that
the parcels of land subject matter of the petition to re-open cadastral proceedings are
portions of the public domain, admittedly within the unclassified public forest of
Mariveles, Bataan, opened for disposition only on or about July 6, 1965; that
subsequently, respondents do not have a registerable title to the land subject matter of
the proceedings; and the lower court, without jurisdiction to decree the confirmation of
registerable title to respondents over portions of the public domain, as respondents do
not qualify under the provisions of Section 48(b) of CA 141, as amended, and that
under the circumstances, respondents employed actual fraud in procuring title over the
parcels of land (Record on Appeal, p. 25).

On May 29, 1979, respondents moved to dismiss the Petition for Review on the grounds
that: (1) The trial court has no jurisdiction over the nature of the action or suit as there
is no fraud to justify the setting aside on review of a decree of registration. If the
Solicitor General was not notified of the subsequent hearings, it was because he
delegated his appearance to the Provincial Fiscal of Bataan. Besides the setting aside or
review was filed out of time. (2) The petition states no cause of action, the parcels of
land involved in the actions having been already transferred to innocent purchasers for
value long before the Solicitor-General even filed the petition for review (Record on
Appeal, pp. 27-40).

Their motion to dismiss having been held in abeyance until the hearing of the merits of
the case which was set for August 16, 1970, respondents filed their answer to the
Petition for Review on August 4, 1970. In their answer, respondents reiterated their
grounds in their motion to dismiss (Record on Appeal, pp. 40-44).
On November 12, 1970, Petitioner filed an amended Petition for Review, with the
additional allegation that after having fraudulently secured title over the parcels of land
involved, the petitioners executed simulated deeds of sale purporting to convey various
lots composing portions of the parcels involved to third parties for fictitious
considerations in an obvious attempt to remove the parcels of land involved from the
coverage of Section 38 of Act 496, but in truth, the aforementioned third parties are not
innocent purchasers for value, being mere dummies of the petitioners, holding the
parcels of land involved only in trust for the petitioners. On November 23, 1970,
respondents filed their answer to the Amended Petition for Review (Record on Appeal,
p. 56).

On August 14, 1971, the lower court issued its Order denying petitioners Amended
Petition for Review (Record on Appeal, p. 56).

On appeal to the Court of Appeals on September 20, 1971, the questioned Order of the
Court of First Instance of Bataan, Branch I was affirmed (Rollo, p. 33).

On February 25, 1975, Petitioner filed a Motion for Reconsideration which was denied
by the Court of Appeals for lack of merit, in the Resolution of a special Division of Five,
promulgated on March 19, 1975.

Hence this petition.

Without giving due course to the Petition, the Court, through its First Division, resolved
on May 5, 1975 to require the respondents to comment thereon. On May 30, 1975,
respondents filed their comment, alleging that the decision of respondent Court and the
questioned resolution were not rendered without or in excess of its jurisdiction. Neither
was the discretion exercised by respondent Court arbitrary or despotic.

In its Resolution dated June 4, 1975, the Court resolved to give due course to the
Petition and denied the urgent motion of respondents for leave to file a supplemental
and/or amended comment. Petitioners filed its Brief on November 29, 1975;
respondents, on March 2, 1976. Petitioner filed its Reply Brief on March 25, 1976 and
on May 5, 1976, the case was deemed submitted for decision.

Petitioner assigns the following errors:chanrob1es virtual 1aw library

I. THE RESPONDENT COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN


TOTALLY DISREGARDING THE UNDISPUTED FACT THAT THE LOTS CLAIMED BY
HEREIN PRIVATE RESPONDENTS BECAME AGRICULTURAL ONLY ON JULY 6, 1965
WHEN THE SAME WERE RELEASED FROM THE FOREST ZONE AND THAT
CONSEQUENTLY THEY LACK THE REQUISITE THIRTY (30) YEARS POSSESSION TO
ENTITLE THEM TO A GRANT.
II. THE RESPONDENT COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN NOT
HOLDING THAT THE ENTIRE PROCEEDING FOR REOPENING OF THE CADASTRAL CASE
OVER THE LOTS IN QUESTION WAS VITIATED BY LACK OF NOTICE TO THE
SOLICITOR-GENERAL.

III. THE RESPONDENT COURT ERRED IN NOT HOLDING THAT THE ALLEGED
TRANSFER OF THE LOTS IN QUESTION BY PRIVATE RESPONDENTS TO THIRD
PARTIES WHEN THEIR TITLES WERE STILL SUBJECT TO THE ONE-YEAR PERIOD OF
REVIEW CONSTITUTES FRAUD SCHEMED BY THE TRANSFERORS AS A MEANS OF
FRUSTRATING ANY ACTION AIMED AT NULLIFYING THEIR TITLES THERETO.

The governments cause is meritorious.

It is evident from the facts of the case at bar that private respondents did file a claim
for Lot No. 622 of the Mariveles Cadastre and in fact a decision was rendered before
the last war in Cadastral Case No. 19 LRC Cadastral Record No. 1097, declaring the lot
in question as public land. It must be stressed that said lot was declared public land by
virtue of a court decision which has become final and as held by the Supreme Court
aforesaid decision is res judicata. (Republic v. Estenzo, 120 SCRA 222 [1983]). It is
therefore beyond question that the trial court has no jurisdiction to reopen the cadastral
proceeding under R.A. 931 as amended by R.A. 2061 and the decision therein rendered
is null and void ab initio.

Furthermore, it is undisputed that aforesaid Lot No. 622 was released as an agricultural
land for disposition under Public Land Act only on July 6, 1965. The lower court ordered
the issuance of the corresponding decrees of registration for the lots, pursuant to Sec.
48(b), C.A. 141, otherwise known as the Public Land Act, as amended by Republic Act
No. 1942, providing for the confirmation of imperfect or incomplete titles, which
reads:jgc:chanrobles.com.ph

"(b) Those who by themselves or through their predecessors in interest have been in
open, continuous, exclusive, and notorious possession and occupation of agricultural
lands of the public domain, under a bona fide claim of acquisition of 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."cralaw
virtua1aw library

As pointed out by petitioner, the question is whether or not the lots claimed by
respondents could legally be the subject of a judicial confirmation of title under the
aforequoted provisions of the Public Land Act, as amended.

The answer is in the negative.

Section 48(b) of C.A. No. 141, as amended, applies exclusively to public agricultural
land. Forest lands or areas covered with forests are excluded. They are incapable of
registration and their inclusion in a title, whether such title be one issued during the
Spanish sovereignty or under the present Torrens system of registration, nullifies the
title (Li Seng Giap v. Director of Lands, 55 Phil. 693 [1931]; Director of Lands v. Reyes,
68 SCRA 177 [1975]). Thus, possession of forest lands, however long, cannot ripen into
private ownership (Vano v. Government, 41 Phil. 161 [1920]; Adorable v. Director of
Forestry, 107 Phil. 401 [1960]; Director of Forestry v. Muoz, 23 SCRA 1183 [1968];
Director of Lands v. Abanzado, 65 SCRA 5 [1975]). A parcel of forest land is within the
exclusive jurisdiction of the Bureau of Forestry and beyond the power and jurisdiction of
the cadastral court to register under the Torrens System (Republic v. Court of Appeals,
89 SCRA 648 [1979]; Republic v. Vera (120 SCRA 210 [1983]; Director of Lands v.
Court of Appeals, 129 SCRA 689 [1984].

Thus, even if the reopening of the cadastral proceedings was at all possible, private
respondents have not qualified for a grant under Sec. 48(b) of Commonwealth Act 141,
the facts being that private respondents could only be credited with 1 year, 9 months
and 20 days possession and occupation of the lots involved, counted from July 6, 1965,
the date when the land area in sitio San Jose, barrio Cabcaban, Mariveles, Bataan,
known as Bataan PMD No. 267, which includes the lots claimed by respondents, had
been segregated from the forest zone and released by the Bureau of Forestry as an
agricultural land for disposition under the Public Land Act. (Record on Appeal, p. 19).
Consequently, under the above mentioned jurisprudence, neither private respondents
nor their predecessors-in-interest could have possessed the lots for the requisite period
of thirty (30) years as disposable agricultural land.

II

Petitioner argues that the government, being a necessary party in the cadastral case, as
reopened, its counsel, the Solicitor-General, should have been furnished copies of all
court orders, notices and decisions, as in ordinary cases, in order to bind the
government. Failure to give such notice deprives the State of its day in Court, and
renders the decision void. (Brief for Petitioner, pp. 16-17).

The records show that the Solicitor-General was duly notified of the initial hearing on
the petition to reopen Cadastral Case No. 19 but thereafter, notice of subsequent
hearings as well as a copy of the decision itself promulgated by the lower court on
December 19, 1968 was sent instead to the Provincial Fiscal of Bataan, admittedly the
duly authorized representative of the Solicitor-General in the cadastral proceeding as
shown in a telegram dated January 19, 1968. (Record on Appeal, p. 47).

In the case of Republic v. Director of Lands (71 SCRA 426 [1976], the Supreme Court,
applying the time-honored principle of agency ruled that the service of the questioned
decision on the Provincial Fiscal must necessarily be service on the Solicitor-General,
and added that technical transgressions relative to the filing and service may be
brushed aside when the adverse party (this time the Director of Lands and Forestry and
their counsel, the Solicitor-General) is aware of the matter which his adversary would
want the court to act upon. Once it appears that the party is already informed by one
means or another of what he is to be notified, the required service becomes an empty
gesture and strict observance thereof is considered waived. (Citing Estrada v. Sto.
Domingo, 28 SCRA 890 [1969]).

In the case at bar, it does not appear that the Solicitor General was so apprised of the
decision of the lower court in question as there is no proof that the Provincial Fiscal of
Bataan ever sent the Solicitor-General a copy thereof. Furthermore, after the 3rd
Assistant Provincial Fiscal filed a notice of appeal from the decision of the trial court, the
Provincial Fiscal on March 21, 1969 manifested that he was withdrawing the appeal
upon the intervention of the District Forester. (Respondents Brief, p. 44).

It will be observed however that later decisions of the Supreme Court tend to be more
strict in the matter of giving notice to the Solicitor General. In a more recent case,
Republic v. Court of Appeals, 135 SCRA 161 [1985], it was established that the
Solicitor-General is the only legal counsel of the government in land registration cases
and as such, he alone may withdraw the Governments appeal with binding effect on
the latter. He is entitled to be furnished copies of all court orders, notices and decisions
and as held the reglementary thirty-day period for appeal should be reckoned from the
time the Solicitor-Generals Office is apprised of the 1970 order of denial and not from
the time the special counsel or the fiscal was served with that order. Thus,
representatives of the Solicitor General in the case at bar, had no power to decide
whether or not an appeal should be made. They should have referred the matter to the
Solicitor-General and without copies of court orders, notices and decisions, having been
provided by either the trial court or the Provincial Fiscal of Bataan to the Solicitor-
General, the assailed decision has no binding effect on the government.

III

The petition for review of Decrees Nos. N-124813 to N-124818 under Sec. 38 of Act No.
496 as amended was filed by the Solicitor General on May 7, 1970 in representation of
the Republic of the Philippines, in the same Cadastral Case No. 19, LRC Cadastral
Record No. 1097, exactly a year after the issuance of aforesaid decrees of registration,
on the ground of actual fraud. (Record on Appeal, pp. 43-44).
The basic elements for the allowance of the reopening or review of a decree, are: (1)
that the petitioner has real or dominical right; (2) that he has been deprived thereof
through fraud; (3) that the petition is filed within one year from the issuance of the
decree and (4) that the property has not as yet been transferred to an innocent
purchaser. (Libudan v. Gil, 45 SCRA 27 [1972]; Rubico, Et. Al. v. Orellana, 30 SCRA 513
[1969]). It has been held however that the action to annul a judgment, upon the
ground of fraud would be unavailing unless the fraud be extrinsic or collateral and the
facts upon which it is based have not been controverted or resolved in the case where
the judgment sought to be annulled was rendered. (Libudan v. Gil, supra). Review of
the decree demands a showing of actual (not constructive) fraud, i.e. actual malice.
(Rublico v. Orellana, supra).

In the case at bar, it cannot be said that private respondents employed actual fraud in
procuring titles over parcels of land of the public domain as it is a matter of record that
the land in question was opened for disposition and alienation only on July 6, 1965. The
matter was threshed out in the lower court and the decision of the latter was affirmed
by the Court of Appeals. Actual malice is therefore absent.

However, it has been held that, if a decree issued in pursuance of a valid decision,
obtained by fraud, may be annulled within one (1) year from entry of said decree, there
is more reason to hold that the same is true if entered in compliance with a decision
suffering from a fatal infirmity, such as want of due process, (Vda. de Cuaycong v. Vda.
de Sangbengoo, 110 Phil. 118 [1960] or lack of jurisdiction of the court that decided the
cadastral case. (Republic v. De Kalintas, 25 SCRA 720 [1969]). Thus, on both counts,
the case at bar can properly be the subject of review, it having been shown that the
Solicitor-General was not properly furnished the requisite notices and copy of the
assailed decision but more importantly, the lower court as previously stated had no
jurisdiction to re-open the cadastral proceeding under Republic Act 931 as amended by
R.A. No. 2061.

IV

As to whether or not the transferees of the lot in question are innocent purchasers for
value, it is a well settled rule that a purchaser cannot close his eyes to facts which
should put a reasonable man upon his guard, and then claim that he acted in good faith
under the belief that there was no defect in the title of the vendor. (Leung Yee v. F.L.
Strong Machiner Co., Et Al., 37 Phil. 651[1918]. Without the needed verification, he
cannot claim to be an innocent purchaser for value in contemplation of law.

Moreover, it is well-settled that a certificate of title is void, when it covers property of


public domain classified as forest or timber and mineral lands. Any title issued on non-
disposable lots even in the hands of an alleged innocent purchaser for value, shall be
cancelled. (Lepanto Consolidated Mining Company v. Dumyung, 89 SCRA 540 [1979]
underscoring supplied). In the case at bar, it will be noted that in granting titles to the
land in dispute, the lower court counted the period of possession of private respondents
before the same were released as forest lands for disposition, which release is
tantamount to qualifying the latter to a grant on said lands while they were still non-
disposable. Thus, under the foregoing rulings, even assuming that the transferees are
innocent purchasers for value, their titles to said lands derived from the titles of private
respondents which were not validly issued as they cover lands still a part of the public
domain, may be cancelled.

PREMISES CONSIDERED, the assailed decision of the Court of Appeals and the decision
of the Court of First Instance are hereby SET ASIDE and REVERSED, because the lots in
question still form part of the public domain. The certificates of title issued over them
are hereby ordered CANCELLED.

SO ORDERED.

Fernan, Padilla, Bidin and Cortes, JJ., concur.

Alampay, J., is on leave.

Gutierrez, Jr., J., no part as one of the parties was my former colleague.
G.R. No. 186639 February 5, 2014

REPUBLIC OF THE PHILIPPINES, Petitioner,


vs.
EMMANUEL C. CORTEZ, Respondent.

DECISION

REYES, J.:

Before this Court is a petition for review on certiorari1 under Rule 45 of the Rules of
Court seeking to annul and set aside the Decision2 dated February 17, 2009 of the
Court of Appeals (CA) in CA-G.R. CV No. 87505. The CA affirmed the Decision3 dated
February 7, 2006 of the Regional Trial Court (RTC) of Pasig City, Branch 68, in LRC
Case No. N-11496.

The Facts

On February 28, 2003, respondent Emmanuel C. Cortez (Cortez) filed with the RTC an
application4 for judicial confirmation of title over a parcel of land located at Barangay
(Poblacion) Aguho, P. Herrera Street, Pateros, Metro Manila. The said parcel of land has
an area of 110 square meters and more particularly described as Lot No. 2697-B of the
Pateros Cadastre. In support of his application, Cortez submitted, inter alia, the
following documents: (1) tax declarations for various years from 1966 until 2005; (2)
survey plan of the property, with the annotation that the property is classified as
alienable and disposable; (3) technical description of the property, with a certification
issued by a geodetic engineer; (4) tax clearance certificate; (5) extrajudicial settlement
of estate dated March 21, 1998, conveying the subject property to Cortez; and (6)
escritura de particion extrajudicial dated July 19, 1946, allocating the subject property
to Felicisima Cotas Cortez mother.

As there was no opposition, the RTC issued an Order of General Default and Cortez was
allowed to present his evidence ex-parte.

Cortez claimed that the subject parcel of land is a portion of Lot No. 2697, which was
declared for taxation purposes in the name of his mother. He alleged that Lot No. 2697
was inherited by his mother from her parents in 1946; that, on March 21, 1998, after
his parents died, he and his siblings executed an Extra-Judicial Settlement of Estate
over the properties of their deceased parents and one of the properties allocated to him
was the subject property. He alleged that the subject property had been in the
possession of his family since time immemorial; that the subject parcel of land is not
part of the reservation of the Department of Environment and Natural Resources
(DENR) and is, in fact, classified as alienable and disposable by the Bureau of Forest
Development (BFD).
Cortez likewise adduced in evidence the testimony of Ernesto Santos, who testified that
he has known the family of Cortez for over sixty (60) years and that Cortez and his
predecessors-in-interest have been in possession of the subject property since he came
to know them.

On February 7, 2006, the RTC rendered a Decision,5 which granted Cortez application
for registration, viz:

WHEREFORE, finding the application meritorious, the Court DECLARES, CONFIRMS, and
ORDERS the registration of the applicants title thereto.

As soon as this Decision shall have become final and after payment of the required
fees, let the corresponding Decrees be issued in the name of the applicant, Emmanuel
C. Cortez.

Let copies of this Decision be furnished the Office of the Solicitor General, Land
Registration Authority, Land Management Bureau, and the Registry of Deeds of Rizal.

SO ORDERED.6

In granting Cortez application for registration of title to the subject property, the RTC
made the following ratiocinations:

From the foregoing, the Court finds that there is sufficient basis to grant the relief
prayed for. It having been established by competent evidence that the possession of
the land being applied for by the applicant and his predecessor-in-interest have been in
open, actual, uninterrupted, and adverse possession, under claim of title and in the
concept of owners, all within the time prescribed by law, the title of the applicant
should be and must be AFFIRMED and CONFIRMED.7

The Republic of the Philippines (petitioner), represented by the Office of the Solicitor
General, appealed to the CA, alleging that the RTC erred in granting the application for
registration despite the failure of Cortez to comply with the requirements for original
registration of title. The petitioner pointed out that, although Cortez declared that he
and his predecessors-in-interest were in possession of the subject parcel of land since
time immemorial, no document was ever presented that would establish his
predecessors-in-interests possession of the same during the period required by law.
That petitioner claimed that Cortez assertion that he and his predecessors-in-interest
had been in open, adverse, and continuous possession of the subject property for more
than thirty (30) years does not constitute well-neigh incontrovertible evidence required
in land registration cases; that it is a mere claim, which should not have been given
weight by the RTC.

Further, the petitioner alleged that there was no certification from any government
agency that the subject property had already been declared alienable and disposable.
As such, the petitioner claims, Cortez possession of the subject property, no matter
how long, cannot confer ownership or possessory rights.

On February 17, 2009, the CA, by way of the assailed Decision,8 dismissed the
petitioners appeal and affirmed the RTC Decision dated February 7, 2006. The CA ruled
that Cortez was able to prove that the subject property was indeed alienable and
disposable, as evidenced by the declaration/notation from the BFD.

Further, the CA found that Cortez and his predecessors-in-interest had been in open,
continuous, and exclusive possession of the subject property for more than 30 years,
which, under Section 14(2) of Presidential Decree (P.D.) No. 15299, sufficed to convert
it to private property. Thus:

It has been settled that properties classified as alienable and disposable land may be
converted into private property by reason of open, continuous and exclusive possession
of at least 30 years. Such property now falls within the contemplation of "private lands"
under Section 14(2) of PD 1529, over which title by prescription can be acquired. Thus,
under the second paragraph of Section 14 of PD 1529, those who are in possession of
alienable and disposable land, and whose possession has been characterized as open,
continuous and exclusive for 30 years or more, may have the right to register their title
to such land despite the fact that their possession of the land commenced only after 12
June 1945. x x x

xxxx

While it is significant to note that applicant-appellees possession of the subject


property can be traced from his mothers possession of the same, the records, indeed,
show that his possession of the subject property, following Section 14(2) [of PD 1529],
is to be reckoned from January 3, 1968, when the subject property was declared
alienable and disposable and not way back in 1946, the year when he inherited the
same from his mother. At any rate, at the time the application for registration was filed
in 2003, there was already sufficient compliance with the requirement of possession.
His possession of the subject property has been characterized as open, continuous,
exclusive and notorious possession and occupation in the concept of an
owner.10 (Citations omitted)

Hence, the instant petition.

The Issue

The sole issue to be resolved by the Court is whether the CA erred in affirming the RTC
Decision dated February 7, 2006, which granted the application for registration filed by
Cortez.

The Courts Ruling


The petition is meritorious.

At the outset, the Court notes that the RTC did not cite any specific provision of law
under which authority Cortez application for registration of title to the subject property
was granted. In granting the application for registration, the RTC merely stated that
"the possession of the land being applied for by [Cortez] and his predecessor-in-interest
have been in open, actual, uninterrupted, and adverse possession, under claim of title
and in the concept of owners, all within the time prescribed by law[.]"11 On the other
hand, the CA assumed that Cortez application for registration was based on Section
14(2) of P.D. No. 1529. Nevertheless, Cortez, in the application for registration he filed
with the RTC, proffered that should the subject property not be registrable under
Section 14(2) of P.D. No. 1529, it could still be registered under Section 48(b) of
Commonwealth Act No. 141 (C.A. No. 141), or the Public Land Act, as amended by P.D.
No. 107312 in relation to Section 14(1) of P.D. No. 1529. Thus, the Court deems it
proper to discuss Cortez application for registration of title to the subject property vis-
-vis the provisions of Section 14(1) and (2) of P.D. No. 1529.

Applicants for original registration of title to land must establish compliance with the
provisions of Section 14 of P.D. No. 1529, which pertinently provides that:

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:

(1) Those who by themselves or through their predecessors-in interest have


been in open, continuous, exclusive and notorious possession and occupation of
alienable and disposable lands of the public domain under a bona fide claim of
ownership since June 12, 1945, or earlier.

(2) Those who have acquired ownership of private lands by prescription under
the provision of existing laws.

xxxx

After a careful scrutiny of the records of this case, the Court finds that Cortez failed to
comply with the legal requirements for the registration of the subject property under
Section 14(1) and (2) of P.D. No. 1529.

Section 14(1) of P.D. No. 1529 refers to the judicial confirmation of imperfect or
incomplete titles to public land acquired under Section 48(b) of C.A. No. 141, as
amended by P.D. No. 1073. "Under Section 14(1) [of P.D. No. 1529], applicants for
registration of title must sufficiently establish first, that the subject land forms part of
the disposable and alienable lands of the public domain; second, that the applicant and
his predecessors-in-interest have been in open, continuous, exclusive, and notorious
possession and occupation of the same; and third, that it is under a bona fide claim of
ownership since June 12, 1945, or earlier."13

The first requirement was not satisfied in this case. To prove that the subject property
forms part of the alienable and disposable lands of the public domain, Cortez adduced
in evidence a survey plan Csd-00-00063314 (conversion-subdivision plan of Lot 2697,
MCadm 594-D, Pateros Cadastral Mapping) prepared by Geodetic Engineer Oscar B.
Fernandez and certified by the Lands Management Bureau of the DENR. The said
survey plan contained the following annotation:

This survey is inside L.C. Map No. 2623, Project No. 29, classified as alienable &
disposable by the Bureau of Forest Development on Jan. 3, 1968.

However, Cortez reliance on the foregoing annotation in the survey plan is amiss; it
does not constitute incontrovertible evidence to overcome the presumption that the
subject property remains part of the inalienable public domain. In Republic of the
Philippines v. Tri-Plus Corporation,15 the Court clarified that, the applicant must at the
very least submit a certification from the proper government agency stating that the
parcel of land subject of the application for registration is indeed alienable and
disposable, viz:

It must be stressed that incontrovertible evidence must be presented to establish that


the land subject of the application is alienable or disposable.

In the present case, the only evidence to prove the character of the subject lands as
required by law is the notation appearing in the Advance Plan stating in effect that the
said properties are alienable and disposable. However, this is hardly the kind of proof
required by law. To prove that the land subject of an application for registration is
alienable, an applicant must establish the existence of a positive act of the government
such as a presidential proclamation or an executive order, an administrative action,
investigation reports of Bureau of Lands investigators, and a legislative act or statute.
The applicant may also secure a certification from the Government that the lands
applied for are alienable and disposable. In the case at bar, while the Advance Plan
bearing the notation was certified by the Lands Management Services of the DENR, the
certification refers only to the technical correctness of the survey plotted in the said
plan and has nothing to do whatsoever with the nature and character of the property
surveyed. Respondents failed to submit a certification from the proper government
agency to prove that the lands subject for registration are indeed alienable and
disposable.16 (Citations omitted and emphasis ours)

Similarly, in Republic v. Roche,17 the Court declared that:

Respecting the third requirement, the applicant bears the burden of proving the status
of the land. In this connection, the Court has held that he must present a certificate of
land classification status issued by the Community Environment and Natural Resources
Office (CENRO) or the Provincial Environment and Natural Resources Office (PENRO) of
the DENR. He must also prove that the DENR Secretary had approved the land
classification and released the land as alienable and disposable, and that it is within the
approved area per verification through survey by the CENRO or PENRO. Further, the
applicant must present a copy of the original classification approved by the DENR
Secretary and certified as true copy by the legal custodian of the official records. These
facts must be established by the applicant to prove that the land is alienable and
disposable.

Here, Roche did not present evidence that the land she applied for has been classified
as alienable or disposable land of the public domain. She submitted only the survey
map and technical description of the land which bears no information regarding the
lands classification. She did not bother to establish the status of the land by any
certification from the appropriate government agency. Thus, it cannot be said that she
complied with all requisites for registration of title under Section 14(1) of P.D.
1529.18 (Citations omitted and emphasis ours)

The annotation in the survey plan presented by Cortez is not the kind of evidence
required by law as proof that the subject property forms part of the alienable and
disposable land of the public domain. Cortez failed to present a certification from the
proper government agency as to the classification of the subject property. Cortez
likewise failed to present any evidence showing that the DENR Secretary had indeed
classified the subject property as alienable and disposable. Having failed to present any
incontrovertible evidence, Cortez claim that the subject property forms part of the
alienable and disposable lands of the public domain must fail.

Anent the second and third requirements, the Court finds that Cortez likewise failed to
establish the same.1wphi1 Cortez failed to present any evidence to prove that he and
his predecessors-in-interest have been in open, continuous, exclusive, and notorious
possession and occupation of the subject property since June 12, 1945, or earlier.
Cortez was only able to present oral and documentary evidence of his and his mothers
ownership and possession of the subject property since 1946, the year in which his
mother supposedly inherited the same.

Other than his bare claim that his family possessed the subject property since time
immemorial, Cortez failed to present any evidence to show that he and his
predecessors-in-interest indeed possessed the subject property prior to 1946; it is a
mere claim and not factual proof of possession. "It is a rule that general statements
that are mere conclusions of law and not factual proof of possession are unavailing and
cannot suffice. An applicant in a land registration case cannot just harp on mere
conclusions of law to embellish the application but must impress thereto the facts and
circumstances evidencing the alleged ownership and possession of the land."19
Further, the earliest tax declaration presented by Cortez was only in 1966. Cortez failed
to explain why, despite his claim that he and his predecessors-in-interest have been in
possession of the subject property since time immemorial, it was only in 1966 that his
predecessors-in-interest started to declare the same for purposes of taxation.

That Cortez and his predecessors-in-interest have been in possession of the subject
property for fifty-seven (57) years at the time he filed his application for registration in
2003 would likewise not entitle him to registration thereof under Section 14(2) of P.D.
No. 1529.

Section 14(2) of P.D. No. 1529 sanctions the original registration of lands acquired by
prescription under the provisions of existing laws. "As Section 14(2) [of P.D. No. 1529]
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."20

In Heirs of Mario Malabanan v. Republic,21 the Court however clarified that lands of the
public domain that are patrimonial in character are susceptible to acquisitive
prescription and, accordingly, eligible for registration under Section 14(2) of P.D. No.
1529, viz:

The Civil Code makes it clear that patrimonial property of the State may be acquired by
private persons through prescription. This is brought about by Article 1113, which
states that "[a]ll things which are within the commerce of man are susceptible to
prescription," and that property of the State or any of its subdivisions not patrimonial in
character shall not be the object of prescription."

There are two modes of prescription through which immovables may be acquired under
the Civil Code.1wphi1 The first is ordinary acquisitive prescription, which, under Article
1117, requires possession in good faith and with just title; and, under Article 1134, is
completed through possession of ten (10) years. There is nothing in the Civil Code that
bars a person from acquiring patrimonial property of the State through ordinary
acquisitive prescription, nor is there any apparent reason to impose such a rule. At the
same time, there are indispensable requisitesgood faith and just title. The
ascertainment of good faith involves the application of Articles 526, 527, and 528, as
well as Article 1127 of the Civil Code, provisions that more or less speak for
themselves.22 (Citation omitted and emphasis ours)

The Court nevertheless emphasized that there must be an official declaration by the
State that the public dominion property is no longer intended for public use, public
service, or for the development of national wealth before it can be acquired by
prescription; that a mere declaration by government officials that a land of the public
domain is already alienable and disposable would not suffice for purposes of
registration under Section 14(2) of P.D. No. 1529. The Court further stressed that the
period of acquisitive prescription would only begin to run from the time that the State
officially declares that the public dominion property is no longer intended for public use,
public service, or for the development of national wealth. Thus:

Let us now explore the effects under the Civil Code of a declaration by the President or
any duly authorized government officer of alienability and disposability of lands of the
public domain. Would such lands so declared alienable and disposable be converted,
under the Civil Code, from property of the public dominion into patrimonial property?
After all, by connotative definition, alienable and disposable lands may be the object of
the commerce of man; Article 1113 provides that all things within the commerce of man
are susceptible to prescription; and the same provision further provides that patrimonial
property of the State may be acquired by prescription.

Nonetheless, Article 422 of the Civil Code states that "[p]roperty 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."

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.23 (Emphasis
supplied)

In Republic v. Rizalvo,24 the Court deemed it appropriate to reiterate the ruling in


Malabanan, viz:

On this basis, respondent would have been eligible for application for registration
because his claim of ownership and possession over the subject property even exceeds
thirty (30) years. However, it is jurisprudentially clear that the thirty (30)-year period of
prescription for purposes of acquiring ownership and registration of public land under
Section 14 (2) of P.D. No. 1529 only begins from the moment the State expressly
declares 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. x x x.25 (Citation omitted and emphasis ours)

Accordingly, although lands of the public domain that are considered patrimonial may
be acquired by prescription under Section 14(2) of P.D. No. 1529, before acquisitive
prescription could commence, the property sought to be registered must not only be
classified as alienable and disposable; it must also be declared by the State that it is no
longer intended for public use, public service or the development of the national wealth.
Thus, absent an express declaration by the State, the land remains to be property of
public dominion.26

The Court finds no evidence of any official declaration from the state attesting to the
patrimonial character of the subject property. Cortez failed to prove that acquisitive
prescription has begun to run against the State, much less that he has acquired title to
the subject property by virtue thereof. It is of no moment that Cortez and his
predecessors-in-interest have been in possession of the subject property for 57 years at
the time he applied for the registration of title thereto. "[l]t is not the notorious,
exclusive and uninterrupted possession and occupation of an alienable and disposable
public land for the mandated periods that converts it to patrimonial. The indispensability
of an official declaration that the property is now held by the State in its private
capacity or placed within the commerce of man for prescription to have any effect
against the State cannot be overemphasized. "27

WHEREFORE, in consideration of the foregoing disquisitions, the instant petition is


GRANTED. The Decision dated February 17, 2009 of the Court of Appeals in CA-G.R. CV
No. 87505, which affirmed the Decision dated February 7, 2006 of the Regional Trial
Court of Pasig City, Branch 68, in LRC Case No. N-11496, is hereby REVERSED and SET
ASIDE. The Application for Registration of Emmanuel C. Cortez in LRC Case No. N-
11496 is DENIED for lack of merit.

SO ORDERED.
G.R. No. 164408 March 24, 2014

REPUBLIC OF THE PHILIPPINES, Petitioner,


vs.
ZURBARAN REALTY AND DEVELOPMENT CORPORATION, Respondent.

DECISION

BERSAMIN, J.:

An application for original registration of land of the public domain under Section 14(2)
of Presidential Decree (PD) No. 1529 must show not only that the land has previously
been declared alienable and disposable, but also that the land has been declared
patrimonial property of the State at the onset of the 30-year or 10-year period of
possession and occupation required under the law on acquisitive prescription. Once
again, the Court applies this rule-as clarified in Heirs of Mario Malabanan v. Republic1
in reviewing the decision promulgated on June 10, 2004,2whereby the Court of Appeals
(CA) granted the petitioner's application for registration of land.

Antecedents

On May 28, 1993, respondent Zurbaran Realty and Development Corporation filed in
the Regional Trial Court (RTC) in San Pedro, Laguna an application for original
registration covering a 1,520 square meter parcel of land situated in Barrio Banlic,
Municipality of Cabuyao, Province of Laguna, denominated as Lot 8017-A of Subdivision
Plan CSD-04-006985-D, Cad. 455-D, Cabuyao Cadastre,3 alleging that it had purchased
the land on March 9, 1992 from Jane de Castro Abalos, married to Jose Abalos, for
300,000.00; that the land was declared for taxation purposes in the name of its
predecessor-in-interest under Tax Declaration No. 22711; that there was no mortgage
or encumbrance of any kind affecting the land, nor was there any other person or entity
having any interest thereon, legal or equitable, adverse to that of the applicant; and
that the applicant and its predecessors-in-interest had been in open, continuous and
exclusive possession and occupation of the land in the concept of an owner.

Attached to the application were several documents, namely: (1) tracing cloth plan as
approved by the Land Management Division of the Department of Environment and
Natural Resources (DENR); (2) blue print copies of the tracing cloth plan; (3) copies of
the technical description; (4) copies of Tax Declaration No. 2711; and (5) copies of the
Deed of Sale dated March 9, 1992.

The Republic, represented by the Director of Lands, opposed the application, arguing
that the applicant and its predecessors-in-interest had not been in open, continuous,
exclusive and notorious possession and occupation of the land since June 12, 1945;
that the muniments of title and tax declaration presented did not constitute competent
and sufficient evidence of a bona fide acquisition of the land; and that the land was a
portion of the public domain, and, therefore, was not subject to private appropriation.4

The RTC directed the Land Management Bureau, Manila; the Community Environment
and Natural Resources Office (CENRO) of Los Baos, Laguna; and the Land
Management Sector and Forest Management Bureau, Manila, to submit a status report
on the land, particularly, on whether the land was covered by a land patent, whether it
was subject of a previously approved isolated survey, and whether it was within a forest
zone.5

In his memorandum to the DENR, Region IV (Lands Forestry Sector), and the Provincial
Prosecutor of Laguna, a copy of which was furnished the trial court, CENRO Officer
Arnulfo Hernandez stated that the land had been "verified to be within the Alienable
and Disposable land under Land Classification Project No. 23-A of Cabuyao, Laguna,
certified and declared as such pursuant to the provisions of Presidential Decree No.
705, as amended, under Forestry Administrative Order No. A-1627 dated September 28,
1981 per BFD Map LC-3004." Attached to the memorandum was the inspection report
declaring that "the area is surrounded with concrete fence, three (3) buildings for
employees residence;" that the land was acquired through sale before the filing of the
application; that the applicant and its predecessors-in-interest had been in "continuous,
open and peaceful occupation" of the land, and that "no forestry interest is adversely
affected."6

CENRO Land Management Inspector/Investigator Rodolfo S. Gonzales reported that: (1)


the land was covered by a survey plan approved by the Regional Land Director/Land
Registration Authority on May 25, 1988 pursuant to PD No. 239 dated July 9, 1975; (2)
it consisted of 22,773 square meters and was located in Barangay Banlic, Cabuyao,
Laguna; (3) the area was entirely within the alienable and disposable area; (4) it had
never been forfeited in favor of the government for non-payment of taxes, and had not
been confiscated in connection with any civil or criminal cases; (5) it was not within a
previously patented property as certified to by the Register of Deeds, Calamba, Laguna;
and (6) there was no public land application filed for it by the applicant or any other
persons as per verification from the records unit of his office. The report further stated
that a verification at the Office of the Municipal Assessor showed that: (1) the land was
declared for the first time in 1960 under Tax Declaration No. 6712 in the name of
Enrique Hemedez with an area of 23,073 square meters; (2) it was now covered by Tax
Declaration No. 2253 issued in the name of the respondent; (3) the real property taxes
had been paid since 1968; and (4) it had not been earmarked for public or quasi-public
purposes per information from the District Engineer.

After inspection, it was also found that (1) the land was residential; (2) the respondent
was in the actual occupation and possession of the land; and (3) the land did not
encroach upon an established watershed, riverbank/bed protection, creek, right-of-way
or park site or any area devoted to general use or devoted to public service.7
A certification was issued by the Records Management Division of the Land
Management Bureau stating that it had no record of any kind of public land
applications/land patents covering the parcel of land subject of the application.8

The respondent presented Gloria P. Noel, its Vice President and Treasurer, who testified
that the respondent had purchased the land from Jane de Castro Abalos on March 9,
1992 for 300,000.00; that the land had been declared for taxation purposes in the
name of Abalos under Tax Declaration No. 22711; that after the sale, a new Tax
Declaration had been issued in the name of the respondent, who had meanwhile taken
possession of the land by building a fence around it and introducing improvements
thereon; that the respondent had paid the real property taxes thereon since its
acquisition; that the respondents possession had been continuous, open and public;
and that the land was free from any lien or encumbrance; and that there was no
adverse claimant to the land.9

Engr. Edilberto Tamis attested that he was familiar with the land because it was a
portion of Lot No. 8017 of Subdivision Plan Cad-455-D of the Cabuyao Cadastre, owned
by Corazon Tapalla who had acquired it from the Hemedez family; that Tapalla had sold
a portion of Lot No. 8017 to Abalos and the remaining portion to him; and that he had
witnessed the sale of the land to the respondent.10

The respondents final witness was Armando Espela who declared that he was a retired
land overseer residing in Barangay Banlic from birth; that he was familiar with the land
which was part of a bigger parcel of land owned by the Hemedez family; that his father,
Toribio Espela, with his assistance, and one Francisco Capacio worked on the land since
1960; that the entire landholding had originally been sugarland, but was later on
subdivided, sold, and resold until it ceased to be agricultural land; that, in 1982, the
land was sold to Corazon Tapalla who hired him as the overseer; that as the overseer,
he fenced and cleared the area; that he was allowed to use the grassy portion for
grazing purposes; that in 1987, Tapalla sold part of the land to Abalos and the
remaining portion to Engr. Tamis; that he continued to oversee the land for the new
owners; that Abalos then sold her portion to the respondent in 1992; that since then,
the respondent took possession of the land, and he then ceased to be the overseer;
that the possession by the Hemedez family and its successors-in-interest was open,
continuous, public and under claim of ownership; and that he did not know any person
who claimed ownership of the land other than those he and his father served as
overseers.11

Decision of the RTC

On May 12, 1997, the RTC rendered its decision, holding that the respondent and its
predecessors-in-interest had been in open, public, peaceful, continuous, exclusive and
adverse possession and occupation of the land under a bona fide claim of ownership
even prior to 1960 and, accordingly, granted the application for registration, viz:
WHEREFORE, taking into consideration the evidence submitted by the applicant, this
Court hereby orders the confirmation and registration of title of the land described as
Lot 8017-A of subdivision plan Csd-04-006985-D, being a portion of Lot 8017 of
subdivision plan Cad-455-D, Cabuyao Cadastre situated at Barangay Banlic, Cabuyao,
Laguna with an area of 1,520 square meters to be entered under the name of the
applicant Zurbaran Realty and Development Corporation, a corporation organized and
existing under the laws of the Philippines with office address at 33 M. Viola St., San
Francisco del Monte, Quezon City by the Land Registration Authority. After the decision
shall become final, let an order for the issuance of a decree of title be issued in favor of
said applicant.

SO ORDERED.12

Judgment of the CA

The Republic appealed, arguing that the issue of whether the applicant and its
predecessors-in-interest had possessed the land within the required length of time
could not be determined because there was no evidence as to when the land had been
declared alienable and disposable.

On June 10, 2004, the CA promulgated its judgment affirming the RTC, and concluded
that the reports made by the concerned government agencies and the testimonies of
those familiar with the land in question had buttressed the court a quos conclusion that
the respondent and its predecessors-in-interest had been in open, public, peaceful,
continuous, exclusive, and adverse possession and occupation of the land under a bona
fide claim of ownership even prior to 1960.13

Issue

Hence, the Republic appeals the adverse judgment of the CA upon the following
ground:

THE COURT OF APPEALS GRAVELY ERRED ON A QUESTION OF LAW WHEN IT


AFFIRMED THE TRIAL COURTS GRANT OF THE APPLICATION FOR ORIGINAL
REGISTRATION DESPITE THE ABSENCE OF EVIDENCE THAT RESPONDENT AND ITS
PREDECESSORS-IN-INTEREST HAVE COMPLIED WITH THE PERIOD OF POSSESSION
AND OCCUPATION REQUIRED BY LAW.14

The Republic contends that the respondent did not establish the time when the land
covered by the application for registration became alienable and disposable;15 that such
detail was crucial because the possession of the respondent and its predecessors-in-
interest, for the purpose of determining whether it acquired the property by
prescription, should be reckoned from the time when the land was declared alienable
and disposable; and that prior to the declaration of the land of the public domain as
alienable and disposable, it was not susceptible to private ownership, and any
possession or occupation at such time could not be counted as part of the period of
possession required under the law on prescription.16

The respondent counters that whether it established when the property was declared
alienable and disposable and whether it complied with the 30-year required period of
possession should not be entertained anymore by the Court because: (a) these issues
had not been raised in the trial court and were being raised for the first time on appeal;
and (b) factual findings of the trial court, especially when affirmed by the CA, were
binding and conclusive on this Court. At any rate, the respondent insists that it had
been in open, public, peaceful, continuous, and adverse possession of the property for
the prescribed period of 30 years as evidenced by the fact that the property had been
declared for taxation purposes in 1960 in the name of its predecessors-in-interest, and
that such possession had the effect of converting the land into private property and
vesting ownership upon the respondent.17

In reply, the Republic asserts that it duly opposed the respondents application for
registration; that it was only able to ascertain the errors committed by the trial court
after the latter rendered its decision; and that the burden of proof in land registration
cases rested on the applicant who must prove its ownership of the property being
registered. The Republic maintains that the Court had the authority to review and
reverse the factual findings of the lower courts when the conclusion reached was not
supported by the evidence on record, as in this case.18

Ruling

The petition for review is meritorious.

Section 14 of P.D. No. 1529 enumerates those who may file an application for
registration of land based on possession and occupation of a land of the public domain,
thus:

Section 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:

(1) Those who by themselves or through their predecessors-in-interest have


been in open, continuous, exclusive and notorious possession and occupation of
alienable and disposable lands of the public domain under a bona fide claim of
ownership since June 12, 1945, or earlier.

(2) Those who have acquired ownership of private lands by prescription under
the provision of existing laws.

xxxx
An application for registration under Section14(1) of P.D. No. 1529 must establish the
following requisites, namely: (a) the land is alienable and disposable property of the
public domain; (b) the applicant and its predecessors in interest have been in open,
continuous, exclusive and notorious possession and occupation of the land under a
bona fide claim of ownership; and (c) the applicant and its predecessors-in-interest
have possessed and occupied the land since June 12, 1945, or earlier. The Court has
clarified in Malabanan19 that under Section14(1), it is not necessary that the land must
have been declared alienable and disposable as of June 12, 1945, or earlier, because
the law simply requires the property sought to be registered to be alienable and
disposable at the time the application for registration of title is filed. The Court has
explained that a contrary interpretation would absurdly limit the application of the
provision "to the point of virtual inutility."

The foregoing interpretation highlights the distinction between a registration proceeding


filed under Section 14(1) of P.D. No. 1529 and one filed under Section 14(2) of P.D. No.
1529. According to Malabanan:

Section 14(1) mandates registration on the basis of possession, while Section 14(2)
entitles registration on the basis of prescription. Registration under Section 14(1) is
extended under the aegis of the Property Registration Decree and the Public Land Act
while registration under Section 14(2) is made available both by the Property
Registration Decree and the Civil Code.20

In other words, registration under Section 14(1) of P.D. No. 1529 is based on
possession and occupation of the alienable and disposable land of the public domain
since June 12, 1945 or earlier, without regard to whether the land was susceptible to
private ownership at that time. The applicant needs only to show that the land had
already been declared alienable and disposable at any time prior to the filing of the
application for registration.

On the other hand, an application under Section 14(2) of P.D. No. 1529 is based on
acquisitive prescription and must comply with the law on prescription as provided by
the Civil Code. In that regard, only the patrimonial property of the State may be
acquired by prescription pursuant to the Civil Code.21 For acquisitive prescription to set
in, therefore, the land being possessed and occupied must already be classified or
declared as patrimonial property of the State. Otherwise, no length of possession would
vest any right in the possessor if the property has remained land of the public
dominion. Malabanan stresses that even if the land is later converted to patrimonial
property of the State, possession of it prior to such conversion will not be counted to
meet the requisites of acquisitive prescription.22 Thus, registration under Section 14(2)
of P.D. No. 1529 requires that the land had already been converted to patrimonial
property of the State at the onset of the period of possession required by the law on
prescription.
An application for registration based on Section 14(2) of P.D. No. 1529 must, therefore,
establish the following requisites, to wit: (a) the land is an alienable and disposable,
and patrimonial property of the public domain; (b) the applicant and its predecessors-
in-interest have been in possession of the land for at least 10 years, in good faith and
with just title, or for at least 30 years, regardless of good faith or just title; and (c) the
land had already been converted to or declared as patrimonial property of the State at
the beginning of the said 10-year or 30-year period of possession.

To properly appreciate the respondents case, we must ascertain under what provision
its application for registration was filed. If the application was filed under Section 14(1)
of P.D. No. 1529, the determination of the particular date when the property was
declared alienable and disposable would be unnecessary, inasmuch as proof showing
that the land had already been classified as such at the time the application was filed
would be enough. If the application was filed under Section 14(2) of P.D. No. 1529, the
determination of the issue would not be crucial for, as earlier clarified, it was not the
declaration of the land as alienable and disposable that would make it susceptible to
private ownership by acquisitive prescription. Malabanan expounds thereon, thus
Would such lands so declared alienable and disposable be converted, under the Civil
Code, from property of the public dominion into patrimonial property? After all, by
connotative definition, alienable and disposable lands may be the object of the
commerce of man; Article 1113 provides that all things within the commerce of man are
susceptible to prescription; and the same provision further provides that patrimonial
property of the State may be acquired by prescription.

Nonetheless, Article 422 of the Civil Code states that "[p]roperty 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."

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.23

The respondents application does not enlighten as to whether it was filed under
Section 14(1) or Section 14(2) of P.D. No. 1529. The application alleged that the
respondent and its predecessors-in-interest had been in open, continuous and exclusive
possession and occupation of the property in the concept of an owner, but did not state
when possession and occupation commenced and the duration of such possession. At
any rate, the evidence presented by the respondent and its averments in the other
pleadings reveal that the application for registration was filed based on Section 14(2),
not Section 14(1) of P.D. No. 1529. The respondent did not make any allegation in its
application that it had been in possession of the property since June 12, 1945, or
earlier, nor did it present any evidence to establish such fact.1wphi1

With the application of the respondent having been filed under Section 14(2) of P.D.
No. 1529, the crucial query is whether the land subject of the application had already
been converted to patrimonial property of the State. In short, has the land been
declared by law as no longer intended for public service or the development of the
national wealth?

The respondent may perhaps object to a determination of this issue by the Court for
the same reason that it objects to the determination of whether it established when the
land was declared alienable and disposable, that is, the issue was not raised in and
resolved and by the trial court. But the objection would be futile because the issue was
actually raised in the trial court, as borne out by the Republic's allegation in its
opposition to the application to the effect "that the land is a portion of the public
domain not subject to prescription." In any case, the interest of justice dictates the
consideration and resolution of an issue that is relevant to another that was specifically
raised. The rule that only theories raised in the initial proceedings may be taken up by a
party on appeal refers only to independent, not concomitant, matters to support or
oppose the cause of action.24

Here, there is no evidence showing that the land in question was within an area
expressly declared by law either to be the patrimonial property of the State, or to be no
longer intended for public service or the development of the national wealth. The Court
is left with no alternative but to deny the respondent's application for registration.

WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and
SETS ASIDE the decision promulgated on June 10, 2004; and DISMISSES the
respondent's application for original registration of Lot 8017-A of Subdivision Plan CSD-
04-006985-D, Cad. 455-D, of the Cabuyao Cadastre.

No pronouncement on costs of suit.


SO ORDERED.
G.R. No. 179987 September 3, 2013

HEIRS OF MARIO MALABANAN, (Represented by Sally A.


Malabanan), Petitioners,
vs.
REPUBLIC OF THE PHILIPPINES, Respondent.

RESOLUTION

BERSAMIN, J.:

For our consideration and resolution are the motions for reconsideration of the parties
who both assail the decision promulgated on April 29, 2009, whereby we upheld the
ruling of the Court of Appeals (CA) denying the application of the petitioners for the
registration of a parcel of land situated in Barangay Tibig, Silang, Cavite on the ground
that they had not established by sufficient evidence their right to the registration in
accordance with either Section 14(1) or Section 14(2) of Presidential Decree No. 1529
(Property Registration Decree).

Antecedents

The property subject of the application for registration is a parcel of land situated in
Barangay Tibig, Silang Cavite, more particularly identified as Lot 9864-A, Cad-452-D,
with an area of 71,324-square meters. On February 20, 1998, applicant Mario
Malabanan, who had purchased the property from Eduardo Velazco, filed an application
for land registration covering the property in the Regional Trial Court (RTC) in Tagaytay
City, Cavite, claiming that the property formed part of the alienable and disposable land
of the public domain, and that he and his predecessors-in-interest had been in open,
continuous, uninterrupted, public and adverse possession and occupation of the land for
more than 30 years, thereby entitling him to the judicial confirmation of his title.1

To prove that the property was an alienable and disposable land of the public domain,
Malabanan presented during trial a certification dated June 11, 2001 issued by the
Community Environment and Natural Resources Office (CENRO) of the Department of
Environment and Natural Resources (DENR), which reads:

This is to certify that the parcel of land designated as Lot No. 9864 Cad 452-D, Silang
Cadastre as surveyed for Mr. Virgilio Velasco located at Barangay Tibig, Silang, Cavite
containing an area of 249,734 sq. meters as shown and described on the Plan Ap-04-
00952 is verified to be within the Alienable or Disposable land per Land Classification
Map No. 3013 established under Project No. 20-A and approved as such under FAO 4-
1656 on March 15, 1982.2

After trial, on December 3, 2002, the RTC rendered judgment granting Malabanans
application for land registration, disposing thusly:
WHEREFORE, this Court hereby approves this application for registration and thus
places under the operation of Act 141, Act 496 and/or P.D. 1529, otherwise known as
Property Registration Law, the lands described in Plan Csd-04-0173123-D, Lot 9864-A
and containing an area of Seventy One Thousand Three Hundred Twenty Four (71,324)
Square Meters, as supported by its technical description now forming part of the record
of this case, in addition to other proofs adduced in the name of MARIO MALABANAN,
who is of legal age, Filipino, widower, and with residence at Munting Ilog, Silang,
Cavite.

Once this Decision becomes final and executory, the corresponding decree of
registration shall forthwith issue.

SO ORDERED.3

The Office of the Solicitor General (OSG) appealed the judgment to the CA, arguing that
Malabanan had failed to prove that the property belonged to the alienable and
disposable land of the public domain, and that the RTC erred in finding that he had
been in possession of the property in the manner and for the length of time required by
law for confirmation of imperfect title.

On February 23, 2007, the CA promulgated its decision reversing the RTC and
dismissing the application for registration of Malabanan. Citing the ruling in Republic v.
Herbieto (Herbieto),4 the CA declared that under Section 14(1) of the Property
Registration Decree, any period of possession prior to the classification of the land as
alienable and disposable was inconsequential and should be excluded from the
computation of the period of possession. Noting that the CENRO-DENR certification
stated that the property had been declared alienable and disposable only on March 15,
1982, Velazcos possession prior to March 15, 1982 could not be tacked for purposes of
computing Malabanans period of possession.

Due to Malabanans intervening demise during the appeal in the CA, his heirs elevated
the CAs decision of February 23, 2007 to this Court through a petition for review on
certiorari.

The petitioners assert that the ruling in Republic v. Court of Appeals and Corazon
Naguit5 (Naguit) remains the controlling doctrine especially if the property involved is
agricultural land. In this regard, Naguit ruled that any possession of agricultural land
prior to its declaration as alienable and disposable could be counted in the reckoning of
the period of possession to perfect title under the Public Land Act (Commonwealth Act
No. 141) and the Property Registration Decree. They point out that the ruling in
Herbieto, to the effect that the declaration of the land subject of the application for
registration as alienable and disposable should also date back to June 12, 1945 or
earlier, was a mere obiter dictum considering that the land registration proceedings
therein were in fact found and declared void ab initio for lack of publication of the
notice of initial hearing.

The petitioners also rely on the ruling in Republic v. T.A.N. Properties, Inc.6 to support
their argument that the property had been ipso jure converted into private property by
reason of the open, continuous, exclusive and notorious possession by their
predecessors-in-interest of an alienable land of the public domain for more than 30
years. According to them, what was essential was that the property had been
"converted" into private property through prescription at the time of the application
without regard to whether the property sought to be registered was previously
classified as agricultural land of the public domain.

As earlier stated, we denied the petition for review on certiorari because Malabanan
failed to establish by sufficient evidence possession and occupation of the property on
his part and on the part of his predecessors-in interest since June 12, 1945, or earlier.

Petitioners Motion for Reconsideration

In their motion for reconsideration, the petitioners submit that the mere classification of
the land as alienable or disposable should be deemed sufficient to convert it into
patrimonial property of the State. Relying on the rulings in Spouses De Ocampo v.
Arlos,7 Menguito v. Republic8 and Republic v. T.A.N. Properties, Inc.,9 they argue that
the reclassification of the land as alienable or disposable opened it to acquisitive
prescription under the Civil Code; that Malabanan had purchased the property from
Eduardo Velazco believing in good faith that Velazco and his predecessors-in-interest
had been the real owners of the land with the right to validly transmit title and
ownership thereof; that consequently, the ten-year period prescribed by Article 1134 of
the Civil Code, in relation to Section 14(2) of the Property Registration Decree, applied
in their favor; and that when Malabanan filed the application for registration on
February 20, 1998, he had already been in possession of the land for almost 16 years
reckoned from 1982, the time when the land was declared alienable and disposable by
the State.

The Republics Motion for Partial Reconsideration

The Republic seeks the partial reconsideration in order to obtain a clarification with
reference to the application of the rulings in Naguit and Herbieto.

Chiefly citing the dissents, the Republic contends that the decision has enlarged, by
implication, the interpretation of Section 14(1) of the Property Registration Decree
through judicial legislation. It reiterates its view that an applicant is entitled to
registration only when the land subject of the application had been declared alienable
and disposable since June 12, 1945 or earlier.

Ruling
We deny the motions for reconsideration.

In reviewing the assailed decision, we consider to be imperative to discuss the different


classifications of land in relation to the existing applicable land registration laws of the
Philippines.

Classifications of land according to ownership

Land, which is an immovable property,10 may be classified as either of public dominion


or of private ownership.11Land is considered of public dominion if it either: (a) is
intended for public use; or (b) belongs to the State, without being for public use, and is
intended for some public service or for the development of the national wealth.12 Land
belonging to the State that is not of such character, or although of such character but
no longer intended for public use or for public service forms part of the patrimonial
property of the State.13 Land that is other than part of the patrimonial property of the
State, provinces, cities and municipalities is of private ownership if it belongs to a
private individual.

Pursuant to the Regalian Doctrine (Jura Regalia), a legal concept first introduced into
the country from the West by Spain through the Laws of the Indies and the Royal
Cedulas,14 all lands of the public domain belong to the State.15This means that the State
is the source of any asserted right to ownership of land, and is charged with the
conservation of such patrimony.16

All lands not appearing to be clearly under private ownership are presumed to belong to
the State. Also, public lands remain part of the inalienable land of the public domain
unless the State is shown to have reclassified or alienated them to private persons.17

Classifications of public lands


according to alienability

Whether or not land of the public domain is alienable and disposable primarily rests on
the classification of public lands made under the Constitution. Under the 1935
Constitution,18 lands of the public domain were classified into three, namely,
agricultural, timber and mineral.19 Section 10, Article XIV of the 1973 Constitution
classified lands of the public domain into seven, specifically, agricultural, industrial or
commercial, residential, resettlement, mineral, timber or forest, and grazing land, with
the reservation that the law might provide other classifications. The 1987 Constitution
adopted the classification under the 1935 Constitution into agricultural, forest or timber,
and mineral, but added national parks.20 Agricultural lands may be further classified by
law according to the uses to which they may be devoted.21 The identification of lands
according to their legal classification is done exclusively by and through a positive act of
the Executive Department.22
Based on the foregoing, the Constitution places a limit on the type of public land that
may be alienated. Under Section 2, Article XII of the 1987 Constitution, only agricultural
lands of the public domain may be alienated; all other natural resources may not be.

Alienable and disposable lands of the State fall into two categories, to wit: (a)
patrimonial lands of the State, or those classified as lands of private ownership under
Article 425 of the Civil Code,23 without limitation; and (b) lands of the public domain, or
the public lands as provided by the Constitution, but with the limitation that the lands
must only be agricultural. Consequently, lands classified as forest or timber, mineral, or
national parks are not susceptible of alienation or disposition unless they are reclassified
as agricultural.24 A positive act of the Government is necessary to enable such
reclassification,25 and the exclusive prerogative to classify public lands under existing
laws is vested in the Executive Department, not in the courts.26 If, however, public land
will be classified as neither agricultural, forest or timber, mineral or national park, or
when public land is no longer intended for public service or for the development of the
national wealth, thereby effectively removing the land from the ambit of public
dominion, a declaration of such conversion must be made in the form of a law duly
enacted by Congress or by a Presidential proclamation in cases where the President is
duly authorized by law to that effect.27 Thus, until the Executive Department exercises
its prerogative to classify or reclassify lands, or until Congress or the President declares
that the State no longer intends the land to be used for public service or for the
development of national wealth, the Regalian Doctrine is applicable.

Disposition of alienable public lands

Section 11 of the Public Land Act (CA No. 141) provides the manner by which alienable
and disposable lands of the public domain, i.e., agricultural lands, can be disposed of,
to wit:

Section 11. Public lands suitable for agricultural purposes can be disposed of only as
follows, and not otherwise:

(1) For homestead settlement;

(2) By sale;

(3) By lease; and

(4) By confirmation of imperfect or incomplete titles;

(a) By judicial legalization; or

(b) By administrative legalization (free patent).


The core of the controversy herein lies in the proper interpretation of Section 11(4), in
relation to Section 48(b) of the Public Land Act, which expressly requires possession by
a Filipino citizen of the land since June 12, 1945, or earlier, viz:

Section 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 thereafter, under the Land Registration Act, to wit:

xxxx

(b) Those who by themselves or through their predecessors-in-interest have been in


open, continuous, exclusive, and notorious possession and occupation of alienable and
disposable lands of the public domain, under a bona fide claim of acquisition of
ownership, since June 12, 1945, or earlier, immediately preceding the filing of the
applications 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. (Bold emphasis supplied)

Note that Section 48(b) of the Public Land Act used the words "lands of the public
domain" or "alienable and disposable lands of the public domain" to clearly signify that
lands otherwise classified, i.e., mineral, forest or timber, or national parks, and lands of
patrimonial or private ownership, are outside the coverage of the Public Land Act. What
the law does not include, it excludes. The use of the descriptive phrase "alienable and
disposable" further limits the coverage of Section 48(b) to only the agricultural lands of
the public domain as set forth in Article XII, Section 2 of the 1987 Constitution. Bearing
in mind such limitations under the Public Land Act, the applicant must satisfy the
following requirements in order for his application to come under Section 14(1) of the
Property Registration Decree,28 to wit:

1. The applicant, by himself or through his predecessor-in-interest, has been in


possession and occupation of the property subject of the application;

2. The possession and occupation must be open, continuous, exclusive, and


notorious;

3. The possession and occupation must be under a bona fide claim of acquisition
of ownership;

4. The possession and occupation must have taken place since June 12, 1945, or
earlier; and
5. The property subject of the application must be an agricultural land of the
public domain.

Taking into consideration that the Executive Department is vested with the authority to
classify lands of the public domain, Section 48(b) of the Public Land Act, in relation to
Section 14(1) of the Property Registration Decree, presupposes that the land subject of
the application for registration must have been already classified as agricultural land of
the public domain in order for the provision to apply. Thus, absent proof that the land is
already classified as agricultural land of the public domain, the Regalian Doctrine
applies, and overcomes the presumption that the land is alienable and disposable as
laid down in Section 48(b) of the Public Land Act. However, emphasis is placed on the
requirement that the classification required by Section 48(b) of the Public Land Act is
classification or reclassification of a public land as agricultural.

The dissent stresses that the classification or reclassification of the land as alienable
and disposable agricultural land should likewise have been made on June 12, 1945 or
earlier, because any possession of the land prior to such classification or reclassification
produced no legal effects. It observes that the fixed date of June 12, 1945 could not be
minimized or glossed over by mere judicial interpretation or by judicial social policy
concerns, and insisted that the full legislative intent be respected.

We find, however, that the choice of June 12, 1945 as the reckoning point of the
requisite possession and occupation was the sole prerogative of Congress, the
determination of which should best be left to the wisdom of the lawmakers. Except that
said date qualified the period of possession and occupation, no other legislative intent
appears to be associated with the fixing of the date of June 12, 1945. Accordingly, the
Court should interpret only the plain and literal meaning of the law as written by the
legislators.

Moreover, an examination of Section 48(b) of the Public Land Act indicates that
Congress prescribed no requirement that the land subject of the registration should
have been classified as agricultural since June 12, 1945, or earlier. As such, the
applicants imperfect or incomplete title is derived only from possession and occupation
since June 12, 1945, or earlier. This means that the character of the property subject of
the application as alienable and disposable agricultural land of the public domain
determines its eligibility for land registration, not the ownership or title over it.

Alienable public land held by a possessor, either personally or through his predecessors-
in-interest, openly, continuously and exclusively during the prescribed statutory period
is converted to private property by the mere lapse or completion of the period.29 In
fact, by virtue of this doctrine, corporations may now acquire lands of the public domain
for as long as the lands were already converted to private ownership, by operation of
law, as a result of satisfying the requisite period of possession prescribed by the Public
Land Act.30 It is for this reason that the property subject of the application of
Malabanan need not be classified as alienable and disposable agricultural land of the
public domain for the entire duration of the requisite period of possession.

To be clear, then, the requirement that the land should have been classified as
alienable and disposable agricultural land at the time of the application for registration
is necessary only to dispute the presumption that the land is inalienable.

The declaration that land is alienable and disposable also serves to determine the point
at which prescription may run against the State. The imperfect or incomplete title being
confirmed under Section 48(b) of the Public Land Act is title that is acquired by reason
of the applicants possession and occupation of the alienable and disposable agricultural
land of the public domain. Where all the necessary requirements for a grant by the
Government are complied with through actual physical, open, continuous, exclusive and
public possession of an alienable and disposable land of the public domain, the
possessor is deemed to have acquired by operation of law not only a right to a grant,
but a grant by the Government, because it is not necessary that a certificate of title be
issued in order that such a grant be sanctioned by the courts.31

If one follows the dissent, the clear objective of the Public Land Act to adjudicate and
quiet titles to unregistered lands in favor of qualified Filipino citizens by reason of their
occupation and cultivation thereof for the number of years prescribed by law32 will be
defeated. Indeed, we should always bear in mind that such objective still prevails, as a
fairly recent legislative development bears out, when Congress enacted legislation
(Republic Act No. 10023)33in order to liberalize stringent requirements and procedures
in the adjudication of alienable public land to qualified applicants, particularly residential
lands, subject to area limitations.34

On the other hand, if a public land is classified as no longer intended for public use or
for the development of national wealth by declaration of Congress or the President,
thereby converting such land into patrimonial or private land of the State, the applicable
provision concerning disposition and registration is no longer Section 48(b) of the Public
Land Act but the Civil Code, in conjunction with Section 14(2) of the Property
Registration Decree.35 As such, prescription can now run against the State.

To sum up, we now observe the following rules relative to the disposition of public land
or lands of the public domain, namely:

(1) As a general rule and pursuant to the Regalian Doctrine, all lands of the
public domain belong to the State and are inalienable. Lands that are not clearly
under private ownership are also presumed to belong to the State and,
therefore, may not be alienated or disposed;

(2) The following are excepted from the general rule, to wit:
(a) Agricultural lands of the public domain are rendered alienable and
disposable through any of the exclusive modes enumerated under Section
11 of the Public Land Act. If the mode is judicial confirmation of imperfect
title under Section 48(b) of the Public Land Act, the agricultural land
subject of the application needs only to be classified as alienable and
disposable as of the time of the application, provided the applicants
possession and occupation of the land dated back to June 12, 1945, or
earlier. Thereby, a conclusive presumption that the applicant has
performed all the conditions essential to a government grant arises,36 and
the applicant becomes the owner of the land by virtue of an imperfect or
incomplete title. By legal fiction, the land has already ceased to be part of
the public domain and has become private property.37

(b) Lands of the public domain subsequently classified or declared as no


longer intended for public use or for the development of national wealth
are removed from the sphere of public dominion and are considered
converted into patrimonial lands or lands of private ownership that may
be alienated or disposed through any of the modes of acquiring ownership
under the Civil Code. If the mode of acquisition is prescription, whether
ordinary or extraordinary, proof that the land has been already converted
to private ownership prior to the requisite acquisitive prescriptive period is
a condition sine qua non in observance of the law (Article 1113, Civil
Code) that property of the State not patrimonial in character shall not be
the object of prescription.

To reiterate, then, the petitioners failed to present sufficient evidence to establish that
they and their predecessors-in-interest had been in possession of the land since June
12, 1945. Without satisfying the requisite character and period of possession -
possession and occupation that is open, continuous, exclusive, and notorious since June
12, 1945, or earlier - the land cannot be considered ipso jure converted to private
property even upon the subsequent declaration of it as alienable and disposable.
Prescription never began to run against the State, such that the land has remained
ineligible for registration under Section 14(1) of the Property Registration Decree.
Likewise, the land continues to be ineligible for land registration under Section 14(2) of
the Property Registration Decree unless Congress enacts a law or the President issues a
proclamation declaring the land as no longer intended for public service or for the
development of the national wealth.1wphi1

WHEREFORE, the Court DENIES the petitioners' Motion for Reconsideration and the
respondent's Partial Motion for Reconsideration for their lack of merit.

SO ORDERED.

G.R. No. 97764 August 10, 1992


LEVY D. MACASIANO, Brigadier General/PNP Superintendent, Metropolitan
Traffic Command, petitioner,
vs.
HONORABLE ROBERTO C. DIOKNO, Presiding Judge, Branch 62, Regional
Trial Court of Makati, Metro Manila, MUNICIPALITY OF PARAAQUE, METRO
MANILA, PALANYAG KILUSANG BAYAN FOR SERVICE, respondents.

Ceferino, Padua Law Office for Palanyag Kilusang Bayan for service.

Manuel de Guia for Municipality of Paraaque.

MEDIALDEA, J.:

This is a petition for certiorari under Rule 65 of the Rules of Court seeking the
annulment of the decision of the Regional Trial Court of Makati, Branch 62, which
granted the writ of preliminary injunction applied for by respondents Municipality of
Paraaque and Palanyag Kilusang Bayan for Service (Palanyag for brevity) against
petitioner herein.

The antecedent facts are as follows:

On June 13, 1990, the respondent municipality passed Ordinance No. 86, Series of
1990 which authorized the closure of J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia
Extension and Opena Streets located at Baclaran, Paraaque, Metro Manila and the
establishment of a flea market thereon. The said ordinance was approved by the
municipal council pursuant to MMC Ordinance No. 2, Series of 1979, authorizing and
regulating the use of certain city and/or municipal streets, roads and open spaces
within Metropolitan Manila as sites for flea market and/or vending areas, under certain
terms and conditions.

On July 20, 1990, the Metropolitan Manila Authority approved Ordinance No. 86, s.
1990 of the municipal council of respondent municipality subject to the following
conditions:

1. That the aforenamed streets are not used for vehicular traffic, and that
the majority of the residents do not oppose the establishment of the flea
market/vending areas thereon;

2. That the 2-meter middle road to be used as flea market/vending area


shall be marked distinctly, and that the 2 meters on both sides of the road
shall be used by pedestrians;
3. That the time during which the vending area is to be used shall be
clearly designated;

4. That the use of the vending areas shall be temporary and shall be
closed once the reclaimed areas are developed and donated by the Public
Estate Authority.

On June 20, 1990, the municipal council of Paraaque issued a resolution authorizing
Paraaque Mayor Walfrido N. Ferrer to enter into contract with any service cooperative
for the establishment, operation, maintenance and management of flea markets and/or
vending areas.

On August 8, 1990, respondent municipality and respondent Palanyag, a service


cooperative, entered into an agreement whereby the latter shall operate, maintain and
manage the flea market in the aforementioned streets with the obligation to remit dues
to the treasury of the municipal government of Paraaque. Consequently, market stalls
were put up by respondent Palanyag on the said streets.

On September 13, 1990, petitioner Brig. Gen. Macasiano, PNP Superintendent of the
Metropolitan Traffic Command, ordered the destruction and confiscation of stalls along
G.G. Cruz and J. Gabriel St. in Baclaran. These stalls were later returned to respondent
Palanyag.

On October 16, 1990, petitioner Brig. General Macasiano wrote a letter to respondent
Palanyag giving the latter ten (10) days to discontinue the flea market; otherwise, the
market stalls shall be dismantled.

Hence, on October 23, 1990, respondents municipality and Palanyag filed with the trial
court a joint petition for prohibition and mandamus with damages and prayer for
preliminary injunction, to which the petitioner filed his memorandum/opposition to the
issuance of the writ of preliminary injunction.

On October 24, 1990, the trial court issued a temporary restraining order to enjoin
petitioner from enforcing his letter-order of October 16, 1990 pending the hearing on
the motion for writ of preliminary injunction.

On December 17, 1990, the trial court issued an order upholding the validity of
Ordinance No. 86 s. 1990 of the Municipality' of Paraaque and enjoining petitioner
Brig. Gen. Macasiano from enforcing his letter-order against respondent Palanyag.

Hence, this petition was filed by the petitioner thru the Office of the Solicitor General
alleging grave abuse of discretion tantamount to lack or excess of jurisdiction on the
part of the trial judge in issuing the assailed order.
The sole issue to be resolved in this case is whether or not an ordinance or resolution
issued by the municipal council of Paraaque authorizing the lease and use of public
streets or thoroughfares as sites for flea markets is valid.

The Solicitor General, in behalf of petitioner, contends that municipal roads are used for
public service and are therefore public properties; that as such, they cannot be subject
to private appropriation or private contract by any person, even by the respondent
Municipality of Paraaque. Petitioner submits that a property already dedicated to public
use cannot be used for another public purpose and that absent a clear showing that the
Municipality of Paraaque has been granted by the legislature specific authority to
convert a property already in public use to another public use, respondent municipality
is, therefore, bereft of any authority to close municipal roads for the establishment of a
flea market. Petitioner also submits that assuming that the respondent municipality is
authorized to close streets, it failed to comply with the conditions set forth by the
Metropolitan Manila Authority for the approval of the ordinance providing for the
establishment of flea markets on public streets. Lastly, petitioner contends that by
allowing the municipal streets to be used by market vendors the municipal council of
respondent municipality violated its duty under the Local Government Code to promote
the general welfare of the residents of the municipality.

In upholding the legality of the disputed ordinance, the trial court ruled:

. . . that Chanter II Section 10 of the Local Government Code is a


statutory grant of power given to local government units, the Municipality
of Paraaque as such, is empowered under that law to close its roads,
streets or alley subject to limitations stated therein (i.e., that it is in
accordance with existing laws and the provisions of this code).

xxx xxx xxx

The actuation of the respondent Brig. Gen. Levi Macasiano, though


apparently within its power is in fact an encroachment of power legally
vested to the municipality, precisely because when the municipality
enacted the ordinance in question the authority of the respondent as
Police Superintendent ceases to be operative on the ground that the
streets covered by the ordinance ceases to be a public thoroughfare. (pp.
33-34, Rollo)

We find the petition meritorious. In resolving the question of whether the disputed
municipal ordinance authorizing the flea market on the public streets is valid, it is
necessary to examine the laws in force during the time the said ordinance was enacted,
namely, Batas Pambansa Blg. 337, otherwise known as Local Government Code, in
connection with established principles embodied in the Civil Code an property and
settled jurisprudence on the matter.
The property of provinces, cities and municipalities is divided into property for public
use and patrimonial property (Art. 423, Civil Code). As to what consists of property for
public use, Article 424 of Civil Code states:

Art. 424. Property for public use, in the provinces, cities and
municipalities, consists of the provincial roads, city streets, the squares,
fountains, public waters, promenades, and public works for public service
paid for by said provinces, cities or municipalities.

All other property possessed by any of them is patrimonial and shall be


governed by this Code, without prejudice to the provisions of special laws.

Based on the foregoing, J. Gabriel G.G. Cruz, Bayanihan, Lt. Garcia Extension and
Opena streets are local roads used for public service and are therefore considered
public properties of respondent municipality. Properties of the local government which
are devoted to public service are deemed public and are under the absolute control of
Congress (Province of Zamboanga del Norte v. City of Zamboanga, L-24440, March 28,
1968, 22 SCRA 1334). Hence, local governments have no authority whatsoever to
control or regulate the use of public properties unless specific authority is vested upon
them by Congress. One such example of this authority given by Congress to the local
governments is the power to close roads as provided in Section 10, Chapter II of the
Local Government Code, which states:

Sec. 10. Closure of roads. A local government unit may likewise,


through its head acting pursuant to a resolution of its sangguniang and in
accordance with existing law and the provisions of this Code, close any
barangay, municipal, city or provincial road, street, alley, park or
square. No such way or place or any part of thereof shall be close without
indemnifying any person prejudiced thereby. A property thus withdrawn
from public use may be used or conveyed for any purpose for which other
real property belonging to the local unit concerned might be lawfully used
or conveyed. (Emphasis ours).

However, the aforestated legal provision which gives authority to local government
units to close roads and other similar public places should be read and interpreted in
accordance with basic principles already established by law. These basic principles have
the effect of limiting such authority of the province, city or municipality to close a public
street or thoroughfare. Article 424 of the Civil Code lays down the basic principle that
properties of public dominion devoted to public use and made available to the public in
general are outside the commerce of man and cannot be disposed of or leased by the
local government unit to private persons. Aside from the requirement of due process
which should be complied with before closing a road, street or park, the closure should
be for the sole purpose of withdrawing the road or other public property from public
use when circumstances show that such property is no longer intended or necessary for
public use or public service. When it is already withdrawn from public use, the property
then becomes patrimonial property of the local government unit concerned (Article 422,
Civil Code; Cebu Oxygen, etc. et al. v. Bercilles, et al., G.R. No. L-40474, August 29,
1975, 66 SCRA 481). It is only then that the respondent municipality can "use or convey
them for any purpose for which other real property belonging to the local unit
concerned might be lawfully used or conveyed" in accordance with the last sentence of
Section 10, Chapter II of Blg. 337, known as Local Government Code. In one case, the
City Council of Cebu, through a resolution, declared the terminal road of M. Borces
Street, Mabolo, Cebu City as an abandoned road, the same not being included in the
City Development Plan. Thereafter, the City Council passes another resolution
authorizing the sale of the said abandoned road through public bidding. We held therein
that the City of Cebu is empowered to close a city street and to vacate or withdraw the
same from public use. Such withdrawn portion becomes patrimonial property which can
be the object of an ordinary contract (Cebu Oxygen and Acetylene Co., Inc. v. Bercilles,
et al., G.R. No.
L-40474, August 29, 1975, 66 SCRA 481). However, those roads and streets which are
available to the public in general and ordinarily used for vehicular traffic are still
considered public property devoted to public use. In such case, the local government
has no power to use it for another purpose or to dispose of or lease it to private
persons. This limitation on the authority of the local government over public properties
has been discussed and settled by this Court en banc in "Francisco V. Dacanay,
petitioner v. Mayor Macaria Asistio, Jr., et al., respondents, G.R. No. 93654, May 6,
1992." This Court ruled:

There is no doubt that the disputed areas from which the private
respondents' market stalls are sought to be evicted are public streets, as
found by the trial court in Civil Case No. C-12921. A public street is
property for public use hence outside the commerce of man (Arts. 420,
424, Civil Code). Being outside the commerce of man, it may not be the
subject of lease or others contract (Villanueva, et al. v. Castaeda and
Macalino, 15 SCRA 142 citing the Municipality of Cavite v. Rojas, 30 SCRA
602; Espiritu v. Municipal Council of Pozorrubio, 102 Phil. 869; And Muyot
v. De la Fuente, 48 O.G. 4860).

As the stallholders pay fees to the City Government for the right to occupy
portions of the public street, the City Government, contrary to law, has
been leasing portions of the streets to them. Such leases or licenses are
null and void for being contrary to law. The right of the public to use the
city streets may not be bargained away through contract. The interests of
a few should not prevail over the good of the greater number in the
community whose health, peace, safety, good order and general welfare,
the respondent city officials are under legal obligation to protect.
The Executive Order issued by acting Mayor Robles authorizing the use of
Heroes del '96 Street as a vending area for stallholders who were granted
licenses by the city government contravenes the general law that reserves
city streets and roads for public use. Mayor Robles' Executive Order may
not infringe upon the vested right of the public to use city streets for the
purpose they were intended to serve: i.e., as arteries of travel for vehicles
and pedestrians.

Even assuming, in gratia argumenti, that respondent municipality has the authority to
pass the disputed ordinance, the same cannot be validly implemented because it cannot
be considered approved by the Metropolitan Manila Authority due to non-compliance by
respondent municipality of the conditions imposed by the former for the approval of the
ordinance, to wit:

1. That the aforenamed streets are not used for vehicular traffic, and that
the majority of the residents do(es) not oppose the establishment of the
flea market/vending areas thereon;

2. That the 2-meter middle road to be used as flea market/vending area


shall be marked distinctly, and that the 2 meters on both sides of the road
shall be used by pedestrians;

3. That the time during which the vending area is to be used shall be
clearly designated;

4. That the use of the vending areas shall be temporary and shall be
closed once the reclaimed areas are developed and donated by the Public
Estate Authority. (p. 38, Rollo)

Respondent municipality has not shown any iota of proof that it has complied with the
foregoing conditions precedent to the approval of the ordinance. The allegations of
respondent municipality that the closed streets were not used for vehicular traffic and
that the majority of the residents do not oppose the establishment of a flea market on
said streets are unsupported by any evidence that will show that this first condition has
been met. Likewise, the designation by respondents of a time schedule during which
the flea market shall operate is absent.

Further, it is of public notice that the streets along Baclaran area are congested with
people, houses and traffic brought about by the proliferation of vendors occupying the
streets. To license and allow the establishment of a flea market along J. Gabriel, G.G.
Cruz, Bayanihan, Lt. Garcia Extension and Opena streets in Baclaran would not help in
solving the problem of congestion. We take note of the other observations of the
Solicitor General when he said:
. . . There have been many instances of emergencies and fires where
ambulances and fire engines, instead of using the roads for a more direct
access to the fire area, have to maneuver and look for other streets which
are not occupied by stalls and vendors thereby losing valuable time which
could, otherwise, have been spent in saving properties and lives.

Along G.G. Cruz Street is a hospital, the St. Rita Hospital. However, its
ambulances and the people rushing their patients to the hospital cannot
pass through G.G. Cruz because of the stalls and the vendors. One can
only imagine the tragedy of losing a life just because of a few seconds
delay brought about by the inaccessibility of the streets leading to the
hospital.

The children, too, suffer. In view of the occupancy of the roads by stalls
and vendors, normal transportation flow is disrupted and school children
have to get off at a distance still far from their schools and walk, rain or
shine.

Indeed one can only imagine the garbage and litter left by vendors on the
streets at the end of the day. Needless to say, these cause further
pollution, sickness and deterioration of health of the residents therein.
(pp. 21-22, Rollo)

Respondents do not refute the truth of the foregoing findings and observations of
petitioners. Instead, respondents want this Court to focus its attention solely on the
argument that the use of public spaces for the establishment of a flea market is well
within the powers granted by law to a local government which should not be interfered
with by the courts.

Verily, the powers of a local government unit are not absolute. They are subject to
limitations laid down by toe Constitution and the laws such as our Civil Code. Moreover,
the exercise of such powers should be subservient to paramount considerations of
health and well-being of the members of the community. Every local government unit
has the sworn obligation to enact measures that will enhance the public health, safety
and convenience, maintain peace and order, and promote the general prosperity of the
inhabitants of the local units. Based on this objective, the local government should
refrain from acting towards that which might prejudice or adversely affect the general
welfare.

As what we have said in the Dacanay case, the general public have a legal right to
demand the demolition of the illegally constructed stalls in public roads and streets and
the officials of respondent municipality have the corresponding duty arising from public
office to clear the city streets and restore them to their specific public purpose.
The instant case as well as the Dacanay case, involves an ordinance which is void and
illegal for lack of basis and authority in laws applicable during its time. However, at this
point, We find it worthy to note that Batas Pambansa Blg. 337, known as Local
Government Lode, has already been repealed by Republic Act No. 7160 known as Local
Government Code of 1991 which took effect on January 1, 1992. Section 5(d) of the
new Code provides that rights and obligations existing on the date of effectivity of the
new Code and arising out of contracts or any other source of prestation involving a local
government unit shall be governed by the original terms and conditions of the said
contracts or the law in force at the time such rights were vested.

ACCORDINGLY, the petition is GRANTED and the decision of the respondent Regional
Trial Court dated December 17, 1990 which granted the writ of preliminary injunction
enjoining petitioner as PNP Superintendent, Metropolitan Traffic Command from
enforcing the demolition of market stalls along J. Gabriel, G.G. Cruz, Bayanihan, Lt.
Garcia Extension and Opena streets is hereby RESERVED and SET ASIDE.

SO ORDERED.

Narvasa, C.J., Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin, Grio-Aquino, Regalado,
Davide, Jr., Romero, Nocon and Bellosillo, JJ., concur.
G.R. No. 192896 July 24, 2013

DREAM VILLAGE NEIGHBORHOOD ASSOCIATION, INC., represented by its


Incumbent President, GREG SERIEGO, Petitioner,
vs.
BASES DEVELOPMENT AUTHORITY, Respondent.

DECISION

REYES, J.:

Before us on Petition for Review1 under Rule 45 of the Rules of Court is the
Decision2 dated September 10, 2009 and Resolution3 dated July 13, 2010 of the Court
of Appeals (CA) in CA-G.R. SP No. 85228 nullifying and setting aside for lack of
jurisdiction the Resolution4 dated April 28, 2004 of the Commission on the Settlement of
Land Problems (COSLAP) in COS LAP Case No. 99-500. The fallo of the assailed COS
LAP Resolution reads, as follows:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. Declaring the subject property, covering an area of 78,466 square meters,


now being occupied by the members of the Dream Village Neighborhood
Association, Inc. to be outside of Swo-00-0001302 BCDA property.

2. In accordance with the tenets of social justice, members of said association


are advised to apply for sales patent on their respective occupied lots with the
Land Management Bureau, DENR-NCR, pursuant to R.A. Nos. 274 and 730.

3. Directing the Land Management Bureau-DENR-NCR to process the sales


patent application of complainants pursuant to existing laws and regulation.

4. The peaceful possession of actual occupants be respected by the respondents.

SO ORDERED.5

Antecedent Facts

Petitioner Dream Village Neighborhood Association, Inc. (Dream Village) claims to


represent more than 2,000 families who have been occupying a 78,466-square meter
lot in Western Bicutan, Taguig City since 1985 "in the concept of owners continuously,
exclusively and notoriously."6 The lot used to be part of the Hacienda de Maricaban
(Maricaban), owned by Dolores Casal y Ochoa and registered under a Torrens
title,7 Original Certificate of Title (OCT) No. 291, issued on October 17, 1906 by the
Registry of Deeds of Rizal.8 Maricaban covered several parcels of land with a total area
of over 2,544 hectares spread out over Makati, Pasig, Taguig, Pasay, and Paraaque.9
Following the purchase of Maricaban by the government of the United States of
America (USA) early in the American colonial period, to be converted into the military
reservation known as Fort William Mckinley, Transfer Certificate of Title (TCT) No. 192
was issued in the name of the USA to cancel OCT No. 291.10 The US government later
transferred 30 has. of Maricaban to the Manila Railroad Company, for which TCT No.
192 was cancelled by TCT Nos. 1218 and 1219, the first in the name of the Manila
Railroad Company for 30 has., and the second in the name of the USA for the rest of
the Maricaban property.11

On January 29, 1914, TCT No. 1219 was cancelled and replaced by TCT No. 1688, and
later that year, on September 15, 1914, TCT No. 1688 was cancelled and replaced by
TCT No. 2288, both times in the name of the USA.12 On December 6, 1956, the USA
formally ceded Fort William Mckinley to the Republic of the Philippines (Republic), and
on September 11, 1958, TCT No. 2288 was cancelled and replaced by TCT No. 61524,
this time in the name of the Republic.13 On July 12, 1957, President Carlos P. Garcia
issued Proclamation No. 423 withdrawing from sale or settlement the tracts of land
within Fort William Mckinley, now renamed Fort Bonifacio, and reserving them for
military purposes.14

On January 7, 1986, President Ferdinand E. Marcos issued Proclamation No. 2476


declaring certain portions of Fort Bonifacio alienable and disposable15 in the manner
provided under Republic Act (R.A.) Nos. 274 and 730, in relation to the Public Land
Act,16 thus allowing the sale to the settlers of home lots in Upper Bicutan, Lower
Bicutan, Signal Village, and Western Bicutan.17

On October 16, 1987, President Corazon C. Aquino issued Proclamation No. 172
amending Proclamation No. 2476 by limiting to Lots 1 and 2 of the survey Swo-13-
000298 the areas in Western Bicutan open for disposition.18

On March 13, 1992, R.A. No. 7227 was passed19 creating the Bases Conversion and
Development Authority (BCDA) to oversee and accelerate the conversion of Clark and
Subic military reservations and their extension camps (John Hay Station, Wallace Air
Station, ODonnell Transmitter Station, San Miguel Naval Communications Station and
Capas Relay Station) to productive civilian uses. Section 820 of the said law provides
that the capital of the BCDA will be provided from sales proceeds or transfers of lots in
nine (9) military camps in Metro Manila, including 723 has. of Fort Bonifacio. The law,
thus, expressly authorized the President of the Philippines "to sell the above lands, in
whole or in part, which are hereby declared alienable and disposable pursuant to the
provisions of existing laws and regulations governing sales of government
properties,"21 specifically to raise capital for the BCDA. Titles to the camps were
transferred to the BCDA for this purpose,22 and TCT No. 61524 was cancelled on
January 3, 1995 by TCT Nos. 23888, 23887, 23886, 22460, 23889, 23890, and 23891,
now in the name of the BCDA.23
Excepted from disposition by the BCDA are: a) approximately 148.80 has. reserved for
the National Capital Region (NCR) Security Brigade, Philippine Army officers housing
area, and Philippine National Police jails and support services (presently known as Camp
Bagong Diwa); b) approximately 99.91 has. in Villamor Air Base for the Presidential
Airlift Wing, one squadron of helicopters for the NCR and respective security units; c)
twenty one (21) areas segregated by various presidential proclamations; and d) a
proposed 30.15 has. as relocation site for families to be affected by the construction of
Circumferential Road 5 and Radial Road 4, provided that the boundaries and technical
description of these exempt areas shall be determined by an actual ground survey.24

Now charging the BCDA of wrongfully asserting title to Dream Village and unlawfully
subjecting its members to summary demolition, resulting in unrest and tensions among
the residents,25 on November 22, 1999, the latter filed a letter-complaint with the
COSLAP to seek its assistance in the verification survey of the subject 78,466-sq m
property, which they claimed is within Lot 1 of Swo-13-000298 and thus is covered by
Proclamation No. 172. They claim that they have been occupying the area for thirty
(30) years "in the concept of owners continuously, exclusively and notoriously for
several years," and have built their houses of sturdy materials thereon and introduced
paved roads, drainage and recreational and religious facilities. Dream Village, thus,
asserts that the lot is not among those transferred to the BCDA under R.A. No. 7227,
and therefore patent applications by the occupants should be processed by the Land
Management Bureau (LMB).

On August 15, 2000, Dream Village formalized its complaint by filing an Amended
Petition26 in the COSLAP. Among the reliefs it sought were:

d. DECLARING the subject property as alienable and disposable by virtue of


applicable laws;

e. Declaring the portion of Lot 1 of subdivision Plan SWO-13-000298, situated in


the barrio of Western Bicutan, Taguig, Metro Manila, which is presently being
occupied by herein petitioner as within the coverage of Proclamation Nos. 2476
and 172 and outside the claim of AFP-RSBS INDUSTRIAL PARK COMPLEX and/or
BASES CONVESION DEVELOPMENT AUTHORITY.

f. ORDERING the Land Management Bureau to process the application of the


ASSOCIATION members for the purchase of their respective lots under the
provisions of Acts Nos. 274 and 730. (Underscoring supplied)

Respondent BCDA in its Answer28 dated November 23, 2000 questioned the jurisdiction
of the COSLAP to hear Dream Villages complaint, while asserting its title to the subject
property pursuant to R.A. No. 7227. It argued that under Executive Order (E.O.) No.
561 which created the COSLAP, its task is merely to coordinate the various government
offices and agencies involved in the settlement of land problems or disputes, adding
that BCDA does not fall in the enumeration in Section 3 of E.O. No. 561, it being neither
a pastureland-lease holder, a timber concessionaire, or a government reservation
grantee, but the holder of patrimonial government property which cannot be the
subject of a petition for classification, release or subdivision by the occupants of Dream
Village.

In its Resolution29 dated April 28, 2004, the COSLAP narrated that it called a mediation
conference on March 22, 2001, during which the parties agreed to have a
relocation/verification survey conducted of the subject lot. On April 4, 2001, the
COSLAP wrote to the Department of Environment and Natural Resources (DENR)-
Community Environment and Natural Resources Office-NCR requesting the survey,
which would also include Swo-00-0001302, covering the adjacent AFP-RSBS Industrial
Park established by Proclamation No. 1218 on May 8, 1998 as well as the abandoned
Circumferential Road 5 (C-5 Road).30

On April 1, 2004, the COSLAP received the final report of the verification survey and a
blueprint copy of the survey plan from Atty. Rizaldy Barcelo, Regional Technical Director
for Lands of DENR. Specifically, Item No. 3 of the DENR report states:

3. Lot-1, Swo-000298 is inside Proclamation 172. Dream Village Neighborhood


Association, Inc. is outside Lot-1, Swo-13-000298 and inside Lot-10, 11 & Portion of Lot
13, Swo-00-0001302 with an actual area of 78,466 square meters. Likewise, the area
actually is outside Swo-00-0001302 of BCDA.31 (Emphasis ours and underscoring
supplied)

COSLAP Ruling

On the basis of the DENRs verification survey report, the COSLAP resolved that Dream
Village lies outside of BCDA, and particularly, outside of Swo-00-0001302, and thus
directed the LMB of the DENR to process the applications of Dream Villages members
for sales patent, noting that in view of the length of time that they "have been openly,
continuously and notoriously occupying the subject property in the concept of an
owner, x x x they are qualified to apply for sales patent on their respective occupied
lots pursuant to R.A. Nos. 274 and 730 in relation to the provisions of the Public Land
Act."32

On the question of its jurisdiction over the complaint, the COSLAP cited the likelihood
that the summary eviction by the BCDA of more than 2,000 families in Dream Village
could stir up serious social unrest, and maintained that Section 3(2) of E.O. No. 561
authorizes it to "assume jurisdiction and resolve land problems or disputes which are
critical and explosive in nature considering, for instance, the large number of parties
involved, the presence or emergence of social tension or unrest, or other similar critical
situations requiring immediate action," even as Section 3(2)(d) of E.O. No. 561 also
allows it to take cognizance of "petitions for classification, release and/or subdivision of
lands of the public domain," exactly the ultimate relief sought by Dream Village.
Rationalizing that it was created precisely to provide a more effective mechanism for
the expeditious settlement of land problems "in general," the COSLAP invoked as its
authority the 1990 case of Baaga v. COSLAP,33 where this Court said:

It is true that Executive Order No. 561 provides that the COSLAP may take cognizance
of cases which are "critical and explosive in nature considering, for instance, the large
number of parties involved, the presence or emergence of social tension or unrest, or
other similar critical situations requiring immediate action." However, the use of the
word "may" does not mean that the COSLAPs jurisdiction is merely confined to the
above mentioned cases. The provisions of the said Executive Order are clear that the
COSLAP was created as a means of providing a more effective mechanism for the
expeditious settlement of land problems in general, which are frequently the source of
conflicts among settlers, landowners and cultural minorities. Besides, the COSLAP
merely took over from the abolished PACLAP whose functions, including its jurisdiction,
power and authority to act on, decide and resolve land disputes (Sec. 2, P.D. No. 832)
were all assumed by it. The said Executive Order No. 561 containing said provision,
being enacted only on September 21, 1979, cannot affect the exercise of jurisdiction of
the PACLAP Provincial Committee of Koronadal on September 20, 1978. Neither can it
affect the decision of the COSLAP which merely affirmed said exercise of jurisdiction.34

In its Motion for Reconsideration35 filed on May 20, 2004, the BCDA questioned the
validity of the survey results since it was conducted without its representatives present,
at the same time denying that it received a notification of the DENR verification
survey.36 It maintained that there is no basis for the COSLAPs finding that the members
of Dream Village were in open, continuous, and adverse possession in the concept of
owner, because not only is the property not among those declared alienable and
disposable, but it is a titled patrimonial property of the State.37

In the Order38 dated June 17, 2004, the COSLAP denied BCDAs Motion for
Reconsideration, insisting that it had due notice of the verification survey, while also
noting that although the BCDA wanted to postpone the verification survey due to its
tight schedule, it actually stalled the survey when it failed to suggest an alternative
survey date to ensure its presence.

CA Ruling

On Petition for Review39 to the CA, the BCDA argued that the dispute is outside the
jurisdiction of the COSLAP because of the lands history of private ownership and
because it is registered under an indefeasible Torrens title40; that Proclamation No. 172
covers only Lots 1 and 2 of Swo-13-000298 in Western Bicutan, whereas Dream Village
occupies Lots 10, 11 and part of 13 of Swo-00-0001302, which also belongs to the
BCDA 41; that the COSLAP resolution is based on an erroneous DENR report stating that
Dream Village is outside of BCDA, because Lots 10, 11, and portion of Lot 13 of Swo-
00-0001302 are within the DA42; that the COSLAP was not justified in ignoring BCDAs
request to postpone the survey to the succeeding year because the presence of its
representatives in such an important verification survey was indispensable for the
impartiality of the survey aimed at resolving a highly volatile situation43; that the
COSLAP is a mere coordinating administrative agency with limited jurisdiction44; and,
that the present case is not among those enumerated in Section 3 of E.O. No. 56145.

The COSLAP, on the other hand, maintained that Section 3(2)(e) of E.O. No. 561
provides that it may assume jurisdiction and resolve land problems or disputes in "other
similar land problems of grave urgency and magnitude,"46 and the present case is one
such problem.

The CA in its Decision47 dated September 10, 2009 ruled that the COSLAP has no
jurisdiction over the complaint because the question of whether Dream Village is within
the areas declared as available for disposition in Proclamation No. 172 is beyond its
competence to determine, even as the land in dispute has been under a private title
since 1906, and presently its title is held by a government agency, the BCDA, in
contrast to the case of Baaga relied upon by Dream Village, where the disputed land
was part of the public domain and the disputants were applicants for sales patent
thereto.

Dream Villages motion for reconsideration was denied in the appellate courts
Order48 of July 13, 2010.

Petition for Review in the Supreme Court

On petition for review on certiorari to this Court, Dream Village interposes the following
issues:

IN ANNULLING THE RESOLUTION OF COSLAP IN COSLAP CASE NO. 99-500, THE


HONORABLE CA DECIDED THE CASE IN A MANNER NOT CONSISTENT WITH LAW AND
APPLICABLE DECISIONS OF THIS HONORABLE COURT;

THE HONORABLE CA ERRED IN RULING THAT COSLAP HAD NO JURISDICTION OVER


THE CONTROVERSY BETWEEN THE PARTIES HEREIN.49

The Courts Ruling

We find no merit in the petition.

The BCDA holds title to Fort Bonifacio.


That the BCDA has title to Fort Bonifacio has long been decided with finality. In
Samahan ng Masang Pilipino sa Makati, Inc. v. BCDA,50 it was categorically ruled as
follows:

First, it is unequivocal that the Philippine Government, and now the BCDA, has title and
ownership over Fort Bonifacio. The case of Acting Registrars of Land Titles and Deeds
of Pasay City, Pasig and Makati is final and conclusive on the ownership of the then
Hacienda de Maricaban estate by the Republic of the Philippines. Clearly, the issue on
the ownership of the subject lands in Fort Bonifacio is laid to rest. Other than their view
that the USA is still the owner of the subject lots, petitioner has not put forward any
claim of ownership or interest in them.51

The facts in Samahan ng Masang Pilipino sa Makati are essentially not much different
from the controversy below. There, 20,000 families were long-time residents occupying
98 has. of Fort Bonifacio in Makati City, who vainly sought to avert their eviction and
the demolition of their houses by the BCDA upon a claim that the land was owned by
the USA under TCT No. 2288. The Supreme Court found that TCT No. 2288 had in fact
been cancelled by TCT No. 61524 in the name of the Republic, which title was in turn
cancelled on January 3, 1995 by TCT Nos. 23888, 23887, 23886, 22460, 23889, 23890,
and 23891, all in the name of the BCDA. The Court ruled that the BCDAs aforesaid
titles over Fort Bonifacio are valid, indefeasible and beyond question, since TCT No.
61524 was cancelled in favor of BCDA pursuant to an explicit authority under R.A. No.
7227, the legal basis for BCDAs takeover and management of the subject lots.52

Dream Village sits on the


abandoned C-5 Road, which lies
outside the area declared in
Proclamation Nos. 2476 and 172 as
alienable and disposable.

Pursuant to Proclamation No. 2476, the following surveys were conducted by the
Bureau of Lands to delimit the boundaries of the areas excluded from the coverage of
Proclamation No. 423:

Barangay Survey Plan Date Approved

1. Lower Bicutan SWO-13-000253 October 21, 1986

2. Signal Village SWO-13-000258 May 13, 1986

3. Upper Bicutan SWO-13-000258 May 13, 1986

4. Western Bicutan SWO-13-000298 January 15, 198753


However, the survey plan for Western Bicutan, Swo-13-000298, shows that Lots 3, 4, 5
and 6 thereof are inside the area segregated for the Libingan ng mga Bayani under
Proclamation No. 208, which then leaves only Lots 1 and 2 of Swo-13-000298 as
available for disposition. For this reason, it was necessary to amend Proclamation No.
2476. Thus, in Proclamation No. 172 only Lots 1 and 2 of Swo-13-000298 are declared
alienable and disposable.54

The DENR verification survey report states that Dream Village is not situated in Lot 1 of
Swo-13-000298 but actually occupies Lots 10, 11 and part of 13 of Swo-00-0001302: "x
x x Dream Village is outside Lot1, SWO-13-000298 and inside Lot 10, 11 & portion of
Lot 13, SWO-00-0001302 with an actual area of 78466 square meters. The area is
actually is [sic] outside SWO-00-0001302 of BCDA."55 Inexplicably and gratuitously, the
DENR also states that the area is outside of BCDA, completely oblivious that the BCDA
holds title over the entire Fort Bonifacio, even as the BCDA asserts that Lots 10, 11 and
13 of SWO-00-0001302 are part of the abandoned right-of-way of C-5 Road. This area
is described as lying north of Lot 1 of Swo-13-000298 and of Lots 3, 4, 5 and 6 of Swo-
13-000298 (Western Bicutan) inside the Libingan ng mga Bayani, and the boundary line
of Lot 1 mentioned as C-5 Road is really the proposed alignment of C-5 Road, which
was abandoned when, as constructed, it was made to traverse northward into the
Libingan ng mga Bayani. Dream Village has not disputed this assertion.

The mere fact that the original plan for C-5 Road to cross Swo-00-0001302 was
abandoned by deviating it northward to traverse the southern part of Libingan ng mga
Bayani does not signify abandonment by the government of the bypassed lots, nor that
these lots would then become alienable and disposable. They remain under the title of
the BCDA, even as it is significant that under Section 8(d) of R.A. No. 7227, a relocation
site of 30.5 has. was to be reserved for families affected by the construction of C-5
Road. It is nowhere claimed that Lots 10, 11 and 13 of Swo-00-0001302 are part of the
said relocation site. These lots border C-5 Road in the south,56making them
commercially valuable to BCDA, a farther argument against a claim that the government
has abandoned them to Dream Village.

While property of the State or any


of its subdivisions patrimonial in
character may be the object of
prescription, those "intended for
some public service or for the
development of the national
wealth" are considered property of
public dominion and therefore not
susceptible to acquisition by
prescription.
Article 1113 of the Civil Code provides that "property of the State or any of its
subdivisions not patrimonial in character shall not be the object of prescription." Articles
420 and 421 identify what is property of public dominion and what is patrimonial
property:

Art. 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports
and bridges constructed by the State, banks, shores, roadsteads, and others of
similar character;

(2) Those 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.

Art. 421. All other property of the State, which is not of the character stated in the
preceding article, is patrimonial property.

One question laid before us is whether the area occupied by Dream Village is
susceptible of acquisition by prescription. In Heirs of Mario Malabanan v. Republic,57 it
was pointed out that from the moment R.A. No. 7227 was enacted, the subject military
lands in Metro Manila

became alienable and disposable. However, it was also clarified that the said lands did
not thereby become patrimonial, since the BCDA law makes the express reservation
that they are to be sold in order to raise funds for the conversion of the former
American bases in Clark and Subic. The Court noted that the purpose of the law can be
tied to either "public service" or "the development of national wealth" under Article
420(2) of the Civil Code, such that the lands remain property of the public dominion,
albeit their status is now alienable and disposable. The Court then explained that it is
only upon their sale to a private person or entity as authorized by the BCDA law that
they become private property and cease to be property of the public dominion:58

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."59

Thus, under Article 422 of the Civil Code, public domain lands become patrimonial
property only if there is a declaration that these are alienable or disposable, together
with an express government manifestation that the property is already patrimonial or
no longer retained for public service or the development of national wealth. Only when
the property has become patrimonial can the prescriptive period for the acquisition of
property of the public dominion begin to run. Also under Section 14(2) of Presidential
Decree (P.D.) No. 1529, it is provided that before acquisitive prescription can
commence, the property sought to be registered must not only be classified as alienable
and disposable, it must also be expressly declared by the State that it is no longer
intended for public service or the development of the national wealth, or that the
property has been converted into patrimonial. Absent such an express declaration by
the State, the land remains to be property of public dominion.60

Since the issuance of Proclamation No. 423 in 1957, vast portions of the former
Maricaban have been legally disposed to settlers, besides those segregated for public or
government use. Proclamation No. 1217 (1973) established the Maharlika Village in
Bicutan, Taguig to serve the needs of resident Muslims of Metro Manila; Proclamation
No. 2476 (1986), as amended by Proclamation No. 172 (1987), declared more than 400
has. of Maricaban in Upper and Lower Bicutan, Signal Village, and Western Bicutan as
alienable and disposable; Proclamation No. 518 (1990) formally exempted from
Proclamation No. 423 the Barangays of Cembo, South Cembo, West Rembo, East
Rembo, Comembo, Pembo and Pitogo, comprising 314 has., and declared them open
for disposition.

The above proclamations notwithstanding, Fort Bonifacio remains property of public


dominion of the State, because although declared alienable and disposable, it is
reserved for some public service or for the development of the national wealth, in this
case, for the conversion of military reservations in the country to productive civilian
uses.61Needless to say, the acquisitive prescription asserted by Dream Village has not
even begun to run.

Ownership of a land registered


under a Torrens title cannot be lost
by prescription or adverse
possession.

Dream Village has been unable to dispute BCDAs claim that Lots 10, 11 and part of 13
of Swo-00-0001302 are the abandoned right-of-way of C-5 Road, which is within the
vast titled territory of Fort Bonifacio. We have already established that these lots have
not been declared alienable and disposable under Proclamation Nos. 2476 or 172.

Moreover, it is a settled rule that lands under a Torrens title cannot be acquired by
prescription or adverse possession.62 Section 47 of P.D. No. 1529, the Property
Registration Decree, expressly provides that no title to registered land in derogation of
the title of the registered owner shall be acquired by prescription or adverse possession.
And, although the registered landowner may still lose his right to recover the
possession of his registered property by reason of laches,63 nowhere has Dream Village
alleged or proved laches, which has been defined as such neglect or omission to assert
a right, taken in conjunction with lapse of time and other circumstances causing
prejudice to an adverse party, as will operate as a bar in equity. Put any way, it is a
delay in the assertion of a right which works disadvantage to another because of the
inequity founded on some change in the condition or relations of the property or
parties. It is based on public policy which, for the peace of society, ordains that relief
will be denied to a stale demand which otherwise could be a valid claim.64

The subject property having been


expressly reserved for a specific
public purpose, the COSLAP
cannot exercise jurisdiction over the
complaint of the Dream Village
settlers.

BCDA has repeatedly asserted that the COSLAP has no jurisdiction to hear Dream
Villages complaint. Concurring, the CA has ruled that questions as to the physical
identity of Dream Village and whether it lies in Lots 10, 11 and 13 of Swo-00-0001302,
or whether Proclamation No. 172 has released the disputed area for disposition are
issues which are "manifestly beyond the scope of the COSLAPs jurisdiction vis--vis
Paragraph 2, Section 3 of E.O. No. 561,"65 rendering its Resolution a patent nullity and
its pronouncements void. Thus, the CA said, under Section 3 of E.O. No. 561, the
COSLAPs duty would have been to refer the conflict to another tribunal or agency of
government in view of the serious ramifications of the disputed claims:

In fine, it is apparent that the COSLAP acted outside its jurisdiction in taking cognizance
of the case. It would have been more prudent if the COSLAP has [sic] just referred the
controversy to the proper forum in order to fully thresh out the ramifications of the
dispute at bar. As it is, the impugned Resolution is a patent nullity since the tribunal
which rendered it lacks jurisdiction. Thus, the pronouncements contained therein are
void. "We have consistently ruled that a judgment for want of jurisdiction is no
judgment at all. It cannot be the source of any right or the creator of any obligation. All
acts performed pursuant to it and all claims emanating from it have no legal
effect."66 (Citation omitted)

We add that Fort Bonifacio has been reserved for a declared specific public purpose
under R.A. No. 7227, which unfortunately for Dream Village does not encompass the
present demands of its members. Indeed, this purpose was the very reason why title to
Fort Bonifacio has been transferred to the BCDA, and it is this very purpose which takes
the dispute out of the direct jurisdiction of the COSLAP. A review of the history of the
COSLAP will readily clarify that its jurisdiction is limited to disputes over public lands not
reserved or declared for a public use or purpose.

On July 31, 1970, President Marcos issued E.O. No. 251 creating the Presidential Action
Committee on Land Problems (PACLAP) to expedite and coordinate the investigation
and resolution of all kinds of land disputes between settlers, streamline and shorten
administrative procedures, adopt bold and decisive measures to solve land problems, or
recommend other solutions.67 E.O. No. 305, issued on March 19, 1971, reconstituted
the PACLAP and gave it exclusive jurisdiction over all cases involving public lands and
other lands of the public domain,68 as well as adjudicatory powers phrased in broad
terms: "To investigate, coordinate, and resolve expeditiously land disputes, streamline
administrative proceedings, and, in general, to adopt bold and decisive measures to
solve problems involving public lands and lands of the public domain."69

On November 27, 1975, P.D. No. 832 reorganized the PACLAP and enlarged its
functions and duties. Section 2 thereof even granted it quasi judicial functions, to wit:

Sec. 2. Functions and duties of the PACLAP. The PACLAP shall have the following
functions and duties:

1. Direct and coordinate the activities, particularly the investigation work, of the
various government agencies and agencies involved in land problems or
disputes, and streamline administrative procedures to relieve small settlers and
landholders and members of cultural minorities of the expense and time-
consuming delay attendant to the solution of such problems or disputes;

2. Refer for immediate action any land problem or dispute brought to the
attention of the PACLAP, to any member agency having jurisdiction thereof:
Provided, That when the Executive Committee decides to act on a case, its
resolution, order or decision thereon shall have the force and effect of a regular
administrative resolution, order or decision, and shall be binding upon the parties
therein involved and upon the member agency having jurisdiction thereof;

xxxx

4. Evolve and implement a system of procedure for the speedy investigation and
resolution of land disputes or problems at provincial level, if possible. (Underscoring
supplied)

On September 21, 1979, E.O. No. 561 abolished the PACLAP and created the COSLAP
to be a more effective administrative body to provide a mechanism for the expeditious
settlement of land problems among small settlers, landowners and members of the
cultural minorities to avoid social unrest.70 Paragraph 2, Section 3 of E.O No. 561 now
specifically enumerates the instances when the COSLAP can exercise its adjudicatory
functions:

Sec. 3. Powers and Functions. The Commission shall have the following powers and
functions:

1. Coordinate the activities, particularly the investigation work, of the various


government offices and agencies involved in the settlement of land problems or
disputes, and streamline administrative procedures to relieve small settlers and
landholders and members of cultural minorities of the expense and time
consuming delay attendant to the solution of such problems or disputes;
2. Refer and follow-up for immediate action by the agency having appropriate
jurisdiction any land problem or dispute referred to the Commission: Provided,
That the Commission may, in the following cases, assume jurisdiction and
resolve land problems or disputes which are critical and explosive in nature
considering, for instance, the large number of the parties involved, the presence
or emergence of social tension or unrest, or other similar critical situations
requiring immediate action:

(a) Between occupants/squatters and pasture lease agreement holders or


timber concessionaires;

(b) Between occupants/squatters and government reservation grantees;

(c) Between occupants/squatters and public land claimants or applicants;

(d) Petitions for classification, release and/or subdivision of lands of the


public domain; and

(e) Other similar land problems of grave urgency and magnitude.

xxxx

Citing the constant threat of summary eviction and demolition by the BCDA and the
seriousness and urgency of the reliefs sought in its Amended Petition, Dream Village
insists that the COSLAP was justified in assuming jurisdiction of COSLAP Case No. 99-
500. But in Longino v. Atty. General,71 it was held that as an administrative agency,
COSLAPs jurisdiction is limited to cases specifically mentioned in its enabling statute,
E.O. No. 561. The Supreme Court said:

Administrative agencies, like the COSLAP, are tribunals of limited jurisdiction and, as
such, could wield only such as are specifically granted to them by the enabling statutes.
x x x.

xxxx

Under the law, E.O. No. 561, the COSLAP has two options in acting on a land dispute or
problem lodged before it, namely, (a) refer the matter to the agency having appropriate
jurisdiction for settlement/resolution; or (b) assume jurisdiction if the matter is one of
those enumerated in paragraph 2(a) to (e) of the law, if such case is critical and
explosive in nature, taking into account the large number of the parties involved, the
presence or emergence of social tension or unrest, or other similar critical situations
requiring immediate action. In resolving whether to assume jurisdiction over a case or
to refer the same to the particular agency concerned, the COSLAP has to consider the
nature or classification of the land involved, the parties to the case, the nature of the
questions raised, and the need for immediate and urgent action thereon to prevent
injuries to persons and damage or destruction to property. The law does not vest
jurisdiction on the COSLAP over any land dispute or problem.72 (Citation omitted)

The Longino ruling has been consistently cited in subsequent COSLAP cases, among
them Davao New Town Development Corp. v. COSLAP,73 Barranco v. COSLAP,74 NHA v.
COSLAP,75 Cayabyab v. de Aquino,76 Ga, Jr. v. Tubungan,77 Machado v. Gatdula,78 and
Vda. de Herrera v. Bernardo.79

Thus, in Machado, it was held that the COSLAP cannot invoke Section 3(2)(e) of E.O.
No. 561 to assume jurisdiction over "other similar land problems of grave urgency,"
since the statutory construction principle of ejusdem generis prescribes that where
general words follow an enumeration of persons or things, by words of a particular and
specific meaning, such general words are not to be construed in their widest extent but
are to be held as applying only to persons or things of the same kind as those
specifically mentioned.80 Following this rule, COSLAPs jurisdiction is limited to disputes
involving lands in which the government has a proprietary or regulatory interest,81 or
public lands covered with a specific license from the government such as a pasture
lease agreements, a timber concessions, or a reservation grants,82 and where
moreover, the dispute is between occupants/squatters and pasture lease agreement
holders or timber concessionaires; between occupants/squatters and government
reservation grantees; and between occupants/squatters and public land claimants or
applicants.

In Longino, the parties competed to lease a property of the Philippine National


Railways. The high court rejected COSLAPs jurisdiction, noting that the disputed lot is
not public land, and neither party was a squatter, patent lease agreement holder,
government reservation grantee, public land claimant or occupant, or a member of any
cultural minority, nor was the dispute critical and explosive in nature so as to generate
social tension or unrest, or a critical situation which required immediate action.83

In Davao New Town Development Corp., it was held that the COSLAP has no
concurrent jurisdiction with the Department of Agrarian Reform (DAR) in respect of
disputes concerning the implementation of agrarian reform laws, since "the grant of
exclusive and primary jurisdiction over agrarian reform matters on the DAR implies that
no other court, tribunal, or agency is authorized to resolve disputes properly cognizable
by the DAR."84 Thus, instead of hearing and resolving the case, COSLAP should have
simply referred private respondents complaint to the DAR or DARAB. According to the
Court:

The abovementioned proviso Section (3)(2) of E.O. No. 561, which vests COSLAP the
power to resolve land disputes, does not confer upon COSLAP blanket authority to
assume every matter referred to it. Its jurisdiction is confined only to disputes over
lands in which the government has proprietary or regulatory interest. Moreover, the
land dispute in Baaga involved parties with conflicting free patent applications which
was within the authority of PACLAP to resolve, unlike that of the instant case which is
exclusively cognizable by the DAR.85

In Barranco, COSLAP issued a writ to demolish structures encroaching into private


property.1wphi1 The Supreme court ruled that COSLAP may resolve only land disputes
"involving public lands or lands of the public domain or those covered with a specific
license from the government such as a pasture lease agreement, a timber concession,
or a reservation grant."86

In NHA, it was held that COSLAP has no jurisdiction over a boundary dispute between
two local government units, that its decision is an utter nullity correctible by certiorari,
that it can never become final and any writ of execution based on it is void, and all acts
performed pursuant to it and all claims emanating from it have no legal effect.87

In Cayabyab, it was held that "the jurisdiction of COSLAP does not extend to disputes
involving the ownership of private lands, or those already covered by a certificate of
title, as these fall exactly within the jurisdiction of the courts and other administrative
agencies."88

In Ga, Jr., it was reiterated that the COSLAP has no jurisdiction over controversies
relating to ownership and possession of private lands, and thus, the failure of
respondents to properly appeal from the COSLAP decision before the appropriate court
was held not fatal to the petition for certiorari that they eventually filed with the CA.
The latter remedy remained available despite the lapse of the period to appeal from the
void COSLAP decision.89

In Machado, the high court ruled that COSLAP has no jurisdiction in disputes over
private lands between private parties, reiterating the essential rules contained in
Section 3 of E.O. No. 561 governing the exercise by COSLAP of its jurisdiction, to wit:

Under these terms, the COSLAP has two different rules in acting on a land dispute or
problem lodged before it, e.g., COSLAP can assume jurisdiction only if the matter is one
of those enumerated in paragraph 2(a) to (e) of the law. Otherwise, it should refer the
case to the agency having appropriate jurisdiction for settlement or resolution. In
resolving whether to assume jurisdiction over a case or to refer it to the particular
agency concerned, the COSLAP considers: (a) the nature or classification of the land
involved; (b) the parties to the case; (c) the nature of the questions raised; and (d) the
need for immediate and urgent action thereon to prevent injury to persons and damage
or destruction to property. The terms of the law clearly do not vest on the COSLAP the
general power to assume jurisdiction over any land dispute or problem. Thus, under EO
561, the instances when the COSLAP may resolve land disputes are limited only to
those involving public lands or those covered by a specific license from the government,
such as pasture lease agreements, timber concessions, or reservation
grants.90 (Citations omitted)
In Vda. de Herrera, the COSLAP assumed jurisdiction over a complaint for "interference,
disturbance, unlawful claim, harassment and trespassing" over a private parcel of land.
The CA ruled that the parties were estopped to question COSLAPs jurisdiction since
they participated actively in the proceedings. The Supreme Court, noting from the
complaint that the case actually involved a claim of title and possession of private land,
ruled that the RTC or the MTC has jurisdiction since the dispute did not fall under
Section 3, paragraph 2 (a) to (e) of E.O. No. 561, was not critical and explosive in
nature, did not involve a large number of parties, nor was there social tension or unrest
present or emergent.91

In the case at bar, COSLAP has invoked Baaga to assert its jurisdiction. There,
Guillermo Baaga had filed a free patent application with the Bureau of Lands over a
public land with an area of 30 has. Gregorio Daproza (Daproza) also filed a patent
application for the same property. The opposing claims and protests of the claimants
remained unresolved by the Bureau of Lands, and neither did it conduct an
investigation. Daproza wrote to the COSLAP, which then opted to exercise jurisdiction
over the controversy. The high court sustained COSLAP, declaring that its jurisdiction is
not confined to the cases mentioned in paragraph 2(a) to (e) of E.O. No. 561, but
includes land problems in general, which are frequently the source of conflicts among
settlers, landowners and cultural minorities.

But as the Court has since clarified in Longino and in the other cases aforecited, the
land dispute in Baaga was between private individuals who were free patent applicants
over unregistered public lands. In contrast, the present petition involves land titled to
and managed by a government agency which has been expressly reserved by law for a
specific public purpose other than for settlement. Thus, as we have advised in Longino,
the law does not vest jurisdiction on the COSLAP over any land dispute or problem, but
it has to consider the nature or classification of the land involved, the parties to the
case, the nature of the questions raised, and the need for immediate and urgent action
thereon to prevent injuries to persons and damage or destruction to property.

WHEREFORE, premises considered, the petition is DENIED.

SO ORDERED.
REPUBLIC OF THE PHILIPPINES, G.R. No. 186166

Petitioner,

Present:

CORONA,* CJ,

CARPIO, J., Chairperson,

- versus - LEONARDO-DE CASTRO,* *

PERALTA, and

MENDOZA, JJ.

JOSE T. CHING represented by his


Attorney-in-fact, ANTONIO V.
CHING,

Respondent. Promulgated:

October 20, 2010

X -------------------------------------------------------------------------------------- X

DECISION

MENDOZA, J.:
In this Petition for Review on certiorari under Rule 45, the Republic of the
Philippines, represented by the Office of the Solicitor General (OSG), assails the
November 28, 2008 Decision[1] of the Court of Appeals (CA), in CA-G.R. CV No. 00318-
MIN, reversing the December 3, 2002 Resolution[2] of the Regional Trial Court, Butuan
City, Branch 2 (RTC), disallowing the Application for Registration of Title of respondent
Jose Ching, represented by his Attorney-in-Fact, Antonio Ching, in Land Registration Case
No. N-290.

THE FACTS

On August 9, 1999, respondent Jose Ching, represented by his Attorney-in-Fact, Antonio


Ching, filed a verified Application for Registration of Title covering a parcel of land with
improvements identified as Lot 1, SGS-13-000037-D, being a portion of Lot 2738, GSS-
10-000043, before the RTC. The subject lot is a consolidation of three (3) contiguous lots
situated in Banza, Butuan City, Agusan del Norte, with an area of 58,229 square
meters. The first parcel of land is covered by Tax Declaration No. 96GR-11-003-0556-A;
the second parcel by Tax Declaration No. 96GR-11-003-0444-I; and the third parcel by
Tax Declaration No. 96GR-11-003-0537-A. In support of his application, respondent
attached the (a) Sketch plan;[3] (b) Technical description;[4] (c) Tracing Cloth of Plan of
Portion of Lot 2738, Gss-10-000043, which is a Segregation Plan of Portion of Lot 2738,
Gss-10-0000431, as surveyed for Jose T. Ching and duly approved by the Bureau of Land
DENR Region XIII on July 08, 1998 covering the subject land;[5] and (d) Special Power of
Attorney executed by Jose T. Ching authorizing Antonio V. Ching, Jr. to file an application
for title over the land.[6]

Respondent alleged that on April 10, 1979, he purchased the subject land from
the late former governor and Congressman Democrito O. Plaza as evidenced by a Deed
of Sale of Unregistered Lands.[7]

Initially, the RTC, acting as a land registration court, ordered respondent to show cause
why his application for registration of title should not be dismissed for his failure to state
the current assessed value of the subject land and his non-compliance with the last
paragraph of Section 17 of Presidential Decree (P.D.) No. 1529.[8]
Accordingly, on September 3, 1999, respondent filed a Verified Amended
Application[9] which the RTC found to be sufficient in form and substance. The case was
set for initial hearing on December 22, 1999.[10]

On December 16, 1999, the OSG duly deputized the Provincial Prosecutor of Agusan del
Norte to appear on behalf of the State.[11] Thereafter, on January 20, 2000, the OSG filed
an Opposition to the application for registration of title. Specifically, the OSG alleged:

(1) That neither the applicant nor his predecessors-in-interest have


been in open, continuous, exclusive and notorious possession and
occupation of the land in question since June 12, 1945 or prior thereto [Sec.
48 (b) C.A. 141, as amended by P.D. 1073];

(2) That the muniments of title and/or any tax declarations and tax
payments receipts of applicant attached to or alleged in the application, do
not constitute competent and sufficient evidence of a bona fide acquisition
of the land applied for or of his open, continuous, exclusive and notorious
possession and occupation of the land in the concept of owner since June
12, 1945 or prior and the tax declaration and tax payment receipts appear
not to be genuine and are of recent vintage;
(3) That the claim of ownership in fee simple on the basis of Spanish
title or grant can no longer be availed of by the applicant who have failed
to file an appropriate application for registration within six (6) months from
16 February 1976 under P.D. No. 892 as the instant application appears to
have been filed on December 17, 1998; and

(4) That the parcels of land applied for are portions of the public
domain belonging to the Republic of the Philippines not subject to private
appropriation.[12]
On June 28, 2001, the Department of Environment and Natural Resources likewise
filed its opposition to the application.

On December 3, 2002, the RTC resolved to dismiss the respondents application for
registration.[13] The dispositive portion reads:

IN VIEW OF THE FOREGOING, the court resolves to dismiss as it hereby


dismisses the instant application for registration of title for insufficiency of
evidence.

SO ORDERED.
The RTC was not convinced that respondents Deed of Sale sufficiently established that
he was the owner in fee simple of the land sought to be registered. The RTC wrote
[e]vidence only shows that the applicant and his vendor as predecessor-in-interest have
been in open, peaceful, notorious and exclusive possession starting from 1965. Among
the tax declarations marked Exhibits R to R-7 includes the oldest one marked Exhibit R-
7 shown in the back lower portion that it was effective beginning the year 1980, and
among the tax declarations marked Exhibit S to S-8 inclusive, the oldest one marked
Exhibit S-8 is effective in the year 1980 and among the Tax Declaration marked Exhibit T
to T-7 inclusive, the oldest one marked Exhibit T-7 shows that it began to be effective in
the year 1980 also. In the Certification (Exhibit U) issued by the Office of the City
Treasurer of Butuan shows that the payment of the realty taxes paid for the 3 parcels
started only in the year 1980.[14]

Respondent filed a motion for reconsideration and a subsequent supplemental motion for
reconsideration with attached additional tax declarations. The RTC denied both motions
in its December 11, 2003 Resolution[15] stating that it could not consider the additional
tax declarations attached in the Supplemental Motion for Reconsideration as these were
not formally offered in evidence. The RTC also noted that the additional documents were
mere photocopies and would not have any probative value because they were not in
accord with the requirements under Act 496[16] and P.D. 1529[17] that only original
muniments of title or copies thereof must be presented.

Respondent appealed the RTC ruling before the CA. Respondent claimed that the RTC
erred in dismissing the application for registration of title for insufficiency of evidence and
in failing to consider the additional tax declarations attached in his Supplemental Motion
for Reconsideration.[18]

On November 28, 2008, the CA reversed the RTCs earlier resolution and granted
respondents application for registration of title.[19] The decretal portion of said decision
reads:

WHEREFORE, the appealed Decision of the Regional Trial Court, Branch


2, Butuan City acting as land registration court, dismissing the application
for registration of title for insufficiency of evidence is hereby REVERSED and
SET ASIDE. The Appellants application for land registration is GRANTED.
SO ORDERED.[20]

The CA ruled that the RTC erred in failing to consider the additional documents
attached in respondents Supplemental Motion for Reconsideration. The CA ratiocinated:

Clearly from the foregoing tax declarations which all went


unchallenged and formed part of the record of the instant case, it could
clearly be seen that the same parcels of land had been in possession of the
petitioner-appellants (respondent) predecessors-in-interest since 1948 until
these parcels were purchased by him on 10 April 1979. Since the applicant
and his predecessors-in-interest had been in possession of the land for more
than thirty (30) years continuously, peacefully, adversely, publicly and to
the exclusion of everybody, the same was in the concept of owners. This
also means that petitioner-appellant is no longer required to prove
that the property in question is classified as alienable and
disposable land of the public domain.[21] The long and continuous
possession thereof by petitioner-appellant and his predecessors-in-interest
since 1948 or a total period of fifty-one (51) years before the application
was filed on 09 August 1999 converted the property to a private one. This
is but a mere reiteration of the established rule that alienable public land
held by a possessor, personally, or through his predecessor-in-interest,
openly, continuously and exclusively for the prescribed statutory period of
thirty (30) years under the Public Land Act, as amended, is converted to
private property by the mere lapse or completion of said period, ipso
jure.[22]

Hence, this petition.[23]

In its Memorandum,[24] the OSG submits the following

ISSUES

The Court of Appeals erred in reversing and setting aside the


Resolution dated December 23, 2002 of the Land Registration
Court denying the BELATED submission of tax declarations which
the herein respondent merely attached in its supplemental motion
for reconsideration and which were NOT FORMALLY OFFERED in
evidence during the trial of the case, as required under Section 34
of Rule 132 of the 1997 Revised Rules of Civil Procedure;
II

The Court of Appeals erred in reversing and setting aside the


Resolution dated December 23, 2002 of the Land Registration
Court denying the admission of MERE PHOTOCOPIES of tax
declarations which have not been verified or authenticated, in
flagrant violation of the requirements of both Act 496 (Land
Registration Act) and PD 1529 (Property Registration
Act) providing that only ORIGINAL muniments of titles or original
copies thereof shall be filed;
III

The Court of Appeals erred in reversing and setting aside the


subject Resolution of the Land Registration Court which denied
the application for registration on the ground that the respondent
herein failed to prove that the subject land is alienable and
disposable land of the public domain and have been in possession
for the length of time and manner and concept prescribed in
Section 48(b) of the CA 141 as amended.[25]

The petition is meritorious.


Sec. 14(1) of P.D. 1529[26] in relation to Section 48(b) of Commonwealth Act 141, as
amended by Section 4 of P.D. 1073,[27] provides:

SEC. 14. Who may apply.The following persons may file in the
proper Court of First Instance [now Regional Trial Court] an application for
registration of title to land, whether personally or through their duly
authorized representatives:

(1) Those who by themselves or through their predecessors-in-


interest have been in open, continuous, exclusive and notorious possession
and occupation of alienable and disposable lands of the public domain under
a bona fide claim of ownership since June 12, 1945, or earlier.

Xxx
Section 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 [now Regional Trial Court] 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:
Xxx

(b) Those who by themselves or through their


predecessors-in-interest have been in open, continuous,
exclusive and notorious possession and occupation of
agricultural lands of the public domain, under a bona
fide claim of acquisition of ownership, since June 12, 1945,
or earlier, 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.

Based on these legal parameters, applicants for registration of title under Section 14(1)
must sufficiently establish: (1) that the subject land forms part of the disposable and
alienable lands of the public domain; (2) that the applicant and his predecessors-in-
interest have been in open, continuous, exclusive and notorious possession and
occupation of the same; and (3) that it is under a bona fide claim of ownership since June
12, 1945, or earlier.

Thus, before an applicant can adduce evidence of open, continuous, exclusive and
notorious possession and occupation of the property in question, he must first prove that
the land belongs to the alienable and disposable lands of the public domain. It is doctrinal
that, under the Regalian doctrine, all lands of the public domain pertain to the State and
the latter is the foundation of any asserted right to ownership in land. Accordingly, the
State presumably owns all lands not otherwise appearing to be clearly within private
ownership. To overcome such presumption, irrefutable evidence must be shown by the
applicant that the land subject of registration has been declassified and now belongs to
the alienable and disposable portion of the public domain.[28]

Notably, the Court finds no evidence in this case that would show that the land in
question has been classified as alienable and disposable land of the public domain. The
sketch plan, technical description and the tracing clothing plan that respondent presented
do not show the actual legal status of the land. Hence, the conclusion reached by the CA
that it was no longer necessary for the respondent to prove the alienability of the land in
question on the assumption that he had already completed the thirty-year possessory
requirement was misplaced. The requirements of alienability and possession and
occupation since June 12, 1945 or earlier under Section 14(1) are indispensable
prerequisites to a favorable registration of his title to the property. Absent one, the
application for registration is materially infirmed.

Since respondent provided no competent and persuasive evidence to show that


the land has been classified as alienable and disposable, then the application for
registration should be denied.

At any rate, after reviewing the documents submitted by the respondent, it is clear
that there was no substantive evidence to show that he complied with the requirement
of possession and occupation since June 12, 1945 or earlier.

The earliest tax declaration that respondent tried to incorporate in his


Supplemental Motion for Reconsideration does not measure up to the time
requirement. In particular, the tax declaration on the first lot, as shown by Tax
Declaration No. 6932 in the name of Adulfo Calo, only began in 1948.[29] On the second
lot, Tax Declaration No. 3852 in the name of Marcos Azote merely appeared in
1952.[30] While on the third lot, Tax Declaration No. 6891 registered in the name of the
Heirs of Felipe Calo came up in 1948.[31]Unmistakably, the respondent cannot avail of
registration under Section 14(1) of P.D. 1529.

In his Memorandum,[32] respondent proffered that should not the land be


registrable under Section 14(1) of P.D. 1529, it could still be registered under Section
14(2) of P.D. 1529.[33]
He cannot.
The case of Heirs of Mario Malabanan vs. Republic[34] summarized the distinctions
between the legal requisites in applications for registration of title under Section 14(1)
and Section 14(2) of P.D. 1529, to wit:

(1) In connection with Section 14(1) of the Property Registration


Decree, Section 48(b) of the Public Land Act recognizes and confirms that
those who by themselves or through their predecessors in interest have
been in open, continuous, exclusive, and notorious possession and
occupation of alienable and disposable lands of the public domain, under a
bona fide claim of acquisition of ownership, since June 12, 1945 have
acquired ownership of, and registrable title to, such lands based on the
length and quality of their possession.

(a) Since Section 48(b) merely requires possession since 12


June 1945 and does not require that the lands should have been
alienable and disposable during the entire period of possession, the
possessor is entitled to secure judicial confirmation of his title
thereto as soon as it is declared alienable and disposable, subject
to the timeframe imposed by Section 47 of the Public Land Act.[35]

(b) The right to register granted under Section 48(b) of the


Public Land Act is further confirmed by Section 14(1) of the
Property Registration Decree.

(2) In complying with Section 14(2) of the Property Registration Decree,


consider that under the Civil Code, prescription is recognized as a mode of
acquiring ownership of patrimonial property. However, public domain
lands become only patrimonial property not only with a
declaration that these are alienable or disposable. There must also
be an express government manifestation that the property is
already patrimonial or no longer retained for public service or the
development of national wealth, under Article 422 of the Civil
Code.[36]And only when the property has become patrimonial can the
prescriptive period for the acquisition of property of the public dominion
begin to run.

(a) Patrimonial property is private property of the


government. The person acquires ownership of patrimonial
property by prescription under the Civil Code is entitled to secure
registration thereof under Section 14(2) of the Property
Registration Decree.
(b) There are two kinds of prescription by which patrimonial
property may be acquired, one ordinary and other extraordinary.
Under ordinary acquisitive prescription, a person acquires
ownership of a patrimonial property through possession for at least
ten (10) years, in good faith and with just title. Under extraordinary
acquisitive prescription, a persons uninterrupted adverse
possession of patrimonial property for at least thirty (30) years,
regardless of good faith or just title, ripens into ownership.

The import of this ruling is clear. Under Section 14(2) of P.D. 1529, before
acquisitive prescription could commence, the property sought to be registered must not
only be classified as alienable and disposable; it must also be expressly declared by the
State that it is no longer intended for public service or the development of the national
wealth or that the property has been converted into patrimonial. Thus, absent an express
declaration by the State, the land remains to be property of public dominion.

WHEREFORE, the petition is GRANTED. The November 28, 2008 Decision of the
Court of Appeals is hereby REVERSED and SET ASIDE. The Application for Registration
of Title of respondent Jose T. Ching in Land Registration Case No. N-290 is DENIED.

SO ORDERED.
April 6, 2016

G.R. No. 203949

SPOUSES GEORGE A. GALLENT, SR. and MERCEDES M. GALLENT, Petitioners,


vs.
JUAN G. VELASQUEZ, Respondent.

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

G.R. No. 205071

JUAN G. VELASQUEZ, Petitioner,


vs.
SPOUSES GEORGE A. GALLENT, SR. and MERCEDES M. GALLENT, Respondents.

DECISION

REYES, J.:

Before this Court are two conflicting decisions rendered by two different divisions of the
Court of Appeals (CA) on the same question of whether the Regional Trial Court (RTC)
may validly issue an ex parte writ of possession to the transferee of the winning bidder
at the extrajudicial foreclosure sale of mortgaged real property.

Antecedent Facts

George A. Gallent, Sr. (George) was the registered owner of a 761-square-meter


residential property covered by Transfer Certificate of Title (TCT) No. S-99286, 1 located
at No. 3, Angeles Street, Alabang Hills Village, Muntinlupa City, with improvements
thereon consisting of a two-storey house and a swimming pool. On December 20, 1996,
the Spouses George and Mercedes Gallent (Spouses Gallent) mortgaged the said
property to Allied Banking Corporation (Allied Bank) as security for a loan of Pl.5 Million.
The Spouses Gallent failed to pay their loan, which had ballooned to P4,631,97 4.66;
thus, Allied Bank extrajudicially foreclosed the mortgaged property. At the public
auction, Allied Bank emerged as the highest bidder and was issued a corresponding
certificate of sale2 dated September 25, 2000. Since the Spouses Gallent failed to
redeem the subject property after one year, Allied Bank consolidated its ownership over
the subject property. Accordingly, TCT No. S-99286 was cancelled and replaced with
TCT No. 84603 in the name of Allied Bank.4

On June 11, 2003, Allied Bank agreed to sell back the foreclosed property to the
Spouses Gallent for P4 Million, as evidenced by an Agreement to Sell, 5 wherein the
Spouses Gallent paid a down payment of P3.5 Million, evidenced by an Official Receipt
(O.R.) No. 0990687-A6 dated March 12, 2003, and the balance thereof was payable in
12 monthly amortizations. It was also stipulated that the Spouses Gallent would be
allowed to keep the possession of the subject property as tenants or lessees of Allied
Bank. 7

Due to financial difficulties, sometime in October 2003, the Spouses Gallent sought the
help of their close family friend, Juan Velasquez (Velasquez), to help them settle their
remaining monthly amortizations. As an inducement, they agreed that Velasquez would
have the subject property registered under his name until they have repaid him. 8

On October 24, 2003, the Spouses Gallent executed a Deed of Assignment of


Rights9 whereby they assigned to Velasquez all their rights, interests, and obligations
under their Agreement to Sell with Allied Bank. Velasquez paid Allied Bank the
remaining balance amounting to P216,635.97, evidenced by O.R. No. 0006352. 10

On November 5, 2003, Allied Bank and Velasquez executed a Deed of Absolute


Sale11 over the subject property for the price of P4 Million, wherein George himself
signed as an instrumental witness. 12 However, the said instrument was not registered.
Subsequently, Velasquez caused another Deed of Sale13 dated November 19, 2003,
over the subject property which showed a lower selling price of Pl.2 Million to be
registered, purportedly for tax purposes.

On November 28, 2003, TCT No. 1181414 was issued under the name of Velasquez to
replace TCT No. 8460.

After more than four years, or on June 27, 2008, Velasquez sent a demand letter15 to
the Spouses Gallent to vacate the subject property, but the latter refused to do so. On
July 6, 2009, Velasquez filed an ex parte petition for issuance of a writ of possession,
docketed as LRC Case No. 09-055, in the RTC of Muntinlupa City. 16 The Spouses
Gallent sought to dismiss the petition by filing Consolidated Motions for Leave to
Intervene and to Dismiss Petition17on January 14, 2010.

On February 12, 2010, the RTC of Muntinlupa City, Branch 256, issued an
Order18 denying the Spouses Gallent's consolidated motions, viz:

The issuance of the writ of possession is a ministerial duty of the court upon
filing of the proper application and proof of title and by its nature does not
require notice upon persons interested in the subject properties. By virtue of
the sale of the properties involved, [Velasquez] became the new owner of the lots
entitled to all rights and interests its predecessor [Allied Bank] had therein, including
the right to file an application for writ of possession. The court therefore finds the
petition to be sufficient in form and substance.

As to the motion for leave to intervene filed by [Spouses Gallent], the same will be
treated by this court as their opposition to the petition and they will be considered an
oppositor.
Wherefore premises considered, the motions are hereby denied for lack of merit.

xxxx

SO ORDERED.19 (Emphasis ours)

The Spouses Gallent filed a motion for reconsideration but it was denied by the RTC in
an Order20 dated April 13, 2010, reasoning as follows:

The instant motion deserves a scant consideration considering that the issues and
arguments raised by the oppositors are mere rehashed which were already passed
upon by this court in the order sought to be reconsidered. To reiterate, it is a ministerial
duty on the part of this court to act on cases of this nature, particularly if the twelve-
month period for redemption had already lapsed. Should the oppositors intend to
recover title over the subject property, the same should be ventilated in a separate
proceeding and proceed independently of this petition.

Wherefore premises considered, the motion for reconsideration is hereby denied for
lack of merit. Accordingly, the reception of ex parte evidence is hereby assigned to the
Branch Clerk of Court to act as Commissioner and to make a report to this Court ten
(10) days upon completion thereof.

xxxx

SO ORDERED.21

On July 2, 2010, the Spouses Gallent filed a petition for certiorari22 before the CA,
docketed as CA-G.R. SP No. 114527, raffled to the Special 4th Division, seeking to
annul the RTC Orders dated February 12, 2010 and April 13, 2010. Invoking Mendoza v.
Salinas,23 the Spouses Gallent argued that: (1) the RTC has no jurisdiction to issue
an ex parte writ of possession to Velasquez since he did not acquire the property at a
foreclosure sale, but purchased the same from the mortgagee, winning bidder and
purchaser, Allied Bank, and only after it had consolidated its title thereto;24 (2) in their
Agreement to Sell, Allied Bank and the Spouses Gallent entered into new contractual
relations as vendees-lessees and vendor-lessor, and ceased to be mortgagors and
mortgagee;25 (3) Velasquez should have filed an action for ejectment or for recovery of
ownership or possession, not an ex parte petition for writ of possession;26 and (4) the
RTC's duty to issue the writ has ceased to be ministerial in view of the Spouses
Gallent's adverse claim upon the property based on their substantial payment of its
purchase price, in addition to the fact that Velasquez and Allied Bank executed a forged
deed of sale.27

Meanwhile, on July 7, 2010, the RTC rendered its Decision28 in LRC Case No. 09-055,
the dispositive portfon of which reads:
WHEREFORE, in view of the foregoing and considering that it is a ministerial duty of the
court to issue writ of possession, the redemption period having been expired without
the subject property being redeemed by the mortgagors, the petition is hereby granted.
Accordingly, let a writ of possession be issued in favor of [Velasquez] and against the
oppositors and all persons claiming rights under them, to place [Velasquez] in
possession of the subject property and for the oppositors and all persons claiming rights
under them to vacate the land covered by TCT No. 11814 of the Register of Deeds of
Muntinlupa City.

SO ORDERED.29

On September 24, 2010, the Spouses Gallent filed another petition


for certiorari30 before the CA, docketed as CA-G.R. SP No. 116097 and raffled to the
10th Division, arguing that the deed of sale between Velasquez and Allied Bank was a
forgery. In their certification of non-forum shopping,31 they mentioned the pendency
of CA-GR. SP No. 114527 in the CA. Surprisingly, neither of the parties nor the CA
10th Division moved for the consolidation of CA-G.R. SP No. 116097 with CA-G.R. SP No.
114527.

Meanwhile, on October 21, 2010, the Spouses Gallent also filed before the RTC of
Muntinlupa City a complaint for "Reformation of Instruments, Consignation, Annulment
of TCT No. 11814 of the Registry of Deeds for the City of Muntinlupa and Damages
With Application for Immediate Issuance of Temporary Restraining Order and/or Writ of
Preliminary Injunction," docketed as Civil Case No. 10-102. In this action, the
Spouses Gallent sought to annul the deed of assignment they executed in favor of
Velasquez allegedly because their true intent was an equitable mortgage. They thus
prayed to declare void the sale between Velasquez and Allied Bank on account of
forgery, to order the judicial consignment of the amount of P216,635.97 to settle their
"loan" from Velasquez, and to enjoin him from taking possession of the property. 32

Rulings of the CA

CA-G.R. SP No. 116097

The CA 10th Division rendered its Decision33 on May 23, 2012 finding that since Allied
Bank, the mortgagee-purchaser at the extrajudicial foreclosure sale, is entitled to an ex
parte writ of possession after the title to the mortgaged property had been consolidated
in its name, Velasquez, as the bank's transferee of the said property may also petition
the court for an ex parte writ of possession since he merely stepped into the shoes of
Allied Bank. The 10th Division also ruled that the Spouses Gallent can no longer be
considered to hold an interest in the property adverse to Allied Bank or Velasquez after
they assigned their entire interest therein to Velasquez. Having no more claims on the
title of either Allied Bank or Velasquez, an ex parte writ of possession may issue against
them.
On October 12, 2012, the CA 10th Division denied the Spouses Gallent's motion for
reconsideration.34 On December 6, 2012, they filed a Petition for Review
on Certiorari35 before this Court docketed as G.R. No. 203949.

CA-G.R. SP No. 11.4527

The CA Special 4th Division issued its Decision36 dated August 28, 2012, finding that
an ex parte writ of possession cannot issue against the Spouses Gallent since they are
adverse claimants of the property who are in actual possession. The CA relied
on Mendoza, 37 where the Court ruled that an ex parte writ of possession may be issued
as a ministerial duty of the court only in three instances: (a) in a land registration case,
as provided under Section 17 of Act No. 496; (b) in a judicial foreclosure of real estate
mortgage; or (c) in an extra judicial foreclosure of real estate mortgage under Section 7
of Act No. 3135,38 as amended. 39 According to the CA, since Velasquez did not acquire
his title to the property in a foreclosure sale, but bought the same directly from Allied
Bank after title had been consolidated in the said bank, he must first bring an ejectment
suit or an accion reivindictoria against the Spouses Gallent in order for him to obtain
possession thereof. 40

According to Mendoza, an ex parte writ of possession ceases to issue as a ministerial


duty of the court when sought against a party who has remained in the property upon
an adverse claim of ownership, viz:

Based on these tenets, the issuance of a writ of possession, therefore, is clearly a


ministerial duty of the land registration court. Such ministerial duty, however,
ceases to be so with particular regard to petitioners who are actual
possessors of the property under a claim of ownership. Actual possession under
claim of ownership raises a disputable presumption of ownership. This conclusion is
supported by Article 433 of the Civil Code, which provides:

Actual possession under claim of ownership raises a disputable presumption of


ownership. The true owner must resort to judicial process for the recovery of the
property. Under said provision, one who claims to be the owner of a property possessed
by another must bring the appropriate judicial action for its physical recovery. The term
"judicial process" could mean no less than an ejectment suit or reinvindicatory action, in
which the ownership claims of the contending parties may be properly heard and
adjudicated. 41 (Citation omitted and emphasis ours)

Velasquez filed a motion for reconsideration, but it was denied;42 hence, he filed a
Petition for Review on Certiorarz43 before this Court docketed as GR. No. 205071.

Ruling of the Court

The Court grants the petition of the Spouses Gallent, but denies the petition of
Velasquez.
The general rule in extrajudicial
foreclosure of mortgage is that after
the consolidation of the title over
the foreclosed property in the
buyer, it is the ministerial duty of
the court to issue a writ of
possession upon an ex parte
petition44 by the new owner as a
matter of right.

It is well-settled that the purchaser in an extrajudicial foreclosure of real property


becomes the absolute owner of the property if no redemption is made within one year
from the registration of the certificate of sale by those entitled to redeem. 45 As
absolute owner, he is entitled to all the rights of ownership over a property recognized
in Article 428 of the New Civil Code, not least of which is possession, or jus
possidendi:46

A torrens title recognizes the owner whose name appears in the certificate as entitled to
all the rights of ownership under the civil law. The Civil Code of the Philippines defines
ownership in Articles 427, 428 and 429. This concept is based on Roman Law which the
Spaniards introduced to the Philippines through the Civil Code of 1889. Ownership,
under Roman Law, may be exercised over things or rights. It primarily includes the right
of the owner to enjoy and dispose of the thing owned. And the right to enjoy and
dispose of the thing includes the right to receive from the thing what it produces, [jus
utendi; jus fruendi] the right to consume the thing by its use, [jus abutendi] the right to
alienate, encumber, transform or even destroy the thing owned, [jus disponendi] and
the right to exclude from the possession of the thing owned by any other person to
whom the owner has not transmitted such thing [jus vindicandi].47

Possession being an essential right of the owner with which he is able to exercise the
other attendant rights of ownership, 48 after consolidation of title the purchaser in a
foreclosure sale may demand possession as a matter of right.49 This is why Section 7 of
Act No. 3135, as amended by Act No. 4118, imposes upon the RTC a ministerial duty to
issue a writ of possession to the new owner upon a mere ex parte motion.50 Section 7
reads:

Sec. 7. In any sale made under the provisions of this Act, the purchaser may petition
the Court of First Instance of the province or place where the property or any part
thereof is situated, to give him possession thereof during the redemption period,
furnishing bond in an amount equivalent to the use of the property for a period of
twelve months, to indemnify the debtor in case it be shown that the sale was made
without violating the mortgage or without complying with the requirements of this Act.
Such petition shall be made under oath and filed in form of an ex parte motion in the
registration or cadastral proceedings if the property is registered, or in special
proceedings in the case of property registered under the Mortgage Law or under
Section 194 of the Administrative Code, or of any other real property encumbered with
a mortgage duly registered in the office of any register of deeds in accordance with any
existing law, and in each case the clerk of court shall, upon the filing of such petition,
collect the fees specified in paragraph 11 of Section 114 of Act No. 496, as amended by
Act No. 2866, and the court shall, upon approval of the bond, order that a writ of
possession issue, addressed to the sheriff of the province in which the property is
situated, who shall execute said order immediately.

In Spouses Arquiza v. CA,51 it is reiterated that simply on the basis of the purchaser's
ownership of the foreclosed property there is no need for an ordinary action to gain
possession thereof:

Indeed, it is well-settled that an ordinary action to acquire possession in favor of the


purchaser at an extrajudicial foreclosure of real property is not necessary. There is no
law in this jurisdiction whereby the purchaser at a sheriff's sale of real property is
obliged to bring a separate and independent suit for possession after the one-year
period for redemption has expired and after he has obtained the sheriff's final certificate
of sale. The basis of this right to possession is the purchaser's ownership of the
property. The mere filing of an ex parte motion for the issuance of the writ of
possession would suffice, and no bond is required. 52 (Citations omitted)

As also explained in Asia United Bank v. Goodland Company, Jnc.,53 the ex


parte application for writ of possession is a non-litigious summary proceeding without
need to post a bond, except when possession is being sought even during the
redemption period:

It is a time-honored legal precept that after the consolidation of titles in the buyer's
name, for failure of the mortgagor to redeem, entitlement to a writ of possession
becomes a matter of right. As the confirmed owner, the purchaser's right to possession
becomes absolute. There is even no need for him to post a bond, and it is the
ministerial duty of the courts to issue the same upon proper application and proof of
title. To accentuate the writ's ministerial character, the Court has consistently
disallowed injunction to prohibit its issuance despite a pending action for annulment of
mortgage or the foreclosure itself.

The nature of an ex parte petition for issuance of the possessory writ under Act No.
3135 has been described as a non-litigious proceeding and summary in nature. As an ex
parte proceeding, it is brought for the benefit of one party only, and without notice to
or consent by any person adversely interested. 54 (Citations omitted)

Moreover, not even a pending action to annul the mortgage or the foreclosure sale will
by itself stay the issuance of the writ of possession, as held in BPI Family Savings Bank,
Inc. v. Golden Power Diesel Sales Center, Inc., et al.:55
Furthermore, it is settled that a pending action for annulment of mortgage or
foreclosure sale does not stay the issuance of the writ of possession. The trial court,
where the application for a writ of possession is filed, does not need to look into the
validity of the mortgage or the manner of its foreclosure. The purchaser is entitled to a
writ of possession without prejudice to the outcome of the pending annulment
case. 56 (Citations omitted)

When the thing purchased at a


foreclosure sale is in turn sold or
transferred, the right to the
possession thereof, along with all
other rights of ownership, follows
the thing sold to its new owner.

In Laureano v. Bormaheco, 57 the mortgagee-purchaser, Philippine National Cooperative


Bank (PNCB), sold the foreclosed lots located in Bel-Air, Makati City to Bormaheco, Inc.
without first seeking its possession. The latter filed an ex parte petition for a writ of
possession, but the RTC of Makati City ordered the service of a copy of the petition
upon the former owners, the Spouses Laureano, who as in the case before the Court,
opposed the ex parte petition and moved to dismiss the same on the ground of the
RTC's lack of jurisdiction. The RTC denied the said motion, which was upheld by the CA
in a certiorari action. When the case reached the Court, it was held that, by the nature
of an ex parte petition for writ of possession, no notice is needed to be served upon the
Spouses Laureano, the mortgagors-debtors of PNCB, since they already lost all their
interests in the properties when they failed to redeem them. By virtue of the sale,
Bormaheco, Inc. became the new owner of the lots, entitled to all rights and interests
that its predecessor PNCB acquired, including the right to a writ of possession.

As an exception, the ministerial


duty of the court to issue an ex
parte writ of possession ceases
once it appears that a third party,
not the debtor-mortgagor, is in
possession of the property under a
claim of title adverse to that of the
applicant.

Section 33 of Rule 39 of the Rules of Court provides that in an execution sale, the
possession of the property shall be given to the purchaser or last redemptioner, unless
a third party is actually holding the property adversely to the judgment
obligor.

Sec. 33. Deed and possession to be given at expiration of redemption period; by whom
executed or given. - If no redemption be made within one (1) year from the date of the
registration of the certificate of sale, the purchaser is entitled to a conveyance and
possession of the property; or, if so redeemed whenever sixty (60) days have elapsed
and no other redemption has been made, and notice thereof given, and the time for
redemption has expired, the last redemptioner is entitled to the conveyance and
possession; but in all cases the judgment obligor shall have the entire period of one (1)
year from the date of the registration of the sale to redeem the property. The deed
shall be executed by the officer making the sale or by his successor in office, and in the
latter case shall have the same validity as though the officer making the sale had
continued in office and executed it.

Upon the expiration of the right of redemption, the purchaser or redemptioner shall be
substituted to and acquire all the rights, title, interest and claim of the judgment obligor
to the property as of the time of the levy. The possession of the property shall be given
to the purchaser or last redemptioner by the same officer unless a third party is
actually holding the property adversely to the judgment obligor. (Emphasis
ours)

Pursuant to Section 6 of Act No. 3135, the application of Section 33, Rule 39 of the
Rules of Court has been extended to extrajudicial foreclosure sales, thus:

Sec. 6. In all cases in which an extrajudicial sale is made under the special power
hereinbefore referred to, the debtor, his successors in interest or any judicial creditor or
judgment creditor of said debtor, or any person having a lien on the property
subsequent to the mortgage or deed of trust under which the property is sold, may
redeem the same at any time within the term of one year from and after the date of
the sale; and such redemption shall be governed by the provisions of Sections 464 to
466, inclusive, of the Code of Civil Procedure, in so far as these are not inconsistent
with the provisions of this Act.1wphi1

In China Banking Corporation v. Spouses Lozada, 58 it was held that for the court's
ministerial duty to issue a writ of possession to cease, it is not enough that the property
be held by a third party, but rather the said possessor must have a claim thereto
adverse to the debtor/mortgagor:

Where a parcel levied upon on execution is occupied by a party other than a judgment
debtor, the procedure is for the court to order a hearing to determine the nature of said
adverse possession. Similarly, in an extrajudicial foreclosure of real property, when the
foreclosed property is in the possession of a third party holding the same adversely to
the defaulting debtor/mortgagor, the issuance by the RTC of a writ of possession in
favor of the purchaser of the said real property ceases to be ministerial and may no
longer be done ex parte. For the exception to apply, however, the property need not
only be possessed by a third party, but also held by the third party adversely to the
debtor/mortgagor. 59 (Citation omitted)
Specifically, the Court held that to be considered in adverse possession, the third party
possessor must have done so in his own right and not merely as a successor or
transferee of the debtor or mortgagor:

The exception provided under Section 33 of Rule 39 of the Revised Rules of Court
contemplates a situation in which a third party holds the property by adverse title or
right, such as that of a co-owner, tenant or usufructuary. The co-owner, agricultural
tenant, and usufructuary possess the property in their own right, and they are not
merely the successor or transferee of the right of possession of another co-owner or
the owner of the property. x x x.60(Citations omitted)

Thus, in BPI Family, 61 the Court held that it was an error to issue an ex parte writ of
possession to the purchaser in an extrajudicial foreclosure, or to refuse to abate one
already granted, where a third party has raised in an opposition to the writ or in a
motion to quash the same, his actual possession thereof upon a claim of ownership or a
right adverse to that of the debtor or mortgagor. The procedure, according to Unchuan
v. CA,62 is for the trial court to order a hearing to determine the nature of the adverse
possession, conformably with the time-honored principle of due process.63

In Okabe v. Saturnina, 64 the Court made a definite ruling on the matter, to wit:

The remedy of a writ of possession, a remedy that is available to the mortgagee-


purchaser to acquire possession of the foreclosed property from the mortgagor, is made
available to a subsequent purchaser, but only after hearing and after determining that
the subject property is still in the possession of the mortgagor. Unlike if the purchaser is
the mortgagee or a third party during the redemption period, a writ of possession may
issue ex parte or without hearing. In other words, if the purchaser is a third party who
acquired the property after the redemption period, a hearing must be conducted to
determine whether possession over the subject property is still with the mortgagor or is
already in the possession of a third party holding the same adversely to the defaulting
debtor or mortgagor. If the property is in the possession of the mortgagor, a writ of
possession could thus be issued. Otherwise, the remedy of a writ of possession is no
longer available to such purchaser, but he can wrest possession over the property
through an ordinary action of ejectment.65

In regard to their deed of


assignment in favor of Velasquez,
the Spouses Gallent may be
considered as adverse possessors in
their own right, the said agreement
being in essence an equitable
mortgage.
It is the Spouses Gallent's contention that the Deed of Assignment of Rights which they
executed in favor of Velasquez was in reality an equitable mortgage under Article 1602
of the New Civil Code. The Spouses Gallent maintained that their true agreement with
Velasquez was an equitable mortgage and not an assignment of their interest in the
subject property.66 Having substantially paid the repurchase price of their property, that
is, P3,790,500.00 out of the price of P4 Million, they insisted that they had virtually
recovered full ownership of the house when they entered into an equitable mortgage
with Velasquez. To prove their allegation, they filed an action, Civil Case No. 10-102, to
reform the said deed into a mortgage. In addition, they are seeking to declare void the
transfer of the title to Velasquez.

An equitable mortgage67 has been defined as one which although lacking in some
formality, or form or words, or other requisites demanded by a statute, nevertheless
reveals the intention of the parties to charge real property as security for a debt, there
being no impossibility nor anything contrary to law in this intent. 68 A contract where
the vendor/mortgagor remains in physical possession as lessee or otherwise has been
held to be an equitable mortgage. 69 In determining the nature of a contract, the Court
is not bound by the title or name given to it by the parties, but by their intention, as
shown not necessarily by the terminology used in the contract but by their conduct,
words, actions and deeds prior to, during and immediately after executing the
agreement. 70

Without in any way pre-empting the trial court's factual determination in Civil Case No.
10-102, particularly as regards what the Spouses Gallent may have additionally received
from Velasquez by way of favor or consideration for the house, if any, the Court will
rule on the matter, but only in order to resolve the question of whether the Spouses
Gallent may be considered as adverse claimant-occupants against whom an ex
parte writ of possession will not issue. The substantial payment for the repurchase from
Allied Bank of the subject property, P3,790,500.00 out of the price of P4 Million, as
against Velasquez's assumption of the remaining balance of P216,635.97, entitles the
Spouses Gallent to the legal presumption that their assignment to Velasquez of all their
interest under their Contract to Sell with Allied Bank was an equitable mortgage. In a
contract of mortgage, the mortgagor retains possession of the property given as
security for the payment of the sum borrowed from the mortgagee. 71 By the clear
dictate of equity, and as held in Rockville Excel International Exim Corporation v.
Spouses Culla and Miranda,72 when the vendor remains in possession of the property
sold as lessee or otherwise, or the price of the sale is unusually inadequate, as in this
case, the law deems the contract as an equitable mortgage. 73

It is evident that on account of the Spouses Gallent's substantial down payment under
their contract to sell, Allied Bank allowed them to remain in the property, albeit as
"lessees". The Spouses Gallent eventually paid a total of P3,790,500.00, all within five
months. After the additional payment by Velasquez of P216,635.97, the next logical
step would have been for Allied Bank to execute the sale in favor of the Spouses
Gallent, by virtue of their Contract to Sell, but the Spouses Gallent had assured
Velasquez that he could keep the title to the property until they have repaid him. To
achieve this, they executed a deed of assignment to enable Allied Bank to transfer the
title directly to Velasquez, since a transfer, first to the Spouses Gallent, and then a sale
or assignment to Velasquez, would have entailed paying capital gains and documentary
stamp taxes twice, along with the transfer fees. It was also apparently agreed with
Velasquez that the Spouses Gallent could remain in the property, but it seems that they
could do so not just as lessees but as owners-mortgagors.

If there was a forgery in the sale to Velasquez by Allied Bank, it was obviously a mere
ploy to reduce the taxes and fees due on the said transaction, and not the cause of the
transfer of the title of Allied Bank to Velasquez. The consent of the Spouses Gallent to
the said transfer, for the probable reasons already expounded, is clear from the fact
that George himself signed in the first deed of sale to Velasquez as an instrumental
witness. But even if it is eventually shown that there was in fact forgery for the purpose
of committing fraud against the Spouses Gallent, as held in Capital Credit Dimension,
Inc. v. Chua, 74 they, as third party occupants, should not be adversely affected by
the ex parte writ of possession sought by Velasquez, for not being parties to the
forgery. Thus, they cannot be summarily ejected without due process.

To recapitulate, it is important to note that this controversy can no longer be


considered as an offshoot of the extrajudicial foreclosure proceedings involving Allied
Bank, but rather is the result of a subsequent personal transaction between the
Spouses Gallent and Velasquez, which they called an assignment; but which the law
otherwise recognizes as an equitable mortgage. In the face then of the ex parte motion
of Velasquez for a writ of possession, it must be kept in mind that, under the facts laid
down, the contending parties are now Velasquez and the Spouses Gallent. The Spouses
Gallent's defense of equitable mortgage is upheld in law and, they have a superior right
to retain the possession of the subject property in their own right.

WHEREFORE, premises considered, the petition in G.R. No. 203949 is


GRANTED. The Decision dated May 23, 2012 of the Court of Appeals in CA-G.R. SP No.
116097 is SET ASIDE.

The petition in G.R. No. 205071 is DENIED. The Decision dated August 28, 2012 of
the Court of Appeals in CA-G.R. SP No. 114527 is AFFIRMED.

No costs.

SO ORDERED.
THIRD DIVISION

G.R. NO. 194336 : March 11, 2013

PILAR DEVELOPMENT CORPORATION, Petitioner, v. RAMON DUMADAG, EMMA


BACABAC, RONALDO NAVARRO, JIMMY PAGDALIAN, PAY DELOS SANTOS,
ARMANDO TRILLOS, FELICISIMO TRILLOS, ARCANGEL FLORES, EDDIE
MARTIN, PRESILLA LAYOG, CONRADO CAGUYONG, GINA GONZALES, ARLENE
PEDROSA, JOCELYN ABELINO, ROQUE VILLARAZA, ROLANDO VILLARAZA,
CAMILO GENOVE, NILDA ROAYANA, SUSAN ROAYANA, JUANCHO
PANGANIBAN, BONG DE GUZMAN, ARNOLD ENVERSO, DONNA DELA RAZA,
EMELYN HAGNAYA, FREDDIE DE LEON, RONILLO DE LEON, MARIO
MARTINEZ, and PRECY LOPEZ, Respondents.

DECISION

PERALTA, J.:

Challenged in this petition for review on certiorari under Rule 45 of the Rules of Civil
Procedure are the March 5, 2010 Decision1 and October 29, 2010 Resolution2 of the
Court of Appeals (CA) in CA-G.R. CV No. 90254, which affirmed the May 30, 2007
Decision3 of the Las Pias Regional Trial Court, Branch 197 (trial court) dismissing the
complaint filed by petitioner.

On July 1, 2002, petitioner filed a Complaint4 for accion publiciana with damages
against respondents for allegedly building their shanties, without its knowledge and
consent, in its 5,613-square-meter property located at Daisy Road, Phase V, Pilar
Village Subdivision, Almanza, Las

Pias City. It claims that said parcel of land, which is duly registered in its name under
Transfer Certificate of Title No. 481436 of the Register of Deeds for the Province of
Rizal, was designated as an open space of Pilar Village Subdivision intended for village
recreational facilities and amenities for subdivision residents.5 In their Answer with
Counterclaim,6 respondents denied the material allegations of the Complaint and briefly
asserted that it is the local government, not petitioner, which has jurisdiction and
authority over them.

Trial ensued. Both parties presented their respective witnesses and the trial court
additionally conducted an ocular inspection of the subject property.

On May 30, 2007, the trial court dismissed petitioner's complaint, finding that the land
being occupied by respondents are situated on the sloping area going down and leading
towards the Mahabang Ilog Creek, and within the three-meter legal easement; thus,
considered as public property and part of public dominion under Article 5027 of the New
Civil Code (Code), which could not be owned by petitioner. The court
held:chanroblesvirtualawlibrary

x x x The land title of [petitioner] only proves that it is the owner in fee simple of the
respective real properties described therein, free from all liens and encumbrances,
except such as may be expressly noted thereon or otherwise reserved by law x x x. And
in the present case, what is expressly reserved is what is written in TCT No. T-481436,
to wit "that the 3.00 meter strip of the lot described herein along the Mahabang Ilog
Creek is reserved for public easement purposes. (From OCT 1873/A-50) and to the
limitations imposed by Republic Act No. 440. x x x"8chanroblesvirtualawlibrary

The trial court opined that respondents have a better right to possess the occupied lot,
since they are in an area reserved for public easement purposes and that only the local
government of Las Pias City could institute an action for recovery of possession or
ownership.

Petitioner filed a motion for reconsideration, but the same was denied by the trial court
in its Order dated August 21, 2007.9 Consequently, petitioner elevated the matter to the
Court of Appeals which, on March 5, 2010, sustained the dismissal of the case.

Referring to Section 210 of Administrative Order (A.O.) No. 99-21 of the Department of
Environment and Natural Resources (DENR), the appellate court ruled that the 3-meter
area being disputed is located along the creek which, in turn, is a form of a stream;
therefore, belonging to the public dominion. It said that petitioner could not close its
eyes or ignore the fact, which is glaring in its own title, that the 3-meter strip was
indeed reserved for public easement. By relying on the TCT, it is then estopped from
claiming ownership and enforcing its supposed right. Unlike the trial court, however, the
CA noted that the proper party entitled to seek recovery of possession of the contested
portion is not the City of Las Pias, but the Republic of the Philippines, through the
Office of the Solicitor General (OSG), pursuant to Section 10111 of Commonwealth Act
(C.A.) No. 141 (otherwise known as The Public Land Act).

The motion for reconsideration filed by petitioner was denied by the CA per Resolution
dated October 29, 2010, hence, this petition.

Anchoring its pleadings on Article 63012 of the Code, petitioner argues that although the
portion of the subject property occupied by respondents is within the 3-meter strip
reserved for public easement, it still retains ownership thereof since the strip does not
form part of the public dominion. As the owner of the subject parcel of land, it is
entitled to its lawful possession, hence, the proper party to file an action for recovery of
possession against respondents conformably with Articles 42813 and 53914 of Code.

We deny.
An easement or servitude is a real right on another's property, corporeal and
immovable, whereby the owner of the latter must refrain from doing or allowing
somebody else to do or something to be done on his or her property, for the benefit of
another person or tenement; it is jus in re aliena, inseparable from the estate to which
it actively or passively belongs, indivisible, perpetual, and a continuing property right,
unless extinguished by causes provided by law.15 The Code defines easement as an
encumbrance imposed upon an immovable for the benefit of another immovable
belonging to a different owner or for the benefit of a community, or of one or more
persons to whom the encumbered estate does not belong.16 There are two kinds of
easement according to source: by law or by will of the owners the former are called
legal and the latter voluntary easement.17 A legal easement or compulsory easement, or
an easement by necessity constituted by law has for its object either public use or the
interest of private persons.18chanroblesvirtualawlibrary

While Article 630 of the Code provides for the general rule that "the owner of the
servient estate retains the ownership of the portion on which the easement is
established, and may use the same in such a manner as not to affect the exercise of
the easement," Article 635 thereof is specific in saying that "all matters concerning
easements established for public or communal use shall be governed by the special
laws and regulations relating thereto, and, in the absence thereof, by the provisions of
this Title Title VII on Easements or Servitudes."

In the case at bar, the applicability of DENR A.O. No. 99-21 dated June 11, 1999, which
superseded DENR A.O. No. 97-0519 dated March 6, 1997 and prescribed the revised
guidelines in the implementation of the pertinent provisions of Republic Act (R.A.) No.
1273 and Presidential Decree (P.D.) Nos. 705 and 1067, cannot be doubted. Inter alia,
it was issued to further the government's program of biodiversity preservation. Aside
from Section 2.1 above-quoted, Section 2.3 of which further
mandates:chanroblesvirtualawlibrary

2.3 Survey of Titled Lands:chanroblesvirtualawlibrary

2.3.1 Administratively Titled Lands:chanroblesvirtualawlibrary

The provisions of item 2.1.a and 2.1.b shall be observed as the above. However, when
these lands are to be subdivided, consolidated or consolidated-subdivided, the strip of
three (3) meters which falls within urban areas shall be demarcated and marked on the
plan for easement and bank protection.

The purpose of these strips of land shall be noted in the technical description and
annotated in the title.

xxx
2.3.3 Complex Subdivision or Consolidation Subdivision Surveys for Housing/Residential,
Commercial or Industrial Purposes:chanroblesvirtualawlibrary

When titled lands are subdivided or consolidated-subdivided into lots for residential,
commercial or industrial purposes the segregation of the three (3) meter wide strip
along the banks of rivers or streams shall be observed and be made part of the open
space requirement pursuant to P.D. 1216.

The strip shall be preserved and shall not be subject to subsequent subdivision.
(Underscoring supplied)

Certainly, in the case of residential subdivisions, the allocation of the 3-meter strip
along the banks of a stream, like the Mahabang Ilog Creek in this case, is required and
shall be considered as forming part of the open space requirement pursuant to P.D.
1216 dated October 14, 1977.20 Said law is explicit: open spaces are "for public use and
are, therefore, beyond the commerce of men" and that "[the] areas reserved for parks,
playgrounds and recreational use shall be non-alienable public lands, and non-
buildable."

Running in same vein is P.D. 1067 or The Water Code of the Philippines21 which
provides:chanroblesvirtualawlibrary

Art. 51. The banks of rivers and streams and the shores of the seas and lakes
throughout their entire length and within a zone of three (3) meters in urban areas,
twenty (20) meters in agricultural areas and forty (40) meters in forest areas, along
their margins, are subject to the easement of public use in the interest of recreation,
navigation, floatage, fishing and salvage. No person shall be allowed to stay in this zone
longer than what is necessary for recreation, navigation, floatage, fishing or salvage or
to build structures of any kind. (Underscoring supplied)

Thus, the above prove that petitioner's right of ownership and possession has been
limited by law with respect to the 3-meter strip/zone along the banks of Mahabang Ilog
Creek. Despite this, the Court cannot agree with the trial court's opinion, as to which
the CA did not pass upon, that respondents have a better right to possess the subject
portion of the land because they are occupying an area reserved for public easement
purposes. Similar to petitioner, respondents have no right or title over it precisely
because it is public land. Likewise, we repeatedly held that squatters have no
possessory rights over the land intruded upon.22 The length of time that they may have
physically occupied the land is immaterial; they are deemed to have entered the same
in bad faith, such that the nature of their possession is presumed to have retained the
same character throughout their occupancy.23chanroblesvirtualawlibrary

As to the issue of who is the proper party entitled to institute a case with respect to the
3-meter strip/zone, We find and so hold that both the Republic of the Philippines,
through the OSG and the local government of Las Pias City, may file an action
depending on the purpose sought to be achieved. The former shall be responsible in
case of action for reversion under C.A. 141, while the latter may also bring an action to
enforce the relevant provisions of Republic Act No. 7279 (otherwise known as the
Urban Development and Housing Act of 1992).24 Under R.A. 7279, which was enacted
to uplift the living conditions in the poorer sections of the communities in urban areas
and was envisioned to be the antidote to the pernicious problem of squatting in the
metropolis,25 all local government units (LGUs) are mandated to evict and demolish
persons or entities occupying danger areas such as esteros, railroad tracks, garbage
dumps, riverbanks, shorelines, waterways, and other public places such as sidewalks,
roads, parks, and playgrounds.26 Moreover, under pain of administrative and criminal
liability in case of non-compliance,27 it obliges LGUs to strictly observe the
following:chanroblesvirtualawlibrary

Section 29. Resettlement. - Within two (2) years from the effectivity of this Act, the
local government units, in coordination with the National Housing Authority, shall
implement the relocation and resettlement of persons living in danger areas such as
esteros, railroad tracks, garbage dumps, riverbanks, shorelines, waterways, and in
other public places such as sidewalks, roads, parks and playgrounds. The local
government unit, in coordination with the National Housing Authority, shall provide
relocation or resettlement sites with basic services and facilities and access to
employment and livelihood opportunities sufficient to meet the basic needs of the
affected families.

Section 30. Prohibition Against New Illegal Structures. - It shall be unlawful for any
person to construct any structure in areas mentioned in the preceding section. After the
effectivity of this Act, the barangay, municipal or city government units shall prevent
the construction of any kind or illegal dwelling units or structures within their respective
localities. The head of any local government unit concerned who allows, abets or
otherwise tolerates the construction of any structure in violation of this section shall be
liable to administrative sanctions under existing laws and to penal sanctions provided
for in this Act.

Yet all is not lost for petitioner. It may properly file an action for mandamus to compel
the local government of Las Pias City to enforce with reasonable dispatch the eviction,
demolition, and relocation of respondents and any other persons similarly situated in
order to give flesh to one of the avowed policies of R.A. 7279, which is to reduce urban
dysfunctions, particularly those that adversely affect public health, safety, and
ecology.28chanroblesvirtualawlibrary

Indeed, as one of the basic human needs, housing is a matter of state concern as it
directly and significantly affects the general welfare.29chanroblesvirtualawlibrary
WHEREFORE, the petition is DENIED. The March 5, 2010 Decision and October 29,
2010 Resolution of the Court of Appeals in CA-G.R. CV No. 90254, which affirmed the
May 30, 2007 Decision of the Las Pias RTC, Branch 197, dismissing petitioner's
complaint, is hereby AFFIRMED.

SO ORDERED.
G.R. No. 194077 December 3, 2014

FLORENTINO W. LEONG AND ELENA LEONG, ET AL., Petitioners,


vs.
EDNA C. SEE, Respondent.

DECISION

LEONEN, J.:

Factual findings of lower courts are generally deemed conclusive and binding upon this
court.1 In any event, "even if the procurement of title was tainted with fraud and
misrepresentation, such defective title may be the source of a completely legal and
valid title in the hands of an innocent purchaser for value."2

This petition originated from two civil complaints involving the sale of a parcel of land in
favor of respondent Edna C. See (Edna). Before us is a petition for review3 assailing the
Court of Appeals (a) May 19, 2010 decision affirming in toto the trial court's July 9,
2008 decision granting Edna possession and ownership over the land upon finding her
to be a buyer in good faith and for value, and (b) August 25, 2010 resolution denying
reconsideration.

Petitioners pray for the reversal of the Court of Appeals decision and resolution, as well
as the trial courts decision.4They pray that this court render its decision as follows:

(a) The Deed of Sale between Edna See and Carmelita Leong is hereby declared
null and void. The Register [of] Deeds for the City of Manila is hereby directed to
cancel TCT No. 231105 in the name of Edna See and reinstating TCT No.
175628;

(b) Confirming the right of Elena Leong and those people claiming right under
her, to the possession over the subject property; [and]

(c) Defendants Carmelita Leong and Edna See are declared to be jointly and
severally liable to pay plaintiff, Florentino Leong[,] the sum of Php50,000.00 as
moral damages;the sum of Php50,000.00 a[s] Attorneys Fees; and the cost of
suit.5

The spouses Florentino Leong (Florentino) and Carmelita Leong (Carmelita) used to
own the property located at No. 53941 Z.P. De Guzman Street, Quiapo, Manila.6

Petitioner Elena Leong (Elena) is Florentino's sister-in-law.7 She had stayed with her in-
laws on the property rental-free for over two decades until the building they lived in
was razed by fire.8 They then constructed makeshift houses, and the rental-free
arrangement continued.9 Florentino and Carmelita immigrated to the United States and
eventually had their marriage dissolved in Illinois.10 A provision in their marital
settlement agreement states that"Florentino shall convey and quitclaim all of his right,
title and interest in and to 540 De Guzman Street, Manila, Philippines . . . to
Carmelita."11

The Court of Appeals found that "[a]pparently intercalated in the lower margin of page
12 of the instrument was a long-hand scribbling of a proviso, purporting to be a
footnote remark":12 Neither party shall evict or charge rent to relatives of the parties, or
convey title, until it has been established that Florentino has clear title to the Malabon
property. Clear title to be established by the attorneys for the parties or the ruling of a
court of competent jurisdiction. In the event Florentino does not obtain clear title, this
court reserves jurisdiction to reapportion the properties or their values to effect a 50-50
division of the value of the 2 remaining Philippine properties.13

On November 14, 1996,14 Carmelita sold the land to Edna.15 In lieu of Florentino's
signature of conformity in the deed of absolute sale, Carmelita presented to Edna and
her father, witness Ernesto See, a waiver of interest notarized on March 11, 1996 in
Illinois.16 In this waiver, Florentino reiterated his quitclaim over his right, title, and
interest to the land.17 Consequently, the lands title, covered by TCT No. 231105, was
transferred to Edna's name.18

Edna was aware of the Leong relatives staying in the makeshift houses on the
land.19 Carmelita assured her that her nieces and nephews would move out, but
demands to vacate were unheeded.20

On April 1, 1997,21 Edna filed a complaint22 for recovery of possession against Elena
and the other relatives of the Leong ex-spouses.23

The complaint alleged that in 1995 after the fire had razed the building on the land,
Elena erected makeshift houses on the land without Carmelitas knowledge or
consent.24

In response, Elena alleged the titles legal infirmity for lack of Florentino's conformity to
its sale.25 She argued that Carmelita's noncompliance with the proviso in the property
agreement that the Quiapo property "may not be alienated without Florentino first
obtaining a clean title over the Malabon property"26 annulled the transfer to Edna.

On April 23, 1997, Florentino filed a complaint27 for declaration of nullity of contract,
title, and damages against Carmelita Leong, Edna C. See, and the Manila Register of
Deeds, alleging that the sale was without his consent.28The two cases were
consolidated.

The Regional Trial Court, in its decision29 dated July 9,2008, ruled in favor of Edna:
WHEREFORE, in view of the foregoing, judgment is hereby rendered as follows:
(a) Defendant Edna See is granted possession and ownership over the subject
property;

(b) Defendants Elena Leong and all other persons are directed to vacate the
premises at 539541 Guzman Street, Quiapo, Manila; [and]

(c) Defendant Carmelita Leong is ordered to pay plaintiff, Florentino Leong his
one-half (1/2) or 2Million with interest thereon at the rate of 6% per annum from
the date of conveyance on November 12, 1996, up to the finality of this
Decision; the sum of PhP 50,000.00 as moral damages; the sum of PhP
50,000.00 for attorneys fees; and, the costs of the suit.

SO ORDERED.30

The Court of Appeals, in its decision31 dated May 19, 2010, affirmed in toto the trial
courts decision.32 It likewise denied reconsideration.

Thus, this petition for review was filed.

Petitioners contend that the principle of indefeasibility of Torrens titles does not apply
when fraud exists, and respondent was a buyer in bad faith.33 Respondent knew at the
time of the purchase that Elena had actual possession of the property, thus, she should
have made inquiries on their right to the property.34

Petitioners argue the conjugal nature of the property, evidenced by the title in the
names of Florentino and Carmelita Leong, and the waiver relied upon by
respondent.35 They cite Articles 336 and 1537 of the Civil Code, and Articles 8738 and
13439 of the Family Code, to support their contention that respondent should have
demanded Florentinos consent to the sale.40 Petitioners submit that Florentinos waiver
is void since donations between spouses are void.41

Petitioners argue that respondent should bear the loss42 of her negligence in purchasing
the property without Florentinos consent.43 They cite at length Aggabao v. Parulan,
Jr.44 to support their argument that respondent failed to exercise the required due
diligence in the purchase of the property.45 Consequently, petitioners submit that the
lower courts erred in ruling that respondent was entitled to possession of the
property.46

Respondent counters that only questions of law can be raised in a petition for review on
certiorari, and petitioners raise purely factual questions.47

In any event, the lower courts correctly found that respondent is a purchaser in good
faith for value who exercised the necessary diligence in purchasing the property.48
First, good faith is presumed, and petitioners did not substantiate their bold allegation
of fraud.49 Second, respondent did notrely on the clean title alone precisely because of
the possession by third parties, thus, she also relied on Florentinos waiver of
interest.50 Respondent even verified the authenticity of the title at the Manila Register
of Deeds with her father and Carmelita.51 These further inquiries prove respondents
good faith.52

Respondent submits that petitioners invocation of the Civil Code provisions misleads
this court.53 Philippine laws cannot govern Florentino who was already an American
citizen when he executed the waiver of interest, obtained a divorce, and signed a
marital settlement agreement with Carmelita on July 8, 1994.54 The waiver was also a
consequence of the separation of properties and not in the nature of a donation
between spouses.55

Lastly, respondent argues that "between possessors who are not owners and a buyer in
good faith and for value,it is clear in this case that the Respondent Edna See, the buyer
in good faith, has the greater right to possession over the subject property."56

The sole issue for resolution is whether respondent Edna C. See is a buyer in good faith
and for value.

We affirm the Court of Appeals.

The Torrens system was adopted to "obviate possible conflicts of title by giving the
public the right to rely upon the face of the Torrens certificate and to dispense, as a
rule, with the necessity of inquiring further."57

One need not inquire beyond the four corners of the certificate of title when dealing
with registered property.58Section 44 of Presidential Decree No. 1529 known as the
Property Registration Decree recognizes innocent purchasers in good faith for value and
their right to rely on a clean title:

Section 44. Statutory liens affecting title. - Every registered owner receiving a certificate
of title in pursuance of a decree of registration, and every subsequent purchaser of
registered land taking a certificate of title for value and in good faith, shall hold the
same free from all encumbrances except those noted in said certificate and any of the
following encumbrances which may be subsisting, namely:

First. Liens, claims or rights arising or existing under the laws and Constitution of the
Philippines which are not by law required to appear of record in the Registry of Deeds in
order to be valid against subsequent purchasers or encumbrances of record.

Second. Unpaid real estate taxes levied and assessed within two years immediately
preceding the acquisition of any right over the land by an innocent purchaser for value,
without prejudice to the right of the government to collect taxes payable before that
period from the delinquent taxpayer alone.

Third. Any public highway or private way established or recognized by law, or any
government irrigation canal or lateral thereof, if the certificate of title does not state
that the boundaries of such highway or irrigation canalor lateral thereof have been
determined.

Fourth. Any disposition of the property or limitation on the use thereof by virtue of, or
pursuant to, Presidential Decree No. 27 or any other law or regulations on agrarian
reform.59 (Emphasis supplied)

An innocent purchaser for value refers to someone who "buys the property of another
without notice that some other person has a right to or interest in it, and who paysa full
and fair price at the time of the purchase or before receiving any notice of another
persons claim."60 One claiming to be an innocent purchaser for value has the burden of
proving such status.61

The protection of innocent purchasers in good faith for value grounds on the social
interest embedded in the legal concept granting indefeasibility of titles. Between the
third party and the owner, the latter would be more familiar with the history and status
of the titled property. Consequently, an owner would incur less costs to discover alleged
invalidities relating to the property compared to a third party. Such costs are, thus,
better borne by the owner to mitigate costs for the economy, lessen delays in
transactions, and achieve a less optimal welfare level for the entire society.62

Both lower courts found respondent to be an innocent purchaser in good faith for
value.63 The trial court discussed:

By her overt acts, Edna See with her father verified the authenticity of Carmelitas land
title at the Registry of Deeds of Manila. There was no annotation on the same thus
deemed a clean title (page 19, TSN, 12 January 2005). Also, she relied on the duly
executed and notarized Certificate of Authority issued by the State of Illinois and
Certificate of Authentication issued by the Consul of the Republic of the Philippines for
Illinois in support to the Waiver of Interest incorporated in the Deed of Absolute Sale
presented to her by Carmelita (Exhibit 2). Examination of the assailed Certificate of
Authority shows that it is valid and regular on its face. It contains a notarial seal. . . .

. . . . The assailed Certificate of Authority is a notarized document and therefore,


presumed to be validand duly executed. Thus, Edna Sees reliance on the notarial
acknowledgment found in the duly notarized Certificate of Authority presented by
Carmelita is sufficient evidence of good faith. . . .64

A determination of whether a party is an innocent purchaser in good faith and for value
involves a factual issue beyond the ambit of a petition for review on certiorari.65
Generally, factual findings of lower courts are deemed conclusive and binding upon this
court.66 No cogent reason exists to overturn the findings of both lower courts.

Petitioners raise that "actual possession of the property by a person other than the
vendor should put the purchaser in inquiry and absen[t] such inquiry[,] he cannot be
regarded as a bona fide purchaser against such possessors."67

As discussed by the Court of Appeals, respondent did conduct further inquiry by relying
not only on the certificate of title, but also on Florentinos waiver.68

Petitioners submit that respondent bought the property knowing that Florentino and
Carmelita were married.69 They then invoke Civil Code and Family Code provisions on
the nature of conjugal properties and the prohibition against donations between
spouses.70

Respondent counters that Florentino and Carmelita were already American citizens
when they executed the marital settlement agreement.71 She even presented before the
trial court Florentinos special power of attorney executed on March 25, 1997 to prove
Florentinos citizenship.72

The trial court disregarded petitioners argument on the applicability of our civil laws on
the validity of the sale since it already deemed respondent to be an innocent purchaser
in good faith and for value.73 The trial court added that since "[respondent] parted
witha substantial amount of 4 Million, equity dictates that she shall have possession of
the property[,] [n]onetheless, Florentino Leong shall get his one-half share of the
purchase price."74

On the other hand, the Court of Appeals discussed that Florentino was estopped from
questioning the transfer of the property since he already waived all his rights, title, and
interests over the same.75 The court also found that the intercalated proviso in the
marital settlement agreement violated the mutuality of contracts principle.76

The question of whether Florentino and Carmelita were already American citizens at the
time of the propertys sale to Edna thus no longer covered by our laws relating to
family rights and duties77 involves a factual question outside the ambit of a petition
for review on certiorari. In any event, respondent exerted due diligence when she
ascertained the authenticity of the documents attached to the deed of sale such as the
marital settlement agreement with Florentinos waiver of interest over the property. She
did not rely solely on the title. She even went to the Registry of Deeds to verify the
authenticity of the title.78 These further inquiries were considered by the lower courts in
finding respondent to be an innocent purchaser in good faith and for value.

Lastly, an allegation of fraud must be substantiated. Rule 8, Section 5 of the Rules of


Court provides:
SEC. 5. Fraud, mistake, condition of the mind. In all averments of fraud or mistake,
the circumstances constituting fraud or mistake must be stated with particularity.Malice
intent, knowledge or other condition of the mind of a person may be averred generally.
(Emphasis supplied)

In petitioners memorandum before this court, they mentioned the rule of fraud as an
exception to the indefeasibility of title principle, but failed to substantiate their
allegation by immediately concluding as follows:

Petitioners beg to disagree with the ruling of the Honorable Trial Court and the
Honorable Court of Appeals.1wphi1Respondent Edna See is not a buyer in good faith.
The ruling that every person can rely on the correctness of the certificate of title and
that the buyer need not go beyond the four corners of the title to determine the
condition of the property is not absolute and admits of exception. As held in the case of
Remegia Feliciano vs. Sps. Zaldivar, G.R. No. 162593, 2006 Sep 26 the principle of
indefeasibilty of a Torrens title does not apply where fraud attended the issuance of the
title. The Torrens title does not furnish a shield for fraud. As such, a title issued based
on void documents may be annulled.79 (Emphasis in the original removed)

Even assuming the procurement of title was tainted with fraud and misrepresentation,
"such defective title may still be the source of a completely legal and valid title in the
hands of an innocent purchaser for value."80

Respondent, an innocent purchaser ingood faith and for value with title in her name,
has a better right to the property than Elena. Elenas possession was neither adverse to
nor in the concept of owner.81

Article 428 of the Civil Code provides:

Art. 428. The owner has the right toenjoy and dispose of a thing, without other
limitations than those established by law. The owner has also a right of action against
the holder and possessor of the thing inorder to recover it.82

Thus, respondent had every right to pursue her claims as she did.

WHEREFORE, premises considered, the Court of Appeals' decision in CA-G.R. CV No.


92289 is AFFIRMED.

SO ORDERED.
[G.R. No. 146364. June 3, 2004]

COLITO T. PAJUYO, petitioner, vs. COURT OF APPEALS and EDDIE


GUEVARRA, respondents.

DECISION
CARPIO, J.:

The Case

Before us is a petition for review[1] of the 21 June 2000 Decision[2] and 14 December
2000 Resolution of the Court of Appeals in CA-G.R. SP No. 43129. The Court of Appeals
set aside the 11 November 1996 decision[3] of the Regional Trial Court of Quezon City,
Branch 81,[4] affirming the 15 December 1995 decision[5] of the Metropolitan Trial Court
of Quezon City, Branch 31.[6]

The Antecedents

In June 1979, petitioner Colito T. Pajuyo (Pajuyo) paid P400 to a certain Pedro Perez
for the rights over a 250-square meter lot in Barrio Payatas, Quezon City. Pajuyo then
constructed a house made of light materials on the lot. Pajuyo and his family lived in the
house from 1979 to 7 December 1985.
On 8 December 1985, Pajuyo and private respondent Eddie Guevarra (Guevarra)
executed a Kasunduan or agreement. Pajuyo, as owner of the house, allowed Guevarra
to live in the house for free provided Guevarra would maintain the cleanliness and
orderliness of the house. Guevarra promised that he would voluntarily vacate the
premises on Pajuyos demand.
In September 1994, Pajuyo informed Guevarra of his need of the house and
demanded that Guevarra vacate the house. Guevarra refused.
Pajuyo filed an ejectment case against Guevarra with the Metropolitan Trial Court of
Quezon City, Branch 31 (MTC).
In his Answer, Guevarra claimed that Pajuyo had no valid title or right of possession
over the lot where the house stands because the lot is within the 150 hectares set aside
by Proclamation No. 137 for socialized housing. Guevarra pointed out that from December
1985 to September 1994, Pajuyo did not show up or communicate with him. Guevarra
insisted that neither he nor Pajuyo has valid title to the lot.
On 15 December 1995, the MTC rendered its decision in favor of Pajuyo. The
dispositive portion of the MTC decision reads:

WHEREFORE, premises considered, judgment is hereby rendered for the plaintiff and
against defendant, ordering the latter to:

A) vacate the house and lot occupied by the defendant or any other person or
persons claiming any right under him;
B) pay unto plaintiff the sum of THREE HUNDRED PESOS (P300.00) monthly as
reasonable compensation for the use of the premises starting from the last
demand;
C) pay plaintiff the sum of P3,000.00 as and by way of attorneys fees; and
D) pay the cost of suit.

SO ORDERED.[7]

Aggrieved, Guevarra appealed to the Regional Trial Court of Quezon City, Branch 81
(RTC).
On 11 November 1996, the RTC affirmed the MTC decision. The dispositive portion
of the RTC decision reads:

WHEREFORE, premises considered, the Court finds no reversible error in the decision
appealed from, being in accord with the law and evidence presented, and the same is
hereby affirmed en toto.

SO ORDERED.[8]

Guevarra received the RTC decision on 29 November 1996. Guevarra had only until
14 December 1996 to file his appeal with the Court of Appeals. Instead of filing his appeal
with the Court of Appeals, Guevarra filed with the Supreme Court a Motion for Extension
of Time to File Appeal by Certiorari Based on Rule 42 (motion for extension). Guevarra
theorized that his appeal raised pure questions of law. The Receiving Clerk of the
Supreme Court received the motion for extension on 13 December 1996 or one day before
the right to appeal expired.
On 3 January 1997, Guevarra filed his petition for review with the Supreme Court.
On 8 January 1997, the First Division of the Supreme Court issued a
Resolution[9] referring the motion for extension to the Court of Appeals which has
concurrent jurisdiction over the case. The case presented no special and important matter
for the Supreme Court to take cognizance of at the first instance.
On 28 January 1997, the Thirteenth Division of the Court of Appeals issued a
Resolution[10] granting the motion for extension conditioned on the timeliness of the filing
of the motion.
On 27 February 1997, the Court of Appeals ordered Pajuyo to comment on Guevaras
petition for review. On 11 April 1997, Pajuyo filed his Comment.
On 21 June 2000, the Court of Appeals issued its decision reversing the RTC
decision. The dispositive portion of the decision reads:

WHEREFORE, premises considered, the assailed Decision of the court a quo in Civil
Case No. Q-96-26943 is REVERSED and SET ASIDE; and it is hereby declared that
the ejectment case filed against defendant-appellant is without factual and legal basis.

SO ORDERED.[11]

Pajuyo filed a motion for reconsideration of the decision. Pajuyo pointed out that the
Court of Appeals should have dismissed outright Guevarras petition for review because it
was filed out of time. Moreover, it was Guevarras counsel and not Guevarra who signed
the certification against forum-shopping.
On 14 December 2000, the Court of Appeals issued a resolution denying Pajuyos
motion for reconsideration. The dispositive portion of the resolution reads:

WHEREFORE, for lack of merit, the motion for reconsideration is hereby DENIED. No
costs.

SO ORDERED.[12]

The Ruling of the MTC

The MTC ruled that the subject of the agreement between Pajuyo and Guevarra is
the house and not the lot. Pajuyo is the owner of the house, and he allowed Guevarra to
use the house only by tolerance. Thus, Guevarras refusal to vacate the house on Pajuyos
demand made Guevarras continued possession of the house illegal.

The Ruling of the RTC

The RTC upheld the Kasunduan, which established the landlord and tenant
relationship between Pajuyo and Guevarra. The terms of the Kasunduan bound Guevarra
to return possession of the house on demand.
The RTC rejected Guevarras claim of a better right under Proclamation No. 137, the
Revised National Government Center Housing Project Code of Policies and other pertinent
laws. In an ejectment suit, the RTC has no power to decide Guevarras rights under these
laws. The RTC declared that in an ejectment case, the only issue for resolution is material
or physical possession, not ownership.

The Ruling of the Court of Appeals

The Court of Appeals declared that Pajuyo and Guevarra are squatters. Pajuyo and
Guevarra illegally occupied the contested lot which the government owned.
Perez, the person from whom Pajuyo acquired his rights, was also a squatter. Perez
had no right or title over the lot because it is public land. The assignment of rights
between Perez and Pajuyo, and the Kasunduan between Pajuyo and Guevarra, did not
have any legal effect. Pajuyo and Guevarra are in pari delicto or in equal fault. The court
will leave them where they are.
The Court of Appeals reversed the MTC and RTC rulings, which held that
the Kasunduan between Pajuyo and Guevarra created a legal tie akin to that of a landlord
and tenant relationship. The Court of Appeals ruled that the Kasunduan is not a lease
contract but a commodatum because the agreement is not for a price certain.
Since Pajuyo admitted that he resurfaced only in 1994 to claim the property, the
appellate court held that Guevarra has a better right over the property under Proclamation
No. 137.President Corazon C. Aquino (President Aquino) issued Proclamation No. 137 on
7 September 1987. At that time, Guevarra was in physical possession of the
property. Under Article VI of the Code of Policies Beneficiary Selection and Disposition of
Homelots and Structures in the National Housing Project (the Code), the actual occupant
or caretaker of the lot shall have first priority as beneficiary of the project. The Court of
Appeals concluded that Guevarra is first in the hierarchy of priority.
In denying Pajuyos motion for reconsideration, the appellate court debunked Pajuyos
claim that Guevarra filed his motion for extension beyond the period to appeal.
The Court of Appeals pointed out that Guevarras motion for extension filed before
the Supreme Court was stamped 13 December 1996 at 4:09 PM by the Supreme Courts
Receiving Clerk. The Court of Appeals concluded that the motion for extension bore a
date, contrary to Pajuyos claim that the motion for extension was undated. Guevarra filed
the motion for extension on time on 13 December 1996 since he filed the motion one day
before the expiration of the reglementary period on 14 December 1996. Thus, the motion
for extension properly complied with the condition imposed by the Court of Appeals in its
28 January 1997 Resolution. The Court of Appeals explained that the thirty-day extension
to file the petition for review was deemed granted because of such compliance.
The Court of Appeals rejected Pajuyos argument that the appellate court should have
dismissed the petition for review because it was Guevarras counsel and not Guevarra who
signed the certification against forum-shopping. The Court of Appeals pointed out that
Pajuyo did not raise this issue in his Comment. The Court of Appeals held that Pajuyo
could not now seek the dismissal of the case after he had extensively argued on the
merits of the case. This technicality, the appellate court opined, was clearly an
afterthought.

The Issues

Pajuyo raises the following issues for resolution:

WHETHER THE COURT OF APPEALS ERRED OR ABUSED ITS AUTHORITY AND


DISCRETION TANTAMOUNT TO LACK OF JURISDICTION:

1) in GRANTING, instead of denying, Private Respondents Motion for an


Extension of thirty days to file petition for review at the time when
there was no more period to extend as the decision of the Regional
Trial Court had already become final and executory.
2) in giving due course, instead of dismissing, private
respondents Petition for Review even though the certification against
forum-shopping was signed only by counsel instead of by petitioner
himself.
3) in ruling that the Kasunduan voluntarily entered into by the parties
was in fact a commodatum, instead of a Contract of Lease as found
by the Metropolitan Trial Court and in holding that the ejectment case
filed against defendant-appellant is without legal and factual basis.
4) in reversing and setting aside the Decision of the Regional Trial Court
in Civil Case No. Q-96-26943 and in holding that the parties are in
pari delicto being both squatters, therefore, illegal occupants of the
contested parcel of land.
5) in deciding the unlawful detainer case based on the so-called Code of
Policies of the National Government Center Housing Project instead
of deciding the same under the Kasunduan voluntarily executed by
the parties, the terms and conditions of which are the laws between
themselves.[13]

The Ruling of the Court

The procedural issues Pajuyo is raising are baseless. However, we find merit in the
substantive issues Pajuyo is submitting for resolution.
Procedural Issues

Pajuyo insists that the Court of Appeals should have dismissed outright Guevarras
petition for review because the RTC decision had already become final and executory
when the appellate court acted on Guevarras motion for extension to file the
petition. Pajuyo points out that Guevarra had only one day before the expiry of his period
to appeal the RTC decision.Instead of filing the petition for review with the Court of
Appeals, Guevarra filed with this Court an undated motion for extension of 30 days to file
a petition for review. This Court merely referred the motion to the Court of
Appeals. Pajuyo believes that the filing of the motion for extension with this Court did not
toll the running of the period to perfect the appeal. Hence, when the Court of Appeals
received the motion, the period to appeal had already expired.
We are not persuaded.
Decisions of the regional trial courts in the exercise of their appellate jurisdiction are
appealable to the Court of Appeals by petition for review in cases involving questions of
fact or mixed questions of fact and law.[14] Decisions of the regional trial courts involving
pure questions of law are appealable directly to this Court by petition for review.[15] These
modes of appeal are now embodied in Section 2, Rule 41 of the 1997 Rules of Civil
Procedure.
Guevarra believed that his appeal of the RTC decision involved only questions of
law. Guevarra thus filed his motion for extension to file petition for review before this
Court on 14 December 1996. On 3 January 1997, Guevarra then filed his petition for
review with this Court. A perusal of Guevarras petition for review gives the impression
that the issues he raised were pure questions of law. There is a question of law when the
doubt or difference is on what the law is on a certain state of facts.[16] There is a question
of fact when the doubt or difference is on the truth or falsity of the facts alleged.[17]
In his petition for review before this Court, Guevarra no longer disputed the
facts. Guevarras petition for review raised these questions: (1) Do ejectment cases
pertain only to possession of a structure, and not the lot on which the structure stands?
(2) Does a suit by a squatter against a fellow squatter constitute a valid case for
ejectment? (3) Should a Presidential Proclamation governing the lot on which a squatters
structure stands be considered in an ejectment suit filed by the owner of the structure?
These questions call for the evaluation of the rights of the parties under the law on
ejectment and the Presidential Proclamation. At first glance, the questions Guevarra
raised appeared purely legal. However, some factual questions still have to be resolved
because they have a bearing on the legal questions raised in the petition for
review. These factual matters refer to the metes and bounds of the disputed property
and the application of Guevarra as beneficiary of Proclamation No. 137.
The Court of Appeals has the power to grant an extension of time to file a petition
for review. In Lacsamana v. Second Special Cases Division of the Intermediate
Appellate Court,[18] we declared that the Court of Appeals could grant extension of time
in appeals by petition for review. In Liboro v. Court of Appeals,[19] we clarified that
the prohibition against granting an extension of time applies only in a case where ordinary
appeal is perfected by a mere notice of appeal. The prohibition does not apply in a petition
for review where the pleading needs verification. A petition for review, unlike an ordinary
appeal, requires preparation and research to present a persuasive position. [20] The
drafting of the petition for review entails more time and effort than filing a notice of
appeal.[21] Hence, the Court of Appeals may allow an extension of time to file a petition
for review.
In the more recent case of Commissioner of Internal Revenue v. Court of
Appeals,[22] we held that Liboros clarification of Lacsamana is consistent with the
Revised Internal Rules of the Court of Appeals and Supreme Court Circular No. 1-91. They
all allow an extension of time for filing petitions for review with the Court of Appeals. The
extension, however, should be limited to only fifteen days save in exceptionally
meritorious cases where the Court of Appeals may grant a longer period.
A judgment becomes final and executory by operation of law. Finality of judgment
becomes a fact on the lapse of the reglementary period to appeal if no appeal is
perfected.[23] The RTC decision could not have gained finality because the Court of
Appeals granted the 30-day extension to Guevarra.
The Court of Appeals did not commit grave abuse of discretion when it approved
Guevarras motion for extension. The Court of Appeals gave due course to the motion for
extension because it complied with the condition set by the appellate court in its
resolution dated 28 January 1997. The resolution stated that the Court of Appeals would
only give due course to the motion for extension if filed on time. The motion for extension
met this condition.
The material dates to consider in determining the timeliness of the filing of the motion
for extension are (1) the date of receipt of the judgment or final order or resolution
subject of the petition, and (2) the date of filing of the motion for extension.[24] It is the
date of the filing of the motion or pleading, and not the date of execution, that determines
the timeliness of the filing of that motion or pleading. Thus, even if the motion for
extension bears no date, the date of filing stamped on it is the reckoning point for
determining the timeliness of its filing.
Guevarra had until 14 December 1996 to file an appeal from the RTC
decision. Guevarra filed his motion for extension before this Court on 13 December 1996,
the date stamped by this Courts Receiving Clerk on the motion for extension. Clearly,
Guevarra filed the motion for extension exactly one day before the lapse of the
reglementary period to appeal.
Assuming that the Court of Appeals should have dismissed Guevarras appeal on
technical grounds, Pajuyo did not ask the appellate court to deny the motion for extension
and dismiss the petition for review at the earliest opportunity. Instead, Pajuyo vigorously
discussed the merits of the case. It was only when the Court of Appeals ruled in Guevarras
favor that Pajuyo raised the procedural issues against Guevarras petition for review.
A party who, after voluntarily submitting a dispute for resolution, receives an adverse
decision on the merits, is estopped from attacking the jurisdiction of the
court.[25] Estoppel sets in not because the judgment of the court is a valid and conclusive
adjudication, but because the practice of attacking the courts jurisdiction after voluntarily
submitting to it is against public policy.[26]
In his Comment before the Court of Appeals, Pajuyo also failed to discuss Guevarras
failure to sign the certification against forum shopping. Instead, Pajuyo harped on
Guevarras counsel signing the verification, claiming that the counsels verification is
insufficient since it is based only on mere information.
A partys failure to sign the certification against forum shopping is different from the
partys failure to sign personally the verification. The certificate of non-forum shopping
must be signed by the party, and not by counsel.[27] The certification of counsel renders
the petition defective.[28]
On the other hand, the requirement on verification of a pleading is a formal and not
a jurisdictional requisite.[29] It is intended simply to secure an assurance that what are
alleged in the pleading are true and correct and not the product of the imagination or a
matter of speculation, and that the pleading is filed in good faith.[30] The party need not
sign the verification. A partys representative, lawyer or any person who personally knows
the truth of the facts alleged in the pleading may sign the verification.[31]
We agree with the Court of Appeals that the issue on the certificate against forum
shopping was merely an afterthought. Pajuyo did not call the Court of Appeals attention
to this defect at the early stage of the proceedings. Pajuyo raised this procedural issue
too late in the proceedings.

Absence of Title over the Disputed Property will not Divest the Courts of
Jurisdiction to Resolve the Issue of Possession

Settled is the rule that the defendants claim of ownership of the disputed property
will not divest the inferior court of its jurisdiction over the ejectment case.[32] Even if the
pleadings raise the issue of ownership, the court may pass on such issue to determine
only the question of possession, especially if the ownership is inseparably linked with the
possession.[33] The adjudication on the issue of ownership is only provisional and will not
bar an action between the same parties involving title to the land.[34] This doctrine is a
necessary consequence of the nature of the two summary actions of ejectment, forcible
entry and unlawful detainer, where the only issue for adjudication is the physical or
material possession over the real property.[35]
In this case, what Guevarra raised before the courts was that he and Pajuyo are not
the owners of the contested property and that they are mere squatters. Will the defense
that the parties to the ejectment case are not the owners of the disputed lot allow the
courts to renounce their jurisdiction over the case? The Court of Appeals believed so and
held that it would just leave the parties where they are since they are in pari delicto.
We do not agree with the Court of Appeals.
Ownership or the right to possess arising from ownership is not at issue in an action
for recovery of possession. The parties cannot present evidence to prove ownership or
right to legal possession except to prove the nature of the possession when necessary to
resolve the issue of physical possession.[36] The same is true when the defendant asserts
the absence of title over the property. The absence of title over the contested lot is not
a ground for the courts to withhold relief from the parties in an ejectment case.
The only question that the courts must resolve in ejectment proceedings is - who is
entitled to the physical possession of the premises, that is, to the possession de facto and
not to the possession de jure.[37] It does not even matter if a partys title to the property
is questionable,[38] or when both parties intruded into public land and their applications
to own the land have yet to be approved by the proper government
agency.[39] Regardless of the actual condition of the title to the property, the party in
peaceable quiet possession shall not be thrown out by a strong hand, violence or
terror.[40] Neither is the unlawful withholding of property allowed. Courts will always
uphold respect for prior possession.
Thus, a party who can prove prior possession can recover such possession even
against the owner himself.[41] Whatever may be the character of his possession, if he has
in his favor prior possession in time, he has the security that entitles him to remain on
the property until a person with a better right lawfully ejects him.[42] To repeat, the only
issue that the court has to settle in an ejectment suit is the right to physical possession.
In Pitargue v. Sorilla,[43] the government owned the land in dispute. The
government did not authorize either the plaintiff or the defendant in the case of forcible
entry case to occupy the land. The plaintiff had prior possession and had already
introduced improvements on the public land. The plaintiff had a pending application for
the land with the Bureau of Lands when the defendant ousted him from possession. The
plaintiff filed the action of forcible entry against the defendant. The government was not
a party in the case of forcible entry.
The defendant questioned the jurisdiction of the courts to settle the issue of
possession because while the application of the plaintiff was still pending, title remained
with the government, and the Bureau of Public Lands had jurisdiction over the case. We
disagreed with the defendant. We ruled that courts have jurisdiction to entertain
ejectment suits even before the resolution of the application. The plaintiff, by priority of
his application and of his entry, acquired prior physical possession over the public land
applied for as against other private claimants. That prior physical possession enjoys legal
protection against other private claimants because only a court can take away such
physical possession in an ejectment case.
While the Court did not brand the plaintiff and the defendant in Pitargue[44] as
squatters, strictly speaking, their entry into the disputed land was illegal. Both the plaintiff
and defendant entered the public land without the owners permission. Title to the land
remained with the government because it had not awarded to anyone ownership of the
contested public land. Both the plaintiff and the defendant were in effect squatting on
government property. Yet, we upheld the courts jurisdiction to resolve the issue of
possession even if the plaintiff and the defendant in the ejectment case did not have any
title over the contested land.
Courts must not abdicate their jurisdiction to resolve the issue of physical possession
because of the public need to preserve the basic policy behind the summary actions of
forcible entry and unlawful detainer. The underlying philosophy behind ejectment suits is
to prevent breach of the peace and criminal disorder and to compel the party out of
possession to respect and resort to the law alone to obtain what he claims is his. [45] The
party deprived of possession must not take the law into his own hands.[46] Ejectment
proceedings are summary in nature so the authorities can settle speedily actions to
recover possession because of the overriding need to quell social disturbances.[47]
We further explained in Pitargue the greater interest that is at stake in actions for
recovery of possession. We made the following pronouncements in Pitargue:

The question that is before this Court is: Are courts without jurisdiction to take
cognizance of possessory actions involving these public lands before final award is
made by the Lands Department, and before title is given any of the conflicting
claimants? It is one of utmost importance, as there are public lands everywhere and
there are thousands of settlers, especially in newly opened regions. It also involves a
matter of policy, as it requires the determination of the respective authorities and
functions of two coordinate branches of the Government in connection with public land
conflicts.

Our problem is made simple by the fact that under the Civil Code, either in the old,
which was in force in this country before the American occupation, or in the new, we
have a possessory action, the aim and purpose of which is the recovery of the physical
possession of real property, irrespective of the question as to who has the title thereto.
Under the Spanish Civil Code we had the accion interdictal, a summary proceeding
which could be brought within one year from dispossession (Roman Catholic Bishop of
Cebu vs. Mangaron, 6 Phil. 286, 291); and as early as October 1, 1901, upon the
enactment of the Code of Civil Procedure (Act No. 190 of the Philippine Commission) we
implanted the common law action of forcible entry (section 80 of Act No. 190), the
object of which has been stated by this Court to be to prevent breaches of the
peace and criminal disorder which would ensue from the withdrawal of the
remedy, and the reasonable hope such withdrawal would create that some
advantage must accrue to those persons who, believing themselves entitled
to the possession of property, resort to force to gain possession rather than
to some appropriate action in the court to assert their claims. (Supia and
Batioco vs. Quintero and Ayala, 59 Phil. 312, 314.) So before the enactment of the first
Public Land Act (Act No. 926) the action of forcible entry was already available in the
courts of the country. So the question to be resolved is, Did the Legislature intend,
when it vested the power and authority to alienate and dispose of the public lands in
the Lands Department, to exclude the courts from entertaining the possessory action of
forcible entry between rival claimants or occupants of any land before award thereof to
any of the parties? Did Congress intend that the lands applied for, or all public lands for
that matter, be removed from the jurisdiction of the judicial Branch of the Government,
so that any troubles arising therefrom, or any breaches of the peace or disorders
caused by rival claimants, could be inquired into only by the Lands Department to the
exclusion of the courts? The answer to this question seems to us evident. The Lands
Department does not have the means to police public lands; neither does it have the
means to prevent disorders arising therefrom, or contain breaches of the peace among
settlers; or to pass promptly upon conflicts of possession. Then its power is clearly
limited to disposition and alienation, and while it may decide conflicts of
possession in order to make proper award, the settlement of conflicts of
possession which is recognized in the court herein has another ultimate
purpose, i.e., the protection of actual possessors and occupants with a view
to the prevention of breaches of the peace. The power to dispose and
alienate could not have been intended to include the power to prevent or
settle disorders or breaches of the peace among rival settlers or claimants
prior to the final award. As to this, therefore, the corresponding branches of the
Government must continue to exercise power and jurisdiction within the limits of their
respective functions. The vesting of the Lands Department with authority to
administer, dispose, and alienate public lands, therefore, must not be
understood as depriving the other branches of the Government of the
exercise of the respective functions or powers thereon, such as the authority
to stop disorders and quell breaches of the peace by the police, the authority
on the part of the courts to take jurisdiction over possessory actions arising
therefrom not involving, directly or indirectly, alienation and disposition.

Our attention has been called to a principle enunciated in American courts to the effect
that courts have no jurisdiction to determine the rights of claimants to public lands, and
that until the disposition of the land has passed from the control of the Federal
Government, the courts will not interfere with the administration of matters concerning
the same. (50 C. J. 1093-1094.) We have no quarrel with this principle. The
determination of the respective rights of rival claimants to public lands is different from
the determination of who has the actual physical possession or occupation with a view
to protecting the same and preventing disorder and breaches of the peace. A judgment
of the court ordering restitution of the possession of a parcel of land to the actual
occupant, who has been deprived thereof by another through the use of force or in any
other illegal manner, can never be prejudicial interference with the disposition or
alienation of public lands. On the other hand, if courts were deprived of
jurisdiction of cases involving conflicts of possession, that threat of judicial
action against breaches of the peace committed on public lands would be
eliminated, and a state of lawlessness would probably be produced between
applicants, occupants or squatters, where force or might, not right or justice,
would rule.

It must be borne in mind that the action that would be used to solve conflicts of
possession between rivals or conflicting applicants or claimants would be no other than
that of forcible entry. This action, both in England and the United States and in our
jurisdiction, is a summary and expeditious remedy whereby one in peaceful and quiet
possession may recover the possession of which he has been deprived by a stronger
hand, by violence or terror; its ultimate object being to prevent breach of the peace and
criminal disorder. (Supia and Batioco vs. Quintero and Ayala, 59 Phil. 312, 314.) The
basis of the remedy is mere possession as a fact, of physical possession, not a legal
possession. (Mediran vs. Villanueva, 37 Phil. 752.) The title or right to possession is
never in issue in an action of forcible entry; as a matter of fact, evidence thereof is
expressly banned, except to prove the nature of the possession. (Second 4, Rule 72,
Rules of Court.) With this nature of the action in mind, by no stretch of the imagination
can conclusion be arrived at that the use of the remedy in the courts of justice would
constitute an interference with the alienation, disposition, and control of public lands.
To limit ourselves to the case at bar can it be pretended at all that its result would in
any way interfere with the manner of the alienation or disposition of the land
contested? On the contrary, it would facilitate adjudication, for the question of priority
of possession having been decided in a final manner by the courts, said question need
no longer waste the time of the land officers making the adjudication or
award. (Emphasis ours)

The Principle of Pari Delicto is not Applicable to Ejectment Cases

The Court of Appeals erroneously applied the principle of pari delicto to this case.
Articles 1411 and 1412 of the Civil Code[48] embody the principle of pari delicto. We
explained the principle of pari delicto in these words:

The rule of pari delicto is expressed in the maxims ex dolo malo non eritur actio and in
pari delicto potior est conditio defedentis. The law will not aid either party to an illegal
agreement. It leaves the parties where it finds them.[49]

The application of the pari delicto principle is not absolute, as there are exceptions
to its application. One of these exceptions is where the application of the pari delicto rule
would violate well-established public policy.[50]
In Drilon v. Gaurana,[51] we reiterated the basic policy behind the summary actions
of forcible entry and unlawful detainer. We held that:

It must be stated that the purpose of an action of forcible entry and detainer is that,
regardless of the actual condition of the title to the property, the party in peaceable
quiet possession shall not be turned out by strong hand, violence or terror. In affording
this remedy of restitution the object of the statute is to prevent breaches of the peace
and criminal disorder which would ensue from the withdrawal of the remedy, and the
reasonable hope such withdrawal would create that some advantage must accrue to
those persons who, believing themselves entitled to the possession of property, resort
to force to gain possession rather than to some appropriate action in the courts to
assert their claims. This is the philosophy at the foundation of all these actions of
forcible entry and detainer which are designed to compel the party out of possession to
respect and resort to the law alone to obtain what he claims is his.[52]

Clearly, the application of the principle of pari delicto to a case of ejectment between
squatters is fraught with danger. To shut out relief to squatters on the ground of pari
delicto would openly invite mayhem and lawlessness. A squatter would oust another
squatter from possession of the lot that the latter had illegally occupied, emboldened by
the knowledge that the courts would leave them where they are. Nothing would then
stand in the way of the ousted squatter from re-claiming his prior possession at all cost.
Petty warfare over possession of properties is precisely what ejectment cases or
actions for recovery of possession seek to prevent.[53] Even the owner who has title over
the disputed property cannot take the law into his own hands to regain possession of his
property. The owner must go to court.
Courts must resolve the issue of possession even if the parties to the ejectment suit
are squatters. The determination of priority and superiority of possession is a serious and
urgent matter that cannot be left to the squatters to decide. To do so would make
squatters receive better treatment under the law. The law restrains property owners from
taking the law into their own hands. However, the principle of pari delicto as applied by
the Court of Appeals would give squatters free rein to dispossess fellow squatters or
violently retake possession of properties usurped from them. Courts should not leave
squatters to their own devices in cases involving recovery of possession.

Possession is the only Issue for Resolution in an Ejectment Case

The case for review before the Court of Appeals was a simple case of ejectment. The
Court of Appeals refused to rule on the issue of physical possession. Nevertheless, the
appellate court held that the pivotal issue in this case is who between Pajuyo and
Guevarra has the priority right as beneficiary of the contested land under Proclamation
No. 137.[54] According to the Court of Appeals, Guevarra enjoys preferential right under
Proclamation No. 137 because Article VI of the Code declares that the actual occupant or
caretaker is the one qualified to apply for socialized housing.
The ruling of the Court of Appeals has no factual and legal basis.
First. Guevarra did not present evidence to show that the contested lot is part of a
relocation site under Proclamation No. 137. Proclamation No. 137 laid down the metes
and bounds of the land that it declared open for disposition to bona fide residents.
The records do not show that the contested lot is within the land specified by
Proclamation No. 137. Guevarra had the burden to prove that the disputed lot is within
the coverage of Proclamation No. 137. He failed to do so.
Second. The Court of Appeals should not have given credence to Guevarras
unsubstantiated claim that he is the beneficiary of Proclamation No. 137. Guevarra merely
alleged that in the survey the project administrator conducted, he and not Pajuyo
appeared as the actual occupant of the lot.
There is no proof that Guevarra actually availed of the benefits of Proclamation No.
137. Pajuyo allowed Guevarra to occupy the disputed property in 1985. President Aquino
signed Proclamation No. 137 into law on 11 March 1986. Pajuyo made his earliest demand
for Guevarra to vacate the property in September 1994.
During the time that Guevarra temporarily held the property up to the time that
Proclamation No. 137 allegedly segregated the disputed lot, Guevarra never applied as
beneficiary of Proclamation No. 137. Even when Guevarra already knew that Pajuyo was
reclaiming possession of the property, Guevarra did not take any step to comply with the
requirements of Proclamation No. 137.
Third. Even assuming that the disputed lot is within the coverage of Proclamation
No. 137 and Guevarra has a pending application over the lot, courts should still assume
jurisdiction and resolve the issue of possession. However, the jurisdiction of the courts
would be limited to the issue of physical possession only.
In Pitargue,[55] we ruled that courts have jurisdiction over possessory actions
involving public land to determine the issue of physical possession. The determination of
the respective rights of rival claimants to public land is, however, distinct from the
determination of who has the actual physical possession or who has a better right of
physical possession.[56] The administrative disposition and alienation of public lands
should be threshed out in the proper government agency.[57]
The Court of Appeals determination of Pajuyo and Guevarras rights under
Proclamation No. 137 was premature. Pajuyo and Guevarra were at most merely potential
beneficiaries of the law. Courts should not preempt the decision of the administrative
agency mandated by law to determine the qualifications of applicants for the acquisition
of public lands. Instead, courts should expeditiously resolve the issue of physical
possession in ejectment cases to prevent disorder and breaches of peace.[58]

Pajuyo is Entitled to Physical Possession of the Disputed Property


Guevarra does not dispute Pajuyos prior possession of the lot and ownership of the
house built on it. Guevarra expressly admitted the existence and due execution of
the Kasunduan.The Kasunduan reads:

Ako, si COL[I]TO PAJUYO, may-ari ng bahay at lote sa Bo. Payatas, Quezon City, ay
nagbibigay pahintulot kay G. Eddie Guevarra, na pansamantalang manirahan sa
nasabing bahay at lote ng walang bayad.Kaugnay nito, kailangang panatilihin nila ang
kalinisan at kaayusan ng bahay at lote.

Sa sandaling kailangan na namin ang bahay at lote, silay kusang aalis ng walang
reklamo.

Based on the Kasunduan, Pajuyo permitted Guevarra to reside in the house and lot
free of rent, but Guevarra was under obligation to maintain the premises in good
condition. Guevarra promised to vacate the premises on Pajuyos demand but Guevarra
broke his promise and refused to heed Pajuyos demand to vacate.
These facts make out a case for unlawful detainer. Unlawful detainer involves the
withholding by a person from another of the possession of real property to which the
latter is entitled after the expiration or termination of the formers right to hold
possession under a contract, express or implied.[59]
Where the plaintiff allows the defendant to use his property by tolerance without any
contract, the defendant is necessarily bound by an implied promise that he will vacate on
demand, failing which, an action for unlawful detainer will lie.[60] The defendants refusal
to comply with the demand makes his continued possession of the property
unlawful.[61] The status of the defendant in such a case is similar to that of a lessee or
tenant whose term of lease has expired but whose occupancy continues by tolerance of
the owner.[62]
This principle should apply with greater force in cases where a contract embodies the
permission or tolerance to use the property. The Kasunduan expressly articulated
Pajuyos forbearance. Pajuyo did not require Guevarra to pay any rent but only to maintain
the house and lot in good condition. Guevarra expressly vowed in the Kasunduan that he
would vacate the property on demand. Guevarras refusal to comply with Pajuyos demand
to vacate made Guevarras continued possession of the property unlawful.
We do not subscribe to the Court of Appeals theory that the Kasunduan is one
of commodatum.
In a contract of commodatum, one of the parties delivers to another something not
consumable so that the latter may use the same for a certain time and return it. [63] An
essential feature of commodatum is that it is gratuitous. Another feature
of commodatum is that the use of the thing belonging to another is for a certain
period.[64] Thus, the bailor cannot demand the return of the thing loaned until after
expiration of the period stipulated, or after accomplishment of the use for which
the commodatum is constituted.[65] If the bailor should have urgent need of the thing, he
may demand its return for temporary use.[66] If the use of the thing is merely tolerated
by the bailor, he can demand the return of the thing at will, in which case the contractual
relation is called a precarium.[67] Under the Civil Code, precarium is a kind
of commodatum.[68]
The Kasunduan reveals that the accommodation accorded by Pajuyo to Guevarra was
not essentially gratuitous. While the Kasunduan did not require Guevarra to pay rent, it
obligated him to maintain the property in good condition. The imposition of this obligation
makes the Kasunduan a contract different from a commodatum. The effects of
the Kasunduan are also different from that of a commodatum. Case law on ejectment
has treated relationship based on tolerance as one that is akin to a landlord-tenant
relationship where the withdrawal of permission would result in the termination of the
lease.[69] The tenants withholding of the property would then be unlawful. This is settled
jurisprudence.
Even assuming that the relationship between Pajuyo and Guevarra is one
of commodatum, Guevarra as bailee would still have the duty to turn over possession of
the property to Pajuyo, the bailor. The obligation to deliver or to return the thing received
attaches to contracts for safekeeping, or contracts of commission, administration
and commodatum.[70] These contracts certainly involve the obligation to deliver or return
the thing received.[71]
Guevarra turned his back on the Kasunduan on the sole ground that like him, Pajuyo
is also a squatter. Squatters, Guevarra pointed out, cannot enter into a contract involving
the land they illegally occupy. Guevarra insists that the contract is void.
Guevarra should know that there must be honor even between squatters. Guevarra
freely entered into the Kasunduan. Guevarra cannot now impugn the Kasunduan after he
had benefited from it. The Kasunduan binds Guevarra.
The Kasunduan is not void for purposes of determining who between Pajuyo and
Guevarra has a right to physical possession of the contested property. The Kasunduan is
the undeniable evidence of Guevarras recognition of Pajuyos better right of physical
possession. Guevarra is clearly a possessor in bad faith. The absence of a contract would
not yield a different result, as there would still be an implied promise to vacate.
Guevarra contends that there is a pernicious evil that is sought to be avoided, and
that is allowing an absentee squatter who (sic) makes (sic) a profit out of his illegal
act.[72] Guevarra bases his argument on the preferential right given to the actual occupant
or caretaker under Proclamation No. 137 on socialized housing.
We are not convinced.
Pajuyo did not profit from his arrangement with Guevarra because Guevarra stayed
in the property without paying any rent. There is also no proof that Pajuyo is a
professional squatter who rents out usurped properties to other squatters. Moreover, it
is for the proper government agency to decide who between Pajuyo and Guevarra
qualifies for socialized housing. The only issue that we are addressing is physical
possession.
Prior possession is not always a condition sine qua non in ejectment.[73] This is one
of the distinctions between forcible entry and unlawful detainer.[74] In forcible entry, the
plaintiff is deprived of physical possession of his land or building by means of force,
intimidation, threat, strategy or stealth. Thus, he must allege and prove prior
possession.[75] But in unlawful detainer, the defendant unlawfully withholds possession
after the expiration or termination of his right to possess under any contract, express or
implied. In such a case, prior physical possession is not required.[76]
Pajuyos withdrawal of his permission to Guevarra terminated
the Kasunduan. Guevarras transient right to possess the property ended as
well. Moreover, it was Pajuyo who was in actual possession of the property because
Guevarra had to seek Pajuyos permission to temporarily hold the property and Guevarra
had to follow the conditions set by Pajuyo in theKasunduan. Control over the property
still rested with Pajuyo and this is evidence of actual possession.
Pajuyos absence did not affect his actual possession of the disputed property.
Possession in the eyes of the law does not mean that a man has to have his feet on every
square meter of the ground before he is deemed in possession.[77] One may acquire
possession not only by physical occupation, but also by the fact that a thing is subject to
the action of ones will.[78]Actual or physical occupation is not always necessary.[79]

Ruling on Possession Does not Bind Title to the Land in Dispute

We are aware of our pronouncement in cases where we declared that squatters and
intruders who clandestinely enter into titled government property cannot, by such act,
acquire any legal right to said property.[80] We made this declaration because the person
who had title or who had the right to legal possession over the disputed property was a
party in the ejectment suit and that party instituted the case against squatters or
usurpers.
In this case, the owner of the land, which is the government, is not a party to the
ejectment case. This case is between squatters. Had the government participated in this
case, the courts could have evicted the contending squatters, Pajuyo and Guevarra.
Since the party that has title or a better right over the property is not impleaded in
this case, we cannot evict on our own the parties. Such a ruling would discourage
squatters from seeking the aid of the courts in settling the issue of physical
possession. Stripping both the plaintiff and the defendant of possession just because they
are squatters would have the same dangerous implications as the application of the
principle of pari delicto. Squatters would then rather settle the issue of physical
possession among themselves than seek relief from the courts if the plaintiff and
defendant in the ejectment case would both stand to lose possession of the disputed
property. This would subvert the policy underlying actions for recovery of possession.
Since Pajuyo has in his favor priority in time in holding the property, he is entitled to
remain on the property until a person who has title or a better right lawfully ejects
him. Guevarra is certainly not that person. The ruling in this case, however, does not
preclude Pajuyo and Guevarra from introducing evidence and presenting arguments
before the proper administrative agency to establish any right to which they may be
entitled under the law.[81]
In no way should our ruling in this case be interpreted to condone squatting. The
ruling on the issue of physical possession does not affect title to the property nor
constitute a binding and conclusive adjudication on the merits on the issue of
ownership.[82] The owner can still go to court to recover lawfully the property from the
person who holds the property without legal title. Our ruling here does not diminish the
power of government agencies, including local governments, to condemn, abate, remove
or demolish illegal or unauthorized structures in accordance with existing laws.

Attorneys Fees and Rentals

The MTC and RTC failed to justify the award of P3,000 attorneys fees to
Pajuyo. Attorneys fees as part of damages are awarded only in the instances enumerated
in Article 2208 of the Civil Code.[83] Thus, the award of attorneys fees is the exception
rather than the rule.[84] Attorneys fees are not awarded every time a party prevails in a
suit because of the policy that no premium should be placed on the right to litigate.[85] We
therefore delete the attorneys fees awarded to Pajuyo.
We sustain the P300 monthly rentals the MTC and RTC assessed against
Guevarra. Guevarra did not dispute this factual finding of the two courts. We find the
amount reasonable compensation to Pajuyo. The P300 monthly rental is counted from
the last demand to vacate, which was on 16 February 1995.
WHEREFORE, we GRANT the petition. The Decision dated 21 June 2000 and
Resolution dated 14 December 2000 of the Court of Appeals in CA-G.R. SP No. 43129 are
SET ASIDE.The Decision dated 11 November 1996 of the Regional Trial Court of Quezon
City, Branch 81 in Civil Case No. Q-96-26943, affirming the Decision dated 15 December
1995 of the Metropolitan Trial Court of Quezon City, Branch 31 in Civil Case No. 12432,
is REINSTATED with MODIFICATION. The award of attorneys fees is deleted. No costs.
SO ORDERED.
FIRST DIVISION

G.R. NO. 184079 : April 17, 2013

SPS. ARMANDO SILVERIO, SR. AND REMEDIOS SILVERIO, Petitioners, v.SPS.


RICARDO AND EVELYN MARCELO, Respondents.

G.R. NO. 184490

SPS. EVELYN AND RICARDO MARCELO, Petitioners, v.SPS. ARMANDO


SILVERIO, SR. AND REMEDIOS SILVERIO, Respondents.

DECISION

VILLARAMA, JR., J.:

Before the Court are twin petitions for review on certiorari under Rule 45 of the 1997
Rules of Civil Procedure, as amended.

The petition1 in G.R. NO. 184079 was filed by petitioners spouses Armando Silverio, Sr.
and Remedios Silverio to assail the Decision2 dated March 18, 2008 and
Resolution3 dated August 12, 2008 of the Court of Appeals (CA) in CA-G.R. SP No.
98105. The CA had affirmed the Decision4 dated November 7, 2006 of the Regional
Trial Court (RTC) of Paraaque City, Branch 258, in Civil Case No. 06-0099, which in
turn, affirmed the Decision5 dated September 6, 2005 of the Metropolitan Trial Court
(MeTC), Branch 78 in Civil Case No. 2004-271. The Paraaque MeTC, Branch 78, had
ordered petitioners to demolish the improvements they have introduced in Lot No.
3976, Paraaque Cad. 299 (Lot 3976), to peacefully surrender possession of the same
to respondents spouses Ricardo and Evelyn Marcelo and to pay P1,000 per month from
May 20, 2004 until they have done so. The court a quo likewise directed petitioners to
pay respondents P20,000 as attorney's fees plus P3,000 per appearance of the latter's
counsel and costs.

Meanwhile, the petition6 in G.R. NO. 184490 was filed by petitioners spouses Evelyn
and Ricardo Marcelo to contest the Decision7 dated March 27, 2008 and
Resolution8 dated September 1, 2008 of the CA in CA-G.R. SP No. 98713. The CA had
reversed and set aside the Decision9 dated December 29, 2006 of the RTC of
Paraaque City, Branch 257, in Civil Case

No. 06-0237, which in turn, affirmed in toto the Decision10 dated April 25, 2006 of the
MeTC of Paraaque City, Branch 77, in Civil Case No. 2004-269. The Paraaque MeTC,
Branch 77, had ordered respondents Armando Silverio, Sr. and Remedios Silverio to
vacate the Marcelo Compound in Lot 3976 and to surrender possession thereof to
petitioners. The court a quo likewise directed respondents to pay petitioners P1,000 per
month from May 20, 2004 until they have completely moved out of said
property, P10,000 as attorney's fees and costs.

The factual antecedents of these consolidated petitions are culled from the records.

G.R. NO. 184079

On July 12, 2004, respondents spouses Ricardo and Evelyn Marcelo filed a
Complaint11 for unlawful detainer against petitioners spouses Armando Silverio, Sr., and
his mother, Remedios Silverio. The case was docketed as Civil Case No. 2004-271
before the MeTC of Paraaque City, Branch 78.

Respondents represented themselves as the lawful owners and possessors of Lot 3976,
a residential land with an area of 5,004 square meters located in Marcelo Compound,
Philip St. Ext., Multinational Village, Paraaque City. They claimed ownership over said
lot by virtue of a Decision12 dated December 12, 1996 of the Department of
Environment and Natural Resources (DENR) in DENR-NCR Case No. 95-253 and Tax
Declaration No. E-008-19942.13chanroblesvirtualawlibrary

Respondents alleged that sometime in May 1987, petitioners sought permission to


construct a house within Lot 3976. Respondents agreed on the condition that
petitioners will vacate the moment they need the land. Subsequently, respondents
made an oral demand on petitioners to leave the house and return possession of the lot
within 15 days from notice. In a Letter14 dated May 18, 2004, respondents reiterated
their demand for petitioners to demolish the house, vacate the 120-square-meter lot on
which the house stands and to pay P1,000 as rent until they have done so.

As respondents' demands remained unheeded, they filed a complaint for unlawful


detainer against petitioners before Barangay Moonwalk in Paraaque City. The case was
docketed as Barangay Case No. 05/04-051. On July 24, 2004, Atty. Wendell E. Coronel,
Lupon/Pangkat Secretary of Barangay Moonwalk issued a Certification to File Action15 in
said case upon the reasons "Failed or refused to accept/obey summons to appear for
hearing" and "Settlement has been repudiated."

In their Answer,16 petitioners sought the dismissal of the complaint on the ground that
respondents had filed a similar case against them before the MeTC of Paraaque City,
Branch 77, docketed as Civil Case No. 2004-269. The latter case is the subject of the
petition in G.R. NO. 184490.

On September 6, 2005, the MeTC of Paraaque City, Branch 78, rendered judgment in
favor of respondents Marcelo. The court a quo ruled out forum shopping upon finding
that the house subject of the present case is different from that in Civil Case No. 2004-
269. The structure involved in the latter case was "originally occupied by petitioners'
relative and later taken over by them"17 while the house subject of the present case
was constructed by petitioners themselves. The MeTC held that petitioners failed to
refute the character of their possession as merely tolerated by respondents and they
became deforciants upon the latter's demand for them to vacate the subject premises.
The court ordered petitioners to pay respondents P1,000 as reasonable compensation
for the use and occupation of the premises, attorney's fees of P20,000 and P3,000 per
appearance of counsel for respondents.

On appeal, the Paraaque RTC, Branch 258, affirmed the ruling of the MeTC. In a
Decision dated November 7, 2006, the RTC sustained respondents' right to bring action
to evict petitioners from the contested property. It found petitioners' claim of ownership
unsubstantiated and their defense of forum shopping without merit since the properties
involved in Civil Case Nos. 2004-269 and 2004-271 are different from each other.

Petitioners moved for reconsideration but their motion was denied in an Order18 dated
February 5, 2007. Thereafter, petitioners filed a Petition for Review19 under Rule 42 of
the Rules with the CA.

In the assailed Decision dated March 18, 2008, the appellate court affirmed in toto the
RTC judgment. It found no basis to dismiss respondents' complaint based on either
forum shopping or splitting a cause of action. The CA disregarded petitioners' argument
that the subject property is public land in view of their admission in their Answer20 that
respondents are the owners and possessors thereof.

Petitioners filed a Motion for Reconsideration21 which the CA denied in a


Resolution22 dated August 12, 2008.

G.R. NO. 184490

On July 12, 2004, petitioners spouses Ricardo and Evelyn Marcelo filed a
Complaint23 for unlawful detainer against respondents Armando Silverio, Sr., and
Remedios Silverio. The case was docketed as Civil Case No. 2004-269 before the MeTC
of Paraaque City, Branch 77.

Petitioners' Complaint bore essentially the same allegations as their Complaint in Civil
Case No. 2004-271 save for two allegations: (1) respondents requested petitioners'
permission to construct a house in Lot 3976 in May 1986; and (2) respondents
"improved the house and even operated a sari-sari store"24 in Marcelo Compound.

In their Answer25 dated August 3, 2004, respondents belied petitioners' claim of


exclusive ownership and possession of the subject property. According to respondents,
the land in dispute was first occupied by Graciano Marcelo along with his sons Armando
Marcelo, petitioner Ricardo Marcelo and Florante Marcelo. Respondents anchor their
right of possession on Florante Marcelo, in his capacity as an ostensible co-owner of the
contested property. Florante Marcelo is the husband of Marilou Silverio, the daughter of
respondents spouses Silverio.

Subsequently, petitioners submitted an Amended Complaint26 dated August 14, 2004, in


which they clarified that it was the spouses Florante Marcelo and Marilou Silverio, and
not the respondents, who sought their consent to build a house and live in Marcelo
Compound. Petitioners recounted that it was after Florante Marcelo and Marilou Silverio
separated in 1998 and abandoned said house that respondents asked for permission to
stay therein. Petitioners agreed upon an understanding that respondents shall
"dismantle said house the moment petitioners need the premises."27 However,
respondents refused to move out and surrender possession of the subject property
upon demand.

In a Demand Letter28 dated May 18, 2004, petitioners insisted on their demand for
respondents to demolish the house they built, vacate the 80-square-meter lot on which
it stands, to surrender peaceful possession of the same and to pay P1,000 as rent until
they have done so.

As respondents ignored petitioners' demands, the latter brought a complaint for


unlawful detainer against respondents before Barangay Moonwalk in Paraaque City.
The case was docketed as Barangay Case No. 05/04-070. On July 24, 2004, Atty.
Wendell E. Coronel, Lupon/Pangkat Secretary of Barangay Moonwalk issued a
Certification to File Action29 in said case upon the reasons "Failed or refused to
accept/obey summons to appear for hearing" and "Settlement has been repudiated."

In an Answer30 dated September 8, 2004, respondents assailed the DENR Decision


dated December 12, 1996 for supposedly awarding ownership of the subject property
to petitioners. According to respondents, Graciano Marcelo, Sr., petitioner Ricardo
Marcelo's father, was a tenant of Fabian Lumbos before the latter sold his land to Mike
Velarde. Subsequently, Velarde fenced the subject property, which respondents insist is
not part of the parcels that Lumbos sold to Velarde. Upon the belief that Lot 3976 is still
government property, the sons of Graciano Marcelo, Sr., including petitioner Ricardo
Marcelo and Florante Marcelo, divided the land among themselves and occupied the
same. On the tract allotted to Florante, he took in respondent Remedios Silverio to live
with him and his wife, Marilou.

Respondents averred that it was in 1997 when the Marcelos conceived the idea of
applying for a sales patent over Lot 3976 with the DENR. The Marcelo siblings
appointed petitioner Ricardo Marcelo to file the Miscellaneous Sales Application (MSA) in
their behalf, sharing the expenses among themselves. However, it was not until later
that the Marcelo siblings learned that Ricardo had filed the application in his name
alone. Respondents revealed that Ricardo had sold several portions of Lot 3976 even
before he could apply for a sales patent thereon.

On February 3, 2005, respondents filed a Supplemental Answer31 in which they charged


petitioners with forum shopping for filing another ejectment case against them,
docketed as Civil Case No. 2004-271 before Branch 78 of the Paraaque MeTC.

In a Decision dated April 25, 2006, the MeTC of Paraaque City, Branch 77, ruled for
petitioners Marcelo. The court a quo ordered respondents to vacate the subject
property, to surrender peaceful possession thereof to petitioners, to give reasonable
rent from May 20, 2004 until they have moved out and to pay attorney's fees and costs.

On the basis of the Decision dated December 12, 1996 of the DENR, the MeTC declared
petitioners the owners of the subject property, with concomitant right to possess it. The
court found no evidence to support respondents' possessory claim and considered their
occupation of the subject land as merely tolerated by petitioners. The court a quo
discounted forum shopping upon finding that the house concerned in Civil Case No.
2004-271 was built by petitioners whereas the house in this case was only taken over
by them.

In a Decision dated December 29, 2006, the Paraaque RTC, Branch 257, affirmed in
toto the MeTC ruling. The RTC declared petitioners as the lawful possessors of the
subject property by virtue of Tax Declaration No. E-008-19942 in the name of petitioner
Ricardo Marcelo. It explained that Florante Marcelo's affinity with petitioner Ricardo,
alone, did not automatically make him a co-owner of the contested property.

Dissatisfied, respondents elevated the case to the CA through a Petition32 for review
under Rule 42.

In the assailed Decision dated March 27, 2008, the CA reversed and set aside the RTC
judgment. It brushed aside the alleged procedural infirmities that attended the filing of
respondents' petition for being trivial and insufficient to warrant its dismissal. The
appellate court found petitioners guilty of forum shopping and splitting of a cause of
action. It observed that the two cases for unlawful detainer filed by petitioners are
based on a single claim of ownership over Lot 3976 which embraces the subject
properties. The CA explains that an adjudication in either suit that petitioners are
entitled to the possession of Lot No. 3976 would necessarily mean res judicata in the
other case. The appellate court noted that the demand letter in both cases was served
on respondents on the same day.

Issues/Assignment of Errors

On September 29, 2008, spouses Armando Silverio, Sr. and Remedios Silverio filed a
petition for review on certiorari which was docketed as G.R. NO. 184079. Said petition,
which seeks to reverse and set aside the Decision dated March 18, 2008 and Resolution
dated August 12, 2008 of the CA in CA-G.R. SP No. 98105, assigns a lone
error:chanroblesvirtualawlibrary

THE COURT OF APPEALS, WITH ALL DUE RESPECT, SERIOUSLY ERRED AND GRAVELY
ABUSED ITS DISCRETION IN DISMISSING THE APPEAL INTERPOSED BY PETITIONERS
IN THE ABOVE-ENTITLED CASE ON TECHNICALITIES AND HAS DECIDED A QUESTION
OF SUBSTANCE, NOT THERETOFORE DETERMINED BY THE SUPREME COURT, AND/OR
HAS DECIDED IT IN A WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH THE
APPLICABLE DECISIONS OF THE HONORABLE SUPREME
COURT.33chanroblesvirtualawlibrary

A few days later, on October 2, 2008, spouses Evelyn and Ricardo Marcelo filed a
Petition for Review on Certiorari which was docketed as G.R. NO. 184490. Said petition,
in turn, contests the Decision dated March 27, 2008 and the Resolution dated
September 1, 2008 of the CA in CA-G.R. SP No. 98713. Condensed, the issues
presented by petitioners are as follows: (1) Whether the filing of separate complaints
for unlawful detainer against the same lessees who refuse to vacate, on demand, two
different houses constitutes forum shopping and splitting of a cause of action; (2)
Whether the CA erred in dismissing Civil Case No. 2004-269; and (3) Whether the
instant petition was filed seasonably.

Essentially, the questions that must be addressed in the consolidated petitions before
us are common: (1) Are the spouses Ricardo and Evelyn Marcelo guilty of forum
shopping? and (2) Who between the spouses Marcelo and the Silverios have better
right to the physical possession of Lot 3976?

The Parties' Arguments

Armando Silverio, Sr. and Remedios Silverio allege mainly that spouses Ricardo and
Evelyn Marcelo engaged in forum shopping and split a common cause of action when
they filed separate complaints for unlawful detainer based on a single claim of
ownership over Lot No. 3976. The Silverios maintain that the spouses Marcelo are
simply applicants for the issuance of a sales patent over Lot No. 3976 and are actually
occupying only 50 square meters of the 5,020-square-meter property. In support
thereof, the Silverios invoke the Decision34 dated July 11, 2007 of the DENR which
annulled and canceled the MSA filed by the spouses Marcelo over Lot No. 3976.
Ultimately, the Silverios insist that the subject property remains a public land.

In their consolidated Memorandum35 for G.R. Nos. 184079 and 184490, spouses
Ricardo and Evelyn Marcelo denied the allegations of forum shopping and splitting a
single cause of action. They assert the following distinctions between the houses
involved in Civil Case Nos. 2004-269 and 2004-271: (1) the house in Civil Case No.
2004-271 was built by the Silverios in May 1987 while the house subject of Civil Case
No. 2004-269 was constructed by Florante Marcelo and Marilou Silverio in May 1986;
and (2) the house in Civil Case No. 2004-271 has been occupied by the Silverios from
the beginning while they merely took over the house referred to in Civil Case No. 2004-
269 and put up a sari-sari store therein. The spouses Marcelo contend that while they
claim ownership of Lot No. 3976 as a whole, the portions thereof on which the two
houses stand are distinct -- one has an area of 80 square meters while the other
measures 120 square meters. In view of this, the spouses Marcelo believe that the
refusal by the Silverios to vacate said houses violated at least two rights and gave rise
to separate causes of action.
The Court's Ruling

Unlawful detainer is an action to recover possession of real property from one who
illegally withholds possession after the expiration or termination of his right to hold
possession under any contract, express or implied. The possession of the defendant in
unlawful detainer is originally legal but became illegal due to the expiration or
termination of the right to possess.36 In an unlawful detainer case, the sole issue for
resolution is physical or material possession of the property involved, independent of
any claim of ownership by any of the parties. Where the issue of ownership is raised by
any of the parties, the courts may pass upon the same in order to determine who has
the right to possess the property. The adjudication is, however, merely provisional and
would not bar or prejudice an action between the same parties involving title to the
property.37chanroblesvirtualawlibrary

Here, the spouses Ricardo and Evelyn Marcelo brought separate complaints for unlawful
detainer against Armando Silverio, Sr. and Remedios Silverio based on their refusal to
vacate two houses inside the Marcelo Compound. In both Civil Case Nos. 2004-
26938 and 2004-271, the spouses Marcelo anchor their right of possession over the
subject properties on Tax Declaration No. E-008-19942 and on the Decision dated
December 12, 1996 of the DENR in DENR-NCR Case No. 95-253. The DENR gave due
course to the MSA filed by the spouses Marcelo over Lot 3976, where the Marcelo
Compound is situated.

For their part, the Silverios seek the dismissal of both complaints on the grounds of
forum shopping and splitting a single cause of action.

Forum shopping is a deplorable practice of litigants consisting of resort to two different


fora for the purpose of obtaining the same relief, to increase the chances of obtaining a
favorable judgment.39 The grave evil sought to be avoided by the rule against forum
shopping is the rendition by two competent tribunals of two separate and contradictory
decisions.40chanroblesvirtualawlibrary

In Chua v. Metropolitan Bank & Trust Company,41 the Court enumerated the ways by
which forum shopping may be committed:chanroblesvirtualawlibrary

Forum shopping can be committed in three ways: (1) filing multiple cases based on the
same cause of action and with the same prayer, the previous case not having been
resolved yet (where the ground for dismissal is litis pendentia); (2) filing multiple cases
based on the same cause of action and the same prayer, the previous case having been
finally resolved (where the ground for dismissal is res judicata); and (3) filing multiple
cases based on the same cause of action, but with different prayers (splitting of causes
of action, where the ground for dismissal is also either litis pendentia or res
judicata).42chanroblesvirtualawlibrary
Common to these types of forum shopping is the identity of the cause of action in the
different cases filed. Cause of action is defined as "the act or omission by which a party
violates the right of another."43chanroblesvirtualawlibrary

In this case, the spouses Marcelo filed two cases for unlawful detainer against Armando
Silverio, Sr. and Remedios Silverio on July 12, 2004. In Civil Case No. 2004-269, the
cause of action is the alleged unlawful withholding of possession by the Silverios of the
house which Florante Marcelo and Marilou Silverio constructed in Lot 3976. On the
other hand, the cause of action in Civil Case No. 2004-271 for unlawful detainer is the
supposed unlawful withholding of possession by the Silverios of the house which they,
themselves, built in Lot 3976. While the main relief sought in Civil Case No. 2004-269
appears to be different from that in Civil Case No. 2004-271, the right on which both
claims are hinged is the same the purported ownership by the spouses Marcelo of Lot
3976. Indeed, paragraph 3 of the spouses Marcelo's Complaint in both cases similarly
read:chanroblesvirtualawlibrary

3. Plaintiffs are the lawful owners and possessors of a residential lot containing an area
of 5,004 sq. m. known as Lot 3976 Paraaque Cad. 299 by virtue of a final and
executory decision of the Land Management Bureau (DENR) promulgated on Dec. 12,
1996 and Tax Dec. No. E-008083-77 issued in their name by the City Assessor of
Paraaque City. Certified true copy of Tax Dec. No. E-008-19942 is hereto attached as
"Annex "A". 44chanroblesvirtualawlibrary

Basically, the cause of action in both cases is the unlawful withholding by the Silverios
of Lot 3976.

We find no merit in the contention of the spouses Marcelo that Civil Case Nos. 2004-
269 and 2004-271 present distinct causes of action since they pertain to separate
portions of the Marcelo Compound. The analogy drawn by the spouses Marcelo
between the ejectment of a tenant leasing several units of a condominium project and
the unlawful detainer cases they brought against the Silverios is misplaced. In the
former, there exists a lessor-lessee relationship between the owner of the condominium
and the tenant, respectively. Hence, the rights and duties of the condominium owner
and the tenant are defined by the terms of the contract. In contrast, the parties in this
case present adverse possessory claims over those portions of Lot 3976 in which the
houses concerned are situated.

In particular, the spouses Marcelo assert better right of possession based on their
alleged right as "lawful owners and possessors of a residential lot containing an area of
5,004 sq. m. known as Lot 3976 Paraaque Cad. 299 by virtue of a final and executory
decision of the Land Management Bureau (DENR) promulgated on Dec. 12, 1996 and
Tax Dec. No. E-008-083-77 issued in their name by the City Assessor of
Paraaque."45 For their part, the Silverios claim better right of possession on account of
their actual occupation of the subject properties. In either case, a finding that the
spouses Marcelo have better right to possess the subject property could only be
premised on their lawful possession of the entire Lot No. 3976, Paraaque Cad. 299. It
follows, therefore, that a final adjudication in favor of the spouses Marcelo in one case
would constitute res judicata in the other.

In Agustin v. Delos Santos,46 the Court cited three tests to verify whether there is
identity of causes of action for purposes of applying the principle of res judicata. The
first test is the "absence of inconsistency test" where it is determined whether the
judgment sought will be inconsistent with the prior judgment. If no inconsistency is
shown, the prior judgment shall not constitute a bar to subsequent actions.47 The more
common approach in ascertaining identity of causes of action is the "same evidence
test," whereby the following question serves as a sufficient criterion: "would the same
evidence support and establish both the present and former causes of action?" If the
answer is in the affirmative, then the prior judgment is a bar to the subsequent action;
conversely, it is not.48 Aside from the "absence of inconsistency test" and "same
evidence test," we have also ruled that a previous judgment operates as a bar to a
subsequent one when it had touched on a matter already decided, or if the parties are
in effect "litigating for the same thing."49chanroblesvirtualawlibrary

The "absence of inconsistency test" finds no application in this case since it


presupposes that a final judgment has been rendered in the first case. By applying the
"same evidence test," however, it becomes apparent that the proof necessary to obtain
affirmative relief in Civil Case No. 2004-269 is the same as that in Civil Case No. 2004-
271. Since the spouses Marcelo are claiming sole ownership of Lot 3976 in their MSA,
the evidence needed to establish better right of possession over the house constructed
by Florante Marcelo and Marilou Silverio, and the one built by the Silverios is the same,
regardless of the fact that they were built on separate portions of said lot. We have
ruled time and again that "a party cannot, by varying the form of action, or adopting a
different method of presenting his case, escape the operation of the principle that one
and the same cause of action shall not be twice litigated."50chanroblesvirtualawlibrary

Evidently, the spouses Marcelo engaged in forum shopping by filing separate cases for
unlawful detainer based on a single claim of ownership over Lot 3976. Said act is
likewise tantamount to splitting a cause of action which, in this case, is a cause for
dismissal on the ground of litis pendentia. On this score alone, the petition for review
on certiorari filed by the spouses Marcelo in G.R. Nos. 184490 must fail, alongside their
averments in G.R. NO. 184079.

In any case, even if we confront the issue as to who between the spouses Marcelo and
the Silverios have better right of possession over the subject properties, the former
would still not prevail.

As earlier stated, the DENR-NCR had canceled the MSA filed by the spouses Marcelo in
its Decision51 dated July 11, 2007. The Department found that the spouses Marcelo
failed to satisfy the requirements for the acquisition of Lot 3976 under the Public Land
Act. The DENR-NCR clarified that the Decision dated December 12, 1996 gave due
course to the application, not only of the spouses Marcelo, but also those of other
applicants. It gave weight to the findings in the ocular inspection that the spouses
Marcelo are actually occupying only 50 square meters of Lot 3976 while the remaining
portions are inhabited by 111 families. The DENR-NCR adds that the spouses Marcelo
cannot claim the entire Lot No. 3976 since Republic Act No. 73052 limits the area of land
that may be applied for to 1,000 square meters.53 In conclusion, the DENR-NCR held
that Lot 3976 remains a public land and its dwellers may apply for the purchase of
those portions that they are actually occupying.

Factual considerations relating to lands of the public domain properly rest within the
administrative competence of the Director of Lands and the DENR. Findings of
administrative agencies, which have acquired expertise because of their jurisdiction, are
confined to specific matters and are accorded respect, if not finality, by the courts. Even
if they are not binding to civil courts exercising jurisdiction over ejectment cases, such
factual findings deserve great consideration and are accorded much
weight.54chanroblesvirtualawlibrary

Nonetheless, the declaration by the DENR-NCR that Lot 3976 is still part of the public
domain does not mean that neither of the parties is entitled to the possession of the
subject properties. In Pajuyo v. Court of Appeals,55 we reiterated the policy behind the
summary action of forcible entry and unlawful detainer, thus:chanroblesvirtualawlibrary

It must be stated that the purpose of an action of forcible entry and detainer is that,
regardless of the actual condition of the title to the property, the party in peaceable
quiet possession shall not be turned out by strong hand, violence or terror. In affording
this remedy of restitution the object of the statute is to prevent breaches of the peace
and criminal disorder which would ensue from the withdrawal of the remedy, and the
reasonable hope such withdrawal would create that some advantage must accrue to
those persons who, believing themselves entitled to the possession of property, resort
to force to gain possession rather than to some appropriate action in the courts to
assert their claims. This is the philosophy at the foundation of all these actions of
forcible entry and detainer which are designed to compel the party out of possession to
respect and resort to the law alone to obtain what he claims is
his.56chanroblesvirtualawlibrary

The parties in Pajuyo were informal settlers on the public land which was the subject of
said case. We ruled that since the government, which has title or better right over the
property was not impleaded in the case, the Court cannot, on its own, evict the parties.
We recognized better right of possession in favor of the petitioner therein who began
occupying the disputed property ahead of the respondents in said case.

A case with parallel factual milieu is Modesto v. Urbina.57 Like the spouses Marcelo, the
respondents in said case relied on a MSA and tax declarations to substantiate their
claim of possession over the contested land therein. In ruling for the petitioners in said
case, the Court stressed that the mere declaration of land for taxation purposes does
not constitute possession thereof nor is it proof of ownership in the absence of the
claimant's actual possession.58 We explained that unless a public land is shown to have
been reclassified as alienable or actually alienated by the State to a private person, that
piece of land remains part of the public domain, and its occupation, in the concept of
owner, no matter how long, cannot confer ownership or possessory rights.59 This finds
support in Section 88 of the Public Land Act, which provides:chanroblesvirtualawlibrary

Section 88. The tract or tracts of land reserved under the provisions of section eighty-
three shall be non-alienable and shall not be subject to occupation, entry, sale, lease, or
other disposition until again declared alienable under the provisions of this Act or by
proclamation of the President.

In a Certification60 dated June 8, 2006, Samson G. de Leon, the Regional Technical


Director for Lands of the DENR-NCR stated that:chanroblesvirtualawlibrary

This is to certify that Lot 3976 Cad 299, Paraaque Cadastre situated at San Dionisio,
Paraaque, Metro Manila, containing an area of 5,027.00 square meters has been
verified based on available records of this Office to be under Project No. 25, classified
as Alienable or Disposable Public Land, certified as such on 3 January 1968 per BFD
L.C. Map No. 2323.

xxx

This is to further certify that as per Certification dated 15 December 2005 issued by
Records Officer II Anita B. Ibardolasa which is hereto attached, no land patent has been
issued over the same or any portion thereof.

x x x. (Emphasis supplied.)

It is undisputed by the spouses Marcelo that the Silverios presently occupy those
portions of Lot 3976 which are the subjects of the consolidated petitions before us. In
particular, the Silverios tie their possession of the parcel at issue in G.R. NO. 184490 to
Florante Marcelo who appropriated a portion of Lot 3976 for himself, and with his wife,
constructed a house thereon in 1986. As regards the portion of Lot 3976 subject of G.R.
NO. 184079, the Silverios have established their dwelling thereon in 1987 - long after
Lot 3976 was classified as alienable and disposable public land on January 3, 1968.

Meanwhile, the spouses Marcelo insist on their better right to possess the contested
parcels as holders of Tax Declaration No. E-008-19942 in the name of Ricardo Marcelo.
Said tax declaration, which covers Lot 3976, was issued for the year 2005 and canceled
Tax Declaration No. E-008-18821, also under the name of Ricardo Marcelo. Other than
said tax declaration, however, we found nothing in the records of these cases to show
that the spouses Marcelo have been consistently paying taxes on Lot 3976. We note
that Tax Declaration No. E-008-19942 was issued fairly recently, and by itself, is
inadequate to convince the Court that the spouses Marcelo have been in open,
continuous and exclusive possession of the subject portions of Lot 3976, by themselves
or through a successor-in-interest, since January 3, 1968. More importantly, it is
ingrained in our jurisprudence that the mere declaration of a land for taxation purposes
does not constitute possession thereof nor is it proof of ownership in the absence of the
claimant's actual possession.61chanroblesvirtualawlibrary

Considering that the Silverios are in actual possession of the subject portions of Lot
3976, they are entitled to remain on the property until a person who has a title or a
better right lawfully ejects them. The ruling in this case, however, does not preclude
the Silverios and the spouses Marcelo from introducing evidence and presenting
arguments before the proper administrative agency to establish any right to which they
may be entitled under the law.62chanroblesvirtualawlibrary

WHEREFORE, the Court RESOLVES:chanroblesvirtualawlibrary

(1) To GRANT the petition in G.R. NO. 184079. The Decision dated March 18, 2008 and
Resolution dated August 12, 2008 of the Court of Appeals in CA-G.R. SP No. 98105 are
REVERSED and SET ASIDE;cralawlibrary

(2) To DENY the petition in G.R. NO. 184490. Consequently, the Decision dated March
27, 2008 and Resolution dated September 1, 2008 of the Court of Appeals in CA-G.R SP
No. 98713 are AFFIRMED; and

(3) To DISMISS the complaints for unlawful detainer filed by the spouses Ricardo and
Evelyn Marcelo against Armando Silverio, Sr. and Remedios Silverio for lack of merit.

No pronouncement as to costs.

SO ORDERED.
SPOUSES ISAGANI and G.R. No. 190122
DIOSDADA CASTRO,
Petitioners, Present:

- versus - CARPIO MORALES, J., Chairperson,


BRION,
BERSAMIN,
SPOUSES REGINO SE and VILLARAMA, JR., and
VIOLETA DELA CRUZ, SPOUSES SERENO, JJ.
EDUARDO and CHARITO PEREZ
and MARCELINO TOLENTINO,
Respondents.
Promulgated:
January 10, 2011
x--------------------------------------------------x

DECISION

CARPIO MORALES, J.,

For the Courts consideration is the propriety of the issuance of a writ of


preliminary mandatory injunction in favor of respondent Spouses Regino Se and Violeta
dela Cruz (Spouses dela Cruz).

Respondent Spouses Eduardo and Charito Perez (Spouses Perez) obtained a P250,000
loan from Spouses Isagani and Diosdada Castro (petitioners) on November 15, 1996, to
secure which they executed a real estate mortgage in petitioners favor covering an
unregistered 417 square meter parcel of land, located in San Isidro, Hagonoy, Bulacan,
covered by Tax Declaration (TD) No. 01844 (the property).

Respondent Spouses Perez having failed to settle their loan, petitioners extrajudicially
foreclosed the mortgage and, as the highest bidder at the public auction, bought the
property on February 4, 1999. It turned out that before the foreclosure or sometime
in 1997 respondent Spouses Perez, contrary to a provision of the real estate mortgage,
sold the property to respondent Spouses dela Cruz who had in fact caused the
cancellation of TD No. 01844 by TD No. 01892 in their name on August 15, 1997.
Petitioners thus filed on April 8, 1999 a complaint against herein two sets of
respondent Spouses, for annulment of Deed of Sale and TD No. 01892[1] and damages
before the Malolos Regional Trial Court (RTC). Respondent Marcelino Tolentino, Municipal
Assessor of Hagonoy, Bulacan was impleaded as defendant. The complaint was raffled to
Branch 7 of the RTC.

By respondent Spouses dela Cruzs allegation, before buying the property, they
inspected it and found no improvements thereon that would put them on guard against
the integrity of the TD of the sellers-Spouses Perez which TD, contrary to petitioners
claim, bore no annotation of the mortgage. They had in fact constructed a house on the
property in the course of which they were approached by petitioners who informed them
of an existing mortgage thereover, but as petitioners did not present any document to
prove it, they paid no heed to the information.

During the pendency of petitioners complaint against respondents spouses, petitioners


filed an ex-parte motion before Branch 16 of the RTC for the issuance of a writ of
possession over the property by virtue of the foreclosure of the mortgage of the sale to
them of the property. [2] Petitioners motion was granted and a writ of possession dated
August 2, 2001 was issued and enforced against respondent Spouses dela Cruz who were
evicted from the property.

On December 7, 2002, petitioners amended, with leave of court, their complaint, alleging
that, inter alia, respondent Spouses Perez failed to redeem the mortgage within the
reglementary period.

In their Answer to the Amended Complaint, respondent Spouses dela Cruz prayed
for the issuance of a writ of preliminary mandatory injunction to restore them to physical
possession of the property, which prayer Branch 7 of the RTC granted by Order of October
29, 2004 in this wise:

. . . It is not disputed that the Sps. Isagani Castro and Diosdada Castro,
herein plaintiffs, were placed in possession of the subject property by virtue
of a writ of possession issued by Branch 16 of the Court. This writ of
possession commanded the sheriff to require the spouses Eduardo Perez
and Charito Lopez and all persons claiming rights under them to vacate
subject property and surrender possession thereof to spouses Castro. At
that time, the Spouses Regino Se and Violeta dela Cruz were in possession
of the property as owners thereof, having already purchased the same from
the Sps. Castro. Their evidence of ownership is Tax Declaration No. 01892
of the Office of the Municipal Assessor of Hagonoy, Bulacan, the property
being still an unregistered property. They were not claiming rights under
the spouses Perez. They were and still are the owners in their own right.
Hence, the writ of possession issued was improperly implemented and
under Art. 539 of the Civil Code, they must be restored to said possession
by the means established by the laws and the Rules of Court. The writ of
preliminary mandatory injunction prayed for is undeniably one of the means
established by the laws and the Rules of Court. [3] (underscoring supplied)

Petitioners motion for reconsideration of the trial courts Order of October 29, 2004
was denied by Order of March 5, 2007, hence, they filed a petition for certiorari before
the Court of Appeals. Finding no grave abuse of discretion in the issuance of the Order,
the appellate court denied petitioners petition, by Decision of September 14, 2009.[4]

Hence, the present petition.

The trial court anchored its assailed Order granting the writ of preliminary mandatory
injunction on Article 539 of the Civil Code. The Article reads:

Art. 539. Every possessor has a right to be respected in his


possession; and should he be disturbed therein, he shall be protected in or
restored to said possession by the means established by the laws and the
Rules of Court.

xxxx

Undoubtedly, respondent Spouses dela Cruz actually took possession of the


property before the real estate mortgage covering it was foreclosed, and had in fact
cancelled the TD in Spouses Perez name and had one issued in their name. It appears,
however, that petitioners did not inform Branch 16, RTC of the previous sale of the
property to third parties, herein respondent Spouses dela Cruz, and the latters actual
possession thereof.

For an injunctive writ to issue, a clear showing of extreme urgency to prevent


irreparable injury and a clear and unmistakable right to it must be proven by the party
seeking it. The primary objective of a preliminary injunction, whether prohibitory or
mandatory, is to preserve the status quo until the merits of the case can be heard.[5]
[T]he rule is well-entrenched that the issuance of the writ of preliminary
injunction rests upon the sound discretion of the trial court. It bears
reiterating that Section 4 of Rule 58 gives generous latitude to the trial
courts in this regard for the reason that conflicting claims in an
application for a provisional writ more often than not involve a factual

determination which is not the function of appellate courts. Hence,


the exercise of sound judicial discretion by the trial court in
injunctive matters must not be interfered with except when there
is manifest abuse, which is wanting in the present case.[6] (emphasis and
underscoring supplied)

Indeed, the rule is well-entrenched that for grave abuse of discretion to exist as a
valid ground for the nullification of an injunctive writ, there must be a capricious and
whimsical exercise of judgment, equivalent to lack or excess of jurisdiction. Or the power
must be exercised in an arbitrary manner by reason of passion or personal hostility, and
it must be patent and gross as to amount to an evasion of a positive duty or a virtual
refusal to perform a duty enjoined by law. [7]

Recall that respondent Spouses dela Cruz had long before the foreclosure of the
mortgage or sometime in 1997 bought and took possession of the property, and had in
fact cancelled the seller-respondent Spouses Perez TD and had one issued in their
name. By petitioners seeking ex parte the issuance to them on February 1999 of a writ
of possession over the property, which was granted and the writ enforced against
respondent Spouses de la Cruz, they disturbed the status quo ante litem. The trial court
did not thus commit grave abuse of discretion when it issued the writ of
preliminary mandatory injunction in favor of Spouses de la Cruz.

For the enforcement of the writ of possession against respondent Spouses dela
Cruz, who did not take part in the foreclosure proceedings, would amount to taking of
real property without the benefit of a proper judicial intervention. The procedural shortcut
which petitioners is impermissible. Even Article 433 of the Civil Code instructs that Actual
possession under claim of ownership raises disputable presumption of ownership. The
true owner must resort to judicial process for the recovery of the property. The
contemplated judicial process is not through an ex-parte petition as what petitioners
availed of, but a process wherein a third party, Spouses de la Cruz herein, is given an
opportunity to be heard.[8]

The jurisdictional foundation for the issuance of a writ of injunction rests not only
in the existence of a cause of action and in the probability of irreparable injury, among
other considerations, but also in the prevention of multiplicity of suits.

Since petitioners failed to show that the appellate court erred in upholding the trial
courts exercise of its discretion in issuing the writ of preliminary mandatory injunction,
the challenged Decision stands.

Parenthetically, the issuance of the challenged writ does not render petitioners
case closed. Whether there existed a conspiracy between both sets of respondent
spouses to defraud petitioners can be only be determined after the principal action is
tried on the merits during which the parties are afforded the opportunity to present
evidence in support of their respective claims.[9]

WHEREFORE, the petition is DENIED.

SO ORDERED.

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