G.R. No.

213209

REPUBLIC OF THE PHILIPPINES, … Petitioner

-versus–

GERTRUDES V. SUSI, … Respondent

The Facts

Facts: Susi filed For reconstitution of TCT No. 118999 purportedly registered in her
name, covering Lot 257 of plan Psu-32606 located in Barrio (now Barangay) Talanay
City (QC), with an area of 240,269 square meters (subject that the original copy of TCT
No. 118999 was destroyed by the fire that gutted the Registry of Deeds of Quezon City (

The Land Registration Authority (LRA) stated that respondent filed similar petitions for
reconstitution covering the subject land before RTC

Issue: A. The Republic is not estopped from assailing the propriety of the order of
reconstitution.

it is well to emphasize that the State cannot be put in estoppel by the mistakes or errors
of its officials or agents, absent any showing that it had dealt capriciously or
dishonorably with its citizens.

Moreover, it bears to emphasize that even assuming that no opposition was filed by the
Republic or a private party, the person seeking reconstitution is not relieved of his
burden of proving not only the loss or destruction of the title sought to be reconstituted,
but that also at that time, she was the registered owner thereof. As such, the Republic is
not estopped from assailing the decision granting the petition if, on the basis of the law
and the evidence on record, such petition has no merit.54

B. Procedures and requirements for reconstitution of lost or destroyed certificates of

title; effect of non-compliance.

the Court has held that the non-compliance with the prescribed procedure and
requirements deprives the trial court of jurisdiction over the subject matter or nature of
the case and, consequently, all its proceedings are rendered null and void.

As such, the court upon which the reconstitution petition is filed is duty-bound to
examine thoroughly the same, and review the record and the legal provisions laying
down the germane jurisdictional requirements.60
C. The petition for reconstitution failed to comply with the applicable procedures and
requirements for reconstitution.

previous reconstitution petition before Branch 88, expressing serious doubts on the
authenticity of Susi’s duplicate title, and informing it of the existence of other titles over
the subject land.66

It is well to point out that trial courts hearing reconstitution petitions under RA 26
are duty-bound to take into account the LRA’sreport. The Court notes that Susi did
not refute the existence of the said certificates bearing different serial numbers in her
comment69 to the said motion.

In cases where the LRA challenges the authenticity of the applicant’s purported
owner’s duplicate certificate of title, the reconstitution petition should be treated
as falling under Section 3 (f)70 of RA 26, and the trial court should require
compliance with the requisites under Sections 1271 and 1372 of RA 26.73

Jurisprudence is replete with cases underscoring the indispensability of actual and

personal notice of the date of hearing of the reconstitution petition to actual
owners and possessors of the land involved in order to vest the trial court with
jurisdictionthereon.75 If no notice of the date of hearing of a reconstitution case is
served on a possessor or one having interest in the property involved, he is deprived of
his day in court and the order of reconstitution is null and void. 76

G.R. No. 192602

SPOUSES MAY S. VILLALUZ and JOHNNY VILLALUZ, JR., Petitioners vs. LAND
BANK OF THE PHILIPPINES and the REGISTER OF DEEDS FOR DAVAO CITY,
Respondents

Rule: An agent may appoint a substitute if the principal has not prohibited him from
doing so. The issue in this petition for review on certiorari, 1 which seeks to set aside the
Decision2 dated September 22, 2009 and Resolution3 dated May 26, 2010 of the Court
of Appeals (CA) in CA-G.R. CV No. 01307, is whether the mortgage contract executed
by the substitute is valid and binding

Facts: Paula Agbisit (Agbisit), mother of petitioner May S. Villaluz (May), requested the
latter to provide her with collateral for a loan. At the time, Agbisit was the chairperson of
Milflores Cooperative and she needed ₱600,000 to ₱650,000 for the expansion of her
backyard cut flowers business.4 May convinced her husband, Johnny Villaluz
(collectively, the Spouses Villaluz), to allow Agbisit to use their landas collateral.
 Spouses Villaluz executed a Special Power of Attorney6 in favor of Agbisit authorizing
her to, among others, "negotiate for the sale mortgage, or other forms of disposition a
parcel of land " and "sign in our behalf all documents relating to the sale, loan or
mortgage, or other disposition of the aforementioned property. " 7 The one-page power
of attorney neither specified the conditions under which the special powers may be
exercised nor stated the amounts for which the subject land may be sold or mortgaged.

, Agbisit executed her own Special Power of Attorney, 8 appointing Milflores

Cooperative as attorney-in-fact in obtaining a loan from and executing a real mortgage
in favor of Land Bank of the Philippines (Land Bank). Cooperative, in a representative
capacity, executed a Real Estate Mortgage9 in favor of Land Bank in consideration of
the ₱3,000,000 loan to be extended by the latter. Milflores Cooperative also executed a
Deed of Assignment of the Produce/Inventory 10 as additional collateral for the loan.

Unfortunately, Milflorcs Cooperative was unable to pay its obligations to Land Bank.
Thus, Land Bank filed a petition for extra-judicial foreclosure sale with the Office of the
Clerk of Court of Davao City. Sometime in August, 2003, the Spouses Villaluz learned
that an auction sale covering their land had been set for October 2, 2003. Land Bank
won the auction sale as the sole bidder. 12

ISSUE: The sole question presented before the RTC was whether Agbisit could have
validly delegated her authority as attorney-in-fact to Milflores Cooperative.

Held: Articles 1892 and 1893 of the Civil Code provide the rules regarding the
appointment of a substitute by an agent:

Art. 1892. The agent may appoint a substitute if the principal has not prohibited him
from doing so; but he shall be responsible for the acts of the substitute:

(1) When he was not given the power to appoint one;

(2) When he was given such power, but without designating the person, and the person
appointed was notoriously incompetent or insolvent.

All acts of the substitute appointed against the prohibition of the principal shall be void.

Art. 1893. In the cases mentioned in Nos. 1 and 2 of the preceding article, the principal
may furthermore bring an action against the substitute with respect to the obligations
which the latter has contracted under the substitution.

The law creates a presumption that an agent has the power to appoint a substitute. The
consequence of the presumption is that, upon valid appointment of a substitute by the
agent, there ipso jure arises an agency relationship between the principal and the
substitute, i.e., the substitute becomes the agent of the principal. As a result, the
principal is bound by the acts of the substitute as if these acts had been performed by
the principal's appointed agent. Concomitantly, the substitute assumes an agent's
obligations to act within the scope of authority, 18to act in accordance with the principal's
instructions, 19 and to carry out the agency, 20 among others. In order to make the
presumption inoperative and relieve himself from its effects, it is incumbent upon the
principal to prohibit the agent from appointing a substitute.

the Special Power of Attorney executed by the Spouses Villaluz contains no restrictive
language indicative of an intention to prohibit Agbisit from appointing a substitute or
sub-agent. Thus, we agree with the findings of the CA and the RTC that Agbisit's
appointment of Milflores Cooperative was valid.

The Spouses Villaluz understandably feel shorthanded because their property was
foreclosed by reason of another person's inability to pay. However, they were not
coerced to grant a special power of attorney in favor of Agbisit. Nor were they prohibited
from prescribing conditions on how such power may be exercised. Absent such express
limitations, the law recognizes Land Bank's right to rely on the terms of the power of
attorney as written.38 "Courts cannot follow one every step of his life and extricate him
from bad bargains, protect him from unwise investments, relieve him from one-sided
contracts, or annul the effects of [unwise] acts."39 The remedy afforded by the Civil
Code to the Spouses Villaluz is to proceed against the agent and the substitute in
accordance with A1iicles 1892 and 1893.

G.R. No. 167995

JULITA V. IMUAN, RODOLFO VELASQUEZ, ARTURO VELASQUEZ, ARCADIO
VELASQUEZ, BETTY VELASQUEZ, ROSA V. PETUYA, FELICIDAD VELASQUEZ,
RAYMUNDO IMUAN, GERARDO IMUAN, JR., and ANDONG VELASQUEZ, vs.
JUANITO CERENO, FEBELINDA G. CERENO, GEMMA C. GABARDA, LEDESMA G.
CERENO, BLECERIA C. SULA and SALLY G. CERENO

Facts: During his lifetime, Pablo de Guzman (Pablo) contracted two marriages. His first marriage
was with Teodora Soriano (Teodora), with whom he had three children, namely,Alfredo de
Guzman (Alfredo), Cristita G. Velasquez (Cristita), and Inday G. Soriano (Inday). His second
marriage was in 1919 with Juana Velasquez (Juana), with whom he also had three children,
namely: Nena De Guzman (Nena), Teodora de Guzman (Teodora), and Soledad G. Cereno
(Soledad). All these children are now dead.

Petitioners are Pablo's grandchildren by his first marriage, while respondent Juanito Cereno
(Juanito) is Soledad's husband and the other respondents are their children.
Pablo died intestate leaving two parcels of land. After Pablo's death in 1936, his second
wife Juana and their children continued to be in possession of the parcel of land located at Salaan,
Mangaldan, Pangasinan (the disputed property), where they lived since they were married in 1919.
Juana executed a Deed of Absolute Sale[3] in favor of respondents-spouses, Soledad, Juana
and Pablo's daughter, and her
husband Juanito conveying the subject property. The deed was duly registered with the Register
of Deeds of Lingayen, Pangasinan.
Sometime in January 1999, petitioners entered and took possession of Lot 3533 by building
a small nipa hut thereon. Respondents then filed an ejectment case against petitioners.

HELD: We agree with the CA that respondents have acquired the disputed property by
acquisitive prescription.

Prescription is another mode of acquiring ownership and other real rights over immovable
property.[13] It is concerned with lapse of time in the manner and under conditions laid down by
law, namely, that the possession should be in the concept of an owner, public, peaceful,
uninterrupted and adverse.[14] Possession is open when it is patent, visible, apparent, notorious and
not clandestine.[15] It is continuous when uninterrupted, unbroken and not intermittent or
occasional;[16] exclusive when the adverse possessor can show exclusive dominion over the land
and an appropriation of it to his own use and benefit; and notorious when it is so conspicuous that
it is generally known and talked of by the public or the people in the neighborhood. [17] The party
who asserts ownership by adverse possession must prove the presence of the essential elements of
acquisitive prescription.[18]
Acquisitive prescription of real rights may be ordinary or extraordinary.[19] Ordinary acquisitive
prescription requires possession in good faith and with just title for ten years.[20] In extraordinary
prescription, ownership and other real rights over immovable property are acquired through
uninterrupted adverse possession for thirty years without need of title or of good faith.[21]
The good faith of the possessor consists in the reasonable belief that the person from whom
he received the thing was the owner thereof, and could transmit his ownership.[22] For purposes of
prescription, there is just title when the adverse claimant came into possession of the property
through one of the modes recognized by law for the acquisition of ownership or other real rights,
but the grantor was not the owner or could not transmit any right.[23]
Records show that as early as 1970, when the property was sold by Juana to respondents
Spouses Cereno, the latter immediately took possession of the property. Since then, respondents
possessed the property continuously, openly, peacefully, in the concept of an owner, exclusively
and in good faith with just title, to the exclusion of the petitioners and their predecessors-in-interest
until the filing of the complaint in 1999 which is the subject of this present petition.
petitioners are guilty of laches that would bar them from belatedly asserting their
claim.
Laches is defined as the failure to assert a right for an unreasonable and unexplained length
of time, warranting a presumption that the party entitled to assert it has either abandoned or
declined to assert it. This equitable defense is based upon grounds of public policy, which requires
the discouragement of stale claims for the peace of society.[39]
Juana sold the property to the Spouses Cereno in 1970 and since then have possessed the
property peacefully and publicly without any opposition from petitioners. While petitioners claim
that they knew about the sale only in 1980 yet they did not take any action to recover the same and
waited until 1999 to file a suit without offering any excuse for such delay. Records do not show
any justifiable reason for petitioners' inaction for a long time in asserting whatever rights they have
over the property given the publicity ofrespondents' conduct as owners of the property.

G.R. No. 168288, January 25, 2017

REPUBLIC OF THE PHILIPPINES, Petitioner, v. HAROLD TIO

GO, Respondent.

Facts: Harold Tio Go (Go) filed an application for original registration of title
in 1999.4 His application covered two (2) parcels of land. The Republic filed
an opposition5 to the application on the grounds that: (1) Go or his
predecessors-in-interest have not been in open, continuous, exclusive and
notorious possession of the property since June 12, 1945 or prior thereto;
(2) Go failed to adduce evidence showing bona fide acquisition of the land
applied for; (3) the claim of ownership can no longer be availed of by Go
since he failed to file an application within six months from February 16,
1976 as required by Presidential Decree No. 892; and (4) the parcels of land
applied for belong to a portion of the public domain.6 Despite its written
opposition, the Republic failed to appear during the initial hearing of the
case.7
Ruling of the Court

The issue in this petition is whether the CA committed a reversible error in

admitting the CENRO Certification. A corollary issue is whether Go
sufficiently established the alienability and disposability of the subject
properties.

that applicant, [GO], married to Mich Y. Go, is entitled to the reliefs prayed
for in his application. His possession of the subject property, x x x, including
his predecessors-in-interest is more than thirty (30) years, which is open,
public, peaceful continuous and uninterrupted in the concept of an owner
and against the whole world. Thus, applicant, [Go,] is entitled to the
issuance of title over the subject land and the same should be registered and
confirmed.34ChanRoblesVirtualawlibrary

G.R. No. 167615

SPOUSES ALEXANDER AND JULIE LAM, Doing Business Under the Name and
Style "COLORKWIK LABORATORIES" AND "COLORKWIK PHOTO
SUPPLY", Petitioners,
vs.
KODAK PHILIPPINES, LTD., Respondent.

Lam Spouses and Kodak Philippines, Ltd. entered into an agreement (Letter
Agreement) for the sale of three (3) units of the Kodak Minilab System 22XL 6 (Minilab
Equipment) in the amount of ₱1,796,000.00 per unit,7

This confirms our verbal agreement for Kodak Phils., Ltd. To provide Colorkwik
Laboratories, Inc. with three (3) units Kodak Minilab System 22XL . .

Kodak Philippines, Ltd. delivered one (1) unit of the Minilab Equipment in Tagum,
Davao Province.9 The delivered unit was installed by Noritsu representatives 10 The
Lam Spouses issued postdated checks amounting to ₱35,000.00 each for 12 months as
payment for the first delivered unit, with the first check due on March 31, 1992. 11

The Lam Spouses requested that Kodak Philippines, Ltd. not negotiate the check dated
March 31, 1992 allegedly due to insufficiency of funds.12 The same request was made
for the check due on April 30, 1992. However, both checks were negotiated by Kodak
Philippines, Ltd. and were honored by the depository bank.13 The 10 other checks were
subsequently dishonored after the Lam Spouses ordered the depository bank to stop
payment.14

Kodak Philippines, Ltd. canceled the sale and demanded that the Lam Spouses return
the unit it delivered together with its accessories.15 The Lam Spouses ignored the
demand but also rescinded the contract on account of Kodak Philippines, Ltd.’s failure
to deliver the two (2) remaining Minilab Equipment units.16

On November 25, 1992, Kodak Philippines, Ltd. filed a Complaint for replevin and/or
recovery of sum of money.

II

We resolve the following issues:

First, whether the contract between petitioners Spouses Alexander and Julie Lam
and respondent Kodak Philippines, Ltd. pertained to obligations that are
severable, divisible, and susceptible of partial performance under Article 1225 of
the New Civil Code; and

Second, upon rescission of the contract, what the parties are entitled to under
Article 1190 and Article 1522 of the New Civil Code.

III

The Letter Agreement contained an indivisible obligation.

Both parties rely on the Letter Agreement97 as basis of their respective obligations.
Written by respondent’s Jeffrey T. Go and Antonio V. Mines and addressed to petitioner
Alexander Lam, the Letter Agreement contemplated a "package deal" involving three (3)
units of the Kodak Minilab System 22XL, with the following terms and conditions:

The intention of the parties to bind themselves to an indivisible obligation can be further
discerned through their direct acts in relation to the package deal. There was only one
agreement covering all three (3) units of the Minilab Equipment and their accessories.
The Letter Agreement specified only one purpose for the buyer, which was to obtain
these units for three different outlets.

, the tenor of the Letter Agreement indicated an intention for a single transaction. This
intent must prevail even though the articles involved are physically separable and
capable of being paid for and delivered individually, consistent with the New Civil Code:

Article 1225. For the purposes of the preceding articles, obligations to give definite
things and those which are not susceptible of partial performance shall be deemed to be
indivisible.

When the obligation has for its object the execution of a certain number of days of work,
the accomplishment of work by metrical units, or analogous things which by their nature
are susceptible of partial performance, it shall be divisible.

However, even though the object or service may be physically divisible, an obligation is
indivisible if so provided by law or intended by the parties. (Emphasis supplied)

IV

With both parties opting for rescission of the contract under Article 1191, the Court of
Appeals correctly ordered for restitution.

The contract between the parties is one of sale, where one party obligates himself or
herself to transfer the ownership and deliver a determinate thing, while the other pays a
certain price in money or its equivalent.103 A contract of sale is perfected upon the
meeting of minds as to the object and the price, and the parties may reciprocally
The power to rescind obligations is implied in reciprocal ones, in case one of the
obligors should not comply with what is incumbent upon him.

The injured party may choose between the fulfilment and the rescission of the
obligation, with the payment of damages in either case. He may also seek rescission,
even after he has chosen fulfilment, if the latter should become impossible.

The Court of Appeals correctly ruled that both parties must be restored to their original
situation as far as practicable, as if the contract was never entered into.

The damages awarded by the Court of Appeals were supported by documentary

evidence.121 Petitioners failed to show any reason why the factual determination of the
Court of Appeals must be reviewed, especially in light of their failure to produce receipts
or check payments to support their other claim for actual damages.122

Furthermore, the actual damages amounting to ₱2,040,000.00 being sought by

petitioners123 must be tempered on account of their own failure to pay the rest of the
installments for the delivered unit. This failure on their part is a breach of their
obligation, for which the liability of respondent, for its failure to deliver the remaining
units, shall be equitably tempered on account of Article 1192 of the New Civil Code.124

The award for moral and exemplary damages also appears to be sufficient. Moral
damages are granted to alleviate the moral suffering suffered by a party due to an act of
another, but it is not intended to enrich the victim at the defendant’s expense. 127 It is not
meant to punish the culpable party and, therefore, must always be reasonable vis-a-vis
the injury caused.128 Exemplary damages, on the other hand, are awarded when the
injurious act is attended by bad faith.129 In this case, respondent was found to have
misrepresented its right over the generator set that was seized. As such, it is properly
liable for exemplary damages as an example to the public.130

Furthermore, we affirm the award of exemplary damages and attorney’s fees.

Exemplary damages may be awarded when a wrongful act is accompanied by bad faith
or when the defendant acted in a wanton, fraudulent, reckless, oppressive, or
malevolent manner which would justify an award of exemplary damages under Article
2232 of the Civil Code. Since the award of exemplary damages is proper in this case,
attorney’s fees and cost of the suit may also be recovered as provided under Article
2208 of the Civil Code.132 (Emphasis supplied, citation omitted)

Based on the amount awarded for moral and exemplary damages, it is reasonable to
award petitioners ₱20,000.00 as attorney’s fees.

Respondent Kodak Philippines, Ltd. is ordered to pay petitioners Alexander and Julie
Lam:
 (a) P270,000.00, representing the partial payment made on the Minilab
Equipment;

(b) P130,000.00, representing the amount of the generator set, plus legal interest
at 12% .per annum from December 1992 until fully paid;

(c) P440,000.00 as actual damages;

(d) P25,000.00 as moral damages;

(e) P50,000.00 as exemplary damages; and

(f) P20,000.00 as attorney's fees.

Petitioners are ordered to return the Kodak Minilab System 22XL unit and its standard
accessories to respondent.

G.R. No. 206584

MAE FLOR GALIDO, Petitioner, vs.NELSON P. MAGRARE, EVANGELINE M.

PALCAT, RODOLFO BAYOMBONG, and REGISTER OF DEEDS OF ANTIQUE, San
Jose, Antique, Respondents.

The Antecedent Facts

Mae Flor Galido filed before the RTC a petition5 to cancel all entries appearing on
Transfer Certificate of Title (TCT), all in the name of Isagani Andigan (Andigan),.

The controversy revolves around three parcels of land, designated as Lot 1052-A-1, Lot
1052-A-2 and Lot 1052-A-3, all of the San Jose, Antique Cadastre. These parcels of
land were, prior to subdivision in 1999, part of Lot 1052-A which was covered by TCT
No. T-21405 in the name of Andigan.

On 28 December 1998, Andigan sold undivided portions of Lot 1052-A to Nelson P.

Magrare (Magrare), Evangeline M. Palcat (Palcat) and Rodolfo Bayombong
(Bayombong). To Magrare was sold an undivided portion with an area of 700 square
meters, more or less; to Palcat, 1,000 square meters, more or less; and to Bayombong,
500 square meters, more or less.

Andigan caused the subdivision of Lot 1052-A into five lots, Andigan did not turn over
the new TCTs to Magrare, Palcat and Bayombong, and the latter were unaware of the
subdivision.

On 8 May 2000, Andigan mortgaged the same three lots to petitioner and the latter
came into possession of the owner’s duplicate copies of TCT Nos. T-22374, T-22375
and T-22376.
On 6 February 2001, at 11:00 a.m., Magrare, Palcat and Bayombong registered their
respective adverse claims on TCT Nos. T-22374, T-22375 and T-22376. On the same
day, at 3:00 p.m., petitioner also registered her mortgage on the same TCTs, such that
the certificates in the custody of the Register of Deeds were annotated.

The Court’s Ruling

At the crux is the question of who has a better right to the properties concerned:
petitioner on the one hand, and Magrare, Palcat and Bayombong on the other?

No Valid Mortgage in Favor of Petitioner

Petitioner derives her title from Andigan, as mortgagor. However, at the time Andigan
mortgaged the lots to petitioner he had already sold the same to Magrare, Palcat and
Bayombong. Indeed, petitioner’s case is negated by Civil Case No. 2001-2-3230. There,
Andigan admitted that Lot Nos. 1052-A-1, 1052-A-2 and 1052-A-3 were the parcels of
land he sold to Magrare, Palcat and Bayombong,

Finally, when the spouses Andigan mortgaged to the herein petitioner Galido Lot Nos.
1052-A-1 and 1052-A-2, the said lots were already sold to the respondents Palcat and
Magrare. It is therefore as if nothing was mortgaged to her because Isagani Andigan
was no longer the owner of the mortgaged real property. Under Art. 2085 of the Civil
Code, two of the prescribed requisites for a valid mortgage are, that, the mortgagor be
the absolute owner of the thing mortgaged and, that, he has the free disposal thereof.
These requisites are absent when Isagani Andigan and his wife mortgaged the lots
alluded to above to the herein petitioner.43

A spring cannot rise higher than its source. Since Andigan no longer had any interest in
the subject properties at the time he mortgaged them to her, petitioner had nothing to
foreclose.

Prior Registered Adverse Claims Prevail

The parcels of land involved in this case are registered under the Torrens system. One
who deals with property registered under the Torrens system need not go beyond the
certificate of title, but only has to rely on the certificate of title.44 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 on said certificate and
any of the encumbrances provided by law.45

Petitioner is not a Buyer in Good Faith

But even assuming that the mortgage was valid, petitioner can hardly be considered a
buyer in good faith. A purchaser in good faith and for value is one who buys the
property of another without notice that some other person has a right to or interest in
such property and pays a full and fair price for the same at the time of such purchase, or
before he has notice of the claims or interest of some other person in the property. 48

As discussed above, petitioner had notice as early as 2001 of the adverse claims of
Magrare, Palcat and Bayombong.

Without speculating as to petitioner’s motivations in foreclosing on the mortgage, the

law on the matter is clear. Preference is given to the prior registered adverse claim
because registration is the operative act that binds or affects the land insofar as third
persons are concerned.49 Thus, upon registration of respondents’ adverse claims,
notice was given the whole world, including petitioner.

G.R. No. 160408

SPOUSES ROBERTO and ADELAIDA PEN, Petitioners, vs.SPOUSES SANTOS and

LINDA JULIAN, Respondents.

Antecedents

(the Julians) obtained a P60,000.00 loan from appellant Adelaida Pen. they were again
extended loans in the amounts of P50,000.00 and P10,000.00, respectively by appellant
Adelaida. Both Joans were charged interest at 6% per month., the appellees executed a
Real Estate Mortgage over their property

When the loans became due and demandable, appellees failed to pay despite several
demands. As such, appellant Adelaida decided to institute foreclosure proceedings.
However, she was prevailed upon by appellee Linda not to foreclose the property.
Instead, appellee Linda offered their mortgaged property as payment in kind. After the
ocular inspection, the parties agreed to have the property valued at P70,000.00.
Thereafter, on October 22, 1986 appellee executed a two (2) page Deed of Sale duly
signed by her on the left margin and over her printed name.

Issues

(1) whether or not the CA erred in ruling against the validity of the deed of sale;

Ruling of the Court

Nonetheless, We will take the occasion to explain why we concur with the CA's
justification in discrediting the deed of sale between the parties as pactum
commissorium.
Article 2088 of the Civil Code prohibits the creditor from appropriating the things given
by way of pledge or mortgage, or from disposing of them; any stipulation to the contrary
is null and void. The elements for pactum commissorium to exist are as follows, to
wit: (a) that there should be a pledge or mortgage wherein property is pledged or
mortgaged by way of security for the payment of the principal obligation; and (b) that
there should be a stipulation for an automatic appropriation by the creditor of the thing
pledged or mortgaged in the event of non-payment of the principal obligation within the
stipulated period.9 The first element was present considering that the property of the
respondents was mortgaged by Linda in favor of Adelaida as security for the farmer's
indebtedness. As to the second, the authorization for Adelaida to appropriate the
property subject of the mortgage upon Linda's default was implied from Linda's having
signed the blank deed of sale simultaneously with her signing of the real estate
mortgage. The haste with which the transfer of property was made upon the default by
Linda on her obligation, and the eventual transfer of the property in a manner not in the
form of a valid dacion en pago ultimately confirmed the nature of the transaction as
a pactum commissorium.

The CA justly deduced that the completion and execution of the deed of sale had been
conditioned on the non-payment of the debt by Linda, and reasonably pronounced that
such circumstances rendered the transaction pactum commissorium.

The petitioners have theorized that their transaction with the respondents was a
valid dacion en pago by highlighting that it was Linda who had offered to sell her
property upon her default. Their theory cannot stand scrutiny. Dacion en pago is in the
nature of a sale because property is alienated in favor of the creditor in satisfaction of a
debt in money.11 For a valid dacion en pago to transpire, however, the attendance of the
following elements must be established, namely: (a) the existence of a money
obligation; (b) the alienation to the creditor of a property by the debtor with the consent
of the former; and (c) the satisfaction of the money obligation of the debtor.12 To have a
valid dacion en pago, therefore, the alienation of the property must fully
extinguish the debt. Yet, the debt of the respondents subsisted despite the
transfer of the property in favor of Adelaida.

In a sale, the contract is perfected at the moment when the seller obligates herself to
deliver and to transfer ownership of a thing or right to the buyer for a price certain, as to
which the latter agrees.19 The absence of the consideration from Linda's copy of the
deed of sale was credible proof of the lack of an essential requisite for the sale. In other
words, the meeting of the minds of the parties so vital in the perfection of the contract of
sale did not transpire. And, even assuming that Linda's leaving the consideration blank
implied the authority of Adelaida to fill in that essential detail in the deed of sale upon
Linda's default on the loan, the conclusion of the CA that the deed of sale was a pactum
commisorium still holds, for, as earlier mentioned, all the elements of pactum
commisorium were present.
G.R. No. 181435

REPUBLIC OF THE PHILIPPINES, Petitioner vs. ROSARIO L. NICOLAS, Respondent

FACTUAL ANTECEDENTS

respondent filed a Petition seeking to register her title a parcel of with an area of
118,448 square meters.9 She asserted that she was entitled to confirmation and
registration of title, as she had been in "natural, open, public, adverse, continuous,
uninterrupted" possession of the land in the concept of an owner since October 1964.10

Petitioner Republic of the Philippines filed an Opposition11 to the Petition. It contended

that (a) neither respondent nor her predecessors-ininterest had been in open,
continuous, exclusive and notorious possession of the land since 12 June 1945; 12 (b)
the Tax Declarations attached to the Petition did not constitute sufficient evidence of the
acquisition or possession of the property;13 (c) respondent failed to apply for registration
of title within six months from 16 February 1976 as required by Presidential Decree No.
(P.D.) 892;14 and (d) the land in question was part of the public domain and not subject
to private appropriation.15

ISSUES

Based on the submissions of the parties and the Decisions of the CA and the RTC, two
issues are presented for resolution by this Court:

(1) Whether the CA erroneously allowed the judicial confirmation of respondent's

title to the property under Section 14(1) of P.D. 1529; and

(2) Whether the CA erred in declaring that respondent is likewise entitled to

registration of title based on ownership by acquisitive prescription under Section
14(2) of P.D. 1529.

OUR RULING

We GRANT the Petition.

Applications for registration of title to land, both public and private, are governed
by Section 14 of P.D. 1529:

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
provisions of existing laws.

(3) Those who have acquired ownership of private lands or abandoned river beds by
right of accession or accretion under the existing laws.

(4) Those who have acquired ownership of land in any other manner provided for by
law.

From the foregoing allegations, it appears that the claim of respondent is anchored on
either of the first two paragraphs of Section 14. However, it is unclear whether she
sought judicial confirmation and registration of her title pursuant to Section 14(1) of P.D.
1529, or of the registration of her title on the ground of acquisitive prescription under
Section 14(2) of the same law.

Respondent has failed to prove that the land subject of the application is part of
the patrimonial property of the State that may be acquired by prescription under
Section 14(2) of P.D. 1529.

As previously noted, the CA also allowed the registration of the property under Section
14(2) of P.D. 1529 based on the following findings: (1) the property is "private in nature"
as shown by the fact that it is "covered by a private survey";76 (2) respondent had
occupied the land continuously for more than 30 years from the time of the filing of the
application in 1996;77 and (3) the land is not covered by any public land application
based on the DENR-CENRO Certifications submitted by respondent.78

We do not agree. The Court fields no sufficient basis to allow the registration of
the property under Section 14(2).

By express provision of the law, only private lands that have been acquired by
prescription under existing laws may be the subject of applications for registration under
Section 14(2). The starting point of the Court's evaluation must, therefore, be whether
the property involved falls within the scope of the paragraph.

Under the Civil Code, all things within human commerce are generally susceptible of
prescription.79 Properties of the public dominion, or those owned by the State, are
expressly excluded by law from this general rule,80 unless they are proven to
be patrimonial in character. As the Court explained in Republic of the Philippines v. Tan:

Only private property can be acquired by prescription. Property of public dominion is

outside the commerce of man.1âwphi1 It cannot be the object of prescription because
prescription does not run against the State in its sovereign capacity. However, when
property of public dominion is no longer intended for public use or for public service, it
becomes part of the patrimonial property of the State. When this happens, the property
is withdrawn from public dominion and becomes property of private ownership, albeit
still owned by the State. The property is now brought within the commerce of man and
becomes susceptible to the concepts of legal possession and prescription. 81 (Emphasis
supplied)

To establish that the land subject of the application has been converted into patrimonial
property of the State, an applicant must prove the following:

l. The subject property has been classified as agricultural land.82

2. The property has been declared alienable and disposable. 83

3. There is an express government manifestation that the property is already

patrimonial, or is no longer retained for public service or the development of national
wealth.84

It must be emphasized that without the concurrence of these three conditions, the land
remains part of public dominion and thus incapable of acquisition by prescription. 85

Here, the records show that respondent has failed to allege or prove that the subject
land belongs to the patrimonial property of the State.1âwphi1 As earlier discussed, the
evidence she has presented does not even show that the property is alienable and
disposable agricultural land. She has also failed to cite any government act or
declaration converting the land into patrimonial property of the State.

Contrary to the ruling of the CA, the DENR-CENRO Certifications submitted by

respondent are not enough; they cannot substitute for the three conditions required by
law as proof that the land may be the subject of prescription under the Civil Code. For
the same reason, the mere conduct of a private survey of a property - even with
the approval of the Bureau of Lands - does not convert the lot into private land or
patrimonial property of the State. Clearly, the appellate court erred when it relied
on the survey to justify its conclusion that the land is private in nature.

Considering the absence of sufficient evidence that the subject land is a patrimonial
property of the State, we must consider it part of public dominion and thus immune from
acquisitive prescription.

As a final note, the Court must point out that proof of the classification, alienability and
disposability of the subject property is of particular significance in applications for the
registration of land. Given the general rule that public lands may not be alienated, 86 it is
the burden of applicants to prove that the land they seek to register falls within the
classifications enumerated in Section 14 of P.D. 1529; in particular, the specific
paragraph they invoke as basis for registration.87 Absent that proot: no length of
possession or occupation would vest any right of ownership over the property, 88 and
registration under P.D. 1529 cannot be sanctioned by this Court.
WHEREFORE, the Petition is hereby GRANTED. The Court of Appeals Decision dated
23 August 2007 and Resolution dated 22 January 2008 are REVERSED and SET
ASIDE. Respondent's application for land registration is DENIED for lack of merit.

SO ORDERED.