Republic of the Philippines

Supreme Court
Manila

EN BANC

THE SECRETARY OF THE G.R. No. 167707

DEPARTMENT OF ENVIRONMENT
AND NATURAL RESOURCES, THE
REGIONAL EXECUTIVE Present:
DIRECTOR, DENR-REGION VI,
REGIONAL TECHNICAL PUNO, C.J.,
DIRECTOR FOR LANDS, QUISUMBING,
LANDS MANAGEMENT BUREAU, YNARES-SANTIAGO,
REGION VI PROVINCIAL CARPIO,
ENVIRONMENT AND NATURAL AUSTRIA-MARTINEZ,
RESOURCES OFFICER OF KALIBO, CORONA,*
AKLAN, REGISTER OF DEEDS, CARPIO MORALES,
DIRECTOR OF LAND AZCUNA,
REGISTRATION AUTHORITY, TINGA,
DEPARTMENT OF TOURISM CHICO-NAZARIO,
SECRETARY, DIRECTOR OF VELASCO, JR.,
PHILIPPINE TOURISM NACHURA,**
AUTHORITY, REYES,
Petitioners, LEONARDO-DE CASTRO, and
BRION, JJ.
- versus -

MAYOR JOSE S. YAP, LIBERTAD

TALAPIAN, MILA Y. SUMNDAD, and
ANICETO YAP, in their behalf and Promulgated:
in behalf of all those similarly situated,
Respondents. October 8, 2008

x--------------------------------------------------x

DR. ORLANDO SACAY and G.R. No. 173775

WILFREDO GELITO, joined by
THE LANDOWNERS OF
BORACAY SIMILARLY
SITUATED NAMED IN A LIST,
ANNEX A OF THIS PETITION,
Petitioners,

- versus -

THE SECRETARY OF THE

DEPARTMENT OF ENVIRONMENT
AND NATURAL RESOURCES, THE
REGIONAL TECHNICAL
DIRECTOR FOR LANDS, LANDS
MANAGEMENT BUREAU,
REGION VI, PROVINCIAL
ENVIRONMENT AND NATURAL
RESOURCES OFFICER, KALIBO,
AKLAN,
Respondents.

x--------------------------------------------------x
 DECISION

REYES, R.T., J.:

AT stake in these consolidated cases is the right of the present occupants of Boracay Island to secure titles
over their occupied lands.

There are two consolidated petitions. The first is G.R. No. 167707, a petition for review on certiorari of the
Decision of the Court of Appeals (CA) affirming that [2] of the Regional Trial Court (RTC) in Kalibo, Aklan, which
[1]

granted the petition for declaratory relief filed by respondents-claimants Mayor Jose Yap, et al. and ordered the
survey of Boracay for titling purposes. The second is G.R. No. 173775, a petition for prohibition, mandamus, and
nullification of Proclamation No. 1064[3] issued by President Gloria Macapagal-Arroyo classifying Boracay into
reserved forest and agricultural land.

The Antecedents

G.R. No. 167707

Boracay Island in the Municipality of Malay, Aklan, with its powdery white sand beaches and warm
crystalline waters, is reputedly a premier Philippine tourist destination. The island is also home to 12,003
inhabitants[4] who live in the bone-shaped islands three barangays.[5]

On April 14, 1976, the Department of Environment and Natural Resources (DENR) approved the National
Reservation Survey of Boracay
Island,[6] which identified several lots as being occupied or claimed by named persons. [7]

On November 10, 1978, then President Ferdinand Marcos issued Proclamation

No. 1801[8] declaring Boracay Island, among other islands, caves and peninsulas in the Philippines, as tourist zones
and marine reserves under the administration of the Philippine Tourism Authority (PTA). President Marcos later
approved the issuance of PTA Circular 3-82[9] dated September 3, 1982, to implement Proclamation No. 1801.

Claiming that Proclamation No. 1801 and PTA Circular No 3-82 precluded them from filing an application
for judicial confirmation of imperfect title or survey of land for titling purposes, respondents-claimants
Mayor Jose S. Yap, Jr., Libertad Talapian, Mila Y. Sumndad, and Aniceto Yap filed a petition for declaratory relief
with the RTC in Kalibo, Aklan.

In their petition, respondents-claimants alleged that Proclamation No. 1801 and PTA Circular No. 3-82
raised doubts on their right to secure titles over their occupied lands. They declared that they themselves, or
through their predecessors-in-interest, had been in open, continuous, exclusive, and notorious possession and
occupation in Boracay since June 12, 1945, or earlier since time immemorial. They declared their lands for tax
purposes and paid realty taxes on them.[10]

Respondents-claimants posited that Proclamation No. 1801 and its implementing Circular did not place
Boracay beyond the commerce of man. Since the Island was classified as a tourist zone, it was susceptible of
private ownership. Under Section 48(b) of Commonwealth Act (CA) No. 141, otherwise known as the Public Land
Act, they had the right to have the lots registered in their names through judicial confirmation of imperfect titles.

The Republic, through the Office of the Solicitor General (OSG), opposed the petition for declaratory
relief. The OSG countered that Boracay Island was an unclassified land of the public domain. It formed part of the
mass of lands classified as public forest, which was not available for disposition pursuant to Section 3(a) of
Presidential Decree (PD) No. 705 or the Revised Forestry Code,[11] as amended.
 The OSG maintained that respondents-claimants reliance on PD No. 1801 and PTA Circular No. 3-82 was
misplaced. Their right to judicial confirmation of title was governed by CA No. 141 and PD No.
705. Since Boracay Island had not been classified as alienable and disposable, whatever possession they had
cannot ripen into ownership.

During pre-trial, respondents-claimants and the OSG stipulated on the following facts: (1) respondents-
claimants were presently in possession of parcels of land in Boracay Island; (2) these parcels of land were planted
with coconut trees and other natural growing trees; (3) the coconut trees had heights of more or less twenty (20)
meters and were planted more or less fifty (50) years ago; and (4) respondents-claimants declared the land they
were occupying for tax purposes.[12]

The parties also agreed that the principal issue for resolution was purely legal: whether Proclamation No.
1801 posed any legal hindrance or impediment to the titling of the lands in Boracay. They decided to forego with
the trial and to submit the case for resolution upon submission of their respective memoranda.[13]

The RTC took judicial notice[14] that certain parcels of land in Boracay Island, more particularly Lots 1 and
30, Plan PSU-5344, were covered by Original Certificate of Title No. 19502 (RO 2222) in the name of the Heirs of
Ciriaco S. Tirol. These lots were involved in Civil Case Nos. 5222 and 5262 filed before
the RTC of Kalibo, Aklan.[15] The titles were issued on
August 7, 1933.[16]

RTC and CA Dispositions

On July 14, 1999, the RTC rendered a decision in favor of respondents-claimants, with a fallo reading:

WHEREFORE, in view of the foregoing, the Court declares that Proclamation No. 1801
and PTA Circular No. 3-82 pose no legal obstacle to the petitioners and those similarly situated to
acquire title to their lands in Boracay, in accordance with the applicable laws and in the manner
prescribed therein; and to have their lands surveyed and approved by respondent Regional
Technical Director of Lands as the approved survey does not in itself constitute a title to the land.

SO ORDERED.[17]

The RTC upheld respondents-claimants right to have their occupied lands titled in their name. It ruled that
neither Proclamation No. 1801 nor PTA Circular No. 3-82 mentioned that lands in Boracay were inalienable or
could not be the subject of disposition.[18] The Circular itself recognized private ownership of lands. [19] The trial
court cited Sections 87[20] and 53[21] of the Public Land Act as basis for acknowledging private ownership of lands in
Boracay and that only those forested areas in public lands were declared as part of the forest reserve.[22]

The OSG moved for reconsideration but its motion was denied.[23] The Republic then appealed to the CA.

On December 9, 2004, the appellate court affirmed in toto the RTC decision, disposing as follows:

WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us

DENYING the appeal filed in this case and AFFIRMING the decision of the lower court. [24]

The CA held that respondents-claimants could not be prejudiced by a declaration that the lands they
occupied since time immemorial were part of a forest reserve.

Again, the OSG sought reconsideration but it was similarly denied. [25] Hence, the present petition under
Rule 45.

G.R. No. 173775

On May 22, 2006, during the pendency of G.R. No. 167707, President Gloria Macapagal-Arroyo issued
Proclamation No. 1064[26] classifying Boracay Island into four hundred (400) hectares of reserved forest land
(protection purposes) and six hundred twenty-eight and 96/100 (628.96) hectares of agricultural land (alienable
and disposable). The Proclamation likewise provided for a fifteen-meter buffer zone on each side of the centerline
of roads and trails, reserved for right-of-way and which shall form part of the area reserved for forest land
protection purposes.

On August 10, 2006, petitioners-claimants Dr. Orlando Sacay,[27] Wilfredo Gelito,[28] and other
landowners[29] in Boracay filed with this Court an original petition for prohibition, mandamus, and nullification of
Proclamation No. 1064.[30] They allege that the Proclamation infringed on their prior vested rights over portions of
Boracay. They have been in continued possession of their respective lots in Boracay since time immemorial. They
have also invested billions of pesos in developing their lands and building internationally renowned first class
resorts on their lots.[31]

Petitioners-claimants contended that there is no need for a proclamation reclassifying Boracay into
agricultural land. Being classified as neither mineral nor timber land, the island is deemed agricultural pursuant to
the Philippine Bill of 1902 and Act No. 926, known as the first Public Land Act.[32] Thus, their possession in the
concept of owner for the required period entitled them to judicial confirmation of imperfect title.

Opposing the petition, the OSG argued that petitioners-claimants do not have a vested right over their
occupied portions in the island. Boracay is an unclassified public forest land pursuant to Section 3(a) of PD No.
705. Being public forest, the claimed portions of the island are inalienable and cannot be the subject of judicial
confirmation of imperfect title. It is only the executive department, not the courts, which has authority to
reclassify lands of the public domain into alienable and disposable lands. There is a need for a positive government
act in order to release the lots for disposition.

On November 21, 2006, this Court ordered the consolidation of the two petitions as they principally
involve the same issues on the land classification of Boracay Island.[33]

Issues

G.R. No. 167707

The OSG raises the lone issue of whether Proclamation No. 1801 and PTA Circular No. 3-82 pose any legal
obstacle for respondents, and all those similarly situated, to acquire title to their occupied lands
in Boracay Island.[34]

G.R. No. 173775

Petitioners-claimants hoist five (5) issues, namely:

I.
AT THE TIME OF THE ESTABLISHED POSSESSION OF PETITIONERS IN CONCEPT OF OWNER OVER
THEIR RESPECTIVE AREAS IN BORACAY, SINCE TIME IMMEMORIAL OR AT THE LATEST SINCE 30
YRS. PRIOR TO THE FILING OF THE PETITION FOR DECLARATORY RELIEF ON NOV. 19, 1997, WERE
THE AREAS OCCUPIED BY THEM PUBLIC AGRICULTURAL LANDS AS DEFINED BY LAWS THEN ON
JUDICIAL CONFIRMATION OF IMPERFECT TITLES OR PUBLIC FOREST AS DEFINED BY SEC. 3a, PD
705?

II.
 HAVE PETITIONERS OCCUPANTS ACQUIRED PRIOR VESTED RIGHT OF PRIVATE OWNERSHIP OVER
THEIR OCCUPIED PORTIONS OF BORACAY LAND, DESPITE THE FACT THAT THEY HAVE NOT
APPLIED YET FOR JUDICIAL CONFIRMATION OF IMPERFECT TITLE?

III.
IS THE EXECUTIVE DECLARATION OF THEIR AREAS AS ALIENABLE AND DISPOSABLE UNDER SEC 6,
CA 141 [AN] INDISPENSABLE PRE-REQUISITE FOR PETITIONERS TO OBTAIN TITLE UNDER
THE TORRENS SYSTEM?

IV.
IS THE ISSUANCE OF PROCLAMATION 1064 ON MAY 22, 2006, VIOLATIVE OF THE PRIOR VESTED
RIGHTS TO PRIVATE OWNERSHIP OF PETITIONERS OVER THEIR LANDS IN BORACAY, PROTECTED
BY THE DUE PROCESS CLAUSE OF THE CONSTITUTION OR IS PROCLAMATION 1064 CONTRARY
TO SEC. 8, CA 141, OR SEC. 4(a) OF RA 6657.

V.
CAN RESPONDENTS BE COMPELLED BY MANDAMUS TO ALLOW THE SURVEY AND TO APPROVE
THE SURVEY PLANS FOR PURPOSES OF THE APPLICATION FOR TITLING OF THE LANDS OF
PETITIONERS IN BORACAY?[35] (Underscoring supplied)

In capsule, the main issue is whether private claimants (respondents-claimants in G.R. No. 167707 and
petitioners-claimants in G.R. No. 173775) have a right to secure titles over their occupied portions in Boracay. The
twin petitions pertain to their right, if any, to judicial confirmation of imperfect title under CA No. 141, as
amended. They do not involve their right to secure title under other pertinent laws.

Our Ruling

Regalian Doctrine and power of the executive

to reclassify lands of the public domain

Private claimants rely on three (3) laws and executive acts in their bid for judicial confirmation of
imperfect title, namely: (a) Philippine Bill of 1902[36] in relation to Act No. 926, later amended and/or superseded
by Act No. 2874 and CA No. 141;[37](b) Proclamation No. 1801[38] issued by then President Marcos; and (c)
Proclamation No. 1064[39] issued by President Gloria Macapagal-Arroyo. We shall proceed to determine their rights
to apply for judicial confirmation of imperfect title under these laws and executive acts.

But first, a peek at the Regalian principle and the power of the executive to reclassify lands of the public
domain.

The 1935 Constitution classified lands of the public domain into agricultural, forest or
[40]
timber. Meanwhile, the 1973 Constitution provided the following divisions: agricultural, industrial or
commercial, residential, resettlement, mineral, timber or forest and grazing lands, and such other classes as may
be provided by law,[41] giving the government great leeway for classification.[42] Then the 1987 Constitution
reverted to the 1935 Constitution classification with one addition: national parks. [43] Of these, only agricultural
lands may be alienated.[44] Prior to Proclamation No. 1064 of May 22, 2006, Boracay Island had never been
expressly and administratively classified under any of these grand divisions. Boracay was an unclassified land of the
public domain.

The Regalian Doctrine dictates that all lands of the public domain belong to the State, that the State is the
source of any asserted right to ownership of land and charged with the conservation of such patrimony. [45] The
doctrine has been consistently adopted under the 1935, 1973, and 1987 Constitutions. [46]

All lands not otherwise appearing to be clearly within private ownership are presumed to belong to the
[47]
State. Thus, all lands that have not been acquired from the government, either by purchase or by grant, belong
to the State as part of the inalienable public domain.[48] Necessarily, it is up to the State to determine if lands of the
public domain will be disposed of for private ownership. The government, as the agent of the state, is possessed of
the plenary power as the persona in law to determine who shall be the favored recipients of public lands, as well
as under what terms they may be granted such privilege, not excluding the placing of obstacles in the way of their
exercise of what otherwise would be ordinary acts of ownership. [49]

Our present land law traces its roots to the Regalian Doctrine. Upon the Spanish conquest of
the Philippines, ownership of all lands, territories and possessions in the Philippines passed to the Spanish
Crown.[50] The Regalian doctrine was first introduced in the Philippines through the Laws of the Indies and the
Royal Cedulas, which laid the foundation that all lands that were not acquired from the Government, either by
purchase or by grant, belong to the public domain.[51]

The Laws of the Indies was followed by the Ley Hipotecaria or the Mortgage Law of 1893. The Spanish
Mortgage Law provided for the systematic registration of titles and deeds as well as possessory claims. [52]

The Royal Decree of 1894 or the Maura Law[53] partly amended the Spanish Mortgage Law and the Laws of
the Indies. It established possessory information as the method of legalizing possession of vacant Crown land,
under certain conditions which were set forth in said decree. [54] Under Section 393 of the Maura Law,
an informacion posesoria or possessory information title,[55] when duly inscribed in the Registry of Property, is
converted into a title of ownership only after the lapse of twenty (20) years of uninterrupted possession which
must be actual, public, and adverse,[56] from the date of its inscription.[57] However, possessory information title
had to be perfected one year after the promulgation of the Maura Law, or until April 17, 1895. Otherwise, the
lands would revert to the State.[58]

In sum, private ownership of land under the Spanish regime could only be founded on royal concessions
which took various forms, namely: (1) titulo real or royal grant; (2) concesion especial or special
grant; (3) composicion con el estado or adjustment title; (4) titulo de compra or title by purchase; and
(5) informacion posesoria or possessory information title.[59]

The first law governing the disposition of public lands in the Philippines under American rule was
embodied in the Philippine Bill of 1902.[60] By this law, lands of the public domain in the Philippine Islands were
classified into three (3) grand divisions, to wit: agricultural, mineral, and timber or forest lands.[61] The act provided
for, among others, the disposal of mineral lands by means of absolute grant (freehold system) and by lease
(leasehold system).[62] It also provided the definition by exclusion of agricultural public lands. [63] Interpreting the
meaning of agricultural lands under the Philippine Bill of 1902, the Court declared in Mapa v. Insular
Government:[64]

x x x In other words, that the phrase agricultural land as used in Act No. 926
means those public lands acquired from Spain which are not timber or mineral lands. x x
x[65] (Emphasis Ours)

On February 1, 1903, the Philippine Legislature passed Act No. 496, otherwise known as the Land
Registration Act. The act established a system of registration by which recorded title becomes absolute,
indefeasible, and imprescriptible. This is known as the Torrens system.[66]

Concurrently, on October 7, 1903, the Philippine Commission passed Act No. 926, which was the first
Public Land Act. The Act introduced the homestead system and made provisions for judicial and administrative
confirmation of imperfect titles and for the sale or lease of public lands. It permitted corporations regardless of the
nationality of persons owning the controlling stock to lease or purchase lands of the public domain. [67] Under the
Act, open, continuous, exclusive, and notorious possession and occupation of agricultural lands for the next ten
(10) years preceding July 26, 1904 was sufficient for judicial confirmation of imperfect title.[68]

On November 29, 1919, Act No. 926 was superseded by Act No. 2874, otherwise known as the second
Public Land Act. This new, more comprehensive law limited the exploitation of agricultural lands to Filipinos and
Americans and citizens of other countries which gave Filipinos the same privileges. For judicial confirmation of
title, possession and occupation en concepto dueo since time immemorial, or since July 26, 1894, was required.[69]

After the passage of the 1935 Constitution, CA No. 141 amended Act No. 2874 on December 1, 1936. To
this day, CA No. 141, as amended, remains as the existing general law governing the classification and disposition
of lands of the public domain other than timber and mineral lands, [70] and privately owned lands which reverted to
the State.[71]

Section 48(b) of CA No. 141 retained the requirement under Act No. 2874 of possession and occupation of
lands of the public domain since time immemorial or since July 26, 1894. However, this provision was superseded
by Republic Act (RA) No. 1942,[72] which provided for a simple thirty-year prescriptive period for judicial
confirmation of imperfect title. The provision was last amended by PD No. 1073,[73] which now provides for
possession and occupation of the land applied for since June 12, 1945, or earlier.[74]

The issuance of PD No. 892[75] on February 16, 1976 discontinued the use of Spanish titles as evidence in
land registration proceedings.[76] Under the decree, all holders of Spanish titles or grants should apply for
registration of their lands under Act No. 496 within six (6) months from the effectivity of the decree on February
16, 1976. Thereafter, the recording of all unregistered lands[77] shall be governed by Section 194 of the Revised
Administrative Code, as amended by Act No. 3344.

On June 11, 1978, Act No. 496 was amended and updated by PD No. 1529, known as the Property
Registration Decree. It was enacted to codify the various laws relative to registration of property. [78] It governs
registration of lands under the Torrenssystem as well as unregistered lands, including chattel mortgages.[79]

A positive act declaring land as alienable and disposable is required. In keeping with the presumption of
State ownership, the Court has time and again emphasized that there must be a positive act of the
government, such as an official proclamation,[80] declassifying inalienable public land into disposable land for
agricultural or other purposes.[81] In fact, Section 8 of CA No. 141 limits alienable or disposable lands only to those
lands which have been officially delimited and classified.[82]

The burden of proof in overcoming the presumption of State ownership of the lands of the public domain
is on the person applying for registration (or claiming ownership), who must prove that the land subject of the
application is alienable or disposable.[83] To overcome this presumption, incontrovertible evidence must be
established that the land subject of the application (or claim) is alienable or disposable. [84] There must still be a
positive act declaring land of the public domain as alienable and disposable. To prove that the land subject of an
application for registration is alienable, the 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 a statute. [85] The applicant may also secure a
certification from the government that the land claimed to have been possessed for the required number of years
is alienable and disposable.[86]

In the case at bar, no such proclamation, executive order, administrative action, report, statute, or
certification was presented to the Court. The records are bereft of evidence showing that, prior to 2006, the
portions of Boracay occupied by private claimants were subject of a government proclamation that the land is
alienable and disposable. Absent such well-nigh incontrovertible evidence, the Court cannot accept the submission
that lands occupied by private claimants were already open to disposition before 2006. Matters of land
classification or reclassification cannot be assumed. They call for proof.[87]

Ankron and De Aldecoa did not make the whole of Boracay Island, or portions of it, agricultural lands.
Private claimants posit that Boracay was already an agricultural land pursuant to the old cases Ankron v.
Government of the Philippine Islands(1919)[88] and De Aldecoa v. The Insular Government (1909).[89] These cases
were decided under the provisions of the Philippine Bill of 1902 and Act No. 926. There is a statement in these old
cases that in the absence of evidence to the contrary, that in each case the lands are agricultural lands until the
contrary is shown.[90]

Private claimants reliance on Ankron and De Aldecoa is misplaced. These cases did not have the effect of
converting the whole of Boracay Island or portions of it into agricultural lands. It should be stressed that the
Philippine Bill of 1902 and Act No. 926 merely provided the manner through which land registration courts would
classify lands of the public domain. Whether the land would be classified as timber, mineral, or agricultural
depended on proof presented in each case.

Ankron and De Aldecoa were decided at a time when the President of the Philippines had no power to
classify lands of the public domain into mineral, timber, and agricultural. At that time, the courts were free to
make corresponding classifications in justiciable cases, or were vested with implicit power to do so, depending
upon the preponderance of the evidence.[91] This was the Courts ruling in Heirs of the Late Spouses Pedro S.
Palanca and Soterranea Rafols Vda. De Palanca v. Republic,[92] in which it stated, through Justice Adolfo
Azcuna, viz.:

x x x Petitioners furthermore insist that a particular land need not be formally released
by an act of the Executive before it can be deemed open to private ownership, citing the cases
of Ramos v. Director of Lands and Ankron v. Government of the Philippine Islands.

xxxx

Petitioners reliance upon Ramos v. Director of Lands and Ankron v. Government is

misplaced. These cases were decided under the Philippine Bill of 1902 and the first Public Land
Act No. 926 enacted by the Philippine Commission on October 7, 1926, under which there was no
legal provision vesting in the Chief Executive or President of the Philippines the power to classify
lands of the public domain into mineral, timber and agricultural so that the courts then were free
to make corresponding classifications in justiciable cases, or were vested with implicit power to
do so, depending upon the preponderance of the evidence. [93]

To aid the courts in resolving land registration cases under Act No. 926, it was then necessary to devise a
presumption on land classification. Thus evolved the dictum in Ankron that the courts have a right to presume, in
the absence of evidence to the contrary, that in each case the lands are agricultural lands until the contrary is
shown.[94]

But We cannot unduly expand the presumption in Ankron and De Aldecoa to an argument that all lands of
the public domain had been automatically reclassified as disposable and alienable agricultural lands. By no stretch
of imagination did the presumption convert all lands of the public domain into agricultural lands.

If We accept the position of private claimants, the Philippine Bill of 1902 and Act No. 926 would have
automatically made all lands in the Philippines, except those already classified as timber or mineral land, alienable
and disposable lands. That would take these lands out of State ownership and worse, would be utterly inconsistent
with and totally repugnant to the long-entrenched Regalian doctrine.

The presumption in Ankron and De Aldecoa attaches only to land registration cases brought under the
provisions of Act No. 926, or more specifically those cases dealing with judicial and administrative confirmation of
imperfect titles. The presumption applies to an applicant for judicial or administrative conformation of imperfect
title under Act No. 926. It certainly cannot apply to landowners, such as private claimants or their predecessors-in-
interest, who failed to avail themselves of the benefits of Act No. 926. As to them, their land remained unclassified
and, by virtue of the Regalian doctrine, continued to be owned by the State.
 In any case, the assumption in Ankron and De Aldecoa was not absolute. Land classification was, in the
end, dependent on proof. If there was proof that the land was better suited for non-agricultural uses, the courts
could adjudge it as a mineral or timber land despite the presumption. In Ankron, this Court stated:

In the case of Jocson vs. Director of Forestry (supra), the Attorney-General admitted in
effect that whether the particular land in question belongs to one class or another is a question
of fact. The mere fact that a tract of land has trees upon it or has mineral within it is not of itself
sufficient to declare that one is forestry land and the other, mineral land. There must be some
proof of the extent and present or future value of the forestry and of the minerals. While, as we
have just said, many definitions have been given for agriculture, forestry, and mineral lands, and
that in each case it is a question of fact, we think it is safe to say that in order to be forestry or
mineral land the proof must show that it is more valuable for the forestry or the mineral which it
contains than it is for agricultural purposes. (Sec. 7, Act No. 1148.) It is not sufficient to show that
there exists some trees upon the land or that it bears some mineral. Land may be classified as
forestry or mineral today, and, by reason of the exhaustion of the timber or mineral, be classified
as agricultural land tomorrow. And vice-versa, by reason of the rapid growth of timber or the
discovery of valuable minerals, lands classified as agricultural today may be differently classified
tomorrow. Each case must be decided upon the proof in that particular case, having regard for
its present or future value for one or the other purposes. We believe, however, considering the
fact that it is a matter of public knowledge that a majority of the lands in the Philippine Islands
are agricultural lands that the courts have a right to presume, in the absence of evidence to the
contrary, that in each case the lands are agricultural lands until the contrary is shown. Whatever
the land involved in a particular land registration case is forestry or mineral land must,
therefore, be a matter of proof. Its superior value for one purpose or the other is a question of
fact to be settled by the proof in each particular case. The fact that the land is a manglar
[mangrove swamp] is not sufficient for the courts to decide whether it is agricultural, forestry, or
mineral land. It may perchance belong to one or the other of said classes of land. The
Government, in the first instance, under the provisions of Act No. 1148, may, by reservation,
decide for itself what portions of public land shall be considered forestry land, unless private
interests have intervened before such reservation is made. In the latter case, whether the land is
agricultural, forestry, or mineral, is a question of proof. Until private interests have intervened,
the Government, by virtue of the terms of said Act (No. 1148), may decide for itself what
portions of the public domain shall be set aside and reserved as forestry or mineral land. (Ramos
vs. Director of Lands, 39 Phil. 175; Jocson vs. Director of Forestry, supra)[95] (Emphasis ours)

Since 1919, courts were no longer free to determine the classification of lands from the facts of each case,
except those that have already became private lands. [96] Act No. 2874, promulgated in 1919 and reproduced in
Section 6 of CA No. 141, gave the Executive Department, through the President, the exclusive prerogative to
classify or reclassify public lands into alienable or disposable, mineral or forest. 96-a Since then, courts no longer had
the authority, whether express or implied, to determine the classification of lands of the public domain.[97]

Here, private claimants, unlike the Heirs of Ciriaco Tirol who were issued their title in 1933,[98] did not
present a justiciable case for determination by the land registration court of the propertys land
classification. Simply put, there was no opportunity for the courts then to resolve if the land the Boracay occupants
are now claiming were agricultural lands. When Act No. 926 was supplanted by Act No. 2874 in 1919, without an
application for judicial confirmation having been filed by private claimants or their predecessors-in-interest, the
courts were no longer authorized to determine the propertys land classification. Hence, private claimants cannot
bank on Act No. 926.

We note that the RTC decision[99] in G.R. No. 167707 mentioned Krivenko v. Register of Deeds of
Manila,[100] which was decided in 1947 when CA No. 141, vesting the Executive with the sole power to classify
lands of the public domain was already in effect. Krivenko cited the old cases Mapa v. Insular Government,[101] De
Aldecoa v. The Insular Government,[102] and Ankron v. Government of the Philippine Islands.[103]

Krivenko, however, is not controlling here because it involved a totally different issue. The pertinent issue
in Krivenko was whether residential lots were included in the general classification of agricultural lands; and if so,
whether an alien could acquire a residential lot. This Court ruled that as an alien, Krivenko was prohibited by the
1935 Constitution[104] from acquiring agricultural land, which included residential lots. Here, the issue is whether
unclassified lands of the public domain are automatically deemed agricultural.

Notably, the definition of agricultural public lands mentioned in Krivenko relied on the old cases decided
prior to the enactment of Act No. 2874, including Ankron and De Aldecoa.[105] As We have already stated, those
cases cannot apply here, since they were decided when the Executive did not have the authority to classify lands
as agricultural, timber, or mineral.

Private claimants continued possession under Act No. 926 does not create a presumption that the land
is alienable. Private claimants also contend that their continued possession of portions of Boracay Island for the
requisite period of ten (10) years under Act No. 926 [106] ipso facto converted the island into private
ownership. Hence, they may apply for a title in their name.

A similar argument was squarely rejected by the Court in Collado v. Court of Appeals.[107] Collado, citing
the separate opinion of now Chief Justice Reynato S. Puno in Cruz v. Secretary of Environment and Natural
Resources,107-a ruled:

Act No. 926, the first Public Land Act, was passed in pursuance of the
provisions of the Philippine Bill of 1902. The law governed the disposition of
lands of the public domain. It prescribed rules and regulations for the
homesteading, selling and leasing of portions of the public domain of the
Philippine Islands, and prescribed the terms and conditions to enable persons
to perfect their titles to public lands in the Islands. It also provided for the
issuance of patents to certain native settlers upon public lands, for the
establishment of town sites and sale of lots therein, for the completion of
imperfect titles, and for the cancellation or confirmation of Spanish
concessions and grants in the Islands. In short, the Public Land Act operated on
the assumption that title to public lands in the Philippine Islands remained in
the government; and that the governments title to public land sprung from the
Treaty of Paris and other subsequent treaties between Spain and the United
States. The term public land referred to all lands of the public domain whose
title still remained in the government and are thrown open to private
appropriation and settlement, and excluded the patrimonial property of the
government and the friar lands.

Thus, it is plain error for petitioners to argue that under the Philippine Bill of 1902
and Public Land Act No. 926, mere possession by private individuals of lands creates the legal
presumption that the lands are alienable and disposable.[108] (Emphasis Ours)

Except for lands already covered by existing titles, Boracay was an unclassified land of the public
domain prior to Proclamation No. 1064. Such unclassified lands are considered public forest under PD No.
705. The DENR[109] and the National Mapping and Resource Information Authority [110] certify that Boracay Island is
an unclassified land of the public domain.

PD No. 705 issued by President Marcos categorized all unclassified lands of the public domain as public
forest. Section 3(a) of PD No. 705 defines a public forest as a mass of lands of the public domain which has not
been the subject of the present system of classification for the determination of which lands are needed for forest
purpose and which are not. Applying PD No. 705, all unclassified lands, including those in Boracay Island, are ipso
facto considered public forests. PD No. 705, however, respects titles already existing prior to its effectivity.

The Court notes that the classification of Boracay as a forest land under PD No. 705 may seem to be out of
touch with the present realities in the island. Boracay, no doubt, has been partly stripped of its forest cover to
pave the way for commercial developments. As a premier tourist destination for local and foreign tourists, Boracay
appears more of a commercial island resort, rather than a forest land.
 Nevertheless, that the occupants of Boracay have built multi-million peso beach resorts on the
island;[111] that the island has already been stripped of its forest cover; or that the implementation of Proclamation
No. 1064 will destroy the islands tourism industry, do not negate its character as public forest.

Forests, in the context of both the Public Land Act and the Constitution [112] classifying lands of the public
domain into agricultural, forest or timber, mineral lands, and national parks, do not necessarily refer to large tracts
of wooded land or expanses covered by dense growths of trees and underbrushes.[113] The discussion in Heirs of
Amunategui v. Director of Forestry[114] is particularly instructive:

A forested area classified as forest land of the public domain does not lose such
classification simply because loggers or settlers may have stripped it of its forest cover. Parcels of
land classified as forest land may actually be covered with grass or planted to crops
by kaingincultivators or other farmers. Forest lands do not have to be on mountains or in out of
the way places. Swampy areas covered by mangrove trees, nipa palms, and other trees growing
in brackish or sea water may also be classified as forest land. The classification is descriptive of
its legal nature or status and does not have to be descriptive of what the land actually looks
like. Unless and until the land classified as forest is released in an official proclamation to that
effect so that it may form part of the disposable agricultural lands of the public domain, the rules
on confirmation of imperfect title do not apply.[115] (Emphasis supplied)

There is a big difference between forest as defined in a dictionary and forest or timber land as a classification of
lands of the public domain as appearing in our statutes. One is descriptive of what appears on the land while the
other is a legal status, a classification for legal purposes. [116] At any rate, the Court is tasked to determine
the legal status of Boracay Island, and not look into its physical layout. Hence, even if its forest cover has been
replaced by beach resorts, restaurants and other commercial establishments, it has not been automatically
converted from public forest to alienable agricultural land.

Private claimants cannot rely on Proclamation No. 1801 as basis for judicial confirmation of imperfect
title. The proclamation did not convert Boracay into an agricultural land. However, private claimants argue that
Proclamation No. 1801 issued by then President Marcos in 1978 entitles them to judicial confirmation of imperfect
title. The Proclamation classified Boracay, among other islands, as a tourist zone. Private claimants assert that, as a
tourist spot, the island is susceptible of private ownership.

Proclamation No. 1801 or PTA Circular No. 3-82 did not convert the whole of Boracay into an agricultural
land. There is nothing in the law or the Circular which made Boracay Island an agricultural land. The reference in
Circular No. 3-82 to private lands[117] and areas declared as alienable and disposable[118] does not by itself classify
the entire island as agricultural. Notably, Circular No. 3-82 makes reference not only to private lands and areas but
also to public forested lands. Rule VIII, Section 3 provides:

No trees in forested private lands may be cut without prior authority from the PTA. All
forested areas in public lands are declared forest reserves. (Emphasis supplied)

Clearly, the reference in the Circular to both private and public lands merely recognizes that the island can
be classified by the Executive department pursuant to its powers under CA No. 141. In fact, Section 5 of the
Circular recognizes the then Bureau of Forest Developments authority to declare areas in the island as alienable
and disposable when it provides:

Subsistence farming, in areas declared as alienable and disposable by the Bureau of

Forest Development.

Therefore, Proclamation No. 1801 cannot be deemed the positive act needed to classify Boracay Island as
alienable and disposable land. If President Marcos intended to classify the island as alienable and disposable or
forest, or both, he would have identified the specific limits of each, as President Arroyo did in Proclamation No.
1064. This was not done in Proclamation No. 1801.
 The Whereas clauses of Proclamation No. 1801 also explain the rationale behind the declaration of
Boracay Island, together with other islands, caves and peninsulas in the Philippines, as a tourist zone and marine
reserve to be administered by the PTA to ensure the concentrated efforts of the public and private sectors in the
development of the areas tourism potential with due regard for ecological balance in the marine
environment. Simply put, the proclamation is aimed at administering the islands for tourism and ecological
purposes. It does not address the areas alienability.[119]

More importantly, Proclamation No. 1801 covers not only Boracay Island, but sixty-four (64) other islands,
coves, and peninsulas in the Philippines, such as Fortune and Verde Islands in Batangas, Port Galera in Oriental
Mindoro, Panglao and Balicasag Islands in Bohol, Coron Island, Puerto Princesa and surrounding areas in Palawan,
Camiguin Island in Cagayan de Oro, and Misamis Oriental, to name a few. If the designation of Boracay Island as
tourist zone makes it alienable and disposable by virtue of Proclamation No. 1801, all the other areas mentioned
would likewise be declared wide open for private disposition. That could not have been, and is clearly beyond, the
intent of the proclamation.

It was Proclamation No. 1064 of 2006 which positively declared part of Boracay as alienable and
opened the same to private ownership. Sections 6 and 7 of CA No. 141[120] provide that it is only the President,
upon the recommendation of the proper department head, who has the authority to classify the lands of the
public domain into alienable or disposable, timber and mineral lands. [121]

In issuing Proclamation No. 1064, President Gloria Macapagal-Arroyo merely exercised the authority
granted to her to classify lands of the public domain, presumably subject to existing vested rights. Classification of
public lands is the exclusive prerogative of the Executive Department, through the Office of the President. Courts
have no authority to do so.[122] Absent such classification, the land remains unclassified until released and rendered
open to disposition.[123]

Proclamation No. 1064 classifies Boracay into 400 hectares of reserved forest land and 628.96 hectares of
agricultural land. The Proclamation likewise provides for a 15-meter buffer zone on each side of the center line of
roads and trails, which are reserved for right of way and which shall form part of the area reserved for forest land
protection purposes.
Contrary to private claimants argument, there was nothing invalid or irregular, much less
unconstitutional, about the classification of Boracay Island made by the President through Proclamation No.
1064. It was within her authority to make such classification, subject to existing vested rights.

Proclamation No. 1064 does not violate the Comprehensive Agrarian Reform Law. Private claimants
further assert that Proclamation No. 1064 violates the provision of the Comprehensive Agrarian Reform Law
(CARL) or RA No. 6657 barring conversion of public forests into agricultural lands. They claim that since Boracay is a
public forest under PD No. 705, President Arroyo can no longer convert it into an agricultural land without running
afoul of Section 4(a) of RA No. 6657, thus:

SEC. 4. Scope. The Comprehensive Agrarian Reform Law of 1988 shall cover, regardless
of tenurial arrangement and commodity produced, all public and private agricultural lands as
provided in Proclamation No. 131 and Executive Order No. 229, including other lands of the
public domain suitable for agriculture.

More specifically, the following lands are covered by the Comprehensive Agrarian
Reform Program:

(a) All alienable and disposable lands of the public domain devoted to or
suitable for agriculture. No reclassification of forest or mineral lands to
agricultural lands shall be undertaken after the approval of this Act until
Congress, taking into account ecological, developmental and equity
considerations, shall have determined by law, the specific limits of the
public domain.
 That Boracay Island was classified as a public forest under PD No. 705 did not bar the Executive from later
converting it into agricultural land. Boracay Island still remained an unclassified land of the public domain despite
PD No. 705.

In Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols v. Republic,[124] the Court stated that
unclassified lands are public forests.

While it is true that the land classification map does not categorically state that the
islands are public forests, the fact that they were unclassified lands leads to the same result. In
the absence of the classification as mineral or timber land, the land remains unclassified land
until released and rendered open to disposition.[125] (Emphasis supplied)

Moreover, the prohibition under the CARL applies only to a reclassification of land. If the land had never
been previously classified, as in the case of Boracay, there can be no prohibited reclassification under the agrarian
law. We agree with the opinion of the Department of Justice[126] on this point:

Indeed, the key word to the correct application of the prohibition in Section 4(a) is the
word reclassification. Where there has been no previous classification of public forest [referring,
we repeat, to the mass of the public domain which has not been the subject of the present system
of classification for purposes of determining which are needed for forest purposes and which are
not] into permanent forest or forest reserves or some other forest uses under the Revised Forestry
Code, there can be no reclassification of forest lands to speak of within the meaning of Section
4(a).

Thus, obviously, the prohibition in Section 4(a) of the CARL against the reclassification of
forest lands to agricultural lands without a prior law delimiting the limits of the public domain,
does not, and cannot, apply to those lands of the public domain, denominated as public forest
under the Revised Forestry Code, which have not been previously determined, or classified, as
needed for forest purposes in accordance with the provisions of the Revised Forestry Code. [127]

Private claimants are not entitled to apply for judicial confirmation of imperfect title under CA No.
141. Neither do they have vested rights over the occupied lands under the said law. There are two requisites for
judicial confirmation of imperfect or incomplete title under CA No. 141, namely: (1) open, continuous, exclusive,
and notorious possession and occupation of the subject land by himself or through his predecessors-in-interest
under a bona fide claim of ownership since time immemorial or fromJune 12, 1945; and (2) the classification of the
land as alienable and disposable land of the public domain.[128]

As discussed, the Philippine Bill of 1902, Act No. 926, and Proclamation No. 1801 did not convert portions
of Boracay Island into an agricultural land. The island remained an unclassified land of the public domain and,
applying the Regalian doctrine, is considered State property.

Private claimants bid for judicial confirmation of imperfect title, relying on the Philippine Bill of 1902, Act
No. 926, and Proclamation No. 1801, must fail because of the absence of the second element of alienable and
disposable land. Their entitlement to a government grant under our present Public Land Act presupposes that the
land possessed and applied for is already alienable and disposable. This is clear from the wording of the law
itself.[129] Where the land is not alienable and disposable, possession of the land, no matter how long, cannot
confer ownership or possessory rights.[130]

Neither may private claimants apply for judicial confirmation of imperfect title under Proclamation No.
1064, with respect to those lands which were classified as agricultural lands. Private claimants failed to prove the
first element of open, continuous, exclusive, and notorious possession of their lands in Boracay since June 12,
1945.
 We cannot sustain the CA and RTC conclusion in the petition for declaratory relief that private claimants
complied with the requisite period of possession.

The tax declarations in the name of private claimants are insufficient to prove the first element of
possession. We note that the earliest of the tax declarations in the name of private claimants were issued in
1993. Being of recent dates, the tax declarations are not sufficient to convince this Court that the period of
possession and occupation commenced on June 12, 1945.

Private claimants insist that they have a vested right in Boracay, having been in possession of the island
for a long time. They have invested millions of pesos in developing the island into a tourist spot. They say their
continued possession and investments give them a vested right which cannot be unilaterally rescinded by
Proclamation No. 1064.

The continued possession and considerable investment of private claimants do not automatically give
them a vested right in Boracay. Nor do these give them a right to apply for a title to the land they are presently
occupying. This Court is constitutionally bound to decide cases based on the evidence presented and the laws
applicable. As the law and jurisprudence stand, private claimants are ineligible to apply for a judicial confirmation
of title over their occupied portions in Boracay even with their continued possession and considerable investment
in the island.

One Last Note

The Court is aware that millions of pesos have been invested for the development of Boracay Island,
making it a by-word in the local and international tourism industry. The Court also notes that for a number of
years, thousands of people have called the island their home. While the Court commiserates with private claimants
plight, We are bound to apply the law strictly and judiciously. This is the law and it should prevail. Ito ang batas at
ito ang dapat umiral.

All is not lost, however, for private claimants. While they may not be eligible to apply for judicial
confirmation of imperfect title under Section 48(b) of CA No. 141, as amended, this does not denote their
automatic ouster from the residential, commercial, and other areas they possess now classified as
agricultural. Neither will this mean the loss of their substantial investments on their occupied alienable lands. Lack
of title does not necessarily mean lack of right to possess.

For one thing, those with lawful possession may claim good faith as builders of improvements. They can
take steps to preserve or protect their possession. For another, they may look into other modes of applying for
original registration of title, such as by homestead[131] or sales patent,[132] subject to the conditions imposed by law.

More realistically, Congress may enact a law to entitle private claimants to acquire title to their occupied
lots or to exempt them from certain requirements under the present land laws. There is one such bill[133] now
pending in the House of Representatives. Whether that bill or a similar bill will become a law is for Congress to
decide.

In issuing Proclamation No. 1064, the government has taken the step necessary to open up the island to
private ownership. This gesture may not be sufficient to appease some sectors which view the classification of the
island partially into a forest reserve as absurd. That the island is no longer overrun by trees, however, does not
becloud the vision to protect its remaining forest cover and to strike a healthy balance between progress and
ecology. Ecological conservation is as important as economic progress.

To be sure, forest lands are fundamental to our nations survival. Their promotion and protection are not
just fancy rhetoric for politicians and activists. These are needs that become more urgent as destruction of our
environment gets prevalent and difficult to control. As aptly observed by Justice Conrado Sanchez in 1968
in Director of Forestry v. Munoz:[134]

The view this Court takes of the cases at bar is but in adherence to public policy that
should be followed with respect to forest lands. Many have written much, and many more have
spoken, and quite often, about the pressing need for forest preservation, conservation,
protection, development and reforestation. Not without justification. For, forests constitute a
vital segment of any country's natural resources. It is of common knowledge by now that
absence of the necessary green cover on our lands produces a number of adverse or ill effects of
serious proportions.Without the trees, watersheds dry up; rivers and lakes which they supply are
emptied of their contents. The fish disappear. Denuded areas become dust bowls. As waterfalls
cease to function, so will hydroelectric plants. With the rains, the fertile topsoil is washed away;
geological erosion results. With erosion come the dreaded floods that wreak havoc and
destruction to property crops, livestock, houses, and highways not to mention precious human
lives. Indeed, the foregoing observations should be written down in a lumbermans decalogue. [135]

WHEREFORE, judgment is rendered as follows:

1. The petition for certiorari in G.R. No. 167707 is GRANTED and the Court of Appeals Decision in CA-G.R.
CV No. 71118 REVERSED AND SET ASIDE.

2. The petition for certiorari in G.R. No. 173775 is DISMISSED for lack of merit.

SO ORDERED.
 Republic of the Philippines
Supreme Court

FIRST DIVISION

ROGELIO, GEORGE, LOLITA, G.R. No. 159494

ROSALINDA, and JOSEPHINE, all
surnamed PASIO, represented by Present:
their father and attorney-in-fact
JOSE PASIO, PUNO, C.J., Chairperson,
Petitioners, CARPIO,
AUSTRIA-MARTINEZ,*
CORONA, and
- versus - LEONARDO-DE CASTRO, JJ.

DR. TEOFILO EDUARDO F.

MONTERROYO, substituted by
ROMUALDO MONTERROYO,
MARIA TERESA MONTERROYO, Promulgated:
and STEPHEN MONTERROYO,
Respondents. July 31, 2008

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review[1] assailing the 31 January 2003 Decision[2] and the 5 August 2003
Resolution[3] of the Court of Appeals in CA-G.R. CV No. 63199. The Court of Appeals affirmed the Decision[4] dated 2
February 1999 of theRegional Trial Court of Iligan City, Branch 6 (trial court), in Civil Case No. 06-3060.

The Antecedent Facts

This case originated from an action for recovery of possession and damages, with prayer for the issuance of a
temporary restraining order or writ of preliminary mandatory injunction, filed by Rogelio, George, Lolita, Rosalinda
and Josephine, all surnamed Pasio, represented by their father and attorney-in-fact Jose Pasio (petitioners) against
Dr. Teofilo Eduardo F. Monterroyo (Dr. Monterroyo), later substituted by his heirs Romualdo, Maria Teresa and
Stephen, all surnamed Monterroyo (respondents).

Cad. Lot No. 2139 of Cad. 292, Iligan Cadastre (Lot No. 2139), with an area of 19,979 square meters, located at
Panul-iran, Abuno, Iligan City, was part of a 24-hectare land occupied, cultivated and cleared by Laureano Pasio
(Laureano) in 1933. The 24-hectare land formed part of the public domain which was later declared alienable and
disposable. On 18 February 1935, Laureano filed a homestead application over the entire 24-hectare land under
Homestead Application No. 205845.[5] On 22 April 1940, the Bureau of Forestry wrote Laureano and informed him
that the tract of land covered by his application was not needed for forest purposes.[6] On 11 September 1941, the
Director of Lands issued an Order[7] approving Laureanos homestead application and stating that Homestead Entry
No. 154651 was recorded in his name for the land applied for by him.
Laureano died on 24 March 1950. On 15 April 1952, the Director of Lands issued an Order[8] for the issuance of a
homestead patent in favor of Laureano, married to Graciana Herbito [9] (Graciana). Laureanos heirs did not receive
the order and consequently, the land was not registered under Laureanos name or under that of his heirs. In 1953,
the property was covered by Tax Declaration No. 11102 [10] in the name of Laureano with Graciana[11] as
administrator.

Between 1949 and 1954, a Cadastral Survey was conducted in Iligan City. The surveyor found that a small creek
divided the 24-hectare parcel of land into two portions, identified as Lot No. 2138 and Lot No. 2139.

Petitioners claimed that Laureanos heirs, headed by his son Jose, continuously possessed and cultivated both
lots. On 16 October 1962, Joses co-heirs executed a Deed of Quitclaim renouncing their rights and interest over the
land in favor of Jose. Jose secured a title in his name for Lot No. 2138. Later, Jose alienated Lot No. 2139 in favor of
his children (petitioners in this case) who, on 8 January 1994, simultaneously filed applications for grant of Free
Patent Titles over their respective shares of Lot No. 2139 before the Land Management Bureau of the Department
of Environment and Natural Resources (DENR). On 22 August 1994, the DENR granted petitioners applications and
issued Original Certificate of Title (OCT) No. P-1322 (a.f.) in favor of Rogelio Pasio, OCT No. P-1318 (a.f.) in favor of
George Pasio, OCT No. P-1317 (a.f.) in favor of Lolita Pasio, OCT No. P-1321 (a.f.) in favor of Josephine Pasio, and
OCT No. P-1319 (a.f.) in favor of Rosalinda Pasio. Petitioners alleged that their possession of Lot No. 2139 was
interrupted on 3 January 1993 when respondents forcibly took possession of the property.
Respondents alleged that they had been in open, continuous, exclusive and notorious possession of Lot No. 2139,
by themselves and through their predecessors-in-interest, since 10 July 1949. They alleged that on 10 July 1949,
Rufo Larumbe (Larumbe) sold Lot No. 2139 to Petra Teves (Petra). On 27 February 1984, Petra executed a deed of
sale over Lot No. 2139 in favor of Vicente Teves (Vicente). On 20 February 1985, Vicente executed a pacto de retro
sale over the land in favor of Arturo Teves (Arturo). In 1992, Arturo sold Lot No. 2139 in favor of respondents
father, Dr. Monterroyo, by virtue of an oral contract. On 5 January 1995, Arturo executed a Deed of Confirmation
of Absolute Sale of Unregistered Land in favor of Dr. Monterroyos heirs.

Respondents alleged that Jose was not the owner of Lot No. 2139 and as such, he could not sell the land to his
children. They alleged that petitioners OCTs were null and void for having been procured in violation of the Public
Land Act. They further alleged that the Land Management Bureau had no authority to issue the free patent titles
because Lot No. 2139 was a private land.
The Ruling of the Trial Court

In its 2 February 1999 Decision, the trial court ruled, as follows:

WHEREFORE, judgment is rendered in favor of all the defendants and against the plaintiffs:

1. Dismissing the complaint;

2. Declaring Lot No. 2139, Iligan Cadastre 292, located at Panul-iran, Abuno, Iligan City
to have acquired the character of a private land over which the Land Management
Bureau has been divested of jurisdiction;

3. Declaring the defendants to be the owners and possessors of the said lot;
4. Declaring OCT Nos. P-1322 (a.f.) of Rogelio Pasio, P-1318 (a.f.) of George Pasio, P-
1317 (a.f.) of Lolita Pasio, P-1321 (a.f.) of Josephine Pasio and P-1319 (a.f.) of
Rosalinda Pasio to be null and void for having been procured by fraud and for having
been issued by the Land Management Bureau which has been divested of
jurisdiction over said lot;

5. Declaring the defendants to be entitled to the sum of P6,000.00 deposited with the
Office of the Clerk of Court under O.R. No. 1487777;

6. Dismissing the defendants counterclaim for attorneys fees.

 Costs against the plaintiffs.

SO ORDERED.[12]

The trial court ruled that as of January 1994, Lot No. 2139 had already acquired the character of a private land by
operation of law. Since Lot No. 2139 had already ceased to be a public land, the Land Management Bureau had no
power or authority to dispose of it by issuing free patent titles.

The trial court ruled that respondents counterclaim stands on the same footing as an independent action. Thus, it
could not be considered a collateral attack on petitioners titles. The trial court further ruled that respondents filed
their counterclaim within one year from the grant of petitioners titles, which was the reglementary period for
impugning a title.

The trial court ruled that the order for the issuance of a patent in favor of Laureano lapsed and became functus
officio when it was not registered with the Director of Deeds. The trial court ruled that while Laureano was the
original claimant of the entire 24 hectares, he ceded the right to possession over half of the property,
denominated as Lot No. 2139, to Larumbe sometime in 1947. The trial court found that Laureano offered to sell
half of the land to his tenant Gavino Quinaquin (Gavino) but he did not have money. Later, Gavino learned from
Larumbe that he (Larumbe) acquired half of the land from Laureano. Gavino then started delivering the owners
share of the harvest to Larumbe. Laureano never contested Gavinos action nor did he demand that Gavino deliver
to him the owners share of the harvest and not to Larumbe. When Lot No. 2139 was sold, Gavino and his
successors delivered the owners share of the harvest to Petra, Vicente, Arturo, Dr. Monterroyo, and Dindo
Monterroyo, successively. The trial court also found that the other tenants had never given any share of the
harvest to Jose. The trial court ruled that petitioners had failed to present convincing evidence that they and their
predecessors-in-interest were in possession of Lot No. 2139 from 1947 to 1994 when they filed their application
for free patent. The trial court ruled that petitioners committed actual fraud when they misrepresented in their
free patent applications that they were in possession of the property continuously and publicly.

Petitioners appealed from the trial courts Decision.

The Ruling of the Court of Appeals

In its 31 January 2003 Decision, the Court of Appeals affirmed the trial courts Decision.

The Court of Appeals ruled that the trial court did not err in allowing respondents counterclaim despite the non-
appearance of Dr. Monterroyo, the original defendant, at the barangay conciliation proceedings. The Court of
Appeals ruled that petitioners themselves did not personally appear. They were represented by their attorney-in-
fact although they were all of legal age, which was a violation of the Katarungang Pambarangay proceedings
requiring the personal appearance of the parties. Hence, the Court of Appeals ruled that there was never a valid
conciliation proceeding. However, while this would have been a ground for the dismissal of the complaint, the
issue was deemed waived because respondents did not raise it in their answer before the trial court.

The Court of Appeals ruled that the validity of petitioners titles could be attacked in a counterclaim. The Court of
Appeals ruled that respondents counterclaim was a compulsory counterclaim.

The Court of Appeals sustained the trial courts ruling that the Land Management Bureau had been divested of
jurisdiction to grant the patent because the land already acquired the character of a private land. While the
homestead patent was issued in favor of Laureano, the issuance of patent order became functus officio when it
was not registered. The Court of Appeals further sustained the trial courts finding that respondents were in
physical, open, public, adverse and continuous possession of Lot No. 2139 in the concept of owner for at least 30
years prior to petitioners application for free patent titles over the land.
Petitioners filed a motion for reconsideration.

In its 5 August 2003 Resolution, the Court of Appeals denied petitioners motion for reconsideration.

Hence, the petition before this Court.

The Issue

Petitioners raised the sole issue of whether the Court of Appeals erred in sustaining the trial courts Decision
declaring respondents as the rightful owners and possessors of Lot No. 2139. [13]

The Ruling of this Court

The petition has no merit.

Land Management Bureau Had No Jurisdiction

To Issue Free Patent Titles

In Director of Lands v. IAC,[14] the Court ruled:

[A]lienable public land held by a possessor, continuously or through his predecessors-in-interest,

openly, continuously and exclusively for the prescribed statutory period (30 years under The
Public Land Act, as amended) is converted to private property by the mere lapse or completion of
the period, ipso jure.[15]

In Magistrado v. Esplana,[16] the Court ruled that so long as there is a clear showing of open, continuous, exclusive
and notorious possession, and hence, a registrable possession, by present or previous occupants, by any proof that
would be competent and admissible, the property must be considered to be private.

In this case, the trial court found that the preponderance of evidence favors respondents as the possessors of Lot
No. 2139 for over 30 years, by themselves and through their predecessors-in-interest. The question of who
between petitioners and respondents had prior possession of the property is a factual question whose resolution is
the function of the lower courts.[17] When the factual findings of both the trial court and the Court of Appeals are
supported by substantial evidence, they are conclusive and binding on the parties and are not reviewable by this
Court.[18] While the rule is subject to exceptions, no exception exists in this case.

Respondents were able to present the original Deed of Absolute Sale, dated 10 July 1949, executed by Larumbe in
favor of Petra.[19] Respondents also presented the succeeding Deeds of Sale showing the transfer of Lot No. 2139
from Petra to Vicente[20] and from Vicente to Arturo[21] and the Deed of Confirmation of Absolute Sale of
Unregistered Real Property executed by Arturo in favor of respondents.[22] Respondents also presented a
certification[23] executed by P/Sr. Superintendent Julmunier Akbar Jubail, City Director of Iligan City Police
Command and verified from the Log Book records by Senior Police Officer Betty Dalongenes Mab-Abo confirming
that Andres Quinaquin made a report that Jose, Rogelio and Luciana Pasio, Lucino Pelarion and Nando Avilo
forcibly took his copra. This belied petitioners allegation that they were in possession of Lot No. 2139 and
respondents forcibly took possession of the property only in January 1993.

Considering that petitioners application for free patent titles was filed only on 8 January 1994, when Lot No. 2139
had already become private land ipso jure, the Land Management Bureau had no jurisdiction to entertain
petitioners application.
 Non-Registration of Homestead Patent Rendered it
Functus Officio

Once a homestead patent granted in accordance with law is registered, the certificate of title issued by virtue of
the patent has the force and effect of a Torrens title issued under the land registration law. [24] In this case, the
issuance of a homestead patent in 1952 in favor of Laureano was not registered. Section 103 of Presidential
Decree No. 1529[25] mandates the registration of patents, and registration is the operative act to convey the land
to the patentee, thus:

Sec. 103. x x x x. The deed, grant, patent or instrument of conveyance from the Government to
the grantee shall not take effect as a conveyance or bind the land but shall operate only as a
contract between the Government and the grantee and as evidence of authority to the Register
of Deeds to make registration. It is the act of registration that shall be the operative act to
affect and convey the land, and in all cases under this Decree, registration shall be made in the
office of the Register of Deeds of the province or city where the land lies. The fees for registration
shall be paid by the grantee. After due registration and issuance of the certificate of title, such
land shall be deemed to be registered land to all intents and purposes under this Decree.
(Emphasis supplied)
Further, in this case, Laureano already conveyed Lot No. 2139 to Larumbe in 1947 before the approval of his
homestead application. In fact, Larumbe already sold the land to Petra in 1949, three years before the issuance of
the homestead patent in favor of Laureano. The trial court found that since 1947, the tenants of Lot No. 2139 had
been delivering the owners share of the harvest, successively, to Larumbe, Petra, Vicente and Arturo Teves, Dr.
Monterroyo and Dindo Monterroyo. The trial court found no instance when the owners share of the harvest was
delivered to Jose Pasio.

Hence, we sustain the trial court that the non-registration of Laureanos homestead patent had rendered it functus
officio.
A Counterclaim is Not a Collateral Attack on the Title

It is already settled that a counterclaim is considered an original complaint and as such, the attack on the title in a
case originally for recovery of possession cannot be considered as a collateral attack on the title. [26] Development
Bank of the Philippines v. Court of Appeals[27] is similar to the case before us insofar as petitioner in that case filed
an action for recovery of possession against respondent who, in turn, filed a counterclaim claiming ownership of
the land. In that case, the Court ruled:

Nor is there any obstacle to the determination of the validity of TCT No. 10101. It is true that the
indefeasibility of torrens title cannot be collaterally attacked. In the instant case, the original
complaint is for recovery of possession filed by petitioner against private respondent, not an
original action filed by the latter to question the validity of TCT No. 10101 on which petitioner
bases its right. To rule on the issue of validity in a case for recovery of possession is tantamount
to a collateral attack. However, it should not [b]e overlooked that private respondent filed a
counterclaim against petitioner, claiming ownership over the land and seeking damages. Hence,
we could rule on the question of the validity of TCT No. 10101 for the counterclaim can be
considered a direct attack on the same. A counterclaim is considered a complaint, only this time,
it is the original defendant who becomes the plaintiff... It stands on the same footing and is to be
tested by the same rules as if it were an independent action. x x x. [28]
As such, we sustain both the trial court and the Court of Appeals on this issue.

Principle of Constructive Trust Applies

Under the principle of constructive trust, registration of property by one person in his name, whether by mistake
or fraud, the real owner being another person, impresses upon the title so acquired the character of a constructive
trust for the real owner, which would justify an action for reconveyance. [29] In the action for reconveyance, the
decree of registration is respected as incontrovertible but what is sought instead is the transfer of the property
wrongfully or erroneously registered in anothers name to its rightful owner or to one with a better right.[30] If the
registration of the land is fraudulent, the person in whose name the land is registered holds it as a mere trustee,
and the real owner is entitled to file an action for reconveyance of the property. [31]

In the case before us, respondents were able to establish that they have a better right to Lot No. 2139 since they
had long been in possession of the property in the concept of owners, by themselves and through their
predecessors-in-interest. Hence, despite the irrevocability of the Torrens titles issued in their names and even if
they are already the registered owners under the Torrens system, petitioners may still be compelled under the law
to reconvey the property to respondents.[32]

WHEREFORE, we DENY the petition. We AFFIRM the 31 January 2003 Decision and the 5 August 2003 Resolution
of the Court of Appeals in CA-G.R. CV No. 63199. Costs against petitioners.
 Republic of the Philippines
Supreme Court
Manila

THIRD DIVISION

LAND BANK OF THE G.R. No. 150824

PHILIPPINES,
Petitioner, Present:
YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CORONA,*
NACHURA, and
REYES, JJ.
REPUBLIC OF THE
PHILIPPINES, represented Promulgated:
by the Director of Lands,
Respondent. February 4, 2008

x--------------------------------------------------x

DECISION

REYES, R.T., J.:

FOREST lands are outside the commerce of man and unsusceptible of private appropriation in any form. [1]

It is well settled that a certificate of title is void when it covers property of public domain classified as
forest, timber or mineral lands. Any title issued covering non-disposable lots even in the hands of an alleged
innocent purchaser for value shall be cancelled.[2] The rule must stand no matter how harsh it may seem. Dura lex
sed lex.[3] Ang batas ay maaaring mahigpit subalit ito ang mananaig.

Before Us is a petition for review on certiorari under Rule 45 filed by petitioner Land Bank of the
Philippines (LBP) appealing the: (1) Decision[4] of the Court of Appeals (CA), dated August 23, 2001, in CA-G.R. CV
No. 64121 entitled Republic of the Philippines, represented by the Director of Lands v. Angelito Bugayong, et al.;
and (2) Resolution[5] of the same Court, dated November 12, 2001, denying LBPs motion for reconsideration.

The CA affirmed the Decision [6] of the Regional Trial Court (RTC), dated July 9, 1996, declaring null and
void Original Certificate of Title (OCT) No. P-2823, as well as other titles originating from it, on the ground that at
the time it was issued, the land covered was still within the forest zone. [7]

The Facts

OCT No. P-2823 was issued on September 26, 1969 in favor of one Angelito C. Bugayong. Said mother title
emanated from Sales Patent No. 4576 issued in Bugayongs name on September 22, 1969.[8] It covered a parcel of
land located in Bocana, Kabacan,Davao City, with an area of 41,276 square meters. It was originally identified and
surveyed as Lot No. 4159 under Plan SI-(VIII-1), 328-D. Marshy and under water during high tide, it used to be a
portion of a dry river bed near the mouth of Davao River.[9]

The land was initially subdivided into four lots, viz.: Lot Nos. 4159-A, 4159-B, 4159-C and 4159-D under
Subdivision Plan (LRC) Psd-139511 approved by the Commissioner of Land Registration on April 23,
1971.[10] Consequently, OCT No. P-2823 was cancelled and new Transfer Certificates of Title (TCTs) replaced it, all in
the name of Bugayong.

Bugayong sold all of the four lots to different persons. Lot No. 4159-A, which was then under TCT No. T-
32769, was sold to spouses Lourdes and Candido Du. Accordingly, said TCT was cancelled and replaced by TCT No.
T-42166 in the name of spouses Du.[11]

Afterwards, the spouses Du further caused the subdivision of the land covered by their TCT No. T-42166
into two (2) lots. They sold one of said lots to spouses Felix and Guadalupe Dayola, who were issued TCT No. T-
45586. The other remaining lot, registered under TCT No. T-45587, was retained by and registered in the names of
spouses Du.[12]

Subsequently, Du spouses TCT No. T-45587 was cancelled and was replaced by TCT No. T-57348
registered in the name of Lourdes Farms, Inc. subject of this case. [13] Lourdes Farms, Inc. mortgaged this property
to petitioner LBP on April 14, 1980.[14]

The validity of OCT No. P-2823, as well as its derivative TCTs, remained undisturbed until some residents
of the land it covered, particularly those along Bolton Diversion Road, filed a formal petition before the Bureau of
Lands on July 15, 1981.[15]

Investigation and ocular inspection were conducted by the Bureau of Lands to check the legitimacy of OCT
No. P-2823. They found out that: (1) at the time Sales Patent No. 4576 was issued to Bugayong, the land it covered
was still within the forest zone, classified under Project No. 1, LC-47 dated August 6, 1923; it was released as
alienable and disposable land only on March 25, 1981, pursuant to BFD Administrative Order No. 4-1585 and to
the provisions of Section 13, Presidential Decree (P.D.) No. 705;[16] (2) the land was marshy and covered by sea
water during high tide; and (3) Bugayong was never in actual possession of the land.[17]

In view of the foregoing findings, the Bureau of Lands resolved that the sales patent in favor of Bugayong
was improperly and illegally issued and that the Director of Lands had no jurisdiction to dispose of the subject
land.[18]

Upon recommendation of the Bureau of Lands, the Republic of the Philippines represented by the
Director of Lands, through the Office of the Solicitor General (OSG), instituted a complaint[19] before the RTC in
Davao, Branch 15, for the cancellation of title/patent and reversion of the land covered by OCT No. P-2823 into the
mass of public domain. The complaint, as amended,[20] was filed against Bugayong and other present owners and
mortgagees of the land, such as Lourdes Farms, Inc. and the latters mortgagee, petitioner LBP.

In its answer with cross-claim,[21] LBP claimed that it is a mortgagee in good faith and for value. It prayed
that should TCT No. T-57348 of Lourdes Farms, Inc. be annulled by the court, Lourdes Farms, Inc. should be
ordered to pay its outstanding obligations to LBP or to provide a new collateral security. [22]

RTC Judgment

Eventually, the RTC rendered its judgment[23] on July 9, 1996 determining that:

x x x The mistakes and the flaws in the granting of the title were made by the Bureau of
Lands personnel more particularly the Director of Lands who is the Officer charged with the
following the provisions of the Public Land Law. x x x.
 It is clear that the mother Title, OCTP-2823 in the name of defendant Bugayong was
issued at a time when the area was not yet released by the Bureau of Forestry to the Bureau of
Lands.

The area covered by OCT No. P. 2823 was not yet declared by the Bureau of Lands
alienable and disposable when the said OCT was issued. The subdivision of the lot covered by
OCT P-2823 into 4 lots covered by TCT Nos. T-32768, 32769, 32756 and 32771 did not cure the
defect.x x x.[24]

The RTC explained that titles issued to private parties by the Bureau of Lands are void ab initio if the land
covered by it is a forest land.[25] It went further by stating that if the mother title is void, all titles arising from the
mother title are also void.[26] It thus ruled in favor of the Republic with a fallo reading:

IN VIEW WHEREOF, judgment is hereby rendered declaring Original Certificate of Title

No. P-2823 issued in the name of defendant Angelito Bugayong null and void. The following
Transfer Certificate of Titles which were originally part of the lot covered by O.C.T. No. P-2823
are likewise declared void:

1.A. TCT No. 57348 in the name of defendant Lourdes Farms mortgaged to
defendant Land Bank.

B. TCT No. 84749 in the name of defendants Johnny and Catherine Du

mortgaged to defendant Development Bank of the Philippines.

C. TCT No. 37386 in the name of defendants spouses Pahamotang mortgaged

to defendant Lourdes Du mortgaged with defendant Allied Bank.

E. TCT Nos. 68154 and 32768 in the names of defendants/spouses Maglana

Santamaria.

2. All private defendants shall give to the Davao City Register of Deeds their
titles, who shall cancel the Transfer Certificate of Titles mentioned in
paragraph number one.

3. Lot No. 4159, Plan SI (VIII-1) 328-D covered by O.C.T. P-2823 is hereby
REVERTED to the mass of public domain.

SO ORDERED.[27] (Underscoring supplied)

Disagreeing with the RTC judgment, LBP appealed to the CA on October 31, 1996. It asserted in its appellants
brief[28] that it validly acquired mortgage interest or lien over the subject property because it was an innocent
mortgagee for value and in good faith.[29] It also emphasized that it is a government financial institution.

CA Disposition

In a Decision[30] dated August 23, 2001, the CA ruled against the appellants,[31] disposing thus:

WHEREFORE, premises considered, the present appeals are hereby DISMISSED and the
Decision of the trial court in Civil Case No. 17516 is hereby AFFIRMED.[32]

The CA confirmed that the evidence for the plaintiff clearly established that the land covered by OCT No.
P-2823 issued pursuant to a sales patent granted to defendant Angelito C. Bugayong was still within the forestal
zone at the time of the grant of the said patent.[33] It explained:
 Forest lands or forest reserves, are incapable of private appropriation and possession
thereof, however long, cannot convert them into private properties. This is premised on
the Regalian Doctrine enshrined not only in the 1935 and 1973 Constitutions but also in
the 1987 Constitution.Our Supreme Court has upheld this rule consistently even in earlier
cases. It has also been held that whatever possession of the land prior to the date of release of
forested land as alienable and disposable cannot be credited to the 30-year requirement (now,
since June 12, 1945) under Section 48(b) of the Public Land Act. It is only from that date that the
period of occupancy for purposes of confirmation of imperfect or incomplete title may be
counted. Since the subject land was declared as alienable and disposable only on March 25,
1981, appellants and their predecessors-in-interest could not claim any vested right thereon
prior to its release from public forest zone.

The inclusion of forest land in a title, whether title be issued during the Spanish regime
or under the Torrens system, nullifies the title. It is, of course, a well-recognized principle that
the Director of Lands (now Land Management Bureau) is bereft of any jurisdiction over public
forest or any lands not capable of registration. 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. And where the land applied for is part of the public forest, the land
registration court acquires no jurisdiction over the land, which is not yet alienable and
disposable.

Thus, notwithstanding the issuance of a sales patent over the subject parcel of land, the
State may still take action to have the same land reverted to the mass of public domain and the
certificate of title covering said forest land declared null and void for having been improperly and
illegally issued. Titles issued over non-alienable public lands have been held as void ab initio. The
defense of indefeasibility of title issued pursuant to such patent does not lie against the
State. 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. In such cases,
prescription does not lie against the State. Likewise, the government is not estopped by such
fraudulent or wrongful issuance of a patent over public forest land inasmuch as the principle of
estoppel does not operate against the Government for the acts of its agents. x x x.[34] (Citations
omitted)

With respect to LBPs contention[35] that it was a mortgagee in good faith and for value, the CA declared,
citing Republic v. Reyes[36] that: mortgagees of non-disposable lands where titles thereto were erroneously
issued acquire no protection under the land registration law. Appellants-mortgagees proper recourse therefore is
to pursue their claims against their respective mortgagors and debtors.[37]

When LBPs motion for reconsideration was denied, it resorted to the petition at bar.

Issues

LBP seeks the reversal of the CA disposition on the following grounds

A.
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE PETITIONER LAND BANK OF
THE PHILIPPINES MORTGAGE RIGHT AND INTEREST AS AN INNOCENT PURCHASER (MORTGAGEE)
FOR VALUE AND IN GOOD FAITH OVER THE SUBJECT LANDCOVERED BY TCT NO. T-57348 IS
VALID AND SUBSISTING IN ACCORDANCE WITH THE LAW AND EXISTING JURISPRUDENCE IN OUR
COUNTRY.

B.
THE COURT OF APPEALS ERRED IN NOT FINDING PETITIONER LAND BANK OF
THE PHILIPPINES MORTGAGE RIGHT AND INTEREST OVER THE SUBJECT LAND AS
 VALID AND SUBSISTING UNDER THE CONSTITUTIONAL GUARANTEE OF NON-IMPAIRMENT OF
OBLIGATION OF CONTRACTS.

C.
THE COURT OF APPEALS ERRED IN NOT AWARDING TO PETITIONER LAND BANK OF THE
PHILIPPINES THE RELIEF PRAYED FOR UNDER ITS CROSS-CLAIM AGAINST CO-DEFENDANT
LOURDES FARMS, INC., THAT IS, ORDERING SAID CO-DEFENDANT LOURDES FARMS, INC. TO PAY
ITS OUTSTANDING OBLIGATION TO THE LAND BANK COVERED BY THE SUPPOSED
NULL AND VOID TCT NO. T-57348, OR TO PROVIDE A SUBSTITUTE COLLATERAL IN LIEU OF
SAID TCT NO. T-57348.[38] (Underscoring supplied)

Our Ruling

LBP has no valid and subsisting mortgagees interest

over the land covered by TCT No. T-57348.

It has been established and admitted by LBP that: (1) the subject land mortgaged to it by Lourdes Farms, Inc. is
covered by TCT No. T-57348; and (2) the said TCT is derived from OCT No. P-2823 issued to Bugayong.[39]

It was further ascertained by the courts below that at the time OCT No. P-2823 was issued to Bugayong
on September 26, 1969, the land it covered was still within the forest zone. It was declared as alienable and
disposable only on March 25, 1981.[40]

Despite these established facts, LBP argues that its alleged interest as mortgagee of the subject land covered
by TCT No. T-57348 must be respected. It avers that TCT No. T-57348 is a Torrens title which has no written
indications of defect or vice affecting the ownership of Lourdes Farms, Inc. Hence, it posits that it was not and
could not have been required to explore or go beyond what the title indicates or to search for defects not
indicated in it.

LBP cites cases where the Court ruled that a party is not required to explore further than what the Torrens title
upon its face indicates in quest of any hidden defect of an inchoate right that may subsequently defeat his right to
it; and that a bank is not required before accepting a mortgage to make an investigation of the title of the property
being given as security. LBP submits that its right as a mortgagee is binding against the whole world and may not
be disregarded. [41]

It further argues that review or reopening of registration is proscribed, as the title has become
incontrovertible pursuant to Section 32 of P.D. No. 1529; and that its mortgage rights and interest over the subject
land is protected by the constitutional guarantee of non-impairment of contracts.[42]

The contention that LBP has an interest over the subject land as a mortgagee has no merit. The
mortgagor, Lourdes Farms, Inc. from which LBP supposedly obtained its alleged interest has never been the owner
of the mortgaged land. Acquisition of the subject land by Lourdes Farms, Inc. is legally impossible as the land was
released as alienable and disposable only on March 25, 1981. Even at present, no one could have possessed the
same under a claim of ownership for the period of thirty (30) years required under Section 48(b) of
Commonwealth Act No. 141, as amended.[43] Hence, LBP acquired no rights over the land.

Under Article 2085 of the Civil Code, it is essential that the mortgagor be the absolute owner of the thing
mortgaged, to wit:
 ARTICLE 2085. The following requisites are essential to the contracts of pledge and
mortgage:

(1) That they be constituted to secure the fulfillment of a principal obligation;

(2) That the pledgor or mortgagor be the absolute owner of the thing pledged or
mortgaged;

(3) That the persons constituting the pledge or mortgage have the free disposal of their
property, and in the absence thereof, that they be legally authorized for the purpose. (Emphasis
ours)

Since Lourdes Farms, Inc. is not the owner of the land, it does not have the capacity to mortgage it to
LBP. In De la Cruz v. Court of Appeals,[44] the Court declared:

While it is true that the mortgagees, having entered into a contract with petitioner as
mortgagor, are estopped from questioning the latters ownership of the mortgaged property and
his concomitant capacity to alienate or encumber the same, it must be considered that, in the
first place, petitioner did not possess such capacity to encumber the land at the time for the
stark reason that it had been classified as a forest land and remained a part of the patrimonial
property of the State. Assuming, without admitting, that the mortgagees cannot subsequently
question the fact of ownership of petitioner after having dealt with him in that capacity, still,
petitioner was never vested with the proprietary power to encumber the property. In fact, even
if the mortgagees continued to acknowledge petitioner as the owner of the disputed land, in the
eyes of the law, the latter can never be presumed to be owner.

As correctly pointed out by the OSG, mortgagees of non-disposable lands, titles to which were
erroneously issued, acquire no protection under the Land Registration Law.[45]

Even assuming that LBP was able to obtain its own TCT over the property by means of its mortgage
contract with Lourdes Farms, Inc., the title must also be cancelled as it was derived from OCT No. P-2823 which
was not validly issued to Bugayong.Forest lands cannot be owned by private persons. It is not registerable whether
the title is a Spanish title or a Torrens title.[46] It is well settled that a certificate of title is void when it covers
property of public domain classified as forest or timber or mineral land. Any title issued covering non-disposable
lots even in the hands of an alleged innocent purchaser for value shall be cancelled. [47]

Moreover, the Court has already addressed the same issue in its Resolution of November 14, 2001 on the
petition filed by the Philippine National Bank (PNB) in G. R. No. 149568 entitled Philippine National Bank v.
Republic of the Philippinesrepresented by the Director of Lands,
which also appealed the subject CA decision. PNB, like LBP, is also a mortgagee of another derivative TCT of the
same OCT No. 2823. Said resolution reads:

On September 22, 1969, Angelito C. Bugayong was issued a sales patent covering a
41,276 square meter parcel of land in Bocana, Barrio Kabacan, Davao City by the Bureau of
Lands. On the basis of the sales patent, the Register of Deeds of Davao City issued OCT No. P-
2823 to Bugayong. Bugayong later subdivided the land into four lots, one of which (Lot No. 4159-
B covered by TCT No. T-32770) was sold by him to the spouses Reynaldo Rogacion and Corazon
Pahamotang. After obtaining TCT No. T-37786 in their names, the spouses mortgaged the lot to
the Philippine National Bank (PNB). As they defaulted in the payment of their loan,
the PNB foreclosed the property and purchased it at the foreclosure sale as the highest
bidder. Eventually, the PNB consolidated its title.
 Sometime in 1981, upon the petition of the residents of the land, the Bureau of Lands
conducted an investigation into the sales patent issued in favor of Angelito C. Bugayong and
found the sales patent to have been illegally issued because (1) the land was released as
alienable and disposable only on March 25, 1981; previous to that, the land was within the forest
zone; (2) the land is covered by sea water during high tide; and (3) the patentee, Angelito C.
Bugayong, had never been in actual possession of the land.

Based on this investigation, the government instituted the present suit in 1987 for
cancellation of title/patent and reversion of the parcel of land against Angelito C. Bugayong, the
Rogacion spouses, and the PNB, among others.

On July 6, 1996, the trial court rendered a decision declaring OCT No. P-2823 and all
titles derived therefrom null and void and ordering reversion of the subject property to the mass
of the public domain. On appeal, the Court of Appeals affirmed the trial courts decision. Hence,
this petition.

First. Petitioner contends that it had a right to rely on TCT No. T-37786 showing the
mortgagors Reynaldo Rogacion and Corazon Pahamotangs ownership of the property.

The contention is without merit. It is well settled that a certificate of title is void when it
covers property of public domain classified as forest or timber or mineral lands. Any title issued
covering non-disposable lots even in the hands of an alleged innocent purchaser for value shall
be cancelled (Republic v. Reyes, 155 SCRA 313 (1987)).

(Republic v. Court of Appeals, 148 SCRA 480 (1987)). In this case, petitioner does not
dispute that its predecessor-in-interest, Angelito C. Bugayong, had the subject property
registered in his name when it was forest land. Indeed, even if the subject property had been
eventually segregated from the forest zone, neither petitioner nor its predecessors-in-
interest could have possessed the same under claim of ownership for the requisite period of
thirty (30) years because it was released as alienable and disposable only on March 25, 1981.

Second. Petitioners contention that respondents action for reversion is barred by

prescription for having been filed nearly two decades after the issuance of Bugayongs sales
patent is likewise without merit. Prescription does not lie against the State for reversion of
property which is part of the public forest or of a forest reservation registered in favor of any
party. Public land registered under the Land Registration Act may be recovered by the State at
any time (Republic v. Court of Appeals, 258 SCRA 223 (1996)).[48]

Contrary to the argument of LBP, since the title is void, it could not have become incontrovertible. Even
prescription may not be used as a defense against the Republic. On this aspect, the Court in Reyes v. Court of
Appeals,[49] citing Republic v. Court of Appeals,[50] held:

Petitioners contention that the government is now estopped from questioning the
validity of OCT No. 727 issued to them, considering that it took the government 45 years to assail
the same, is erroneous. We have ruled in a host of cases that prescription does not run against
the government. In point is the case of Republic v. Court of Appeals, wherein we declared:

And in so far as the timeliness of the action of the Government is

concerned, it is basic that prescription does not run against the State x x x. The
case law has also been:

When the government is the real party in interest,

and is proceeding mainly to assert its own rights and recover
its own property, there can be no defense on the ground of
laches or limitation x x x.
 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. Prescription does not lie against the State in such cases
for the Statute of Limitations does not run against the State.
The right of reversion or reconveyance to the State is not
barred by prescription. (Emphasis ours)

There is no impairment of contract but a valid

exercise of police power of the State.

The constitutional guarantee of non-impairment of contracts may not likewise be used by LBP to validate
its interest over the land as mortgagee. The States restraint upon the right to have an interest or ownership over
forest lands does not violate the constitutional guarantee of non-impairment of contracts. Said restraint is a valid
exercise of the police power of the State. As explained by the Court in Director of Forestry v. Muoz:[51]

The view this Court takes of the cases at bar is but in adherence to public policy that
should be followed with respect to forest lands. Many have written much, and many more have
spoken, and quite often, about the pressing need for forest preservation, conservation,
protection, development and reforestation. Not without justification. For, forests constitute a
vital segment of any country's natural resources. It is of common knowledge by now that
absence of the necessary green cover on our lands produces a number of adverse or ill effects of
serious proportions.Without the trees, watersheds dry up; rivers and lakes which they supply are
emptied of their contents. The fish disappear. Denuded areas become dust bowls. As waterfalls
cease to function, so will hydroelectric plants. With the rains, the fertile topsoil is washed away;
geological erosion results. With erosion come the dreaded floods that wreak havoc and
destruction to property crops, livestock, houses and highways not to mention precious human
lives. Indeed, the foregoing observations should be written down in a lumbermans decalogue.

Because of the importance of forests to the nation, the States police power has been
wielded to regulate the use and occupancy of forest and forest reserves.

To be sure, the validity of the exercise of police power in the name of the general
welfare cannot be seriously attacked. Our government had definite instructions from the
Constitutions preamble to promote the general welfare. Jurisprudence has time and again
upheld the police power over individual rights, because of the general welfare. Five decades ago,
Mr. Justice Malcolm made it clear that the right of the individual is necessarily subject to
reasonable restraint by general law for the common good and that the liberty of the citizen may
be restrained in the interest of public health, or of the public order and safety, or otherwise
within the proper scope of the police power. Mr. Justice Laurel, about twenty years later,
affirmed the precept when he declared that the state in order to promote the general welfare
may interfere with personal liberty, with property, and with business and occupations and that
[p]ersons and property may be subjected to all kinds of restraints and burdens, in order to secure
the general comfort, health, and prosperity of the state. Recently, we quoted from leading
American case, which pronounced thatneither property rights nor contract rights are absolute;
for government cannot exist if the citizen may at will use his property to the detriment of his
fellows, or exercise his freedom of contract to work them harm, and that, therefore, [e]qually
fundamental with the private right is that of the public to regulate it in the common interest.
(Emphasis ours and citations omitted)

In Edu v. Ericta,[52] the Court defined police power as the authority of the state to enact legislation that
may interfere with personal liberty or property in order to promote the general welfare. It is the power to
prescribe regulations to promote the health, morals, peace, education, good order or safety, and general welfare
of the people. It is that inherent and plenary power of the State which enables it to prohibit all things hurtful to the
comfort, safety and welfare of society.[53] It extends to all the great public needs and is described as the most
pervasive, the least limitable and the most demanding of the three inherent powers of the State, far outpacing
taxation and eminent domain.[54] It is a ubiquitous and often unwelcome intrusion. Even so, as long as the activity
or the property has some relevance to the public welfare, its regulation under the police power is not only proper
but necessary.[55]

Preservation of our forest lands could entail intrusion upon contractual rights as in this case but it is
justified by the Latin maxims Salus populi est suprema lex and Sic utere tuo ut alienum non laedas, which call for
the subordination of individual interests to the benefit of the greater number.[56]

While We sympathize with petitioner, We nonetheless cannot, in this instance, yield to compassion and
equity. The rule must stand no matter how harsh it may seem.[57]

We cannot resolve the cross-claim for lack of factual

basis. The cross-claim must be remanded to
the RTC for further proceedings.

LBP filed a cross-claim against Lourdes Farms, Inc. before the RTC.[58] The cross-claim is for the payment of
cross-defendant Lourdes Farms, Inc.s alleged obligation to LBP or its submission of a substitute collateral security
in lieu of the property covered by TCT No. T-57348.

However, the records do not show that Lourdes Farms, Inc. was required by the RTC to file an answer to
the cross-claim. Likewise, Lourdes Farms, Inc. was not notified of the proceedings before the CA. It was not also
made a party to this petition.

LPB now contends that the CA erred in not granting its cross-claim against Lourdes Farms, Inc. We are
thus confronted with the question: Should We now order Lourdes Farms, Inc. to comply with the demand of LBP?

We rule in the negative. It may be true that Lourdes Farms, Inc. still has an obligation to LBP but We cannot make a
ruling regarding the same for lack of factual basis. There is no evidence-taking on the cross-claim. No evidence was
adduced before the RTC or the CA regarding it. No factual finding or ruling was made by the RTC or the CA about it.

It bears stressing that in a petition for review on certiorari, the scope of this Court's judicial review of
decisions of the CA is generally confined only to errors of law. Questions of fact are not entertained.[59]

Moreover, the failure to make a ruling on the cross-claim by the RTC was not assigned as an error in LBPs
appellants brief[60] before the CA. Hence, the CA cannot be faulted for not making a ruling on it.

As held in De Liano v. Court of Appeals,[61] appellant has to specify in what aspect of the law or the facts
the trial court erred. The conclusion, therefore, is that appellant must carefully formulate his assignment of
errors. Its importance cannot be underestimated, as Section 8, Rule 51 of the Rules of Court will attest:

Questions that may be decided. No error which does not affect the jurisdiction over the
subject matter or the validity of the judgment appealed from or the proceedings therein will be
considered unless stated in the assignment of errors, or closely related to or dependent on an
assigned error and properly argued in the brief, save as the court may pass upon plain errors and
clerical errors.
Apparently, the cross-claim was taken for granted not only by the RTC but also by LBP. The cross-claim
was not included as a subject or issue in the pre-trial order and instead of asking that the same be heard, LBP filed
a motion[62] to submit the main case for resolution. The main case was thus resolved by the RTC without touching
on the merits of the cross-claim.
 On the other hand, while the CA did not make a categorical ruling on LBPs cross-claim, it pointed out that:
(1) as found by the RTC, there is a mortgage contract between LBP and Lourdes Farms, Inc., with LBP as mortgagee
and Lourdes Farms, Inc. as mortgagor; and (2) LBPs proper recourse is to pursue its claim against Lourdes Farms,
Inc.[63]

The CA thus impliedly ruled that LBPs cross-claim should not be included in this case. Instead of making a
ruling on the same, it recommended that LBP pursue its claim against Lourdes Farms, Inc.

All told, although the relationship between LBP and Lourdes Farms, Inc. as mortgagee and mortgagor was
established, the cross-claim of LBP against Lourdes Farms, Inc. was left unresolved.

The Court is not in a position to resolve the cross-claim based on the records. In order for the cross-claim
to be equitably decided, the Court, not being a trier of facts, is constrained to remand the case to the RTC for
further proceedings. Remand of the case for further proceedings is proper due to absence of a definitive factual
determination regarding the cross-claim.[64]

WHEREFORE, the appealed Decision of the Court of Appeals is hereby AFFIRMED with the MODIFICATION that the
cross-claim of petitioner Land Bank of the Philippines against Lourdes Farms, Inc. is REMANDED to the Regional
Trial Court, Branch 15, Davao City, for further proceedings.

SO ORDERED.
 Republic of the Philippines
Supreme Court
Manila

THIRD DIVISION

ANECO REALTY AND G.R. No. 165952

DEVELOPMENT
CORPORATION, Present:
Petitioner,
YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
- versus - CHICO-NAZARIO,
NACHURA, and
REYES, JJ.

LANDEX DEVELOPMENT Promulgated:

CORPORATION,
Respondent. July 28, 2008

x--------------------------------------------------x

DECISION

REYES, R.T., J.:

THIS is a simple case of a neighbor seeking to restrain the landowner from fencing his own property. The right to
fence flows from the right of ownership. Absent a clear legal and enforceable right, We will not unduly restrain the
landowner from exercising an inherent proprietary right.

Before Us is a petition for review on certiorari of the Decision[1] of the Court of Appeals (CA) affirming the
Order[2] of the Regional Trial Court (RTC) dismissing the complaint for injunction filed by petitioner Aneco Realty
and Development Corporation (Aneco) against respondent Landex Development Corporation (Landex).

Facts

Fernandez Hermanos Development, Inc. (FHDI) is the original owner of a tract of land in San Francisco Del
Monte, Quezon City. FHDI subdivided the land into thirty-nine (39) lots.[3] It later sold twenty-two (22) lots to
petitioner Aneco and the remaining seventeen (17) lots to respondent Landex.[4]

The dispute arose when Landex started the construction of a concrete wall on one of its lots. To restrain
construction of the wall, Aneco filed a complaint for injunction[5] with the RTC in Quezon City. Aneco later filed two
(2) supplemental complaints seeking to demolish the newly-built wall and to hold Landex liable for two million
pesos in damages.[6]

Landex filed its Answer[7] alleging, among others, that Aneco was not deprived access to its lots due to the
construction of the concrete wall. Landex claimed that Aneco has its own entrance to its property along Miller
Street, Resthaven Street, and San Francisco del Monte Street. The Resthaven access, however, was rendered
inaccessible when Aneco constructed a building on said street. Landex also claimed that FHDI sold ordinary lots,
not subdivision lots, to Aneco based on the express stipulation in the deed of sale that FHDI was not interested in
pursuing its own subdivision project.
 RTC Disposition

On June 19, 1996, the RTC rendered a Decision[8] granting the complaint for injunction, disposing as follows:

Wherefore, premises considered, and in the light aforecited decision of the Supreme
Court judgment is hereby rendered in favor of the plaintiff and the defendant is hereby ordered:

1. To stop the completion of the concrete wall and excavation of the road lot in
question and if the same is already completed, to remove the same and to
return the lot to its original situation;

2. To pay actual and compensatory damage to the plaintiff in the total amount
of P50,000.00;

3. To pay attorneys fees in the amount of P20,000.00;

4. To pay the cost.

SO ORDERED.[9]

Landex moved for reconsideration.[10] Records reveal that Landex failed to include a notice of hearing in its motion
for reconsideration as required under Section 5, Rule 15 of the 1997 Rules of Civil Procedure. Realizing the
defect, Landex later filed a motion[11] setting a hearing for its motion for reconsideration. Aneco countered with a
motion for execution[12] claiming that the RTC decision is already final and executory.

Acting on the motion of Landex, the RTC set a hearing on the motion for reconsideration on August 28,
1996. Aneco failed to attend the slated hearing. The RTC gave Aneco additional time to file a comment on the
motion for reconsideration.[13]

On March 13, 1997, the RTC issued an order[14] denying the motion for execution of Aneco.

On March 31, 1997, the RTC issued an order granting the motion for reconsideration of Landex and
dismissing the complaint of Aneco. In granting reconsideration, the RTC stated:

In previously ruling for the plaintiff, this Court anchored its decision on the ruling of the
Supreme Court in the case of White Plains Association vs. Legaspi, 193 SCRA 765, wherein the
issue involved was the ownership of a road lot, in an existing, fully developed and authorized
subdivision, which after a second look, is apparently inapplicable to the instant case at bar,
simply because the property in question never did exist as a subdivision. Since, the property in
question never did exist as a subdivision, the limitations imposed by Section 1 of Republic Act No.
440, that no portion of a subdivision road lot shall be closed without the approval of the Court is
clearly in appropriate to the case at bar.

The records show that the plaintiffs property has access to a public road as it has its own
ingress and egress along Miller St.; That plaintiffs property is not isolated as it is bounded by
Miller St. and Resthaven St. in San Francisco del Monte, Quezon City; that plaintiff could easily
make an access to a public road within the bounds and limits of its own property; and that the
defendant has not yet been indemnified whatsoever for the use of his property, as mandated by
the Bill of rights. The foregoing circumstances, negates the alleged plaintiffs right of way. [15]

Aneco appealed to the CA.[16]

CA Disposition

On March 31, 2003, the CA rendered a Decision[17] affirming the RTC order, disposing as follows:

WHEREFORE, in consideration of the foregoing, the instant appeal is

perforce dismissed. Accordingly, the order dated 31 March 1996 is hereby affirmed.
 SO ORDERED.[18]

In affirming the RTC dismissal of the complaint for injunction, the CA held that Aneco knew at the time of
the sale that the lots sold by FHDI were not subdivision units based on the express stipulation in the deed of sale
that FHDI, the seller, was no longer interested in pursuing its subdivision project, thus:

The subject property ceased to be a road lot when its former owner
(Fernandez Hermanos, Inc.) sold it to appellant Aneco not as subdivision lots and without the
intention of pursuing the subdivision project. The law in point is Article 624 of the New Civil
Code, which provides:

Art. 624. The existence of an apparent sign of easement between two

estates, established or maintained by the owner of both, shall be considered,
should either of them be alienated, as a title in order that the easement may
continue actively and passively, unless, at the time the ownership of the two
estates is divided, the contrary should be provided in the title of conveyance of
either of them, or the sign aforesaid should be removed before the execution
of the deed. This provision shall also apply in case of the division of a thing
owned in common by two or more persons.

Viewed from the aforesaid law, there is no question that the law allows the continued
use of an apparent easement should the owner alienate the property to different persons. It is
noteworthy to emphasize that the lot in question was provided by the previous owner
(FernandezHermanos, Inc.) as a road lot because of its intention to convert it into a subdivision
project. The previous owner even applied for a development permit over the subject
property. However, when the twenty-two (22) lots were sold to appellant Aneco, it was very
clear from the sellers deed of sale that the lots sold ceased to be subdivision lots. The seller even
warranted that it shall undertake to extend all the necessary assistance for the consolidation of
the subdivided lots, including the execution of the requisite manifestation before the appropriate
government agencies that theseller is no longer interested in pursuing the subdivision project. In
fine, appellant Aneco knew from the very start that at the time of the sale, the 22 lots sold to it
were not intended as subdivision units, although the titles to the different lots have yet to be
consolidated. Consequently, the easement that used to exist on the subject lot ceased when
appellant Aneco and the former owner agreed that the lots would be consolidated and would no
longer be intended as a subdivision project.

Appellant Aneco insists that it has the intention of continuing the subdivision project
earlier commenced by the former owner. It also holds on to the previous development permit
granted to Fernandez Hermanos, Inc. The insistence is futile. Appellant Aneco did not acquire any
right from the said previous owner since the latter itself expressly stated in their agreement that
it has no more intention of continuing the subdivision project. If appellant desires to convert its
property into a subdivision project, it has to apply in its own name, and must have its own
provisions for a road lot.[19]

Anent the issue of compulsory easement of right of way, the CA held that Aneco failed to prove the
essential requisites to avail of such right, thus:

An easement involves an abnormal restriction on the property of the servient owner

and is regarded as a charge or encumbrance on the servient owner and is regarded as a charge or
encumbrance on the servient estate (Cristobal v. CA, 291 SCRA 122). The essential requisites to
be entitled to a compulsory easement of way are: 1) that the dominant estate is surrounded by
other immovables and has no adequate outlet to a public highway; 2) that proper indemnity has
been paid; 3) that the isolation was not due to acts of the proprietor of the dominant estate; 4)
that the right of way claimed is at a point least prejudicial to the servient estate and in so far as
consistent with this rule, where the distance from the dominant estate to a public highway may
be the shortest (Cristobal v. Court of Appeals, 291 SCRA 122).

An in depth examination of the evidence adduced and offered by appellant Aneco,

showed that it had failed to prove the existence of the aforementioned requisites, as the burden
thereof lies upon the appellant Aneco.[20]
 Aneco moved for reconsideration but its motion was denied.[21] Hence, the present petition or appeal
by certiorari under Rule 45.

Issues

Petitioner Aneco assigns quadruple errors to the CA in the following tenor:

A.
THE COURT OF APPEALS GRAVELY ERRED IN DISMISSING PETITIONERS APPEAL AND SUSTAINING
THE TRIAL COURTS ORDER DATED 31 MARCH 1997 GRANTING RESPONDENTS MOTION FOR
RECONSIDERATION WHICH IS FATALLY DEFECTIVE FOR LACK OF NOTICE OF HEARING.

B.
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE TRIAL COURTS ORDER WHICH
GAVE FULL WEIGHT AND CREDIT TO THE MISLEADING AND ERRONEOUS CERTIFICATION ISSUED
BY GILDA E. ESTILO WHICH SHE LATER EXPRESSLY ANDCATEGORICALLY RECANTED BY WAY OF
HER AFFIDAVIT.

C.
THE COURT OF APPEALS GRAVELY ERRED IN APPLYING THE LIBERAL CONSTRUCTION OF THE
RULES IN ORDER TO SUSTAIN THE TRIAL COURTS ORDER DATED 31 MARCH 1997.

D.
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE TRIAL COURTS ORDER THAT MADE
NO PRONOUNCEMENTS AS TO COSTS, AND IN DISREGARDING THE MERIT OF THE PETITIONERS
CAUSE OF ACTION.[22]

Our Ruling

The petition is without merit.

Essentially, two (2) issues are raised in this petition. The first is the procedural issue of whether or not
the RTC and the CA erred in liberally applying the rule on notice of hearing under Section 5, Rule 15 of the 1997
Rules of Civil Procedure. The second is the substantive issue of whether or not Aneco may enjoin Landex from
constructing a concrete wall on its own property.

We shall discuss the twin issues sequentially.

Strict vs. Liberal Construction of Procedural Rules; Defective

motion was cured when Aneco was given an opportunity to
comment on the motion for reconsideration.

Section 5, Rule 15 of the 1997 Rules of Civil Procedure[23] requires a notice of hearing for a contested
motion filed in court. Records disclose that the motion for reconsideration filed by Landex of the RTC decision did
not contain a notice of hearing.There is no dispute that the motion for reconsideration is defective. The RTC and
the CA ignored the procedural defect and ruled on the substantive issues raised by Landex in its motion for
reconsideration. The issue before Us is whether or not the RTC and the CA correctly exercised its discretion in
ignoring the procedural defect. Simply put, the issue is whether or not the requirement of notice of hearing should
be strictly or liberally applied under the circumstances.

Aneco bats for strict construction. It cites a litany of cases which held that notice of hearing is
mandatory. A motion without the required notice of hearing is a mere scrap of paper. It does not toll the running
of the period to file an appeal or a motion for reconsideration. It is argued that the original RTC decision is already
final and executory because of the defective motion.[24]
 Landex counters for liberal construction. It similarly cites a catena of cases which held that procedural
rules may be relaxed in the interest of substantial justice. Landex asserts that the procedural defect was cured
when it filed a motion setting a hearing for its motion for reconsideration. It is claimed that Aneco was properly
informed of the pending motion for reconsideration and it was not deprived of an opportunity to be heard.[25]

It is true that appeals are mere statutory privileges which should be exercised only in the manner required
by law. Procedural rules serve a vital function in our judicial system. They promote the orderly resolution of
cases. Without procedure, there will be chaos. It thus behooves upon a litigant to follow basic procedural
rules. Dire consequences may flow from procedural lapses.

Nonetheless, it is also true that procedural rules are mere tools designed to facilitate the attainment of
justice. Their strict and rigid application should be relaxed when they hinder rather than promote substantial
justice. Public policy dictates that court cases should, as much as possible, be resolved on the merits not on mere
technicalities. Substantive justice trumps procedural rules. In Barnes v. Padilla,[26] this Court held:

Let it be emphasized that the rules of procedure should be viewed as mere tools
designed to facilitate the attainment of justice. Their strict and rigid application, which would
result in technicalities that tend to frustrate rather than promote substantial justice, must always
be eschewed. Even the Rules of Court reflect this principle. The power to suspend or even
disregard rules can be so pervasive and compelling as to alter even that which this Court itself
has already declared to be final x x x.

The emerging trend in the rulings of this Court is to afford every party litigant the
amplest opportunity for the proper and just determination of his cause, free from the constraints
of technicalities. Time and again, this Court has consistently held that rules must not be applied
rigidly so as not to override substantial justice.[27]

Here, We find that the RTC and the CA soundly exercised their discretion in opting for a liberal rather than a strict
application of the rules on notice of hearing. It must be stressed that there are no vested right to technicalities. It is
within the courts sound discretion to relax procedural rules in order to fully adjudicate the merits of a case. This
Court will not interfere with the exercise of that discretion absent grave abuse or palpable error. Section 6, Rule 1
of the 1997 Rules of Civil Procedure even mandates a liberal construction of the rules to promote their objectives
of securing a just, speedy, and inexpensive disposition of every action and proceeding.

To be sure, the requirement of a notice of hearing in every contested motion is part of due process of law. The
notice alerts the opposing party of a pending motion in court and gives him an opportunity to oppose it. What the
rule forbids is not the mere absence of a notice of hearing in a contested motion but the unfair surprise caused by
the lack of notice. It is the dire consequences which flow from the procedural error which is proscribed. If the
opposing party is given a sufficient opportunity to oppose a defective motion, the procedural lapse is deemed
cured and the intent of the rule is substantially complied. In E & L Mercantile, Inc. v. Intermediate Appellate
Court,[28] this Court held:

Procedural due process is not based solely on a mechanistic and literal application of a
rule such that any deviation is inexorably fatal. Rules of procedure, and this includes the three (3)
days notice requirement, are liberally construed in order to promote their object and to assist
the parties in obtaining just, speedy, and inexpensive determination of every action and
proceeding (Section 2, Rule 1, Rules of Court). In Case and Nantz v. Jugo (77 Phil. 517), this Court
made it clear that lapses in the literal observance of a rule of procedure may be overlooked when
they have not prejudiced the adverse party and have not deprived the court of its authority.

A party cannot ignore a more than sufficient opportunity to exercise its right to be heard
and once the court performs its duty and the outcome happens to be against that negligent
party, suddenly interpose a procedural violation already cured, insisting that everybody should
again go back to square one. Dilatory tactics cannot be the guiding principle.

The rule in De Borja v. Tan (93 Phil. 167), that what the law prohibits is not the absence
of previous notice, but the absolute absence thereof and lack of opportunity to be heard, is the
 applicable doctrine. (See also Aguilar v. Tan, 31 SCRA 205; Omico v. Vallejos, 63 SCRA
285;Sumadchat v. Court of Appeals, 111 SCRA 488.) x x x[29]

We also find that the procedural lapse committed by Landex was sufficiently cured when it filed another motion
setting a hearing for its defective motion for reconsideration. Records reveal that the RTC set a hearing for the
motion for reconsideration butAnecos counsel failed to appear. The RTC then gave Aneco additional time to file
comment on the motion for reconsideration.[30]

Aneco was afforded procedural due process when it was given an opportunity to oppose the motion for
reconsideration. It cannot argue unfair surprise because it was afforded ample time to file a comment, as it did
comment, on the motion for reconsideration.There being no substantial injury or unfair prejudice, the RTC and the
CA correctly ignored the procedural defect.

The RTC and the CA did not err in dismissing the complaint
for injunction; factual findings and conclusions of law of
the RTC and the CA are afforded great weight and respect.

Anent the substantive issue, We agree with the RTC and the CA that the complaint for injunction
against Landex should be dismissed for lack of merit. What is involved here is an undue interference on the
property rights of a landowner to build a concrete wall on his own property. It is a simple case of a neighbor,
petitioner Aneco, seeking to restrain a landowner, respondent Landex, from fencing his own land.

Article 430 of the Civil Code gives every owner the right to enclose or fence his land or tenement by
means of walls, ditches, hedges or any other means. The right to fence flows from the right of ownership. As
owner of the land, Landex may fence his property subject only to the limitations and restrictions provided by
law. Absent a clear legal and enforceable right, as here, We will not interfere with the exercise of an essential
attribute of ownership.

Well-settled is the rule that factual findings and conclusions of law of the trial court when affirmed by the CA are
accorded great weight and respect. Here, We find no cogent reason to deviate from the factual findings and
conclusion of law of the trial court and the appellate court. We have meticulously reviewed the records and agree
that Aneco failed to prove any clear legal right to prevent, much less restrain, Landex from fencing its own
property.

Aneco cannot rely on the road lot under the old subdivision project of FHDI because it knew at the time of the sale
that it was buying ordinary lots, not subdivision lots, from FHDI. This is clear from the deed of sale between FHDI
and Aneco where FHDI manifested that it was no longer interested in pursuing its own subdivision
project. If Aneco wants to transform its own lots into a subdivision project, it must make its own provision for road
lots. It certainly cannot piggy back on the road lot of the defunct subdivision project of FHDI to the detriment of
the new owner Landex. The RTC and the CA correctly dismissed the complaint for injunction of Aneco for lack of
merit.

WHEREFORE, the petition is DENIED and the appealed Decision AFFIRMED.

SO ORDERED.
 Republic of the Philippines
Supreme Court

SECOND DIVISION

EVA FLOYD and RODOLFO CALIXTRO, G.R. No. 169047

Petitioners,
Present:

QUISUMBING, J., Chairperson,

CARPIO MORALES,
- versus - TINGA,
VELASCO, JR., and
BRION, JJ.

BENJAMIN GONZALES, ATILANO NANQUIL, LINDA Promulgated:

NISPEROS, LILIAN NISPEROS, SALVADOR NISPEROS &
VIRGILIO CONSTANTINO, November 3, 2008
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

QUISUMBING, J.:

This petition for review on certiorari seeks to reverse the Decision [1] dated July 12, 2005 of the Court of
Appeals in CA-G.R. CV No. 81618. Said Decision affirmed with modification the Decision[2] of the Regional Trial
Court (RTC), Branch 45, San Fernando City, Pampanga in SP. Civil Action No. 234-0-91, dismissing the complaint for
injunction which sought to prevent the demolition of petitioners houses built on the land claimed by respondents
Linda Nisperos, Lilian Nisperos and Salvador Nisperos.

The facts, as culled from the records, are as follows.

Petitioners Eva Floyd and Rodolfo Calixtro are occupants of a lot in Jolo Street, Tabacuhan Road, Sta.
Rita, Olongapo City. Floyd started occupying the said lot in 1986 while Calixtro started doing so in 1988. The lot
forms part of a 1,337.50-square meter property which was the subject of a complaint[3] for forcible entry filed by
respondents Lilian Nisperos, Linda Nisperos and Salvador Nisperos, through their attorney-in-
fact Virgilio Constantino, against Clemente Abarnas. The complaint, filed on September 25, 1984, charged Abarnas
of constructing a house on the subject land in July 1984 through stealth and strategy. The Nisperoses claimed
ownership and prior possession of the land by succession, alleging that their father, Igmedio Nisperos, occupied
and tilled it from 1950 to 1982.

On February 10, 1986, the Municipal Trial Court in Cities of Olongapo City dismissed the ejectment
complaint. On appeal however, the Olongapo City RTC on January 20, 1987 reversed the dismissal of the complaint
and ordered Abarnas to remove any improvements introduced on the land and surrender possession thereof to
the Nisperoses.[4]
 On July 8, 1987, the Court of Appeals affirmed the Olongapo City RTCs Decision.[5] When the appellate
courts decision attained finality, the Olongapo City RTC issued an Alias Writ of Execution [6] on April 3, 1991 and an
Alias Writ of Special Demolition[7] on April 4, 1991. A Notice to Vacate[8] was likewise issued on April 23, 1991.

In June 1991, when respondents Sheriffs Benjamin Gonzales and Atilano Nanquil went to the subject land to
implement the writs, they found that petitioners and Fe Ongsotto were also occupying the property. To prevent the
demolition, petitioners and Ongsotto filed a complaint[9] for injunction, SP. Civil Action No. 234-0-91, before the RTC
of Olongapo City.

On February 5, 1992, the RTC of Olongapo City issued a Writ of Preliminary Injunction.[10] It observed that
petitioners do not appear to be mere trespassers, squatters or Abarnas agents; and that the respondent sheriffs
exceeded their authority granted by the writs of execution and demolition, considering that they were only
directed against Abarnas.[11]

The complaint was transferred to the RTC of San Fernando City by virtue of Supreme Court A.M. No. 00-
11-523-RTC, following a judicial audit.

On August 8, 2003, the RTC of San Fernando City, dismissed the injunction complaint. It considered
petitioners as occupants in bad faith and squatters on the lots, making the judgment in the ejectment case binding
on them. The court recognized the Nisperoses prior possession and claim over the lots which started in 1950 with
their father, Igmedio. The RTC noted that Floyd and Calixtro admitted that they started occupying the premises
only in 1986 and 1988, respectively. It also concluded that petitioners impliedly admitted that the lots are part of
the Nisperoses property because instead of claiming the opposite, they attempted to prove that they had a better
right thereto. It also ordered petitioners to pay private respondents moral damages and attorneys fees. [12]

Petitioners and Ongsotto, separately, appealed the judgment in the injunction case before the Court of
Appeals.

On July 12, 2005, the appellate court ruled against petitioners, thus:

WHEREFORE, upon the premises, the appealed Decision is AFFIRMED with

the MODIFICATION that the awards of moral damages and attorneys fees are DELETED.

SO ORDERED.[13]

The Court of Appeals held that petitioners have not shown a clear and unmistakable right to be protected,
and found that they occupied the land during the pendency of the ejectment case, thereby taking advantage of
such conflict.[14]

On August 22, 2005, Ongsotto, alone, filed a Motion for Reconsideration.[15] On September 21, 2005,
Floyd and Calixtro filed the instant petition.[16] On February 15, 2006, the Court of Appeals deferred ruling on
Ongsottos motion in view of this petition.[17]

Before us, petitioners raise the following assignment of errors:

I.
 THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION IN CIVIL CASE NO.
234-0-91 HOLDING THAT THE PETITIONERS ARE BOUND BY THE DECISION IN CIVIL CASE NO. 139-
0-86 ALTHOUGH THEY WERE NOT IMPLEADED AS PARTY DEFENDANTS THEREIN.

II.

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE PETITIONERS ARE NOT
ENTITLED TO A WRIT OF INJUNCTION ALTHOUGH THE PROPERTY THEY ARE IN POSSESSION OF IS
OWNED AND TITLED IN THE NAME OF ANOTHER PERSON.

III.

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE LAND SUBJECT OF CIVIL CASE
NO. 139-0-86 INCLUDES THE LOTS BEING OCCUPIED AND POSSESSED BY THE PETITIONERS.[18]

Simply stated, the issues are as follows: Are petitioners bound by the decision in the ejectment case? Are
they entitled to an injunctive writ to prevent the demolition of their houses? Who has a better right of possession
over the land where their houses are erected?

Petitioners aver that only Abarnas was ordered by the Olongapo City RTC to surrender possession of the
land and remove any construction thereon, and that they are not trespassers, squatters, or Abarnas relatives,
successors-in-interest, or privies. They further contend that judgments in ejectment cases are in personam. Thus,
even assuming that they are occupying the premises subject of the ejectment case, the judgment cannot be
enforced against them as they were not made parties to it. Petitioners likewise point to several pieces of
documentary evidence which allegedly show that the Nisperoses are not the true owners of the lots on which the
houses sought to be demolished stand, since said lots are registered in the name of one Rodrigo C. Domingo,
Jr. They further argue that there is no factual basis for the appellate courts finding that they impliedly admitted
that the lots they are occupying form part of the property claimed by the Nisperoses. [19]

The Nisperoses on the other hand state that petitioners were not impleaded as defendants in the
ejectment case as the latter were not yet on the premises or hid themselves during the pendency of the case until
the time the latter were served with a notice to vacate on December 21, 1988. They claim that petitioners
connived with Abarnas and his wife Angelina, and insist that petitioners are privies of the Abarnases. They accuse
petitioners of bad faith in applying for a Miscellaneous Sales Application and for belatedly securing other
documents, which were self-serving. Lastly, they aver that the genuineness of the documents presented by
petitioners and the ownership of the lots mentioned in it can only be determined in a full-blown trial.[20]

An ejectment suit is an action in personam wherein judgment is binding only upon parties properly
impleaded and given an opportunity to be heard. [21] Petitioners were not made party-defendants by the
Nisperoses. Hence, they can be bound by said judgment in the ejectment suit, even if they were not impleaded as
defendants, only if they are shown to be (a) trespassers, squatters or agents of the defendant fraudulently
occupying the property to frustrate the judgment; (b) guests or other occupants of the premises with the
permission of the defendant; (c) transferees pendente lite; (d) sub-lessees; (e) co-lessees; or (f) members of the
family, relatives and other privies of the defendant.[22] In such cases, court hearing is a must to determine the
character of such possession. If the execution court finds that they are mere successors-in-interest, guests, or
agents of the defendant, the order of execution shall be enforced against them. [23]
 In the forcible entry case, petitioners had not been given their day in court to present their side to prove
their alleged bona fide possession. Neither was a court hearing held to prove that they are mere successors-in-
interest, guests, or agents of defendant Abarnas when the ejectment judgment was sought to be enforced against
them. Thus, they cannot be bound by the decision in the ejectment case.

We now go to the second issue.

A writ of preliminary injunction may only be issued upon a clear showing that there exists a right to be
protected and that the action sought to be enjoined is violative of that right. [24] From the foregoing discussion, it is
clear that petitioners have a right to be protected against the summary demolition of their houses. Hence, the RTC
correctly issued a writ of preliminary injunction. However, whether the injunction should be made permanent is
another matter.

The determination as to whether petitioners are entitled to a permanent injunction rests on the issue of
who between petitioners and respondents have a better right of possession over the land on which the houses
sought to be demolished stand.

It is relevant to point out that in the pre-trial conference before the Olongapo City RTC the parties agreed
on the following issues for resolution:
(1) Whether or not the plaintiffs were mere trespassers in the property in question or do
they have title over the premises in question.
(2) Whether or not the plaintiffs can be ejected or their house demolished erected on the
land in question inasmuch as they are not parties in the case of Linda Nisperos, et al.
versus Rodolfo Calixtro and Fe Ongsotto, Civil Case No. 139-0-86.
(3) Whether or not the spaces which plaintiffs houses are erected are owned by
plaintiffs.[25]

Clearly, apart from the matter of enjoining the execution against petitioners of the judgment in Civil Case
No. 139-0-86, the issue of who between the petitioners and respondents are entitled to possession of, as a
consequence of title over, the land where the formers houses are erected was also squarely raised and fully tried
before the lower courts. During trial, petitioners fully ventilated their claim / right to possession of the subject
land. Sec. 5, Rule 10 of the Rules of Court states that [w]hen issues not raised by the pleadings are tried with the
express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the
pleadings. Under the circumstances, it is just and proper to resolve the issue of possession over the subject
land. To rule otherwise and require respondents to file another case for ejectment, or institute supplemental
proceedings in Civil Case No. 139-0-86, against petitioners would not be in accord with justice and would only
entail more unnecessary expenses and contribute to the clogged court dockets.

Both the RTC and the Court of Appeals categorically found that respondents have the better right to
possession of the land. The RTC ruled that [petitioners] claim of possession that started in 1988 must yield to that
of the Nisperoses who trace their possession of the property to that of their predecessor-in-interest, their father
Igmedio who began occupying the property in 1950.[26] The Court of Appeals, for its part, ruled that:

[Petitioner] Floyd occupied the property only in 1986; [petitioner] Calixtro occupied the property
in 1988 while admitting that the property was owned by I. Hauseco Subd. Appellant Ongsotto
likewise occupied the property in 1988 and expressed that she derived her alleged title from a
 waiver and quitclaim executed by Angelina Abarnas, the wife of Clemente Abarnas, defendant in
the ejectment case. Thus, she is considered as the latters successor-in-interest, bound by the
judgment in the ejectment case which is conclusive between the parties and their successors-in-
interest. The MSAs [Miscellaneous Sales Applications] and unapproved survey plans presented by
Floyd and Ongsotto are self-serving and of little evidentiary value.

In sum, the [petitioners] have not proved a clear and unmistakable right to the possession of the
property. On the other hand, Nisperos better right was established by final judgment in Civil Case
No. 139-0-86.[27]

We find no cogent reason to overturn the consistent findings of both the RTC and the Court of Appeals that, as
against petitioners, the Nisperoses are entitled to possession of the subject land where the petitioners houses are
erected. Applicable to the instant case, which is an offshoot of an ejectment case and which also in part partakes
of an ejectment case, is the following pronouncement of the Court on the matter of ejectment and possession
in Pajuyo v. Court of Appeals:[28]

The only question that the courts must resolve in ejectment proceedings iswho is
entitled to the physical possession of the premises, that is, to the possession de facto and not to
the possession de jure. It does not even matter if a partys title to the property is questionable, 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. 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.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. 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. To repeat, the only issue that the court has to settle in an
ejectment suit is the right to physical possession.[29]

Petitioners Floyd and Calixtro, in SP. Civil Action No. 234-0-91 admitted having possessed the subject land
only in 1986 and 1988 respectively. These cannot prevail over the Nisperoses possession through their father
Igmedio that started in 1950. Since the Nisperoses have proven prior possession in time, they indeed have a better
right to the possession of the land. Hence, petitioners must relinquish possession of the land to the Nisperoses and
accordingly remove their houses which are built on the subject land.

WHEREFORE, the Decision dated July 12, 2005 of the Court of Appeals in CA-G.R. CV No. 81618 is AFFIRMED with
MODIFICATION. Petitioners are ORDERED to SURRENDER to the respondents Linda, Lilian and
Salvador Nisperos the possession of the land in dispute and REMOVE the improvements that they introduced
thereon.

Costs against petitioners.

SO ORDERED.
 Republic of the Philippines
Supreme Court

THIRD DIVISION

ANTONIO ARBIZO, G.R. No. 171315

Petitioner,

- versus -
Present:

SPS. ANTONIO SANTILLAN and ROSARIO L. YNARES-SANTIAGO, J.,

SANTILLAN, Chairperson,
Respondents. AUSTRIA-MARTINEZ,
x----------------------x CHICO-NAZARIO,
ANTONIO ARBIZO, NACHURA, and
Petitioner, REYES, JJ.

- versus -

SPS. JOHN WASSMER and LUZ MARCELO-

WASSMER,
Respondents.
x----------------------x
ANTONIO ARBIZO,
Petitioner,
Promulgated:
- versus -

PACITA MARCELO,
February 26, 2008
Respondent.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

For review on certiorari under Rule 45[1] of the 1997 Rules of Civil Procedure filed by petitioner Antonio Arbizo is
the Decision[2] of the Court of Appeals dated 31 January 2006. The Court of Appeals ordered petitioner to vacate
the properties subject of this case. The assailed Decision reversed and set aside the Decision [3] dated 20 February
2004 of the Regional Trial Court (RTC) of Iba, Zambales, which affirmed in toto the Decision[4] dated 18 August 2003
of the 3rd Municipal Circuit Trial Court (MCTC) ofBotolan-Cabangan, Cabangan, Zambales, in Civil Cases No. 833,
No. 834, No. 835 and No. 836.

Central to this controversy is the possession of the above three adjoining parcels of land (subject properties) which
are all situated in Barangay San Isidro, Cabangan, Zambales, with an area of 1,200 square meters each. The subject
properties are being claimed by petitioner to be part of the property described under Tax Declaration No. 16-0032
in the name of his deceased father, Celestino Arbizo. Respondents, on the other hand, assert ownership over the
same based on separate titles in their names, particularly: (a) Transfer Certificate of Title (TCT) No. T-50723 in the
names of the spouses John and Luz Marie Wassmer;[5] (b) TCT No. 50722 in the name of Pacita Marcelo;[6] and (c)
TCT No. T-50725 in the names of the spouses Antonio and Rosario Santillan.[7]
The records show that on 27 June 2001, the respondents filed with the MCTC three separate Complaints
for Ejectment against the petitioner. Finding similarity in the issues involved, the MCTC jointly heard the three
Complaints under the Rules on Summary Procedure.

In their Complaints, the respondents averred that right after they purchased the subject properties in 1998, they
immediately enclosed the same with a wooden perimeter fence with barbed wire. Sometime in September 2000,
the petitioner, without their knowledge, much less consent, unlawfully occupied the subject properties by
removing and destroying the fence they had installed, and later replacing it with his own concrete fence. Despite
repeated demands to vacate the subject properties, petitioner vehemently refused to do so. Thus, respondents
prayed that the petitioner be ordered to vacate the subject properties, and to pay each of them: (1) the amount
of P1,000.00 per month from September 2000 until the subject properties are vacated, as actual damages in the
form of reasonable compensation for the use and occupation thereof; (2) the amount of P25,000,00 as attorneys
fees plus P800.00 per court appearance; and (3) the amount of P10,000.00 as moral and exemplary damages.

In response, the petitioner countered that the subject lots formed part of the 29,345-square meter property
previously owned by his father, Celestino Arbizo, who occupied the same during his lifetime as early as 1921. At
the time of his fathers death on 11 May 1956, he left the entire property as part of his estate to his forced and
compulsory heirs; namely, Maria Facelo Arbizo (the petitioners mother), Carolina Arbizo-Noceda, Aurora Arbizo-
Ecdao, Anacleto Arbizo and Ma. Agrifina Arbizo-Mendigorin (the children ofCelestino Arbizo by the first and second
marriages).[8] Petitioners wife, Dominga Arbizo, bought the undivided shares of Anacleto Arbizo and
Ma. Agrifina Arbizo-Mendigorin in the said property on 15 August 1976 and 16 November 1976, respectively. Since
then, petitioner claimed to have been in peaceful, continuous and uninterrupted possession of the 11,230-square
meter parcel of land which included the subject properties. By way of counterclaim, the petitioner prayed that the
respondents be ordered to pay him the amount of P100,000.00 per court appearance as attorneys fees.

On 18 August 2003, on the basis of the position papers and documentary evidence adduced by the parties, the
MCTC rendered a Decision dismissing the three Complaints for Ejectment filed by the respondents after finding
that the petitioner had preferred possession over the subject properties. The fallo of the said Decision is quoted
hereunder:

WHEREFORE, in view of the preponderance of evidence submitted by the [herein petitioner],

judgment is hereby rendered dismissing the complaints against him for lack of merit. [9]

In sustaining the petitioners position, the MCTC explained at length its disposition as follows:

From the evidence on record, it appears that the [herein respondents] obtained their respective
title over the lots in the year 1998. If their and their witnesses word were to be given credit, the
[respondents] entered the land when they thereupon enclosed/fenced the same with wooden
posts and barbed wire but were removed, destroyed and later replaced by the [herein petitioner]
in September, 2000 with concrete fences (sic).

The relocation survey report and sketch plan of the geodetic engineer meantime reveal that the
disputed adjoining lots (having an approximate area of 1,200 square meters each) are part of the
11,230 square-meter land (sic) held and occupied by the [petitioner]. Likewise, extant in the
technical report and plan are the other recorded improvements consisting of huts belonging to
the [petitioner] and found standing inside his occupied property. The Court itself confirmed the
existence of these improvements during the ocular inspection of the property.

Equally evident from the documents presented is the fact that the large stretch of land being
occupied by the [petitioner] came from his father the late Celestino Arbizo in whose name the
tax declaration for the land for the year 1985 was issued. That two (2) of
the Arbizos sibling, AnacletoArbizo and Agrifina Arbizo-Mendigorin, conveyed and sold their
respective 1/5 shares from (sic) the property to Dominga P. Arbizo [petitioners] wife is
 doubtlessly established by the two (2) deeds of sale executed by the former in the year
1976. This logically explains why [petitioner] Antonio Arbizo and his wife are as seen in the
engineers documents occupying an approximate area of 11,230 square meters out of the 2.9
hectare-property (sic) tax declared in the name of Celestino Arbizo who at the time of his death
appeared to have left five (5) heirs. x x x.

Moreover, the corroborated declarations of [petitioners] witnesses (one of whom

[Jesus Paredes] is 81 years old and a long-time friend of [petitioners] father convincingly prove
that [petitioner] has already been occupying the Arbizo property including
the controverted [three] parcels of land much long before the [respondents] bought, registered,
and fenced them in the year 1998. Proof that the [petitioner] has preferred possession is the
testimony of Conrado Santos, [respondents] own witness, to the effect that said [petitioner] was
at the area and that the laborers even took their refreshment at the nearby resthouse of
the Arbizos during their fencing of [respondents] properties. On this point, [petitioners]
possession becomes even more superior if the span of years that his father and predecessor-in-
interest had held the property were to be tacked to his own possession.

Over-all, the unrefuted documentary evidence brought to light by the [petitioner] indubitably
proves that his physical occupation and exercise of acts of possession antedate that of the
[respondents]. Clearly, since it is [petitioners] possession that enjoys priority of time, he is, under
the law, entitled to continue possessing the lands in question. (De Luna vs. Court of Appeals, 212
SCRA 276).[10]

Dissatisfied, the respondents then elevated the matter to the RTC. On 20 February 2004, the RTC sustained the
dismissal by the MCTC of the respondents Complaints for Ejectment, holding that the petitioner had a better right
of possession over the subject properties for having been in possession of the same long before they were
acquired by the respondents in 1998. The respondents then sought the reconsideration of the Decision, but the
RTC denied the same for lack of merit in the Order dated 17 March 2004.[11]

Herein respondents then raised the case to the Court of Appeals. In its Decision dated 31 January 2006, it held:

WHEREFORE, the foregoing premises considered, the instant Petition is hereby GRANTED. The
Decision dated February 20, 2004 of Branch 71 of the Regional Trial Court of Iba, Zambales,
affirming in toto the Decision dated August 18, 2003 of the 3rd Municipal Circuit Trial Court
ofBotolan-Cabangan, Cabangan, Zambales in Civil Case Nos. 834, 835 and 836 is hereby
REVERSED and SET ASIDE. A new one is being entered ORDERING the [herein petitioner] (1) to
vacate the subject lots and peacefully surrender the possession thereof to the [herein
respondents]; and (2) to pay each of the [respondents] the amount of P1,000.00 per month from
September 2000 until the possession of the subject lots shall have been completely restored to
the [respondents] as reasonable compensation for the use and occupation thereof, and the
amount of P10,000.00 as attorneys fees.[12]

To support its contrary conclusion reversing the MCTC and the RTC, the Court of Appeals declared:

The records of the case reveal that prior to 1998, the possession of the subject lots was
undoubtedly in the hands of the [herein petitioner]. To substantiate his allegation that he had
prior possession of the subject lots, the [petitioner] adduced in evidence Tax Declaration No. 16-
0032 which was issued in 1985, and the two (2) deeds of sale in 1976 executed in favor of his
wife, Dominga Arbizo, by Anacleto Arbizo and Agrifina Arbizo-Mendigorin. In addition, the
[petitioner] presented the affidavits of his witnesses, Jesus Paredes and Rosario Corpuz, both
stating therein that he remained in possession of the subject lots even up to the present
time. However, We find that these pieces of evidence do not successfully debunk the claim of the
[herein respondents] that they were able to wrest physical possession of the subject lots in 1998
 when they installed a fence enclosing the same. Furthermore, the fact that the MCTC found
[petitioners] several huts standing on the subject lots during the ocular inspection does not
necessarily establish that the [petitioner] had been in peaceful, continuous and uninterrupted
possession of the subject lots. As the records disclose, the ocular inspection was conducted in
2003 which was approximately three (3) years after the unlawful intrusion by the
[petitioner]. Hence, We cannot readily conclude that the huts were already there when the
[respondents] took actual possession of the subject lots in 1998 as these huts could be easily
constructed.

Upon the other hand, the [respondents] presented their respective certificates of title and tax
declarations to prove that they had been the registered owners of the subject lots since
1998. While it is admitted that tax declarations and certificates of title evidencing their
ownership over the subject lots did not squarely address the issue of prior actual possession
raised in a forcible entry case (German Management Services, Inc. vs. Court of Appeals, 177 SCRA
495, 499 [1989]), they nevertheless bolstered the stance of the [respondents] that they took
physical possession of the subject lots by virtue of such ownership. Significantly, to further
corroborate their claim that they were the actual possessors of the subject property at the time
of the illegal dispossession, they submitted the affidavit of Conrado Santos establishing that he
and his son constructed a wooden fence enclosing the subject lots bought by the [respondents],
and that of Gloria Dalisaymo confirming that this wooden fence was later destroyed and replaced
with a concrete fence by the [petitioner] in September 2000. Clearly from the foregoing, they
sufficiently established by preponderance of evidence that they were able to take material or
physical possession of the subject lots from 1998 to September 2000. It must be stressed that the
fencing of the subject lots by the [respondents] in 1998 without any objection or protest from
the [petitioner] for nearly two (2) years is deemed sufficient to confer upon them actual
possession thereof.[13]

Not to be stymied, petitioner is now before this Court raising the issue of whether the Decision of the Court of
Appeals is supported by evidence on record and in accordance with laws and jurisprudence established by the
Supreme Court.[14]

The pertinent point of inquiry is whether or not private respondents have a valid ground to evict petitioner from
the subject properties.

A complaint for forcible entry may be instituted in accordance with Section 1, Rule 70 of the 1997 Rules of Court:

SECTION 1. Who may institute proceedings, and when. Subject to the provisions of the next
succeeding section, a person deprived of the possession of any land or building by force,
intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against
whom the possession of any land or building is unlawfully withheld after the expiration or
termination of the right to hold possession, by virtue of any contract, express or implied, or the
legal representatives or assigns of any such lessor, vendor, vendee, or other person may at any
time within (1) one year after such unlawful deprivation or withholding of possession, bring an
action in the proper Municipal Trial Court against the person or persons unlawfully withholding
or depriving of possession, or any person or persons claiming under them, for the restitution of
such possession, together with damages and costs.

The summary remedies of forcible entry and unlawful detainer under Section 1, Rule 70 of the 1997 Rules of Court
are distinguished from each other as follows:

In forcible entry, one is deprived of physical possession of land or building by means of force,
intimidation, threat, strategy, or stealth. In unlawful detainer, one unlawfully withholds
possession thereof after the expiration or termination of his right to hold possession under any
 contract, express or implied. In forcible entry, the possession is illegal from the beginning and the
basic inquiry centers on who has the prior possession de facto. In unlawful detainer, the
possession was originally lawful but became unlawful by the expiration or termination of the
right to possess, hence the issue of rightful possession is decisive for, in such action, the
defendant is in actual possession and the plaintiffs cause of action is the termination of the
defendants right to continue in possession.

What determines the cause of action is the nature of defendants entry into the land. If the entry
is illegal, then the action which may be filed against the intruder within one year therefrom is
forcible entry. If, on the other hand, the entry is legal but the possession thereafter became
illegal, the case is one of unlawful detainer which must be filed within one year from the date of
the last demand.[15]

It is a basic rule in civil cases that the party having the burden of proof must establish his case by a preponderance
of evidence, which simply means evidence which is of greater weight or more convincing than that which is offered
in opposition to it.[16]

In filing forcible entry cases, the law tells us that two allegations are mandatory for the municipal court to acquire
jurisdiction: first, the plaintiff must allege prior physical possession of the property, and second, he must also
allege that he was deprived of his possession by any of the means provided for in Section 1, Rule 70 of the Rules of
Court, i.e., by force, intimidation, threat, strategy or stealth. It is also settled that in the resolution of such a case,
what is material is the determination of who is entitled to the physical possession of the property. Indeed, any of
the parties who can prove prior possession de facto may recover such possession even from the owner himself
since such cases proceed independently of any claim of ownership and the plaintiff needs merely to prove prior
possession de facto and undue deprivation thereof. The question of possession is primordial while the issue of
ownership is unessential.[17]

Verily, in ejectment cases, the word possession means nothing more than actual physical possession, not legal
possession, in the sense contemplated in civil law. The only issue in such cases is who is entitled to the physical or
material possession of the property involved, independent of any claim of ownership set forth by any of the party-
litigants.[18] It does not even matter if the partys title to property is questionable. [19]

The Court of Appeals, in its assailed Decision, found that (1) respondents had prior physical possession of the
subject properties, and (2) they were deprived thereof by petitioner by means of force, intimidation, threat,
strategy or stealth.

We agree in the conclusion of the Court of Appeals.

On the issue of who has prior possession, respondents prior physical possession of the subject properties and
deprivation thereof are clear from the allegation that they are the owners of the subject properties which
petitioner forcibly entered, of which they were unlawfully turned out of possession and for which they pray to be
restored in possession.

In ejectment cases, the plaintiff merely needs to prove prior de facto possession and undue deprivation
thereof. Respondents in their complaint averred that after they purchased the lots in 1998 they immediately
enclosed the same with a fence. This prior possession of respondents is buttressed by the Salaysay of their
witness Conrado Santos who stated:

SALAYSAY

Ako, CONRADO SANTOS, sapat ang gulang, Pilipino

at naninirahan sa Cabangan, Zambales, matapos na makapanumpa ng sang-ayon sa pinag-
uutos ng batas ay kusang loob na dito ay nagsasalaysay:
 1. Kaming dalawa ng aking anak na si Edmund Santos ay inupahan nina Atty. at Mrs.
Reynaldo Dantes upang magbakod sa lupang nabili ng kanilang mga kamag anak at kaibigan sa Br
gy. San Isidro, Cabangan, Zambales.

2. Binakuran namin ang lupang nasasakupan ng apat na titulo.

3. Ang ginamit naming pambakod ay kawayan, boho, posteng kahoy at barbed wire.

4. Nang kamiy kasalukuyang nagbabakod nakamasid si Antonio Arbizo. Sa katunayan sa Resthous

e pa ni Tony Arbizo kami kumain ng aming meryenda sa tabi ng nasabing lupa.

5. Nang kami ay kasalukuyang nagbabakod, wala namang nagbawal o tumanggi sa aming ginaga
wa at maayos at mapayapa naming nabakuran ang lupang nasasakupan ng apat na titulo.

6. Sa katunayan nagtagal ang aming ibinakod hanggang sa itoy sinira at pinalitan ng konkreto sa p
ag-uutos ni Antonio Arbizo.[20]

Irrefragably, the above affidavit fortifies respondents claim that they possessed the subject properties in 1998
earlier than the petitioner who came to the premises later on in the year 2000. Notably, petitioner failed to rebut
the contents of the above affidavit.Thus it should be given evidentiary value. The Rule on Summary Procedure
precisely provides for the submission by the parties of affidavits and position papers and enjoins courts to hold
hearings only when it is necessary to do so to clarify factual matters.This procedure is in keeping with the objective
of the Rule: to promote the expeditious and inexpensive determination of cases. [21] Worthy of note is that an
action for forcible entry is a quieting process that is summary in nature. It is designed to recover physical
possession through speedy proceedings that are restrictive in nature, scope and time limits.[22]

As to whether respondents were deprived of possession by force, intimidation, strategy or stealth, the acts of the
petitioner in unlawfully entering the subject properties, erecting a structure thereon and excluding therefrom the
prior possessor would necessarily imply the use of force. In order to constitute force, the trespasser does not have
to institute a state of war. As expressly stated in David v. Cordova[23]:

The words by force, intimidation, threat, strategy or stealth include every situation or condition
under which one person can wrongfully enter upon real property and exclude another, who has
had prior possession therefrom. If a trespasser enters upon land in open daylight, under the very
eyes of the person already clothed with lawful possession, but without the consent of the latter,
and there plants himself and excludes such prior possessor from the property, the action of
forcible entry and detainer can unquestionably be maintained, even though no force is used by
the trespasser other than such as is necessarily implied from the mere acts of planting himself on
the ground and excluding the other party.

All told, after due consideration of the evidence presented by the parties in this case and the applicable
jurisprudence, we hold that the Court of Appeals correctly found respondents to have a superior right of
possession over the subject properties.

We emphasize that our disquisition in this case is provisional and only to the extent necessary to
determine who between the parties has the better right of possession.[24] In an appropriate proceeding before the
court having jurisdiction, petitioner may still have the sale of the subject property to respondents annulled, and
the latters title cancelled if petitioners case is truly meritorious.
Additionally, it must also be remembered that the subject property is registered under the Torrens System in the
names of the respondents whose title to the property is presumed legal and cannot be collaterally attacked, less so
in an action for forcible entry.

In passing, it must be stressed that the jurisdiction of Supreme Court in cases brought before it from the Court of
Appeals via Rule 45, as in this case, is limited to reviewing errors or questions of law. Where factual matters are
involved, it is well-settled that a question of fact is to be determined by the evidence to support the particular
contention. As found by the Court of Appeals, the evidence adduced on this score are in respondents
favor. Whether such conclusion of the Court of Appeals was supported by the evidence presented before it is also
factual in nature. It is the burden of the party seeking review of a decision of the Court of Appeals or other lower
tribunals to distinctly set forth in his petition for review, not only the existence of questions of law fairly and
logically arising therefrom, but also questions substantial enough to merit consideration, or show that there are
special and important reasons warranting the review that he seeks. If these are not shown prima facie in his
petition, this Court will be justified in summarily spurning the petition as lacking in merit.

Admittedly, there are recognized exceptions to this rule when the evidence presented during the trial may be
examined and the factual matters resolved by this Court. Among these exceptional circumstances is when the
findings of fact of the appellate court differ from those of the trial court. [25]

Nonetheless, the exception is not applied unqualifiedly. In Bank of Commerce v. Serrano,[26] we held that this Court
does not, of itself, automatically delve into the record of a case to determine the facts anew where there is
disagreement between the findings of fact by the trial court and by the Court of Appeals. When the disagreement
is merely on the probative value of the evidence, i.e., which is more credible of two versions, we limit our review
to only ascertaining if the findings of the Court of Appeals are supported by the records. So long as the findings of
the appellate court are consistent with and not palpably contrary to the evidence on record, we shall decline to
make a review on the probative value of such evidence. The findings of fact of the Court of Appeals, and not those
of the trial court, will be considered final and conclusive, even in this Court. In this case, we find no cogent reason
to disturb the foregoing factual findings of the Court of Appeals holding respondents entitled to the possession of
the subject properties.

WHEREFORE, premises considered, the instant Petition is DENIED for lack of merit. The Decision of the Court of
Appeals dated 31 January 2006 in CA-G.R. SP No. 86456 is AFFIRMED. Costs against petitioner.

SO ORDERED.
 Republic of the Philippines
Supreme Court

SECOND DIVISION

[G.R. No. 142037. October 18, 2004]

Spouses EDGARDO and CECILIA GONZAGA, petitioners, vs. COURT OF APPEALS and Spouses ALFONSO and
LETICIA ABAGAT, respondents.

DECISION
CALLEJO, SR., J.:
This is a petition for the review of the Decision [1] and resolution of the Court of Appeals in CA-G.R. CV No.
48687 filed by the Spouses Edgardo and Cecilia Gonzaga.

The Antecedents
On October 22, 1991, the respondents, Spouses Abagat, filed a complaint against the petitioners, Spouses
Gonzaga, for the recovery of possession of a parcel of land identified as Lot 11, Block No. 15. The lot was located in
Baclaran, Paraaque, Metro Manila, covered by Transfer Certificate of Title (TCT) No. 128186 issued in their names,
as owners.
The respondents alleged, inter alia in their complaint that they were the owners of a small hut (barong-
barong) constructed on the said lot, which was then owned by the government. On February 22, 1961, when he
was still single, the respondent Alfonso Abagat filed an application for a sales patent over the said parcel of
land. The hut was, however, gutted by fire on January 26, 1973. According to the respondents, after the fire the
Spouses Miguel and Violeta Gregorio built a two-storey house on the property without their consent. As such, they
filed a complaint for ejectment against the Spouses Gregorio but the complaint was dismissed for lack of
jurisdiction because in their answer to the complaint, the petitioners therein claimed ownership over the house.
Thereafter, the Spouses Gregorio sold the house to the petitioners for P100,000.00 under a deed of conditional
sale, in which Spouses Gregorio undertook to secure an award of the land by the government in favor of the
petitioners. On January 2, 1986, the Bureau of Lands granted the application of respondent Alfonso Abagat for a
sales patent over the property on the basis of which TCT No. 128186 was issued by the Register of Deeds to and in
his name. The respondents demanded that the petitioners vacate the property, but the latter refused to do so. The
respondents prayed that judgment be rendered in their favor, thus:

WHEREFORE, premises considered, it is respectfully prayed before this Honorable Court that judgment be
rendered in favor of the plaintiffs
1. Ordering the defendants and all persons claiming rights under them to vacate Lot 11, Block 15 located
at 2063 Bagong Sikat Street, Baclaran, Paraaque, Metro Manila and to demolish at their own
expense the house constructed thereon;

Ordering the defendants:

a) to pay P10,000.00 as attorneys fees, plus P500.00 as appearance fee for every court
hearing;
b) to pay P45,500.00 as compensatory damages representing the unearned rentals on the
subject premises from March 1984 to October 1991, and P500.00 as land rental every
month thereafter;
c) to pay P20,000.00 as exemplary damages;
d) to pay the costs of this suit.

PLAINTIFFS pray for such other and further reliefs as may deemed (sic) equitable in the premises.[2]
In their Answer to the complaint, the petitioners averred that they purchased the house from the Spouses
Gregorio for P100,000.00 under a deed of conditional sale with the understanding that Miguel Gregorio would
secure an award in their favor over the lot. However, the Spouses Gregorio failed to do so. Thereafter, they and
the Spouses Gregorio executed a Deed of Final and Absolute Sale over the property. According to the petitioners,
their refusal to vacate the property was justified in view of the Memorandum of Agreement executed between
them and the Spouses Gregorio, whereby they agreed to rescind the deeds of conditional sale and final and
absolute sale they earlier executed. The said agreement was made in consideration of the refund of the amount
of P90,000.00 to take place on or before December 15, 1991, which amount was earlier paid by them to the
Spouses Gregorio under the deed of conditional sale. Until then, the petitioners alleged, they had the right to
remain in the property. The petitioners prayed that the court render judgment in their favor, thus:
1) Dismissing the complaint for lack of merit;
2) Awarding defendants moral damages in such amount as may be proven during the trial and
exemplary damages in such amount as may be awarded by this Honorable Court;
3) Ordering plaintiff to pay the cost of suit.

Defendants likewise pray for such other relief just and equitable under the premises. [3]
On September 29, 1992, the petitioners filed a motion for leave to file a third-party complaint against the
Spouses Gregorio, appending thereto the said third-party complaint. They prayed that judgment be rendered in
their favor, thus:

WHEREFORE, Third-Party Plaintiffs pray for judgment ordering Third-Party Defendants to indemnify Third-Party
Plaintiffs for whatever is adjudged, if any, against the latter in favor of Plaintiffs in the main case now pending with
this court.

FURTHER, praying for such and other reliefs as may be deemed just and equitable. [4]
The petitioners likewise appended a copy of the deed of conditional sale executed between them and the
third-party defendants which contained the following terms, among others:
11. The VENDOR herein shall bear the costs of notarization of this deed of conditional sale.
12. The VENDOR herein warrants that he is the legal owner in full, without any lien and encumbrance, of
such house, and the VENDOR herein warrants to defend his ownership over such house against
unlawful claims by any third parties. The VENDOR herein further warrants to indemnify the VENDEE
herein for any material damage that may be caused by any unlawful claims from third parties. [5]
Even before the Court could resolve the said motion, the Spouses Gregorio filed their Answer to the Third-
Party Complaint, alleging that the petitioners were entitled to indemnify them for any award which may be
adjudicated in favor of the respondents. Thus:

WHEREFORE, herein third-party defendants voluntarily manifest their full admission of the truth and veracity of
the entirety of Pars. 1 to 9 of the Third-Party Complaint, and that the defendants/third-party plaintiffs are entitled
to the legal benefit of indemnity or subrogation, as against the herein third-party defendants, under Sec. 12, Rule 6
of the Rules of Court.[6]
Although he was already the counsel of the petitioners, Atty. Manuel J. Laserna, Jr. entered his appearance as
counsel of the Spouses Gregorio.[7] The latter, with the assistance of Atty. Laserna, Jr., likewise, filed a motion for
intervention and filed their Answer-In-Intervention in which they alleged that the respondents were able to secure
a sales patent over the residential lot in question through fraud and deceit; and prayed that the complaint be
dismissed.[8]
On November 12, 1992, the trial court issued an Order granting the motion of the Spouses Gregorio to
intervene and admitting their Answer-in-Intervention. The trial court also granted the respondents motion to
strike off the appearance of Atty. Laserna, Jr. as counsel of the Spouses Gregorio as he was already the petitioners
counsel of record. The trial court, however, no longer resolved the motion of the petitioners for leave to file a
third-party complaint against the Spouses Gregorio.

The Evidence for the Respondents

On February 22, 1961, respondent Alfonso Abagat, then single, filed a sales application patent over a
residential lot, particularly Lot 11, Block 15, Bagong Isla Subd., Baclaran, Paraaque, Rizal, Philippines.[9] He built a
house thereon and declared the house for taxation purposes beginning 1961. [10]He later paid the realty taxes for
the house for the period of 1969 to 1970.[11]
Pending the processing of his sales patent application, respondent Alfonso Abagat leased the hut to the
Spouses Miguel and Violeta Gregorio at a monthly rental of seventy pesos (P70.00). On January 26, 1973, the
house was destroyed by fire. The Spouses Gregorio, along with the other residents, near the area were evacuated
to the Baclaran Elementary School.
 In light of the certification of the Committee on Resettlement of Baclaran Fire Victims, on February 28, 1973,
the respondents were allowed to return to the property and to build a make-shift house out of the ruins. They
allowed his nephew, Roberto Boy Abagat, to occupy the said house, but for some reason, he left and resettled
somewhere.
In August 1973, the Spouses Gregorio, surreptitiously occupied the abandoned make-shift house of the
respondents. The couple remodeled the make-shift structure into a two-storey house. On April 7, 1977, the
respondents, thru counsel, demanded payment of rental for his house for the period from 1976 to March 977
amounting to P350.00 but Miguel Gregorio offered to pay only the amount of P280.00 which the plaintiffs
refused. On April 25, 1977, Miguel Gregorio wrote respondent Alfonso Abagat that, in view of his persistent refusal
to accept the amount of P280 for the rent covering the period of January to April 1977, he would consign the
amount to the court.[12]
Respondent Alfonso Abagat filed a complaint with the Municipal Trial Court of Paraaque for unlawful detainer
against the Spouses Gregorio, docketed as Civil Case No. 3898. On January 14, 1983, the court rendered a decision
dismissing the case for lack of jurisdiction.[13]
Unknown to Alfonso Abagat, the Spouses Gregorio, as vendors, and the Spouses Edgardo and Cecilia D.
Gonzaga, as vendees, executed a Deed of Conditional Sale over the house for the price of P100,000.00 under the
following terms and conditions:
2 The VENDOR herein hereby acknowledges receipt of the amount of FIFTY THOUSAND PESOS
(P50,000.00), Philippine currency, in cash, from the VENDEE herein, as part and representing the
FIRST DOWNPAYMENT.
3 The VENDEE herein shall remit and pay to the VENDOR herein the amount of TEN THOUSAND PESOS
(P10,000.00), Philippine Currency, in cash, within the month of May, 1984, as part of and
representing the SECOND DOWNPAYMENT of this sale.
4 The VENDOR herein shall apply, file with and work for the issuance, approval and release of the
government order, decree and award of the official ownership over the government land on which
the said house now stands in favor of the VENDOR, after which, the VENDOR herein shall transfer
such right over said government award to and in favor of the VENDEE herein.
5 Upon the approval, release and issuance of such government award, as mentioned in the immediately
preceding paragraph, the VENDEE herein shall remit and pay to the VENDOR herein the amount of
FORTY THOUSAND PESOS (P40,000.00), Philippine Currency, in cash, as part of and representing the
FINAL AND FULL PAYMENT in settlement in full of the obligation of the VENDEE.
6 The VENDOR herein shall see to it that such government award of ownership over the government
land on which the said house now stands shall be made, done and processed by the concerned
government agency with utmost speed and facility.
7 The VENDOR herein shall shoulder all the official and incidental costs and fees relative to the filing and
application for, and the processing of, such government award.[14]
During the period of April 13, 1984 to July 11, 1985, Miguel Gregorio received from the petitioners the total
amount of P55,000.00[15] thereby leaving a balance of P30,000.00. For Miguel Gregorios failure to secure an award
from the government, as agreed upon, they further agreed to reduce the balance of the purchase price of the
house to P25,000.00. Petitioner Edgardo Gonzaga paid to Miguel Gregorio following the latters execution on July
12, 1985 of a Deed of Final and Absolute Sale in favor of Edgardo Gonzaga, under the following terms and
conditions:

1. That the VENDOR shall exert utmost effort, diligence and speed in securing a government award over the said
property for subsequent transfer to the VENDEE within one (1) year from the execution hereof.

2. That all costs and expenses relative to such government award shall be for the account of the VENDOR;

3. That all costs and expenses relative to the execution of this Deed of Final and Absolute Sale shall be for the
account of the VENDOR;

4. That all costs and expenses for the future or subsequent issuance of Torrens Title over the said property shall be
for the account of the VENDEE;

5. That the VENDOR hereby grants and affords the VENDEE a WARRANTY AGAINST EVICTION, and that the
VENDOR shall be liable to the VENDEE for damages that might arise from any false representations as to the prior
validity of her rights, interest, or ownership over the said property. [16]
 When Miguel Gregorio learned that respondent Alfonso Abagat had earlier filed an application for a sales
patent over the property, he and petitioner Edgardo Gonzaga filed a protest in the Bureau of Lands. On January 2,
1986, the Bureau of Lands rendered a decision ordering the dismissal of the protest and granting the application of
respondent Alfonso Abagat for a sales patent. The Spouses Gonzaga were, likewise, ordered to vacate the
property. The decretal portion of the said decision reads:

WHEREFORE, it is ordered that the protest filed by spouses Miguel Gregorio and Violeta Gregorio against the
Insular Government Property Sales Application No. (IV-1) 191 of Alfonso Abagat be as hereby it is, dismissed and
this once, dropped from the records. Protestants and their privies the spouses Edgardo Gonzaga and Cecilia
Gonzaga, are hereby directed to vacate the land in question and remove whatever improvements introduced
thereon within sixty (60) days from a receipt of a copy hereof. The I.C.P.S.A. No. (IV-1) 191 of Alfonso Abagat shall
be given further due course.[17]
After the decision of the Bureau of Lands had become final and executory, respondent Alfonso Abagat filed
motions for execution of the decision and the demolition of the house thereon on August 12, 1986 and February
17, 1987.
On May 22, 1987, the Bureau of Lands issued an Order of Execution directing the District Land Officer:

WHEREFORE, and pursuant to the provisions of Section 1844 of the Revised Administrative Code, as amended by
Act No. 3077, you are hereby enjoined to repair to the premises of the land in question and enforce the
aforementioned decision by ordering the claimants-protestants, their tenants, relatives and all those acting for and
in their behalf to vacate the said land, remove their improvements therefrom and placing the applicant-
respondent in peaceful possession thereof.

In complying herewith, you should set forth the whole proceeding in writing signed by the parties and witnesses, if
possible, and submit the returns to this Office within sixty (60) days from this date to be used as evidence should it
be necessary to institute action, criminal or otherwise, against any party who may refuse to obey the same.

SO ORDERED.[18]
The Director of Lands executed a Deed of Sale over the parcel of land in favor of respondent Alfonso
Abagat[19] who also paid the realty taxes over the property.[20]
Alfonso Abagat made demands to Edgardo Gonzaga to vacate the property in two Letters dated June 17,
1990 and August 8, 1991, but Edgardo Gonzaga refused. On August 19, 1991, Edgardo Gonzaga and Gregorio
executed a Memorandum of Agreement in which they agreed to rescind the deed of conditional sale and the deed
of final and absolute sale they had earlier executed, and that Miguel Gregorio would refund the amount of
P90,000.00 on or before December 15, 1991, and that in the meantime, Edgardo Gonzaga would remain in the
property until his receipt of the said amount.[21]
However, even before Miguel Gregorio could refund the P90,000.00 to petitioner Edgardo Gonzaga, Alfonso
Abagat filed a complaint against the petitioners for recovery of possession with damages in the Regional Trial
Court of Makati.

Evidence for the Petitioners

Unknown to the petitioners, the respondents had filed an application with the Bureau of Lands for a sales
patent over the land. On March 30, 1984 the Spouses Gregorio, as vendors, and the petitioners as vendees,
executed a deed of conditional sale over the house for P100,000.00, payable on installment basis.

The Decision of the Trial Court

On October 10, 1994, the trial court rendered judgment in favor of the respondents and against the
petitioners and intervenors. The fallo of the decision reads:

WHEREFORE, judgment is hereby rendered as follows:

1. Ordering defendants-spouses Gregorios and Gonzagas and all persons claiming rights under them to vacate the
premises at Lot 11, Block 15 located at No. 2063 Bagong Sikat, Paraaque, Metro Manila, and for defendants-
spouses Gregorios to demolish at their own expense, the house constructed thereon;

2. Ordering defendants-Gregorios to pay plaintiffs the amount of P45,000.00 representing unearned rentals on
subject premises from March, 1984 up to October 1991, and P500.00 land rental every month thereafter;
3. Ordering defendants-spouses Gonzagas and Gregorios jointly and severally to pay plaintiffs the amount
of P10,000.00 as attorneys fees; and

4. Ordering defendants-spouses Gregorios and Gonzagas jointly and severally to pay plaintiffs the costs of suit. [22]
The intervenors did not appeal the decision. The petitioners appealed the decision to the Court of Appeals,
contending that:

e. Assuming arguendo that plaintiffs now have the right to compel defendants to remove their house on the
questioned land, should not the third-party defendants spouses Gregorio be mandated to REFUND the purchase
price paid by defendants/3rd-party plaintiffs plus damages arising out of this case to which defendants were
implicated by reason of spouses Gregorios failure to comply with their 1984 and 1985 agreements with
defendants/3rd party plaintiffs?

In such a scenario, spouses Gregorio have the legal duty to refund spouses Gonzaga the purchase price the latter
paid to the former in 1984 and to answer for all damages that spouses Gonzaga may sustain by reason of any
judgment in favor of plaintiffs against defendants.

It will be noted that third-party defendants spouses Gregorio have filed a voluntary Appearance and a
Manifestation admitting the truth and fairness of the Third-Party Complaint filed by defendants spouses Gonzaga
against them.[23]
The CA affirmed the decision of the trial court on December 19, 1997. The dispositive portion of the decision
reads:

WHEREFORE, finding no reversible error afflicting it, the appealed Decision is hereby AFFIRMED. No
pronouncement as to costs.[24]
On the plea of the petitioners that the trial court should have ordered the intervenors to refund to them
the P90,000.00 the latter had received as payment for the house, the appellate court ruled that a separate
complaint should have been filed against the Spouses Gregorio, instead of appealing the decision of the trial court.
Dissatisfied, the Petitioners filed the instant petition, raising the sole question of whether or not the RTC and
the CA erred in not ordering the intervenors to refund to them the P90,000.00 they had paid for the house and
which the latter promised to do so under their Memorandum of Agreement.
The petitioners aver that in the light of the admission made by the intervenors in their pleadings in the trial
court, including their Answer to the third-party complaint and their urgent motion for intervention, that they were
liable to the petitioners for any judgment for damages adjudged by the trial court in favor of the respondents, the
trial court should have ordered the intervenors to refund to them the aforesaid amount of P90,000.00. The
petitioners assert that while the trial court did not rule on their motion for leave to file a third-party complaint
against the Spouses Gregorio, the caption of the Order dated March 8, 1993, included the Spouses Gregorio as
intervenors and third-party defendants.[25] The petitioners aver that the interest of substantial justice and the
avoidance of multiplicity of suits should likewise be considered by the Court.
In their comment on the petition, the respondents aver that the liability of the intervenors to the petitioners
in the Memorandum of Agreement is personal. Since they were not privies to the Agreement, the respondents
contend that the claim for refund of the petitioners against the intervenors must be presented in a separate action
against the latter. Moreover, the respondents insist that the petitioners did not pray, in their third-party
complaint, for the refund by the Spouses Gregorio of the amount of P90,000.00. Hence, the respondents assert,
even if the trial court had granted leave to the petitioners to file a third-party complaint against the Spouses
Gregorio and admitted the said complaint, the petitioners would not have been entitled to a refund of the said
amount.
The petition has no merit.
We agree with the petitioners that a judgment should be complete by itself. It should not leave open any
judicial question to be determined by others.[26] The Court is to dispose finally of the litigation so as to preclude
further litigation between the parties on the same subject matter thereby avoiding a multiplicity of suits between
the parties and their privies and successors-in-interests. However, the Court has no authority to roam at will and
grant relief to the parties prescinding from their pleadings and prayers. The rule is that a party is entitled only to
such relief consistent with and limited to that sought by the pleadings or incidental thereto. A trial court would be
acting beyond its jurisdiction if it grants relief to a party beyond the scope of the pleadings. [27] Moreover, the right
of a party to recover depends, not on the prayer, but on the scope of the pleadings, the issues made and the law. A
judgment which determines questions not within the courts jurisdiction, because not in issue, is, to that extent,
void.[28] There is no principle better established than that what is not juridically presented cannot be juridically
decided.[29] Also, where a party has prayed only for specific relief or reliefs as to a specific subject matter, usually
no different relief may be granted.[30] A judgment which grants reliefs of a character not sought is void. [31]
Where a prayer for general relief is added to the demand of specific relief, the court may grant such other
appropriate relief as may be consistent with the allegations and proofs. [32]
In this case, the petitioners failed to file any pleading against the Spouses Gregorio for the enforcement of
the deed of conditional sale, the deed of final and absolute sale, and the Memorandum of Agreement executed by
them. The petitioners filed their motion for leave to file a third-party complaint against the intervenors, the
Spouses Gregorio, and appended thereto their third-party complaint for indemnity for any judgment that may be
rendered by the court against them and in favor of the respondents. However, the petitioners did not include in
their prayer that judgment be rendered against the third-party defendants to refund the P90,000.00 paid by them
to the Spouses Gregorio. Worse, the court denied the petitioners motion. The petitioners failed to assail the trial
courts order of denial in the appellate court. Even after the trial court had granted leave to the Spouses Gregorio
to intervene as parties-defendants and the latter filed their Answer-in-Intervention, the petitioners failed to file a
cross-claim against the intervenors for specific performance for the refund of the P90,000.00 they had received
from the petitioners under their deed of conditional sale, the deed of final and absolute sale and the
memorandum of agreement and pay filing and docket fees therefor. Hence, the trial court had no jurisdiction to
render judgment in favor of the petitioners ordering the intervenors to refund the P90,000.00 to them. In fine, if
the trial court had rendered judgment in favor of the petitioners by ordering the enforcement of the deeds
executed by the parties and directing the intervenors to refund the P90,000.00 paid by the petitioners for the
house on the subject property, the court a quo would have acted beyond its authority.
We agree that the intervenors admitted their liability for the payment of P90,000.00 in their Answer to the
Third-Party Complaint of the petitioners. However, the said answer was of no legal consequence because the court
denied the motion of the petitioners for leave to file a third-party complaint against the intervenors. Moreover,
the intervenors, it appears, were inveigled by the petitioners to engage their lawyer, Atty. Laserna, Jr. as their
counsel as intervenors, which the trial court rejected.
The petitioners did not raise in their pleadings the issue of their entitlement to the said refund. [33] The only
issues raised by the petitioners in their Pre-Trial Brief are the following:
1. Who owns the house constructed in 1973 by the Sps. Gregorio using their own funds and at their own
expense at 2063 Bagong Sikat St., Baclaran, Paraaque, Metro Manila?
2. Who owns the parcel of lot located at 2063 Bagong Sikat St., Baclaran, Paraaque, Metro Manila?
3. Who has the right of possession of the house and/or lot mentioned above, or both?
4. May the plaintiff legally demand the defendants to vacate the lot in question and demolish the
subject house at the latters expense?
5. Was there gross bad faith and value on the part of the defendants in refusing to vacate the lot in
question and to demolish the subject house?[34]
On the other hand, the reliefs prayed for by the petitioners are as follows:

X. Reiteration of the Defendants Prayer:

In consideration of the foregoing, defendants respectfully pray for them:

1. Dismissal of the Complaint for lack of merit
2. Awarding in favor of the defendants moral damages for the undue
harassment and loss of reputation continuously experienced by the defendants as well as the
mental anguish suffered by the defendants because of the acts of the plaintiffs.
3. Order plaintiffs to pay costs of suit.[35]
The petitioners did not include in their Pre-Trial Brief a prayer for the refund of the amount of P90,000.00 to
be made by the intervenors.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED DUE COURSE. The assailed decision and resolution
of the Court of Appeals are AFFIRMED. Costs against the petitioners.
SO ORDERED.
 Republic of the Philippines
Supreme Court

THIRD DIVISION

PABLO D. ACAYLAR, JR., G.R. No. 176995

Petitioner,
Present:

YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
- versus -
NACHURA, and
REYES, JJ.

Promulgated:
DANILO G. HARAYO,
Respondent. July 30, 2008
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the Revised Rules of Court filed by
petitioner Pablo D. Acaylar, Jr., seeking the reversal and the setting aside of the Resolutions [2] dated 28 July
2006 and 30 January 2007 of the Court of Appeals in CA-G.R. SP No. 01077-MIN. The appellate court, in its assailed
Resolution dated 28 July 2006, dismissed petitioners Petition for Review on Certiorari therein on technical grounds;
thus, it affirmed the Decision dated 20 January 2006 of the Regional Trial Court (RTC) of Dipolog City, Branch 9,
in Civil Case No. 6087, which, in turn, affirmed the Decision [3] dated 28 March 2005 of the Municipal Trial Court in
Cities (MTCC) of Dapitan City, in Civil Case No. 622, awarding possession of the subject property to respondent
Danilo G. Harayo on the ground that he is the lawful possessor thereof. In its assailed Resolution dated 30 January
2007, the Court of Appeals refused to reconsider its earlier Resolution of 28 July 2006.
The subject property is a parcel of land designated as Lot 741-B-1 situated in Tolon, Potungan, Dapitan City, with
an area of 30,000 square meters, described and bounded as follows:

Lot 741-B-1 of the Sketch Plan, situated at Tolon, Potungan, Dapitan City, containing an area of
30,000 square meters, bounded on the N., by Tolon River; on the South by Lot 741-A; on the E by
Lot 741-B-2; and on the West by the Municipal Road, and embraced in OCT No. (P-14969)-
1119.[4]

In his Complaint filed with the MTCC, and docketed as Civil Case No. 622, respondent alleged that he
acquired the subject property from the spouses Pablo Acaylar, Sr., and Zoila Dangcalan Acaylar (the spouses
Acaylar) by virtue of a Deed of Sale executed on 14 September 2004. On the same day, respondent took
possession of the subject property. On 19 September 2004, one of the spouses Acaylars sons, the petitioner, using
strategy, intimidation, threats and stealth, entered the subject property, cut the tall grasses in the coconut
plantation therein, gathered the fallen coconuts and other fruits, and pastured his cows and other animals
thereon.[5]

In his Answer, petitioner countered that the subject property claimed by respondent is a portion of the
entire property owned by petitioners parents, the spouses Acaylar, with a total area of 59,775 square
meters. Petitioner is in possession of his parents entire property since 1979 as administrator thereof. He built his
house on the property and farmed the land. Respondent cannot definitively claim which portion of the entire
property he was able to buy from the spouses Acaylar since the same was not clearly delineated. [6] In addition,
petitioner, together with his sisters, Rosario Acaylar Herrera and Asteria Acaylar, already filed against respondent
and his spouse Beatriz Harayo a case for annulment of the Deed of Sale dated 14 September 2004, with prayer for
preliminary injunction and damages, presently pending before the RTC, Branch 6.

During the Pre-Trial Conference held before the MTCC on 17 February 2005, the parties stipulated that
the spouses Acaylar sold to respondent only a 30,000-square-meter portion of their entire property; and that there
is a pending civil case before the RTC on the validity of the sale of the subject property.

Among the pieces of evidence presented by respondent before the MTCC was an Affidavit of Zoila Acaylar
(First Affidavit) attesting that she sold the subject property to respondent for consideration and she did not give
petitioner authority to either administer or remain on her and her husbands property.

After trial, the MTCC rendered a Decision[7] on 28 March 2005, awarding to respondent the possession of
the subject property. The MTCC gave credence to respondents claim that he took immediate possession of the
subject property after the execution of the Deed of Sale but was ousted therefrom by petitioner who invoked the
alleged authority granted to him by Zoila Acaylar as the administrator of the unsold portion of her and her
husbands property. The MTCC referred to the First Affidavit executed by Zoila Acaylar wherein she refuted that she
gave petitioner authority or designated him as the administrator of her and her husbands property. Zoila Acaylar
further admitted therein that the subject property was already sold to respondent. For lack of any legal right to
remain on the subject property, the MTCC adjudged that petitioners possession of the same was illegal. The
dispositive portion of the MTCC Decision reads:

WHEREFORE, judgment is hereby rendered, by preponderance of evidence in favor of

the [herein respondent] as against the [herein petitioner], and hereby orders:

(1) For [petitioner] and all other persons who may have derived rights from him to
vacate lot 741-B-1 containing an area of 30,000 square meters as shown in the sketch plan
prepared by Christopher Palpagan and turn over peaceful possession thereof to [herein
respondent];

(2) For [petitioner] to pay [respondent] the amount of P5,000.00 as attorneys fees
and P 1,591.25 as costs of the suit.

All other claims and counterclaims are hereby dismissed for lack of merit.[8]

On appeal, docketed as Civil Case No. 6087, the RTC promulgated its Decision[9] dated 20 January
2006 affirming the award of possession in favor of respondent after finding that the appealed MTCC Decision was
based on facts and law on the matter.The RTC declared that the sale of the subject property by the spouses
Acaylar to respondent vested ownership and possession of said property in the latter. Thus, petitioners acts of
entering the subject property, cutting the tall grasses and gathering the agricultural products therein, constitute
forcible entry, which gave rise to an action for ejectment. The RTC decreed:

WHEREFORE, premises considered, [the RTC] finds by preponderance of evidence that

[herein respondent] is in physical possession of the [subject property] that is on September 14,
 2004 prior to the [herein petitioner] on September 19, 2004 and therefore affirms the decision of
the Municipal Trial Court in the City of Dapitan without modification.[10]

Banking on another Affidavit (Second Affidavit) executed by Zoila Acaylar, in which she recanted the statements
she made in her First Affidavit denying that she designated petitioner as the administrator of her and her husbands
property, petitioner moved for the reconsideration of the 20 January 2006 Decision of the RTC. The RTC, however,
issued a Resolution[11] dated 18 April 2006 denying petitioners Motion for Reconsideration.

Consequently, petitioner filed a Petition for Review on Certiorari[12] with the Court of Appeals where it
was docketed as CA-G.R. SP No. 01077-MIN. Petitioner argued in his Petition that the RTC gravely erred in ruling
that respondent was in prior possession of the subject property based solely on the Deed of Sale executed by the
spouses Acaylar in respondents favor. Petitioner also asserted therein that the RTC gravely abused its discretion
when it did not give credence to the Second Affidavit executed by Zoila Acaylar. [13]

On 28 July 2006, the Court of Appeals issued a Resolution [14] dismissing outright CA-G.R. SP No. 01077-
MIN for failure of petitioner to avail himself of the correct remedy under the law. Petitioner should have filed
a Petition for Review under Rule 42 of the Revised Rules of Court, the proper remedy to appeal the adverse
decisions rendered by the RTC in its appellate capacity. Instead, petitioner erroneously filed a Petition for Review
on Certiorari[15] to assail the 20 January 2006 Decision and 8 April 2006Resolution of the RTC in Civil Case No.
6087. The Court of Appeals also noted non-compliance by petitioner and his counsel with several more
requirements for filing a petition with the Court of Appeals, namely: (a) shortage in the payment of the docket
fees; (b) failure of petitioners counsel to indicate the place of issue of his Integrated Bar of the Philippines (IBP)
number and his complete address; (3) failure of petitioner to furnish the appellate court which rendered the
assailed decision, in this case the RTC, a copy of the Petition; and (4) failure of the Petition to state the material
dates.

The Court of Appeals, in a Resolution[16] dated 30 January 2007, denied for lack of merit the Motion for
Reconsideration interposed by petitioner. The appellate court, however, excused the mistake of petitioner in the
designation of the pleading as a Petition for Review on Certiorari, since it was clear from petitioners Motion for
Extension to file Petition for Review that he wished to avail himself of the remedy provided under Rule 42 of the
Revised Rules of Court.

Petitioner is now before this Court via the Petition at bar, making the following assignment of errors:

I.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DENYING THE PETITION DESPITE
ADEQUATE EXPLANATION SUBMITTED BY THE PETITIONER ON THE TECHNICALITIES ASSIGNED TO
THE PETITIONER;

II.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN READING SHORT THE GIST OF THE
PETITION WHEN IT RULED THAT SPECIFIC MATTERS INVOLVED IN THE CASE WERE INDICATED IN
THE PETITION;

III.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RULING THAT ANNEXES WERE NOT
ATTACHED WHEN THEY ARE DULY ATTACHED;
 IV.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FAILING TO EVALUATE THE PROPRIETY
(SIC) FORCIBLE ENTRY CASE WHICH IS THE ORIGINAL ACTION INVOLVED IN THIS CASE VIS--
VIS UNLAWFUL DETAINER.[17]

The Court first addresses the procedural issues involved in the present case.

The Court of Appeals pointed several procedural defects of petitioners Petition for Review
therein. Petitioners payment of docket fees was short of P500.00. It is also evident after a perusal of the records
that petitioner failed to indicate in his Petition with the Court of Appeals the material dates to establish when he
received notice of the assailed RTC Decision and when he filed his motion for reconsideration thereof with the RTC,
as required by Section 2, Rule 42[18] of the Revised Rules of Court. Petitioner further failed to set forth concisely a
statement of the matters involved in the case in accordance with the same provision. Finally, petitioner did not
furnish the RTC, the court which rendered the assailed decision, a copy of the Petition he filed with the Court of
Appeals.[19]

Petitioner, however, submits that he raised meritorious arguments in his Petition with the Court of
Appeals and, thus, the dismissal thereof on a mere technicality would cause a miscarriage of justice. The petitioner
invokes considerations of substantial justice and prays that this Court give his Petition due course and set aside the
Court of Appeals Resolutions dated 28 July 2006 and 30 January 2007 in CA-G.R. SP No. 01077-MIN.

Respondent counters that the Court of Appeals did not commit any reversible error in dismissing the
Petition in CA-G.R. SP No. 01077-MIN and adopted the discussion of the appellate court in his Memorandum.

In appealed cases, failure to pay the docketing fees does not automatically result in the dismissal of the
appeal; the dismissal is discretionary on the part of the appellate court. [20] Section 5, Rule 141 of the Revised Rules
of Court provides that If the fees are not paid, the court may refuse to proceed with the action until they are paid
and may dismiss the appeal or the action or proceedings. Petitioner explained in his Motion for Reconsideration
before the Court of Appeals that he relied in good faith on the computation provided by the Clerk of Court of
Zamboanga with whom he inquired as regards the amount of docket fees due. He had previously paid P4,030.00
and was short of only P500.00, which he also immediately paid upon being informed of the deficiency. Given the
circumstances, petitioner should have been granted leniency by the Court of Appeals on this matter.

We also agree with the petitioner that failure to state the material dates is not fatal to his cause of action,
provided the date of his receipt, i.e., 9 May 2006, of the RTC Resolution dated 18 April 2006 denying his Motion for
Reconsideration is duly alleged in his Petition.[21] In the recent case of Great Southern Maritime Services
Corporation v. Acua,[22] we held that the failure to comply with the rule on a statement of material dates in the
petition may be excused since the dates are evident from the records. The more material date for purposes of
appeal to the Court of Appeals is the date of receipt of the trial courts order denying the motion for
reconsideration.[23] The other material dates may be gleaned from the records of the case if reasonably
evident.[24]

Likewise excusable is petitioners failure to strictly follow the required form for presenting the facts
and law of his case before the Court of Appeals. His Petition before the appellate court consists of only five
pages, presenting concisely enough the facts and law supporting his case.

With respect to petitioners failure to furnish the RTC a copy of his Petition with the Court of Appeals, this
Court found upon examination of the records that petitioner had already complied with such requirement. [25]
 Accordingly, the parties are now given the amplest opportunity to fully ventilate their claims and defenses
brushing aside technicalities in order to truly ascertain the merits of this case. Indeed, judicial cases do not come
and go through the portals of a court of law by the mere mandate of technicalities. [26] Where a rigid application of
the rules will result in a manifest failure or miscarriage of justice, technicalities should be disregarded in order to
resolve the case. In Aguam v. Court of Appeals,[27] we ruled that:

The court has [the] discretion to dismiss or not to dismiss an appellant's appeal. It is a power
conferred on the court, not a duty. The "discretion must be a sound one, to be exercised in
accordance with the tenets of justice and fair play, having in mind the circumstances obtaining in
each case." Technicalities, however, must be avoided. The law abhors technicalities that impede
the cause of justice. The court's primary duty is to render or dispense justice. "A litigation is not a
game of technicalities." "Law suits, unlike duels, are not to be won by a rapier's thrust.
Technicality, when it deserts its proper office as an aid to justice and becomes its great hindrance
and chief enemy, deserves scant consideration from courts." Litigations must be decided on their
merits and not on technicality. Every party litigant must be afforded the amplest opportunity for
the proper and just determination of his cause, free from the unacceptable plea of technicalities.
Thus, dismissal of appeals purely on technical grounds is frowned upon where the policy of the
court is to encourage hearings of appeals on their merits and the rules of procedure ought not to
be applied in a very rigid, technical sense; rules of procedure are used only to help secure, not
override substantial justice. It is a far better and more prudent course of action for the court to
excuse a technical lapse and afford the parties a review of the case on appeal to attain the ends
of justice rather than dispose of the case on technicality and cause a grave injustice to the
parties, giving a false impression of speedy disposal of cases while actually resulting in more
delay, if not a miscarriage of justice.

In this case, the Court finds that petitioners procedural lapses are forgivable and opts to dispose the
instant Petition on its merits rather than remand the case to the appellate court, a remand not being necessary
where, as in the instant case, the ends of justice would not be served thereby and we are already in a position to
resolve the dispute based on the records before us.

We now proceed to discuss the merits of the case.

Relevant in the case at bar is Section 1, Rule 70 of the Revised Rules of Court which provides:

SECTION 1. Who may institute proceedings, and when. Subject to the provisions of the
next succeeding section, a person deprived of the possession of any land or building by force,
intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against
whom the possession of any land or building is unlawfully withheld after the expiration or
termination of the right to hold possession, by virtue of any contract, express or implied, or the
legal representatives or assigns of any such lessor, vendor, vendee, or other person, may, at any
time within one (1) year after such unlawful deprivation or withholding of possession, bring an
action in the proper Municipal Trial Court against the person or persons unlawfully withholding
or depriving of possession, or any person or persons claiming under them, for the restitution of
such possession, together with damages and costs.

Under the above provision, there are two entirely distinct and different causes of action, to wit: (1) a case
for forcible entry, which is an action to recover possession of a property from the defendant whose occupation
thereof is illegal from the beginning as he acquired possession by force, intimidation, threat, strategy or stealth;
and (2) a case for unlawful detainer, which is an action for recovery of possession from defendant whose
possession of the property was inceptively lawful by virtue of a contract (express or implied) with the plaintiff, but
became illegal when he continued his possession despite the termination of his right thereunder. [28]
 The distinctions between the two forms of ejectment suits, are: first, in forcible entry, the plaintiff must
prove that he was in prior physical possession of the premises until he was deprived thereof by the defendant,
whereas, in unlawful detainer, the plaintiff need not have been in prior physical possession; second, in forcible
entry, the possession of the land by the defendant is unlawful from the beginning as he acquires possession
thereof by force, intimidation, threat, strategy or stealth, while in unlawful detainer, the possession of the
defendant is inceptively lawful but it becomes illegal by reason of the termination of his right to the possession of
the property under his contract with the plaintiff; third, in forcible entry, the law does not require a previous
demand for the defendant to vacate the premises, but in unlawful detainer, the plaintiff must first make such
demand, which is jurisdictional in nature.[29]

The above distinctions, more importantly the nature of defendants entry into the property, are material
to the present case in order to ascertain the propriety of respondents action for forcible entry filed before the
MTCC. It bears to stress that it is the nature of defendants entry into the land which determines the cause of
action, whether it is forcible entry or unlawful detainer. If the entry is illegal, then the action which may be filed
against the intruder is forcible entry. If, however, the entry is legal but the possession thereafter becomes illegal,
the case is unlawful detainer.[30]

In the case at bar, respondent filed an action for forcible entry before the MTCC. Respondent alleged that
he took possession of the subject property immediately after the spouses Acaylar executed a Deed of Sale thereof
in his favor on 14 September 2004, but was forcibly deprived thereof by petitioner. A case for forcible entry,
therefore, is proper since petitioners entry into the subject property is already illegal at its incipience.

Petitioner, on the other hand, harps on the fact that he was in possession of the subject property since
1979, having built his house thereon and farmed the land, and it was impossible for him to wrest possession of the
subject property from respondent, for he was already occupying the same way before its alleged sale to
respondent. Petitioner, thus, maintains that his possession over the subject property is lawful from the start, as he
was authorized by Zoila Acaylar to administer the same, making respondents suit for forcible entry before the
MTCC the wrong remedy.

In a long line of cases,[31] this Court reiterated that the fact of prior physical possession is an indispensable
element in forcible entry cases. The plaintiff must prove that he was in prior physical possession of the premises
long before he was deprived thereof by the defendant.[32] It must be stressed that plaintiff cannot succeed where it
appears that, as between himself and the defendant, the latter had possession antedating his own. To ascertain
this, it is proper to look at the situation as it existed long before the first act of spoliation occurred in order to
intelligibly determine whose position is more in accord with the surrounding circumstances of the case and the
applicable legal principles. Such determination in this case requires a review of factual evidence, generally
proscribed in a petition like this. However, where the factual findings of the courts a quo are contrary to each
other, this Court may intervene to resolve the conflict and settle the factual issues raised by the parties. [33]

In the instant Petition, the MTCC cited Zoila Acaylars First Affidavit in which she attested that she did not
appoint or designate petitioner as administrator of her and her husbands property, and that she gathered the
coconuts and harvested other crops from the property by employing farm workers. Since petitioner was never in
possession of the subject property, then the MTCC concluded that respondent had taken possession of the same
from the spouses Acaylar right after its purchase. The RTC, on the other hand, expressly recognized that petitioner
possessed the subject property, but his possession was merely tolerated by his parents, and that respondent, as
purchaser of the subject property from the parents, the spouses Acaylar, had better right to the possession of the
same. Thus, as to whether petitioner had actual or physical possession of the subject property prior to respondent
is a factual issue which we are called upon to resolve, considering that the courts below had contradicting findings.

After careful and thorough recalibration and re-examination of the evidence available on record, we find
that petitioner had physical possession of the subject property prior to and at the time of its sale by the spouses
Acaylar to respondent. It is actually irrelevant whether petitioner possessed the subject property as the
administrator thereof. As the son of the spouses Acaylar, he could very well enter into possession of the subject
property either with the express permission or at the tolerance of his parents who owned the property. Petitioner
alleged, and respondent did not dispute, that petitioner had entered into possession of his parents property as
early as 1979, and he even built his house thereon. Although Zoila Acaylar may have attested in her First Affidavit
that she did not appoint or designate petitioner as the administrator of her and her husbands property, she never
claimed that petitioner unlawfully or illegally entered her property when he built his house thereon.

We are not persuaded by respondents assertion that after he took possession of the subject property
from the Zoila spouses, petitioner entered the subject property on a whim, for not only does such postulation lack
clear, positive, and convincing evidentiary support, but also because it is illogical and contrary to common human
experience. A person would not, for a reason so shallow as a whim, encroach upon anothers property and gather
fruits and other agricultural products therefrom, thereby risking criminal prosecution and civil liabilities. The more
plausible and logical scenario would be that petitioner was already occupying the subject property prior to the
sale. Petitioner, in gathering the coconut fruits and other crops, cutting grasses, and domesticating animals on the
subject property, even after its sale to respondent on 14 September 2004, was only continuing to exercise acts of
possession over the subject property as he had done in years before.

Moreover, we note that the subject property was sold to respondent and he supposedly took possession
thereof on 14 September 2004; and that petitioner allegedly forced his way into the property on 19 September
2004. This would mean that respondent, after taking over possession of the subject property from petitioners
parents, possessed the subject property for only five days before being deprived thereof by the petitioner. The
very short period when respondent purportedly possessed the subject property renders said possession suspect. It
is not clear to us how petitioner took actual possession of the subject property on 14 September 2004. Neither are
we enlightened on the manner in which respondent exercised or demonstrated his physical or material possession
over the subject property for the five days before he was reputedly ousted therefrom by petitioner.

Both the MTCC and the RTC decided in favor of petitioner since they considered him to have been vested
with possession of the subject property by virtue of the execution of the Deed of Sale on 14 September
2004. However, such a ruling violates one of the most basic doctrines in resolving ejectment cases. We had long
settled that the only question that the courts must resolve in ejectment proceedings is - who is entitled to the
physical or material possession of the property, that is, possession de facto; and they should not involve the
question of ownership or of possession de jure, which is to be settled in the proper court and in a proper
action.[34] As we elucidated in the recent case of Sudaria v. Quiambao[35]:

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. 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. 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. To repeat, the only issue that the court has to settle in an
ejectment suit is the right to physical possession.

Hence, the Deed of Sale conferring ownership of the subject property upon respondent is clearly irrelevant in the
case presently before us. The Deed of Sale did not automatically place respondent in physical possession of the
subject property. It is thus incumbent upon respondent to establish by evidence that he took physical possession
of the subject property from the spouses Acaylar on 14 September 2004 and he was in actual possession of the
said property when petitioner forcibly entered the same five days later.

The conflicting Affidavits of Zoila Acaylar, notwithstanding, we find that petitioner was in peaceful
possession of the subject property prior to its sale to respondent. Even if petitioner was not authorized by Zoila
Acaylar to possess the subject property as administrator, his possession was not opposed and was, thus, tolerated
by his parents. As we ruled in Arcal v. Court of Appeals[36]:

The rule is that possession by tolerance is lawful, but such possession becomes
unlawful upon demand to vacate made by the owner and the possessor by torelance refuses to
comply with such demand. A person who occupies the land of another at the latters tolerance or
permission, without any contract between them, is necessarily bound by an implied promise that
he will vacate upon demand, failing which, a summary action for ejectment is the proper remedy
against him. The status of the possessor is analogous to that of a lessee or tenant whose term of
lease has expired but whose occupancy continued by tolerance of the owner. In such case, the
unlawful deprivation or withholding of possession is to be counted from the date of the demand
to vacate.

In the instant case, there is no showing that either Zoila Acaylar or respondent made an express demand
upon petitioner to vacate the subject property. In the absence of an oral or written demand, petitioners
possession of the subject property has yet to become unlawful. The absence of demand to vacate precludes us
from treating this case, originally instituted as one for forcible entry, as one of unlawful detainer, since demand to
vacate is jurisdictional in an action for unlawful detainer.[37]

In conclusion, since petitioner was in prior physical possession of the subject property, respondent has no cause of
action against petitioner for forcible entry. Neither can we treat respondents case against petitioner as one for
unlawful detainer absent the jurisdictional requirement of demand to vacate made upon petitioner. However, our
dismissal of respondents Complaint herein against petitioner is without prejudice to respondents filing of the
appropriate remedy under the law to acquire possession of the subject property, as well as to the resolution of the
civil case pending with the RTC, Branch 6, for the annulment of the Deed of Sale dated 14 September 2004.

WHEREFORE, premises considered, the instant Petition is GRANTED. The Decision dated 28 July 2006 of
the Court of Appeals and its Resolution dated 30 January 2007 in CA-G.R. SP No. 01077-MIN are REVERSED and
SET ASIDE, and the Complaint of respondent Danilo G. Harayo against petitioner Pablo D. Acaylar before
the Municipal Trial Court in Cities of Dapitan City, in Civil Case No. 622, is DISMISSED, without prejudice. No costs.

SO ORDERED.
 Republic of the Philippines
Supreme Court

SECOND DIVISION

ROSA J. SALES, EARL RYAN G.R. No. 171678

CHENG and EMIL RALPH CHENG,
Petitioners, Present:

QUISUMBING, J., Chairperson,

- versus - CARPIO MORALES,
TINGA,
VELASCO, JR., and
AZCUNA,* JJ.

WILLIAM BARRO, Promulgated:

Respondent.
December 10, 2008
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

QUISUMBING, J.:

For review on certiorari is the Decision[1] dated January 3, 2006 of the Court of Appeals in CA-G.R. SP
No. 90381, which reversed the Decision[2] dated March 10, 2005 of the Regional Trial Court (RTC) of Manila, Branch
39, in Civil Case No. 04-111243.

The facts are as follows:

This case originated from the ejectment complaint filed by the petitioners against the respondent, his
wife, and all persons claiming rights under them before Branch 28 of the Metropolitan Trial Court (MeTC)
of Manila. In their complaint,[3] the petitioners alleged among others that (1) they are owners of the lot described
and embraced in Transfer Certificate of Title (TCT ) No. 262237 [4] of the Registry of Deeds of the City of Manila; (2)
the respondent constructed a shanty thereon without their consent; (3) the respondent and his co-defendants
have not been paying any rent to the petitioners for their occupation thereof; (4) the respondent and his co-
defendants refused the formal demand made by the petitioners for them to vacate the subject lot; and (5) the
Office of the Barangay Captain of Barangay 464, Zone 46, 4th District, Manila issued the necessary Certification to
File Action.[5]

In his answer, the respondent denied the allegations of the complaint, and essentially claimed that (1) his
construction of the temporary makeshift house on the lot was tolerated by the petitioners, considering that he
acted as the caretaker thereof; and (2) he does not remember receiving any demand letter and summons from
the barangay and so he was surprised to know that an ejectment complaint was filed against him.[6]

In its Decision[7] dated September 27, 2004, the MeTC found in favor of the petitioners. It held that the
respondent, his wife, and all persons claiming rights under them, being possessors by tolerance, can be validly
ejected from the lot at any time and after due notice. It then directed them to vacate the lot, pay P5,000 a month
from January 2004 up to such time that the lot is actually turned over to the petitioners, and pay P10,000 as
attorneys fees.

The respondent appealed to the RTC which affirmed in toto the assailed MeTC decision.
 Unfazed by the decision of the RTC, the respondent elevated the case to the Court of Appeals. After
finding the complaint to be substantially lacking in the requisite allegations that would make out a case either for
forcible entry or unlawful detainer,[8]the Court of Appeals reversed the RTC decision and accordingly dismissed the
petitioners complaint. The dispositive portion of the Court of Appeals decision reads:

WHEREFORE, premises considered, we hereby GRANT the petition on the basis of the
lower tribunals lack of jurisdiction, and accordingly DISMISS respondents ejectment complaint.

SO ORDERED.[9]

The petitioners moved for reconsideration, but the Court of Appeals denied the motion. Hence, this
petition on the following grounds:

I.
WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN DISMISSING
PETITIONERS EJECTMENT COMPLAINT ON THE ALLEGED GROUND THAT THE COMPLAINT FAILED
TO STATE THE JURISDICTIONAL FACT OF PRIOR PHYSICAL POSSESSION.

II.
WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN NOT RULING
THAT THE RESPONDENT WAS IN ESTOPPEL FROM QUESTIONING THE JURISDICTION OF THE
METROPOLITAN TRIAL COURT ASSUMING, WITHOUT ADMITTING, THAT THE LOWER COURT HAD
NO JURISDICTION OVER THE COMPLAINT.[10]

Simply put, we are asked to resolve: (1) whether the Court of Appeals correctly dismissed the complaint;
and (2) whether the respondent was already estopped from questioning the jurisdiction of the MeTC.

Anent the first issue, the petitioners argue that the complaint was for unlawful detainer, and hence, there
was no need for them to allege prior physical possession of the lot. They further contend that their position that
the complaint was for unlawful detainer is supported by the claim of the respondent in his answer that he made a
temporary makeshift structure on the lot to serve as his living place and that the same was tolerated by the
petitioners considering that he acted as caretaker of the property.[11]For his part, the respondent insists that the
Court of Appeals was correct in dismissing the complaint.[12]

After carefully examining the averments of the petitioners complaint and the character of the reliefs
sought therein,[13] we hold that the Court of Appeals did not err in finding that the complaint was for forcible entry,
and that the Court of Appeals correctly dismissed it.

There are two reasons why we could not subscribe to the petitioners submission that their complaint was
for unlawful detainer. Firstly, the petitioners own averment in the complaint that the defendant constructed a shanty
in the lot of the plaintiffs without their consent,[14] and the relief asked for by the petitioners that the respondent and
his wife pay the amount of P10,000 a month beginning January 2004 as for reasonable rent of the subject
premises,[15] clearly contradict their claim. It must be highlighted that as admitted by the petitioners in their motion
for reconsideration[16] before the appellate court, and as evidenced by the TCT No. 262237 annexed to the complaint,
the petitioners became owners of the property only on January 6, 2004. By averring that the respondent constructed
his shanty on the lot without their consent and then praying that the MeTC direct the respondent to pay them rent
from January 2004, or from the inception of the respondents occupation of the lot, no other conclusion can be made
except that the petitioners had always considered respondents occupation of the same to be unlawful from the very
beginning. Hence, the complaint can never support a case for unlawful detainer. It is a settled rule that in order to
justify an action for unlawful detainer, the owners permission or tolerance must be present at the beginning of the
possession.[17]

Secondly, the nature of the complaint is neither changed nor dependent upon the allegations and/or defenses
made in the answer. As we had previously stated in Caiza v. Court of Appeals,[18] it is axiomatic that what determines the
nature of an action as well as which court has jurisdiction over it, are the allegations of the complaint and the character
of the relief sought.

As correctly found by the Court of Appeals, what the petitioners actually filed was a fatally defective
complaint for forcible entry, considering that there was no allegation therein regarding the petitioners prior
physical possession of the lot.[19] In Tirona v. Alejo, we held that in actions for forcible entry, two allegations
are mandatory for the municipal trial court to acquire jurisdiction: first, the plaintiff must allege his prior physical
possession of the property; and second, he must also allege that he was deprived of his possession by any of the
means provided for in Section 1,[20] Rule 70 of the Rules of Court, namely, force, intimidation, threats, strategy, and
stealth. [21]

The petitioners allegation that they are the registered owners of the lot miserably falls short of satisfying
the required averment of prior physical possession. As we had clarified and stressed in Tirona, the
word possession as used in forcible entry and unlawful detainer, means nothing more than physical possession, not
legal possession in the sense contemplated in civil law.[22]

Finally, was the respondent already estopped from questioning the jurisdiction of the MeTC to try the
petitioners complaint? The petitioners argue that the respondent is already estopped because the respondent
failed to assail the jurisdiction of the MeTC at the earliest opportunity and actively participated in the proceedings
before it.[23] The respondent counters that he could not be held guilty of estoppel because he questioned in his
answer and pleadings petitioners allegation that he was served a demand letter. By questioning the veracity of the
allegation of the existence of a jurisdictional requirement, he, in effect, questioned the jurisdiction of the MeTC in
trying the case.[24]

It is well-settled that a courts jurisdiction may be raised at any stage of the proceedings, even on
appeal. The reason is that jurisdiction is conferred by law, and lack of it affects the very authority of the court to
take cognizance of and to render judgment on the action.[25] The rule remains that estoppel does not confer
jurisdiction on a tribunal that has none over the cause of action or subject matter of the case.[26] In any event, even
if respondent did not raise the issue of jurisdiction, the reviewing court is not precluded from ruling that it has no
jurisdiction over the case. In this sense, dismissal for lack of jurisdiction may even be ordered by the court motu
proprio.[27]

WHEREFORE, the instant petition is DENIED for lack of merit. Costs against the petitioners.

SO ORDERED.
 Republic of the Philippines
Supreme Court

SECOND DIVISION

G.R. No. 150025

SPS. NARCISO BARNACHEA and JULITA BARNACHEA
(now heirs of deceased Julita Barnachea), Present:
Petitioners,
QUISUMBING, J., Chairperson,
CARPIO MORALES,
- versus - TINGA,
VELASCO, JR., and
BRION, JJ.
HON. COURT OF APPEALS, HON. OSCAR C.
HERRERA, JR., Presiding Judge, RTC Branch 20,
Malolos, Bulacan, HON., HORACIO T. VIOLA,
Presiding Judge, MTC Pulilan, Bulacan, and SPS. Promulgated:
AVELINO and PRISCILLA IGNACIO, July 23, 2008
Respondents.
x ------------------------------------------------------------------------------------------x

DECISION

BRION, J.:

Before us is the Petition for Review by Certiorari filed by the spouses Narciso and Julita
Barnachea[1] (petitioners) against the spouses Avelino and Priscilla Ignacio (respondents), rooted in the ejectment
complaint the respondents filed against the petitioners before the Municipal Trial Court (MTC) of Pulilan,
Bulacan. The petition prays that we nullify the Decision [2] of the Court of Appeals (CA) and its Resolution[3] denying
the motion for reconsideration, and that we suspend the ejectment proceedings in light of a pending action for
quieting of title involving the disputed property.
BACKGROUND FACTS
The respondents filed their complaint for ejectment against the petitioners before the MTC on October
20, 1998. The subject matter of the complaint were lots titled in respondent Avelino Ignacios name (Subdivision
Lot 16 covered by TCT No. 86821, and Subdivision Lot 17 covered by TCT No. 86822), which lots are adjacent to the
property that the petitioners own and occupy. These properties were originally part of a piece of land owned by a
certain Luis Santos and subsequently inherited by his daughter Purificacion Santos Imperial. The land was
subdivided and transferred to tenant-farmers Santiago Isidro (EP No. A-050545 with TCT No. T-188-EP) and
Procopio de Guzman (EP No. 445440 with TCT No. T-185-EP). The property that the petitioners own and occupy
was derived from the land transferred to Santiago Isidro. Respondent Ignacios properties were derived, on the
other hand, from the land originally transferred to Procopio de Guzman.
The complaint was dismissed on December 8, 1999, but was revived on April 5, 2000. The petitioners
received summons on April 13, 2000 and, instead of filing a new Answer, filed on April 18, 2000 a Motion for
Extension of Time to File Answer which the MTC denied on May 5, 2000. The petitioners responded to this denial
by filing a motion for reconsideration on May 23, 2000. Meanwhile, the respondents filed a Motion for the
Issuance of a Writ of Execution dated May 24, 2000, which the petitioners received on May 26, 2000.

To avert the implementation of the writ of execution, the petitioners filed a Notice of Appeal. The MTC issued a
subpoena dated June 5, 2000 setting the hearing on the petitioners Motion for Reconsideration and the
respondents Motion for Issuance of Writ of Execution on June 19, 2000. The petitioners subsequently filed a
Compliance that prayed, among others, that the pending resolution on the incident and the Notice of Appeal be
deemed to have been filed ex abundanti cautela. The respondents, for their part, filed a Manifestation and Motion
praying, among others, that the petitioners Motion for Reconsideration of the May 5, 2000 Order be denied for
being moot and academic.
On July 21, 2000, the MTC issued an order declaring the petitioners Motion for Reconsideration abandoned
because of the Notice of Appeal they previously filed. Thereafter, the MTC forwarded the entire record of Civil
Case No. 818 to the Regional Trial Court, Branch 20 (RTC Branch 20), Malolos, Bulacan. On August 24, 2000,
petitioners submitted their Appeal Memorandum to the RTC Branch 20 which affirmed the MTC decision
on September 20, 2000.

On October 5, 2000, the petitioner Julita's sister, Leticia, representing herself to be the sole owner of EP
No. A-050545 (TCT No. T-188-EP), filed a Petition for Quieting of Title with the Regional Trial Court, Branch 19 (RTC
Branch 19), Malolos, Bulacan, docketed as Civil Case No. 694-M-2000. On October 9, 2000, prior to their receipt of
the RTC Branch 20s September 20, 2000 decision, the petitioners filed an Urgent Motion for the Suspension of
Proceedings (referred to for purposes of this decision as the urgent motion).

RTC Branch 20 denied on October 17, 2000 the petitioners urgent motion and their subsequent Motion
for Reconsideration. The petitioners brought the denials to the CA via a petition for certiorari under Rule 65 of the
Rules of Court on the issue ofwhether the pendency of an action involving the issue of ownership is sufficient
basis for [the] suspension of an ejectment proceeding between the same parties and relating to the same subject
matter.

THE CAS DECISION

The CA denied the petition and the petitioners' subsequent motion for reconsideration, essentially on the
grounds that (1) the issue in an ejectment suit is limited to the physical possession of real property and is separate
and distinct from the issue of ownership and possession de jure that either party may set forth in his or her
pleading; (2) the pendency of an action for reconveyance of title over the same property or for annulment of deed
of sale does not divest the MTC of its jurisdiction to try the forcible entry or unlawful detainer case before it, and
that ejectment actions generally cannot be suspended pending the resolution of a case for quieting of title
between the same parties over the same subject property; and (3) the case does not fall under the exception
provided by the case of Amagan v. Marayag[4], where the Court allowed the suspension of ejectment proceedings
because of strong reasons of equity applicable to the case the demolition of the petitioners house unless the
proceedings would be suspended. The CA ruled that the petitioners reliance on Amagan was inappropriate
because the said case only applies to unlawful detainer actions while the petitioners ejectment suit is an action for
forcible entry. To the CA, the initial tolerance on the part of the private respondents did not convert the nature of
their ejectment suit from forcible entry into unlawful detainer, following the reasoning this Court applied in Munoz
v. Court of Appeals.[5]

ASSIGMENT OF ERRORS

The petitioners impute the following error to the CA:

[T]he Honorable Court of Appeals erred when it ruled that the said ejectment
proceeding was not a suit for illegal detainer but one of forcible entry, thus,
denied application to the exceptional rule on suspension of ejectment
proceedings, at any stage thereof, until the action on ownership is finally
settled.[6]

From this general assignment of error, the petitioners submitted in their memorandum the following
specific issues for our resolution:

1) whether or not the ejectment case filed by the respondents against petitioners with the MTC of
Pulilan is for unlawful detainer or for forcible entry;

2) whether the MTC of Pulilan had validly acquired and exercised jurisdiction over the ejectment case
considering that the complaint was filed beyond one year from the demand to vacate the subject premises; and

3) whether or not the ejectment proceedings should be suspended at any stage until the action on
ownership of the disputed portion of the subject property is finally settled.
 OUR RULING

We find the petition without merit.

1. Nature of the Action before the MTC.

The best indicator of what the plaintiff in an ejectment case intends with respect to the nature of his or her
complaint can be found in the complaint itself. In this case, the complaint states:[7]

That plaintiffs are the registered owners in fee simple of several residential lots identified as lots
16 and 17 covered by Certificate of Title Nos. 86821 and 86822 issued in the name of the spouses
by the Register of Deeds of Bulacan, with a total aggregate area of 254 square meters situated at
Cutcut, Pulilan, Bulacan. Copy of the said titles are hereto attached and marked as Annex A and
A-1

That in a portion of the lots 16 and 17, a portion of the house of the defendants was erected and
built thus usurping the said portion and this was made known to the defendants when the
plaintiffs caused the relocation of the subject lots, however, considering that the latter were not
yet in need of that portion, they allowed the former to stay on the portion by tolerance;

That last July 1998, when the plaintiffs were in the process of fencing the boundary of their lots,
to their surprise, they were not allowed by the defendants to extend the fence up to the portions
they illegally occupied;

That despite the advice given to them by several Geodetic Engineers commissioned by both the
plaintiffs and the herein defendants, for them to give way and allow the plaintiffs to fence their
lot, same proved futile as they stubbornly refused to surrender possession of the subject portion;

The actions for forcible entry and unlawful detainer are similar because they are both summary actions where the
issue is purely physical possession.[8] Other than these commonalities, however, they possess dissimilarities that
are clear, distinct, and well established in law.[9]

In forcible entry, (1) the plaintiff must prove that he was in prior physical possession of the property until he was
deprived of possession by the defendant; (2) the defendant secures possession of the disputed property from the
plaintiff by means of force, intimidation, threat, strategy or stealth; hence, his possession is unlawful from the
beginning; (3) the law does not require a previous demand by the plaintiff for the defendant to vacate the
premises; and (4) the action can be brought only within one-year from the date the defendant actually and illegally
entered the property.[10]

In marked contrast, unlawful detainer is attended by the following features: (1) prior possession of the property by
the plaintiff is not necessary; (2) possession of the property by the defendant at the start is legal but the
possession becomes illegal by reason of the termination of his right to possession based on his or her contract or
other arrangement with the plaintiff; (3) the plaintiff is required by law to make a demand as a jurisdictional
requirement; and (4) the one-year period to bring the complaint is counted from the date of the plaintiffs last
demand on the defendant.[11]

Under these standards, we do not hesitate to declare the Court of Appeals in error when it held that the
present case involves forcible entry rather than unlawful detainer. A plain reading of the complaint shows the
respondents positions that the petitioners were in prior possession of the disputed property; that the respondents
allowed them to occupy the disputed property by tolerance; that the respondents eventually made a demand that
the petitioners vacate the property (on August 26, 1998, which demand the petitioners received on August 31,
1998); and that the petitioners refused to vacate the property in light of the defenses they presented. Separately
from the complaint, the respondents characterized the action they filed against the petitioners in the MTC as an
unlawful detainer when they stated in their memorandum that as alleged in the complaint, what was filed by the
respondents [was] an ejectment suit for unlawful detainer.[12]
 A critical point for us in arriving at our conclusion is the complete absence of any allegation of force,
intimidation, strategy or stealth in the complaint with respect to the petitioners possession of the respondents
property. While admittedly no express contract existed between the parties regarding the petitioners possession,
the absence does not signify an illegality in the entry nor an entry by force, intimidation, strategy or stealth that
would characterize the entry as forcible. It has been held that a person who occupies land of another at the latters
tolerance or permission, without any contract between them, is necessarily bound by an implied promise that he
will vacate upon demand, failing which a summary action for ejectment is the proper remedy. The status of the
defendant is analogous to that of a lessee or tenant whose terms has expired but whose occupancy continues by
tolerance of the owner.[13]

To be sure, we are aware of the Munoz v. Court of Appeals[14] ruling that the CA relied upon to reach the
conclusion that the present case involves forcible entry, not unlawful detainer. What the CA apparently misread
in Munoz was the allegation of stealth in the complaint; anchored on this finding, the Court concluded that the
defendants possession was illegal from the beginning so that there could be no possession by tolerance. The
allegation of stealth, of course, is not present in the present case. On the contrary, tolerance was alleged in the
ejectment complaint itself. Thus, there is no reason for the Munoz ruling to apply to the present case; there is no
basis nor occasion to conclude that the respondents filed a forcible entry case.

2. The Jurisdictional Issue

Was the Ejectment Complaint
Seasonably Filed?

We point out at the outset that what the petitioners directly appealed to this Court is the appellate courts
affirmation of the RTCs refusal to suspend the ejectment proceedings based on the quieting of title case the
petitioners cited. Hence, we are not reviewing the merits of the main ejectment case, particularly the question of
the MTCs jurisdiction, as these aspects of the case were not appealed to us. If we touch the jurisdictional aspect of
the case at all, it is only for purposes of fully responding to the parties arguments.

The petitioners jurisdictional argument cannot succeed as the respondents ejectment complaint was filed
within the one-year period for bringing an action for unlawful detainer or forcible entry that Section 1, Rule 70 of
the Rules of Court requires.Section 1 specifically states:

Section 1. Who may institute proceedings, and when.

Subject to the provisions of the next succeeding section, a person deprived of
the possession of any land or building by force, intimidation, threat, strategy, or stealth,
or a lessor, vendor, vendee, or other person against whom the possession of any land or
building is unlawfully withheld after the expiration or termination of the right to hold
possession, by virtue of any contract, express or implied, or the legal representatives or
assigns of any such lessor, vendor, vendee, or other person, may, at any time within one
(1) year after such unlawful deprivation or withholding of possession, bring an action
in the proper Municipal Trial Court against the person or persons unlawfully withholding
or depriving of possession, or any person or persons claiming under them, for the
restitution of such possession, together with damages and costs.
On the basis of this provision, the petitioners argue that the respondents cause of action whether for forcible entry
or for unlawful detainer had prescribed when the ejectment complaint was filed on April 5, 2000. They point out
that the last demand letter (the reckoning date for unlawful detainer [15]) was dated Aug. 26, 1998 and was received
by the petitioners on August 31, 1998; the complaint was only filed on April 5, 2000 or more than 1 year after
August 31, 1998. On the other hand, if the action had been for forcible entry, the prescriptive period commenced
on the discovery of the usurpation and the computation period would have commenced either during the
relocation survey of the lots or in July 1998 when the respondents were prevented from fencing the disputed
property.

The one-year period within which to commence an ejectment proceeding is a prescriptive period as well as a
jurisdictional requirement. Hence, Article 1155 of the Civil Code on the manner of reckoning the prescriptive
period must necessarily come into play.Under this Article, the filing of a complaint in court interrupts the running
of prescription of actions. As an action for unlawful detainer, the one-year prescription period started running
after August 31, 1998 the date of receipt of the respondents demand letter.The period ran for almost two months
until it was interrupted on October 20, 1998 when the respondents filed their ejectment complaint. This
complaint, however, was dismissed on December 8, 1999. Upon this dismissal, the prescriptive period again began
to run for about four months when another interruption intervened the revival of the complaint on April 5,
2000. Evidently, under these undisputed facts, the period when the prescriptive period effectively ran does not
add up to the one-year prescriptive period that would jurisdictionally bar the ejectment case.
3. Suspension of the Ejectment
Proceedings until Resolution
of the Ownership Issue.

The issue in an unlawful detainer case is limited to physical possession. When a claim of ownership is used
as a basis for de facto possession or to assert a better possessory right, the court hearing the case
may provisionally rule on the issue of ownership. As a rule, however, a pending civil action involving ownership of
the same property does not justify the suspension of the ejectment proceedings. Only in rare cases has this Court
allowed a suspension of the ejectment proceedings and one of these is in the case of Amagan v. Marayag[16] that
the petitioners cite. To quote from Amagan
[i]ndisputably, the execution of the MCTC Decision would have resulted in the demolition of the
house subject of the ejectment suit; thus, by parity of reasoning, considerations of equity require
suspension of the ejectment proceedings. xxx [L]ike Vda. de Legaspi, the respondents suit is one
of unlawful detainer and not of forcible entry, and most certainly, the ejectment of petitioners
would mean a demolition of their house, a matter that is likely to create confusion, disturbance,
inconvenience and expenses mentioned in the said exceptional case.

Necessarily, the affirmance of the MCTC Decision would cause the respondent to go through the
whole gamut of enforcing it by physically removing the petitioners from the premises they claim
to have been occupying since 1937. (Respondent is claiming ownership only of the land, not of
the house) Needlessly, the litigants as well as the courts will be wasting much time and effort by
proceeding at a stage wherein the outcome is at best temporary, but the result of enforcement is
permanent, unjust and probably irreparable.[17]

However, we do not find these same circumstances present in this case for the reasons we shall discuss in detail
below.

First. In Amagan, the party refusing to vacate the disputed premises (or the deforciant in the action for unlawful
detainer) was the same party seeking to quiet his title. In the present case, the petitioners are not parties to the
civil action (for quieting of title) whose result they seek to await; the plaintiff in the quieting of title case is Leticia,
the petitioner Julitas sister. No proof whatsoever was offered to show that petitioner Julita is asserting her own
title to the property; there is only the allegation that Leticia was appointed as the representative of Julita and the
other heirs of Isidro in their various recourses at law to vindicate their landowners rights. [18] The respondents in
fact actively disputed petitioner Julitas identification with the quieting of title case in their Comment since Leticia
claimed to be the sole owner of TCT No. T-188-EP in her action to quiet title. The respondents also pointed to the
document entitled Kasulatan ng Pagmamana ng Lupa sa Labas ng Hukuman na May Pagtalikod sa
Bahagi executed onMay 27, 1995, showing that Julita had relinquished her share over TCT No. T-188-EP in favor of
her sister Leticia. A desperation argument the petitioners advanced in their Memorandum is that
the Kasulatan was only executed pursuant to the agrarian reform policy proscribing the parceling of the awarded
landholding into smaller units to preserve its viability.[19] In other words, the petitioners are disavowing, for
purposes of this case, the representation they made in completing their submission before the agrarian reform
authorities. We cannot of course recognize this line of argument as justification for the suspension of the
ejectment proceedings as the petitioners are bound by their representations before the agrarian reform
authorities and cannot simply turn their back on these representations as their convenience requires. No less
decisive against the petitioners argument for suspension is the decision itself of RTC Branch 19 that the
respondents attached to their Comment. This decision shows that Civil Case No. 694-M-2000, instead of being a
case for quieting of title, is in fact a mere boundary dispute.[20]

Second. In Amagan, the MCTC decision involved the demolition of the petitioners house a result that this
Court found to be permanent, unjust and probably irreparable; in the present case, only a portion of the
petitioners house is apparently affected as the petitioners occupy the lot adjoining the disputed property.
Significantly, the height, width and breadth of the portion of the house that would be affected by the execution of
the RTC Branch 20 decision does not appear anywhere in the records, thus, unavoidably inviting suspicion that the
potential damage to the petitioners is not substantial. More important than the fact of omission is its
implication; the omission constitutes a missing link in the chain of equitable reasons for suspension that the
petitioners wish to establish. Thus, the equitable consideration that drove us to rule as we did in Amagan does not
obtain in the present case.

In the absence of a concrete showing of compelling equitable reasons at least comparable and under
circumstances analogous to Amagan, we cannot override the established rule that a pending civil action for
ownership shall not ipso facto suspend an ejectment proceeding. Additionally, to allow a suspension on the basis
of the reasons the petitioners presented in this case would create the dangerous precedent of allowing an
ejectment suit to be suspended by an action filed in another court by parties who are not involved or affected by
the ejectment suit.

WHEREFORE, premises considered, we hereby DISMISS the petition for lack of merit. Costs against the petitioners.

SO ORDERED.
 Republic of the Philippines
Supreme Court

THIRD DIVISION

FLORA LEONCIO, FELICIA LEONCIO and CLARITA LEONCIO G.R. No. 176842
(In substitution of Elpidio Leoncio, now deceased),
Petitioners, Present:

YNARES-SANTIAGO, J.,
-versus- Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
OLYMPIA DE VERA and REYES, JJ.
CELSO DE VERA,
Respondents.
Promulgated:

February 18, 2008

x-----------------------------------------------------------------------------------x

RESOLUTION

NACHURA, J.:

In a Petition[1] for Review on Certiorari filed before this Court on April 19, 2007, petitioners Flora Leoncio (Flora),
Felicia Leoncio (Felicia) and Clarita Leoncio (Clarita) (petitioners) assail the Court of Appeals (CA) Decision [2] dated
August 17, 2006 and Resolution[3] dated February 28, 2007.

The antecedent facts:

This case flows from a Complaint for Reconveyance of Ownership with Damages filed by the petitioners against the
respondents Olympia de Vera (Olympia) and Celso de Vera (Celso) (respondents) before the Regional Trial Court of
Malolos, Bulacan (RTC). Flora, Felicia, and Clarita are granddaughters and daughter-in-law, respectively, of the late
Emilia Lopez (Emilia). Petitioners allege that Emilia is the sole owner of a parcel of land particularly denominated
as Lot 4659, Cad. 344, Bustos Cadastre, with an area of 2,007 square meters and located at Poblacion, Bustos,
Bulacan (subject lot). Petitioners contend that one Lorenzo Ramos originally owned the subject lot, who gave the
same to Emilia per Relinquishment and Waiver of Rights executed by his heirs. Moreover, the tax declarations
from 1933 to 1948 were issued only in the name of Emilia. As such, Emilia is the sole owner of the subject lot.
Petitioners also claim that they are not aware of any disposition made by Emilia in favor of any person.

On the other hand, Olympia is the niece of Emilia, being the daughter of the latter's eldest brother, Florentino.
Celso is Olympia's son. Respondents allege that Emilia is not the sole owner of the subject lot, as she co-owned it
with her other siblings, Macaria Lopez (Macaria) and Pascual Lopez (Pascual). Olympia bought Macaria's 2/5 share
of the subject lot sometime in 1970. Pascual's 1/5 share of the subject lot was bought by the Spouses Raymundo
which, in turn, Olympia bought in 1986. Respondents aver that the tax declaration for the year 1948 in the name of
Emilia was subsequently canceled by Tax Declaration No. 5482 issued in the names of Emilia (2/5 share), Macaria
(2/5 share) and Pascual (1/5 share). After Pascual sold his 1/5 share to the Spouses Raymundo in 1955, numerous
tax declarations were issued in favor of Emilia, Macaria and Spouses Raymundo. Respondents offered in evidence
these tax declarations together with the deeds of sale executed by Macaria and Spouses Raymundo in favor
of Olympia. After the sale, Olympia paid the real property taxes appurtenant to her 3/5 share of the subject lot and
occupied the same.

On May 20, 1997, the RTC dismissed the case for lack of merit and ordered petitioners to pay respondents moral
and nominal damages, attorney's fees and litigation expenses. The Court held that petitioners failed to introduce in
evidence any deed of transfer involving the subject lot from Lorenzo Ramos to Emilia, and that the tax declarations
which were issued solely in the name of Emilia were subsequently canceled. Moreover, it opined that since
petitioners took possession of the subject lot only after Emilia's death, there is a great likelihood that petitioners
were not truly aware of the status of the subject lot and the extent of Emilia's ownership over the same. The RTC
also held that the evidence presented by respondents clearly established the validity of their claims over the 3/5
portion of the subject lot and that they were possessors in good faith. [4]

Aggrieved, petitioners appealed to the CA, which affirmed the RTC ruling with modification by deleting the award
of damages, attorney's fees and litigation expenses made by the RTC in favor of the respondents. In addition to the
findings of the RTC, the CA also noted that the document denominated as Relinquishment and Waiver of
Rights and allegedly executed by the heirs of Lorenzo Ramos attesting to petitioners' claim that Emilia solely
owned the subject lot, was not offered in evidence. Petitioners filed a Motion for Reconsideration but the same
was denied through CA Resolution dated February 28, 2007.

Hence, this petition which, in sum, raises the following grounds:

The CA committed serious errors of law:

1. In holding that the subject lot is not solely owned by the late Emilia Lopez;

2. By giving undue heavy reliance on the presumption that the late Emilia Lopez could have transferred part
of her ownership of the subject lot to her sister Macaria Lopez and brother Pascual Lopez to the extent of
2/5 and 1/5 portions respectively;
3. In holding that petitioners are already barred by laches in pursuing their ownership over the subject lot
against respondents; and

4. In failing to uphold petitioners' ownership of the subject lot and in failing to award them damages.

The Petition lacks merit.

It is a well-established doctrine that in petitions for review on certiorari under Rule 45 of the Rules of Civil
Procedure, only questions of law may be raised by the parties and passed upon by this Court. Thus, this Court
defined a question of law as distinguished from a question of fact, to wit:

A question of law arises when there is doubt as to what the law is on a certain state of facts,
while there is a question of fact when the doubt arises as to the truth or falsity of the alleged
facts. For a question to be one of law, the same must not involve an examination of the
probative value of the evidence presented by the litigants or any of them. The resolution of
the issue must rest solely on what the law provides on the given set of circumstances. Once it
is clear that the issue invites a review of the evidence presented, the question posed is one
of fact. Thus, the test of whether a question is one of law or of fact is not the appellation
given to such question by the party raising the same; rather, it is whether the appellate
 court can determine the issue raised without reviewing or evaluating the evidence, in
which case, it is a question of law; otherwise it is a question of fact. [5]

A careful perusal of the grounds raised entails the review of the evidence presented, thus, requiring an inquiry into
questions of fact. In sum, petitioners seek this Court's determination of the weight, credence, and probative value
of the evidence presented which were adequately passed upon by the RTC and the CA. Without doubt, the matters
raised are essentially factual in character and, therefore, outside the ambit of a petition for review
on certiorari under Rule 45 of the Rules of Civil Procedure. Petitioners ought to remember that this Court is not a
trier of facts. It is not for this Court to weigh these pieces of evidence all over again[6]

While it is true that tax declarations or realty tax payments of property are not conclusive evidence of ownership,
nevertheless, they are good indicia of possession in the concept of an owner, for no one in his right mind would be
paying taxes for a property that is not in his actual or constructive possession. They constitute at least proof that
the holder has a claim of title over the property.[7] As such, this Court agrees with the CA ruling that petitioners
failed to overcome the burden of proving their main contention that Emilia solely owned the subject lot.

Time and again, this Court held that findings of fact of the CA, affirming those of the trial court, are generally final
and conclusive on this Court.[8] While this Court has recognized several exceptions[9] to this rule, none of these
exceptions finds application in this case. Ergo, we find no cogent reason or reversible error to disturb the common
findings of the RTC and the CA as these are amply supported by the law and evidence on record.

WHEREFORE, the instant Petition is DENIED for lack of merit. The assailed Court of Appeals Decision dated August
17, 2006 and Resolution dated February 28, 2007 are hereby AFFIRMED. Costs against the petitioners.

SO ORDERED.
 Republic of the Philippines
Supreme Court

SECOND DIVISION

ROSALINA CLADO-REYES, ALICIAREYES-POTENCIANO, G.R. No. 163876

ANTONIO C. REYES, BERNARDO C. REYES, JOVITO C.
REYES, MARIAREYES-DIZON, BERNARDA REYES-LLANZA,
deceasedrepresented by BONG R. LLANZA and Present:
REYNALDO C. REYES (deceased), represented by
NINO R. REYES,
Petitioners, QUISUMBING, J., Chairperson,
CARPIO,*
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.

- versus -

SPOUSES JULIUS and LILY LIMPE, Promulgated:

Respondents.
July 9, 2008
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

QUISUMBING, J.:

This petition for review seeks to set aside the Decision [1] dated February 20, 2004 and the
Resolution[2] dated June 9, 2004, of the Court of Appeals in CA-G.R. CV No. 70170, which had affirmed the
Decision[3] dated January 9, 2001 of the Regional Trial Court (RTC), Branch 81, of Malolos, Bulacan in Civil Case No.
61-M-95 for quieting of title, reconveyance and damages.

Subject of the present controversy is a 2,445-square meter portion of a certain lot in Guiguinto, Bulacan
covered by Transfer Certificate of Title (TCT) No. RT-32498 (T-199627),[4] having a total lot area of 20,431 square
meters, more or less.

On February 1, 1995,[5] petitioners filed an action to quiet title, reconveyance and damages against
respondents and alleged that they have been occupying the disputed lot since 1945 through their predecessor-in-
interest, Mamerto B. Reyes. They claimed that during his lifetime, Mamerto had accepted a verbal promise of the
former lot owner, Felipe Garcia, to give the disputed lot to him in exchange for the surrender of his tenancy rights
as a tiller thereof. To prove that Mamerto was a former tenant of Felipe; that during his lifetime he had worked on
the lot; and that he owned and possessed the same, [6] petitioners presented two documents, namely: (1)
Certification[7] dated October 12, 1979 and (2) Pagpapatunay[8] dated November 17, 1982 allegedly executed by
Simeon I. Garcia, the eldest son of Felipe, attesting to such facts. Petitioners also alleged that whenever
respondents visited the lot, respondent Julius Limpe would promise to deliver the certificate of title to
them. However, sometime in October 1994, petitioners received a letter [9] from respondents asserting ownership
over the disputed lot.

In their answer, respondents contended that they are the legal owners of the lot by virtue of a Deed of
Exchange of Real Estate[10] and Deed of Absolute Sale[11] executed on July 5, 1974 and February 28, 1974,
respectively, between them and Farm-Tech Industries, Incorporated. To further assert ownership over the lot, they
presented TCT No. T-199627, Tax Declaration Nos. 15172[12] and 9529[13] and realty tax receipts[14] of the lot, which
were all registered and declared in their names.

In its Decision dated January 9, 2001, the trial court ruled in favor of respondents and held that the
certificate of title, tax declarations and realty tax receipts presented in court indisputably established respondents
ownership over the lot. The certificate of title was registered in respondents names and the realty tax receipts
showed that respondents consistently paid the corresponding real property taxes. These pieces of evidence, said
the trial court, prevail over petitioners allegation of an undocumented promise by the former lot owner, which in
itself, is ineffective or unenforceable under the law. Accordingly, the trial court ordered petitioners to reconvey the
disputed lot to respondents.

On February 20, 2004, the Court of Appeals affirmed the trial courts ruling and held that petitioners have
no title whatsoever upon which respondents title could cast a cloud, as they were the ones casting doubt on
respondents title.[15] It held that the documents allegedly executed by Simeon I. Garcia showed no indicia that the
alleged owner, Felipe Garcia, donated the disputed lot to them. It further held that Simeon I. Garcia was not the
real owner of the lot; thus, he could not make an effective conveyance thereof. Consequently, it upheld
respondents title over the disputed lot. The decretal portion of the decision reads,

WHEREFORE, the appeal is hereby DISMISSED. The decision of the Regional Trial Court
of Malolos, Bulacan, Branch 81, dated January 9, 2001 is AFFIRMED.

SO ORDERED.[16]

Petitioners now before this Court raise the sole issue of:

WHETHER THE [PETITIONERS] HAVE A CAUSE OF ACTION TO QUIET TITLE, RECONVEYANCE AND
DAMAGES AGAINST RESPONDENTS.[17]

Petitioners cite Section 4[18] of Article XIII of the 1987 Constitution and Section 2[19] of the Comprehensive
Agrarian Reform Law and state that their title was founded upon those provisions, which were enacted for the
benefit of farmers, majority ofwhom are educationally deficient, if not uneducated. Next, they contend that
respondents are not purchasers in good faith because they were fully aware of petitioners actual possession of the
lot when they purchased the same. Conformably, according to petitioners, respondents are liable for damages
under Article 19[20] of the Civil Code of the Philippines.

Respondents counter that they are the true and lawful owners of the disputed lot as evidenced by TCT
No. RT-32498 (T-199627), Tax Declaration Nos. 15172 and 9529 and realty tax receipts, all registered and declared
in their names. They claim that they are buyers in good faith when they purchased the lot from Farm-Tech
Industries, Incorporated, free from all liens and encumbrances. They aver that they are not obliged to go beyond
the face of a TCT in the absence of any cloud therein.

Respondents also argue that petitioners cause of action must fail because they failed to prove (1) that
their predecessor-in-interest, Mamerto B. Reyes, was a farmer; (2) that the lot was agricultural and not a
commercial lot; and (3) that they are qualified beneficiaries under the agrarian reform law. They point out that
Simeon I. Garcia, who allegedly executed the Certification and Pagpapatunay, was not presented in court to prove
the veracity of the contents of those two documents. They also aver that the property mentioned in the
document Pagpapatunay was not specifically described as the property litigated herein. Thus, according to
respondents, those documents have no binding effect on third persons, are hearsay, and have no probative value.

After considering the submissions of the parties and the issue before us, we are in agreement that the
petition lacks merit.

To begin with, an action for quieting of title originated in equity jurisprudence to secure an
adjudication that a claim of title to or an interest in property, adverse to that of the complainant, is invalid, so that
the complainant and those claiming under him may be forever free from any danger of hostile claim. Thus, our
courts are tasked to determine the respective rights of the contending parties, not only to put things in their
proper places, but also to benefit both parties, so that he who has the right would see every cloud of doubt over
the property dissipated, and he could afterwards without fear introduce the improvements he may desire, to use
and even to abuse the property as he may deem best.[21]

Under Articles 476[22] and 477[23] of the New Civil Code, there are two indispensable requisites in order
that an action to quiet title could prosper: (1) that the plaintiff or complainant has a legal or an equitable title to or
interest in the real property subject of the action; and (2) that the deed, claim, encumbrance or proceeding
claimed to be casting cloud on his title must be shown to be in fact invalid or inoperative despite its prima
facie appearance of validity or legal efficacy.[24]

To prove their case, petitioners merely cited Section 4 of Article XIII of the 1987 Constitution and Section
2 of the Comprehensive Agrarian Reform Law and stated that their title was founded upon those provisions. They
hardly argued on the matter.Neither was there positive evidence (1) that their predecessor had legal title, i.e., a
certificate of land transfer;[25] (2) that the lot was an agricultural lot and not a commercial one as contended by
respondents; and (3) that they are qualified beneficiaries under the Agrarian Reform Law. Time and again we have
held that a mere allegation is not evidence, and he who alleges has the burden of proving the allegation with the
requisite quantum of evidence.[26]

Next, the documentary evidence petitioners presented, namely, the Certification and Pagpapatunay, did
not confirm their title over the disputed lot. First, original copies of those documents were not presented in
court.[27] Second, as the appellate court pointed out, Simeon I. Garcia, the declarant in those documents, was not
presented in court to prove the veracity of their contents. [28] Third, even a cursory examination of those
documents would not show any transfer or intent to transfer title or ownership of the disputed lot from the
alleged owner, Felipe Garcia, to petitioners or their predecessor-in-interest, Mamerto B. Reyes. Fourth, petitioners
did not bother to adduce evidence that Simeon I. Garcia, as the eldest son of the late Felipe Garcia, inherited the
entire lot as to effectively convey title or ownership over the disputed lot, i.e. thru extrajudicial settlement of the
estate of the late Felipe Garcia. Accordingly, we agree that the documents allegedly executed by Simeon I. Garcia
are purely hearsay and have no probative value.

In contrast, respondents presented evidence which clearly preponderates in their favor. First, the transfer
certificate of title, tax declarations and realty tax receipts were all in their names. Second, pursuant to the Torrens
System, TCT No. RT-32498 (T-199627) enjoys the conclusive presumption of validity and is the best proof of
ownership of the lot.[29] Third, although tax declarations or realty tax receipts are not conclusive evidence of
ownership, nevertheless, they are good indicia of possession in the concept of an owner, for no one in his right
mind would be paying taxes for a property that is not in his actual or at least constructive possession. As we
previously held, such realty tax payments constitute proof that the holder has a claim of title over the property. [30]

Worth stressing, in civil cases, the plaintiff must establish his cause of action by preponderance of
evidence; otherwise, his suit will not prosper.[31] After carefully considering the arguments of the parties, as well as
their respective evidence, we unanimously agree that the petitioners were not able to prove that they have any
legal or equitable title over the disputed lot. Thus, we find no reversible error in the assailed decisions of the courts
below.

WHEREFORE, the instant petition is DENIED for utter lack of merit. The Decision dated February 20,
2004 and the Resolution dated June 9, 2004, of the Court of Appeals in CA-G.R. CV No. 70170 are AFFIRMED. Costs
against petitioners.

SO ORDERED.
 Republic of the Philippines
Supreme Court

FIRST DIVISION

GENEROSO SALIGUMBA, G.R. No. 143365

ERNESTO SALIGUMBA, and
HEIRS OF SPOUSES VALERIA Present:
SALIGUMBA AND ELISEO
SALIGUMBA, SR., PUNO, C.J., Chairperson,
Petitioners, CARPIO,
CORONA,
AZCUNA, and
TINGA,* JJ.
- versus -

MONICA PALANOG, Promulgated:

Respondent. December 4, 2008
x--------------------------------------------------x

DECISION

CARPIO, J.:

The Case

This is a petition for review of the Decision dated 24 May 2000 of the Regional Trial Court, Branch
5, Kalibo, Aklan (RTC-Branch 5) in Civil Case No. 5288 for Revival of Judgment. The case is an offshoot of the action
for Quieting of Title with Damages in Civil Case No. 2570.

The Facts

Monica Palanog, assisted by her husband Avelino Palanog (spouses Palanogs), filed a complaint dated 28 February
1977 for Quieting of Title with Damages against defendants, spouses Valeria Saligumba and Eliseo Saligumba, Sr.
(spouses Saligumbas), before the Regional Trial Court, Branch 3, Kalibo, Aklan (RTC-Branch 3). The case was
docketed as Civil Case No. 2570. In the complaint, spouses Palanogs alleged that they have been in actual, open,
adverse and continuous possession as owners for more than 50 years of a parcel of land located
in Solido, Nabas, Aklan. The spouses Saligumbas allegedly prevented them from entering and residing on the
subject premises and had destroyed the barbed wires enclosing the land. Spouses Palanogs prayed that they be
declared the true and rightful owners of the land in question.

When the case was called for pre-trial on 22 September 1977, Atty. Edilberto Miralles (Atty. Miralles), counsel for
spouses Saligumbas, verbally moved for the appointment of a commissioner to delimit the land in
question. Rizalino Go, Deputy Sheriff of Aklan, was appointed commissioner and was directed to submit his report
and sketch within 30 days.[1] Present during the delimitation were spouses Palanogs, spouses Saligumbas, and
Ernesto Saligumba, son of spouses Saligumbas.[2]

After submission of the Commissioners Report, spouses Palanogs, upon motion, were granted 10 days to amend
their complaint to conform with the items mentioned in the report.[3]

Thereafter, trial on the merits ensued. At the hearing on 1 June 1984, only the counsel for
spouses Palanogs appeared. The trial court issued an order resetting the hearing to 15 August 1984 and likewise
directed spouses Saligumbas to secure the services of another counsel who should be ready on that date. [4] The
order sent to Eliseo Saligumba, Sr. was returned to the court unserved with the notation PartyDeceased while the
order sent to defendant Valeria Saligumba was returned with the notation Party in Manila.[5]

At the hearing on 15 August 1984, spouses Palanogs direct examination was suspended and the continuation of
the hearing was set on 25 October 1984. The trial court stated that Atty. Miralles, who had not withdrawn as
counsel for spouses Saligumbasdespite his appointment as Municipal Circuit Trial Court judge, would be held
responsible for the case of spouses Saligumbas until he formally withdrew as counsel. The trial court reminded
Atty. Miralles to secure the consent of spouses Saligumbas for his withdrawal.[6] A copy of this order was sent to
Valeria Saligumba but the same was returned unserved with the notation Party in Manila.[7]

The hearing set on 25 October 1984 was reset to 25 January 1985 and the trial court directed that a copy of this
order be sent to Eliseo Saligumba, Jr. at COA, PNB, Manila.[8]

The presentation of evidence for spouses Palanogs resumed on 25 January 1985 despite the motion of
Atty. Miralles for postponement on the ground that his client was sick. The exhibits were admitted and plaintiffs
spouses Palanogs rested their case. Reception of evidence for the defendants spouses Saligumbas was scheduled
on 3, 4, and 5 June 1985.[9]

On 3 June 1985, only spouses Palanogs and counsel appeared. Upon motion of the spouses Palanogs,
spouses Saligumbas were deemed to have waived the presentation of their evidence.

On 3 August 1987, after a lapse of more than two years, the trial court considered the case submitted for decision.

On 7 August 1987, RTC-Branch 3 rendered a judgment in Civil Case No. 2570 declaring spouses Palanogs the lawful
owners of the subject land and ordering spouses Saligumbas, their agents, representatives and all persons acting
in privity with them to vacate the premises and restore possession to spouses Palanogs.

The trial court, in a separate Order dated 7 August 1987, directed that a copy of the courts decision be furnished
plaintiff Monica Palanog and defendant Valeria Saligumba.

Thereafter, a motion for the issuance of a writ of execution of the said decision was filed but the trial court, in its
Order dated 8 May 1997, ruled that since more than five years had elapsed after the date of its finality, the
decision could no longer be executed by mere motion.

Thus, on 9 May 1997, Monica Palanog (respondent), now a widow, filed a Complaint seeking to revive and enforce
the Decision dated 7 August 1987 in Civil Case No. 2570 which she claimed has not been barred by the statute of
limitations. She impleadedpetitioners Generoso Saligumba and Ernesto Saligumba, the heirs and children of the
spouses Saligumbas, as defendants. The case was docketed as Civil Case No. 5288 before the RTC-Branch 5.

Petitioner Generoso Saligumba, for himself and in representation of his brother Ernesto who was out of the
country working as a seaman, engaged the services of the Public Attorneys Office, Kalibo, Aklan which filed a
motion for time to allow them to file a responsive pleading. Petitioner Generoso Saligumba filed his
Answer[10] alleging that: (1) respondent had no cause of action; (2) the spouses Saligumbas died while Civil Case
No. 2570 was pending and no order of substitution was issued and hence, the trial was null and void; and (3) the
court did not acquire jurisdiction over the heirs of the spouses Saligumbas and therefore, the judgment was not
binding on them.

Meanwhile, on 19 December 1997, the trial court granted respondents motion to implead additional defendants
namely, Eliseo Saligumba, Jr. and Eduardo Saligumba, who are also the heirs and children of
[11]
spouses Saligumbas. They were, however, declared in default on 1 October 1999 for failure to file any
[12]
responsive pleading.

The Trial Courts Ruling

On 24 May 2000, the RTC-Branch 5 rendered a decision in favor of respondent ordering the revival of judgment in
Civil Case No. 2570. The trial court ruled that the non-substitution of the deceased spouses did not have any legal
significance. The land subject of Civil Case No. 2570 was the exclusive property of defendant
Valeria Saligumba who inherited the same from her deceased parents. The death of her
husband, Eliseo Saligumba, Sr., did not change the complexion of the ownership of the property that would require
his substitution. The spouses Saligumbas children, who are the petitioners in this case, had no right to the property
while Valeria Saligumba was still alive. The trial court further found that when defendant Valeria Saligumba died,
her lawyer, Atty.Miralles, did not inform the court of the death of his client. The trial court thus ruled that the non-
substitution of the deceased defendant was solely due to the negligence of counsel. Moreover, petitioner
Ernesto Saligumba could not feign ignorance of Civil Case No. 2570 as he was present during the delimitation of
the subject land. The trial court likewise held that the decision in Civil Case No. 2570 could not be the subject of a
collateral attack. There must be a direct action for the annulment of the said decision.

Petitioners elevated the matter directly to this Court. Hence, the present petition.

The Courts Ruling

The instant case is an action for revival of judgment and the judgment sought to be revived in this case is the
decision in the action for quieting of title with damages in Civil Case No. 2570. This is not one for annulment of
judgment.

An action for revival of judgment is no more than a procedural means of securing the execution of a previous
judgment which has become dormant after the passage of five years without it being executed upon motion of the
prevailing party. It is not intended to re-open any issue affecting the merits of the judgment debtors case nor the
propriety or correctness of the first judgment.[13] An action for revival of judgment is a new and independent
action, different and distinct from either the recovery of property case or the reconstitution case, wherein the
cause of action is the decision itself and not the merits of the action upon which the judgment sought to be
enforced is rendered.[14] Revival of judgment is premised on the assumption that the decision to be revived, either
by motion or by independent action, is already final and executory.[15]

The RTC-Branch 3 Decision dated 7 August 1987 in Civil Case No. 2570 had been rendered final and executory by
the lapse of time with no motion for reconsideration nor appeal having been filed. While it may be true that the
judgment in Civil Case No. 2570 may be revived and its execution may be had, the issue now before us is whether
or not execution of judgment can be issued against petitioners who claim that they are not bound by the RTC-
Branch 3 Decision dated 7 August 1987 in Civil Case No. 2570.
Petitioners contend that the RTC-Branch 3 Decision of 7 August 1987 in Civil Case No. 2570 is null and void since
there was no proper substitution of the deceased spouses Saligumbas despite the trial courts knowledge that the
deceased spouses Saligumbaswere no longer represented by counsel. They argue that they were deprived of due
process and justice was not duly served on them.
Petitioners argue that the trial court even acknowledged the fact of death of spouses Saligumbas but justified the
validity of the decision rendered in that case despite lack of substitution because of the negligence or fault of their
counsel. Petitioners contend that the duty of counsel for the deceased spouses Saligumbas to inform the court of
the death of his clients and to furnish the name and address of the executor, administrator, heir or legal
representative of the decedent under Rule 3 presupposes adequate or active representation by counsel. However,
the relation of attorney and client was already terminated by the appointment of counsel on record, Atty. Miralles,
as Municipal Circuit Trial Court judge even before the deaths of the spouses Saligumbas were known. Petitioners
invoke the Order of 1 June 1984 directing the spouses Saligumbas to secure the services of another lawyer to
replace Atty. Miralles. The registered mail containing that order was returned to the trial court with the notation
that Eliseo Saligumba, Sr. was deceased. Petitioners thus question the decision in Civil Case No. 2570 as being void
and of no legal effect because their parents were not duly represented by counsel of record. Petitioners further
argue that they have never taken part in the proceedings in Civil Case No. 2570 nor did they voluntarily appear or
participate in the case. It is unfair to bind them in a decision rendered against their deceased parents. Therefore,
being a void judgment, it has no legal nor binding effect on petitioners.

Civil Case No. 2570 is an action for quieting of title with damages which is an action involving real property. It is an
action that survives pursuant to Section 1, Rule 87[16] as the claim is not extinguished by the death of a party. And
when a party dies in an action that survives, Section 17 of Rule 3 of the Revised Rules of Court [17] provides for the
procedure, thus:
Section 17. Death of Party. - After a party dies and the claim is not thereby extinguished, the
court shall order, upon proper notice, the legal representative of the deceased to appear and to
be substituted for the deceased, within a period of thirty (30) days, or within such time as may be
granted. If the legal representative fails to appear within said time, the court may order the
opposing party to procure the appointment of a legal representative of the deceased within a
time to be specified by the court, and the representative shall immediately appear for and on
behalf of the interest of the deceased. The court charges involved in procuring such
appointment, if defrayed by the opposing party, may be recovered as costs. The heirs of the
deceased may be allowed to be substituted for the deceased, without requiring the appointment
of an executor or administrator and the court may appoint guardian ad litem for the minor heirs.
(Emphasis supplied)

Under the express terms of Section 17, in case of death of a party, and upon proper notice, it is the duty of the
court to order the legal representative or heir of the deceased to appear for the deceased. In the instant case, it is
true that the trial court, after receiving aninformal notice of death by the mere notation in the envelopes, failed to
order the appearance of the legal representative or heir of the deceased. There was no court order for deceaseds
legal representative or heir to appear, nor did any such legal representative ever appear in court to be substituted
for the deceased. Neither did the respondent ever procure the appointment of such legal representative, nor did
the heirs ever ask to be substituted.

It appears that Eliseo Saligumba, Sr. died on 18 February 1984 while Valeria Saligumba died on 2 February 1985.
No motion for the substitution of the spouses was filed nor an order issued for the substitution of the deceased
spouses Saligumbas in Civil Case No. 2570. Atty. Miralles and petitioner Eliseo Saligumba, Jr., despite notices sent
to them to appear, never confirmed the death of Eliseo Saligumba, Sr. and Valeria Saligumba. The record is bereft
of any evidence proving the death of the spouses, except the mere notations in the envelopes enclosing the trial
courts orders which were returned unserved.

Section 17 is explicit that the duty of the court to order the legal representative or heir to appear arises only upon
proper notice. The notation Party-Deceased on the unserved notices could not be the proper notice contemplated
by the rule. As the trial court could not be expected to know or take judicial notice of the death of a party without
the proper manifestation from counsel, the trial court was well within its jurisdiction to proceed as it did with the
case. Moreover, there is no showing that the courts proceedings were tainted with irregularities. [18]
Likewise, the plaintiff or his attorney or representative could not be expected to know of the death of the
defendant if the attorney for the deceased defendant did not notify the plaintiff or his attorney of such death as
required by the rules.[19] The judge cannot be blamed for sending copies of the orders and notices to defendants
spouses in the absence of proof of death or manifestation to that effect from counsel.[20]

Section 16, Rule 3 of the Revised Rules of Court likewise expressly provides:

SEC. 16. Duty of attorney upon death, incapacity or incompetency of party. - Whenever a party to
a pending case dies, becomes incapacitated or incompetent, it shall be the duty of his attorney to
inform the court promptly of such death, incapacity or incompetency, and to give the name and
residence of his executor, administrator, guardian or other legal representative.

It is the duty of counsel for the deceased to inform the court of the death of his client. The failure of counsel to
comply with his duty under Section 16 to
inform the court of the death of his client and the non-substitution of such party will not invalidate the
proceedings and the judgment thereon if the action survives the death of such party. The decision rendered shall
bind the partys successor-in-interest.[21]

The rules operate on the presumption that the attorney for the deceased party is in a better position than the
attorney for the adverse party to know about the death of his client and to inform the court of the name and
address of his legal representative.[22]

Atty. Miralles continued to represent the deceased spouses even after the latters demise. Acting on their behalf,
Atty. Miralles even asked for postponement of the hearings and did not even confirm the death of his clients nor
his appointment as Municipal Circuit Trial Court judge. These clearly negate petitioners contention that
Atty. Miralles ceased to be spouses Saligumbas counsel.

Atty. Miralles still remained the counsel of the spouses Saligumbas despite the alleged appointment as judge.
Records show that when Civil Case No. 2570 was called for trial on 25 October 1984, Atty. Miralles appeared and
moved for a postponement. The 25 October 1984 Order reads:
ORDER
Upon petition of Judge Miralles who is still the counsel on record of this case and who is held
responsible for anything that will happen in this case, postpone the hearing of this case to
JANUARY 25, 1985 AT 8:30 in the morning. x x x[23]

The trial court issued an Order dated 1 June 1984 directing the defendants to secure the services of another
counsel. This order was sent to Eliseo Saligumba, Sr. by registered mail but the same was returned with the
notation Party-Deceased while the notice to Valeria Saligumba was returned with the notation Party
in Manila.[24] Eliseo Saligumba, Sr. died on 18 February 1984. When Atty. Miralles appeared in court on 25 October
1984, he did not affirm nor inform the court of the death of his client. There was no formal substitution. The trial
court issued an order resetting the hearing to 25 January 1985 and directed that a copy of the order be furnished
petitioner Eliseo Saligumba, Jr. at COA, PNB, Manila by registered mail.[25] When the case was called on 25 January
1985, Atty. Miralles sought for another postponement on the ground that his client was sick and under medical
treatment in Manila.[26] Again, there was no manifestation from counsel about the death of Eliseo Saligumba,
Sr. The trial court issued an Order dated 25 January 1985 setting the reception of evidence for the defendants on
3, 4, and 5 June 1985. A copy of this order was sent to Eliseo Saligumba, Jr. by registered mail. Nonetheless, as the
trial court in Civil Case No. 5288 declared, the non-substitution ofEliseo Saligumba, Sr. did not have any legal
significance as the land subject of Civil Case No. 2570 was the exclusive property of Valeria Saligumba who
inherited it from her deceased parents.

This notwithstanding, when Valeria Saligumba died on 2 February 1985, Atty. Miralles again did not inform the trial
court of the death of Valeria Saligumba. There was no formal substitution nor submission of proof of death of
Valeria Saligumba. Atty. Miralleswas remiss in his duty under Section 16, Rule 3 of the Revised Rules of Court. The
counsel of record is obligated to protect his clients interest until he is released from his professional relationship
with his client. For its part, the court could recognize no other representation on behalf of the client except such
counsel of record until a formal substitution of attorney is effected. [27]
An attorney must make an application to the court to withdraw as counsel, for the relation does not terminate
formally until there is a withdrawal of record; at least, so far as the opposite party is concerned, the relation
otherwise continues until the end of the litigation. [28] Unless properly relieved, the counsel is responsible for the
conduct of the case.[29] Until his withdrawal shall have been approved, the lawyer remains counsel of record who is
expected by his client as well as by the court to do what the interests of his client require. He must still appear on
the date of hearing for the attorney-client relation does not terminate formally until there is a withdrawal of
record.[30]

Petitioners should have questioned immediately the validity of the proceedings absent any formal substitution.
Yet, despite the courts alleged lack of jurisdiction over the persons of petitioners, petitioners never bothered to
challenge the same, and in fact allowed the proceedings to go on until the trial court rendered its decision. There
was no motion for reconsideration, appeal or even an action to annul the judgment in Civil Case No. 2570.
Petitioners themselves could not feign ignorance of the case since during the pendency of Civil Case No. 2570,
petitioner Ernesto Saligumba, son of the deceased spouses, was among the persons present during the
delimitation of the land in question before the Commissioner held on 5 November
1977.[31] Petitioner EliseoSaligumba, Jr. was likewise furnished a copy of the trial courts orders and notices. It was
only the Answer filed by petitioner Generoso Saligumba in Civil Case No. 5288 that confirmed the dates when the
spouses Saligumbas died and named the latters children.Consequently, Atty. Miralles was responsible for the
conduct of the case since he had not been properly relieved as counsel of record. His acts bind his clients and the
latters successors-in-interest.
In the present case for revival of judgment, the other petitioners have not shown much interest in the case.
Petitioners Eliseo Saligumba, Jr. and Eduardo Saligumba were declared in default for failure to file their answer.
Petitioner Ernesto Saligumba was out of the country working as a seaman. Only
petitioner Generoso Saligumba filed an Answer to the complaint. The petition filed in this Court was signed only by
petitioner Generoso Saligumba as someone signed on behalf of petitioner Ernesto Saligumba without the latters
authority to do so.

WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 24 May 2000 of the Regional Trial Court,
Branch 5, Kalibo, Aklan in Civil Case No. 5288. Costs against petitioners.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 156364 September 3, 2007

JACOBUS BERNHARD HULST, petitioner,

vs.
PR BUILDERS, INC., respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court assailing the
Decision1 dated October 30, 2002 of the Court of Appeals (CA) in CA-G.R. SP No. 60981.

The facts:

Jacobus Bernhard Hulst (petitioner) and his spouse Ida Johanna Hulst-Van Ijzeren (Ida), Dutch nationals, entered
into a Contract to Sell with PR Builders, Inc. (respondent), for the purchase of a 210-sq m residential unit in
respondent's townhouse project in Barangay Niyugan, Laurel, Batangas.

When respondent failed to comply with its verbal promise to complete the project by June 1995, the spouses Hulst
filed before the Housing and Land Use Regulatory Board (HLURB) a complaint for rescission of contract with
interest, damages and attorney's fees, docketed as HLRB Case No. IV6-071196-0618.

On April 22, 1997, HLURB Arbiter Ma. Perpetua Y. Aquino (HLURB Arbiter) rendered a Decision 2 in favor of spouses
Hulst, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the complainant, rescinding
the Contract to Sell and ordering respondent to:

1) Reimburse complainant the sum of P3,187,500.00, representing the purchase price paid by the
complainants to P.R. Builders, plus interest thereon at the rate of twelve percent (12%) per annum from
the time complaint was filed;

2) Pay complainant the sum of P297,000.00 as actual damages;

3) Pay complainant the sum of P100,000.00 by way of moral damages;

4) Pay complainant the sum of P150,000.00 as exemplary damages;

5) P50,000.00 as attorney's fees and for other litigation expenses; and

6) Cost of suit.

SO ORDERED.3

Meanwhile, spouses Hulst divorced. Ida assigned her rights over the purchased property to petitioner. 4 From then
on, petitioner alone pursued the case.

On August 21, 1997, the HLURB Arbiter issued a Writ of Execution addressed to the Ex-Officio Sheriff of the
Regional Trial Court of Tanauan, Batangas directing the latter to execute its judgment. 5

On April 13, 1998, the Ex-Officio Sheriff proceeded to implement the Writ of Execution. However, upon complaint
of respondent with the CA on a Petition for Certiorari and Prohibition, the levy made by the Sheriff was set aside,
requiring the Sheriff to levy first on respondent's personal properties. 6 Sheriff Jaime B. Ozaeta (Sheriff) tried to
implement the writ as directed but the writ was returned unsatisfied. 7
On January 26, 1999, upon petitioner's motion, the HLURB Arbiter issued an Alias Writ of Execution.8

On March 23, 1999, the Sheriff levied on respondent's 15 parcels of land covered by 13 Transfer Certificates of
Title (TCT)9 in Barangay Niyugan, Laurel, Batangas.10

In a Notice of Sale dated March 27, 2000, the Sheriff set the public auction of the levied properties on April 28,
2000 at 10:00 a.m..11

Two days before the scheduled public auction or on April 26, 2000, respondent filed an Urgent Motion to Quash
Writ of Levy with the HLURB on the ground that the Sheriff made an overlevy since the aggregate appraised value
of the levied properties at P6,500.00 per sq m is P83,616,000.00, based on the Appraisal Report12 of Henry Hunter
Bayne Co., Inc. dated December 11, 1996, which is over and above the judgment award. 13

At 10:15 a.m. of the scheduled auction date of April 28, 2000, respondent's counsel objected to the conduct of the
public auction on the ground that respondent's Urgent Motion to Quash Writ of Levy was pending resolution.
Absent any restraining order from the HLURB, the Sheriff proceeded to sell the 15 parcels of land. Holly Properties
Realty Corporation was the winning bidder for all 15 parcels of land for the total amount ofP5,450,653.33. The sum
of P5,313,040.00 was turned over to the petitioner in satisfaction of the judgment award after deducting the legal
fees.14

At 4:15 p.m. of the same day, while the Sheriff was at the HLURB office to remit the legal fees relative to the
auction sale and to submit the Certificates of Sale15 for the signature of HLURB Director Belen G. Ceniza (HLURB
Director), he received the Order dated April 28, 2000 issued by the HLURB Arbiter to suspend the proceedings on
the matter.16

Four months later, or on August 28, 2000, the HLURB Arbiter and HLURB Director issued an Order setting aside the
sheriff's levy on respondent's real properties,17 reasoning as follows:

While we are not making a ruling that the fair market value of the levied properties is PhP6,500.00 per
square meter (or an aggregate value of PhP83,616,000.00) as indicated in the Hunter Baynes Appraisal
Report, we definitely cannot agree with the position of the Complainants and the Sheriff that the
aggregate value of the 12,864.00-square meter levied properties is only around PhP6,000,000.00. The
disparity between the two valuations are [sic] so egregious that the Sheriff should have looked into the
matter first before proceeding with the execution sale of the said properties, especially when the auction
sale proceedings was seasonably objected by Respondent's counsel, Atty. Noel Mingoa. However, instead
of resolving first the objection timely posed by Atty. Mingoa, Sheriff Ozaete totally disregarded the
objection raised and, posthaste, issued the corresponding Certificate of Sale even prior to the payment of
the legal fees (pars. 7 & 8, Sheriff's Return).

While we agree with the Complainants that what is material in an execution sale proceeding is the
amount for which the properties were bidded and sold during the public auction and that, mere
inadequacy of the price is not a sufficient ground to annul the sale, the court is justified to intervene
where the inadequacy of the price shocks the conscience (Barrozo vs. Macaraeg, 83 Phil. 378). The
difference between PhP83,616,000.00 and Php6,000,000.00 is PhP77,616,000.00 and it definitely invites
our attention to look into the proceedings had especially so when there was only one bidder, the HOLLY
PROPERTIES REALTY CORPORATION represented by Ma, Chandra Cacho (par. 7, Sheriff's Return) and the
auction sale proceedings was timely objected by Respondent's counsel (par. 6, Sheriff's Return) due to the
pendency of the Urgent Motion to Quash the Writ of Levy which was filed prior to the execution sale.

Besides, what is at issue is not the value of the subject properties as determined during the auction
sale, but the determination of the value of the properties levied upon by the Sheriff taking into
consideration Section 9(b) of the 1997 Rules of Civil Procedure x x x.

xxxx

It is very clear from the foregoing that, even during levy, the Sheriff has to consider the fair market value
of the properties levied upon to determine whether they are sufficient to satisfy the judgment, and any
levy in excess of the judgment award is void (Buan v. Court of Appeals, 235 SCRA 424).

x x x x18 (Emphasis supplied).

The dispositive portion of the Order reads:

 WHEREFORE, the levy on the subject properties made by the Ex-Officio Sheriff of the RTC of Tanauan,
Batangas, is hereby SET ASIDE and the said Sheriff is hereby directed to levy instead Respondent's real
properties that are reasonably sufficient to enforce its final and executory judgment, this time, taking into
consideration not only the value of the properties as indicated in their respective tax declarations, but
also all the other determinants at arriving at a fair market value, namely: the cost of acquisition, the
current value of like properties, its actual or potential uses, and in the particular case of lands, their size,
shape or location, and the tax declarations thereon.

SO ORDERED.19

A motion for reconsideration being a prohibited pleading under Section 1(h), Rule IV of the 1996 HLURB Rules and
Procedure, petitioner filed a Petition for Certiorari and Prohibition with the CA on September 27, 2000.

On October 30, 2002, the CA rendered herein assailed Decision 20 dismissing the petition. The CA held that
petitioner's insistence that Barrozo v. Macaraeg21 does not apply since said case stated that "when there is a right
to redeem inadequacy of price should not be material" holds no water as what is obtaining in this case is not
"mere inadequacy," but an inadequacy that shocks the senses; that Buan v. Court of Appeals22 properly applies
since the questioned levy covered 15 parcels of land posited to have an aggregate value of P83,616,000.00 which
shockingly exceeded the judgment debt of only around P6,000,000.00.

Without filing a motion for reconsideration,23 petitioner took the present recourse on the sole ground that:

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE ARBITER'S ORDER SETTING
ASIDE THE LEVY MADE BY THE SHERIFF ON THE SUBJECT PROPERTIES.24

Before resolving the question whether the CA erred in affirming the Order of the HLURB setting aside the levy
made by the sheriff, it behooves this Court to address a matter of public and national importance which
completely escaped the attention of the HLURB Arbiter and the CA: petitioner and his wife are foreign nationals
who are disqualified under the Constitution from owning real property in their names.

Section 7 of Article XII of the 1987 Constitution provides:

Sec. 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to
individuals, corporations, or associations qualified to acquire or hold lands of the public domain.
(Emphasis supplied).

The capacity to acquire private land is made dependent upon the capacity to acquire or hold lands of the public
domain. Private land may be transferred or conveyed only to individuals or entities "qualified to acquire lands of
the public domain." The 1987 Constitution reserved the right to participate in the disposition, exploitation,
development and utilization of lands of the public domain for Filipino citizens 25 or corporations at least 60 percent
of the capital of which is owned by Filipinos.26 Aliens, whether individuals or corporations, have been disqualified
from acquiring public lands; hence, they have also been disqualified from acquiring private lands. 27

Since petitioner and his wife, being Dutch nationals, are proscribed under the Constitution from acquiring and
owning real property, it is unequivocal that the Contract to Sell entered into by petitioner together with his wife
and respondent is void. Under Article 1409 (1) and (7) of the Civil Code, all contracts whose cause, object or
purpose is contrary to law or public policy and those expressly prohibited or declared void by law are inexistent
and void from the beginning. Article 1410 of the same Code provides that the action or defense for the declaration
of the inexistence of a contract does not prescribe. A void contract is equivalent to nothing; it produces no civil
effect.28It does not create, modify or extinguish a juridical relation. 29

Generally, parties to a void agreement cannot expect the aid of the law; the courts leave them as they are,
because they are deemed in pari delicto or "in equal fault."30 In pari delicto is "a universal doctrine which holds
that no action arises, in equity or at law, from an illegal contract; no suit can be maintained for its specific
performance, or to recover the property agreed to be sold or delivered, or the money agreed to be paid, or
damages for its violation; and where the parties are in pari delicto, no affirmative relief of any kind will be given to
one against the other."31

This rule, however, is subject to exceptions32 that permit the return of that which may have been given under a
void contract to: (a) the innocent party (Arts. 1411-1412, Civil Code);33 (b) the debtor who pays usurious interest
(Art. 1413, Civil Code);34 (c) the party repudiating the void contract before the illegal purpose is accomplished or
before damage is caused to a third person and if public interest is subserved by allowing recovery (Art. 1414,
Civil Code);35 (d) the incapacitated party if the interest of justice so demands (Art. 1415, Civil Code); 36 (e) the party
for whose protection the prohibition by law is intended if the agreement is not illegal per se but merely prohibited
and if public policy would be enhanced by permitting recovery (Art. 1416, Civil Code); 37 and (f) the party for whose
benefit the law has been intended such as in price ceiling laws (Art. 1417, Civil Code) 38 and labor laws (Arts. 1418-
1419, Civil Code).39

It is significant to note that the agreement executed by the parties in this case is a Contract to Sell and not a
contract of sale. A distinction between the two is material in the determination of when ownership is deemed to
have been transferred to the buyer or vendee and, ultimately, the resolution of the question on whether the
constitutional proscription has been breached.

In a contract of sale, the title passes to the buyer upon the delivery of the thing sold. The vendor has lost and
cannot recover the ownership of the property until and unless the contract of sale is itself resolved and set
aside.40 On the other hand, a contract to sell is akin to a conditional sale where the efficacy or obligatory force of
the vendor's obligation to transfer title is subordinated to the happening of a future and uncertain event, so that if
the suspensive condition does not take place, the parties would stand as if the conditional obligation had never
existed.41 In other words, in a contract to sell, the prospective seller agrees to transfer ownership of the property
to the buyer upon the happening of an event, which normally is the full payment of the purchase price. But even
upon the fulfillment of the suspensive condition, ownership does not automatically transfer to the buyer. The
prospective seller still has to convey title to the prospective buyer by executing a contract of absolute sale. 42

Since the contract involved here is a Contract to Sell, ownership has not yet transferred to the petitioner when he
filed the suit for rescission. While the intent to circumvent the constitutional proscription on aliens owning real
property was evident by virtue of the execution of the Contract to Sell, such violation of the law did not materialize
because petitioner caused the rescission of the contract before the execution of the final deed transferring
ownership.

Thus, exception (c) finds application in this case. Under Article 1414, one who repudiates the agreement and
demands his money before the illegal act has taken place is entitled to recover. Petitioner is therefore entitled to
recover what he has paid, although the basis of his claim for rescission, which was granted by the HLURB, was not
the fact that he is not allowed to acquire private land under the Philippine Constitution. But petitioner is entitled
to the recovery only of the amount of P3,187,500.00, representing the purchase price paid to respondent. No
damages may be recovered on the basis of a void contract; being nonexistent, the agreement produces no juridical
tie between the parties involved.43 Further, petitioner is not entitled to actual as well as interests thereon, 44 moral
and exemplary damages and attorney's fees.

The Court takes into consideration the fact that the HLURB Decision dated April 22, 1997 has long been final and
executory. Nothing is more settled in the law than that a decision that has acquired finality becomes immutable
and unalterable and may no longer be modified in any respect even if the modification is meant to correct
erroneous conclusions of fact or law and whether it was made by the court that rendered it or by the highest court
of the land.45 The only recognized exceptions to the general rule are the correction of clerical errors, the so-
called nunc pro tunc entries which cause no prejudice to any party, void judgments, and whenever circumstances
transpire after the finality of the decision rendering its execution unjust and inequitable. 46 None of the exceptions
is present in this case. The HLURB decision cannot be considered a void judgment, as it was rendered by a tribunal
with jurisdiction over the subject matter of the complaint.47

Ineluctably, the HLURB Decision resulted in the unjust enrichment of petitioner at the expense of respondent.
Petitioner received more than what he is entitled to recover under the circumstances.

Article 22 of the Civil Code which embodies the maxim, nemo ex alterius incommode debet lecupletari (no man
ought to be made rich out of another's injury), states:

Art. 22. Every person who through an act of performance by another, or any other means, acquires or
comes into possession of something at the expense of the latter without just or legal ground, shall return
the same to him.

The above-quoted article is part of the chapter of the Civil Code on Human Relations, the provisions of which were
formulated as basic principles to be observed for the rightful relationship between human beings and for the
stability of the social order; designed to indicate certain norms that spring from the fountain of good conscience;
guides for human conduct that should run as golden threads through society to the end that law may approach its
supreme ideal which is the sway and dominance of justice.48 There is unjust enrichment when a person unjustly
retains a benefit at the loss of another, or when a person retains money or property of another against the
fundamental principles of justice, equity and good conscience. 49
A sense of justice and fairness demands that petitioner should not be allowed to benefit from his act of entering
into a contract to sell that violates the constitutional proscription.

This is not a case of equity overruling or supplanting a positive provision of law or judicial rule. Rather, equity is
exercised in this case "as the complement of legal jurisdiction [that] seeks to reach and to complete justice where
courts of law, through the inflexibility of their rules and want of power to adapt their judgments to the special
circumstances of cases, are incompetent to do so."50

The purpose of the exercise of equity jurisdiction in this case is to prevent unjust enrichment and to ensure
restitution. Equity jurisdiction aims to do complete justice in cases where a court of law is unable to adapt its
judgments to the special circumstances of a case because of the inflexibility of its statutory or legal jurisdiction. 51

The sheriff delivered to petitioner the amount of P5,313,040.00 representing the net proceeds (bidded amount
isP5,450,653.33) of the auction sale after deducting the legal fees in the amount of P137,613.33.52 Petitioner is
only entitled to P3,187,500.00, the amount of the purchase price of the real property paid by petitioner to
respondent under the Contract to Sell. Thus, the Court in the exercise of its equity jurisdiction may validly order
petitioner to return the excess amount of P2,125,540.00.

The Court shall now proceed to resolve the single issue raised in the present petition: whether the CA seriously
erred in affirming the HLURB Order setting aside the levy made by the Sheriff on the subject properties.

Petitioner avers that the HLURB Arbiter and Director had no factual basis for pegging the fair market value of the
levied properties at P6,500.00 per sq m or P83,616,000.00; that reliance on the appraisal report was misplaced
since the appraisal was based on the value of land in neighboring developed subdivisions and on the assumption
that the residential unit appraised had already been built; that the Sheriff need not determine the fair market
value of the subject properties before levying on the same since what is material is the amount for which the
properties were bidded and sold during the public auction; that the pendency of any motion is not a valid ground
for the Sheriff to suspend the execution proceedings and, by itself, does not have the effect of restraining the
Sheriff from proceeding with the execution.

Respondent, on the other hand, contends that while it is true that the HLURB Arbiter and Director did not
categorically state the exact value of the levied properties, said properties cannot just amount to P6,000,000.00;
that the HLURB Arbiter and Director correctly held that the value indicated in the tax declaration is not the sole
determinant of the value of the property.

The petition is impressed with merit.

If the judgment is for money, the sheriff or other authorized officer must execute the same pursuant to the
provisions of Section 9, Rule 39 of the Revised Rules of Court, viz:

Sec. 9. Execution of judgments for money, how enforced. –

(a) Immediate payment on demand. - The officer shall enforce an execution of a judgment for money by
demanding from the judgment obligor the immediate payment of the full amount stated in the writ of
execution and all lawful fees. x x x

(b) Satisfaction by levy. - If the judgment obligor cannot pay all or part of the obligation in cash, certified
bank check or other mode of payment acceptable to the judgment obligee, the officer shall levy upon the
properties of the judgment obligor of every kind and nature whatsoever which may be disposed of for
value and not otherwise exempt from execution, giving the latter the option to immediately choose
which property or part thereof may be levied upon, sufficient to satisfy the judgment. If the judgment
obligor does not exercise the option, the officer shall first levy on the personal properties, if any, and then
on the real properties if the personal properties are insufficient to answer for the judgment.

The sheriff shall sell only a sufficient portion of the personal or real property of the judgment obligor
which has been levied upon.

When there is more property of the judgment obligor than is sufficient to satisfy the judgment and
lawful fees, he must sell only so much of the personal or real property as is sufficient to satisfy the
judgment and lawful fees.
 Real property, stocks, shares, debts, credits, and other personal property, or any interest in either real or
personal property, may be levied upon in like manner and with like effect as under a writ of
attachment (Emphasis supplied).53

Thus, under Rule 39, in executing a money judgment against the property of the judgment debtor, the sheriff shall
levy on all property belonging to the judgment debtor as is amply sufficient to satisfy the judgment and costs, and
sell the same paying to the judgment creditor so much of the proceeds as will satisfy the amount of the judgment
debt and costs. Any excess in the proceeds shall be delivered to the judgment debtor unless otherwise directed by
the judgment or order of the court.54

Clearly, there are two stages in the execution of money judgments. First, the levy and then the execution sale.

Levy has been defined as the act or acts by which an officer sets apart or appropriates a part or the whole of a
judgment debtor's property for the purpose of satisfying the command of the writ of execution. 55 The object of a
levy is to take property into the custody of the law, and thereby render it liable to the lien of the execution, and
put it out of the power of the judgment debtor to divert it to any other use or purpose. 56

On the other hand, an execution sale is a sale by a sheriff or other ministerial officer under the authority of a writ
of execution of the levied property of the debtor.57

In the present case, the HLURB Arbiter and Director gravely abused their discretion in setting aside the levy
conducted by the Sheriff for the reason that the auction sale conducted by the sheriff rendered moot and
academic the motion to quash the levy. The HLURB Arbiter lost jurisdiction to act on the motion to quash the levy
by virtue of the consummation of the auction sale. Absent any order from the HLURB suspending the auction sale,
the sheriff rightfully proceeded with the auction sale. The winning bidder had already paid the winning bid. The
legal fees had already been remitted to the HLURB. The judgment award had already been turned over to the
judgment creditor. What was left to be done was only the issuance of the corresponding certificates of sale to the
winning bidder. In fact, only the signature of the HLURB Director for that purpose was needed 58 – a purely
ministerial act.

A purely ministerial act or duty is one which an officer or tribunal performs in a given state of facts, in a prescribed
manner, in obedience to the mandate of a legal authority, without regard for or the exercise of his own judgment
upon the propriety or impropriety of the act done. If the law imposes a duty upon a public officer and gives him
the right to decide how or when the duty shall be performed, such duty is discretionary and not ministerial. The
duty is ministerial only when the discharge of the same requires neither the exercise of official discretion nor
judgment.59In the present case, all the requirements of auction sale under the Rules have been fully complied with
to warrant the issuance of the corresponding certificates of sale.

And even if the Court should go into the merits of the assailed Order, the petition is meritorious on the following
grounds:

Firstly, the reliance of the HLURB Arbiter and Director, as well as the CA, on Barrozo v. Macaraeg60 and Buan v.
Court of Appeals61 is misplaced.

The HLURB and the CA misconstrued the Court's pronouncements in Barrozo. Barrozo involved a judgment debtor
who wanted to repurchase properties sold at execution beyond the one-year redemption period. The statement of
the Court in Barrozo, that "only where such inadequacy shocks the conscience the courts will intervene," is at best
a mere obiter dictum. This declaration should be taken in the context of the other declarations of the Court
in Barrozo, to wit:

Another point raised by appellant is that the price paid at the auction sale was so inadequate as to shock
the conscience of the court. Supposing that this issue is open even after the one-year period has expired
and after the properties have passed into the hands of third persons who may have paid a price higher
than the auction sale money, the first thing to consider is that the stipulation contains no statement of
the reasonable value of the properties; and although defendant' answer avers that the assessed value
wasP3,960 it also avers that their real market value was P2,000 only. Anyway, mere inadequacy of price –
which was the complaint' allegation – is not sufficient ground to annul the sale. It is only where such
inadequacy shocks the conscience that the courts will intervene. x x x Another consideration is that the
assessed value being P3,960 and the purchase price being in effect P1,864 (P464 sale price plusP1,400
mortgage lien which had to be discharged) the conscience is not shocked upon examining the prices paid
in the sales in National Bank v. Gonzales, 45 Phil., 693 and Guerrero v. Guerrero, 57 Phil., 445, sales which
were left undisturbed by this Court.
 Furthermore, where there is the right to redeem – as in this case – inadequacy of price should not be
material because the judgment debtor may re-acquire the property or else sell his right to redeem and
thus recover any loss he claims to have suffered by reason of the price obtained at the execution sale.

x x x x (Emphasis supplied).62

In other words, gross inadequacy of price does not nullify an execution sale. In an ordinary sale, for reason of
equity, a transaction may be invalidated on the ground of inadequacy of price, or when such inadequacy shocks
one's conscience as to justify the courts to interfere; such does not follow when the law gives the owner the right
to redeem as when a sale is made at public auction,63 upon the theory that the lesser the price, the easier it is for
the owner to effect redemption.64 When there is a right to redeem, inadequacy of price should not be material
because the judgment debtor may re-acquire the property or else sell his right to redeem and thus recover any
loss he claims to have suffered by reason of the price obtained at the execution sale. 65 Thus, respondent stood to
gain rather than be harmed by the low sale value of the auctioned properties because it possesses the right of
redemption. More importantly, the subject matter in Barrozo is the auction sale, not the levy made by the Sheriff.

The Court does not sanction the piecemeal interpretation of a decision. To get the true intent and meaning of a
decision, no specific portion thereof should be isolated and resorted to, but the decision must be considered in its
entirety.66

As regards Buan, it is cast under an entirely different factual milieu. It involved the levy on two parcels of land
owned by the judgment debtor; and the sale at public auction of one was sufficient to fully satisfy the judgment,
such that the levy and attempted execution of the second parcel of land was declared void for being in excess of
and beyond the original judgment award granted in favor of the judgment creditor.

In the present case, the Sheriff complied with the mandate of Section 9, Rule 39 of the Revised Rules of Court, to
"sell only a sufficient portion" of the levied properties "as is sufficient to satisfy the judgment and the lawful fees."
Each of the 15 levied properties was successively bidded upon and sold, one after the other until the judgment
debt and the lawful fees were fully satisfied. Holly Properties Realty Corporation successively bidded upon and
bought each of the levied properties for the total amount of P5,450,653.33 in full satisfaction of the judgment
award and legal fees.67

Secondly, the Rules of Court do not require that the value of the property levied be exactly the same as the
judgment debt; it can be less or more than the amount of debt. This is the contingency addressed by Section 9,
Rule 39 of the Rules of Court. In the levy of property, the Sheriff does not determine the exact valuation of the
levied property. Under Section 9, Rule 39, in conjunction with Section 7, Rule 57 of the Rules of Court, the sheriff is
required to do only two specific things to effect a levy upon a realty: (a) file with the register of deeds a copy of the
order of execution, together with the description of the levied property and notice of execution; and (b) leave with
the occupant of the property copy of the same order, description and notice. 68 Records do not show that
respondent alleged non-compliance by the Sheriff of said requisites.

Thirdly, in determining what amount of property is sufficient out of which to secure satisfaction of the execution,
the Sheriff is left to his own judgment. He may exercise a reasonable discretion, and must exercise the care which
a reasonably prudent person would exercise under like conditions and circumstances, endeavoring on the one
hand to obtain sufficient property to satisfy the purposes of the writ, and on the other hand not to make an
unreasonable and unnecessary levy.69 Because it is impossible to know the precise quantity of land or other
property necessary to satisfy an execution, the Sheriff should be allowed a reasonable margin between the value
of the property levied upon and the amount of the execution; the fact that the Sheriff levies upon a little more
than is necessary to satisfy the execution does not render his actions improper. 70 Section 9, Rule 39, provides
adequate safeguards against excessive levying. The Sheriff is mandated to sell so much only of such real property
as is sufficient to satisfy the judgment and lawful fees.

In the absence of a restraining order, no error, much less abuse of discretion, can be imputed to the Sheriff in
proceeding with the auction sale despite the pending motion to quash the levy filed by the respondents with the
HLURB. It is elementary that sheriffs, as officers charged with the delicate task of the enforcement and/or
implementation of judgments, must, in the absence of a restraining order, act with considerable dispatch so as not
to unduly delay the administration of justice; otherwise, the decisions, orders, or other processes of the courts of
justice and the like would be futile.71 It is not within the jurisdiction of the Sheriff to consider, much less resolve,
respondent's objection to the continuation of the conduct of the auction sale. The Sheriff has no authority, on his
own, to suspend the auction sale. His duty being ministerial, he has no discretion to postpone the conduct of the
auction sale.
Finally, one who attacks a levy on the ground of excessiveness carries the burden of sustaining that contention.72In
the determination of whether a levy of execution is excessive, it is proper to take into consideration encumbrances
upon the property, as well as the fact that a forced sale usually results in a sacrifice; that is, the price demanded for
the property upon a private sale is not the standard for determining the excessiveness of the levy. 73

Here, the HLURB Arbiter and Director had no sufficient factual basis to determine the value of the levied property.
Respondent only submitted an Appraisal Report, based merely on surmises. The Report was based on the
projected value of the townhouse project after it shall have been fully developed, that is, on the assumption that
the residential units appraised had already been built. The Appraiser in fact made this qualification in its Appraisal
Report: "[t]he property subject of this appraisal has not been constructed. The basis of the appraiser is on the
existing model units."74 Since it is undisputed that the townhouse project did not push through, the projected
value did not become a reality. Thus, the appraisal value cannot be equated with the fair market value. The
Appraisal Report is not the best proof to accurately show the value of the levied properties as it is clearly self-
serving.

Therefore, the Order dated August 28, 2000 of HLURB Arbiter Aquino and Director Ceniza in HLRB Case No. IV6-
071196-0618 which set aside the sheriff's levy on respondent's real properties, was clearly issued with grave abuse
of discretion. The CA erred in affirming said Order.

WHEREFORE, the instant petition is GRANTED. The Decision dated October 30, 2002 of the Court of Appeals in CA-
G.R. SP No. 60981 is REVERSED and SET ASIDE. The Order dated August 28, 2000 of HLURB Arbiter Ma. Perpetua Y.
Aquino and Director Belen G. Ceniza in HLRB Case No. IV6-071196-0618 is declared NULL andVOID. HLURB Arbiter
Aquino and Director Ceniza are directed to issue the corresponding certificates of sale in favor of the winning
bidder, Holly Properties Realty Corporation. Petitioner is ordered to return to respondent the amount
of P2,125,540.00, without interest, in excess of the proceeds of the auction sale delivered to petitioner. After the
finality of herein judgment, the amount of P2,125,540.00 shall earn 6% interest until fully paid.

SO ORDERED.
 Republic of the Philippines
Supreme Court

THIRD DIVISION

LEO WEE, G.R. No. 176405

Petitioner,
Present:

YNARES-SANTIAGO, J.,
- versus - Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
GEORGE DE CASTRO (on his behalf and as
attorney-in-fact of ANNIE DE CASTRO and
FELOMINA UBAN) andMARTINIANA DE CASTRO,
Respondents. Promulgated:

August 20, 2008

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the Revised Rules of Court filed by
petitioner Leo Wee, seeking the reversal and setting aside of the Decision [2] dated 19 September 2006 and the
Resolution[3] dated 25 January 2007of the Court of Appeals in CA-G.R. SP No. 90906. The appellate court, in its
assailed Decision, reversed the dismissal of Civil Case. No. 1990, an action for ejectment instituted by
respondent George de Castro, on his own behalf and on behalf of Annie de Castro, Felomina de Castro Uban and
Jesus de Castro[4] against petitioner, by the Municipal Trial Court (MTC) of Alaminos City, which was affirmed by
the Regional Trial Court (RTC), Branch 54, Alaminos City, Pangasinan; and, ruling in favor of the respondents,
ordered the petitioner to vacate the subject property. In its assailed Resolution dated 25 January 2007, the Court
of Appeals refused to reconsider its earlier Decision of 19 September 2006.
In their Complaint[5] filed on 1 July 2002 with the MTC of Alaminos City, docketed as Civil Case No.
1990, respondents alleged that they are the registered owners of the subject property, a two-storey building
erected on a parcel of land registered under Transfer Certificate of Title (TCT) No. 16193 in the Registry of Deeds of
Pangasinan, described and bounded as follows:

A parcel of land (Lot 13033-D-2, Psd-01550-022319, being a portion of Lot 13033-D, Psd-
018529, LRC Rec. No. ____) situated in Pob., Alaminos City; bounded on the NW. along line 1-2
by Lot 13035-D-1 of the subdivision plan; on the NE. along line 2-3 by Vericiano St.; on the SE.
along line 3-4 by Lot 13033-D-2 of the subdivision plan; on the SW. along line 4-1 by Lot 575,
Numeriano Rabago. It is coverd by TCT No. 16193 of the Register of Deeds of Pangasinan
(Alaminos City) and declared for taxation purposes per T.D. No. 2075, and assessed in the sum
ofP93,400.00.[6]

Respondents rented out the subject property to petitioner on a month to month basis
for P9,000.00 per month.[7] Both parties agreed that effective 1 October 2001, the rental payment shall be
increased from P9,000.00 to P15,000.00. Petitioner, however, failed or refused to pay the corresponding increase
on rent when his rental obligation for the month of 1 October 2001 became due. The rental dispute was brought
to the Lupon Tagapagpamayapa of Poblacion, Alaminos, Pangasinan, in an attempt to amicably settle the matter
but the parties failed to reach an agreement, resulting in the issuance by the Barangay Lupon of a Certification to
file action in court on 18 January 2002. On 10 June 2002, respondent George de Castro sent a letter to petitioner
terminating their lease agreement and demanding that the latter vacate and turn over the subject property to
respondents. Since petitioner stubbornly refused to comply with said demand letter, respondent George de
Castro, together with his siblings and co-respondents, Annie de Castro, Felomina de Castro Uban and Jesus de
Castro, filed the Complaint for ejectment before the MTC.

It must be noted, at this point, that although the Complaint stated that it was being filed by all of the
respondents, the Verification and the Certificate of Non-Forum Shopping were signed by respondent George de
Castro alone. He would subsequently attach to his position paper filed before the MTC on 28 October 2002 the
Special Powers of Attorney (SPAs) executed by his sisters Annie de Castro and Felomina de Castro Uban dated 7
February 2002 and 14 March 2002 respectively, authorizing him to institute the ejectment case against petitioner.
Petitioner, on the other hand, countered that there was no agreement between the parties to increase
the monthly rentals and respondents demand for an increase was exorbitant. The agreed monthly rental was only
for the amount of P9,000.00 and he was religiously paying the same every month. Petitioner then argued that
respondents failed to comply with the jurisdictional requirement of conciliation before the Barangay Lupon prior
to the filing of Civil Case. No. 1990, meriting the dismissal of their Complaint therein. The Certification to file action
issued by the Barangay Lupon appended to the respondents Complaint merely referred to the issue of rental
increase and not the matter of ejectment. Petitioner asserted further that the MTC lacked jurisdiction over the
ejectment suit, since respondents Complaint was devoid of any allegation that there was an unlawful withholding
of the subject property by the petitioner.[8]

During the Pre-Trial Conference[9] held before the MTC, the parties stipulated that in May 2002, petitioner
tendered to respondents the sum of P9,000.00 as rental payment for the month of January 2002; petitioner paid
rentals for the months of October 2001 to January 2002 but only in the amount of P9,000.00 per month;
respondents, thru counsel, sent a letter to petitioner on 10 June 2002 terminating their lease agreement which
petitioner ignored; and the Barangay Lupon did issue a Certification to file action after the parties failed to reach
an agreement before it.

After the submission of the parties of their respective Position Papers, the MTC, on 21 November 2002,
rendered a Decision[10] dismissing respondents Complaint in Civil Case No. 1990 for failure to comply with the prior
conciliation requirement before the Barangay Lupon. The decretal portion of the MTC Decision reads:

WHEREFORE, premised considered, judgment is hereby rendered ordering the dismissal

of this case. Costs against the [herein respondents].

On appeal, docketed as Civil Case No. A-2835, the RTC of Alaminos, Pangasinan, Branch 54, promulgated
its Decision[11] dated 27 June 2005 affirming the dismissal of respondents Complaint for ejectment after finding
that the appealed MTC Decision was based on facts and law on the matter. The RTC declared that since the original
agreement entered into by the parties was for petitioner to pay only the sum of P9.000.00 per month for the rent
of the subject property, and no concession was reached by the parties to increase such amount to P15.000.00,
petitioner cannot be faulted for paying only the originally agreed upon monthly rentals. Adopting petitioners
position, the RTC declared that respondents failure to refer the matter to the Barangay court for conciliation
process barred the ejectment case, conciliation before the Lupon being a condition sine qua non in the filing of
ejectment suits. The RTC likewise agreed with petitioner in ruling that the allegation in the Complaint was flawed,
since respondents failed to allege that there was an unlawful withholding of possession of the subject property,
taking out Civil Case No. 1990 from the purview of an action for unlawful detainer. Finally, the RTC decreed that
respondents Complaint failed to comply with the rule that a co-owner could not maintain an action without joining
all the other co-owners. Thus, according to the dispositive portion of the RTC Decision:
 WHEREFORE the appellate Court finds no cogent reason to disturb the findings of the
court a quo. The Decision dated November 21, 2002 appealed from is hereby AFFIRMED IN
TOTO.[12]

Undaunted, respondents filed a Petition for Review on Certiorari[13] with the Court of Appeals where it
was docketed as CA-G.R. SP No. 90906. Respondents argued in their Petition that the RTC gravely erred in ruling
that their failure to comply with the conciliation process was fatal to their Complaint, since it is only respondent
George de Castro who resides in Alaminos City, Pangasinan, while respondent Annie de Castro resides in
Pennsylvania, United States of America (USA); respondent Felomina de Castro Uban, in California, USA; and
respondent Jesus de Castro, now substituted by his wife, Martiniana, resides in Manila. Respondents further
claimed that the MTC was not divested of jurisdiction over their Complaint for ejectment because of the mere
absence therein of the term unlawful withholding of their subject property, considering that they had sufficiently
alleged the same in their Complaint, albeit worded differently. Finally, respondents posited that the fact that only
respondent George de Castro signed the Verification and the Certificate of Non-Forum Shopping attached to the
Complaint was irrelevant since the other respondents already executed Special Powers of Attorney (SPAs)
authorizing him to act as their attorney-in-fact in the institution of the ejectment suit against the petitioner.

On 19 September 2006, the Court of Appeals rendered a Decision granting the respondents Petition and
ordering petitioner to vacate the subject property and turn over the same to respondents. The Court of Appeals
decreed:

WHEREFORE, premises considered, the instant petition is GRANTED. The assailed

Decision dated June 27, 2005 issued by the RTC of Alaminos City, Pangasinan, Branch 54, is
REVERSED and SET ASIDE. A new one is hereby rendered ordering [herein petitioner] Leo Wee to
SURRENDER and VACATE the leased premises in question as well as to pay the sum of P15,000.00
per month reckoned from March, 2002 until he shall have actually turned over the possession
thereof to petitioners plus the rental arrearages of P30,000.00 representing unpaid increase in
rent for the period from October, 2001 to February, 2002, with legal interest at 6% per annum to
be computed from June 7, 2002 until finality of this decision and 12% thereafter until full
payment thereof. Respondent is likewise hereby ordered to pay petitioners the amount
of P20,000.00 as and for attorneys fees and the costs of suit.[14]

In a Resolution dated 25 January 2007, the appellate court denied the Motion for Reconsideration
interposed by petitioner for lack of merit.

Petitioner is now before this Court via the Petition at bar, making the following assignment of errors:

I.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT CONCILIATION

PROCESS IS NOT A JURISDICTIONAL REQUIREMENT THAT NON-COMPLIANCE THEREWITH DOES
NOT AFFECT THE JURISDICTION IN EJECTMENT CASE;

II.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING THE SUFFICIENCY OF THE
ALLEGATIONS IN THE COMPLAINT FOR EJECTMENT DESPITE THE WANT OF ALLEGATION OF
UNLAWFUL WITHOLDING PREMISES (sic) QUESTIONED BY PETITIONER;

III.
 THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE FILING OF THE
COMPLAINT OF RESPONDENT GEORGE DE CASTRO WITHOUT JOINING ALL HIS OTHER CO-
OWNERS OVER THE SUBJECT PROPERTY IS PROPER;

IV.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT APPLYING SUPREME COURT
CIRCULAR NO. 10 WHICH DIRECTS A PLEADER TO INDICATE IN HIS PLEADINGS HIS OFFICIAL
RECEIPT OF HIS PAYMENT OF HIS IBP DUES.[15]

Petitioner avers that respondents failed to go through the conciliation process before
the Barangay Lupon, a jurisdictional defect that bars the legal action for ejectment. The Certification to file action
dated 18 January 2002 issued by the Barangay Lupon, appended by the respondents to their Complaint in Civil
Case No. 1990, is of no moment, for it attested only that there was confrontation between the parties on the
matter of rental increase but not on unlawful detainer of the subject property by the petitioner. If it was the
intention of the respondents from the very beginning to eject petitioner from the subject property, they should
have brought up the alleged unlawful stay of the petitioner on the subject property for conciliation before
the Barangay Lupon.

The barangay justice system was established primarily as a means of easing up the congestion of cases in
the judicial courts. This could be accomplished through a proceeding before the barangay courts which, according
to the one who conceived of the system, the late Chief Justice Fred Ruiz Castro, is essentially arbitration in
character; and to make it truly effective, it should also be compulsory. With this primary objective of
the barangay justice system in mind, it would be wholly in keeping with the underlying philosophy of Presidential
Decree No. 1508 (Katarungang Pambarangay Law), which would be better served if an out-of-court settlement of
the case is reached voluntarily by the parties.[16] To ensure this objective, Section 6 of Presidential Decree No. 1508
requires the parties to undergo a conciliation process before the Lupon Chairman or the Pangkat ng
Tagapagkasundo as a precondition to filing a complaint in court subject to certain exceptions. The said section has
been declared compulsory in nature.[17]

Presidential Decree No. 1508 is now incorporated in Republic Act No. 7160 (The Local Government Code),
which took effect on 1 January 1992.

The pertinent provisions of the Local Government Code making conciliation a precondition to the filing of
complaints in court are reproduced below:

SEC. 412. Conciliation.- (a) Pre-condition to filing of complaint in court. No complaint,

petition, action, or proceeding involving any matter within the authority of the lupon shall be
filed or instituted directly in court or any other government office for adjudication, unless there
has been a confrontation between the parties before the lupon chairman or the pangkat, and
that no conciliation or settlement has been reached as certified by the lupon secretary or
pangkat secretary as attested to by the lupon or pangkat chairman or unless the settlement has
been repudiated by the parties thereto.
(b) Where parties may go directly to court. The parties may go directly to court in the following
instances:

(1) Where the accused is under detention;

(2) Where a person has otherwise been deprived of personal liberty calling for habeas
corpus proceedings;
 (3) Where actions are coupled with provisional remedies such as preliminary injunction,
attachment, delivery of personal property, and support pendente lite; and

(4) Where the action may otherwise be barred by the statute of limitations.
(c) Conciliation among members of indigenous cultural communities. The customs and traditions
of indigenous cultural communities shall be applied in settling disputes between members of the
cultural communities.

SEC. 408. Subject Matter for Amicable Settlement; Exception Thereto. The lupon of each
barangay shall have authority to bring together the parties actually residing in the same city or
municipality for amicable settlement of all disputes except:

(a) Where one party is the government or any subdivision or instrumentality thereof;

(b) Where one party is a public officer or employee, and the dispute relates to the
performance of his official functions;

(c) Offenses punishable by imprisonment exceeding one (1) year or a fine exceeding
Five thousand pesos (P5,000.00);

(d) Offenses where there is no private offended party;

(e) Where the dispute involves real properties located in different cities or
municipalities unless the parties thereto agree to submit their differences to amicable settlement
by an appropriate lupon;

(f) Disputes involving parties who actually reside in barangays of different cities or
municipalities, except where such barangay units adjoin each other and the parties thereto agree
to submit their differences to amicable settlement by an appropriate lupon;

(g) Such other classes of disputes which the President may determine in the interest of
justice or upon the recommendation of the Secretary of Justice.

There is no question that the parties to this case appeared before the Barangay Lupon for conciliation
proceedings. There is also no dispute that the only matter referred to the Barangay Lupon for conciliation was the
rental increase, and not the ejectment of petitioner from the subject property. This is apparent from a perusal of
the Certification to file action in court issued by the Barangay Lupon on 18 January 2002, to wit:

CERTIFICATION TO FILE COMPLAINTS

This is to certify that:

1. There was personal confrontation between parties before the barangay

Lupon regarding rental increase of a commercial building but conciliation
failed;

2. Therefore, the corresponding dispute of the above-entitled case may now be filed in
Court/Government Office.[18] (Emphasis ours.)

The question now to be resolved by this Court is whether the Certification dated 18 January 2002 issued
by the Barangay Lupon stating that no settlement was reached by the parties on the matter of rental increase
sufficient to comply with the prior conciliation requirement under the Katarungang Pambarangay Law to
authorize the respondents to institute the ejectment suit against petitioner.

The Court rules affirmatively.

While it is true that the Certification to file action dated 18 January 2002 of the Barangay Lupon refers
only to rental increase and not to the ejectment of petitioner from the subject property, the submission of the
same for conciliation before theBarangay Lupon constitutes sufficient compliance with the provisions of
the Katarungang Pambarangay Law. Given the particular circumstances of the case at bar, the conciliation
proceedings for the amount of monthly rental should logically and reasonably include also the matter of the
possession of the property subject of the rental, the lease agreement, and the violation of the terms thereof.

We now proceed to discuss the meat of the controversy.

The contract of lease between the parties did not stipulate a fixed period. Hence, the parties agreed to
the payment of rentals on a monthly basis. On this score, Article 1687 of the Civil Code provides:

Art. 1687. If the period for the lease has not been fixed, it is understood to be from
year to year, if the rent agreed upon is annual; from month to month, if it is monthly; from
week to week, if the rent is weekly; and from day to day, if the rent is to be paid daily. However,
even though a monthly rent is paid, and no period for the lease has been set, the courts may fix a
longer term for the lease after the lessee has occupied the premises for over one year. If the rent
is weekly, the courts may likewise determine a longer period after the lessee has been in
possession for over six months. In case of daily rent, the courts may also fix a longer period after
the lessee has stayed in the place for over one month. (Emphasis supplied.)

The rentals being paid monthly, the period of such lease is deemed terminated at the end of each
month. Thus, respondents have every right to demand the ejectment of petitioners at the end of each month, the
contract having expired by operation of law.Without a lease contract, petitioner has no right of possession to the
subject property and must vacate the same. Respondents, thus, should be allowed to resort to an action for
ejectment before the MTC to recover possession of the subject property from petitioner.

Corollarily, petitioners ejectment, in this case, is only the reasonable consequence of his unrelenting
refusal to comply with the respondents demand for the payment of rental increase agreed upon by both
parties. Verily, the lessors right to rescind the contract of lease for non-payment of the demanded increased rental
was recognized by this Court in Chua v. Victorio[19]:

The right of rescission is statutorily recognized in reciprocal obligations, such as

contracts of lease. In addition to the general remedy of rescission granted under Article 1191 of
the Civil Code, there is an independent provision granting the remedy of rescission for breach of
any of the lessor or lessees statutory obligations. Under Article 1659 of the Civil Code, the
aggrieved party may, at his option, ask for (1) the rescission of the contract; (2) rescission and
indemnification for damages; or (3) only indemnification for damages, allowing the contract to
remain in force.

Payment of the rent is one of a lessees statutory obligations, and, upon non-payment
by petitioners of the increased rental in September 1994, the lessor acquired the right to avail
of any of the three remedies outlined above. (Emphasis supplied.)

Petitioner next argues that respondent George de Castro cannot maintain an action for ejectment against
petitioner, without joining all his co-owners.
 Article 487 of the New Civil Code is explicit on this point:

ART. 487. Any one of the co-owners may bring an action in ejectment.

This article covers all kinds of action for the recovery of possession, i.e., forcible entry and unlawful
detainer (accion interdictal), recovery of possession (accion publiciana), and recovery of ownership (accion de
reivindicacion). As explained by the renowned civilist, Professor Arturo M. Tolentino [20]:

A co-owner may bring such an action, without the necessity of joining all the other co-
owners as co-plaintiffs, because the suit is deemed to be instituted for the benefit of all. If the
action is for the benefit of the plaintiff alone, such that he claims possession for himself and not
for the co-ownership, the action will not prosper. (Emphasis added.)

In the more recent case of Carandang v. Heirs of De Guzman,[21] this Court declared that a co-owner is not
even a necessary party to an action for ejectment, for complete relief can be afforded even in his absence, thus:

In sum, in suits to recover properties, all co-owners are real parties in interest. However,
pursuant to Article 487 of the Civil Code and the relevant jurisprudence, any one of them may
bring an action, any kind of action for the recovery of co-owned properties. Therefore, only one
of the co-owners, namely the co-owner who filed the suit for the recovery of the co-owned
property, is an indispensable party thereto. The other co-owners are not indispensable
parties. They are not even necessary parties, for a complete relief can be afforded in the suit
even without their participation, since the suit is presumed to have been filed for the benefit of
all co-owners.

Moreover, respondents Annie de Castro and Felomina de Castro Uban each executed a Special Power of
Attorney, giving respondent George de Castro the authority to initiate Civil Case No. 1990.

A power of attorney is an instrument in writing by which one person, as principal, appoints another as his
agent and confers upon him the authority to perform certain specified acts or kinds of acts on behalf of the
principal. The written authorization itself is the power of attorney, and this is clearly indicated by the fact that it
has also been called a letter of attorney.[22]

Even then, the Court views the SPAs as mere surplusage, such that the lack thereof does not in any way
affect the validity of the action for ejectment instituted by respondent George de Castro. This also disposes of
petitioners contention that respondent George de Castro lacked the authority to sign the Verification and the
Certificate of Non-Forum Shopping. As the Court ruled in Mendoza v. Coronel[23]:

We likewise hold that the execution of the certification against forum shopping by the
attorney-in-fact in the case at bar is not a violation of the requirement that the parties must
personally sign the same. The attorney-in-fact, who has authority to file, and who actually filed
the complaint as the representative of the plaintiff co-owner, pursuant to a Special Power of
Attorney, is a party to the ejectment suit. In fact, Section 1, Rule 70 of the Rules of Court
includes the representative of the owner in an ejectment suit as one of the parties authorized to
institute the proceedings. (Emphasis supplied.)

Failure by respondent George de Castro to attach the said SPAs to the Complaint is innocuous, since it is
undisputed that he was granted by his sisters the authority to file the action for ejectment against petitioner prior
to the institution of Civil Case No. 1990. The SPAs in his favor were respectively executed by respondents Annie de
Castro and Felomina de Castro Uban on 7 February 2002 and 14 March 2002; while Civil Case No. 1990 was filed
by respondent George de Castro on his own behalf and on behalf of his siblings only on 1 July 2002, or way after
he was given by his siblings the authority to file said action. The Court quotes with approval the following
disquisition of the Court of Appeals:

Moreover, records show that [herein respondent] George de Castro was indeed authorized by his
sisters Annie de Castro and Felomina de Castro Uban, to prosecute the case in their behalf as
shown by the Special Power of Attorney dated February 7, 2002 and March 14, 2002. That these
documents were appended only to [respondent George de Castros] position paper is of no
moment considering that the authority conferred therein was given prior to the institution of the
complaint in July, 2002. x x x.[24]

Respondent deceased Jesus de Castros failure to sign the Verification and Certificate of Non-Forum Shopping may
be excused since he already executed an Affidavit[25] with respondent George de Castro that he had personal
knowledge of the filing of Civil Case No. 1990. In Torres v. Specialized Packaging Development Corporation, [26] the
Court ruled that the personal signing of the verification requirement was deemed substantially complied with
when, as in the instant case, two out of 25 real parties-in-interest, who undoubtedly have sufficient knowledge
and belief to swear to the truth of the allegations in the petition, signed the verification attached to it.
In the same vein, this Court is not persuaded by petitioners assertion that respondents failure to allege
the jurisdictional fact that there was unlawful withholding of the subject property was fatal to their cause of
action.

It is apodictic that what determines the nature of an action as well as which court has jurisdiction over it
are the allegations in the complaint and the character of the relief sought. In an unlawful detainer case, the
defendants possession was originally lawful but ceased to be so upon the expiration of his right to possess. Hence,
the phrase unlawful withholding has been held to imply possession on the part of defendant, which was legal in
the beginning, having no other source than a contract, express or implied, and which later expired as a right and is
being withheld by defendant.[27]

In Barba v. Court of Appeals,[28] the Court held that although the phrase unlawfully withholding was not
actually used by therein petitioner in her complaint, the Court held that her allegations, nonetheless, amounted to
an unlawful withholding of the subject property by therein private respondents, because they continuously
refused to vacate the premises even after notice and demand.

In the Petition at bar, respondents alleged in their Complaint that they are the registered owners of the
subject property; the subject property was being occupied by the petitioner pursuant to a monthly lease contract;
petitioner refused to accede to respondents demand for rental increase; the respondents sent petitioner a letter
terminating the lease agreement and demanding that petitioner vacate and turn over the possession of the subject
property to respondents; and despite such demand, petitioner failed to surrender the subject property to
respondents.[29] The Complaint sufficiently alleges the unlawful withholding of the subject property by petitioner,
constitutive of unlawful detainer, although the exact words unlawful withholding were not used. In an action for
unlawful detainer, an allegation that the defendant is unlawfully withholding possession from the plaintiff is
deemed sufficient, without necessarily employing the terminology of the law. [30]

Petitioners averment that the Court of Appeals should have dismissed respondents Petition in light of the
failure of their counsel to attach the Official Receipt of his updated payment of Integrated Bar of the Philippines
(IBP) dues is now moot and academic, since respondents counsel has already duly complied therewith. It must be
stressed that judicial cases do not come and go through the portals of a court of law by the mere mandate of
technicalities.[31] Where a rigid application of the rules will result in a manifest failure or miscarriage of justice,
technicalities should be disregarded in order to resolve the case. [32]
 Finally, we agree in the ruling of the Court of Appeals that petitioner is liable for the payment of back
rentals, attorneys fees and cost of the suit. Respondents must be duly indemnified for the loss of income from
the subject property on account of petitioners refusal to vacate the leased premises.

WHEREFORE, premises considered, the instant Petition is DENIED. The Decision dated 19 September
2006 and Resolution dated 25 January 2007 of the Court of Appeals in CA-G.R. SP No. 90906 are
hereby AFFIRMED in toto. Costs against petitioner.

SO ORDERED.
 Republic of the Philippines
Supreme Court

SECOND DIVISION

LEONOR B. CRUZ, G.R. No. 164110

Petitioner,
Present:

QUISUMBING, J., Chairperson,

- versus - CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.

TEOFILA M. CATAPANG, Promulgated:

Respondent.
February 12, 2008
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

QUISUMBING, J.:

This petition for review seeks the reversal of the Decision[1] dated September 16, 2003 and the
Resolution[2] dated June 11, 2004 of the Court of Appeals in CA-G.R. SP No. 69250. The Court of Appeals reversed the
Decision[3] dated October 22, 2001 of the Regional Trial Court (RTC), Branch 86, Taal, Batangas, which had earlier
affirmed the Decision[4] dated September 20, 1999 of the 7th Municipal Circuit Trial Court (MCTC) of Taal, Batangas
ordering respondent to vacate and deliver possession of a portion of the lot co-owned by petitioner, Luz Cruz and
Norma Maligaya.

The antecedent facts of the case are as follows.

Petitioner Leonor B. Cruz, Luz Cruz and Norma Maligaya are the co-owners of a parcel of land covering an
area of 1,435 square meters located at Barangay Mahabang Ludlod, Taal, Batangas.[5] With the consent of Norma
Maligaya, one of the aforementioned co-owners, respondent Teofila M. Catapang built a house on a lot adjacent
to the abovementioned parcel of land sometime in 1992. The house intruded, however, on a portion of the co-
owned property.[6]

In the first week of September 1995, petitioner Leonor B. Cruz visited the property and was surprised to
see a part of respondents house intruding unto a portion of the co-owned property. She then made several
demands upon respondent to demolish the intruding structure and to vacate the portion encroaching on their
property. The respondent, however, refused and disregarded her demands. [7]

On January 25, 1996, the petitioner filed a complaint [8] for forcible entry against respondent before the
th
7 MCTC of Taal, Batangas. The MCTC decided in favor of petitioner, ruling that consent of only one of the co-
owners is not sufficient to justify defendants construction of the house and possession of the portion of the lot in
question.[9] The dispositive portion of the MCTC decision reads:
WHEREFORE, judgment is hereby rendered ordering the defendant or any person acting
in her behalf to vacate and deliver the possession of the area illegally occupied to the plaintiff;
ordering the defendant to pay plaintiff reasonable attorneys fees of P10,000.00, plus costs of
suit.

SO ORDERED.[10]

On appeal, the RTC, Branch 86, Taal, Batangas, affirmed the MCTCs ruling in a Decision dated October 22,
2001, the dispositive portion of which states:
 Wherefore, premises considered, the decision [appealed] from is hereby
affirmed in toto.

SO ORDERED.[11]

After her motion for reconsideration was denied by the RTC, respondent filed a petition for review with the
Court of Appeals, which reversed the RTCs decision. The Court of Appeals held that there is no cause of action for
forcible entry in this case because respondents entry into the property, considering the consent given by co-owner
Norma Maligaya, cannot be characterized as one made through strategy or stealth which gives rise to a cause of action
for forcible entry.[12] The Court of Appeals decision further held that petitioners remedy is not an action for ejectment
but an entirely different recourse with the appropriate forum. The Court of Appeals disposed, thus:

WHEREFORE, premises considered, the instant Petition is hereby GRANTED. The

challenged Decision dated 22 October 2001 as well as the Order dated 07 January 2002 of the
Regional Trial Court of Taal, Batangas, Branch 86, are hereby REVERSED and SET ASIDE and, in
lieu thereof, another is entered DISMISSING the complaint for forcible entry docketed as Civil
Case No. 71-T.

SO ORDERED.[13]

After petitioners motion for reconsideration was denied by the Court of Appeals in a Resolution
dated June 11, 2004, she filed the instant petition.

Raised before us for consideration are the following issues:

I.
WHETHER OR NOT THE KNOWLEDGE AND CONSENT OF CO-OWNER NORMA MALIGAYA IS A
VALID LICENSE FOR THE RESPONDENT TO ERECT THE BUNGALOW HOUSE ON THE PREMISES
OWNED PRO-INDIVISO SANS CONSENT FROM THE PETITIONER AND OTHE[R] CO-OWNER[.]

II.
WHETHER OR NOT RESPONDENT, BY HER ACTS, HAS ACQUIRED EXCLUSIVE OWNERSHIP OVER THE
PORTION OF THE LOT SUBJECT OF THE PREMISES PURSUANT TO THE CONSENT GRANTED UNTO HER
BY CO-OWNER NORMA MALIGAYA TO THE EXCLUSION OF THE PETITIONER AND THE OTHER CO-
OWNER.[14]

III.
. . . WHETHER OR NOT RESPONDENT IN FACT OBTAINED POSSESSION OF THE PROPERTY IN
QUESTION BY MEANS OF SIMPLE STRATEGY.[15]

Petitioner prays in her petition that we effectively reverse the Court of Appeals decision.

Simply put, the main issue before us is whether consent given by a co-owner of a parcel of land to a
person to construct a house on the co-owned property warrants the dismissal of a forcible entry case filed by
another co-owner against that person.

In her memorandum,[16] petitioner contends that the consent and knowledge of co-owner Norma
Maligaya cannot defeat the action for forcible entry since it is a basic principle in the law of co-ownership that no
individual co-owner can claim title to any definite portion of the land or thing owned in common until partition.

On the other hand, respondent in her memorandum[17] counters that the complaint for forcible entry cannot
prosper because her entry into the property was not through strategy or stealth due to the consent of one of the co-
owners. She further argues that since Norma Maligaya is residing in the house she built, the issue is not
just possession de facto but also one of possession de jure since it involves rights of co-owners to enjoy the property.

As to the issue of whether or not the consent of one co-owner will warrant the dismissal of a forcible
entry case filed by another co-owner against the person who was given the consent to construct a house on the
co-owned property, we have held that a co-owner cannot devote common property to his or her exclusive use to
the prejudice of the co-ownership.[18] In our view, a co-owner cannot give valid consent to another to build a house
on the co-owned property, which is an act tantamount to devoting the property to his or her exclusive use.
 Furthermore, Articles 486 and 491 of the Civil Code provide:

Art. 486. Each co-owner may use the thing owned in common, provided he does so in
accordance with the purpose for which it is intended and in such a way as not to injure the interest
of the co-ownership or prevent the other co-owners from using it according to their rights. The
purpose of the co-ownership may be changed by agreement, express or implied.

Art. 491. None of the co-owners shall, without the consent of the others, make
alterations in the thing owned in common, even though benefits for all would result
therefrom. However, if the withholding of the consent by one or more of the co-owners is clearly
prejudicial to the common interest, the courts may afford adequate relief.

Article 486 states each co-owner may use the thing owned in common provided he does so in accordance
with the purpose for which it is intended and in such a way as not to injure the interest of the co-ownership or
prevent the other co-owners from using it according to their rights. Giving consent to a third person to construct a
house on the co-owned property will injure the interest of the co-ownership and prevent other co-owners from
using the property in accordance with their rights.

Under Article 491, none of the co-owners shall, without the consent of the others, make alterations in the thing
owned in common. It necessarily follows that none of the co-owners can, without the consent of the other co-owners,
validly consent to the making of an alteration by another person, such as respondent, in the thing owned in common.
Alterations include any act of strict dominion or ownership and any encumbrance or disposition has been held implicitly
to be an act of alteration.[19] The construction of a house on the co-owned property is an act of dominion. Therefore, it is
an alteration falling under Article 491 of the Civil Code. There being no consent from all co-owners, respondent had no
right to construct her house on the co-owned property.

Consent of only one co-owner will not warrant the dismissal of the complaint for forcible entry filed against the
builder. The consent given by Norma Maligaya in the absence of the consent of petitioner and Luz Cruz did not vest upon
respondent any right to enter into the co-owned property. Her entry into the property still falls under the classification
through strategy or stealth.

The Court of Appeals held that there is no forcible entry because respondents entry into the property was
not through strategy or stealth due to the consent given to her by one of the co-owners. We cannot give our
imprimatur to this sweeping conclusion.Respondents entry into the property without the permission of petitioner
could appear to be a secret and clandestine act done in connivance with co-owner Norma Maligaya whom
respondent allowed to stay in her house. Entry into the land effected clandestinely without the knowledge of the
other co-owners could be categorized as possession by stealth.[20] Moreover, respondents act of getting only the
consent of one co-owner, her sister Norma Maligaya, and allowing the latter to stay in the constructed house, can
in fact be considered as a strategy which she utilized in order to enter into the co-owned property. As such,
respondents acts constitute forcible entry.

Petitioners filing of a complaint for forcible entry, in our view, was within the one-year period for filing the
complaint. The one-year period within which to bring an action for forcible entry is generally counted from the date of
actual entry to the land. However, when entry is made through stealth, then the one-year period is counted from the
time the petitioner learned about it.[21] Although respondent constructed her house in 1992, it was only in September
1995 that petitioner learned of it when she visited the property.Accordingly, she then made demands on respondent to
vacate the premises. Failing to get a favorable response, petitioner filed the complaint on January 25, 1996, which is
within the one-year period from the time petitioner learned of the construction.

WHEREFORE, the petition is GRANTED. The Decision dated September 16, 2003 and the Resolution dated
June 11, 2004 of the Court of Appeals in CA-G.R. SP No. 69250 are REVERSED and SET ASIDE. The Decision
dated October 22, 2001 of the Regional Trial Court, Branch 86, Taal, Batangas is REINSTATED. Costs against
respondent.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 149313 January 22, 2008

JULITA ROMBAUA PANGANIBAN, PAQUITO ROMBAUA, RUPERTO ROMBAUA, TERESITA ROMBAUA TELAJE and
LEONOR ROMBAUA OPIANA, petitioners,
vs.
JULITA S. OAMIL, respondent.

DECISION

YNARES-SANTIAGO, J.:

Assailed in this petition for review on certiorari are the Decision 1 of the Court of Appeals dated March 2, 2001 in
CA-G.R. CV No. 57557, which affirmed in toto the Order dated October 23, 1997 of the Regional Trial Court of
Olongapo City, Branch 73, and the Resolution2 dated July 10, 2001 denying the motion for reconsideration.

The facts as culled from the records are as follows:

On April 26, 1993 Julita Oamil, herein respondent, filed a complaint for specific performance with damages 3 with
the Regional Trial Court of Olongapo City, praying that Partenio Rombaua (Partenio) be ordered to execute a final
deed of sale over the parcel of land which was the subject of a prior "Agreement to Sell" executed by and between
them on May 17, 1990. The property which is alleged to be covered by the said "Agreement to Sell" consists of
204.5 square meters of land located at #11 21st St., East Bajac-Bajac, Olongapo City, and is claimed by respondent
Oamil to be Partenio’s conjugal share in a parcel of commercial land (the subject property) with an aggregate area
of 409 square meters acquired by Partenio and his deceased first wife Juliana4 during their marriage.

There are two portions of the subject property in contention: one consisting of 204.5 square meters facing
21stStreet (the 21st St. portion), and another consisting of 204.5 square meters facing Canda Street (the Canda St.
portion). Petitioners and their father Partenio are acknowledged co-owners of the subject property to the
following extent: one-half to Partenio as his conjugal share, and one-sixth each of the remaining half to petitioners
and Partenio as the surviving heirs of Juliana.

For failure to file an answer, Partenio was declared in default, and respondent presented her evidence ex parte.

On December 26, 1993, the trial court promulgated its Decision, 5 the dispositive portion of which reads as follows:

WHEREFORE, viewed from all the foregoing, judgment is hereby rendered as follows:

(1) The defendant is hereby ordered to execute a deed of absolute sale over the ½ portion (front) of the
realty subject matter of this case in favor of the plaintiff and to surrender the possession thereof to the
plaintiff. Failure of the defendant to do so, then the City Assessor of Olongapo is hereby directed to effect
the transfer of all rights/interest on the one-half (1/2) front portion of the said realty in the name of the
plaintiff, upon the finality of this decision;

(2) Plaintiff, however, is ordered to pay the amount of EIGHT THOUSAND PESOS (P8,000.00) representing
the balance of the interests due on the amount of P200,000.00, delinquent for one (1) year computed at
12% per annum;

(3) Defendant is, likewise, hereby ordered to pay the plaintiff attorney’s fees in the amount of TEN
THOUSAND PESOS (P10,000.00).

Let a copy of this Decision be furnished the City Assessor of Olongapo City.

SO ORDERED.6

Note that the trial court did not specify which portion of the property – the 21st St. portion or the Canda St. portion
– should be deeded to respondent as buyer of Partenio’s conjugal share.
Partenio failed to appeal, and the decision became final and executory on February 4, 1994. Entry of judgment was
made on February 8, 1994, and a writ of execution was issued on February 15, 1994 and served upon Partenio on
February 21, 1994. The writ was served as well upon the City Assessor of Olongapo City, who caused the transfer
of the Tax Declaration covering the 21st St. portion in respondent’s name.

In June 1994, petitioners filed a verified petition for relief from the decision of the trial court, grounded on the
following: 1) that Partenio’s conjugal share in the property, and that of petitioners as well, are being litigated in a
judicial partition proceeding7 (the partition case) which is pending with the Court of Appeals, hence the trial court
may not yet render a decision disposing of a definite area of the subject property in respondent’s favor; and, (2)
that petitioners were unjustly deprived of the opportunity to protect and defend their interest in court because,
notwithstanding that they are indispensable parties to the case (being co-owners of the subject property), they
were not impleaded in Civil Case No. 140-0-93.

In lieu of a hearing, the parties were directed to submit their respective position papers. Respondent, meanwhile,
moved to dismiss the petition, claiming that the stated grounds for relief are not included in the enumeration
under Section 2, Rule 38 of the Rules of Court. Petitioners opposed the motion.

In an Order dated January 13, 1995, the trial court denied the petition for relief because the decision in Civil Case
No. 140-0-93 had become final and executory. It held that only indispensable parties to the case may participate in
the proceedings thereof, and since petitioners may not be considered as indispensable parties because the subject
matter of the proceedings involves Partenio’s conjugal share in the property, they are precluded from filing a
petition for relief from the court’s judgment.

Petitioners moved for reconsideration insisting that they are indispensable parties in Civil Case No. 140-0-93
because as co-owners of the subject property by virtue of succession to the rights of their deceased mother, they
possess an interest that must be protected. Instead of resolving the motion, the trial court, with the concurrence
of the petitioners and the respondent, deferred the proceedings, to await the result of a pending appeal with the
Court of Appeals of the decision in Special Civil Action No. 340-0-86,8 the partition case, where the trial court, in its
decision, awarded specifically the Canda St. portion to Partenio as his conjugal share.

In the meantime, or sometime in 1995, a Motion for leave of court to file a Complaint in Intervention was filed by
Sotero Gan (Gan), who claims to be the actual and rightful owner of Partenio’s conjugal share. Gan claims to have
purchased Partenio’s conjugal share in the property, and in return, the latter on November 29, 1990 executed a
deed of waiver and quitclaim of his possessory rights. Gan likewise claims that the tax declaration covering the
portion of the property had been transferred in his name. He thus seeks the dismissal of Civil Case No. 140-0-93
and the reinstatement of his name on the tax declaration which by then had been placed in respondent’s name.

The parties submitted their respective oppositions to Gan’s motion, the core of their argument being that with the
finality of the decision in the case, intervention was no longer proper, and that Gan’s cause of action, if any, should
be litigated in a separate proceeding.

The trial court, in an Order dated January 22, 1996, denied Gan’s motion for intervention for being filed out of
time, considering that the decision of the court had become final and executory in February 1994. Gan moved for
reconsideration which was opposed by respondent, citing, among others, an Order dated April 18, 1994 issued by
the Department of Environment and Natural Resources (CENRO of Olongapo) which includes a finding that Gan
had transferred his rights and interest in the subject property to one Chua Young Bing.

In another Order dated October 23, 1997, 9 the trial court denied Gan’s motion for reconsideration, as well as the
petitioners’ motion for reconsideration of the January 13, 1995 order denying the petition for relief. In said order,
the court made reference to the decision in Special Civil Action No. 340-0-86, which by then had become final and
executory.10 The trial court likewise substantially modified its Decision dated December 26, 1993, by awarding
specifically the 21st St. portion of the property to Partenio as his conjugal share, despite the pronouncement in
Special Civil Action No. 340-0-86 which awards the Canda St. portion to him.

From the foregoing October 23, 1997 order, the petitioners and Gan interposed their separate appeals to the
Court of Appeals. Meanwhile, respondent filed a motion for execution pending appeal, which was denied on the
ground that there exist no special or compelling reasons to allow it.

On March 2, 2001, the appellate court rendered the herein assailed Decision, which affirmed in toto the appealed
October 23, 1997 Order of the trial court.

The appellate court sustained the trial court’s ruling that Partenio’s conjugal share in the subject property consists
of the 21st St. portion, thereby disregarding the prior final and executory decision in Special Civil Action No. 340-0-
86 which declares that Partenio is entitled to the Canda St. portion. The appellate court based the award of the
21st St. portion to respondent on the ground that petitioners have always acknowledged their father Partenio’s
"acts of ownership" over the 21st St. portion, thus signifying their consent and thereby barring them from
questioning the award.

Respondents moved for reconsideration but it was denied.

Petitioners are now before us via the present petition, raising the sole issue of whether petitioners can intervene
in the proceedings in Civil Case

No. 140-0-93 in order to protect their rights as co-owners of the subject property.

We resolve to GRANT the petition.

Under a co-ownership, the ownership of an undivided thing or right belongs to different persons. During the
existence of the co-ownership, no individual can claim title to any definite portion of the community property until
the partition thereof; and prior to the partition, all that the co-owner has is an ideal or abstract quota or
proportionate share in the entire land or thing.11 Before partition in a co-ownership, every co-owner has the
absolute ownership of his undivided interest in the common property. The co-owner is free to alienate, assign or
mortgage this undivided interest, except as to purely personal rights. The effect of any such transfer is limited to
the portion which may be awarded to him upon the partition of the property. 12

Under Article 497 of the Civil Code, in the event of a division or partition of property owned in common, assignees
of one or more of the co-owners may take part in the division of the thing owned in common and object to its
being effected without their concurrence. But they cannot impugn any partition already executed, unless there has
been fraud, or in case it was made notwithstanding a formal opposition presented to prevent it, without prejudice
to the right of the debtor or assignor to maintain its validity.

The decision in Special Civil Action No. 340-0-86, which is an action for judicial partition of the subject property,
determines what Partenio, and ultimately, respondent, as his successor-in-interest, is entitled to in Civil Case No.
140-0-93. As Partenio’s successor-in-interest to the property, respondent could not acquire any superior right in
the property than what Partenio is entitled to or could transfer or alienate after partition. In a contract of sale of
co-owned property, what the vendee obtains by virtue of such a sale are the same rights as the vendor had as co-
owner, and the vendee merely steps into the shoes of the vendor as co-owner.13

As early as May 17, 1990, when respondent and Partenio executed the "Agreement to Sell", the former knew that
the property she was purchasing was conjugal property owned in common by Partenio and the heirs of his
deceased wife.14 And while Civil Case No. 140-0-93 (the specific performance case) was pending, respondent was
apprised of the pendency of Special Civil Action No. 340-0-86 (the partition case). Yet, respondent did not
intervene, nor did she take part, nor enter any formal opposition – as assignee of Partenio’s conjugal share in the
property – in said partition proceedings. She did not exercise the rights granted her under Article 497 of the Civil
Code. Instead, when the court in Civil Case No. 140-0-93 decided to suspend the proceedings and hold the same in
abeyance while the appeal in Special Civil Action No. 340-0-86 remained unresolved, the respondent
unconditionally agreed to its temporary abatement. In other words, she chose to sit back and await the resolution
thereof.

Consequently, when the decision in Special Civil Action No. 340-0-86 became final and executory without the
respondent having questioned the same in any manner whatsoever, by appeal or otherwise, the division of
property decreed therein may no longer be impugned by her.

Thus said, the trial court in Civil Case No. 140-0-93 could not award the 21st St. portion to Partenio, since the court
in Special Civil Action No. 340-0-86 specifically awarded the Canda St. portion to him. The decision in Special Civil
Action No. 340-0-86, which became final and executory, should put an end to the co-ownership between Partenio
and the respondents, and the award made to each co-owner of specific portions of the property as their share in
the co-ownership should be respected.

Since the issue of each of the co-owners’ specific portion in the aggregate property has been laid to rest in Special
Civil Action No. 340-0-86, the final and executory decision in said proceeding should be conclusive on the issue of
which specific portion of the property became the subject matter of the sale between Partenio and the
respondent; that is, that Partenio, as declared owner of the Canda St. portion, could have transferred to
respondent only that part of the property and not the 21st St. portion. Although Partenio was free to sell or
transfer his undivided interest to the respondent, the effect of such transfer is limited to the portion which may be
awarded to him upon the partition of the property.
It was likewise error for the appellate court to have considered the alleged acts of ownership exercised upon the
21st St. portion by Partenio as weighing heavily against the decreed partition in Special Civil Action No. 340-0-86.
The determination of this issue is beyond the ambit of the trial court in Civil Case No. 140-0-93. As far as it was
concerned, it could only award to the respondent, if proper, whatever specific portion Partenio is found to be
entitled to in the event of a partition, in accordance with Article 493 of the Civil Code and the procedure outlined
in the Rules of Court. It could not, in an ordinary proceeding for specific performance with damages, subject the
property to a partial division or partition without the knowledge and participation of the other co-owners, and
while a special civil action for partition was simultaneously pending in another court.

The court in Civil Case No. 140-0-93 is not a partition court but one litigating an ordinary civil case, and all evidence
of alleged acts of ownership by one co-owner should have been presented in the partition case, there to be
threshed out in order that the partition court may arrive at a just division of the property owned in common; it is
not for the trial court in the specific performance case to properly appreciate. Being a court trying an ordinary civil
suit, the court in Civil Case No. 140-0-93 had no jurisdiction to act as a partition court. Trial courts trying an
ordinary action cannot resolve to perform acts pertaining to a special proceeding because it is subject to specific
prescribed rules.15

That the trial court suspended the proceedings in Civil Case No. 140-0-93 to make way for the resolution of Special
Civil Action No. 340-0-86 was an indication that it intended to abide by whatever would be decreed in the latter
case. For, understandably, the resolution of Special Civil Action No. 340-0-86 will settle the issue in Civil Case No.
140-0-93 with respect to which specific portion of the property constitutes the subject matter of the specific
performance suit and which would, in any case, be adjudicated to either of the two – the defendant co-owner and
seller Partenio or the plaintiff buyer Oamil, the herein respondent. Yet in the end, the trial court ultimately
disregarded what had been finally adjudicated and settled in Special Civil Action No. 340-0-86, and instead it took a
position that was entirely diametrically opposed to it.

It was likewise irregular for the respondent to have obtained a certificate of title over specific property which has
not been partitioned, especially where she concedes awareness of the existing co-ownership which has not been
terminated, and recognizes her status as mere successor-in-interest to Partenio. The spring may not rise higher
than its source.

In sum, the trial court and the Court of Appeals, by disregarding the final and executory judgment in Special Civil
Action No. 340-0-86, certainly ignored the principle of conclusiveness of judgments, which states that –

[A] fact or question which was in issue in a former suit and was there judicially passed upon and
determined by a court of competent jurisdiction, is conclusively settled by the judgment therein as far as
the parties to that action and persons in privity with them are concerned and cannot be again litigated in
any future action between such parties or their privies, in the same court or any other court of concurrent
jurisdiction on either the same or different cause of action, while the judgment remains unreversed by
proper authority. It has been held that in order that a judgment in one action can be conclusive as to a
particular matter in another action between the same parties or their privies, it is essential that the issue
be identical. If a particular point or question is in issue in the second action, and the judgment will depend
on the determination of that particular point or question, a former judgment between the same parties or
their privies will be final and conclusive in the second if that same point or question was in issue and
adjudicated in the first suit (Nabus vs. Court of Appeals, 193 SCRA 732 [1991]). Identity of cause of action
is not required but merely identity of issues.16

The ruling in Special Civil Action No. 340-0-86 – that the Canda St. portion shall go to Partenio – became the law of
the case and continues to be binding between the parties as well as their successors-in-interest, the decision in
said case having become final and executory. Hence, the binding effect and enforceability of that dictum can no
longer be relitigated anew in Civil Case No. 140-0-93 since said issue had been resolved and finally laid to rest in
the partition case, by conclusiveness of judgment, if not by the principle of res judicata. It may not be reversed,
modified or altered in any manner by any court.

As a result of the trial court’s refusal to abide by the decision in Special Civil Action No. 340-0-86, the rights of the
petitioners have been unnecessarily transgressed, thereby giving them the right to seek relief in court in order to
annul the October 23, 1997 Order of the trial court which substantially and wrongly modified its original decision in
Civil Case No. 140-0-93. It was clear mistake for the trial court to have gone against the final and executory
decision in Special Civil Action No. 340-0-86 and its original decision, which does not award a definite portion of
the disputed property to Partenio, precisely because, as a court litigating an ordinary civil suit, it is not authorized
to partition the subject property but only to determine the rights and obligations of the parties in respect to
Partenio’s undivided share in the commonly owned property. As a result of this mistake, the petitioners are
entitled to relief.
Finally, with respect to Gan’s intervention, we affirm the appellate court’s finding that the same is no longer
proper considering that the decision in Civil Case No. 140-0-93 had become final and executory. Gan moved to
intervene only in 1995, when the decision became final and executory in February 1994. Certainly, intervention,
being merely collateral or ancillary to the principal action, may no longer be allowed in a case already terminated
by final judgment.17 Moreover, since Gan did not appeal the herein assailed decision of the appellate court, then
the same, as against him, has become final and executory.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated March 2, 2001 in CA-G.R. CV
No. 57557 and the Resolution dated July 10, 2001 are REVERSED and SET ASIDE, with the exception that the denial
of the intervenor Sotero Gan’s motion for intervention is AFFIRMED.

The Order dated October 23, 1997 of the Regional Trial Court of Olongapo City in Civil Case No. 140-0-93 is
hereby DECLARED of no effect. In all other respects, the Decision of the trial court in Civil Case No. 140-0-93 dated
December 26, 1993 is AFFIRMED. The said court is moreover ORDERED to abide by the pronouncement in Special
Civil Action No. 340-0-86 with respect to Partenio Rombaua’s conjugal share in the disputed property.

SO ORDERED.
 Republic of the Philippines
Supreme Court

THIRD DIVISION

JOAQUIN QUIMPO, SR., substituted G.R. No. 160956

by Heirs of Joaquin Quimpo, Sr.,
Petitioners, Present:

YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CORONA,*
NACHURA, and
REYES, JJ.
CONSUELO ABAD VDA. DE
BELTRAN, IRENEO ABAD,
DANILO ABAD, MARITES Promulgated:
ABAD, ANITA and HELEN ABAD,
Respondents. February 13, 2008
x-----------------------------------------------------------------------------------------x

RESOLUTION

NACHURA, J.:

This Petition for Review on Certiorari assails the July 22, 2003 Decision[1] of the Court of Appeals in CA-G.R. CV No.
56187, and the October 16, 2003 Resolution denying the motion for its reconsideration.

Eustaquia Perfecto-Abad (Eustaquia) was the owner of several parcels of land in Goa, Camarines Sur,
described as follows:

Parcel I - Residential land situated at Abucayan, Goa, Camarines Sur covering an area of 684
square-meters;

Parcel II Coconut land situated at Abucayan, Goa, Camarines Sur covering an area of 4.3731
hectares;

Parcel III Residential land situated at San Jose Street, Goa, Camarines Sur covering an area of
1,395 square meters; and

Parcel IV Abaca and coconut land situated at Abucayan, Goa, Camarines Sur covering an area
42.6127 hectares.[2]

Eustaquia died intestate in 1948 leaving these parcels of land to her grandchild and great grandchildren,
namely, Joaquin Quimpo and respondents Consuelo, Ireneo, Danilo, Marites, Anita and Helen, all surnamed Abad.

In 1966, Joaquin and respondents undertook an oral partition of parcel III (San Jose property) and parcel
IV. Half of the properties was given to Joaquin and the other half to the respondents. However, no document of
partition was executed, because Joaquin refused to execute a deed. Consuelo and Ireneo occupied their respective
shares in the San Jose property, and installed several tenants over their share in parcel IV. Joaquin, on the other
hand, became the administrator of the remaining undivided properties and of the shares of respondents Danilo,
Marites, Anita and Helen, who were still minors at that time.

In 1989, Danilo, Marites, Anita and Helen wanted to take possession of the portions allotted to them, but
Joaquin prevented them from occupying the same. Joaquin also refused to heed respondents demand for partition
of parcels I and II, prompting respondents to file a complaint for judicial partition and/or recovery of possession
with accounting and damages with the Regional Trial Court (RTC) of Camarines Sur.[3]
Joaquin denied the material allegations in the complaint, and averred, as his special and affirmative
defenses, lack of cause of action and prescription. He asserted absolute ownership over parcels III and IV, claiming
that he purchased these lands from Eustaquia in 1946, evidenced by deeds of sale executed on August 23,
1946 and December 2, 1946. He, likewise, claimed continuous, peaceful and adverse possession of these lots since
1946, and alleged that Consuelos occupation of the portion of the San Joseproperty was by mere tolerance.[4]

During the pendency of the case, Joaquin died. Accordingly, he was substituted by his wife, Estela Tena-
Quimpo and his children, namely, Jose, Adelia, Joaquin, Anita, Angelita, Amelia, Arlene, Joy and Aleli, all surnamed
Quimpo (the Quimpos).

On December 12, 1996, the RTC rendered a Decision[5] in favor of respondents, declaring them as co-
owners of all the properties left by Eustaquia. It rejected Joaquins claim of absolute ownership over parcels III and
IV, and declared void the purported deeds of sale executed by Eustaquia for lack of consideration and consent. The
court found that at the time of the execution of these deeds, Joaquin was not gainfully employed and had no
known source of income, which shows that the deeds of sale state a false and fictitious consideration. Likewise,
Eustaquia could not have possibly given her consent to the sale because she was already 91 years old at that
time. The RTC also sustained the oral partition among the heirs in 1966. According to the trial court, the possession
and occupation of land by respondents Consuelo and Ireneo, and Joaquins acquiescence for 23 years, furnish
sufficient evidence that there was actual partition of the properties. It held that Joaquin and his heirs are
now estopped from claiming ownership over the entire San Jose property as well as over parcel IV.

The RTC disposed, thus:

WHEREFORE, decision is hereby rendered in favor of the plaintiffs Consuelo Vda. de

Beltran, Ireneo Abad, Marites Abad, Danilo Abad, Anita Abad and Helen Abad and against
defendant Joaquin Quimpo, substituted by the latters wife Estela Tena and their children,
Amparo, Jose, Amelia, Joaquin Jr., Adelia, Arlene, Anita, Joy, Angelita and Aleli, all surnamed
Quimpo, as follows:

1. Ordering the above-named substituted defendants, and the plaintiffs to execute

their written agreement of partition with respect to parcel Nos. III and IV more
particularly described in paragraph 7 of the complaint, and for them to execute an
agreement of partition with respect to parcel Nos. I and II, both parcels are more
particularly described in paragraph 7 of the complaint;

2. Declaring the plaintiffs Danilo Abad, Marites Abad, Anita Abad and Helen Abad the
owner of six (6) hectares a portion included in parcel No. IV also described in
paragraph 7 of the complaint, and therefore, entitled to its possession and ordering
the said substituted defendants to deliver that portion to them as their share
thereto;

3. Ordering the above-named substituted defendants to pay plaintiffs the sum of Six
Thousand Pesos (P6,000.00), Philippine Currency, as reasonable attorneys fees and
the sum of One Thousand Pesos (P1,000.00) also of Philippine Currency, as litigation
expenses and for the said defendants to pay the costs.

The counterclaim, not being proved, the same is hereby ordered dismissed.
 SO ORDERED.[6]

On appeal, the CA affirmed the RTC ruling. Sustaining the RTC, the CA declared that it was plausible that
Eustaquias consent was vitiated because she was then 91 years old and sickly. It was bolstered by the fact that the
deeds of sale only surfaced 43 years after its alleged execution and 23 years from the time of the oral
partition. The CA also rejected petitioners argument that the action was barred by prescription and laches,
explaining that prescription does not run against the heirs so long as the heirs, for whose benefit prescription is
invoked, have not expressly or impliedly repudiated the co-ownership. The CA found no repudiation on Joaquins
part. It, therefore, concluded that respondents action could not be barred by prescription or laches.

The Quimpos, thus, filed the instant petition for review on certiorari imputing the following errors to the CA:

1) THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PETITIONERS DID NOT ACQUIRE
OWNERSHIP OVER [THE] SUBJECT PARCELS OF LAND BY WAY OF DEEDS OF ABSOLUTE SALE
EXECUTED IN THEIR FAVOR;

2) THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT CO-OWNERSHIP EXISTS AMONG
PETITIONERS AND RESPONDENTS OVER THE SUBJECT PARCELS OF LAND;

3) THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT RESPONDENTS HAVE PROVEN
THEIR FILIATION TO THE ORIGINAL OWNER OF THE SUBJECT PARCELS OF LAND BY MERE SCANT
EVIDENCE;

4) THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT LACHES HAS TIMEBARRED
THE RESPONDENTS FROM ASSAILING THE ABSOLUTE OWNERSHIP OF PETITIONERS OVER THE
SUBJECT PARCELS OF LAND; AND

5) THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT RESPONDENTS ARE ENTITLED
TO ATTORNEYS FEES.[7]

The Quimpos insist on the validity of the deeds of sale between Joaquin and Eustaquia. They assail the
probative value and weight given by the RTC and the CA in favor of the respondents pieces of evidence while
refusing to give credence or value to the documents they presented. Specifically, they contend that the notarized
deeds of sale and the tax declarations should have adequately established Joaquins ownership of parcels III and IV.
The contention has no merit. Well-entrenched is the rule that the Supreme Courts role in a petition under
Rule 45 is limited to reviewing or reversing errors of law allegedly committed by the appellate court. Factual
findings of the trial court, especially when affirmed by the Court of Appeals, are conclusive on the parties. Since
such findings are generally not reviewable, this Court is not duty-bound to analyze and weigh all over again the
evidence already considered in the proceedings below, unless the factual findings complained of are devoid of
support from the evidence on record or the assailed judgment is based on a misapprehension of facts.[8]

Petitioners fail to convince us that the CA committed reversible error in affirming the trial court and
in giving no weight to the pieces of evidence they presented.

The stated consideration for the sale are P5,000.00 and P6,000.00, respectively, an amount which was so
difficult to raise in the year 1946. Respondents established that at the time of the purported sale Joaquin Quimpo
was not gainfully employed. He was studying in Manila and Eustaquia was the one supporting him; that when
Eustaquia died two (2) years later, Joaquin was not able to continue his studies. The Quimpos failed to override
this. Except for the incredible and unpersuasive testimony of Joaquins daughter, Adelia Magsino, no other
testimonial or documentary evidence was offered to prove that Joaquin was duly employed and had the financial
capacity to buy the subject properties in 1946.
In Rongavilla v. Court of Appeals,[9] reiterated in Cruz v. Bancom Finance Corp,[10] we held that a deed of sale, in
which the stated consideration has not been, in fact, paid is a false contract; that it is void ab
initio. Furthermore, Ocejo v. Flores,[11] ruled that a contract of purchase and sale is null and void and produces no
effect whatsoever where it appears that the same is without cause or consideration which should have been the
motive thereof, or the purchase price which appears thereon as paid but which in fact has never been paid by the
purchaser to the vendor.

Likewise, both the trial court and the CA found that Eustaquia was 91 years old, weak and senile, at the
time the deeds of sale were executed. In other words, she was already mentally incapacitated by then, and could
no longer be expected to give her consent to the sale. The RTC and CA cannot, therefore, be faulted for not giving
credence to the deeds of sale in favor of Joaquin.

Petitioners also presented Tax Declaration Nos. 3650,[12] 3708,[13] and 3659[14] to substantiate Joaquins
claim of absolute dominion over parcels III and IV. But we note that these tax declarations are all in the name of
Eustaquia Perfecto-Abad. These documents, therefore, do not support their claim of absolute dominion since
1946, but enervate it instead. Besides, the fact that the disputed property may have been declared for taxation
purposes in the name of Joaquin Quimpo does not necessarily prove ownership for it is well settled that a tax
declaration or tax receipts are not conclusive evidence of ownership. [15] The CA, therefore, correctly found this
proof inadequate to establish Joaquins claim of absolute dominion.

For forty-three (43) years, Consuelo and Ireneo occupied their portions of the San Jose property and
significantly, Joaquin never disturbed their possession. They also installed tenants in parcel IV, and Joaquin did not
prevent them from doing so, nor did he assert his ownership over the same. These unerringly point to the fact that
there was indeed an oral partition of parcels III and IV.

In Maglucot-aw v. Maglucot,[16] we held, viz.:

[P]artition may be inferred from circumstances sufficiently strong to support the

presumption. Thus, after a long possession in severalty, a deed of partition may be presumed. It
has been held that recitals in deeds, possession and occupation of land, improvements made
thereon for a long series of years, and acquiescence for 60 years, furnish sufficient evidence that
there was an actual partition of land either by deed or by proceedings in the probate court,
which had been lost and were not recorded.

Furthermore, in Hernandez v. Andal,[17] we explained that:

On general principle, independent and in spite of the statute of frauds, courts of equity have
enforced oral partition when it has been completely or partly performed.

Regardless of whether a parol partition or agreement to partition is valid and

enforceable at law, equity will in proper cases, where the parol partition has
actually been consummated by the taking of possession in severalty and the
exercise of ownership by the parties of the respective portions set off to each,
recognize and enforce such parol partition and the rights of the parties
thereunder. Thus, it has been held or stated in a number of cases involving an
oral partition under which the parties went into possession, exercised acts of
ownership, or otherwise partly performed the partition agreement, that equity
will confirm such partition and in a proper case decree title in accordance with
the possession in severalty.

In numerous cases it has been held or stated that parol partitions may be
sustained on the ground of estoppel of the parties to assert the rights of a tenant
in common as to parts of land divided by parol partition as to which possession in
severalty was taken and acts of individual ownership were exercised. And a court
of equity will recognize the agreement and decree it to be valid and effectual for
the purpose of concluding the right of the parties as between each other to hold
their respective parts in severalty.
 A parol partition may also be sustained on the ground that the parties
thereto have acquiesced in and ratified the partition by taking possession in
severalty, exercising acts of ownership with respect thereto, or otherwise
recognizing the existence of the partition.

A number of cases have specifically applied the doctrine of part performance,

or have stated that a part performance is necessary, to take a parol partition out
of the operation of the statute of frauds. It has been held that where there was a
partition in fact between tenants in common, and a part performance, a court of
equity would have regard to and enforce such partition agreed to by the parties.

The CA, therefore, committed no reversible error in sustaining the oral partition over parcels III and IV and in
invalidating the deeds of sale between Eustaquia and Joaquin.

Similarly, we affirm the CA ruling that respondents are co-owners of the subject four (4) parcels of land,
having inherited the same from a common ancestor Eustaquia Perfecto-Abad. Petitioners assertion that
respondents failed to prove their relationship to the late Eustaquia deserves scant consideration.

During the pre-trial, Joaquin Quimpo admitted that:

Eustaquia Perfecto Abad and Diego Abad had two (2) children by the names of Leon Abad and
Joaquin Abad; that Leon Abad has three (3) children namely: Anastacia, Wilfredo and Consuelo,
all surnamed Abad; that Joaquin Abad has only one (1) child, a daughter by the name of Amparo;
that Wilfredo has four (4) children, namely, Danilo, Helen, Marites and Anita; Amparo has one
child, son Joaquin Quimpo, x x x [18]

Consuelo was the grandchild of Eustaquia, while respondents Danilo, Helen, Marites, Anita and also Joaquin
Quimpo were Eustaquias great grandchildren. As such, respondents can rightfully ask for the confirmation of the
oral partition over parcels III and IV, and the partition of parcels I and II. Jurisprudence is replete with rulings that
any co-owner may demand at any time the partition of the common property unless a co-owner has repudiated
the co-ownership. This action for partition does not prescribe and is not subject to laches.[19]

Finally, petitioners challenge the attorneys fees in favor of respondents.

The grant of attorneys fees depends on the circumstances of each case and lies within the discretion of
the court. It may be awarded when a party is compelled to litigate or to incur expenses to protect its interest by
reason of an unjustified act by the other,[20] as in this case.

In fine, we find no reversible error in the assailed rulings of the Court of Appeals.

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 56187,
are AFFIRMED.

SO ORDERED.
 Republic of the Philippines
Supreme Court

FIRST DIVISION

HEIRS OF PANFILO F. ABALOS,[1] G.R. No. 156224

Petitioners,
Present:
PUNO, C.J., Chairperson,
- versus - SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
LEONARDO-DE CASTRO, JJ.

AURORA A. BUCAL, DEMETRIO

BUCAL, ARTEMIO F. ABALOS,
LIGAYA U. ABALOS, ROMULO
F. ABALOS, JESUSA O. ABALOS,
MAURO F. ABALOS and
LUZVIMINDA R. ABALOS, Promulgated:
Respondents.
February 19, 2008

X --------------------------------------------------------------------------------------- X

DECISION

AZCUNA, J.:

This petition for review on certiorari under Rule 45 of the Rules on Civil Procedure assails the August 31,
2001 Decision[2] and November 20, 2002 Resolution[3] of the Court of Appeals (CA) in CA-G.R. CV No. 39138, which
affirmed with modification the May 25, 1992 Decision [4] of the Regional Trial Court (RTC) of Lingayen, Pangasinan,
Branch 39, in Civil Case No. 16289.

Prologue

On October 30, 1978, petitioners father, Panfilo Abalos, filed before the RTC of Lingayen, Pangasinan, a
complaint[5] docketed as Civil Case No. 15465 for Partition, Annulment of Certain Documents, Accounting and
Damages against Faustino Abalos, his brother, and Danilo Abalos, his nephew and the only surviving heir of his
brother Pedro Abalos. In the amended complaint,[6] Panfilo alleged that their father/grandfather, Francisco Abalos,
died intestate and was survived by his wife, Teodorica, and their children, namely: Maria, Faustino, Pedro, Roman
and Panfilo; that at the time of his death, Francisco left the following real properties:

xxx xxx xxx

a.) A parcel of residential land situated in Linoc, Binmaley, Pangasinan, containing an area of
1,020 sq. meters, bounded on the North by Leoncio Dalmacio; On the East by Dimas Perez;
On the South by Callejon; And on the West by Magno Dalmacio; declared under Tax
Declaration No. 121 in the name of Francisco Abalos and assessed at P255.50; [n]ot
registered under Act 496 [or] under the Spanish [M]ortgaged Law[;]

b.) A parcel of unirrigated riceland situated in Linoc, Binmaley, Pangasinan, containing an

area of 841 sq. meters, bounded on the North by Callejon; On the South by Roberto
Aquino; On the East by Eulalio Javier; And on the West by Hipolito Perez. It is originally
covered by Tax Declaration in the name of Francisco Abalos now covered by Tax
Declaration No. 14457 in the name of Faustino Abalos and assessed at P20.00[;] [n]ot
registered under Act 496 [or] under the Spanish [M]ortgaged Law;
 c.) A parcel of unirrigated riceland situated in Linoc, Binmaley, Pangasinan, containing an
area of 1,196 sq. meters, bounded on the North by Callejon; On the East by Estanislao
Ferrer; On the South by Saturnino Aquino; And on the West by Hipolito Perez[.] It is
originally declared in the name of Francisco Abalos and now covered by Tax Declaration
No. 14458 in the name of Faustino Abalos and assessed at P30.00;

d.) A parcel of fishpond situated in Linoc, Binmaley, Pangasinan, containing an area of 1,158
sq. meters, bounded on the North by Doyao River; On the East by Hipolito Perez; On the
South by Leoncio Dalmacio; And on the West by Teodoro Abalos. It is originally declared in
the [name] of Francisco Abalos and now covered by Tax Declaration No. 21592 in the
name of Faustino Abalos and assessed at P370.00;

e.) A parcel of fishpond situated in Linoc, Binmaley, Pangasinan, containing an area of 1,158
sq. meters, bounded on the North by Leoncio Dalmacio; On the East by Teodoro Abalos;
On the South by Leoncio Dalmacio; And on the West by Evaristo Dalmacio. It is originally
declared in the name of Francisco Abalos and now covered by Tax Declaration No. 21591
in the name of Faustino Abalos and assessed at P370.00;

f.) A parcel of unirrigated riceland situated in Linoc, Binmaley, Pangasinan, containing an

area of 950 sq. meters[,] bounded on the North by Liberato Gonzalo; On the East by
Severina Catalan; On the South by Severina Catalan; And on the West by Barrio Road of
Linoc[;] [d]eclared under Tax Declaration No. 124 in the [name] of Francisco Abalos and
[a]ssessed at P20.00;

g.) A parcel of fishpond situated in Canaoalan, Binmaley, Pangasinan, containing an area of

2,480 sq. meters, bounded on the North by Francisco Deogracias; On the East by a Path;
On the South by Ponciano Cayabyab; And on the West by Ponciano Cayabyab[;] [d]eclared
under Tax Declaration No. 122 in the name of Francisco Abalos and assessed at P70.00;

h.) A parcel of fishpond situated in Canaoalan, Binmaley, Pangasinan, containing an area of

1,585 sq. meters, bounded on the North by Adriano Gonzalo; On the East by Florencio
Perez; On the South by Pioquinto Ferrer; And on the West by Pator Terrado[;] [d]eclared
under Tax Declaration No. 123 in the name of Francisco Abalos and assessed at P60.00;

i.) A parcel of little fishpond adjoining and North of the land described in paragraph 4 sub-
paragraph (a) of this complaint whose Tax Declaration could not be produced by the
plaintiff;[7]

xxx xxx xxx

that said properties were administered by Teodorica; that following their mothers death, there was a verbal
agreement among Faustino, Pedro and Panfilo that Faustino would administer all the properties left by their
parents except those given by Teodorica to each of the siblings as their partial advance inheritance; that taking
undue advantage of his position and in clear breach of the trust and confidence reposed on him, Faustino, by
means of fraud and machination, took possession of the properties given to Maria and Roman upon their death
and transferred some of the administered properties in his name and/or in the name of his heirs or disposed of
them in favor of third parties; that since his administration of the properties, Faustino has not made any
accounting of the produce, appropriating them almost to himself; and that Panfilo repeatedly demanded the
partition of the properties but Faustino refused to do so despite earnest efforts towards amicable settlement.

After Panfilo rested his case and following the postponements at the instance of defendants, the trial court, upon
motion, declared that Faustino and Danilo were deemed to have waived their right to present
evidence.[8] On February 21, 1984, RTC Branch 37 of Lingayen, Pangasinan, rendered its Decision, [9] the dispositive
portion of which stated:

WHEREFORE, judgment is hereby rendered ordering:

i. the partition of the intestate estate of the deceased Francisco Abalos in the
following manner
 a. to the plaintiff, Panfilo Abalos, is the fishpond, Parcel D referred to as
Duyao; and of fishpond, Parcel H referred to as Pinirat plus his advance
inheritance, Parcel F referred to as Manga;

b. to defendant, Faustino Abalos, is the residential land where his house

stands and parcels A to I, plus his advance inheritance, Parcels [B] and C;

c. to defendant, Danilo Abalos, is that fishpond, parcel E referred to as

Emong, and the portion of the fishpond, Parcel H referred to as Pinirat and
his advance inheritance of his father Pedro Abalos, Parcel G.

ii. the defendant Faustino Abalos to reimburse to plaintiff the total amount
of P19,580.00, Philippine Currency, as plaintiffs lawful share from 1944;

iii. the annulment of all documents and/or instruments which transferred said
properties and are considered inconsistent with the above partition;

iv. the dismissal of defendants counterclaim;

v. the defendants to pay the costs of the suit.

SO ORDERED.[10]

Despite the filing of a notice of appeal beyond the reglementary period, the trial court still gave due
course to the appeal of Faustino and Danilo; thus, Panfilo filed a petition for certiorari before this Court, which
subsequently referred the case to the Intermediate Appellate Court (IAC, now the Court of Appeals). [11] The IAC
granted the petition and denied the motion for reconsideration. [12] On October 30, 1985, this Court affirmed the
Decision.[13] Upon the issuance of an entry of judgment on November 4, 1985, the IAC ordered the remand of the
case to the RTC.[14] Thereafter, on December 11, 1985, the trial court issued a writ of execution in favor of
Panfilo.[15]

The Case
The instant case arose when petitioners father, Panfilo, began to execute the Decision in Civil Case No.
15465. In opposition, respondents, who are children and in-laws of the now deceased Faustino, filed on January 8,
1986 a case for Quieting of Title, Possession, Annulment of Document and Damages with Preliminary
Injunction.[16] Docketed as Civil Case No. 16289, the complaint alleged, among others, that:

xxx xxx xxx

III

Plaintiffs are the absolute owners and in actual possession of the following parcels of
land more particularly described, to wit:

(a.) A parcel of land (fishpond) with an approximate area of 289.5 square meters, more
or less, located at Linoc, Binmaley, Pangasinan. Bounded on the North by the Duyao River; on the
East by Faustino Abalos before, now Romulo Abalos; on the South by Leoncio Dalmacio; and on
the West by Romulo Abalos. Declared in the name of Aurora A. Bucal under Tax [Dec.] No. 1568
of the current land records of Binmaley, Pangasinan; assessed value P150.00;

(b.) A parcel of riceland located at Linoc, Binmaley, Pangasinan, containing an area of

1,196 square meters, more or less. Bounded on the North by Callejon; on the East by Estanislao
Ferrer; on the South by Saturnino Aquino; and on the West by Hipolito Ferrer. Declared in the
names of Artemio F. Abalos and Mauro F. Abalos under Tax [Dec.] No. 1007 of the land records of
Binmaley, Pangasinan; assessed value P260.00;

(c.) A parcel of residential land located at Linoc, Binmaley, Pangasinan, with an area of
1,029 square meters, more or less. Bounded on the North by Leoncio Dalmacio; on the East by
Dimas Perez; on the South by Callejon; and on the West by Magno Dalmacio. Declared in the
name of Romulo F. Abalos under Tax [Dec.] No. 35 of the current land records of Binmaley,
Pangasinan; assessed value P6,120.00;

(d.) A portion of fishpond located at Linoc, Binmaley, Pangasinan, with an area of 289.5
square meters, more or less. Bounded on the North by the Duyao River; on the East by Faustino
Abalos; on the South by Leoncio Dalmacio; and on the West by Teodoro Abalos. Declared in the
name of Romulo F. Abalos under Tax [Dec.] No. 33 of the current land records of Binmaley,
Pangasinan; assessed value P180.00;

(e.) A portion (eastern) of fishpond located at Linoc, Binmaley, Pangasinan, with an area
of 579 square meters, more or less. Bounded on the North by Leoncio Dalmacio; on the East by
Teodoro Abalos; on the South by Leoncio Abalos; and on the West by Evaristo Dalmacio.
Declared in the names of Artemio F. Abalos and Mauro F. Abalos under Tax [Dec.] No. 1009 of
the land records of Binmaley, Pangasinan; assessed value P340.00;

(f.) A parcel of fishpond located at Canaoalan, Binmaley, Pangasinan, with an area of

1,506 square meters, more or less. Bounded on the North by Adriano Gonzalo; on the East by
Florencio Perez; on the South by Pioquinto Ferrer; and on the West by Pastor Terrado. Declared
in the names of Romulo F. Abalos and Mauro F. Abalos under Tax [Dec.] No. 1314 of the land
records of Binmaley, Pangasinan; assessed value P970.00;
IV
Parcel (a) above-described belongs in absolute ownership to spouses Aurora A. Bucal and
Demetrio Bucal who are in actual possession thereof as such, having acquired the same by
absolute sale from Romulo F. Abalos who in turn bought the same from Maria Abalos; that the
latter in turn acquired the same by inheritance from her deceased parents, Francisco Abalos and
Teodorica Ferrer, who died on May 4, 1928 and June 2, 1945, respectively. A copy of the sale
from Maria Abalos to Romulo F. Abalos is hereto attached as ANNEX A while the sale by Romulo
F. Abalos to Aurora A. Bucal is hereto attached as ANNEX B. A copy of Tax [Dec.] No. 1568
covering said land is hereto attached as ANNEX C;

Parcel (b) above-described belongs in absolute common ownership to the spouses Artemio F.
Abalos and Ligaya U. Abalos and spouses Mauro F. Abalos and Luzviminda R. Abalos who
acquired the same by absolute sale in 1978 from Faustino Abalos as shown by a deed a copy of
which is hereto attached as ANNEX D; that the latter acquired the same by absolute sale from
Bernardo Victorio in 1914, and that Faustino Abalos donated the same in consideration of his
marriage with Teodora Ferrer as shown by a deed a copy of which is hereto attached as ANNEX E.
A copy of Tax [Dec.] No. 1007 is hereto attached as ANNEX F;

VI

Parcel (c) above-described belongs in absolute ownership to the spouses Romulo F. Abalos and
Jesusa O. Abalos and are in actual possession as such having acquired the same by absolute sale
from Aurora A. Bucal as shown by a deed a copy of which is hereto attached as ANNEX G; that
Aurora A. Bucal in turn bought the same from Maria Abalos as shown by a deed a copy of which
is hereto attached as ANNEX H; and that Maria Abalos inherited the same land from her
deceased parents;

VII

Parcel (d) above-described belongs in absolute ownership to spouses Romulo F. Abalos and
Jesusa O. Abalos having acquired the same in 1978 by means of a deed of quitclaim and
renunciation of rights a copy of which is hereto attached as ANNEX I; that Romulo F. Abalos
declared the same for taxation purposes as shown by Tax [Dec.] No. 33 a copy of which is hereto
attached as ANNEX J;

VIII

Parcel (e) above-described belongs in common absolute ownership to the spouses Artemio F.
Abalos and Ligaya U. Abalos and spouses Mauro F. Abalos and Luzviminda R. Abalos having
acquired the same from Maria Abalos as shown by two (2) documents copies of which are hereto
attached as ANNEXES K and L; that Faustino and Maria bought the same from Genoveva Perez as
shown by a deed a copy of which is hereto attached as ANNEX M; that Genoveva Perez in turn
 bought the same from Teodoro Abalos as shown by a deed a copy of which is hereto attached as
ANNEX N; that Mauro F. Abalos and Artemio F. Abalos have declared the land in their names for
taxation purposes as shown by Tax [Dec.] No. 1009 a copy of which is hereto attached as ANNEX
O;

IX

Parcel (f) above-described belongs in absolute common ownership to spouses Romulo F. Abalos
and Jesusa O. Abalos and spouses Mauro F. Abalos and Luzviminda R. Abalos and are in actual
possession as such having acquired the same by absolute sale in 1978 as shown by a deed a copy
of which is hereto attached as ANNEX P; that Faustino in turn inherited the same from his
deceased parents; and that the present owners have declared the same for taxation purposes as
shown by Tax [Dec.] No. 1314 a copy of which is hereto attached as ANNEX Q;

The possession of the present owners as well as their predecessors-in-interest have always been
in good faith, peaceful, public, exclusive, adverse, continuous and in the concept of absolute
owners since their respective acquisition [up to] the present without question from anyone,
much less from the defendant herein. Said owners have likewise religiously paid the taxes due on
the lands [up to] the current year;[17]

xxx xxx xxx

Respondents claimed that on two separate occasions in December 1985 Panfilo sought to execute the
decision by attempting to take possession of the lands in question through the use of force, threat, violence and
intimidation. In addition, to satisfy the damages awarded to Panfilo, the deputy sheriff also levied upon parcels (b)
and (c) above-described for the purpose of selling the same at public auction, in regard to which they also filed
their respective notice of third-party claim. Respondents argued that to compel them to abide by the writ of
execution and notice of levy issued by the court in Civil Case No. 15465 would amount to deprivation of property
without due process of law because the decision rendered in said case is not binding upon them as they were not
made parties thereto and they became owners thereof prior to the institution of the case.

On January 8, 1986, the trial court directed the parties to maintain the status quo pending the resolution
on the motion for the issuance of the writ of preliminary injunction. [18][19]

In the Objection to the Issuance of Writ of Preliminary Injunction, [20] Answer,[21] and Memorandum of
Authorities[22] filed by Panfilo, he stressed that the title, right or interest of respondents with respect to the
fishponds mentioned in sub-paragraphs (a), (d), and (f) of paragraph III of the Complaint had already been declared
null and void in Civil Case No. 15465 by a co-equal and competent court and affirmed with finality by this Court. It
was averred that respondents were never in possession of the fishponds as he was the one peacefully placed in its
possession by the deputy sheriff. For failing to intervene in Civil Case No. 15465, Panfilo asserted that respondents
are now barred by the principles of res judicata and estoppel in pais.

On July 21, 1986, however, the trial court ordered the issuance of a writ of preliminary injunction. [23] Concurring
with the position of respondents, it held that the principle of res judicata does not apply since there is no identity
of parties, subject matter, and causes of action between Civil Case No. 15465 and the present case. In Civil Case
No. 15465, the parties are Panfilo, as plaintiff, and Faustino Abalos and Danilo Abalos, as defendants, while in the
present case, the parties are the children of Faustino Abalos and their respective spouses, as plaintiffs, and Panfilo,
as defendant; in the former, the principal action is for partition while in the latter, the suit is for quieting of title,
possession, annulment of document and damages. The trial court opined that while it is true that respondents
Aurora, Artemio, Romulo, and Mauro are legitimate children and compulsory heirs of Faustino Abalos, the
documents showing their acquisition of the properties in question revealed that they became owners thereof not
through their father alone but also by way of third persons who were not parties in Civil Case No. 15465.
Moreover, they acquired their ownership prior to the institution of said case.
Assailing the aforesaid Order, Panfilo filed a petition for certiorari before this Court. In a Resolution, the petition
was referred to the CA, which later dismissed the same for lack of merit .[24] The CA ruled that, for not being
impleaded as parties, respondents are considered as third persons in Civil Case No. 15465 since they did not in any
way participate or intervene in the partition. Neither did the trial court violate the principle that no court has the
power to interfere by injunction with the judgments or decrees of a court of concurrent or coordinate jurisdiction
having equal power. The CA viewed that the writ of execution was issued for the specific purpose of levying upon
the properties of Faustino Abalos, not that of respondents, as the judgment debtor in Civil Case No. 15465.

On December 16, 1987, this Court, in G.R. No. 77965 entitled Panfilo Abalos v. Aurora Bucal, et al. and
Court of Appeals, affirmed the CA decision, which resolution became final and executory on August 2, 1988.[25]

Upon motion of respondents, the trial court ordered the issuance of an alias writ of preliminary injunction
on March 14, 1989.[26] Again, Panfilo challenged the order via petition for certiorari with prohibition before the CA
but the same was denied.[27]When the incident was elevated to this Court, it was dismissed on November 15,
1989. The resolution became final and executory on February 9, 1990.[28]

Meanwhile, in the proceedings before the trial court, Panfilo and respondents submitted their respective
pre-trial briefs.[29] On October 23, 1989, the trial court issued the Pre-trial Order.[30] Taking into account the
admissions made by the parties, particularly the fact that Panfilo claimed proprietary rights only with respect to
parcels (a), (d) and (f) mentioned in the complaint, the court delimited the issues for resolution as follows:

The factual issues are: (1) With respect to parcels A, D, and F, whether or not the
plaintiffs claiming ownership and possession over said parcels are the lawful owners and
possessors thereof by virtue of genuine and duly executed documents of sale, quitclaim and
renunciation of rights; (2) Whether or not plaintiffs predecessors-in-interest were the lawful
owners and possessors of parcels A, D and F; (3) Whether or not Faustino Abalos and his wife
[Teodorica] Ferrer were awarded the properties subject of partition proceedings in Civil Case No.
15465; (4) Whether or not by virtue of the decision rendered in that partition proceedings, the
fishpond referred to as Duyao which is parcel A, D and F was awarded; (5) Whether or not
pursuant to the decision of the Supreme Court in appealed case No. 713355 the defendant
Panfilo Abalos was placed in possession by the Deputy Sheriff Romulo Jimenez duly assisted by
the members of the police force of Binmaley, sometime on or about the last part of
December 1985.

The legal issues are: (1) Whether or not the decision in Civil Case No. 15465 entitled
Panfilo Abalos versus Faustino Abalos[] is binding upon the plaintiffs who were not impleaded as
party litigants either as plaintiffs or defendants; (2) What is the legal basis of the plaintiffs to file
action to quiet title against the defendant?[31]

Likewise, in the course of the trial and in their respective memoranda, [32] the parties admitted that parcels
(a) and (d) are portions of a fishpond locally known as Duyao[33] and are parts of parcel (d) stated in the Complaint
of Civil Case No. 15465, which was to be held in common pro-indiviso by the heirs of Francisco Abalos.

Thus, the controversy was narrowed down to only two (2) properties, namely: the fishpond located at
Linoc, Binmaley, Pangasinan, locally known as Duyao, and the fishpond located at Canaoalan, Binmaley,
Pangasinan, locally known as Pinirat.

On May 25, 1992, RTC Branch 39 of Lingayen, Pangasinan, rendered its Decision, [34] ordering thus:

WHEREFORE, judgment is hereby rendered declaring:

1. That the plaintiffs-spouses Aurora Bucal and Demetrio Bucal are the
absolute owners of one-fourth () portion pro-indiviso of that fishpond
which is locally known as Duyao;

2. That the defendant Panfilo Abalos is the absolute owner of three-fourth ()

portion pro-indiviso of that fishpond locally known as Duyao;
 3. That the plaintiffs have no right whatsoever over the fishpond locally
known as Pinirat and confirming the adjudication thereof in Civil Case No.
15465; [and]

4. No award of damages, and no costs.

SO ORDERED.[35]

The trial court made the following factual findings: that the original owners of the two fishponds were
spouses Francisco Abalos and Teodorica Ferrer, who died on May 4, 1928 and June 2, 1945, respectively; that the
spouses had five (5) children, namely: (a) Maria, who died single on March 20, 1972; (b) Roman, who died single on
June 10, 1944; (c) Panfilo, petitioner herein; (d) Pedro, who died on May 11, 1971 and was survived by his only
child, Danilo; and (e) Faustino, whose children Aurora, Artemio, Romulo and Mauro are among the respondents
herein; that Roman predeceased his mother, hence, when the latter died only four of the siblings inherited
the Duyao, becoming its pro-indiviso co-owners; that on November 11, 1968, Maria sold her share to Romulo, who,
in turn, sold the same to Aurora; that in view of the sale, the said portion of the Duyao should have been excluded
from the Decision in Civil Case No. 15465 for the reason that said case refers to the partition of the estate only of
spouses Francisco and Teodorica; that Romulo is not the owner the other portion of the Duyao for failure to
establish his ownership thereon and also considering that it could have been the same portion that he sold to
Aurora; and that the Decision in Civil Case No. 15465 has res judicata effect with respect to the Pinirat since the
deed of sale executed by Faustino in favor of Romulo and Mauro was simulated and employed merely to defraud
the other heirs.

Both Panfilo and respondents elevated the case to the CA, assigning the alleged errors of the trial court:

As to Panfilo

1. THE LOWER COURT ERRED IN ADJUDICATING ONE-FOURTH PORTION OF THE FISHPOND

KNOWN AS DUYAO TO PLAINTIFFS DEMETRIO BUCAL AND AURORA ABALOS- BUCAL,
NOTWITHSTANDING THAT SAID ENTIRE FISHPOND WAS AWARDED TO DEFENDANT PANFILO
ABALOS IN CIVIL CASE NO. 15465, ENTITLED PANFILO ABALOS VS. FAUSTINO ABALOS &
DANILO ABALOS.

2. THE LOWER COURT ERRED IN ADJUDICATING ONE-FOURTH PORTION OF THE FISHPOND

KNOWN AS DUYAO TO PLAINTIFFS DEMETRIO BUCAL AND AURORA ABALOS-BUCAL, AS
ALLEGED INHERITANCE OF MARIA ABALOS FROM HER LATE PARENTS, NOTWITHSTANDING
THAT MARIA ABALOS ALREADY INHERITED FROM HER LATE PARENTS THE PARCEL OF
RESIDENTIAL LAND DESCRIBED AS PARCEL (C) IN PLAINTIFFS COMPLAINT.

3. THE LOWER COURT ERRED IN ADJUDICATING ONE-FOURTH PORTION OF THE FISHPOND

KNOWN AS DUYAO TO PLAINTIFFS DEMETRIO BUCAL AND AURORA ABALOS-BUCAL,
NOTWITHSTANDING THAT THE FINAL DECISION IN CIVIL CASE [15465] EXPRESSLY ANNULLED
ALL DOCUMENTS AND INSTRUMENTS WHICH TRANSFERRED SAID PROPERTIES AND ARE
CONSIDERED INCONSISTENT WITH THE PARTITION ORDERED IN SAID CIVIL CASE.

4. THE LOWER COURT ERRED IN NOT TREATING THE PLAINTIFFS AS IN ESTOPPEL.

5. THE LOWER COURT HAD NO JURISDICTION OVER THE SUBJECT MATTER OF THE PRESENT
CASE.[36]

As to respondents

1. THE TRIAL COURT ERRED IN NOT FINDING THAT THE LATE SPOUSES FRANCISCO ABALOS
AND TEODORICA FERRER LEFT AN INTESTATE ESTATE CONSISTING OF FIVE PARCELS OF LAND
ONLY.
 2. THE TRIAL COURT ERRED IN NOT FINDING THAT ONE-FOURTH PRO INDIVISO OF THE LAND
KNOWN AS [DUYAO] WAS THE SHARE OF FAUSTINO ABALOS, WHICH HE QUITCLAIMED IN
FAVOR OF HIS SON ROMULO ABALOS, AND IN APPLYINGRES JUDICATA.

3. THE TRIAL COURT ERRED IN NOT FINDING THAT THE LAND KNOWN AS PINIRAT WAS THE
SHARE OF FAUSTINO ABALOS, WHICH HE SOLD TO HIS SONS, THE PLAINTIFFS ROMULO AND
MAURO ABALOS, AND IN APPLYING RES JUDICATA.

4. THE TRIAL COURT ERRED IN VOIDING THE INSTRUMENTS OF TRANSFER EXECUTED BY

FAUSTINO ABALOS IN FAVOR OF ROMULO ABALOS OF HIS SHARE OF THE [DUYAO] LOT AND
IN FAVOR OF MAURO ABALOS AND ROMULO ABALOS OF THE PINIRAT LOT.

5. THE TRIAL COURT ERRED IN NOT UPHOLDING THE CLAIM OF PLAINTIFF ROMULO ABALOS
OVER OF THE [DUYAO] LOT AND THE CLAIM OF PLAINTIFFS MAURO ABALOS AND ROMULO
ABALOS OVER THE [PINIRAT] LOT.[37]

On August 31, 2001, the CA rendered its Decision.[38] According to the appellate court, the first and
second assigned errors of Panfilo are unmeritorious on the ground that the disposition of the trial court in Civil
Case No. 15465 insofar as the Duyao is concerned has no factual and legal basis. It also held untenable his third
and fourth assigned errors, noting that the principles of res judicata and estoppel are not applicable in this case
since respondents were not made parties to Civil Case No. 15465 despite their acquisition of the contested parcels
prior to the commencement of said case. Finally, Panfilos fifth assigned error was rejected, saying that this Court
already settled the issue of res judicata in G.R. No. 77965 when petitioner questioned the propriety of the issuance
of the writ of preliminary injunction.

On the other hand, the CA ruled that the first assigned error of respondents was rendered moot and
academic since it was stipulated and agreed upon during the pre-trial of the present case that the dispute covers
only parcels (a), (d) and (f). The second assigned error, nonetheless, was affirmed, observing that
the Duyao property was co-owned pro-indiviso by the four remaining children of spouses Francisco and Teodorica;
hence, Faustinos transfer of his share during his lifetime in favor of his son Romulo is perfectly legal. However, the
CA denied the third assigned error as it found that the Pinirat was Roman Abalos advance legitime, which, upon his
death, was inherited by his remaining siblings. Since Maria subsequently died without transferring her share, her
part of the Pinirat should be divided among Pedro (which is transmitted to Danilo), Faustino and Panfilo. As
Faustinos share over the Pinirat is with respect to 1/3 portion thereof, he could validly convey only such part to
Romulo and Mauro.

The CA disposed:

WHEREFORE, premises considered, the assailed Decision of the court a quo in Civil Case
No. 16289 is hereby modified, as follows:

1. Being co-owners of Duyao Fishpond, plaintiffs-appellants Spouses Aurora

Bucal and Demetrio Bucal, plaintiffs-appellants Spouses Romulo Abalos
and Jesusa O. Abalos, defendant-appellant Panfilo Abalos and Danilo
Abalos, in representation of his deceased father, Pedro Abalos, should
divide and distribute the same equally;

2. One-third of the Pinirat Fishpond is co-owned by plaintiffs-appellants

Spouses Romulo Abalos and Jesus Abalos, and Spouses Mauro Abalos and
Luzviminda R. Abalos; That defendant-appellant Panfilo Abalos is the sole
owner of another 1/3 portion of the Pinirat fishpond; While the remaining
1/3 portion is for Danilo Abalos, in representation of his deceased father
Pedro Abalos;

3. No pronouncement as to cost.

SO ORDERED.[39]
Panfilo moved for reconsideration of the Decision but was denied. [40]

Hence this petition.

Echoing the same grounds relied upon by their father, petitioners now claim that the CA seriously erred in
failing to consider the finality of the Decision in Civil Case No. 15465. According to them, the finding that
respondents became owners of the subject properties prior to the institution of said case in effect modified the
disposition and distribution previously ordered. Petitioners opine that when the CA ruled that respondents have
acquired ownership of the questioned parcels prior to the commencement of Civil Case No. 15465 it had
disregarded the conclusiveness of a final judgment rendered in said case which decreed the annulment of all
documents and/or instruments transferring said properties and were considered inconsistent with the order of
partition. They contend that sustaining the conclusion of the CA would allow the re-opening of the factual issue of
whether the documents, which were the source of respondents alleged title, were valid an issue that was dealt
with in an extensive hearing on the merits conducted in said case and supported by testimonial and documentary
evidence for the purpose. Being the prevailing party in Civil Case No. 15465, in regard to which respondents had
remained silent and did not even care to intervene or question, petitioners assert that they already acquired a
vested right over the entire Duyao and portion of the Pinirat. They also oppose the CAs failure to recognize that
estoppel and laches have already set in to bar respondents from further pursuing their claims.

The petition is not meritorious.

Res judicata means "a matter adjudged; a thing judicially acted upon or decided; a thing or matter settled
by judgment." It lays the rule that an existing final judgment or decree rendered on the merits, without fraud or
collusion, by a court of competent jurisdiction, upon any matter within its jurisdiction, is conclusive of the rights of
the parties or their privies, in all other actions or suits in the same or any other judicial tribunal of concurrent
jurisdiction on the points and matters in issue in the first suit. [41]

For the preclusive effect of res judicata to be enforced, however, the following requisites must be
present: (1) the judgment or order sought to bar the new action must be final; (2) the decision must have been
rendered by a court having jurisdiction over the subject matter and the parties; (3) the disposition of the first case
must be a judgment on the merits; and (4) there must be between the first and second action, identity of parties,
subject matter and causes of action.[42]

In the instant case, the fourth requisite, in particular the identity of parties, is clearly wanting.

As found by the CA, this Court, through our earlier resolution in G.R. No. 77965, already settled that res
judicata does not apply in this case. In G.R. No. 77965, which Panfilo instituted to challenge the propriety of the
writ of preliminary injunction issued by the trial court, this Court agreed with the CAs disposition that respondents
are considered as third persons with respect to Civil Case No. 15465 since they were not impleaded as defendants
therein. This Court held as in accordance with law and jurisprudence the CAs opinion that all those who did not in
any way participate or intervene in the partition case are considered third persons within the contemplation of
Article 499 of the Civil Code.[43]

The foregoing rule still stands.

Indeed, Panfilo, the father of petitioners, should have impleaded respondents when he filed Civil Case No.
15465 since at that time the latter were already claiming ownership over the subject fishponds, which were
transferred in their names prior to the commencement of the case. Petitioners cannot shift to respondents the
burden of joining the case because they are not duty bound to intervene therein and they have every right to
institute an independent action: First, intervention is not compulsory or mandatory but merely optional and
permissive;[44] and Second, as the persons who are in actual possession of the fishponds they claim to own,
respondents may wait until their possession are in fact disturbed before taking steps to vindicate their
rights.Understandably, at the time of the institution and pendency of Civil Case No. 15465, respondents still had no
definite idea as to how the very nature of the partition case could actually affect their possession.

On the other hand, Panfilo had personal knowledge that respondents acquired ownership of the
properties prior to the filing of Civil Case No. 15465, that they are in actual possession thereof, and that they have
declared the lands in their names for taxation purposes. Panfilo could not be ignorant of these because he resided
in the same locality where the properties are found.[45] Quite startling, however, is that he did not bother to
implead respondents in the partition case despite all these and the fact that the defendants therein raised the
point that Faustino was not the owner of some of the lands in question and that they belong to others not parties
to the case.[46] As his successors-in-interest, petitioners must suffer from Panfilos evident omission.

Even if res judicata requires not absolute but substantial identity of parties, still there exists substantial
identity only when the additional party acts in the same capacity or is in privity with the parties in the former
action.[47] In this case, while it is true that respondents are legitimate children and relatives by affinity of Faustino it
is more important to remember that, as shown by their documents of acquisition, they became owners of the
subject fishponds not through Faustino alone but also from a third person (i.e., Maria Abalos). Respondents are
asserting their own rights and interests which are distinct and separate from those of Faustinos claim as a
hereditary heir of Francisco Abalos. Hence, they cannot be considered as privies to the judgment rendered in Civil
Case No. 15465. Unfortunately for petitioners, they relied solely on their untenable defense of res judicata instead
of contesting the genuineness and due execution of respondents documentary evidence.

Moreover, Panfilo erred in repeatedly believing that there was no necessity to implead respondents as
defendants in Civil Case No. 15465 since, according to him, the necessary parties in a partition case are only the co-
owners or co-partners in the inheritance of Francisco Abalos. On the contrary, the Rules of Court provides that in
an action for partition, all other persons interested in the property shall be joined as defendants. [48] Not only the
co-heirs but also all persons claiming interests or rights in the property subject of partition are indispensable
parties.[49] In the instant case, it is the responsibility of Panfilo as plaintiff in Civil Case No. 15465 to implead all
indispensable parties, that is, not only Faustino and Danilo but also respondents in their capacity as vendees and
donees of the subject fishponds. Without their presence in the suit the judgment of the court cannot attain real
finality against them. Being strangers to the first case, they are not bound by the decision rendered therein;
otherwise, they would be deprived of their constitutional right to due process.[50]

Finally, it must be stressed that in a complaint for partition, the plaintiff seeks, first, a declaration that he
is a co-owner of the subject properties; and second, the conveyance of his lawful shares. An action for partition is
at once an action for declaration of co-ownership and for segregation and conveyance of a determinate portion of
the properties involved.[51]

Reyes-de Leon v. Del Rosario[52] held:

The issue of ownership or co-ownership, to be more precise, must first be resolved in

order to effect a partition of properties. This should be done in the action for partition itself. As
held in the case of Catapusan v. Court of Appeals:

In actions for partition, the court cannot properly issue an order to divide the
property unless it first makes a determination as to the existence of co-
ownership. The court must initially settle the issue of ownership, the first stage
in an action for partition. Needless to state, an action for partition will not lie if
the claimant has no rightful interest over the subject property. In fact, Section 1
of Rule 69 requires the party filing the action to state in his complaint the
nature and the extent of his title to the real estate. Until and unless the issue of
ownership is definitely resolved, it would be premature to effect a partition of
the properties. x x x (citations omitted)[53]
 It is only properties owned in common that may be the object of an action for partition; it will not lie if the
claimant has no rightful interest over the subject property. Thus, in this case, only the shares in the lots which are
determined to have been co-owned by Panfilo, Faustino and Danilo could be included in the order of partition and,
conversely, shares in the lots which were validly disposed of in favor of respondents must be excluded
therefrom. In this connection, the Court sees no reason to depart from the findings of fact and the partition
ordered by the appellate court as these are amply supported by evidence on record. Furthermore, the rule is that
factual issues are beyond our jurisdiction to resolve since in a petition for review under Rule 45 of the 1997 Rules
of Civil Procedure this Courts power is limited only to review questions of law when there is doubt or difference as
to what the law is on a certain state of facts.[54]

WHEREFORE, the petition is DENIED and the August 31, 2001 Decision and November 20, 2002 Resolution
of the Court of Appeals in CA-G.R. CV No. 39138 are AFFIRMED.

No costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 153567 February 18, 2008

LIBRADA M. AQUINO, petitioner,

vs.
ERNEST S. AURE1, respondent.

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari2 under Rule 45 of the Revised Rules of Court filed by
petitioner Librada M. Aquino (Aquino), seeking the reversal and the setting aside of the Decision 3 dated 17
October 2001 and the Resolution4 dated 8 May 2002 of the Court of Appeals in CA-G.R. SP No. 63733. The
appellate court, in its assailed Decision and Resolution, reversed the Decision 5 of the Regional Trial Court (RTC) of
Quezon City, Branch 88, affirming the Decision 6 of the Metropolitan Trial Court (MeTC) of Quezon City, Branch 32,
which dismissed respondent Ernesto Aure’s (Aure) complaint for ejectment on the ground, inter alia, of failure to
comply with barangay conciliation proceedings.

The subject of the present controversy is a parcel of land situated in Roxas District, Quezon City, with an area of
449 square meters and covered by Transfer Certificate of Title (TCT) No. 205447 registered with the Registry of
Deeds of Quezon City (subject property).7

Aure and E.S. Aure Lending Investors, Inc. (Aure Lending) filed a Complaint for ejectment against Aquino before the
MeTC docketed as Civil Case No. 17450. In their Complaint, Aure and Aure Lending alleged that they acquired the
subject property from Aquino and her husband Manuel (spouses Aquino) by virtue of a Deed of Sale 8 executed on
4 June 1996. Aure claimed that after the spouses Aquino received substantial consideration for the sale of the
subject property, they refused to vacate the same.9

In her Answer,10 Aquino countered that the Complaint in Civil Case No. 17450 lacks cause of action for Aure and
Aure Lending do not have any legal right over the subject property. Aquino admitted that there was a sale but such
was governed by the Memorandum of Agreement 11 (MOA) signed by Aure. As stated in the MOA, Aure shall secure
a loan from a bank or financial institution in his own name using the subject property as collateral and turn over
the proceeds thereof to the spouses Aquino. However, even after Aure successfully secured a loan, the spouses
Aquino did not receive the proceeds thereon or benefited therefrom.

On 20 April 1999, the MeTC rendered a Decision in Civil Case No. 17450 in favor of Aquino and dismissed the
Complaint for ejectment of Aure and Aure Lending for non-compliance with the barangay conciliation process,
among other grounds. The MeTC observed that Aure and Aquino are residents of the same barangay but there is
no showing that any attempt has been made to settle the case amicably at the barangay level. The MeTC further
observed that Aure Lending was improperly included as plaintiff in Civil Case No. 17450 for it did not stand to be
injured or benefited by the suit. Finally, the MeTC ruled that since the question of ownership was put in issue, the
action was converted from a mere detainer suit to one "incapable of pecuniary estimation" which properly rests
within the original exclusive jurisdiction of the RTC. The dispositive portion of the MeTC Decision reads:

WHEREFORE, premises considered, let this case be, as it is, hereby ordered DISMISSED. [Aquino’s]
counterclaim is likewise dismissed.12

On appeal, the RTC affirmed the dismissal of the Complaint on the same ground that the dispute was not brought
before the Barangay Council for conciliation before it was filed in court. In a Decision dated 14 December 2000, the
RTC stressed that the barangay conciliation process is a conditio sine qua non for the filing of an ejectment
complaint involving residents of the same barangay, and failure to comply therewith constitutes sufficient cause
for the dismissal of the action. The RTC likewise validated the ruling of the MeTC that the main issue involved in
Civil Case No. 17450 is incapable of pecuniary estimation and cognizable by the RTC. Hence, the RTC ruled:

WHEREFORE, finding no reversible error in the appealed judgment, it is hereby affirmed in its entirety. 13
Aure’s Motion for Reconsideration was denied by the RTC in an Order14 dated 27 February 2001.

Undaunted, Aure appealed the adverse RTC Decision with the Court of Appeals arguing that the lower court erred
in dismissing his Complaint for lack of cause of action. Aure asserted that misjoinder of parties was not a proper
ground for dismissal of his Complaint and that the MeTC should have only ordered the exclusion of Aure Lending
as plaintiff without prejudice to the continuation of the proceedings in Civil Case No. 17450 until the final
determination thereof. Aure further asseverated that mere allegation of ownership should not divest the MeTC of
jurisdiction over the ejectment suit since jurisdiction over the subject matter is conferred by law and should not
depend on the defenses and objections raised by the parties. Finally, Aure contended that the MeTC erred in
dismissing his Complaint with prejudice on the ground of non-compliance with barangay conciliation process. He
was not given the opportunity to rectify the procedural defect by going through the barangay mediation
proceedings and, thereafter, refile the Complaint. 15

On 17 October 2001, the Court of Appeals rendered a Decision, reversing the MeTC and RTC Decisions and
remanding the case to the MeTC for further proceedings and final determination of the substantive rights of the
parties. The appellate court declared that the failure of Aure to subject the matter to barangay conciliation is not a
jurisdictional flaw and it will not affect the sufficiency of Aure’s Complaint since Aquino failed to seasonably raise
such issue in her Answer. The Court of Appeals further ruled that mere allegation of ownership does not deprive
the MeTC of jurisdiction over the ejectment case for jurisdiction over the subject matter is conferred by law and is
determined by the allegations advanced by the plaintiff in his complaint. Hence, mere assertion of ownership by
the defendant in an ejectment case will not oust the MeTC of its summary jurisdiction over the same. The decretal
part of the Court of Appeals Decision reads:

WHEREFORE, premises considered, the petition is hereby GRANTED - and the decisions of the trial courts below
REVERSED and SET ASIDE. Let the records be remanded back to the court a quo for further proceedings – for an
eventual decision of the substantive rights of the disputants. 16

In a Resolution dated 8 May 2002, the Court of Appeals denied the Motion for Reconsideration interposed by
Aquino for it was merely a rehash of the arguments set forth in her previous pleadings which were already
considered and passed upon by the appellate court in its assailed Decision.

Aquino is now before this Court via the Petition at bar raising the following issues:

I.

WHETHER OR NOT NON-COMPLIANCE WITH THE BARANGAY CONCILIATION PROCEEDINGS IS A

JURISDICTIONAL DEFECT THAT WARRANTS THE DISMISSAL OF THE COMPLAINT.

II.

WHETHER OR NOT ALLEGATION OF OWNERSHIP OUSTS THE MeTC OF ITS JURISDICTION OVER AN
EJECTMENT CASE.

The barangay justice system was established primarily as a means of easing up the congestion of cases in the
judicial courts. This could be accomplished through a proceeding before the barangay courts which, according to
the conceptor of the system, the late Chief Justice Fred Ruiz Castro, is essentially arbitration in character, and to
make it truly effective, it should also be compulsory. With this primary objective of the barangay justice system in
mind, it would be wholly in keeping with the underlying philosophy of Presidential Decree No. 1508, otherwise
known as the Katarungang Pambarangay Law, and the policy behind it would be better served if an out-of-court
settlement of the case is reached voluntarily by the parties. 17

The primordial objective of Presidential Decree No. 1508 is to reduce the number of court litigations and prevent
the deterioration of the quality of justice which has been brought by the indiscriminate filing of cases in the
courts.18 To ensure this objective, Section 6 of Presidential Decree No. 1508 19 requires the parties to undergo a
conciliation process before the Lupon Chairman or the Pangkat ng Tagapagkasundo as a precondition to filing a
complaint in court subject to certain exceptions20 which are inapplicable to this case. The said section has been
declared compulsory in nature.21

Presidential Decree No. 1508 is now incorporated in Republic Act No. 7160, otherwise known as The Local
Government Code, which took effect on 1 January 1992.
The pertinent provisions of the Local Government Code making conciliation a precondition to filing of complaints
in court, read:

SEC. 412. Conciliation.- (a) Pre-condition to filing of complaint in court. – No complaint, petition, action, or
proceeding involving any matter within the authority of the lupon shall be filed or instituted directly in
court or any other government office for adjudication, unless there has been a confrontation between the
parties before the lupon chairman or the pangkat, and that no conciliation or settlement has been
reached as certified by the lupon secretary or pangkat secretary as attested to by the lupon chairman or
pangkat chairman or unless the settlement has been repudiated by the parties thereto.

(b) Where parties may go directly to court. – The parties may go directly to court in the following
instances:

(1) Where the accused is under detention;

(2) Where a person has otherwise been deprived of personal liberty calling for habeas
corpus proceedings;

(3) Where actions are coupled with provisional remedies such as preliminary injunction, attachment,
delivery of personal property, and support pendente lite; and

(4) Where the action may otherwise be barred by the statute of limitations.

(c) Conciliation among members of indigenous cultural communities. – The customs and traditions of
indigenous cultural communities shall be applied in settling disputes between members of the cultural
communities.

SEC. 408. Subject Matter for Amicable Settlement; Exception Therein. – The lupon of each barangay shall
have authority to bring together the parties actually residing in the same city or municipality for amicable
settlement of all disputes except:

(a) Where one party is the government or any subdivision or instrumentality thereof;

(b) Where one party is a public officer or employee, and the dispute relates to the performance of his
official functions;

(c) Offenses punishable by imprisonment exceeding one (1) year or a fine exceeding Five thousand pesos
(P5,000.00);

(d) Offenses where there is no private offended party;

(e) Where the dispute involves real properties located in different cities or municipalities unless the
parties thereto agree to submit their differences to amicable settlement by an appropriate lupon;

(f) Disputes involving parties who actually reside in barangays of different cities or municipalities, except
where such barangay units adjoin each other and the parties thereto agree to submit their differences to
amicable settlement by an appropriate lupon;

(g) Such other classes of disputes which the President may determine in the interest of justice or upon the
recommendation of the Secretary of Justice.

There is no dispute herein that the present case was never referred to the Barangay Lupon for conciliation before
Aure and Aure Lending instituted Civil Case No. 17450. In fact, no allegation of such barangay conciliation
proceedings was made in Aure and Aure Lending’s Complaint before the MeTC. The only issue to be resolved is
whether non-recourse to the barangay conciliation process is a jurisdictional flaw that warrants the dismissal of
the ejectment suit filed with the MeTC.

Aquino posits that failure to resort to barangay conciliation makes the action for ejectment premature and, hence,
dismissible. She likewise avers that this objection was timely raised during the pre-trial and even subsequently in
her Position Paper submitted to the MeTC.

We do not agree.
It is true that the precise technical effect of failure to comply with the requirement of Section 412 of the Local
Government Code on barangay conciliation (previously contained in Section 5 of Presidential Decree No. 1508) is
much the same effect produced by non-exhaustion of administrative remedies -- the complaint becomes afflicted
with the vice of pre-maturity; and the controversy there alleged is not ripe for judicial determination. The
complaint becomes vulnerable to a motion to dismiss. 22 Nevertheless, the conciliation process is not a
jurisdictional requirement, so that non-compliance therewith cannot affect the jurisdiction which the court has
otherwise acquired over the subject matter or over the person of the defendant.23

As enunciated in the landmark case of Royales v. Intermediate Appellate Court24:

Ordinarily, non-compliance with the condition precedent prescribed by P.D. 1508 could affect the
sufficiency of the plaintiff's cause of action and make his complaint vulnerable to dismissal on ground of
lack of cause of action or prematurity; but the same would not prevent a court of competent jurisdiction
from exercising its power of adjudication over the case before it, where the defendants, as in this case,
failed to object to such exercise of jurisdiction in their answer and even during the entire proceedings a
quo.

While petitioners could have prevented the trial court from exercising jurisdiction over the case by
seasonably taking exception thereto, they instead invoked the very same jurisdiction by filing an answer
and seeking affirmative relief from it. What is more, they participated in the trial of the case by cross-
examining respondent Planas. Upon this premise, petitioners cannot now be allowed belatedly to adopt
an inconsistent posture by attacking the jurisdiction of the court to which they had submitted
themselves voluntarily. x x x (Emphasis supplied.)

In the case at bar, we similarly find that Aquino cannot be allowed to attack the jurisdiction of the MeTC over Civil
Case No. 17450 after having submitted herself voluntarily thereto. We have scrupulously examined Aquino’s
Answer before the MeTC in Civil Case No. 17450 and there is utter lack of any objection on her part to any
deficiency in the complaint which could oust the MeTC of its jurisdcition.

We thus quote with approval the disquisition of the Court of Appeals:

Moreover, the Court takes note that the defendant [Aquino] herself did not raise in defense the aforesaid
lack of conciliation proceedings in her answer, which raises the exclusive affirmative defense of
simulation. By this acquiescence, defendant [Aquino] is deemed to have waived such objection. As held in
a case of similar circumstances, the failure of a defendant [Aquino] in an ejectment suit to specifically
allege the fact that there was no compliance with the barangay conciliation procedure constitutes a
waiver of that defense. x x x.25

By Aquino’s failure to seasonably object to the deficiency in the Complaint, she is deemed to have already
acquiesced or waived any defect attendant thereto. Consequently, Aquino cannot thereafter move for the
dismissal of the ejectment suit for Aure and Aure Lending’s failure to resort to the barangay conciliation process,
since she is already precluded from doing so. The fact that Aquino raised such objection during the pre-trial and in
her Position Paper is of no moment, for the issue of non-recourse to barangay mediation proceedings should be
impleaded in her Answer.

As provided under Section 1, Rule 9 of the 1997 Rules of Civil Procedure:

Sec. 1. Defenses and objections not pleaded. – Defenses and objections not pleaded either in a motion to
dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the
evidence on record that the court has no jurisdiction over the subject matter, that there is another action
pending between the same parties for the same cause, or that the action is barred by a prior judgment or
by statute of limitations, the court shall dismiss the claim. (Emphasis supplied.)

While the aforequoted provision applies to a pleading (specifically, an Answer) or a motion to dismiss, a similar or
identical rule is provided for all other motions in Section 8 of Rule 15 of the same Rule which states:

Sec. 8. Omnibus Motion. - Subject to the provisions of Section 1 of Rule 9, a motion attacking a pleading,
order, judgment, or proceeding shall include all objections then available, and all objections not so
included shall be deemed waived.

The spirit that surrounds the foregoing statutory norm is to require the party filing a pleading or motion to raise all
available exceptions for relief during the single opportunity so that single or multiple objections may be
avoided.26It is clear and categorical in Section 1, Rule 9 of the Revised Rules of Court that failure to raise defenses
and objections in a motion to dismiss or in an answer is deemed a waiver thereof; and basic is the rule in statutory
construction that when the law is clear and free from any doubt or ambiguity, there is no room for construction or
interpretation.27 As has been our consistent ruling, where the law speaks in clear and categorical language, there is
no occasion for interpretation; there is only room for application. 28 Thus, although Aquino’s defense of non-
compliance with Presidential Decree No. 1508 is meritorious, procedurally, such defense is no longer available for
failure to plead the same in the Answer as required by the omnibus motion rule.

Neither could the MeTC dismiss Civil Case No. 17450 motu proprio. The 1997 Rules of Civil Procedure provide only
three instances when the court may motu proprio dismiss the claim, and that is when the pleadings or evidence on
the record show that (1) the court has no jurisdiction over the subject matter; (2) there is another cause of action
pending between the same parties for the same cause; or (3) where the action is barred by a prior judgment or by
a statute of limitations. Thus, it is clear that a court may not motu proprio dismiss a case on the ground of failure to
comply with the requirement for barangay conciliation, this ground not being among those mentioned for the
dismissal by the trial court of a case on its own initiative.

Aquino further argues that the issue of possession in the instant case cannot be resolved by the MeTC without first
adjudicating the question of ownership, since the Deed of Sale vesting Aure with the legal right over the subject
property is simulated.

Again, we do not agree. Jurisdiction in ejectment cases is determined by the allegations pleaded in the complaint.
As long as these allegations demonstrate a cause of action either for forcible entry or for unlawful detainer, the
court acquires jurisdiction over the subject matter. This principle holds, even if the facts proved during the trial do
not support the cause of action thus alleged, in which instance the court -- after acquiring jurisdiction -- may
resolve to dismiss the action for insufficiency of evidence.

The necessary allegations in a Complaint for ejectment are set forth in Section 1, Rule 70 of the Rules of Court,
which reads:

SECTION 1. Who may institute proceedings, and when. – Subject to the provisions of the next succeeding
section, a person deprived of the possession of any land or building by force, intimidation, threat,
strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession of any land
or building is unlawfully withheld after the expiration or termination of the right to hold possession, by
virtue of any contract, express or implied, or the legal representatives or assigns of any such lessor,
vendor, vendee, or other person may at any time within one (1) year after such unlawful deprivation or
withholding of possession, bring an action in the proper Municipal Trial Court against the person or
persons unlawfully withholding or depriving of possession, or any person or persons claiming under them,
for the restitution of such possession, together with damages and costs.

In the case at bar, the Complaint filed by Aure and Aure Lending on 2 April 1997, alleged as follows:

2. [Aure and Aure Lending] became the owners of a house and lot located at No. 37 Salazar Street corner
Encarnacion Street, B.F. Homes, Quezon City by virtue of a deed of absolute sale executed by [the spouses
Aquino] in favor of [Aure and Aure Lending] although registered in the name of x x x Ernesto S. Aure; title
to the said property had already been issued in the name of [Aure] as shown by a transfer Certificate of
Title , a copy of which is hereto attached and made an integral part hereof as Annex A;

3. However, despite the sale thus transferring ownership of the subject premises to [Aure and Aure
Lending] as above-stated and consequently terminating [Aquino’s] right of possession over the subject
property, [Aquino] together with her family, is continuously occupying the subject premises
notwithstanding several demands made by [Aure and Aure Lending] against [Aquino] and all persons
claiming right under her to vacate the subject premises and surrender possession thereof to [Aure and
Aure Lending] causing damage and prejudice to [Aure and Aure Lending] and making [Aquino’s]
occupancy together with those actually occupying the subject premises claiming right under her, illegal. 29

It can be inferred from the foregoing that Aure, together with Aure Lending, sought the possession of the subject
property which was never surrendered by Aquino after the perfection of the Deed of Sale, which gives rise to a
cause of action for an ejectment suit cognizable by the MeTC. Aure’s assertion of possession over the subject
property is based on his ownership thereof as evidenced by TCT No. 156802 bearing his name. That Aquino
impugned the validity of Aure’s title over the subject property and claimed that the Deed of Sale was simulated
should not divest the MeTC of jurisdiction over the ejectment case.30

As extensively discussed by the eminent jurist Florenz D. Regalado in Refugia v. Court of Appeals31:
 As the law on forcible entry and unlawful detainer cases now stands, even where the defendant raises the
question of ownership in his pleadings and the question of possession cannot be resolved without
deciding the issue of ownership, the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts nevertheless have the undoubted competence to resolve the issue of ownership albeit
only to determine the issue of possession.

x x x. The law, as revised, now provides instead that when the question of possession cannot be
resolved without deciding the issue of ownership, the issue of ownership shall be resolved only to
determine the issue of possession. On its face, the new Rule on Summary Procedure was extended to
include within the jurisdiction of the inferior courts ejectment cases which likewise involve the issue of
ownership. This does not mean, however, that blanket authority to adjudicate the issue of ownership in
ejectment suits has been thus conferred on the inferior courts.

At the outset, it must here be stressed that the resolution of this particular issue concerns and applies
only to forcible entry and unlawful detainer cases where the issue of possession is intimately intertwined
with the issue of ownership. It finds no proper application where it is otherwise, that is, where ownership
is not in issue, or where the principal and main issue raised in the allegations of the complaint as well as
the relief prayed for make out not a case for ejectment but one for recovery of ownership.

Apropos thereto, this Court ruled in Hilario v. Court of Appeals32:

Thus, an adjudication made therein regarding the issue of ownership should be regarded as merely
provisional and, therefore, would not bar or prejudice an action between the same parties involving title
to the land. The foregoing doctrine is a necessary consequence of the nature of forcible entry and
unlawful detainer cases where the only issue to be settled is the physical or material possession over the
real property, that is, possession de facto and not possession de jure."

In other words, inferior courts are now "conditionally vested with adjudicatory power over the issue of title or
ownership raised by the parties in an ejectment suit." These courts shall resolve the question of ownership raised
as an incident in an ejectment case where a determination thereof is necessary for a proper and complete
adjudication of the issue of possession.33

WHEREFORE, premises considered, the instant Petition is DENIED. The Court of Appeals Decision dated 17 October
2001 and its Resolution dated 8 May 2002 in CA-G.R. SP No. 63733 are hereby AFFIRMED. Costs against the
petitioner.

SO ORDERED.
 Republic of the Philippines
Supreme Court

SECOND DIVISION

SPOUSES VICTOR VALDEZ AND JOCELYN VALDEZ, G.R. No. 175510

represented by their Attorney-In-Fact, VIRGILIO
VALDEZ, Present:
Petitioners,
QUISUMBING, J., Chairperson,
CARPIO MORALES,
- versus - TINGA,
VELASCO, JR., and
SPOUSES FRANCISCO TABISULA AND CARIDAD BRION, JJ.
TABISULA,
Respondents. Promulgated:
July 28, 2008

x--------------------------------------------------x

DECISION

CARPIO MORALES, J.:

Petitioner-spouses Victor and Jocelyn Valdez purchased via a January 11, 1993 Deed of Absolute
Sale[1] (the deed) from respondent-spouses Francisco Tabisula and Caridad Tabisula a 200 square meter (sq.m.)
portion (the subject property) of a 380 sq. m. parcel of land located in San Fernando, La Union, which
380 sq.m. parcel of land is more particularly described in the deed as follows:

A parcel of land classified as residential lot, bounded on the North by Lot No. 25569, on
the East, by Lot No. 247, 251, on the South, by a Creek and on the West, by Lot No. 223-A,
declared under Tax Decl. No. 52820, with an area of 380 square meters, more or less, and
assessed at P 17100.00 for the current year. It is not registered under Act 496 nor under the
Spanish Mortgage Law. (Emphasis and underscoring supplied)
The pertinent portions of the deed read:

xxxx

That for and in consideration of the sum of SEVENTY THOUSAND (P70,000.00) PESOS,
Philippine Currencyp [sic] paid to us at our entire satisfaction by spouses VICTOR and JOECELYN
[sic] VALDEZ, both of legal age, Filipinos and residents of 148 P. Burgos St., San Fernando, La
Union, receipt of which is hereby acknowledged, do hereby SELL, CONVEY and TRANSFER by way
of absolute sale unto the said spouses Victor and Joecelyn Valdez, their heirs and assigns,
the TWO HUNDRED (200) SQUARE METERS, EASTERN PORTION of the parcel of land above-
described, free from all liens and encumbrances.

xxxx

That now and hereinafter, said VENDEE-SPOUSES VICTOR and JOECELYN [sic] VALDEZ
shall be the absolute owners of the said 200 sq. meters, eastern portion and that we shall
warrant and forever defend their ownership of the same against the claims of all persons
whomsoever; they shall be provided a 2 1/2 meters [sic] wide road right-of-way on the western
side of their lot but which is not included in this sale.

x x x.x (Emphasis and underscoring supplied)

 Respondents subsequently built a concrete wall on the western side of the subject property.[2] Believing
that that side is the intended road right of way mentioned in the deed, petitioners, through their representative,
reported the matter to the barangay for mediation and conciliation. Respondents failed to attend the conferences
scheduled by the barangay, however, drawing petitioners to file in April 1999 or more than six years after the
execution of the deed a Complaint for Specific Performance with Damages[3]against respondents before the
Regional Trial Court (RTC) of San Fernando City, La Union.

In their complaint, petitioners alleged that they purchased the subject property on the strength of
respondents assurance of providing them a road right of way. They thus prayed that respondents be ordered to
provide the subject property with a 2-meter wide easement and to remove the concrete wall blocking the same.[4]

Respondents, in their Answer with Compulsory Counterclaim (for damages and attorneys fees), [5] averred that the
2 -meter easement should be taken from the western portion of the subject property and not from theirs; [6] and
petitioners and their family are also the owners of two properties adjoining the subject property, which adjoining
properties have access to two public roads or highways the bigger one which adjoins P. Burgos St. on the north,
and the smaller one which abuts an existing barangay road on the north.[7]

Respondents further averred that they could not have agreed to providing petitioners an easement on the western
side of their lot as there exists a two-storey concrete house on their lot where the supposed easement is to be
located, which was erected long before the subject property was sold to petitioners. [8] In support of this claim,
respondents submitted a February 20, 2003 letter from the City Engineers Office.[9]

Branch 26 of the RTC of San Fernando dismissed petitioners complaint and granted respondents Counterclaim by
Decision[10] of March 18, 2005, the dispositive portion of which reads:

WHEREFORE, and in view of all the foregoing, judgment is hereby rendered finding the
defendants as against the plaintiffs and hereby orders the Complaint dismissed for being
unmeritorious and plaintiffs are hereby ordered to pay the defendants, the following:

1) P100,000.00 as moral damages;

2) P50,000.00 as exemplary damages;

3) P50,000.00 as attorneys fees;

4) P30,000.00 as expenses of litigation; and

5) To pay the costs.

SO ORDERED.[11] (Underscoring supplied)

On appeal by petitioners, the Court of Appeals, by Decision of May 29, 2006,[12] affirmed that of the trial court, it
holding that the deed only conveyed ownership of the subject property to petitioners, and that the reference
therein to an easement in favor of petitioners is not a definite grant-basis of a voluntary easement of right of
way.[13]

The appellate court went on to hold that petitioners are neither entitled to a legal or compulsory
easement of right of way as they failed to present circumstances justifying their entitlement to it under Article 649
of the Civil Code.[14]

Petitioners motion for reconsideration[15] having been denied by the Court of Appeals by Resolution of November
15, 2006, they filed the present petition for review on certiorari faulting the trial [sic] court
 I. . . . IN RULING THAT THE RIGHT OF WAY IS NOT PART OF THE ABSOLUTE
DEED OF SALE DATED JANUARY 11, 1993;

II. . . . IN RULING THAT THE PROVISION OF THE ABSOLUTE DEED OF SALE GRANTING A
RIGHT OF WAY IS VAGUE AND OBSCURE;

III. . . . IN AWARDING MORAL AND EXEMPLARY DAMAGES TO THE

RESPONDENTS.[16] (Underscoring supplied)

An easement or servitude is a real right constituted on anothers property, corporeal and immovable, by virtue of
which the owner of the same has to abstain from doing or to allow somebody else to do something on his property
for the benefit of another thing or person.[17] The statutory basis of this right is Article 613 of the Civil Code which
reads:

Art. 613. An easement or servitude is an encumbrance imposed upon an immovable for

the benefit of another immovable belonging to a different owner.

The immovable in favor of which the easement is established is called the dominant
estate; that which is subject thereto, the servient estate.

There are two kinds of easements according to source by law or by the will of the owners. So Article 619
of the Civil Code provides:

Art. 619. Easements are established either by law or by the will of the owners. The
former are called legal and the latter voluntary easements.

From the allegations in petitioners complaint, it is clear that what they seek to enforce is an alleged grant in the
deed by respondents of an easement reading: they shall be provided a 2 meters wide road right-of-way on the
western side of their lot but which is not included in this sale.

Article 1358 of the Civil Code provides that any transaction involving the sale or disposition of real property must
be in writing.[18] The stipulation harped upon by petitioners that they shall be provided a 2 meters wide road right-
of-way on the western side of their lot but which is not included in this sale is not a disposition of real
property. The proviso that the intended grant of right of way is not included in this sale could only mean that the
parties would have to enter into a separate and distinct agreement for the purpose. [19] The use of the word shall,
which is imperative or mandatory in its ordinary signification, should be construed as merely permissive where, as
in the case at bar, no public benefit or private right requires it to be given an imperative meaning. [20]

Besides, a document stipulating a voluntary easement must be recorded in the Registry of Property in order not to
prejudice third parties. So Articles 708 and 709 of the Civil Code call for, viz:

Art. 708. The Registry of Property has for its object the inscription or annotation of acts
and contracts relating to the ownership and other rights over immovable property.

Art. 709. The titles of ownership, or of other rights over immovable property, which are
not duly inscribed or annotated in the Registry of Property shall not prejudice third persons.

Petitioners are neither entitled to a legal or compulsory easement of right of way. For to be entitled to
such kind of easement, the preconditions under Articles 649 and 650 of the Civil Code must be established, viz:

Art. 649. The owner, or any person who by virtue of a real right may cultivate or use any
immovable, which is surrounded by other immovables pertaining to other persons, and without
 adequate outlet to a public highway, is entitled to demand a right of way through the
neighboring estates, after payment of the proper indemnity.

xxxx

This easement is not compulsory if the isolation of the immovable is due to the
proprietors own acts. (Underscoring supplied)

Art. 650. The easement of right of way shall be established at the point least prejudicial
to the servient estate, and, insofar as consistent with this rule, where the distance from the
dominant estate to a public highway may be the shortest. (Underscoring supplied)

Thus, to be conferred a legal easement of right of way under Article 649, the following requisites must be complied
with: (1) the property is surrounded by other immovables and has no adequate outlet to a public highway; (2)
proper indemnity must be paid; (3)the isolation is not the result of the owner of the dominant estates own
acts; (4) the right of way claimed is at the point least prejudicial to the servient estate; and (5) to the extent
consistent with the foregoing rule, the distance from the dominant estate to a public highway may be the
shortest.[21] The onus of proving the existence of these prerequisites lies on the owner of the dominant
estate,[22] herein petitioners.

As found, however, by the trial court, which is supported by the Sketch[23] (Exhibit B; Exhibit 1) of the location of
the lots of the parties and those adjoining them, a common evidence of the parties, petitioners and their family are
also the owners of two properties adjoining the subject property which have access to two public roads or
highways.[24]

Since petitioners then have more than adequate passage to two public roads, they have no right to demand the
grant by respondents of an easement on the western side of [respondents] lot.

It may not be amiss to note at this juncture that at the time the deed was executed in 1993, the barangay road-
Exhibit 1-G, by which petitioners could access Burgos Street-Exhibit 1-F, was not yet in existence; and that the
Interior Street-Exhibit 1-H, which petitioners via this case seek access to with a right of way, was still a creek,[25] as
reflected in the earlier-quoted particular description of respondents parcel of land from which the subject property
originally formed part.

Respecting the grant of damages in favor of respondents by the trial court which was affirmed by the appellate
court, the Court finds the same baseless.

To merit an award of moral damages, there must be proof of moral suffering, mental anguish, fright and
the like. It is not enough that one suffers sleepless nights, mental anguish, serious anxiety as a result of the
actuation of the other party.[26] Invariably, such actuation must be shown by clear and convincing evidence[27] to
have been willfully done in bad faith or with ill-motive.

In respondents case, they predicated their Counterclaim for damages on general allegations of sickness,
humiliation and embarrassment, without establishing bad faith, fraud or ill-motive on petitioners part.[28]

More importantly, respondents are precluded from filing any counterclaim in light of Article 199 of Rule XXVI of
the Rules and Regulations Implementing the Local Government Code of 1991 reading:

xxxx

ARTICLE 199. Penalty for Refusal or Failure of Any Party or Witness to Appear before
the Lupon or Pangkat. Refusal or willful failure of any party or witness to appear before
the lupon or pangkat in compliance with summons issued pursuant to this Rule may be punished
by the city or municipal court as for indirect contempt of court upon application filed therewith
by the lupon chairman, the pangkat chairman, or by any of the contending parties. Such refusal
 or willful failure to appear shall be reflected in the records of the lupon secretary or in the
minutes of thepangkat secretary and shall bar the complainant who fails to appear, from seeking
judicial recourse for the same course of action, and the respondent who refuses to appear, from
filing any counterclaim arising out of, or necessarily connected with the complaint.

x x x x (Emphasis and underscoring supplied)

While respondent Caridad Tabisula claimed that she always appeared, when summoned, before
the barangay lupon,[29] the following Certificate to File Action[30] belies the claim.

xxxx

This is to certify that respondents failed to appear for (2) Mediation Proceeding before
our Punong Barangay thus the corresponding complaint may now be filed in court.

Issued this 24th day of November 1998 at the Multi Purpose Hall, Barangay 1 City of San Fernando
(LU).

x x x x (Underscoring supplied)

The award for moral damages being thus baseless, that for exemplary damages must too be baseless.

As for the award of attorney's fees and expenses of litigation, respondents have not shown their
entitlement thereto in accordance with Article 2208 of the Civil Code.

WHEREFORE, the May 29, 2006 Decision and November 15, 2006 Resolution of the Court of Appeals are MODIFIED
in that the grant of the Counterclaim of respondents, Spouses Francisco Tabisula and Caridad Tabisula, is reversed
and set aside. In all other respects, the challenged decision is AFFIRMED.

Costs against petitioners.

SO ORDERED.
 Republic of the Philippines
Supreme Court

FIRST DIVISION

CARMEN A. BLAS, G.R. No. 159710

Petitioner,
Present:

PUNO, C.J., Chairperson,

CORONA,
-versus - CHICO-NAZARIO,*
LEONARDO-DE CASTRO, and
BERSAMIN, JJ.

Promulgated:
SPOUSES EDUARDO and
SALUD GALAPON, September 30, 2009
Respondents.
x-----------------------------------------------------------------------------------------x

DECISION

BERSAMIN, J.:

By petition for review on certiorari, the petitioner appeals the April 30, 2002 decision and the September 1, 2003
resolution of the Court of Appeals (CA) in C.A.-G.R. SP No. 49535, affirming the decision of the Office of the
President (OP) that awarded in equal shares to the petitioner and the respondents the 50-square meter lot on
which ZIP Tag Structure No. 86-313 stood.
Antecedents

In pursuit of the urban land reform program of the Government under Presidential Decree No.
1517,[1] Proclamation No. 1893,[2] and National Housing Authority (NHA) Circular No. 13, [3] the NHA conducted in
1987 the Zonal Improvement Program (ZIP) census and tagging of structures as pre-qualifying requisites for
determining the potential lot beneficiaries in the Peafrancia ZIP zone in Paco, Manila. In the census, the petitioner
was determined to be an absentee structure owner of the dwelling unit tagged as Structure No. 86-313,[4] while
respondent Eduardo Galapon and three others, namely Carlos Menodiado, Martin Nobleza and Buenaventura A.
Zapanta, were censused to be the renters of the petitioner in the structure. The petitioner, then a 78-year old
widow living in her son's dwelling unit tagged as Structure No. 86-305, had been renting Structure No. 86-313 out
as a source of income.

NHA Circular No. 13 disqualified any absentee or uncensused structure owner from owning a lot within a ZIP
zone. Alarmed that she might be disqualified to own the 50-square meter lot located at Lot 12, Block 2, Peafrancia
ZIP zone where Structure No. 86-313 stood, the petitioner filed a petition for change of status
from absentee structure owner to residing structure owner with the Awards and Arbitration Committee (AAC) of
NHA.

The Ruling of the NHA

The AAC recommended the approval of the petitioner's petition for change of status.

Aggrieved, respondent Spouses Eduardo and Salud Galapon appealed the recommendation of the AAC.
The NHA gave due course to the appeal and ultimately awarded the 50-square meter lot to them on January 30,
1996,[5] stating:
 Records show the following:

1. During the 1987 census survey of the project, you were censused as absentee owner
of the structure with Tag No. 86-313 while Eduardo Galapon, Jr., Carlos Menodiado,
Martin Nobleza and Buenaventura A. Zapanta were censused as your renters.

2. Although you have not left the project prior to, during and after the 1987 census
survey, you were not found to be residing at the structure with Tag No. 86-313,
allegedly owned by your daughter, Fe Blas.

3. Your daughter Fe Blas, is forty (40) years old, single and physically disabled making
her dependent on you for physical and financial support.

4. Despite the foregoing facts, the Awards and Arbitration Committee recommended
the approval of your request for change of status and the award in your favor of 50.0
sq. m. portion, more or less of Lot 12 Block 2.

5. On September 1, 1995, the District Manager, in an answer to our query, informed our
Legal Department of the following:

4. The Civil Status of Fe Blas, 40 years old, is single.

5. Mrs Carmen Blas do not have any personal belongings nor does she
maintain her own room in the contested structure. She is renting out
the subject structure to renters, Carlos Menodiado, Eduardo Galapon
Jr., Martin Nobleza and Buenaventura Zapanta at the time of the
census to augment her income for old age and medicine.
6. The census masterlist provided by the project office indicates that you were
censused as absentee owner of the structure with Tag No. 86-313 with remarks which
is owned by your son, Rodrigo Blas. He is also an absentee structure owner.

The abode date contradicts findings of the AAC that you lived with your daughter, Fe Blas
in the structure with Tag No. 86-274.

7. You maintain the structure with Tag No. 83-313 not as your residence but for purely
commercial purposes by renting it out.
In view of all the foregoing, your petition for change of census status from absentee
structure owner to residing structure owner and the award of 50.0 sq. m. portion, more or less,
of Lot 12 Blk. 2 is hereby DENIED.
The petitioner elevated for review the NHA decision to the OP, which docketed her appeal as OP Case No.
96-E-6455.

In the meantime, the petitioner filed an ejectment action against the respondents on October 18, 1996.
She obtained a favorable judgment. After she was issued a writ of execution, the respondents voluntarily vacated
the structure on November 17, 1996.

Ruling of the OP

On October 13, 1997, the OP found the petitioner and the respondents to be the long-standing bona fide qualified
applicants and awarded the disputed lot and the structure to both of them in equal shares,[6] viz:

WHEREFORE, premises considered, the appealed letter-decision of the NHA General Manager
Mariano Pineda, dated January 30, 1996 is hereby SET ASIDE, and another one entered, dividing
the area into two equal parts as much as possible, and allocating the same to appellant and
appellees in the manner indicated in the body of this decision.

SO ORDERED.

Both parties sought reconsideration of the OP decision. The petitioner's motion was not acted upon by the OP
while that of the respondents was denied for being filed out of time.
 On August 13, 1998, the respondents, through their representative, Prospero M. de la Torre, wrote a
letter seeking reconsideration to then Chief Presidential Legal Counsel Harriet O. Demetriou. In response, the OP
issued a resolution dated October 15, 1998 denying the request.[7]

Ruling of the CA

The petitioner filed a petition for review in the CA, assailing the October 13, 1997 decision and the October 15,
1998 resolution of the OP. She prayed that the disputed lot and structure be awarded to her solely considering
that the respondents had already vacated the structure even prior to the promulgation of the OP decision.

On April 30, 2002, the CA denied the petition for review for lack of merit, [8] holding:

The fact that she rented out her tagged structure proved that she did not live in that
dwelling unit, hence, she remained under the law an absentee owner who was disqualified
outright. If at all the Office of the President awarded her one-half of the disputed lot, it was out
of pure beneficence of this Office and not because she had that right under the law.

Moreover Blas did not allege in the petition nor prove that the Office of the President
committed grave abuse of discretion, fraud or error in law in dividing the disputed lot between
her and the Galapons. While she assigned as an error on the part of the Office of the President in
having the said lot divided, it was only upon the ground that the Galapons have already ceased to
be renters after they were ejected by the court. This nevertheless does not constitute an error
for the fact remains that the Galapons were the occupants at the time of the census, and not
Blas.Administrative decisions on matters within the executive jurisdiction can only be set aside
on proof of grave abuse of discretion , fraud, or error of law (Itogon-Suyoc Mines, Inc. vs. Office
of the President, 270 SCRA 63; Zabat vs. CA, 338 SCRA 551). Absent these badges of executive
excesses, this petition must fail.

The Office of the President in awarding the disputed lot to both in equal shares, did so
because it was censused that the Galapons were renters of the Tagged Structure owned by
Blas. As such the Galapons similarly were potential ZIP Beneficiaries who enjoyed the right of
preemption and security of tenure as defined in the NHA Implementing guidelines. The fact that
they were ejected in a case before Branch 25, Metropolitan Trial Court of Manila, did not render
them automatically disqualified from being awardees of the ZIP project. Under the Implementing
Guidelines (VIII. Ejectment, par. 1, p. 111, rollo) an ejected censused renter may only lose his
status as a potential ZIP beneficiary if he does not inform the NHA or the local government unit
of his address. There is nothing said and proved in the petition that spouses Galapon failed to up-
date NHA of their address.[9]

The CA also denied the petitioners motion for reconsideration on September 1, 2003.

Issues

The petitioner now seeks the review and reversal of the decision of the CA upon the following issues:

(1) Whether or not the petitioner was an absentee structure owner; and

(2) Whether or not the respondents were disqualified to be awardees of Lot 12, Block 2,
Peafrancia ZIP Project.

Ruling of the Court

The petition lacks merit.

I
Petitioner Was an Absentee Structure Owner
The ZIP is designed to upgrade the legal, environmental, social and economic conditions of slum residents within
Metro Manila, in line with the spirit of the constitutional provision guaranteeing housing and a decent quality of
life for every Filipino. The ownership of land by the landless is the primary objective of the ZIP. [10]

The Code of Policies embodied in NHA Circular No. 13 governed the implementation of the ZIP as to the
classification and treatment of existing structures, the selection and qualification of intended beneficiaries, the
disposition and award of fully developed lots in all ZIP zones within Metro Manila, and other related activities. [11]

Paragraph V of the Code of Policies laid down the rules on beneficiary selection and lot allocation,[12] to wit:

V. BENEFICIARY SELECTION AND LOT ALLOCATION

1. The official Zip census and tagging shall be the primary basis for determining potential
program beneficiaries and structures or dwelling units in the project area.

2. Issuance of Zip tag number in no way constitutes a guarantee for Zip lot allocation.

3. Absentee censused households and all uncensused households are automatically

disqualified from lot allocation.

4. Only those household included in the ZIP census and who, in addition, qualify under the
provisions of the Code of Policies, are the beneficiaries of the Zonal Improvement
Program.

5. A qualified censused-household is entitled to only one residential lot within the ZIP
project areas of Metro Manila.

6. Documentation supporting lot allocation shall be made in the name of the qualified
household head.

7. An Awards and Arbitration (AAC) shall be set up in each ZIP project area to be
composed of representative each from the Authority, the local government, the
barangay and the community. The AAC shall determine lot allocation amongst qualified
beneficiaries, arbitrate in matters of claims and disputes, and safeguard the rights of all
residents in ZIP project areas by any legal means it may consider appropriate. All
decisions of the AAC shall be subject to review and approval of the General Manager of
the Authority, the local Mayors, and finally the Governor of the Metropolitan Manila
Commission.[13]

The declaration of policy in the Code of Policies stated that an absentee or uncensused structure owner was
disqualified from owning a lot within the ZIP zones.[14]

A careful perusal of the Code of Policies shows the following persons to be automatically disqualified,
namely:

(1) Absentee censused household censused household that vacates a duly tagged structure or
dwelling unit and leaves the project area for a continuous period for at least six months
without written notice to the NHA and the local government unit;[15]

(2) Uncensused household household that is not registered in the official ZIP census;[16]

(3) Absentee structure owner any individual who owns a structure or dwelling unit in a ZIP
project area and who has not occupied it prior to the official closure of the Census; [17] and

(4) Uncensused structure owner any person who owns a structure or dwelling unit not registered
in the official ZIP census.[18]

The CA categorically declared the petitioner as an absentee structure owner disqualified to the award of the
disputed lot. On the other hand, the petitioner insists that she was not an absentee structure owner because she
never abandoned nor relinquished her right over Structure No. 86-313. According to her, she occupied the
disputed lot since 1938 although she was not living thereat during the time of the official ZIP census.

We agree with the CA.

The following requisites must concur for one to be considered an absentee structure owner: one, the person must
own a structure or dwelling unit within the ZIP zone; and two, the person has not occupied the structure or
dwelling unit prior to the official closure of the census.

The petitioner did not meet the second requisite because it was the respondents, not her, who were living
in or occupying Structure No. 86-313 at the time of the official ZIP census and until they vacated the premises
on November 17, 1996.

In the award of the ZIP lot allocation, the primary bases for determining the potential program beneficiaries and
structures or dwelling units in the project area were the official ZIP census and tagging conducted in 1987. It was,
therefore, the primordial requisite that the intended beneficiary must be the occupant of the tagged structure at
the time of the official ZIP census or at the closure thereof. Otherwise, the person was considered an absentee
structure owner for being absent from his usual residence or domicile. At any rate, the Code of Policies made it
clear that the issuance of a ZIP tag number to a structure did not guarantee ZIP lot allocation to the owner of the
tagged structure.[19] Such interpretation of the Code of Policies was in harmony with the objectives and principles
underlying the program to provide adequate shelter and place of abode to the legally qualified beneficiaries. That
the petitioner was the person who built Structure No. 86-313 did not necessarily mean that the lot on which the
structure stood would be automatically awarded to her. Like any other beneficiary, she must first comply with the
requirements imposed by the Government before being deemed entitled to the lot allocation. Unfortunately, she
was not using Structure No. 86-313 as a dwelling or living quarters, but as a source of income, which only signified
that she was not a homeless person whom the ZIP intended to benefit. To consider her a homelot beneficiary
would be contrary to the spirit of the Code of Policies and would defeat the very object of the ZIP.

II
Respondents are not disqualified to be awardees
of Lot 12, Block 2, Peafrancia ZIP Project

The petitioner claims that the respondents were disqualified to become homelot beneficiaries because they had
been evicted by virtue of the judgment rendered in the ejectment case she had filed against them; and that when
they vacated Structure No. 86-313, they did not inform the NHA of their present address, an omission that violated
Paragraph III of the Code of Policies, which reads:

III. EJECTMENT
1. A censused renter or censused rent-free occupant who has been ejected should inform
the Authority and the local government of his address in order that he may not lose his
status as a potential ZIP beneficiary.

2. A qualified censused structure owner who succeeds in ejecting his renter or rent-free
occupant or legal grounds, may be allowed to transfer to his structure or dwelling unit,
with the prior written clearance of the Authority or its duly authorized representative,
as certified by the local government.[20]

We are not persuaded by the petitioners claims.

It is undisputed that the respondents were the censused renters or occupants of Structure No. 86-313. Such status
could not automatically be changed by their judicial ejectment at the petitioners instance, considering that their
right to become lot beneficiaries of the ZIP was consistently recognized by the AAC, the NHA, the OP and the
CA. The discretion to determine who were the qualified homelot beneficiaries belonged to the AAC, subject to the
review and approval of the NHA General Manager.[21] The NHA ruling on the issue was conclusive and binding in
the absence of any clear showing of any grave abuse of discretion on the part of such administrative office directly
tasked to execute, implement and administer the ZIP. That such ruling was even upheld by the OP and then the CA
strengthened even more the presumption of correctness in its favor.

The petitioner cannot rely on the judgment rendered in the ejectment case to buttress her claim of the ownership
of the structure. Neither was that judgment a valid basis for asserting a better right to the lot on which the
structure stood. In ejectment cases, the only issue is the physical and material possession of the property involved,
the resolution being independent of any claim of ownership made by any of the litigants. The question of
ownership is, at best, merely provisionally decided, but only for the sole purpose of determining which party has
the better right to the physical possession of the property. [22] Indeed, the judgment in the ejectment case could
only determine who between the petitioner and the respondents had a better right to possess Structure No. 86-
313. It did not, as it could not, decide that the petitioner was entitled to the award of the lot, or that the
respondents could not be considered as qualified beneficiaries of the ZIP.

We further affirm the ruling of the CA to the effect that the petitioner did not substantiate her claim that the
respondents had failed to inform the NHA of their present address; and that contrary to the Code of Policies, she
did not allege that she now lived in her structure following her eviction of the respondents with prior written
clearance from the NHA or its duly authorized representative, as verified by the City Government of Manila.
The respondents, being qualified homelot beneficiaries of Lot 12, Block 2, enjoyed the right of pre-emption vis--
vis Structure No. 86-313, which was a right granted to them as the censused renters of the structure to have the
first option to acquire or to purchase the structure.[23]

WHEREFORE, we deny the petition for review on certiorari for lack of merit.

The April 30, 2002 decision and the September 1, 2003 resolution in C.A.-G.R. SP No. 49535 are modified,
awarding the 50-square meter portion of Lot 12, Block 2 of the Peafrancia ZIP Project on which Structure No. 86-
313 stood exclusively to the respondents.

Costs of suit to be paid by the petitioner.

SO ORDERED.
 Republic of the Philippines
Supreme Court

THIRD DIVISION

RODOLFO RUDY CANLAS, G.R. No. 184285

VICTORIA CANLAS, FELICIDAD
CANLAS and SPOUSES PABLO
CANLAS AND CHARITO CANLAS,
Petitioners, Present:
Ynares-Santiago, J. (Chairperson),
- versus - Chico-Nazario,
Velasco, Jr.,
Nachura, and
Peralta, JJ.
ILUMINADA TUBIL,
Respondent. Promulgated:

September 25, 2009

x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

Assailed in this petition for review on certiorari is the June 12, 2008 Decision[1] of the Court of Appeals
in CA-G.R. SP No. 99736, which reversed the April 11, 2007 Decision [2] of the Regional Trial Court (RTC) of Guagua,
Pampanga, Branch 50, in Special Civil Case No. G-06-544, and ordered said Regional Trial Court to decide the case
on merits, pursuant to Section 8, par. 2 of Rule 40 of the Rules of Court. The RTC affirmed the Decision[3] of the
Municipal Trial Court (MTC) of Guagua, Pampanga, Branch 2, which dismissed Civil Case No. 3582 for unlawful
detainer filed by respondent Iluminada Tubil. Also assailed is the September 1, 2008 Resolution[4] of the Court of
Appeals which denied the Motion for Reconsideration.

The facts are as follows:

On June 9, 2004, a complaint for unlawful detainer was filed by respondent Iluminada Tubil against
petitioners Rodolfo Canlas, Victoria Canlas, Felicidad Canlas and spouses Pablo and Charito Canlas before the
MTC. The pertinent allegations read:

xxxx

3. That the plaintiff is the owner, together with the other heirs of her late husband
Nicolas Tubil who are their children, of a residential land located at San Juan, Betis, Guagua,
Pampanga, identified as Cadastral Lot No. 2420, with an area of 332 square meters, covered by
Original Certificate of Title No. 11199 of the Registry of Deeds of Pampanga, x x x;
xxxx

4. That before the aforesaid parcel of land was titled, it was declared for taxation
purposes in the name of plaintiff Iluminada Tubil in the Municipal Assessors Office of Guagua,
Pampanga, x x x;

xxxx

6. That sometime ago, the defendants Roldolfo Rudy Canlas, Victoria Canlas and
Felicidad Canlas erected a house in the aforesaid land of the plaintiff, which they are presently
occupying as their residential house;
 7. That likewise sometime ago defendants spouses Pablo Canlas and Charito Canlas
erected a house in the aforesaid land of the plaintiff, which they are presently occupying as their
residential house;

8. That the said houses of the defendants were erected in the aforesaid land and their
stay therein was by mere tolerance of the plaintiff, as well as co-heirs, considering that
defendants are plaintiffs relatives;

9. That plaintiff and her co-heirs wish to use and dedicate the aforesaid parcel of land
fruitfully, demands were verbally made upon the defendants to vacate and remove their house
therefrom, but defendants just ignored the plea of plaintiff and co-heirs, and instead failed and
refused to remove the houses without any lawful and justifiable reason;

10. That in light of said refusal, the plaintiff referred the matter to a lawyer, who sent
defendants demand letters to vacate dated January 12, 2004, but inspite of receipt of the same
defendants failed and refused to vacate and remove their houses and continue to fail and refuse
to do so without lawful justification x x x;

11. That this matter was ventilated with before the barangay government for
conciliation, mediation, arbitration and settlement prior to the filing of this case with this court,
but no settlement was arrived at inspite of the effort exerted by the barangay authorities and so
a certification to file action was issued by the Pangkat Chairman of Barangay San Juan, Betis,
Guagua, Pampanga x x x;[5]

Petitioners filed a motion to dismiss alleging that the MTC is without jurisdiction over the subject matter,
and that the case was not prosecuted in the name of the real parties in interest. [6]

On September 14, 2004, the MTC denied the motion because the grounds relied upon were evidentiary in
nature which needed to be litigated.[7]

Thus, petitioners filed their answer where they denied the allegations in the complaint. They claimed that
together with their predecessors-in-interest, they had been in open, continuous, adverse, public and uninterrupted
possession of the land for more than 60 years; that respondents title which was issued pursuant to Free Patent No.
03540 was dubious, spurious and of unlawful character and nature; and that respondents cause of action was for
an accion publiciana, which is beyond the jurisdiction of the MTC.[8]

On October 23, 2006, the MTC rendered judgment dismissing the complaint for unlawful detainer
because respondent failed to show that the possession of the petitioners was by mere tolerance.

Respondent appealed to the RTC which rendered its Decision on April 11, 2007 affirming in toto the
judgment of the MTC. Respondent filed a motion for reconsideration but it was denied in an Order[9] dated June 8,
2007.

Respondent filed a petition for review with the Court of Appeals, which rendered the assailed decision on
June 12, 2008, which reversed the Regional Trial Courts Decision, the dispositive portion of which reads:

WHEREFORE, in view of all the foregoing premises, judgment is hereby rendered by us

SETTING ASIDE the decision rendered by Branch 50 of the RTC in Guagua, Pampanga on April 11,
2007 in Special Civil Case No. G-06-544 and ORDERING the said regional trial court branch to
decide Special Civil Case No. G-06-544 on the merits based on the entire record of the
proceedings had in the Municipal Trial Court of Guagua, Pampanga in Civil Case No. 3582 and
such memoranda as are filed therewith, without prejudice to the admission of amended
pleadings and additional evidence in the interest of justice, pursuant to par. 2 of Section 8 of Rule
40 of the 1997 Revised Rules of Court.

IT IS SO ORDERED.[10]
Petitioners moved for reconsideration but it was denied by the Court of Appeals in its September 1, 2008
Resolution.[11]

Hence, this petition for review on certiorari alleging that:

x x x THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR WHEN IT SET ASIDE THE
DECISION RENDERED BY BRANCH 50 OF THE REGIONAL TRIAL COURT OF GUAGUA, PAMPANGA
ON APRIL 11, 2007 IN SPECIAL CIVIL CASE NO. G-06-544 ANDIN ORDERING THE SAID COURT TO
DECIDE SPECIAL CIVIL CASE NO. G-06-544 ON THE MERITS BASED ON THE ENTIRE RECORD OF
THE PROCEEDINGS HAD IN THE MUNICIPAL TRIAL COURT OF GUAGUA, PAMPANGA IN CIVIL CASE
NO. 3582, WITHOUT PREJUDICE TO THE ADMISSION OF AMENDED PLEADINGS AND ADDITIONAL
EVIDENCE PURSUANT TO PARAGRAPH 2 OF SECTION 8 OF RULE 40 OF THE 1997 RULES OF CIVIL
PROCEDURE AS AMENDED, DESPITE THE FACT THAT BRANCH 50 OF THE REGIONAL TRIAL COURT
OF GUAGUA, PAMPANGA DOES NOT HAVE ORIGINAL JURISDICTION OVER THE SUBJECT MATTER
OF CIVIL CASE NO. 3582 FILED IN THE MUNICIPAL TRIAL COURT OF GUAGUA, PAMPANGA ON
JUNE 9, 2004.[12]

Petitioners contend that the RTC does not have original jurisdiction over the subject matter of the case,
thus, it cannot validly decide on the merits, as ordered by the Court of Appeals, pursuant to paragraph 2 of Section
8, Rule 40 of the Rules of Court, which reads:

SEC. 8. Appeal from orders dismissing case without trial; lack of jurisdiction.

xxxx

If the case was tried on the merits by the lower court without jurisdiction over the subject
matter, the Regional Trial Court on appeal shall not dismiss the case if it has original jurisdiction
thereof, but shall decide the case in accordance with the preceding section, without prejudice to
the admission of amended pleadings and additional evidence in the interest of justice.
We note that when petitioners filed their motion to dismiss before the MTC, they claimed that it is the RTC which
has jurisdiction over the subject matter. However, in the instant petition for review, petitioners changed their
theory; they now claim that it is the MTC, and not the RTC, which has jurisdiction over the subject matter since the
dispossession was only for five months counted from respondents last demand to the filing of the complaint for
unlawful detainer before the MTC.

As a rule, a change of theory cannot be allowed.[13] However, when the factual bases thereof would not
require presentation of any further evidence by the adverse party in order to enable it to properly meet the issue
raised in the new theory,[14] as in this case, the Court may give due course to the petition and resolve the principal
issues raised therein.
The issue to be resolved is which court, the MTC or the RTC has jurisdiction over the subject matter. If it is an
unlawful detainer case, the action was properly filed in the MTC. However, if the suit is one for accion publiciana,
original jurisdiction is with theRTC, which is mandated not to dismiss the appeal but to decide the case on the
merits pursuant to Section 8 of Rule 40 of the Rules of Court.

Well-settled is the rule that what determines the nature of the action as well as the court which has jurisdiction
over the case are the allegations in the complaint.[15] In ejectment cases, the complaint should embody such
statement of facts as to bring the party clearly within the class of cases for which the statutes provide a remedy, as
these proceedings are summary in nature. The complaint must show enough on its face to give the court
jurisdiction without resort to parol evidence.[16]

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.[17]
 An unlawful detainer proceeding is summary in nature, jurisdiction of which lies in the proper municipal
trial court or metropolitan trial court. The action must be brought within one year from the date of last demand
and the issue in said case is the right to physical possession.[18]

On the other hand, accion publiciana is the plenary action to recover the right of possession which should
be brought in the proper regional trial court when dispossession has lasted for more than one year. It is an
ordinary civil proceeding to determine the better right of possession of realty independently of title. In other
words, if at the time of the filing of the complaint, more than one year had elapsed since defendant had turned
plaintiff out of possession or defendants possession had become illegal, the action will be, not one of forcible entry
or illegal detainer, but an accion publiciana.

In Cabrera v. Getaruela,[19] the Court held that a complaint sufficiently alleges a cause of action for unlawful
detainer if it recites the following:

(1) initially, possession of property by the defendant was by contract with or by

tolerance of the plaintiff;

(2) eventually, such possession became illegal upon notice by plaintiff to defendant of the
termination of the latters right of possession;

(3) thereafter, the defendant remained in possession of the property and deprived the
plaintiff of the enjoyment thereof; and

(4) within one year from the last demand on defendant to vacate the property, the
plaintiff instituted the complaint for ejectment.

In the instant case, respondents allegations in the complaint clearly make a case for an unlawful detainer, essential
to confer jurisdiction on the MTC over the subject matter. Respondent alleged that she was the owner of the land
as shown by Original Certificate of Title No. 111999 issued by the Register of Deeds of Pampanga; that the land had
been declared for taxation purposes and she had been paying the taxes thereon; that petitioners entry and
construction of their houses were tolerated as they are relatives; and that she sent on January 12, 2004 a letter
demanding that petitioners vacate the property but they failed and refused to do so. The complaint for unlawful
detainer was filed on June 9, 2004, or within one year from the time the last demand to vacate was made.
It is settled that as long as these allegations demonstrate a cause of action for unlawful detainer, the
court acquires jurisdiction over the subject matter. This principle holds, even if the facts proved during the trial do
not support the cause of action thus alleged, in which instance the court - after acquiring jurisdiction - may resolve
to dismiss the action for insufficiency of evidence.[20]

The ruling cited by the Court of Appeals in Sarmiento v. Court of Appeals,[21] i.e., that jurisdictional facts must
appear on the face of the complaint for ejectment such that when the complaint fails to faithfully aver facts
constitutive of forcible entry or unlawful detainer, as where it does not state how entry was effected, or how and
when dispossession started, the remedy should either be an accion publiciana or an accion reinvindicatoria in the
proper regional trial court,[22] finds no application in the instant case. In Sarmiento, the complaint did not
characterize the entry into the land as legal or illegal. It was also not alleged that dispossession was effected
through force, intimidation, threat, strategy or stealth to make out a case of forcible entry, nor was there a
contract, express or implied, as would qualify the case as unlawful detainer. [23] Contrarily, the complaint in this
case specifically alleged that possession of the petitioners was by tolerance. The rule is that possession by
tolerance is lawful, but such possession becomes unlawful upon demand to vacate made by the owner and the
possessor by tolerance refuses to comply with such demand. [24] In Sarmiento, the claim that possession of the land
was by tolerance was a mere afterthought, raised only in subsequent pleadings but not in the complaint. [25]

The requirement that the complaint should aver jurisdictional facts, like when and how entry on the land was
made by the defendants, applies only when at issue is the timeliness of the filing of the complaint before the MTC
and not when the jurisdiction of the MTC is assailed as being one for accion publiciana cognizable by the RTC. Thus,
in Javelosa v. Court of Appeals,[26] it was held that:

The ruling in the Sarona case cited by petitioner i.e., that a complaint for unlawful
detainer should allege when and how entry on the land was made by the defendant, finds no
application to the case at bar. In Sarona, the main issue was the timeliness of the filing of the
complaint before the MTC. In forcible entry cases, the prescriptive period is counted from the
date of defendants actual entry on the land; in unlawful detainer, from the date of the last
demand to vacate. Hence, to determine whether the case was filed on time, there was a
necessity to ascertain whether the complaint was one for forcible entry or unlawful
detainer. In light of these considerations, the Court ruled that since the main distinction
between the two actions is when and how defendant entered the land, the determinative facts
should be alleged in the complaint.Thus, in Sarona, the jurisdiction of the MTC over the
complaint was never in issue for whether the complaint was one for forcible entry or unlawful
detainer, the MTC had jurisdiction over it. The case at bar is different for at issue is the
jurisdiction of the MTC over the unlawful detainer case for petitioner (defendant therein) asserts
that the case is one for accion publiciana cognizable by the RTC.

In the instant case, the timeliness of the filing of the complaint is not at issue as the dispossession of the
property by the respondent has not lasted for more than one year. Thus, the ruling of the RTC that the length of
time she was dispossessed of the property is almost 36 years, which made her cause of action beyond the ambit of
unlawful detainer and became one for accion publiciana,[27] lacks legal and factual basis.

Section 1, Rule 70 of the Rules of Court allows a plaintiff to bring an action in the proper inferior court for unlawful
detainer within one year, after such unlawful withholding of possession, counted from the date of the last
demand.[28] The records show that respondent sent the demand to vacate the property to the petitioners on
January 24, 2004 and filed the complaint for unlawful detainer on June 9, 2004, which is well within the one-year
period.

Having ruled that the MTC acquired jurisdiction over Civil Case No. 3582, it thus properly exercised its
discretion in dismissing the complaint for unlawful detainer for failure of the respondent to prove tolerance by
sufficient evidence. Consquently, Section 8 (2nd par.) of Rule 40 of the Rules of Court which ordains the Regional
Trial Court not to dismiss the cases appealed to it from the metropolitan or municipal trial court which tried the
same albeit without jurisdiction, but to decide the said case on the merits, finds no application here.

WHEREFORE, the petition is GRANTED. The June 12, 2008 Decision of the Court of Appeals in CA-G.R. SP
No. 99736 ordering the Regional Trial Court of Guagua, Pampanga, Branch 50 to decide Special Civil Case No. G-06-
544, as well as its September 1, 2008 Resolution denying the Motion for Reconsideration, are REVERSED and SET
ASIDE. The October 23, 2006 Decision of the MTC of Guagua, Pampanga, Branch 2, dismissing the complaint for
unlawful detainer for failure of respondent to show that petitioners possession of the subject property was by
mere tolerance is REINSTATED and AFFIRMED.

SO ORDERED.
 Republic of the Philippines
Supreme Court

THIRD DIVISION

SPOUSES ROGELIO F. LOPEZ G.R. No. 184225

AND TEOTIMA G. LOPEZ,
Petitioners, Present:
Ynares-Santiago, J. (Chairperson),
- versus - Chico-Nazario,
Velasco, Jr.,
Nachura, and
Peralta, JJ.
SPOUSES SAMUEL R. ESPINOSA
AND ANGELITA S. ESPINOSA, Promulgated:
Respondents.
September 4, 2009
x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

Assailed in this petition[1] for review on certiorari is the March 24, 2008 Decision[2] of the Court of Appeals in CA-
G.R. CV No. 00113 finding petitioners, Spouses Rogelio F. Lopez and Teotima G. Lopez, liable for forcible entry and
damages as well as the August 7, 2008 Resolution[3] denying petitioners motion for reconsideration.

Respondents, Spouses Samuel R. Espinosa and Angelita S. Espinosa, owned a house located at
Barangay Washington, Surigao City. Constructed in 1983, the house was situated at the back of petitioners
residence and stood over a portion of a parcel of land covered by Transfer Certificate of Title No. T-12332[4], which
was issued under the name of petitioners on June 28, 1996.

It appears from the records that the parties have had conflicting claims over the subject property since
1994 when petitioners, together with a Mr. Nolan Kaimo, filed an action for recovery of possession against
respondents. The case was docketed as Civil Case No. 4301 before Branch 2 of the Municipal Trial Court in Cities of
Surigao City, but was dismissed on September 7, 1994 on technical grounds. [5] On June 9, 1997 and July 2, 1997,
petitioners were also summoned by the Office of the Punong Barangay of Barangay Washington, in connection
with a complaint for malicious mischief filed by respondents.[6]

Meanwhile, the instant case stemmed from a complaint [7] for Forcible Entry with Damages filed by
respondents against petitioners on September 30, 2002. The case was docketed as Civil Case No. 02-5950 before
Branch 2 of the Municipal Trial Court in Cities of Surigao City.

Respondents alleged that on May 10, 2002, petitioners took advantage of their absence and demolished
their house by means of stealth and strategy. Aided by hired personnel, petitioners removed and destroyed
respondents house and enclosed the property with a concrete fence.

In their Answer,[8] petitioners denied having demolished respondents house and claimed that it was destroyed by
the elements. They also averred that respondents permanently transferred residence in 1999 considering that they
paid their water bill only until February 1999 while the electrical utility was disconnected on the same year. [9]

On February 5, 2004, the Municipal Trial Court in Cities ruled in favor of respondents and held that petitioners
forcibly entered the subject premises. It noted that:
 [I]n 1994 defendant Lopez and a certain Nolan Kaimo filed a case for recovery of possession
versus herein plaintiffs [respondents] who were already occupants of a portion thereof, but the
same was dismissed for technical reasons. In 1996, the defendants were able to secure TCT T-
12332 in their name and which cover not only their residential lot but also the adjacent lot which
plaintiffs occupied and where their house was erected. Then, in 1997 the plaintiffs had a clash
with defendants when the latter allegedly destroyed plaintiffs fence which conflict reached
Barangay Captain Laxas attention. These series of events clearly tend to show the many attempts
of defendant Lopez to oust the plaintiffs from the premises and occupy the same as his
own. And, the last event is the one related in the instant case where the defendants, sensing that
plaintiffs were not present and their house already destroyed by the elements, had the lot
relocated and fenced as a consequence of which plaintiffs were totally deprived of possession
thereof.[10]

The Municipal Trial Court did not lend credence to petitioners claims that respondents abandoned their house and
that the same was destroyed by natural elements. It held that despite petitioners constructive possession
following the issuance of TCT No. T-12332, they were not justified in making such forcible entry. [11] The dispositive
portion of the Decision[12] states:

WHEREFORE, judgment is hereby rendered:

1. Directing defendants [petitioners] to remove the concrete fence, steel gate,

grills and other structures found on the premises occupied by plaintiffs previous to the forcible
entry, and after which to deliver possession thereof to plaintiffs smoothly and peacefully;

2. Directing defendants [petitioners] to pay the value of the house and

improvements in the sum of P85,200.00;

3. Ordering defendants [petitioners] to further pay litigation expenses and the

costs, and the sum of P10,000.00 as attorneys fees.

SO ORDERED.[13]

Petitioners appealed to the Regional Trial Court of Surigao City/Surigao del Norte, which reversed the
ruling of the Municipal Trial Court in Cities. In its August 17, 2004 Decision, [14] the Regional Trial Court dismissed
the case on the ground that the evidence clearly prove abandonment on the part of respondents. [15]

Respondents filed a petition for review[16] before the Court of Appeals which affirmed in toto the Decision
of the Municipal Trial Court in Cities. It found that while respondents left the house in 1999 when respondent
Samuel was assigned to Placer, Surigao del Norte, this fact alone does not establish abandonment. Moreover, the
appellate court noted that respondents enjoy priority of possession, and that they paid the corresponding taxes
due on the house.[17] Thus:

WHEREFORE, the instant petition is hereby GRANTED. The Decision dated 17 August 2004 of the
Regional Trial Court, Tenth (10th) Judicial Region, Branch No. 29 of Surigao City in Civil Case No.
6229 is REVERSED and SET ASIDE. The Judgment dated 05 February 2004 of the Municipal Trial
Court in Cities, Branch No. 2 of Surigao City in Civil Case No. 02-5950 for Forcible Entry with
Damages is AFFIRMED IN TOTO.

SO ORDERED.[18]

Petitioners motion for reconsideration was denied, hence this petition on the following grounds:

THE COURT OF APPEALS ERRED IN RULING THAT THE HEREIN RESPONDENTS DID NOT ABANDON
THEIR NIPA HOUSE DESPITE THE FOLLOWING UNDISPUTED FACTS, TO WIT:

THE LOT OVER WHICH THE NIPA HOUSE WAS CONSTRUCTED IS OWNED BY THE HEREIN
PETITIONERS AND COVERED BY TCT-T12332;
 B

NOBODY WAS LEFT STAYING IN THE NIPA HOUSE FOR YEARS AND THE WATER AND ELECTRICAL
CONNECTIONS IN THE NIPA HOUSE WERE ALREADY CUT OFF AS EARLY AS 1999.

Petitioners argue that the disconnection of water and electric supply in respondents house is proof of their
intention to abandon the house, especially because respondents are not the owners of the land on which the
house stood. Petitioners also allege that, even assuming arguendo that the Municipal Trial Court correctly decided
on the issue of possession, the award of Php85,200.00 representing the value of improvements and attorneys fees
is not supported by evidence.

On the other hand, respondents claim that they did not abandon their house, and that the abandonment
of a right, claim or property must be clear, absolute, and irrevocable. On the award of Php85,200.00, respondents
aver that the issue was raised for the first time on appeal.

The petition lacks merit.

In Dy v. Mandy Commodities Co., Inc.,[19] the Court held that there is forcible entry or desahucio when one
is deprived of physical possession of land or building by means of force, intimidation, threat, strategy or
stealth. The basic inquiry centers on who has the prior possession de facto. The plaintiff must prove that he was in
prior possession and that he was deprived thereof.

In the instant case, respondents house was constructed in 1983 and they had prior physical possession
until they were deprived thereof by petitioners. To substantiate their claims, respondents submitted the affidavit,
dated September 20, 2002,[20] of Carlos C. Menil and Lolito S. Bito, who witnessed the demolition of respondents
house during the latters absence. Mr. Menil and Mr. Bito attested that they saw petitioner Rogelio personally
supervising the demolition of respondents house, and that he erected a concrete fence enclosing the area where
the house formerly stood. Petitioners failed to refute the foregoing allegations except with bare denials.

While petitioners hold title to the subject property where the house was located, the sole issue in forcible
entry cases is who had prior possession de facto of the disputed property.[21] In Dy, the Court held that these are
summary proceedings intended to provide an expeditious means of protecting actual possession or right of
possession of property. Title is not involved; that is why it is a special civil action with a special procedure.[22]

The Court of Appeals correctly held that respondents did not abandon their house. Abandonment
requires (a) a clear and absolute intention to renounce a right or claim or to desert a right or property; and (b) an
external act by which that intention is expressed or carried into effect. The intention to abandon implies a
departure, with the avowed intent of never returning, resuming or claiming the right and the interest that have
been abandoned.[23] There is none in this case.

The disconnection of water and electric supply and the fact that respondents left the house when
respondent Samuel was assigned to Surigao del Norte in 1999, do not constitute abandonment. As correctly found
by the Court of Appeals, respondents left valuables inside the house and had the same padlocked, which acts
constitute assertion and protection of their right over the subject house and negate renunciation and intention to
lose the same.[24]

It bears stressing that the instant case was preceded by the filing of actions for recovery of possession and
malicious mischief before the Office of the Punong Barangay. Likewise, upon discovery of petitioners acts of
intrusion, respondents immediately filed a complaint for forcible entry and damages before the Municipal Trial
Court in Cities. The Certification to File Action dated August 26, 2002 shows that no settlement or conciliation was
reached.[25] It is clear from the foregoing that respondents have not been remiss in asserting their rights and that
petitioners claims over the subject property have not gone unchallenged.
 The Court affirms the award of Php85,200.00 representing the value of improvements and attorneys
fees. The issue on the propriety of the award was raised for the first time on motion for reconsideration before the
Court of Appeals. Well-settled is the rule that issues not raised below cannot be raised for the first time on
appeal.[26]

WHEREFORE, based on the foregoing, the petition is DENIED. The March 24, 2008 Decision of the Court of
Appeals in CA-G.R. SP No. 00113-MIN finding petitioners liable for forcible entry is AFFIRMED.

SO ORDERED.
 Republic of the Philippines
Supreme Court

FIRST DIVISION

VALENTIN CABRERA, G.R. No. 164213

MANUEL CABRERA, and
REBECCA LESLIE CABRAS, Present:
Petitioners,
PUNO, C.J., Chairperson,
CARPIO,
- versus - CORONA,
LEONARDO-DE CASTRO, and
BERSAMIN, JJ.
ELIZABETH GETARUELA,
EULOGIO ABABON, LEONIDA
LIGAN, MARIETTO ABABON,
GLORIA PANAL, LEONORA
OCARIZA, SOTERO ABABON, Promulgated:
JR., and JOSEPH ABABON,
Respondents. April 21, 2009
x - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review[1] assailing the 22 January 2004 Decision[2] and 3 May 2004 Resolution[3] of
the Court of Appeals in CA-G.R. SP No. 80062.

The Antecedent Facts

Lot Nos. 3635-CC and 3635-Y, located in Inayawan, Pardo, Cebu City were covered by Tax Declaration Nos. GR2K-
12-078-02409 and GR2K-12-078-02431 in the name of Arcadio Jaca (Arcadio). The heirs of Arcadio executed a
notarized document known asKasabutan nga Hinigala dated 25 July 1951 which stipulated that all the inherited
properties of Arcadio, including Lot No. 3635, would go to Peregrina Jaca Cabrera (Peregrina). However, in a
Repartition Project approved on 21 November 1956 by Judge Jose M. Mendoza of the Court of First Instance of
Cebu City, Branch 6 in Special Proceedings No. 211-V, Lot Nos. 3635-CC and 3635-Y were given to Urbana Jaca
Ababon (Urbana), mother of Elizabeth Getaruela, Eulogio Ababon, Leonida Ligan, Marietto Ababon, Gloria Panal,
Leonora Ocariza, Sotero Ababon, Jr., and Joseph Ababon (respondents). Upon Urbanas death in 1997, respondents
inherited the lots.

Valentin Cabrera (Valentin), Manuel Cabrera (Manuel), and Rebecca Leslie Cabras (Cabras), Peregrinas adopted
daughter, occupied the lots with the knowledge and consent of respondents.

Respondents alleged that Valentin, Manuel, and Cabras (collectively, petitioners) were occupying portions of the
lots without paying any rentals, but with an agreement that they would vacate the premises and demolish their
houses at their expense should respondents need the property. In 2001, respondents personally notified
petitioners that they would repossess the property. Respondents asked petitioners to vacate the premises and
remove the houses they built on the lots. However, despite repeated demands, petitioners refused to vacate the
premises. The matter was referred to the Lupong Tagapamayapa of Barangay Inayawan, Cebu for possible
amicable settlement but petitioners still refused to vacate the premises. Thus, respondents filed an action for
ejectment against petitioners, docketed as Civil Case No. R-45280.
Petitioners assailed the Project of Partition as incredible because its first page was missing and it lacked the
signatures of the parties who executed it. Petitioners asserted the validity of the Kasabutan nga Hinigala. Cabras
alleged that as owner of Lot No. 3635 upon Peregrinas death, she could not be ejected from the premises. Valentin
and Manuel alleged that they could not be ejected because they built their houses with Peregrinas knowledge and
consent.

The Rulings of the MTCC and RTC

In its Decision[4] dated 4 April 2002, the Municipal Trial Court in Cities, Branch 7, Cebu City (MTCC) ruled in favor of
respondents, as follows:

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants,
ordering the latter to vacate the premises in question and to demolish whatever improvements
introduced thereon and surrender complete control and possession thereof to the plaintiffs, and
to jointly and severally pay the latter:

1) the amount of P15,000.00 for and as attorneys fees;

2) litigation expenses in the sum of P5,000.00; and cost of suit.

SO ORDERED.[5]

The MTCC ruled that the Kasabutan nga Hinigala was superseded by the court-approved Repartition Project. The
MTCC noted that in the Repartition Project, Lot Nos. 3635-CC and 3635-Y were given to Urbana, respondents
predecessor-in-interest. The MTCC ruled that while the lots were still in Urbanas name, respondents were not
barred from judicially ejecting petitioners from the premises.

Petitioners appealed from the MTCCs Decision.

In its 19 May 2003 Decision,[6] the Regional Trial Court of Cebu City, Branch 7 (RTC) reversed the MTCCs
Decision. The RTC ruled that the Project of Partition showed that Lot No. 3635-Y was co-owned by Urbana (251 sq.
m.), Peregrina (863 sq. m.), and Andres Jaca (251 sq. m.). The RTC ruled that as Peregrinas heir, Cabras became a
co-owner of Lot No. 3635-Y and she could not be ejected from the property. The RTC ruled that Valentin and
Manuel could not likewise be ejected from the property as they were allowed by Cabras to occupy the lot.

The RTC ruled that the Project of Partition also showed that Urbanas total share of 1,499 sq. m., covering 1,248 sq.
m. of Lot No. 3635-CC and 251 sq. m. of Lot No. 3635-Y, was sold to one Josefina Asas (Asas). As such, respondents
had no cause of action against petitioners.

The dispositive portion of the RTCs Decision reads:

Wherefore, the judgment in the Decision dated April 4, 2002, of the Municipal Trial Court in
Cities, Branch 7, Cebu City, in Civil Case No. R-45280, is REVERSED, and another one is entered
DISMISSING the case against defendants-appellants.

Plaintiffs-appellees are directed to compensate defendants-appellants attorneys fees in the

amount of P15,000.00, and litigation expenses in the amount of P5,000.00, as well as to pay the
costs.
 SO ORDERED.[7]

Respondents filed a motion for reconsideration. In its 29 July 2003 Order, the RTC partially granted respondents
motion. The RTC ruled that it erred in finding that Urbana sold her share to Asas. The RTC ruled that the Project of
Partition showed that it was Panfilo Jaca who sold his share to Asas. The RTC modified its 19 May 2003 Decision as
follows:

Wherefore, the judgment in the Decision dated April 4, 2002, of the Municipal Trial Court in
Cities, Branch 7, Cebu City, in Civil Case No. R-45280, is MODIFIED, as follows:

1) Dismissing the complaint as regards Lot 3655-Y; and

2) Ordering defendants-appellants to vacate Lot No. 3655-CC, demolish whatever
improvements they may have introduced thereon and surrender complete control
and possession thereof to plaintiffs-appellees.

No pronouncement as to costs.
SO ORDERED.[8]

Petitioners moved for reconsideration of the RTCs 29 July 2003 Order, assailing the Project of Partition. In its 3
September 2003 Order,[9] the RTC denied petitioners motion. The RTC ruled that petitioners failed to present any
evidence supporting the purported falsity of the Project of Partition. The RTC upheld the jurisdiction of the MTCC
and further ruled that respondents action was an ejectment case.

Petitioners filed a petition for review before the Court of Appeals.

The Ruling of the Court of Appeals

In its 22 January 2004 Decision, the Court of Appeals affirmed the 29 July 2003 and 3 September 2003 Orders of
the RTC.

The Court of Appeals held that the jurisdiction of the court is determined by the allegations in the complaint. The
Court of Appeals held that a complaint for unlawful detainer is sufficient if it alleges that the withholding of
possession or the refusal to vacate is unlawful. The Court of Appeals ruled that prior physical possession is
indispensable only in actions for forcible entry but not in unlawful detainer. The Court of Appeals further ruled that
occupation of the premises must be tolerated by the owners right from the start of the possession of the property
sought to be recovered.

The Court of Appeals found that in this case, petitioners were occupying the lots without rentals upon agreement
with respondents that they would relinquish possession once respondents need the property. However,
petitioners refused to vacate the premises despite demands by respondents. The Court of Appeals ruled that the
allegations were sufficient to confer jurisdiction upon the MTCC where the ejectment suit was instituted and tried.

The Court of Appeals noted that petitioners challenged respondents claim of ownership of the property. The Court
of Appeals ruled that the only issue involved in an ejectment case is possession de facto. However, when the issue
of possession could not be resolved without resolving the issue of ownership, the court may receive evidence upon
the question of title to the property but solely for the purpose of determining the issue of possession. Hence, the
MTCC acted correctly when it received evidence on the issue of ownership. The Court of Appeals further noted
that the RTC upheld the MTCCs finding that the Project of Partition superseded the Kasabutan nga Hinigala. The
Court of Appeals sustained the RTC in refusing to admit documents submitted by petitioners which they failed to
present before the MTCC. The Court of Appeals stressed that the MTCCs finding on the issue of ownership was
merely provisional. Thus, petitioners were not legally barred from filing the proper action to settle the question of
title.

The dispositive portion of the Decision of the Court of Appeals reads:

WHEREFORE, premises considered, the present petition is hereby DENIED DUE COURSE and
accordingly DISMISSED. The assailed Orders dated July 29, 2003 and September 3, 2003 of the
court a quo are hereby both AFFIRMED.

No pronouncement as to costs.

SO ORDERED.[10]

Petitioners filed a motion for reconsideration. In its 3 May 2004 Resolution, the Court of Appeals denied the
motion.

The Court of Appeals ruled that a complaint for unlawful detainer must be filed within one year from demand and
not from the start of possession as claimed by petitioners. The Court of Appeals reiterated that in cases of forcible
entry and unlawful detainer, the issue is pure physical or de facto possession and pronouncements made on the
question of ownership are provisional in nature. The Court of Appeals further ruled that all cases of forcible entry
and unlawful detainer shall be filed before the proper Municipal Trial Court, there being no jurisdictional amount
involved, even with respect to damages or unpaid rentals sought.

Hence, the petition before this Court.

The Issues

Petitioners raise the following issues in their Memorandum: [11]

1. Whether the MTCC had jurisdiction to entertain the ejectment case considering the absence of
a contract, written or oral, entered into by respondents and petitioners as lessors and
lessees, respectively;

2. Whether tolerance as a ground for ejectment is tenable in this case; and

3. Whether the Project of Partition superseded the Kasabutan nga Hinigala.

The Ruling of this Court

The petition has no merit.

Petitioners insist that the MTCC had no jurisdiction to entertain respondents complaint because there was no
contract, oral or written, between the parties. Petitioners allege that the proper action should have been one for
recovery of possession and not for unlawful detainer.

We do not agree.

It is settled that a complaint sufficiently alleges a cause of action for unlawful detainer if it recites the following:

(1) initially, possession of property by the defendant was by contract with or by

tolerance of the plaintiff;
 (2) eventually, such possession became illegal upon notice by plaintiff to defendant of the
termination of the latters right of possession;

(3) thereafter, the defendant remained in possession of the property and deprived the
plaintiff of the enjoyment thereof; and

(4) within one year from the last demand on defendant to vacate the property, the
plaintiff instituted the complaint for ejectment.[12]

In this case, the complaint alleged that petitioners were occupying the property, with agreement that should
respondents need the property, petitioners would relinquish possession of the lots and demolish their houses at
their expense. Respondents personally notified petitioners to vacate the premises and to demolish their houses
but petitioners refused to vacate the lots. The complaint established that petitioners possession was by tolerance
of respondents, and their possession became illegal when they refused to vacate the premises upon demand by
respondents. Here, the possession became illegal not from the time petitioners started occupying the property but
from the time demand was made for them to vacate the premises. In short, the complaint sufficiently established a
case for unlawful detainer.

Contrary to petitioners contention, the issue in this case is not the ownership of the lots. It should be stressed
that the allegations in the complaint and the character of the relief sought determine the nature of the action and
the court with jurisdiction over it.[13]The defenses set up in an answer are not determinative of jurisdiction. [14] The
jurisdiction of the court cannot be made to depend on the exclusive characterization of the case by one of the
parties.[15] Thus:

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. However, where
the issue of ownership is raised, the courts may pass upon the issue of ownership in order to
determine who has the right to possess the property. We stress, however, that this adjudication
is only an initial determination of ownership for the purpose of settling the issue of possession,
the issue of ownership being inseparably linked thereto. The lower courts adjudication of
ownership in the ejectment case is merely provisional and would not bar or prejudice an action
between the same parties involving title to the property. It is, therefore, not conclusive as to the
issue of ownership x x x.[16]

The MTCC, the RTC, and the Court of Appeals all held that the Repartition Project superseded the Kasabutan nga
Hinigala. We sustain their factual finding as this Court gives substantial weight to the factual finding of the trial
court, particularly if this factual finding is sustained by appellate courts. However, we also reiterate that this
resolution on the issue of ownership is only provisional for the purpose of settling the issue of possession.

WHEREFORE, we DENY the petition. We AFFIRM the 22 January 2004 Decision and 3 May 2004 Resolution of the
Court of Appeals in CA-G.R. SP No. 80062.

SO ORDERED.
 Republic of the Philippines
Supreme Court

THIRD DIVISION

SPOUSES JONEL PADILLA and SARAH PADILLA, G.R. No. 169956

Petitioners,
Present:
- versus -
YNARES-SANTIAGO, J.,
ISAURO A. VELASCO, TEODORA A. VELASCO, DELIA A. Chairperson,
VELASCO, VALERIANO A. VELASCO, JR., IDA A. AUSTRIA-MARTINEZ,
VELASCO, AMELITA C. VELASCO, ERIBERTO C. CHICO-NAZARIO,
VELASCO, JR., and CELIA C. VELASCO, NACHURA, and
Respondents. LEONARDO-DE CASTRO,*JJ.

Promulgated:

January 19, 2009

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the
Decision[1] dated February 11, 2005 and the Resolution[2] dated October 4, 2005 of the Court of Appeals (CA) in CA-
G.R. CV No. 69997 entitled Isauro A. Velasco, Teodora A. Velasco, Delia A. Velasco, Valeriano A. Velasco, Jr., Ida A.
Velasco, Amelita C. Velasco, Eriberto C. Velasco, Jr. and Celia C. Velasco v. Spouses Jonel Padilla and Sarah Padilla.

The Facts

The facts of the case are as follows:

Respondents are the heirs of Dr. Artemio A. Velasco (Artemio), who died single and without any issue on January
22, 1949. During his lifetime, Artemio acquired Lot No. 2161 consisting of 7,791 square meters situated
at Barangay Pinagsanjan, Pagsanjan, Laguna, covered by Tax Declaration No. 4739. Artemio acquired the lot from
spouses Brigido Sacluti and Melitona Obial, evidenced by a deed of sale dated February 14, 1944.

In October 1987, petitioners entered the property as trustees by virtue of a deed of sale executed by the Rural
Bank of Pagsanjan in favor of spouses Bartolome Solomon, Jr. and Teresita Padilla (Solomon spouses).

Respondents demanded that petitioners vacate the property, but the latter refused. The matter was referred to
the barangay for conciliation; however, the parties failed to reach an amicable settlement. Thereafter, petitioners
caused the cutting of trees in the area, fenced it and built a house thereon. They harvested the crops and
performed other acts of dominion over the property.
On October 14, 1991, respondents filed a complaint for accion publiciana, accounting and damages against
petitioners before the Regional Trial Court (RTC) of Santa Cruz, Laguna. They asked the court to order petitioners
to vacate the property and to pay moral and exemplary damages, attorneys fees and cost of suit.

Isauro A. Velasco (Isauro), the brother of the deceased Artemio, as administrator of the property, was presented as
a witness. He testified that Artemio owned the property. As evidence thereof, he presented the Kasulatan ng
Bilihang Tuluyan executed by spouses Brigido Sacluti and Melitona Obial in favor of Artemio, and declared that he
(Isauro) was present during the signing of the instrument. He offered in evidence tax declarations and tax receipts
covering Lot No. 2161 which were all in the name of Artemio. A certification from the Land Registration Authority
(LRA) was likewise presented by Isauro which states that based on the records of the LRA, Decree No. 403348 was
issued on October 10, 1930 covering Lot No. 2161.[3]

Rolando R. Flores, a geodetic engineer, also testified that on January 16, 1993, upon prior notice to petitioners, he
conducted a survey of the land based on the technical description of the property and the map from the Bureau of
Lands. The purpose of the survey was to verify if the area occupied by petitioners was Lot No. 2161. Upon his
examination and based on his survey, he concluded that the land occupied by petitioners was Lot No. 2161.[4]

On the other hand, petitioners averred that the Solomon spouses owned the property; that the said spouses
bought it from the Rural Bank of Pagsanjan as evidenced by a deed of sale dated September 4, 1987; that the land
was identified as Lot No. 76-pt, consisting of 10,000 square meters, located at Pinagsanjan, Pagsanjan, Laguna; and
that the spouses authorized petitioners to occupy the land and introduce improvements thereon.

Petitioners further claimed that subsequent to the sale of the property to the Solomon spouses, Lot No. 76-pt. was
levied on in Civil Case No. 320 under the jurisdiction of the Municipal Trial Court of Pagsanjan, Laguna. The case
was entitled Rural Bank of Pagsanjan, Inc. v. Spouses Hector and Emma Velasco, Valeriano Velasco
and Virginia Miso. Petitioners alleged that Valeriano Velasco obtained a loan from the Rural Bank of Pagsanjan,
with Hector Velasco as co-maker, and the land was mortgaged by Valeriano as collateral. Valerianos failure to pay
the loan caused the foreclosure of the land, and on September 17, 1980, Lot No. 76-pt was sold at a public auction
by the Provincial Sheriff. The Rural Bank of Pagsanjan was the highest bidder.

Pedro Zalameda Trinidad, Jr. (Pedro), as a witness for the petitioners, testified that he was born
in Barangay Pinagsanjan, Pagsanjan, Laguna, and had been residing there since birth. He said that based on his
knowledge, the land belonged to Nonong (Valeriano) Velasco because he used to buy coconuts harvested from the
said land and it was Nonong Velasco who caused the gathering of coconuts thereon. [5]

Petitioner Jonel Padilla also took the witness stand. He testified that Pedro was occupying the land when he
initially visited it. A representative of the Rural Bank of Pagsanjan disclosed to him that the land previously
belonged to Valeriano. He verified from the Municipal Assessor the technical description of the land, but no longer
verified from the Bureau of Lands because he trusted the bank. Upon his recommendation, his sister and his
brother-in-law purchased the property after verifying the supporting documents. It was his brother-in-law who
went to the Bureau of Lands and found that it was Lot No. 2161. [6]

On July 27, 1999, the RTC rendered a Decision,[7] the dispositive portion of which reads:

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered in favor of the [respondents]

ordering the [petitioners] to vacate the land presently occupied by them and restore possession
thereof to the [respondents], to render an accounting of the proceeds from the crop harvested
therefrom starting September 1987 up to the time the property is returned to the [respondents],
and to remove at their expense all the structures they constructed thereon. [8]
Petitioners filed an appeal before the CA, but on February 11, 2005, the CA issued the assailed decision affirming
the decision of the RTC. They consequently filed a motion for reconsideration. However, the same was denied in
the assailed resolution datedOctober 4, 2005.

Hence, the instant petition.

The Issues

Petitioners anchor their petition on the following grounds:

I. The alleged sale executed between Brigido Sacluti and Melitona Obial as seller and Dr. Artemio
[Velasco] as buyer was never established, respondents having failed to present the
original copy thereof during the trial despite their clear and categorical commitment to
do so. Furthermore, the purported Original Certificate of Title issued in the name of
Brigido Sacluti and Melitona Obial was never presented in evidence, thus, creating the
presumption that had it been presented, the same would have been adverse to
respondents.[9]

II. The spouses Solomon acquired the subject property from its lawful owner in good faith and for
value.[10]

III. The spouses Solomon acquired the subject property at the public auction sale conducted by
the provincial sheriff of Laguna based on the judgment and writ of execution issued by
the Municipal Trial Court of Laguna against respondent Valeriano Velasco for non-
payment of a loan considering that (1) the issuance of Tax Declaration No. 4624 in the
name of respondent Valeriano Velasco is entitled to the presumption of regularity
especially since respondents have not explained how and why it was wrongly issued in
the name of their own brother, respondent Valeriano Velasco and without any of them
taking any action to correct the alleged mistake; and (2) by their failure to assert their
alleged ownership of the property and their inaction [by not] questioning the legal
action taken by the bank against their co-respondent Valeriano Velasco and the subject
property despite their full awareness since 1980, respondents are barred by estoppel
from denying the title of the bank and the Solomon spouses.[11]

IV. The action a quo was barred by prescription considering that respondents filed their legal
action against the petitioners only on October 14, 1991, more than ten (10) years after
the bank had acquired the subject property on September 17, 1980 at the public auction
conducted by the Provincial Sheriff of Laguna.[12]

V. At the very least, respondents are guilty of laches, they having slept on their rights for an
unreasonable length of time such that to dispossess petitioners of the property after
they had introduced substantial improvements thereon in good faith would result in
undue damage and injury to them all due to the silence and inaction of respondents in
asserting their alleged ownership over the property.[13]

VI. The evidence proves that Lot no. 2161 and Lot no. 76-pt are one and the same.[14]

VII. The failure of Atty. Asinas to present other witnesses, additional documents and to respond
to certain pleadings brought about by his serious illnesses constitutes excusable
negligence or incompetency to warrant a new trial considering that the Supreme Court
itself had recognized negligence or incompetency of counsel as a ground for new trial
especially if it has resulted in serious injustice or to an uneven playing field.[15]

VIII. The overwhelming testimonial and documentary evidence, if presented, would have altered
the result and the decision now appealed from.[16]
 IX. The petitioners should be awarded their counterclaim for exemplary damages, attorneys fees
and litigation expenses.[17]

The arguments submitted by petitioners may be summed up in the following issues:

I. Who, as between the parties, have a better right of possession of Lot No. 2161;
II. Whether the complaint for accion publiciana has already prescribed; and
III. Whether the negligence of respondents counsel entitles them to a new trial.

The Ruling of the Court

We deny the instant petition.

First. The instant case is for accion publiciana, or for recovery of the right to possess. This was a plenary action filed
in the regional trial court to determine the better right to possession of realty independently of the title. [18] Accion
publiciana is also used to refer to an ejectment suit where the cause of dispossession is not among the grounds for
forcible entry and unlawful detainer, or when possession has been lost for more than one year and can no longer
be maintained under Rule 70 of the Rules of Court. The objective of the plaintiffs in accion publiciana is to recover
possession only, not ownership.[19]

Based on the findings of facts of the RTC which were affirmed by the CA, respondents were able to establish lawful
possession of Lot No. 2161 when the petitioners occupied the property. Lot No. 2161 was the subject of Decree
No. 403348 based on the decision dated October 10, 1930 in Cadastre (Cad.) Case No. 11, LRC Record No. 208. The
Original Certificate of Title to the land was issued to Brigido Sacluti and Melitona Obial. On February 14, 1944, the
original owners of the land sold the same to Artemio. From the date of sale, until Artemios death on January 22,
1949, he was in continuous possession of the land. When Artemio died, Isauro acted as administrator of the land
with Tomas Vivero as caretaker. In 1987, petitioners occupied the property by virtue of a deed of sale between the
Rural Bank of Pagsanjan and the Solomon spouses. The land bought by the Solomon spouses from the Bank is
denominated as Lot No. 76-pt and previously owned by Valeriano. However, it was proved during trial that the
land occupied by petitioners was Lot No. 2161 in the name of Artemio, whereas the land sold by the bank to the
petitioners was Lot No. 76-pt.

Given this factual milieu, it can readily be deduced that respondents are legally entitled to the possession of Lot
No. 2161.

It is a long-standing policy of this Court that the findings of facts of the RTC which were adopted and affirmed by
the CA are generally deemed conclusive and binding. This Court is not a trier of facts and will not disturb the
factual findings of the lower courts unless there are substantial reasons for doing so.[20] In the instant case, we find
no exceptional reason to depart from this policy.

Second. The case filed by respondents for accion publiciana has not prescribed. The action was filed with the RTC
on October 14, 1991. Petitioners dispossessed respondents of the property in October 1987. At the time of the
filing of the complaint, only four (4) years had elapsed from the time of dispossession.

Under Article 555(4) of the Civil Code of the Philippines, the real right of possession is not lost till after the lapse of
ten years. It is settled that the remedy of accion publiciana prescribes after the lapse of ten years.[21] Thus, the
instant case was filed within the allowable period.
Third. Petitioners put in issue that Lot No. 2161 and Lot 76-pt are one and the same, and that the land was owned
by Valeriano when it was foreclosed by the bank. This, in effect, is a collateral attack on the title over the property
which is registered in the name of Artemio.

We cannot countenance this stance of the petitioners, and perforce, must strike it down. Title to a registered land
cannot be collaterally attacked.[22] A separate action is necessary to raise the issue of ownership.

In accion publiciana, the principal issue is possession, and ownership is merely ancillary thereto. Only in cases
where the possession cannot be resolved without resolving the issue of ownership may the trial court delve into
the claim of ownership. This rule is enunciated in Refugia v. CA,[23] where the Court declared, viz.:

Where the question of who has prior possession hinges on the question of who the real owner of
the disputed portion is, the inferior court may resolve the issue of ownership and make a
declaration as to who among the contending parties is the real owner. In the same vein, where
the resolution of the issue of possession hinges on a determination of the validity and
interpretation of the document of title or any other contract on which the claim of possession is
premised, the inferior court may likewise pass upon these issues. This is because, and it must be
so understood, that any such pronouncement made affecting ownership of the disputed portion
is to be regarded merely as provisional, hence, does not bar nor prejudice an action between the
same parties involving title to the land.

Fourth. Petitioners aver that they are entitled to a new trial due to the failure of their counsel in the proceedings
before the RTC to present testimonial and documentary evidence necessary for them to obtain a favorable
judgment. They maintain that the failure of their counsel to present these other evidence was due to counsels
lingering illness at that time, and therefore, constitutes excusable negligence.

It may be reiterated that mistakes of counsel as to the competency of witnesses, the sufficiency and relevancy of
evidence, the proper defense, or the burden of proof, as well as his failure to introduce certain evidence or to
summon witnesses and to argue the case, are not proper grounds for a new trial, unless the incompetence of
counsel be so great that his client is prejudiced and prevented from fairly presenting his case.[24]

In this case, the illness of petitioners counsel and his alleged failure to present additional evidence during the trial
of the case do not constitute sufficient ground for a new trial. The Order[25] issued by the trial court in its denial of
the motion for new trial filed by petitioners aptly explains the reason why a new trial is unnecessary, viz.:

Assuming that Atty. Asinas failed to perform the imputed acts by reason of his ailments, still, the
same is insufficient ground to grant a new trial. The evidence on record established the fact that
[respondents] and their predecessors-in-interest have been in possession of the subject realty for
a long time. Their possession was interrupted by [petitioners] who entered the property in
[1987] pursuant to a deed of sale between the Rural Bank of Pagsanjan and spouses Bartolome C.
Solomon and Teresita Padilla. Considering that this is an accion publiciana and [respondents]
earlier rightful possession of the subject parcel of land has been adequately established, the
testimonial and documentary evidence sought to be adduced in a new trial would not adversely
affect the findings of the Court. The ownership and possession of the property purchased by the
Solomon spouses from the Rural Bank of Pagsanjan could be the subject of an appropriate
action.

WHEREFORE, the instant petition is DENIED for lack of merit. Costs against the petitioners.

SO ORDERED.
 Republic of the Philippines
Supreme Court

THIRD DIVISION

SPOUSES EXEQUIEL LOPEZ and EUSEBIA LOPEZ, G.R. No. 161925

Petitioners,
Present:

CORONA, J.,
- versus - Chairperson,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.
SPOUSES EDUARDO LOPEZ and MARCELINA R. LOPEZ,
Respondents. Promulgated:

November 25, 2009

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

This is a petition for review on certiorari of the Court of Appeals (CA) Decision[1] dated January 26, 2004,
which ordered the cancellation of Transfer Certificate of Title (TCT) No. T-5066 in the name of petitioners.

Respondents, spouses Eduardo and Marcelina Lopez, are the owners and occupants of an 80-square-
meter residential lot situated in San Pascual, Hagonoy, Bulacan. They acquired the property by donation inter
vivos from Maria Alvarado and Agatona Caparas, in whose names the lot was previously declared for taxation
purposes. Respondents have occupied the lot since 1977.[2]

In November 1992, respondents discovered that Victor Villadares was granted a free patent over an 885-
sq-m land, which included respondents lot, and was subsequently issued Original Certificate of Title (OCT) No. RP-
253 (P-8511) on March 8, 1978. Thereafter, Villadares subdivided the entire parcel of land into 3 lots, namely: Lot
9954-A, Lot 9954-B and Lot 9954-C. As shown in the Deed of Absolute Sale of Portions of a Parcel of Land,
Villadares sold Lot 9954-B with an area of 273 sq m to petitioners, spouses Eusebia and Exequiel Lopez,
and Lot 9954-C with an area of 337 square meters to Filomena Caparas. Consequently, OCT No. RP-253 (P-8511)
was cancelled and TCT Nos. T-5065, T-5066 and T-5067 were issued to Villadares, to petitioners, and to Caparas,
respectively.

Respondents filed an action for reconveyance, declaration of nullity of a deed of absolute sale,
cancellation of titles, and damages against Villadares and petitioners. The action was filed only against the two
parties because respondents property is situated between their properties, Lots 9954-A and 9954-B.

In their Answer, petitioners averred that respondents had no personality to institute the action, that the
free patent in favor of Villadares was issued pursuant to law, that they were innocent purchasers for value, and
that their certificate of title was already incontrovertible.[3]
 During trial, Pedro Manansala, a witness for respondents, testified that petitioners lot consisted of 168 sq
m only, which they bought from him for P20,000.00 sometime after Martial Law.[4]

Petitioner Eusebia Lopez refuted this by stating that she bought a 273-sq-m lot from Pedro
Manansala.[5] She admitted that she filed a protest against Villadares application for registration but claimed that
Villadares later agreed to sell the property to her for P30,000.00.[6] Villadares corroborated her testimony, saying
that when petitioners showed him proof that they owned a portion of the lot registered in his name, he agreed to
transfer the title of the said portion to their names.[7]

The Regional Trial Court ruled in favor of respondents. According to the trial court, the declaration of the
subject property for taxation purposes in the name of respondents, coupled with their actual possession thereof,
strongly indicated that they owned the same. It held that petitioners were not buyers in good faith because it
appeared that the execution of the deed of sale was only an afterthought. The dispositive portion of the trial
courts decision reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the

plaintiffs and against herein defendants:

1. that the deed of absolute sale, dated May 8, 1990 is hereby declared null and
void;

2. that defendants reconvey to the plaintiffs the subject 80-square meter lot;

3. the Register of Deeds of Tabang, Guiguinto, Bulacan is hereby ordered to

cancel TCT Nos. T-5065 in the name of defendant Victor Villadares and T-5066
in the name of defendants/Spouses Exequiel and Eusebia Lopez;
4. that defendants jointly and severally pay the plaintiffs the sum of: P10,000.00
for moral damages; P10,000.00 for exemplary damages and P10,000.00 for
attorneys fees and cost of suit.

SO ORDERED.[8]

Subsequently, the case was elevated to the CA on appeal, through petitioners and Villadares respective
notices of appeal.

Based on the doctrine that land registration proceedings cannot shield fraud or permit the enrichment of
a person at the expense of another, the CA affirmed the trial courts decision. In so ruling, the appellate court
considered the following: (a) respondents ownership of the 80-sq-m lot was admitted by petitioners during pre-
trial; (b) petitioners were not innocent purchasers for value; (c) respondents were in possession of the subject
property and paid the real property taxes thereon; and (d) the conveyance of the 273-sq-m lot from Villadares to
petitioners was simulated.[9]

Only Villadares filed a motion for reconsideration with the CA; petitioners elevated the case immediately
to this Court. In a Resolution[10] dated April 28, 2004, the CA resolved to hold in abeyance the resolution of
Villadares motion and to consider it abandoned if the present petition would be given due course by this Court.
In this petition, petitioners ascribe the following errors to the CA:

I.

THE HONORABLE COURT OF APPEALS FAILED TO RECOGNIZE THE ACTUAL POSSESSION OF

PETITIONERS AND THEIR PREDECESSORS-IN-INTEREST ON (sic) THE PROPERTY NOW COVERED BY
 TCT NO. T-5066 OF THE REGISTRY OF DEEDS FOR THEPROVINCE OF BULACAN FOR MORE THAN
FIFTY (50) YEARS.

II.

THE HONORABLE COURT OF APPEALS FAILED TO RECOGNIZE THAT PETITIONERS EXEQUIEL LOPEZ
AND EUSEBIA LOPEZ HAVE BEEN PAYING REAL ESTATE TAXES ON THE SUBJECT PROPERTY AFTER
THEY HAVE BOUGHT IT FROM PEDRO MANANSALA AND MIGUELA AYUSON MANANSALA ON
AUGUST 2, 1974.

III.

THE HONORABLE COURT OF APPEALS ERRED IN CONSIDERING THE POSSESSION OF

RESPONDENTS ON (sic) THE SUBJECT PROPERTY FOR LESS THAN THIRTY (30) YEARS.

IV.

THE HONORABLE COURT OF APPEALS FAILED TO RECOGNIZE THAT THE DEED OF ABSOLUTE SALE
OF PORTION OF PARCEL OF LAND EXECUTED BY DEFENDANT VICTOR VILLADARES IN FAVOR OF
PETITIONERS, EXEQUIEL LOPEZ AND EUSEBIA LOPEZ, WAS MERELY TO SETTLE THEIR CONFLICT OF
OWNERSHIP ON THE SUBJECT PROPERTY AND TO EXPEDITE THE TRANSFER THEREOF TO THE
PETITIONERS.

V.

THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE RULING OF THE LOWER
COURT FOR THE CANCELLATION OF TCT NO. T-5065 WITH AN AREA OF 275 SQUARE METERS IN
THE NAME OF DEFENDANT VICTOR VILLADARES AND THE CANCELLATION OF TCT NO. T-5066
WITH AN AREA OF 273 SQUARE METERS IN THE NAME OF PETITIONERS EXEQUIEL LOPE[Z] AND
EUSEBIA LOPEZ, WHEN THE CLAIM OF RESPONDENTS IS ONLY EIGHTY (80) SQUARE METERS.[11]

The petition is partly meritorious.

An action for reconveyance is a legal and equitable remedy granted to the rightful owner of a land which
has been wrongfully or erroneously registered in the name of another for the purpose of compelling the latter to
transfer or reconvey the land to him.[12] The action does not seek to reopen the registration proceedings and to
set aside the decree of registration but only purports to show that the person who secured the registration of the
property in controversy is not the real owner thereof.[13]

Initially, we affirm the CAs findings of fact that respondents are the rightful owners of the subject
property, an 80-sq-m portion of land, wrongfully included in either or in both of the certificates of title of
petitioners or Villadares, and that petitioners were not innocent purchasers for value. As neighbors of
respondents, petitioners certainly would have known that respondents actually occupied the subject
property. Thus, Villadares, not being the owner of the subject property, could not have transferred ownership of
the subject 80-sq-m portion of land to petitioners.

As a logical consequence, petitioners did not become the owners of the subject property even after a TCT
had been issued in their names. After all, registration does not vest title. Certificates of title merely confirm or
record title already existing and vested. They cannot be used to protect a usurper from the true owner, nor can
they be used as a shield for the commission of fraud, or to permit one to enrich oneself at the expense of
others.[14] Hence, reconveyance of the subject property is warranted.
 It is well to remember that in an action for reconveyance, the decree of registration is highly regarded as
incontrovertible. What is sought is the transfer of the property or its title, which has been wrongfully or
erroneously registered in another persons name, to its rightful owner or to one who has a better right. [15] The
present action for reconveyance only entails the segregation of the portion wrongfully included in the certificate of
title. The decree of registration is to be respected, but the certificate of title will be cancelled for the purpose of
amending it in order to exclude the portion wrongfully included therein. A new certificate covering the portion
reconveyed shall then be subsequently issued in the name of the real owner.

However, the CA went beyond this and declared the entire deed of sale, covering 273 sq m, void for being
simulated. As such, the CA decision would result not only in the amendment of petitioners certificate of title, but in
the absolute revocation of petitioners title itself. The property would then revert to its previous owner, subject to
the right of respondents over the portion of the lot which they claim as their own.

Understandably, petitioners anxiously insist that their TCT should not be cancelled even if the deed of sale
is declared void. They maintain that they own the entire Lot 9954-B, not because they purchased the same from
Villadares, but because they previously acquired the same from Pedro Manansala, in whose name the lot was
previously declared for taxation purposes. Petitioners allegedly acquired the property from Pedro Manansala long
before they bought the property from Villadares, and they claim that they and their predecessors-in-interest have
been in possession thereof for more than 50 years. Hence, even if the deed of sale executed by Villadares in their
favor is nullified, they would remain owners of the land and their title thereto should not be cancelled. [16]

However, petitioners are barred from raising this issue as it constitutes a collateral attack on the decree of
registration. The record shows that petitioners had participated in the land registration proceeding by filing their
opposition to Villadares application for registration. Petitioners alleged possession of the property prior to
Villadares filing of the application for registration was, in fact, the meat of their opposition in the land registration
proceeding. And in a proceeding for land registration, whether with or without opposition, the final judgment of
the court confirming the title of the applicant or oppositor, as the case may be, and ordering its registration in his
name constitutes res judicata against the whole world.[17]

Thus, the Court is compelled to exercise its authority to review the validity of the Deed of Absolute Sale of
Portions of a Parcel of Land, though not specifically assigned as error in this petition, because its resolution is
necessary to arrive at a just decision and complete disposition of the case. [18]

In finding that the contract of sale was simulated, the CA held that petitioners opposition to Villadares
application for registration, together with Pedro Manansalas testimony that petitioners actually bought the
property from him, evinces the falsity of the claim that petitioners purchased the property from Villadares.

We are not convinced. The primary consideration in determining the true nature of a contract is the
intention of the parties. Such intention is determined not only from the express terms of their agreement, but also
from the contemporaneous and subsequent acts of the parties.[19]

Simulation takes place when the parties do not really want the contract they have executed to produce
the legal effects expressed by its wordings.[20] This Courts pronouncement in Valerio v. Refresca[21] is instructive

Article 1345 of the Civil Code provides that the simulation of a contract may either be
absolute or relative. In absolute simulation, there is a colorable contract but it has no substance as
the parties have no intention to be bound by it. The main characteristic of an absolute simulation
is that the apparent contract is not really desired or intended to produce legal effect or in any way
alter the juridical situation of the parties. As a result, an absolutely simulated or fictitious contract
is void, and the parties may recover from each other what they may have given under the
contract.However, if the parties state a false cause in the contract to conceal their real agreement,
the contract is relatively simulated and the parties are still bound by their real agreement. Hence,
where the essential requisites of a contract are present and the simulation refers only to the
 content or terms of the contract, the agreement is absolutely binding and enforceable between
the parties and their successors in interest.[22]

Based on the foregoing, the subject deed of sale can hardly be considered simulated. There is no showing
that the parties did not intend to be bound by the contract and to comply with its terms. In fact, Villadares
surrendered to petitioners any right he had over the property. He caused the titling of the property and the
transfer of the tax declaration in petitioners names, and thereafter, delivered the certificate of title and the tax
declaration to petitioners and accepted the purchase price from them. To recall, Villadares admitted that he was
swayed by petitioners claim that they had a right over the property and thus, he agreed to sell it to them. Such
motivation for entering into the contract would not negate the efficacy of the contract. In the same way,
petitioners opposition in the land registration case does not necessarily mean that petitioners did not really intend
to purchase the property. Petitioners could have accepted or acquiesced to Villadares title and entered into the
agreement to finally settle their claim over the property. The following testimony of petitioner Eusebia Lopez is
telling:
Q Then after filing the protest, what did you do?
A I talked with Victor Villadares and we agreed that he will sell the land in a much lower
price, sir.

Q Did he comply with his promise?

A Yes, sir.

Q So how much was it sold [to] you[;] as you said it will be sold to you at a lower price.
How much was the selling price?
A P30,000.00, sir.

Q Did you pay the P30,000.00 to him?

A Yes, sir.

Q When did you pay it to defendant Victor Villadares?

A When the title was given to me by him as well as the tax declaration and the Bilihang
Patuluyan, sir.[23]

We, therefore, uphold the validity of the deed of sale subject to the reconveyance of respondents 80-sq-
m portion of the land.

WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The Court of Appeals Decision
dated January 26, 2004 is AFFIRMED WITH MODIFICATIONS. The Deed of Absolute Sale of Portions of a Parcel of
Land dated May 8, 1990 is declared VALID but subject to our disposition hereunder. Petitioners and Victor
Villadares are directed to cause a SURVEY of Lots 9954-A and 9954-B in order to determine the exact location of
the 80-sq m portion pertaining to respondents.Thereafter, the Register of Deeds of Tabang, Guiguinto, Bulacan is
ordered to ISSUE the corresponding transfer certificates of title in the names of petitioners, respondents and
Victor Villadares, in accordance with said survey.

SO ORDERED.
 Republic of the Philippines
Supreme Court

FIRST DIVISION

JOSEPH REMENTIZO, G.R. No. 170318

Petitioner,
Present:

PUNO, C.J., Chairperson,

- versus - CARPIO,
CORONA,
AZCUNA, and
LEONARDO-DE CASTRO, JJ.

HEIRS OF PELAGIA VDA. Promulgated:

DE MADARIETA,
Respondents. January 15, 2009
x-----------------------------------------------------------------------------------------x

DECISION

CARPIO, J.:

The Case

This petition for review[1] assails the 4 July 2005 Amended Decision[2] and 3 October 2005 Resolution[3] of the Court
of Appeals in CA-G.R. SP No. 65286. The Court of Appeals set aside its 26 May 2004 Decision[4] by declaring void
Emancipation Patent (EP) No. A-028390-H issued to petitioner Joseph Rementizo (Rementizo).

The Facts

The instant controversy stemmed from a Complaint for Annulment and Cancellation of Original Certificate of Title
(OCT) No. EP-195 and EP No. A-028390-H filed by the late Pelagia Vda. De Madarieta (Madarieta) against
Rementizo before the Department of Agrarian Reform Adjudication Board (DARAB) in Camiguin.

In her complaint, Madarieta claimed that she is the owner of a parcel of land declared in the name of her late
husband Angel Madarieta (Angel), Lot No. 153-F with an area of 436 square meters situated in Tabulig, Poblacion,
Mambajao, Camiguin. Madarieta alleged that Rementizo was a tenant of Roque Luspo (Luspo) and, as such,
Rementizo was issued OCT No. EP-185 and OCT No. 174. Madarieta also alleged that the Department of Agrarian
Reform (DAR) mistakenly included Lot No. 153-F as part of Luspos property covered by Operation Land Transfer. As
a result, EP No. A-028390-H was issued to Rementizo. By virtue of such emancipation patent, OCT No. EP-195 was
registered in Rementizos name. Madarieta further claimed that she had been deprived of her property without
due process since she had not received any notice or information from the DAR relating to the transfer of
ownership over the subject land to Rementizo.
In his answer, Rementizo claimed that he had been in possession of the subject land in the concept of an owner
since 1987 and even constructed a house on the subject lot after the registration of the title. Rementizo denied
that Lot No. 153-F is owned by Angel.Instead, the subject land was allegedly adjoining Lot No. 153 which is owned
by Luspo. Rementizo further claimed that assuming Madarietas allegations were true, Angel did not object to his
possession of the subject land during the latters lifetime considering that the subject land is just a few meters
away from the Madarietas house. Further, Rementizo asserted that, in instituting the case, Madarieta was guilty of
laches and that the action had already prescribed.

On 22 December 1998, the Provincial Adjudicator[5] issued an Order declaring OCT No. EP-195 and EP No. A-
028390-H null and void, and directing Rementizo or anyone in possession to vacate the subject property. The
dispositive portion of this Order reads:

WHEREFORE, the Original Certificate of Title No. 195, EP No. A-028390-H issued in the name of
the respondent is hereby ordered cancelled and/or revoked for being null and void ab initio, and
the respondent or anybody in possession or occupation of subject land is hereby ordered to turn
over subject land to the plaintiff and vacate the premises.

SO ORDERED.[6]

Rementizo appealed the Provincial Adjudicators order to the DARAB-Central Office. On 7 February 2001, the
DARAB-Central Office reversed the Provincial Adjudicators order by ruling in favor of Rementizo, thus:

x x x After careful considerations, we find the appeal impressed with merit.

The records show that the subject land was placed under Operation Land Transfer, pursuant to
P.D. No. 27. It must be pointed out that the coverage was made during the lifetime of Angel
Madarieta who is the alleged declared owner of the land in question. There is no showing that
the late Angel objected to the coverage. Consequently, OCT No. 195 was generated in favor of
Respondent-Appellant who took possession thereof and even built his house thereon. All this
while there was no objection to said occupation. Considering that the occupation is manifest,
that the landholding of said Angel is proximate thereto, there can be no question that the
occupancy of Respondent was known to the late Angel Madarieta, under whose alleged rights
over said landholding, herein Petitioner-Appellee anchors her claim. Angel Madarieta failed to
object to Respondent-Appellants possession and occupation of the subject premises for a period
of eleven (11) years; said inaction of alleged declared owner of the subject land only shows that
Respondents occupancy thereof was legitimate, and that the late Angel had no rights or claims
thereon.Under the circumstances, the surviving wifes claim now of rights over said land on
alleged non-notice of DAR coverage is untenable.

Moreover, an action to invalidate a Certificate of Title on the ground of fraud prescribes after one
(1) year from the entry of the decree of registration. (Bishop vs. Court of Appeals, 208 SCRA
637). In this case, Petitioners (sic) inaction for more than eleven (11) years is inexcusable
(Comero vs. Court of Appeals, 247 SCRA 291).

WHEREFORE, premises considered, the appealed decision is SET ASIDE. A new judgment is
rendered.

1. Upholding the validity of Original Certificate of Title (CTC) No. 195, E.P. No. A-028390-H
issued in favor of Respondent-Appellant Joseph Rementizo;
2. Nullifying the Order dated February 15, 1999, and Ordering the Plaintiff and all persons
acting in her behalf to respect and maintain Respondent Rementizo's peaceful
occupation of the land in question; and
3. Reinstating Respondent-Appellant over the subject land, if already ejected.
SO ORDERED.[7]
Madarieta filed a petition for review with the Court of Appeals under Rule 43 of the Rules of Court assailing the
decision of the DARAB. Madarieta raised the following errors in the Court of Appeals:

1. The DARAB erred in holding that she had already learned of Rementizos occupation and
possession of the subject property for the last 11 years prior to the filing of the case, when
EP No. A-028390-H was registered and the OCT was issued in 1987; and

2. The DARAB erred in holding that she committed negligence for failing to file the instant
case within the prescriptive period.

Madarieta argued that she never knew that the subject land was part of her husbands estate. Madarieta averred
that it was only on 21 November 1997, through a relocation survey, that she discovered that the land where
Rementizo constructed his house was part of her husbands property. This discovery prompted Madarieta to file a
complaint with the DARAB on 5 November 1998, or within 11 months and 14 days reckoned from such knowledge.

The Court of Appeals Ruling

In its Decision of 26 May 2004, the Court of Appeals held that when Madarieta filed an action on 5 November
1998, for the annulment and cancellation of Rementizos title, more than 10 years had passed after the issuance of
Rementizos title rendering the title incontrovertible.

Madarieta sought reconsideration of the 26 May 2004 Decision, which the Court of Appeals partially granted in its
Amended Decision of 4 July 2005. The Court of Appeals set aside its earlier decision of 26 May 2004.

In its Amended Decision, the appellate court applied the exception to the rule that an action for reconveyance of a
fraudulently registered real property prescribes in 10 years. Citing Bustarga v. Navo II,[8] the appellate court held
that Lot No. 153-F was erroneously awarded to Rementizo. The entire Lot No. 153 was indeed covered by the
Operation Land Transfer. Hence, Lot No. 153 was subdivided into: (1) Lot No. 153-B, declared in the name of
Alberto Estanilla; (2) Lot No. 153-C, declared in the name of Eusebio Arce; (3) Lot No. 153-D, declared in the name
of Feliciano Tadlip; and (4) Lot Nos. 153-E and F, retained and declared in the name of Angel. Nowhere in the
records is it shown that Rementizo was a beneficiary or tenant of Lot No. 153-F.

The Court of Appeals granted the petition insofar as the cancellation of EP No. A-028390-H was concerned. The
appellate court opined that Madarieta still has to file the appropriate action in the Regional Trial Court, which has
original jurisdiction in actions after original registration, to have the subject OCT reconveyed by virtue of the
issuance of a void emancipation patent.

The Court of Appeals disposed of the instant case, as follows:

WHEREFORE, the instant motion for reconsideration is PARTIALLY GRANTED. The Decision of this
Court promulgated on May 26,2004 is SET ASIDE. In lieu thereof, the herein discussion is adopted
and a new judgment is entered, as follows:

WHEREFORE, the petition for review is GRANTED. The decision of the DARAB
dated February 7, 2001 is REVERSED and SET ASIDE. Further, Emancipation Patent
(EP) No. A-028390-H, covering Lot No. 153-F, issued to the private respondent, is
declared NULL and VOID.

SO ORDERED.[9]
 The Issue

The crucial issue in this case is whether the action for the annulment of the emancipation patent, which ultimately
seeks the reconveyance of the title issued to Rementizo, has already prescribed.

The Ruling of the Court

The petition is meritorious.

In the present case, the DAR, which is presumed to have regularly performed its official function, awarded EP No.
A-028390-H to Rementizo in 1987. Aside from this emancipation patent, two other emancipation patents and
certificates of title (OCT Nos. 183 and 174) were issued to Rementizo covering two different parcels of land. This
means that Rementizo was a qualified beneficiary of various parcels of agricultural land placed under the
governments Operation Land Transfer.

The Court notes that Madarieta was claiming the subject property as the surviving spouse of Angel. While
Madarieta presented evidence pointing out that Lot No. 153-F was historically owned and declared in the name of
her deceased husband, Angel, there is nothing in the records showing that Angel during his lifetime opposed
Rementizos occupation and possession of the subject land. Madarieta and respondents started claiming the
property after the death of Angel. Considering that the subject property was proximate to the Madarietas
residence, Angel could have questioned the legality of Rementizos occupation over the land.

There is no dispute that Rementizo possessed the subject land in the concept of an owner since the issuance of EP
No. A-028390-H and the registration of OCT No. EP-195 in 1987, when Angel was still alive. Rementizo even
constructed a house on the subject property immediately thereafter. No objection was interposed by Angel against
Rementizos possession of the subject land. With Angels unexplained silence or acquiescence, it may be concluded
that Angel recognized the legitimacy of Rementizos rights over the land. Otherwise, Angel could have
challenged Rementizos occupation of the subject property.

There is no allegation or proof that there was fraud in the issuance of EP No. A-028390-H and OCT No. EP-
195. Madarieta did not adduce any evidence showing the existence of fraud in the issuance of the subject
emancipation patent and title. In fact, Madarieta faulted the DAR in including the subject land in the Operation
Land Transfer and termed DARs alleged unlawful taking of the subject property as landgrabbing. In her
Memorandum before the DARAB, Madarieta stated that:
Unfortunately for petitioner (Madarieta), sometime about 1988, DAR people of Camiguin
Province identified respondent as tenant of Roque Luspo and Lourdes Luspo Neri and made him
qualified beneficiary of the said landowner in the implementation of P.D. 27, and awarded to
respondent not only the farm of the said landowner but also the subject land exclusively
belonging to petitioner x x x.

That by virtue thereof, said respondent was issued OCT No. EP 195.

xxx

Respondent cannot be considered possessor in good faith. He has no hand in the acquisition of
the property. He was merely a recipient being a qualified beneficiary. It was the government
thru the instrumentality of a law P.D. 27 that acquired the land thru the Ministry of Agrarian
Reform.[10] (Emphasis supplied)
Thus, Madarieta miserably failed to show that Rementizo employed fraud in the awarding of EP No. A-028390-H in
his favor. Fraud is a question of fact which must be alleged and proved. Fraud cannot be presumed and must be
proven by clear and convincing evidence.[11] In this case, there was no such evidence showing actual fraud on the
part of Rementizo.

Madarietas evidence at the most tends to show that the DAR committed a mistake in issuing EP No. A-028390-H in
favor of Rementizo, who was admittedly a tenant of Luspo and not of Angel. While the entire Lot No. 153 was
indeed covered by the Operation Land Transfer, Madarieta presented the Real Property Historical Ownership
which was issued by the Office of the Provincial Assessor, [12] stating that Lot Nos. 153-E and F were retained and
declared in the name of Angel.

Considering that there appears to be a mistake in the issuance of the subject emancipation patent, then the
registration of the title to the subject property in Rementizos name is likewise erroneous. In such a case, the law
prescribes a specific remedy reserved to the rightful owner of the erroneously registered property, that is, an
action for reconveyance.

In an action for reconveyance, the decree of registration is respected as incontrovertible but what is sought
instead is the transfer of the property wrongfully or erroneously registered in anothers name to its rightful owner
or to one with a better right. The person in whose name the land is registered holds it as a mere trustee. [13]
Nevertheless, the right to seek reconveyance of registered property is not absolute because it is subject
to extinctive prescription.[14] In Caro v. Court of Appeals,[15] the prescriptive period of an action for reconveyance
was explained:

[U]nder the present Civil Code, we find that just as an implied or constructive trust is an offspring
of the law (Art. 1456, Civil Code), so is the corresponding obligation to reconvey the property and
the title thereto in favor of the true owner. In this context, and vis--vis prescription, Article 1144
of the Civil Code is applicable.
Article 1144. The following actions must be brought within ten years from the time the right of
action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment. (Emphasis supplied)

The 10-year prescriptive period is reckoned from the date of issuance of the certificate of title.

There is but one instance when prescription cannot be invoked in an action for reconveyance, that is, when the
plaintiff or complainant (Madarieta or respondents in this case) is in possession of the land to be
reconveyed,[16] and the registered owner was never in possession of the disputed property. In such a case, the
Court has allowed the action for reconveyance to prosper despite the lapse of more than 10 years from the
issuance of the title to the land.[17]

In the instant case, however, it is the rule rather than the exception which should apply.

To repeat, an action for reconveyance based on an implied or constructive trust prescribes in 10 years from the
issuance of the Torrens title over the property, which operates as a constructive notice to the whole world. [18] The
title over the subject land was registered in Rementizos name in 1987 while Madarieta filed the complaint to
recover the subject lot only in 1998. More than 11 years had lapsed before Madarieta instituted the action for
annulment of EP No. A-028390-H, which in essence is an action for reconveyance. Therefore, the complaint was
clearly barred by prescription.
Madarietas discovery in 1997, through a relocation survey, of the ownership of the subject land can not be
considered as the reckoning point for the computation of the prescriptive period. EP No. A-028390-H, by virtue of
which OCT No. EP-195 was registered, was issued in 1987, when Angel who is the declared landowner was still
alive.

In GSIS v. Santiago,[19] Samonte v. Court of Appeals,[20] and Adille v. Court of Appeals,[21] this Court used as starting
point the date of the actual discovery of the fraud, instead of the date of the issuance of the certificate of title. In
those cases, however, there were evident bad faith, misrepresentations, and fraudulent machinations employed
by the registered owners in securing titles over the disputed lots.

In this case, there is no evidence adduced by Madarieta or respondents that Rementizo employed fraud in the
issuance of EP No. A-028390-H and OCT No. EP-195. Madarieta did not even present any evidence that her late
husband objected to Rementizos occupation over the subject land after the issuance of EP No. A-028390-H and
OCT No. EP-195. The absence of fraud in the present case distinguishes it from the cases
of GSIS,[22] Samonte,[23] and Adille.[24] The reckoning point, therefore, for the computation of the 10-year
prescriptive period is the date of the issuance of EP No. A-028390-H and registration of OCT No. EP-195 in the
name of Rementizo.

WHEREFORE, we GRANT the petition. We SET ASIDE the 4 July 2005 Amended Decision and 3 October 2005
Resolution of the Court of Appeals in CA-G.R. SP No. 65286. We DISMISS the Complaint for Annulment and
Cancellation of Original Certificate of Title No. EP-195 and Emancipation Patent No. A-028390-H on the ground of
prescription. Costs against respondents.

SO ORDERED.
 Republic of the Philippines
Supreme Court

SECOND DIVISION

ANGEL M. PAGADUAN, AMELIA P. G.R. No. 176308

TUCCI, TERESITA P. DEL MONTE,
ORLITA P. GADIN, PERLA P. Present:
ESPIRITU, ELISA P. DUNN, LORNA
P. KIMBLE, EDITO N. PAGADUAN, CARPIO MORALES, J.*
and LEO N. PAGADUAN, Acting Chairperson,
Petitioners, TINGA,
VELASCO, JR.,
LEONARDO DE CASTRO,** and
- versus - BRION, JJ.

SPOUSES ESTANISLAO & FE Promulgated:

POSADAS OCUMA,
Respondents. May 8, 2009
x-------------------------------------------------------------------------------------x

DECISION

TINGA, J.:

In this Petition for Review,[1] petitioners assail the Decision[2] of the Court of Appeals dated September 18,
2006 which ruled that petitioners action for reconveyance is barred by prescription and consequently reversed the
decision[3] dated June 25, 2002 of the Regional Trial Court (RTC) of Olongapo City.

Petitioners Angel N. Pagaduan, Amelia P. Tucci, Teresita P. del Monte, Orlita P. Gadin, Perla P. Espiritu,
Elisa P. Dunn, Lorna P. Kimble, Edito N. Pagaduan and Leo N. Pagaduan are all heirs of the late Agaton Pagaduan.
Respondents are the spousesEstanislao Ocuma and Fe Posadas Ocuma.

The facts are as follows:

The subject lot used to be part of a big parcel of land that originally belonged to Nicolas Cleto as
evidenced by Certificate of Title (C.T.) No. 14. The big parcel of land was the subject of two separate lines of
dispositions. The first line of dispositions began with the sale by Cleto to Antonio Cereso on May 11, 1925. Cereso
in turn sold the land to the siblings with the surname Antipolo on September 23, 1943. The Antipolos sold the
property to Agaton Pagaduan, father of petitioners, on March 24, 1961. All the dispositions in this line were not
registered and did not result in the issuance of new certificates of title in the name of the purchasers.

The second line of dispositions started on January 30, 1954, after Cletos death, when his widow Ruperta
Asuncion as his sole heir and new owner of the entire tract, sold the same to Eugenia Reyes. This resulted in the
issuance of Transfer Certificate of Title (TCT) No. T-1221 in the name of Eugenia Reyes in lieu of TCT No. T-1220 in
the name of Ruperta Asuncion.

On November 26, 1961, Eugenia Reyes executed a unilateral deed of sale where she sold the northern
portion with an area of 32,325 square meters to respondents for P1,500.00 and the southern portion consisting
of 8,754 square meters to Agaton Pagaduan for P500.00. Later, on June 5, 1962, Eugenia executed another deed of
sale, this time conveying the entire parcel of land, including the southern portion, in respondents favor. Thus, TCT
No. T-1221 was cancelled and in lieu thereof TCT No. T-5425 was issued in the name of respondents. On June 27,
1989, respondents subdivided the land into two lots. The subdivision resulted in the cancellation of TCT No. T-5425
and the issuance of TCT Nos. T-37165 covering a portion with 31,418 square meters and T-37166 covering the
remaining portion with 9,661 square meters.

On July 26, 1989, petitioners instituted a complaint for reconveyance of the southern portion with an area
of 8,754 square meters, with damages, against respondents before the RTC of Olongapo City.

On June 25, 2002, the trial court rendered a decision in petitioners favor. Ruling that a constructive trust
over the property was created in petitioners favor, the court below ordered respondents to reconvey the disputed
southern portion and to payattorneys fees as well as litigation expenses to petitioners. The dispositive portion of
the decision reads:

WHEREFORE, foregoing premises considered, judgment is hereby rendered:

1. Ordering the defendants to reconvey to the plaintiffs, a portion of their property
originally covered by Certificate of Title No. T-54216[4] now TCT Nos. 37165 and 37166 an area
equivalent to 8,754 square meters.
2. Ordering the defendant to pay plaintiffs P15,000.00 as attorneys fees and P5,000.00
for litigation expenses.
3. Defendants counterclaims are dismissed.
SO ORDERED.[5]

Dissatisfied with the decision, respondents appealed it to the Court of Appeals. The Court of Appeals
reversed and set aside the decision of the trial court; with the dispositive portion of the decision reading, thus:

WHEREFORE, premises considered, the appeal is granted. Accordingly, prescription

having set in, the assailed June 25, 2002 Decision of the RTC is reversed and set aside, and the
Complaint for reconveyance is hereby DISMISSED.
SO ORDERED.[6]

The Court of Appeals ruled that while the registration of the southern portion in the name of respondents
had created an implied trust in favor of Agaton Pagaduan, petitioners, however, failed to show that they had taken
possession of the said portion. Hence, the appellate court concluded that prescription had set in, thereby
precluding petitioners recovery of the disputed portion.

Unperturbed by the reversal of the trial courts decision, the petitioners come to this Court via a petition
for review on certiorari.[7] They assert that the Civil Code provision on double sale is controlling. They submit
further that since the incontrovertible evidence on record is that they are in possession of the southern portion,
the ten (10)-year prescriptive period for actions for reconveyance should not apply to them. [8] Respondents, on the
other hand, aver that the action for reconveyance has prescribed since the ten (10)-year period, which according
to them has to be reckoned from the issuance of the title in their name in 1962, has elapsed long ago. [9]

The Court of Appeals decision must be reversed and set aside, hence the petition succeeds.
An action for reconveyance respects the decree of registration as incontrovertible but seeks the transfer of
property, which has been wrongfully or erroneously registered in other persons' names, to its rightful and legal
owners, or to those who claim to have a better right. However, contrary to the positions of both the appellate and
trial courts, no trust was created under Article 1456 of the new Civil Code which provides:

Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is,
by force of law, considered a trustee of an implied trust for the benefit of the person from
whom the property comes. (Emphasis supplied)

The property in question did not come from the petitioners. In fact that property came from Eugenia
Reyes. The title of the Ocumas can be traced back from Eugenia Reyes to Ruperta Asuncion to the original owner
Nicolas Cleto. Thus, if the respondents are holding the property in trust for anyone, it would be Eugenia Reyes and
not the petitioners.

Moreover, as stated in Berico v. Court of Appeals,[10] Article 1456 refers to actual or constructive fraud.
Actual fraud consists in deception, intentionally practiced to induce another to part with property or to surrender
some legal right, and which accomplishes the end designed. Constructive fraud, on the other hand, is a breach of
legal or equitable duty which the law declares fraudulent irrespective of the moral guilt of the actor due to the
tendency to deceive others, to violate public or private confidence, or to injure public interests. The latter proceeds
from a breach of duty arising out of a fiduciary or confidential relationship. In the instant case, none of the
elements of actual or constructive fraud exists. The respondents did not deceive Agaton Pagaduan to induce the
latter to part with the ownership or deliver the possession of the property to them. Moreover, no fiduciary
relations existed between the two parties.

This lack of a trust relationship does not inure to the benefit of the respondents. Despite a host of
jurisprudence that states a certificate of title is indefeasible, unassailable and binding against the whole world, it
merely confirms or records title already existing and vested, and it cannot be used to protect a usurper from the
true owner, nor can it be used for the perpetration of fraud; neither does it permit one to enrich himself at the
expense of others.[11]

Rather, after a thorough scrutiny of the records of the instant case, the Court finds that this is a case of
double sale under article 1544 of the Civil Code which reads:

ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first possession thereof in good faith, if it should be
movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it
who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good
faith was first in possession; and, in the absence thereof; to the person who presents the oldest
title, provided there is good faith.

Otherwise stated, where it is an immovable property that is the subject of a double sale, ownership shall
be transferred: (1) to the person acquiring it who in good faith first recorded it in the Registry of Property; (2) in
default thereof, to the person who in good faith was first in possession; and (3) in default thereof, to the person
who presents the oldest title, provided there is good faith. The requirement of the law then is two-fold: acquisition
in good faith and registration in good faith.[12]
 In this case there was a first sale by Eugenia Reyes to Agaton Pagaduan and a second sale by Eugenia
Reyes to the respondents.[13] For a second buyer like the respondents to successfully invoke the second paragraph,
Article 1544 of the Civil Code, it must possess good faith from the time of the sale in its favor until the registration
of the same. Respondents sorely failed to meet this requirement of good faith since they had actual knowledge of
Eugenias prior sale of the southern portion property to the petitioners, a fact antithetical to good faith. This cannot
be denied by respondents since in the same deed of sale that Eugenia sold them the northern portion to the
respondents for P1,500.00, Eugenia also sold the southern portion of the land to Agaton Pagaduan for P500.00.[14]

It is to be emphasized that the Agaton Pagaduan never parted with the ownership and possession of that
portion of Lot No. 785 which he had purchased from Eugenia Santos. Hence, the registration of the deed of sale by
respondents was ineffectual and vested upon them no preferential rights to the property in derogation of the rights
of the petitioners.

Respondents had prior knowledge of the sale of the questioned portion to Agaton Pagaduan as the same
deed of sale that conveyed the northern portion to them, conveyed the southern portion to Agaton
Pagaduan.[15] Thus the subsequent issuance of TCT No. T-5425, to the extent that it affects the Pagaduans portion,
conferred no better right than the registration which was the source of the authority to issue the said title.
Knowledge gained by respondents of the first sale defeats their rights even if they were first to register the second
sale. Knowledge of the first sale blackens this prior registration with bad faith. [16] Good faith must concur with the
registration.[17] Therefore, because the registration by the respondents was in bad faith, it amounted to no
registration at all.

As the respondents gained no rights over the land, it is petitioners who are the rightful owners, having
established that their successor-in-interest Agaton Pagaduan had purchased the property from Eugenia Reyes
on November 26, 1961 and in fact took possession of the said property. The action to recover the immovable is not
barred by prescription, as it was filed a little over 27 years after the title was registered in bad faith by the Ocumas
as per Article 1141 of the Civil Code.[18]

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated January 25, 2006 and
its Resolution dated May 5, 2006 are hereby REVERSED and SET ASIDE. The Decision of the Regional Trial Court is
hereby REINSTATED.
SO ORDERED.
 Republic of the Philippines
Supreme Court

THIRD DIVISION

D.B.T. MAR-BAY CONSTRUCTION, INCORPORATED, G.R. No. 167232

Petitioner,
Present:

- versus - YNARES-SANTIAGO, J.,

Chairperson,
CHICO-NAZARIO,
VELASCO, JR.,
RICAREDO PANES, ANGELITO PANES,SALVADOR CEA, NACHURA, and
ABOGADO MAUTIN, DONARDO PACLIBAR, ZOSIMO PERALTA PERALTA, JJ.
and HILARION MANONGDO,
Respondents.
Promulgated:

July 31, 2009

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

Before this Court is a Petition[1] for Review on Certiorari under Rule 45 of the Rules of Civil Procedure, assailing the
Court of Appeals (CA) Decision[2] dated October 25, 2004 which reversed and set aside the Order[3] of the Regional
Trial Court (RTC) ofQuezon City, Branch 216, dated November 8, 2001.

The Facts

Subject of this controversy is a parcel of land identified as Lot Plan Psu-123169,[4] containing an area of Two
Hundred Forty Thousand, One Hundred Forty-Six (240,146) square meters, and situated at Barangay (Brgy.) Pasong
Putik, Novaliches, Quezon City(subject property). The property is included in Transfer Certificate of Title (TCT) No.
200519,[5] entered on July 19, 1974 and issued in favor of B.C. Regalado & Co. (B.C. Regalado). It was conveyed by
B.C. Regalado to petitioner D.B.T. Mar-Bay Construction, Inc. (DBT) through a dacion en pago[6] for services
rendered by the latter to the former.

On June 24, 1992, respondents Ricaredo P. Panes (Ricaredo), his son Angelito P. Panes (Angelito), Salvador Cea,
Abogado Mautin, Donardo Paclibar, Zosimo P. Peralta, and Hilarion Manongdo (herein collectively referred to as
respondents) filed a Complaint[7]for Quieting of Title with Cancellation of TCT No. 200519 and all Titles derived
thereat (sic), Damages, with Petition for the Issuance of Injunction with Prayer for the Issuance of Restraining
Order Ex-Parte, Etc. against B.C. Regalado, Mar-Bay Realty, Inc., Spouses Gereno Brioso and Criselda M. Brioso,
Spouses Ciriaco and Nellie Mariano, Avelino C. Perdido and Florentina Allado, Eufrocina A. Maborang and Fe
Maborang, Spouses Jaime and Rosario Tabangcura, Spouses Oscar Ikalina and the Register of Deeds (RD) of
Quezon City. Subsequently, respondents filed an Amended Complaint [8] and a Second Amended
[9]
Complaint particularly impleading DBT as one of the defendants.
In the Complaints, Ricaredo alleged that he is the lawful owner and claimant of the subject property which he had
declared for taxation purposes in his name, and assessed in the amount of P2,602,190.00 by the City Assessor of
Quezon City as of the year 1985.Respondents alleged that per Certification [10] of the Department of Environment
and Natural Resources (DENR) National Capital Region (NCR) dated May 7, 1992, Lot Plan Psu-123169 was verified
to be correct and on file in said office, and approved on July 23, 1948.

Respondents also claimed that Ricaredo, his immediate family members, and the other respondents had been, and
still are, in actual possession of the portions of the subject property, and their possession preceded the Second
World War. To perfect his title in accordance with Act No. 496 (The Land Registration Act) as amended by
Presidential Decree (P.D.) No. 1529 (The Property Registration Decree), Ricaredo filed with the RTC of Quezon City,
Branch 82 a case docketed as LRC Case No. Q-91-011, with LRC Rec. No. N-62563.[11]

Respondents averred that in the process of complying with the publication requirements for the Notice of Initial
Hearing with the Land Registration Authority (LRA), it was discovered by the Mapping Services of the LRA that
there existed an overlapping of portions of the land subject of Ricaredos application, with the subdivision plan of
B.C. Regalado. The said portion had, by then, already been conveyed by B.C. Regalado to DBT.

Ricaredo asseverated that upon verification with the LRA, he found that the subdivision plan of B.C. Regalado was
deliberately drawn to cover portions of the subject property. Respondents claimed that the title used by B.C.
Regalado in the preparation of the subdivision plan did not actually cover the subject property. They asserted that
from the records of B.C. Regalado, they gathered that TCT Nos. 211081,[12] 211095[13] and 211132,[14] which
allegedly included portions of the subject property, were derived from TCT No. 200519. However, TCT No. 200519
only covered Lot 503 of the Tala Estate with an area of Twenty-Two Thousand Six Hundred Fifteen (22,615) square
meters, and was different from those mentioned in TCT Nos. 211081, 211095 and 211132.According to
respondents, an examination of TCT No. 200519 would show that it was derived from TCT Nos.
14814,[15] 14827,[16] 14815[17] and T-28.

In essence, respondents alleged that B.C. Regalado and DBT used the derivative titles which covered properties
located far from Pasong Putik, Novaliches, Quezon City where the subject property is located, and B.C. Regalado
and DBT then offered the same for sale to the public. Respondents thus submitted that B.C Regalado and DBT
through their deliberate scheme, in collusion with others, used (LRC) Pcs-18345 as shown in the consolidation-
subdivision plan to include the subject property covered by Lot Plan Psu-123169.

In his Answer[18] dated July 24, 1992, the RD of Quezon City interposed the defense that at the time of registration,
he found all documents to be in order. Subsequently, on December 5, 1994, in his Motion [19] for Leave to Admit
Amended Answer, with the Amended Answer attached, he admitted that he committed a grave mistake when he
earlier said that TCT No. 200519 covered only one lot, i.e. Lot 503. He averred that upon careful examination, he
discovered that TCT No. 200519 is composed of 17 pages, and actually covered 54 lots, namely: Lots 503, 506, 507,
508, 509, 582, 586, 655, 659, 686, 434, 495, 497, 299, 498, 499, 500, 501, 502, 493, 692, 776, 496, 785, 777, 786,
780, 783, 505, 654, 660, 661, 663, 664, 665, 668, 693, 694, 713, 716, 781, 779, 784, 782, 787, 893, 1115, 1114, 778,
669 and 788, all of the Tala Estate. Other lots included therein are Lot 890-B of Psd 36854, Lot 2 of (LRC) Pcs 12892
and Lot 3 of (LRC) Pcs 12892. Thus, respondents' allegation that Lots 661, 664, 665, 693 and 694 of the Tala Estate
were not included in TCT No. 200519 was not true.

On December 28, 1993, then defendants Spouses Jaime and Rosario Tabangcura (Spouses Tabangcura) filed their
Answer[20] with Counterclaim, claiming that they were buyers in good faith and for value when they bought a
house and lot covered by TCT No. 211095 from B.C. Regalado, the latter being a subdivision developer and
registered owner thereof, on June 30, 1986. When respondent Abogado Mautin entered and occupied the
property, Spouses Tabangcura filed a case for Recovery of Property before the RTC,Quezon City, Branch 97 which
rendered a decision[21] in their favor.
On its part, DBT, traversing the complaint, alleged that it is the legitimate owner and occupant of the subject
property pursuant to a dacion en pago executed by B.C. Regalado in the formers favor; that respondents were not
real parties-in-interests because Ricaredo was a mere claimant whose rights over the property had yet to be
determined by the RTC where he filed his application for registration; that the other respondents did not
allege matters or invoke rights which would entitle them to the relief

prayed for in their complaint; that the complaint was premature; and that the action inflicted a chilling effect on
the lot buyers of DBT.[22]
The RTC's Rulings

On June 15, 2000, the RTC through Judge Marciano I. Bacalla (Judge Bacalla), rendered a Decision [23] in favor of the
respondents. The RTC held that the testimony of Ricaredo that he occupied the subject property since 1936 when
he was only 16 years old had not been rebutted; that Ricaredo's occupation and cultivation of the subject property
for more than thirty (30) years in the concept of an owner vested in him equitable ownership over the same by
virtue of an approved plan, Psu 123169; that the subject property was declared under the name of Ricaredo for
taxation purposes;[24] and that the subject property per survey should not have been included in TCT No. 200519,
registered in the name of B.C. Regalado and ceded to DBT. The RTC further held that Spouses Tabangcura failed to
present satisfactory evidence to prove their claim. Thus, the RTC disposed of the case in this wise:
WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered declaring
Certificate of Title No. 200519 and all titles derived thereat as null and void insofar as the same
embrace the land covered by Plan PSU-123169 with an area of 240,146 square meters in the
name of Ricaredo Panes; ordering defendant DBT Marbay Realty, Inc. to pay plaintiff Ricaredo
Panes the sum of TWENTY THOUSAND (P20,000) pesos as attorneys fees plus costs of suit.

SO ORDERED.

On September 12, 2000, DBT filed a Motion[25] for Reconsideration, based on the grounds of prescription and
laches. DBT also disputed Ricaredos claim of open, adverse, and continuous possession of the subject property for
more than thirty (30) years, and asserted that the subject property could not be acquired by prescription or
adverse possession because it is covered by TCT No. 200519.

While the said Motion for Reconsideration was pending, Judge Bacalla passed away.

Meanwhile, on January 2, 2001, a Motion[26] for Intervention and a Complaint in Intervention were filed by Atty.
Andres B. Pulumbarit (Atty. Pulumbarit), representing the Don Pedro/Don Jose de Ocampo Estate. The intervenor
alleged that the subject property formed part of the vast tract of land with an area of 117,000 hectares, covered
by Original Certificate of Title (OCT) No. 779 issued by the Honorable Norberto Romualdez on March 14, 1913
under Decree No. 10139, which belongs to the Estate of Don Pedro/Don Jose de Ocampo. Thus, the
Complaint[27] in Intervention prayed that the RTCs Decision be reconsidered; that the legitimacy and superiority of
OCT 779 be upheld; and that the subject property be declared as belonging to the Estate of Don Pedro/Don Jose
de Ocampo.

In its Order[28] dated March 13, 2001, the RTC, through Acting Judge Modesto C. Juanson (Judge Juanson), denied
Atty. Pulumbarits Motion for Intervention because a judgment had already been rendered pursuant to Section
2,[29] Rule 19 of the 1997 Rules of Civil Procedure.

On April 10, 2001, the RTC issued an Order[30] stating that there appeared to be a need for a clarificatory hearing
before it could act on DBT's Motion for Reconsideration. Thus, a hearing was held on May 17, 2001. Thereafter,
supplemental memoranda were required of the parties. [31] Both parties complied.[32] However, having found that
the original copy of TCT No. 200519 was not submitted to it for comparison with the photocopy thereof on file,
the RTC directed DBT to present the original or certified true copy of the TCT on August 21, 2001. [33] Respondents
moved to reconsider the said directive[34] but the same was denied.[35] DBT, on the other hand, manifested that a
copy of TCT No. 200519, consisting of 17 pages, had already been admitted in evidence; and that because of the
fire in the Office of the RD in Quezon City sometime in 1988, DBT, despite diligent effort, could not secure an
original or certified true copy of said TCT. Instead, DBT submitted a certified true copy of Consolidated Subdivision
Plan Pcs 18345.[36]

On November 8, 2001, the RTC, through Judge Juanson, issued an Order [37] reversing the earlier RTC Decision and
dismissing the Complaint for lack of merit. The RTC held that prescription does not run against registered land;
hence, a title once registered cannot be defeated even by adverse, open or notorious possession. Moreover, the
RTC opined that even if the subject property could be acquired by prescription, respondents' action was already
barred by prescription and/or laches because they never asserted their rights when B.C. Regalado registered the
subject property in 1974; and later developed, subdivided and sold the same to individual lot buyers.

On December 18, 2001, respondents filed a Motion for Reconsideration [38] which the RTC denied in its
Order[39] dated June 17, 2002. Aggrieved, respondents appealed to the CA. [40]
The CA's Ruling

On October 25, 2004, the CA reversed and set aside the RTC Orders dated November 8, 2001 and June 17, 2002
and reinstated the RTC Decision dated June 15, 2000. The CA held that the properties described and included in
TCT No. 200519 are located in San Francisco del Monte, San Juan del Monte, Rizal and Cubao, Quezon City while
the subject property is located in Brgy. Pasong Putik, Novaliches, Quezon City. Furthermore, the CA held that Engr.
Vertudazo's testimony that there is a gap of around 1,250 meters between Lot 503 and Psu 123169 was not
disproved or refuted. The CA found that Judge Juanson committed a procedural infraction when he entertained
issues and admitted evidence presented by DBT in its Motion for Reconsideration which were never raised in the
pleadings and proceedings prior to the rendition of the RTC Decision. The CA opined that DBT's claims of laches
and prescription clearly appeared to be an afterthought. Lastly, the CA held that DBT's Motion for Reconsideration
was not based on grounds enumerated in the Rules of Procedure. [41]

Petitioner filed a Motion for Reconsideration,[42] which was, however, denied by the CA in its Resolution [43] dated
February 22, 2005.

Hence, this Petition.

The Issues

Petitioner raises the following as grounds for this Petition:

I.

PETITIONER'S FAILURE TO ALLEGE PRESCRIPTION IN ITS ANSWER IS NOT A WAIVER OF SUCH

DEFENSE.

II.

IT IS NOT ERRONEOUS TO REQUIRE THE PRODUCTION OF A CERTIFIED TRUE COPY OF TCT NO.
200519 AFTER THE DECISION ON THE MERITS HAS BEEN RENDERED BUT BEFORE IT BECAME
FINAL.

III.

A REGISTERED LAND CAN NOT BE ACQUIRED BY ACQUISITIVE PRESCRIPTION.

IV.
THE TESTIMONY OF ENGR. VERTUDAZO ON THE BASIS OF THE TECHNICAL DESCRIPTION
OF LOT 503 IN AN INCOMPLETE DOCUMENT IS UNRELIABLE.
 V.

MR. PANES HAS NEVER BEEN IN OPEN, ADVERSE AND CONTINUOUS POSSESSION OF THE
SUBJECT PROPERTY FOR MORE THAN THIRTY (30) YEARS.[44]

Distilled from the petition and the responsive pleadings, and culled from the arguments of the parties, the issues
may be reduced to two questions, namely:

1) Did the RTC err in upholding DBT's defenses of prescription and laches as raised in the latter's Motion for
Reconsideration?
2) Which between DBT and the respondents have a better right over the subject property?

Our Ruling

We answer the first question in the affirmative.

It is true that in Dino v. Court of Appeals[45] we ruled:

(T)rial courts have authority and discretion to dismiss an action on the ground of prescription
when the parties' pleadings or other facts on record show it to be indeed time-barred;
(Francisco v. Robles, Feb. 15, 1954; Sison v. McQuaid, 50 O.G. 97; Bambao v. Lednicky, Jan. 28,
1961;Cordova v. Cordova, Jan. 14, 1958; Convets, Inc. v. NDC, Feb. 28, 1958; 32 SCRA 529; Sinaon
v. Sorongan, 136 SCRA 408); and it may do so on the basis of a motion to dismiss (Sec. 1, [f] Rule
16, Rules of Court), or an answer which sets up such ground as an affirmative defense (Sec. 5,
Rule 16), or even if the ground is alleged after judgment on the merits, as in a motion for
reconsideration (Ferrer v. Ericta, 84 SCRA 705); or even if the defense has not been asserted at
all, as where no statement thereof is found in the pleadings (Garcia v. Mathis, 100 SCRA
250;PNB v. Pacific Commission House, 27 SCRA 766; Chua Lamco v. Dioso, et al., 97 Phil. 821); or
where a defendant has been declared in default (PNB v. Perez; 16 SCRA 270). What is essential
only, to repeat, is that the facts demonstrating the lapse of the prescriptive period be
otherwise sufficiently and satisfactorily apparent on the record; either in the averments of the
plaintiff's complaint, or otherwise established by the evidence. (Emphasis supplied)

Indeed, one of the inherent powers of courts is to amend and control its processes so as to make them
conformable to law and justice. This includes the right to reverse itself, especially when in its opinion it has
committed an error or mistake in judgment, and adherence to its decision would cause injustice. [46] Thus, the RTC
in its Order dated November 8, 2001 could validly entertain the defenses of prescription and laches in DBT's
motion for reconsideration.

However, the conclusion reached by the RTC in its assailed Order was erroneous. The RTC failed to consider that
the action filed before it was not simply for reconveyance but an action for quieting of title which is
imprescriptible.

Verily, an action for reconveyance can be barred by prescription. When an action for reconveyance is based on
fraud, it must be filed within four (4) years from discovery of the fraud, and such discovery is deemed to have
taken place from the issuance of the original certificate of title. On the other hand, an action for reconveyance
based on an implied or constructive trust prescribes in ten (10) years from the date of the issuance of the original
certificate of title or transfer certificate of title. The rule is that the registration of an instrument in the Office of the
RD constitutes constructive notice to the whole world and therefore the discovery of the fraud is deemed to have
taken place at the time of registration.[47]
However, the prescriptive period applies only if there is an actual need to reconvey the property as when the
plaintiff is not in possession of the property. If the plaintiff, as the real owner of the property also remains in
possession of the property, the prescriptive period to recover title and possession of the property does not run
against him. In such a case, an action for reconveyance, if nonetheless filed, would be in the nature of a suit for
quieting of title, an action that is imprescriptible.[48] Thus, in Vda. de Gualberto v. Go,[49] this Court held:

[A]n action for reconveyance of a parcel of land based on implied or constructive trust
prescribes in ten years, the point of reference being the date of registration of the deed or the
date of the issuance of the certificate of title over the property, but this rule applies only when
the plaintiff or the person enforcing the trust is not in possession of the property, since if a
person claiming to be the owner thereof is in actual possession of the property, as the
defendants are in the instant case, the right to seek reconveyance, which in effect seeks to
quiet title to the property, does not prescribe. The reason for this is that one who is in actual
possession of a piece of land claiming to be the owner thereof may wait until his possession is
disturbed or his title is attacked before taking steps to vindicate his right, the reason for the rule
being, that his undisturbed possession gives him a continuing right to seek the aid of a court of
equity to ascertain and determine the nature of the adverse claim of a third party and its effect
on his own title, which right can be claimed only by one who is in possession.

Insofar as Ricaredo and his son, Angelito, are concerned, they established in their testimonies that, for some time,
they possessed the subject property and that Angelito bought a house within the subject property in 1987.[50] Thus,
the respondents are proper parties to bring an action for quieting of title because persons having legal, as well as
equitable, title to or interest in a real property may bring such action, and title here does not necessarily denote a
certificate of title issued in favor of the person filing the suit.[51]

Although prescription and laches are distinct concepts, we have held, nonetheless, that in some instances, the
doctrine of laches is inapplicable where the action was filed within the prescriptive period provided by law.
Therefore, laches will not apply to this case, because respondents' possession of the subject property has rendered
their right to bring an action for quieting of title imprescriptible and, hence, not barred by laches. Moreover, since
laches is a creation of equity, acts or conduct alleged to constitute the same must be intentional and unequivocal
so as to avoid injustice. Laches will operate not really to penalize neglect or sleeping on one's rights, but rather to
avoid recognizing a right when to do so would result in a clearly inequitable situation. [52]

Albeit the conclusion of the RTC in its Order dated November 8, 2001, which dismissed respondents' complaint on
grounds of prescription and laches, may have been erroneous, we, nevertheless, resolve the second question in
favor of DBT.

It is a well-entrenched rule in this jurisdiction that no title to registered land in derogation of the rights of the
registered owner shall be acquired by prescription or adverse possession. [53]

Article 1126[54] of the Civil Code in connection with Section 46[55] of Act No. 496 (The Land Registration Act), as
amended by Section 47[56] of P.D. No. 1529 (The Property Registration Decree), clearly supports this rule.
Prescription is unavailing not only against the registered owner but also against his hereditary successors.
Possession is a mere consequence of ownership where land has been registered under the Torrens system, the
efficacy and integrity of which must be protected. Prescription is rightly regarded as a statute of repose whose
objective is to suppress fraudulent and stale claims from springing up at great distances of time and surprising the
parties or their representatives when the facts have become obscure from the lapse of time or the defective
memory or death or removal of witnesses.[57]

Thus, respondents' claim of acquisitive prescription over the subject property is baseless. Under Article 1126 of the
Civil Code, acquisitive prescription of ownership of lands registered under the Land Registration Act shall be
governed by special laws. Correlatively, Act No. 496, as amended by PD No. 1529, provides that no title to
registered land in derogation of that of the registered owner shall be acquired by adverse
possession. Consequently, in the instant case, proof of possession by the respondents is immaterial and
inconsequential.[58]

Moreover, it may be stressed that there was no ample proof that DBT participated in the alleged fraud. While
factual issues are admittedly not within the province of this Court, as it is not a trier of facts and is not required to
re-examine or contrast the oral and documentary evidence anew, we have the authority to review and, in proper
cases, reverse the factual findings of lower courts when the findings of fact of the trial court are in conflict with
those of the appellate court.[59] In this regard, we reviewed the records of this case and found no clear evidence
that DBT participated in the fraudulent scheme. In Republic v. Court of Appeals,[60] this Court gave due importance
to the fact that the private respondent therein did not participate in the fraud averred. We accord the same
benefit to DBT in this case. To add, DBT is an innocent purchaser for value and good faith which, through a dacion
en pago duly entered into with B.C. Regalado, acquired
ownership over the subject property, and whose rights must be protected under Section 32 [61] of P.D. No. 1529.
Dacion en pago is the delivery and transmission of ownership of a thing by the debtor to the creditor as an
accepted equivalent of the performance of the obligation. It is a special mode of payment where the debtor offers
another thing to the creditor, who accepts it as an equivalent of the payment of an outstanding debt. In its modern
concept, what actually takes place in dacion en pago is an objective novation of the obligation where the thing
offered as an accepted equivalent of the performance of an obligation is considered as the object of the contract
of sale, while the debt is considered as the purchase price.[62]

It must also be noted that portions of the subject property had already been sold to third persons who, like DBT,
are innocent purchasers in good faith and for value, relying on the certificates of title shown to them, and who had
no knowledge of any defect in the title of the vendor, or of facts sufficient to induce a reasonably prudent man to
inquire into the status of the subject property.[63] To disregard these circumstances simply on the basis of alleged
continuous and adverse possession of respondents would not only be inimical to the rights of the aforementioned
titleholders, but would ultimately wreak havoc on the stability of the Torrens system of registration.

A final note.

While the Torrens system is not a mode of acquiring title, but merely a system of registration of titles to lands,
justice and equity demand that the titleholder should not be made to bear the unfavorable effect of the mistake or
negligence of the State's agents, in the absence of proof of his complicity in a fraud or of manifest damage to third
persons. The real purpose of the Torrens system is to quiet title to land and put a stop forever to any question as
to the legality of the title, except claims that were noted in the certificate at the time of the registration or that
may arise subsequent thereto. Otherwise, the integrity of the Torrens system would forever be sullied by the
ineptitude and inefficiency of land registration officials, who are ordinarily presumed to have regularly performed
their duties.[64] Thus, where innocent third persons, relying on the correctness of the certificate of title thus issued,
acquire rights over the property, the court cannot disregard those rights and order the cancellation of the
certificate. The effect of such outright cancellation will be to impair public confidence in the certificate of title. The
sanctity of the Torrens system must be preserved; otherwise, everyone dealing with the property registered under
the system will have to inquire in every instance on whether the title had been regularly or irregularly issued,
contrary to the evident purpose of the law. Every person dealing with the registered land may safely rely on the
correctness of the certificate of title issued therefor, and the law will in no way oblige him to go behind the
certificate to determine the condition of the property.[65]

WHEREFORE, the instant Petition is GRANTED and the assailed Court of Appeals Decision dated October 25, 2004
is hereby REVERSED and SET ASIDE. A new judgment is hereby entered DISMISSING the Complaint filed by the
respondents for lack of merit.

SO ORDERED.